24 June 2015

Reflections on SPIEF: Competition vs. Centralization

The annual St Petersburg International Economic Forum (SPIEF) is Russia’s top gathering for investors and a chance for them to meet top-level government officials. Anton Gubnitsyn, PBN Hill+Knowlton Strategies’ Vice President for Government and Public Affairs, shares his impressions from this year’s forum.
Reflections on SPIEF: Competition vs. Centralization
SPIEF has become an indicator of the investment climate in Russia. On the one hand, it shows business how interested Russian officials are in global investors. On the other hand, for government, it is an indicator of international companies’ commitment to working and investing in Russia. In this regard, the 2015 forum can be judged as a  success. There were noticeably more participants this year than last. And many senior international executives who participated in the discussions and working meetings were encouraged by what they heard. The Russian leadership has learned very well how to deliver key messages to international investors. Government officials were open about the country’s economic problems and administrative barriers. One speaker after another talked about the need for an open economy as the best means for attracting investment and bolstering competition.
What remains lacking, however, is a genuine expression of views from Russian special interest groups. Take for example one of the main opening discussions titled “Frank Answers to Pressing Questions”. The three participants included: First Deputy Prime Minister Igor Shuvalov, representing government; Sberbank CEO German Gref, representing business; and former Finance Minister and current Dean at St Petersburg State University Alexey Kudrin, representing civil society. Each of the speakers is highly regarded by business; however, in the triangle of relations between state, business and civil society, each of them could easily switch seats and the debate would remain the same. Having all been government officials, they can authoritatively speak on behalf of any of the three groups within the triangle and still defer to the state. As a result, their recipes for revitalizing the economy did not surprise the forum’s audience. Business suggested creating a new body responsible for reform. Civil society proposed early presidential elections to gain a strong mandate for sweeping reforms. The state said it would continue its successful stabilization efforts despite criticism from business and society.
Another key panel, “The Imperative to Spur Competitive Factors and Incentivize Efficiencies,” (the Russian title was “Developing Competition in an Environment of Resources Being Centralized”) perfectly captured the central question in Russian economic policy today. Business observes the lack of economic competition while the state’s centralization of economic power continues to increase. In this standoff, competition, even being an essential condition for economic growth, has little chance of winning. It seems centralization is the stronger imperative for the government as a means of ensuring stability.
Stability has its advantages. Russia’s position and the direction it is heading in are clear and unchanging – centralization, oil & gas development, and social stability.  Discussions about structural reforms between the triangle of government, business and civil society remain just that – professional discussions. Not everybody likes the status quo. But, this status quo gives us some clarity and even certain predictability in state policy. Russian government, as well as government-oriented business and society are ready to explain their positions - clearly, openly and even taking into account the expectations of their international audience.
 

Related contacts :

Anton Gubnitsyn
Vice President, Government Relations

phone: +7 495 775 0077
email: anton.gubnitsyn@hkstrategies.com