Moscow News
http://www.mnweekly.ru/
May 30, 2008
Russia Looks to the Future
By Rebeccah Billing
Deputy Minister of finance Dmitry Pankin and other Russian government officials met with key figures from international economic institutions on Wednesday to discuss Russia's integration into global institutions and the global economy. The conference entitled "Russia in the World" is the first of what is hoped will be an annual event to review and analyse Russian domestic and foreign policy issues and the economic situation in the country.
Dr Robin Niblett, Director of the Royal Institute of International Affairs, who co-chaired the event via a live satellite link up with London, highlighted the current need for dialogue on the political landscape in Russia after the elections:
"The timing of this conference with the arrival of a new Russian administration makes this conference especially topical. It is our impression in London that the new president will focus on Russia's economic integration... in the global economy."
Much of the discussion at the conference centered on how Russia will use the vast sovereign wealth funds it has created with the proceeds from oil revenues, currently worth a combined total of $162 billion. Earlier this year the Russian government cleared the way for one of the funds to invest in foreign stocks and bonds, which resulted in widespread concern among market regulators.
Pankin offered assurances at the conference, but also used the opportunity to respond to criticism that the government is not spending more of this money to improve domestic infrastructure:
"If you double the amount of money you invest into infrastructure it does not mean that the infrastructure will become twice as good... it is likely that you will just make the concrete twice as expensive," he said.
The issue of inflation was also raised as a concern for foreign investors in Russia; inflation from January 1 to May 26 alone reached 7.5 percent, making it increasingly unlikely that the government will meet its annual target of 10.5 percent.
"We will need to keep a tight control on the budget," Pankin said. "Last year the budget grew by 26 percent, this is much greater than the growth of the economy."
Deputy Director of the Department of Trade Negotiations, Vladimir Tkachenko, reported that after 14 years of negotiations Russia is reaching the final stages of agreeing entry into the WTO:
"We are also looking at the future prospects of joining the Organization for Economic Cooperation and Development (OECD), which will also lead to improvements in the investment climate," he said.
Deputy Director of the OECD., Dr Rainer Geiger, refused to be drawn on questions of a timeframe for Russia joining the institution:
"But I am a professional optimist, so I'm talking months and years and not decades," said Geiger.