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Moscow Times
January 28, 2005
A Foreign Investor Pitches for Russia at Davos
By Lynn Berry
Staff Writer

DAVOS, Switzerland -- As the World Economic Forum makes headlines in all the major international papers this week, the only splash of interest in Russia so far has been generated by the ever-upbeat born salesman Bill Browder.

Browder, the CEO of Hermitage Capital Management, gathered together a room of prominent journalists on Thursday for a 7:45 a.m. breakfast and a slick presentation in which he made the case for investing in Russia. He argued that Russia's stock market is grossly underperforming and the reason is gross misperceptions in the West.

The West, he said, fears a renationalization program because of the state takeover of Yukos, a new Cold War because of the disputed election in Ukraine, an end of democracy in Russia because of the cancellation of gubernatorial elections, and that reforms are finished because of delays in electricity, gas and banking reform. He then proceeded, with carefully chosen facts and figures, to argue quite persuasively that all of these fears are ungrounded.

Even with these fears driving down the market, Russia is in a strong economic position relative to other countries, Browder said. He showed a graph estimating that Russia will have the fourth-highest GDP growth in the world this year and a fiscal balance second to none because of its large budget surplus (and relatively low GDP).

The question, then, is why so far it has been left to Browder, as effective as he is, to make Russia's case. Some of Russia's more successful businesspeople are at Davos, but there are fewer of them than in past years and most tend to talk mainly among themselves. They can be spotted in one of the conference center's many cafes during the day or after dinner in the bar of the Sunset Park Hotel, where the Russians traditionally stay.

In the 1990s, Davos became the place to be for the Russian political and business elite, which in those days had no qualms about flaunting its fabulous new wealth. History of a sort was made here in 1996 when the future oligarchs decided to work together to get an unpopular Boris Yeltsin re-elected.

Yeltsin never attended the World Economic Forum, and neither has President Vladimir Putin. As in past years, Putin was invited to speak at this year's meeting, where he would have joined British Prime Minister Tony Blair, French President Jacques Chirac, German Chancellor Gerhard Schr der, and many other world leaders.

Instead, he decided to send Deputy Prime Minister Alexander Zhukov, who is to participate in the only two sessions related to Russia this year, both on Friday. With the abrupt cancellation of Putin economic adviser Andrei Illarionov, a Davos favorite, Zhukov is the only Russian official who will make the trip this year.

In any case, the Russians are likely to be overshadowed on Friday by new Ukrainian President Viktor Yushchenko, who will speak to the entire forum that evening.

Ruben Vardanian, CEO of Troika Dialog, said he was disappointed, not that more Russian government officials had not come, but that so few Russian business leaders had come.

"Davos is one of the few places where you can really learn something about what the international elite are thinking," he said. For example, the discussions here about how better to help the victims of a disaster such as the tsunami could help Russia, in light of its troubles getting aid to the victims in Beslan.

(Beslan also provided an analogy for Browder, who said the Yukos case was "the economic equivalent of Dubrovka and Beslan. Putin was not willing to negotiate with terrorists and as a result a lot of innocent people got killed.")

Vardanian also scolded Russians who do come to Davos for not attending more of the sessions unrelated to Russia to learn about experiences in other parts of the world, or to participate in discussions on global economic, social and political issues. Thursday's schedule, for instance, included 70 programs, held either in the conference center or over lunch or dinner in a local hotel.

Lilia Shevtsova, a scholar at the Carnegie Moscow Center who is participating on several panels, was harsher. "I peek in at some of the panels and there are no Russians," she said. "They are not interested in global issues. They don't schmooze but stay among themselves."

Shevtsova was a discussion leader at a dinner Wednesday night at which the participants were asked to reflect on the lessons of World War II on the eve of the 60th anniversary of the liberation of Auschwitz. About 60 people attended the dinner. She was the only Russian.

Anatoly Karachinsky, CEO of the major IT holding company IBS, said more Russian business leaders would have come to Davos this year if the government had decided to play a bigger role. One of the premises of the forum is that it brings together leaders from business and government in an informal setting. Without a solid Russian government presence, business leaders had less of an interest, he said.

A frustration expressed by many Russians here, including journalists who work for state-owned news organizations, is that the current political leadership does not seem to understand the importance of promoting Russia and pushing its agenda on the world stage.

"Nobody can understand what kind of agenda Russia has," Shevtsova said. "Russians are not coming [to Davos] because they have nothing to say."

The job will be left to her, Browder, Vardanian, Vneshtorgbank CEO Andrei Kostin, Severstal chairman Alexei Mordashov, and TV Center program host Alexei Pushkov to join Zhukov in leading the discussion at Friday's dinner on the question of "Where is Russia heading?"