With President Vladimir Putin back in the Kremlin and Russia in pursuit of a leading economic role on the world stage, the organizers of the St. Petersburg International Economic Forum are showcasing the country this year through the theme "Leadership That Works."

In the run-up to the forum, The Moscow Times contacted some of the biggest business leaders working in Russia to ask what they think makes leadership work, as well as to hear their insights into where the country's business climate is headed and which areas of the economy or society demand the most urgent improvements.

An interview with a new business leader will be added to this page each day leading up to the forum.

Anatoly Karachinsky
Founder and president, IBS Group, a leading Russian IT services provider

Q: What makes leadership work?

A: It's when a leader has a strategy, he explains the essence of the strategy to people, they trust him, and this strategy brings the company success. The government differs little from a company.

Q: Where is Russia's business climate headed?

A: If I knew of some strategy that Russia's leaders were trying to bring to fruition, then I could say something. There isn't such a program. It seems to me that they aren't thinking about how to fundamentally change the business climate.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: I would like the business climate to improve. Serious changes in the judicial and law enforcement systems are essential. Everything related to corruption needs to be dealt with, and something needs to be done about business competition so that everyone competes on equal terms. The fewer state companies working in business, the more competition there will be. People assume that they aren't competitive, and they pay bribes. There can't be equal footing if people pay bribes.

Jostein Davidsen
Head of emerging markets commercial operations, Takeda, the largest pharmaceutical company in Japan, which is building a $100 million plant in Yaroslavl

Q: What makes leadership work?

A: It's the top leader who sets the aspirations of the company so it can build a peak-performance management team that will work effectively over time, not just in the short term.

Q: Where is Russia's business climate headed?

A: I think it's positive overall. Look at Europe, the United States and Japan, where growth is declining. The growth is in the emerging markets, and Russia is one of the most solid emerging markets. Russia's natural reserves are immense, the infrastructure is on a moderately solid level, and the government is really attracting investment and putting it high on the agenda. From my point of view, if you have a sizeable business and are thinking in the long term, you should invest in Russia.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: If I stick to my pharmaceuticals area, the key priority would be extending the life expectancy, which is among the lowest on the globe. I would focus on the social sector and healthcare. More emphasis should be placed on reimbursing the population for healthcare costs and rebuilding infrastructure in hospitals and clinics. We all know that nothing works without good health.

Antonio Linares
Managing director, Roca Russia, a Spanish bathroom-fixture company with seven factories in Russia

Q: What makes leadership work?

A: Leadership comes together with the right mixture of several ingredients. Among them, and not necessarily in order of importance, are empowering the team, co-responsibility, giving a good example, a sense of humor, providing help whenever required, self-confidence, humility, respect, open mindedness, and self-criticism. You can cook up various recipes that will make leadership work, but all of them will contain some or all of these ingredients.

Q: Where is Russia's business climate headed?

A: I see difficulties if the government's strategy continues to focus on energy and services and to ignore everything else. There must be industrial diversification and a significant growth in small and mid-sized businesses. To move in that direction, a stable juridical environment needs to be built.

I usually use the example of Roca to illustrate this principle at seminars and conferences. The company was born in 1917, during the constitutional monarchy of Alfonso XIII. Then we went through one dictatorship (Miguel Primo de Rivera), the Second Republic, a second dictatorship, and finally ­ I hope ­ democracy. Through all those years, the company remained in the hands of the Roca family. That is what I call a stable juridical environment, irrespective of the many changes of the political regime.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: I think that there is an urgent need to improve the infrastructure: utilities, roads and railways. Better-quality roads will contribute to people's mobility to places other than Moscow. Otherwise, Moscow will continue to be the only place where people see prospects for growth.

In addition, Russia needs to help its own entrepreneurs to stay put and not have to fly abroad or sell out to multinationals. That will come only with the protection of business initiatives, especially for small and mid-sized companies. Just look at the percentage that SMEs represent in Western economies and compare them to Russia ­ it is devastating.

Jochen Wermuth
Founding partner, Wermuth Asset Management, which has advised on more than $1 billion of investments in Russia since 1993

Q: What makes leadership work?

A: Having shared experiences about what makes good leadership with presidents, CEOs and company founders, as well as NGO and political leaders within the Young Presidents' Organization, the answers seem very clear to me: 1. Lead, do not manage, and 2. Lead by example.

