Russia investment forum starts under cloud of Ukraine tensions

18th June 2015, Comments 0 comments

Russia's showcase investment forum kicked off in Saint Petersburg Thursday under the shadow of Moscow's standoff with the West over Ukraine and the country's economic crisis.

Greek Prime Minister Alexis Tsipras is set to jet in as the star guest at the three-day conference -- once billed as Russia's answer to Davos -- but many Western leaders and CEOs have shied away amid tensions with Moscow.

Russian President Vladimir Putin is due to meet the Saudi Defence Minister Prince Mohammed bin Salman and business leaders Thursday before giving a keynote speech Friday.

Attention is set to focus on Russia's economic woes, with the country having slumped into recession on the back of Western sanctions over Ukraine and lower oil prices.

The Kremlin has claimed that the worst of the crisis might be over as the ruble has stabilised somewhat this year after losing some 40 percent of its value in 2014.

"I can't say the situation is good, that isn't true, it is still quite complicated. But it is not as complicated as we saw in October, November and December," First Deputy Prime Minister Igor Shuvalov said at the conference.

But the economy continues to contract, with the central bank predicting it will shrink 3.2 percent this year, and experts warned the bad blood with the West would inflict long-term damage.

- 'Eye of the storm' -

"Where are we in terms of growth? We are in the eye of the storm," respected former finance minister Alexei Kudrin warned.

"The uncertainty in terms of the third and fourth quarters are high because the challenges are not just cyclical and economic, linked to the oil price, but political," said Kudrin, who is believed to still have Putin's ear.

Herman Gref, chief executive of state-run Sberbank, criticised the government's handling of the crisis.

"Crisis is a result of bad management," he said to applause from the audience.

In a sign of the continuing rancour, economy minister Alexei Ulyukayev said Russia would maintain embargoes on Western products if the European Union extends its sanctions.

EU member states agreed Wednesday to extend damaging economic sanctions against Russia over the Ukraine crisis by another six months to the end of January 2016 and will finalise the decision on Monday, officials said.

Faced with growing isolation from the West, Russia has sought to bolster ties with new partners including China.

Putin is set to sit down with China's vice premier Zhang Gaoli, among other leaders.

The Kremlin strongman will meet with Tsipras -- who is making his second visit to Russia in less than three months -- on Friday.

The two leaders are expected to ink a gas deal, but Tsipras -- who has openly criticised sanctions against Russia -- is unlikely to get any help with the immediate problem of Greece's June 30 deadline to repay 1.6 billion euros ($1.8 billion) to the IMF.

Analysts say they expect few deals to be signed at the forum. But despite the ambient tensions, some leaders of Western businesses with interests in Russia are taking part in it, including the heads of Britain's BP and France's Societe Generale.

© 2015 AFP

0 Comments To This Article