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Finance
03
Interview Former Politician David Shaw (UK) Turned to Business Global Russia
in Russia. 10 Years Later, He Assesses the Current Situation
Calendar
Find more events and contact details at
Climate of Opportunity
www.rbth.rg.ru/global_calendar.html
14th International Adam Smith
Conferences’ Russian Banking Forum,
December 3, 2007, Marriott Hotel
NIKOLAY KOROLEV_RBTH
Grosvenor Square, London
Adam Smith Conferences’ London elite banking
Since 1997, ex-MP David Shaw has been involved in a gathering is well known to all the leading market
number of large-scale investment projects in Russia. Du-
players. There were a record number of attendees
at the Russian Banking Forum in 2006; the event at-
ring this time, he has ridden a somewhat dramatic ride of
tracted over 300 top bankers from across Europe,
Russian risk and opportunity. Nonetheless, today he is
Russia and the Commonwealth of Independent
States.
convinced of Russia's continuing growth, and has detec-
www.adamsmithconferences.com
ted positive changes in business and work attitudes. In Conference “Russian Language and
an exclusive interview with Russia Beyond the Headlines,
Culture in the United States: Practical
Issues in Preservation and Development”
Shaw shares his past experiences and future vision.
December 8-9, 2007, Washington, D.C.
The conference, organized by American Associa-
tion for Russian Language, Culture and Education
(AARCE) and Russian Washington (RussianDC.
com), provides an educational and business forum
Russian investment with Russian partners. Indeed, 1979—1983 Assistant Direc- vestors like a certain stability to to share practices of the Russian culture preserva-
opportunities never I'm aware of at least one Rus- RBTH Dosier tor, County Bank be present. tion and development, learn from leading experts
looked upon so favorably sian law firm that has just — in 1987—1997 Conservative Inevitably, the fact that Russia in the subject area, meet with Russian and U.S.
before, says influential UK the last three months — set up David Shaw is a chartered ac- Member of Parliament for is going through elections may government officials, and network with potential
businessman in London. countant with over 25 years of Dover; mean some people reconsider business partners.
experience in corporate finan- Vice-Chairman of the Conser- investment, but I do not expect www.aarce.org/Conference.asp
How do you rate the current in- You are a frequent business ce. Previously, he was also Con- vative Members Finance Com- it to affect the overall level per
vestment climate in Russia? traveler to Russia. What do you servative MP for Dover, a seat mittee; Chairman of the Smaller se. On the contrary, I think in- Global Investment and Finance Forum
I think this is an increasingly think about the changes that he lost in the 1997 Labor lands- Businesses Committee and the vestment is going to continue December 10-11, 2007, The Ritz-Carlton,
good one. Indeed, it is being have taken place in the country? lide. Shaw currently has several senior Conservative member of increasing. I was speaking to Moscow
recognized as such all around Do you believe Russia is a coun- business interests, is non-exe- the Social Security Select Com- one American investment Markets are now experiencing a long awaited
the world. There is no doubt the try that is good for business? cutive director of an influential mittee. banker in London recently who credit crunch, after many years of exceptional
BRIC [emerging market quartet It really should be said that business NGO and director of 1983 — present told me that his bank is going to stability. However, another phenomenon has co-
of Brazil, Russia, India and Russia is making enormously a listed IT company he set up in Director, Sabrelance Ltd. grow and grow and grow its incided with this rise and fall, perhaps even more
China] countries are exciting a impressive changes. In three 1983. Since 1997, Shaw has 1997 — present Russian activities in the next significant than any fluctuations in stock prices
lot of interest in the financial years that I've been coming to become involved in a number of Member of Marketing, Com- few years. and interest rates. Today, we are witnessing a
markets and London in particu- Russia I've seen a great deal of large-scale business projects munications and Political Com- profound shift in the center of gravity of the global
lar. It’s the topic of conversation change — be it a change in the in Russia, many involving the mittee, Quoted Companies One of the most serious factors economy, towards a new and ambitious set of in-
in London’s bars and restau- attitude of the people, or a real estate sector. Alliance. hindering business develop- creasingly influential emerging market economies.
rants — and this, by the way, is change in the energy and en- 2001 — present ment in any country is corrup- The world’s financial architecture is changing be-
where financial markets grew thusiasm they demonstrate to- 1971—1979 Director, The Ads- Non-Executive Director (Euro- tion. How serious is this factor yond recognition.
up some three hundred years wards work. cene Group plc, Coopers and Ly- pe), Business Council for Inter- in Russia? Do you have any per- www.eventica.co.uk
ago. One of my business contacts brand national Understanding. sonal experience with it?