My guess is that most Russians believe senior government officials are only interested in enriching themselves and seek to use their positions in government to achieve this. Because working for personal gain is the example that the country's leadership is perceived to be giving, this is the approach copied at all levels of officialdom, judiciary and business.

Q: Where is Russia's business climate headed?

A: Without a doubt, the biggest issues for the business climate are the lack of an independent judiciary, independent media, political competition, and functioning government services that can be relied on. Whether you are a Russian citizen, a foreigner or a business, you can't be assured of getting a fair court trial. Whether you are a private individual or an investor, it's troubling to think that if ever you need emergency medical support, you might need to "interest" the police or the ambulance driver for assistance. Or you might need to "incentivise" firefighters before the fire truck arrives. And it's disturbing to think that half of the medicine in the drugstore might be falsified. These are examples of the numerous day-to-day issues that stand in the way of real progress. The big picture in the case of Russian investment is clear and compelling; it's these "micro" issues that need to be addressed by leadership through example and proper incentives.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: Even though I get chastised for saying this, I believe that there was a case for supporting President Vladimir Putin for rolling back democracy a bit in the 2000s to rein in the free-wheeling oligarchs who controlled local economies and elections and then abused the power of the state to further enrich themselves. But the problem is that in the absence of checks and balances, some people in or near power appear to have developed a taste for living off economic rent themselves. If Putin called in the bureaucrats as he called in the oligarchs and led by example, submitting the country and himself to independent courts, Russia could boom.

With the Kremlin promising to clamp down on corruption and allow more political competition, it should:

1. Accept an outside international court as the highest legal authority for all cases in Russia (just as the high court in London is the highest court for Singapore and Brussels is the highest court for any EU commercial dispute);

2. Re-introduce the election of mayors, governors and local parliaments without restrictions or unfair access to media and administrative resources.

3. Make any undeclared income above $50 a bribe that is subject to criminal punishment, increase the penalty for petty bribery and large white-collar corruption to up to 20 years in prison, and call for a date from which everyone will be asked to live by these new rules. People who fail to adhere to the rules should be locked in prison to prevent them from abusing the new system to further enrich themselves.

Keywords: Russia, Business, Economy - Russian News - Russia

With President Vladimir Putin back in the Kremlin and Russia in pursuit of a leading economic role on the world stage, the organizers of the St. Petersburg International Economic Forum are showcasing the country this year through the theme "Leadership That Works."

In the run-up to the forum, The Moscow Times contacted some of the biggest business leaders working in Russia to ask what they think makes leadership work, as well as to hear their insights into where the country's business climate is headed and which areas of the economy or society demand the most urgent improvements.

An interview with a new business leader will be added to this page each day leading up to the forum.

Anatoly Karachinsky
Founder and president, IBS Group, a leading Russian IT services provider

Q: What makes leadership work?

A: It's when a leader has a strategy, he explains the essence of the strategy to people, they trust him, and this strategy brings the company success. The government differs little from a company.

Q: Where is Russia's business climate headed?

A: If I knew of some strategy that Russia's leaders were trying to bring to fruition, then I could say something. There isn't such a program. It seems to me that they aren't thinking about how to fundamentally change the business climate.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: I would like the business climate to improve. Serious changes in the judicial and law enforcement systems are essential. Everything related to corruption needs to be dealt with, and something needs to be done about business competition so that everyone competes on equal terms. The fewer state companies working in business, the more competition there will be. People assume that they aren't competitive, and they pay bribes. There can't be equal footing if people pay bribes.

Jostein Davidsen
Head of emerging markets commercial operations, Takeda, the largest pharmaceutical company in Japan, which is building a $100 million plant in Yaroslavl

Q: What makes leadership work?

A: It's the top leader who sets the aspirations of the company so it can build a peak-performance management team that will work effectively over time, not just in the short term.

Q: Where is Russia's business climate headed?

A: I think it's positive overall. Look at Europe, the United States and Japan, where growth is declining. The growth is in the emerging markets, and Russia is one of the most solid emerging markets. Russia's natural reserves are immense, the infrastructure is on a moderately solid level, and the government is really attracting investment and putting it high on the agenda. From my point of view, if you have a sizeable business and are thinking in the long term, you should invest in Russia.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: If I stick to my pharmaceuticals area, the key priority would be extending the life expectancy, which is among the lowest on the globe. I would focus on the social sector and healthcare. More emphasis should be placed on reimbursing the population for healthcare costs and rebuilding infrastructure in hospitals and clinics. We all know that nothing works without good health.

