#7 - JRL 7133
April 7, 2003
Iraq War Haunts London Forum
By Andrei Zolotov Jr.
LONDON -- Along with hundreds of Russian and Western businessmen and a handful or two of politicians, there was a ghostly participant in the Russian Economic Forum -- the war in Iraq.
With several notable exceptions, the war earned few direct references in the two days of speeches, and its only visible incarnation was a scarcely attended ongoing protest in front of the Houses of Parliament, around the corner from the forum's venue, the Queen Elizabeth II Conference Centre.
Yet the prospect of dropping oil prices and worries about the extent to which this would derail Russia's economic growth, together with the latest political jitters over the war, cast a shadow on the main good news dominating the forum -- British Petroleum's $6.75 billion deal with Tyumen Oil Co.'s shareholders, seen as a breakthrough capable of raising Western investment in the Russian economy to a new level.
In a way, the main question of the forum -- if not in the substance of the discussions, then in their spirit -- was this: Would the political tensions kill potentially lucrative business contacts or would the rising economic tide help reverse the negative political trend?
"The main themes of the forum are the consequences of the BP-TNK deal and a switch to practical issues -- the technology of investing in Russia," said Grigory Tomchin, chairman of the State Duma's economic policy and business committee. "But the war will bring about an unfavorable chain of consequences. That is alarming people. If not for the war, it [the forum] would have been a big success."
On Thursday, the first day of the forum, Russian Ambassador to Britain Grigory Karasin struck a cautious note before reading President Vladimir Putin's upbeat message to the participants. "It would be hypocritical to pretend that the forum is taking place under ordinary or, even more so, under favorable conditions," Karasin said, referring to Russia's differences with the United States and Britain over the war. "The atmosphere is not what it was during the previous forums."
State Duma Deputy Speaker Irina Khakamada, however, said on the sidelines that she hoped the positive business developments would help keep political relations on track.
"We hope the already accumulated potential of business contacts will be able to maintain the high level of relations between Russia and the West," she said in an interview. "Our cooperation will have to go through many trials in times to come, and we have to learn to work together, without giving up our positions and without turning back after encountering the first difficulty."
Jean Lemierre, president of the European Bank for Reconstruction and Development, said the general mood of Western investors is positive and the "external shock" to the Russian economy in the form of dropping oil prices would not be critical.
"There is a new atmosphere," he said in an interview. "You have stronger Russian businessmen and a new interest on the part of Western investors."
He said that for Western participants, the most interesting topic of discussion was the oil and gas sector, while Russian participants were also interested in banking. At the same session where Lemierre spoke Friday, Vneshtorgbank chairman Andrei Kostin initiated another discussion that continued in the wings by saying that foreign banks are now welcome on the Russian market, with some limitations. "Today Russian bankers don't have a panicky fear at the prospect of Western capital coming in," Kostin said. "But the situation that took place in Eastern Europe, where Western capital practically eradicated the domestic banking sector, has to be avoided."
Despite its European venue and formal orientation toward Westerners, the forum was first and foremost a Russian event, an opportunity for members of the Russian business and government elite to meet in one place without the usual domestic constraints.
Yet perhaps as another fallout of the war, the Russian government was poorly represented. Neither Prime Minister Mikhail Kasyanov, Finance Minister Alexei Kudrin (who attended last year) nor Economic Development and Trade Minister German Gref attended. The open spot in the forum's program for a senior government representative was filled at the last minute by Anti-Monopoly Minister Ilya Yuzhanov.
Even without them, and with all the jokes about why go to London for such a Russian event, participants were returning home in a generally positive mood.
Yevgeny Satanovsky, president of the Russian Jewish Congress and head of the Ariel Group industrial trading company, compared the forum to an outing for the Russian business elite where relationships are easier to strike up.
"Here, you get to see people whom you had long not seen in Moscow because everybody is busy or doesn't want to see each other," Satanovsky said. "A place where [outspoken Communist Deputy Vasily] Shandybin and [self-exiled oligarch Boris] Berezovsky can speak at the same time is worth coming to -- like to a zoo where a tiger and a white bear, whom you never see together in nature, sit in neighboring cages. It's a curiosity.
"I heard a dozen intelligent ideas, several dozen stupid ones, met several smart people and several conmen -- I don't regret coming," Satanovsky said.