So I think the climate of oppor- in London is a Russian busi- I cannot say that I have experi- International Show and Seminars by
tunity is there. The question is nessman who brings over enced corruption personally. I MARBC
whether everybody is able take conferences involving hun- be done in the regions. On the have are horrendous. We simply would not get involved March-December 2008, USA
advantage of these new oppor- dreds of Russian business- other hand, it takes some time have to learn to live with bu- in that sort of area. It's some- March – December, 2007 (dates not established
tunities. men and women each year. I to get to know these regions reaucracy and regulation. thing I would stay away from. yet): The MARBC Seminar Series: “The Changing
There are obviously problems have met many of these busi- well, which first and foremost This is not to undermine the Of course, I’m aware of the con- Face of Russia.” Location: Pennsylvania, Mary-
as well, which people are con- nessmen and women: not just means getting to know the peo- issue in Russia, however. I cerns many other organizations land, Delaware, New Jersey, New York. A revival of
cerned about. Emerging mar- from Moscow and St. Peters- ple there. understand why Russian and have, as I’m aware of a number a highly successful seminar series hosted by the
kets naturally means emerging burg, the two main cities, but I don't deal directly with the bu- Western businesspeople of reports in newspapers. Just MARBC in 1999-2000 addressing the changing
legal and regulatory systems. from all over Russia. For ex- reaucracies. Instead, I leave complain a lot about it. last week I read that a govern- business environment in Russia after the financial
In many cases the BRIC coun- ample, at the last conference that to my Russian partners to ment official had been arrested crisis of 1998. The continuing series will again
tries do not have established we had some businessmen deal with. Certainly, they say How different are the risk pro- [Deputy Finance Minister Ser- highlight and analyze recent developments affect-
legal principles going back from as far east as Vladivo- they have great difficulty. When files in Russia today? gei Storchak, arrested on charg- ing Russian-American business interactions.
many years. In this regard, stok. We are now beginning to it comes to real estate, for ex- Investors like certainty, and the es of embezzlement — RBTH]. www.russiaprofile.org
India has an advantage be- see the whole of Russia com- ample, multiple approvals are fact that there are elections But occasionally we have such
cause India has the basis of ing to London to do business, required: zoning approvals and coming up may have some im- problems in the West too. We 4th Annual Russian Winter Festival
British law which investors in to learn the opportunities that what we call building control pact. all have to deal with these prob- January 13, 2008, Trafalgar Square,
London understand. Con- exist for mutual trade and busi- approvals. My company was It’s a double-edged sword: In- lems. Besides, what you can London
currrently, we have a problem ness activities. advising a Russian client on a vestors like a system of elec- surmise from the recent case is The Russian Winter Festival has now become
with the other three countries As it happens, I think that there project, and at one point I tions but they do not like too that President Putin’s govern- an important annual fixture for the London public.
— Brazil, Russia and China — will be an increasing emphasis asked “How many more ap- much change as the result of ment has been genuinely ac- Each year, it has attracted record crowds, who
because their systems do not by British and American busi- provals?” The answer I got: the elections. Even in a demo- tive in dealing with the prob- are treated to an extremely diverse look at Russian
have such a history and are nessmen on the regions. I have “twelve.” cratic environment, change is lems. Vice-ministers do not get culture, from modern pop stars and indie rock, to
sometimes difficult to under- been concentrating a lot of my So bureaucracy does provide not always good for investors. arrested without having a gov- folk groups, street theatre and military marching
stand, at least at the present own activities there, first and difficulties; for many these be- Investors are putting their ernment that is against corrup- bands.
time. Russia, on the other foremost because there is so come barriers. At the same money at risk normally for tion. Russia has to deal with its www.eventica.co.uk
hand, is being helped by a much competition is Moscow time, however, I should also much longer periods than the problems as we have to deal
great number of British law and business opportunities — say I have lived in Britain, an term of the parliament. Inves- with our problems in the west. CIS Metals Summit 2008
firms now opening up in Rus- especially real estate opportu- environment not completely tors like to invest 5, 10 or 15 We must all support one an- February 18-20, 2008, Marriott Grand
sia. And both British and Amer- nities — are relatively expen- devoid of regulation. And when years, except for certain types other
-
Hotel, Moscow
ican firms are beginning to de- sive. It's usually the case that I visited the United States, of private equity funds that are Prepared by Following the unprecedented success of the 12th
velop working understanding there are better transactions to some of the regulations they much shorter term. But all in- Sergey Merinov CIS Metals Summit, which took place in February
2007 in Moscow, we are happy to announce that
preparations are under way for the next event in
the series, the 13th CIS Metals Summit. Held an-
Finances How Russia Paid Off Soviet Debt
nually for 12 years, the Summit has become a key
of a short-term state obliga- mestic debt is to fund pensions, event, gathering professionals and top executives
tions pyramid, borrowing did which are facing a mounting from the CIS Metals sector and their international
Debt Maneuvering
not resume until after the be- squeeze, along with the added colleagues, each year attracting 300+ biggest
ginning of 2000. burden of funded pensions to names in the industry.