Antonio Linares
Managing director, Roca Russia, a Spanish bathroom-fixture company with seven factories in Russia

Q: What makes leadership work?

A: Leadership comes together with the right mixture of several ingredients. Among them, and not necessarily in order of importance, are empowering the team, co-responsibility, giving a good example, a sense of humor, providing help whenever required, self-confidence, humility, respect, open mindedness, and self-criticism. You can cook up various recipes that will make leadership work, but all of them will contain some or all of these ingredients.

Q: Where is Russia's business climate headed?

A: I see difficulties if the government's strategy continues to focus on energy and services and to ignore everything else. There must be industrial diversification and a significant growth in small and mid-sized businesses. To move in that direction, a stable juridical environment needs to be built.

I usually use the example of Roca to illustrate this principle at seminars and conferences. The company was born in 1917, during the constitutional monarchy of Alfonso XIII. Then we went through one dictatorship (Miguel Primo de Rivera), the Second Republic, a second dictatorship, and finally ­ I hope ­ democracy. Through all those years, the company remained in the hands of the Roca family. That is what I call a stable juridical environment, irrespective of the many changes of the political regime.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: I think that there is an urgent need to improve the infrastructure: utilities, roads and railways. Better-quality roads will contribute to people's mobility to places other than Moscow. Otherwise, Moscow will continue to be the only place where people see prospects for growth.

In addition, Russia needs to help its own entrepreneurs to stay put and not have to fly abroad or sell out to multinationals. That will come only with the protection of business initiatives, especially for small and mid-sized companies. Just look at the percentage that SMEs represent in Western economies and compare them to Russia ­ it is devastating.

Jochen Wermuth
Founding partner, Wermuth Asset Management, which has advised on more than $1 billion of investments in Russia since 1993

Q: What makes leadership work?

A: Having shared experiences about what makes good leadership with presidents, CEOs and company founders, as well as NGO and political leaders within the Young Presidents' Organization, the answers seem very clear to me: 1. Lead, do not manage, and 2. Lead by example.

My guess is that most Russians believe senior government officials are only interested in enriching themselves and seek to use their positions in government to achieve this. Because working for personal gain is the example that the country's leadership is perceived to be giving, this is the approach copied at all levels of officialdom, judiciary and business.

Q: Where is Russia's business climate headed?

A: Without a doubt, the biggest issues for the business climate are the lack of an independent judiciary, independent media, political competition, and functioning government services that can be relied on. Whether you are a Russian citizen, a foreigner or a business, you can't be assured of getting a fair court trial. Whether you are a private individual or an investor, it's troubling to think that if ever you need emergency medical support, you might need to "interest" the police or the ambulance driver for assistance. Or you might need to "incentivise" firefighters before the fire truck arrives. And it's disturbing to think that half of the medicine in the drugstore might be falsified. These are examples of the numerous day-to-day issues that stand in the way of real progress. The big picture in the case of Russian investment is clear and compelling; it's these "micro" issues that need to be addressed by leadership through example and proper incentives.

Q: What area would you most like to see improvement in, and how would you recommend improving it?

A: Even though I get chastised for saying this, I believe that there was a case for supporting President Vladimir Putin for rolling back democracy a bit in the 2000s to rein in the free-wheeling oligarchs who controlled local economies and elections and then abused the power of the state to further enrich themselves. But the problem is that in the absence of checks and balances, some people in or near power appear to have developed a taste for living off economic rent themselves. If Putin called in the bureaucrats as he called in the oligarchs and led by example, submitting the country and himself to independent courts, Russia could boom.

With the Kremlin promising to clamp down on corruption and allow more political competition, it should:

1. Accept an outside international court as the highest legal authority for all cases in Russia (just as the high court in London is the highest court for Singapore and Brussels is the highest court for any EU commercial dispute);

2. Re-introduce the election of mayors, governors and local parliaments without restrictions or unfair access to media and administrative resources.

3. Make any undeclared income above $50 a bribe that is subject to criminal punishment, increase the penalty for petty bribery and large white-collar corruption to up to 20 years in prison, and call for a date from which everyone will be asked to live by these new rules. People who fail to adhere to the rules should be locked in prison to prevent them from abusing the new system to further enrich themselves.