Saturday, April 21, 2007

Dangerous Tendencies

The Financial Times has caught on to the news of the Russian Economic Forum in London that has been actively losing its key guests:

Senior Russian business leaders and officials have abruptly pulled out of a premier Russian investment conference starting in London on Monday under what some participants said were Kremlin instructions, amid a chill in UK-Russian relations.

The 10-year-old Russian Economic Forum has long been a must for Russian oligarchs and ministers to woo London’s investment community – and a key social event for the Russian business world.

Senior Russian attendance has waned in the past two years, partly as the Kremlin sought to build up a Russian-based conference, the St Petersburg Economic Forum, in June. But this year has seen unparalleled last-minute pull-outs by company chiefs, including Alexander Medvedev of Gazprom, Sergei Bogdanchikov of state oil company Rosneft, Pyotr Aven of Alfa Bank, and Vladimir Yevtushenkov of the Sistema conglomerate.

Officials including Arkady Dvorkovich, president Vladimir Putin’s economic adviser, and Kirill Androsov, a deputy economy minister, also withdrew, and the finance ministry will not be represented.

Alexander Shokhin, head of Russia’s main business lobby, said he decided on Friday not to attend because the “forum’s efficiency has fallen”.

This is becoming a dangerous tendency stemming from the direct links of key Russian businesses to the Kremlin. What we may see in the future is a decreasing trend of state-linked companies raising capital in London (an unsustainable tendency in the long-run). Whenever government has the ability to exercise immediate control over half of its economy one must worry on the economic impact of such activities on the bottom line of Gazprom, Rosneft, TNK-BP, and others.

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