The structure of the debt, take care of and place on the www.adamsmithconferences.com
Has its Rewards
based on long papers, or debt market.
issued for five, ten, fifteen or The ultimate question, of Russian Alternative Investment Forum
more years, does not help. course, is whether Russia’s February 19-21, 2008, Marriott Hotel
Current domestic debt stands debt is large enough to be a Grosvenor Square, London
at 1.230 trillion rubles ($49.8 significant worry. In the light of recent developments in the global
Russia has paid back But even without that caveat, creditors think, the state will billion) and is expected to rise The answer is a definitive no. economy, which are causing unease on the finan-
practically all of its Soviet- the debt that Russia inherited pay up. to 1.6 trillion rubles ($65.3 bil- Experts at the International cial markets of the developed world, the emerging
era debt. Now experts are from the Soviet Union now This is one reason Russia’s Fi- lion) by 2009 Monetary Fund say that the markets have proved resilient and analysts envis-
discussing an early repayment stands at just $8 billion, and nance Ministry has repeatedly But this is not necessarily a bad country’s gold and hard curren- age further growth potential in the future. With its
of some of Russia’s new debt. that accumulated in the post- sought a ban on state-owned thing. The domestic national cy reserves and the Stabiliza- healthy current account surplus, high levels of GDP,
Soviet era, at $30 billion. companies issuing debt in a debt has been growing accord- tion Fund are more than ade- foreign direct investment and consumer spending,
TATIANA KONISHCHEVA
If the bank is paid back, Rus- borrowers’ market. ing to plan, in line with the debt quate to protect Russia from together with its enormous commodity reserves,
ROSSIYSKAYA GAZETA sian debt will be down $4 bil- Unfortunately, that ban proved strategy adopted by the gov- any sudden shocks caused by Russia remains one of the most promising develop-
MOSCOW
lion. ineffective for the simple rea- ernment. It is a useful, if limited, a change in business condi- ing economies to invest in. What do the prospects
Loans taken by Russian busi- son that no Russian bank had weapon against inflation, be- tions. for alternative investment in Russia look like?
A quick look at the figures of nesses and banks are another pockets deep enough to pro- cause by issuing securities the They also add that the policy of www.adamsmithconferences.com
the country’s balance of pay- story. In the past five to seven vide a loan of, say, $10 billion Finance Ministry trims the internal borrowing pursued by
ments tells us that the external years they have increased their for 10 years. No Russian bank economy of excess money. It the government is not an un-
debt is growing. A paradox? debt from $29 billion to $300 is in a position to issue credit should be noted, however, that reasonable one.
Did we leave out any
Not quite. billion. Many of these banks to a major business undertak- because the sums involved are Russian national debt is only important events?
Russia’s external debt is being and companies are partly ing; even the biggest Russian relatively small by Russian 8% of the GDP. That figure, if
fed by the apparently insatiable state-owned, which in credi- banks are by western stan- standards, they cannot be ex- compared with the debt of such editor.usa@rg.ru
appetite for foreign credit tors’ eyes is the principal secu- dards only middleweights. pected to be anything more developed countries as the
among its businesses and rity for their loans. Domestic debt is also growing. than mildly useful. U.S., is very low, fund experts
banks. The sum is hefty, nearly If worse comes to worst, so Following the collapse in 1998 Another use of the national do- say.
-
300 billion dollars.
By comparison, the national
debt is negligible. Not so long
ago, a high-ranking official of The internal debt of the Russian Federation in Key indicators of the international investment
the Russia’s Finance Ministry
government securities position for external debt for Jan–June 2007
made a surprising statement in
Washington, D.C.
Russia, he said, was ready and
External debt, External debt,
willing to pay off its debts to the as of January 2007 as of June 2007
World Bank ahead of sched-
33.8
30.8
ule. The sum involved was
9.4 8.5
80% of the loans. These are
practically utilized loans and
the treasury is wasting money
on servicing them.
The sum he estimated as re-
$ $
payment would total about four
159.9 billion 212.0 billion
131.0
billion dollars. True, he noted
101.2
somewhat later, “we have not
yet agreed among ourselves”
whether or not to pay back that
part of the debt, adding the Russia’s new debt Bank debt (no capital subscription)
qualification that everything
would have to be substantiated
Former USSR’s debt Other economic sectors’ debt
and documented.
SOURCE: MINISTRY OF FINANCE OF THE RUSSIAN FEDERATION
SOURCE: CENTRAL BANK OF RUSSIA
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