Blog Post
Neither fierce winter storms in Boston nor the dramatic political and
economic uncertainties in Russia following the August 1998 financial crisis
prevented more than 500 serious, high-level representatives of business and
government from gathering in Cambridge for the Strengthening Democratic
Institutions (SDI) Project''s 3rd Annual U.S.-Russian Investment Symposium.
Titled "Financial and Direct Investment Opportunities in Russia: Meeting
the Challenge," and held from January 14-16, the Symposium provided an
active and effective venue for three intense days of discussions,
presentations, and meetings on the opportunities for direct and portfolio
investment in Russia.
The Russian delegation included leaders from across the spectrum:
high-level government leaders; business "oligarchs" like Boris Berezovsky;
business leaders like Anatoly Kisilev of Khrunichev (a joint venture
partner with Lockheed Martin for satellite launches); and political
hopefuls like Boris Nemtsov and Moscow Mayor Yuri Luzhkov. At this year''s
session, Federation Council Budget Committee Chairman and Samara Oblast
Governor Konstantin Titov, Moscow First Deputy Mayor Vladimir Resin, and
others emphasized that despite the August 1998 financial crisis and
subsequent difficulties, Russia is ready to support investment and to
cooperate on mutually beneficial joint projects.
Technology played a saving role in this year''s Symposium, as U.S. Deputy
Secretary of the Treasury Lawrence Summers, IMF First Deputy Managing
Director Stanley Fischer, World Bank Vice President for Europe and Central
Asia Johannes Linn, and A.T. Kearney Vice President Martin Cannon all
addressed the Symposium by videobridge after their travel plans were foiled
by a winter ice storm - which reportedly gave Russian Deputy Prime Minister
Yuri Maslyukov and Stanley Fischer an opportunity for lengthy, informal,
private discussion at Washington''s National Airport.
In the opening sessions, Stanley Fischer, Lawrence Summers, and World Bank
Chairman James Wolfensohn (who gave his presentation in person) reinforced
each other''s presentations in communicating several key messages: that Russia
really matters; that the U.S. government and the international institutions really do care and are ready to help Russia; that Russia nonetheless has to do first what is required for itself with its own budget in narrowing the gap between expenditures and income; and that the current 1999 budget is not yet on
target.
EBRD First Vice President Charles Frank, Johannes Linn, and OPIC President
and CEO George Muñoz, among others, backed these discussions with an
assessment of some of the concrete forms of assistance which are available
to investors from the EBRD, World Bank, OPIC, and other agencies. Moscow
Mayor Yuri Luzhkov made a special presentation via videolink from Moscow,
in which he devoted attention to Moscow''s response to the crisis and its
emerging mortgage system.
At the closing dinner, Samara Oblast Governor Konstantin Titov struck a
positive note by declaring "Mr. Fischer and Mr. Wolfensohn have shown that
Russia can rely on international institutions, but each person and each
region must work hard for its own investment."
Fourteen breakout sessions were a fascinating series of discussions on key
topics of concern for investors, including investment in Russia''s regions
(outside of Moscow and St. Petersburg), telecommunications, mortgages,
Production Sharing Agreements, and investment in Russia''s nuclear cities.
The telecommunications panel brought together the CEOs of some of Russia''s
leading telecom firms and U.S. counterparts from Teledesic, Loral Space
Systems, and Global Partner Ventures. The session on mortgages discussed
what many think will be a major new sector for Russia in coming years.
Sessions on corporate governance and taxation addressed perhaps the most
challenging two issues for investors in Russia. And a session on Production
Sharing Agreements featured a remarkably frank and candid exchange about
this piece of legislation that is vital to Russia''s economic development,
especially in the oil and gas sectors.
The Symposium was co-sponsored by the Center''s Strengthening Democratic
Institutions Project, The Conference Board, The U.S.-Russia Business
Council, the Russian National Foundation for Strategic Research, and the
Russian Marketing Association. Financial support for the Symposium was
provided by Prima Industries, AEGIS, A.T. Kearney, Comverse Network
Systems, McDermott, Will & Emery, Mobil Oil Corporation, R.J. Reynolds
International, Khrunichev State Research and Production Space Center,
Sistema JFSC, Kazieva & Hermes-Holding, Publishing House ''Kommersant'',
Rosneftegazstroy, Sistema Telecom, and Sobinbank.