The St. Petersburg International Economic Forum (SPIEF) has become an annual event on the calendars of the global economic elite – an indicator that Russia is playing an increasingly important role in the development of the world economy.
The 17th St. Petersburg International Economic Forum (SPIEF) was held from June 20–22, 2013. Over the years, SPIEF has grown into a key event – not just for Russian business, but also for international investors and companies, heads of state, leading scientists and public figures.
From chancellors to billionaires
Attendees at this year’s forum included German Chancellor Angela Merkel and First Vice Premier of the People’s Republic of China Zhang Gaoli. Members of the Russian government and the governors of almost all of Russia’s 83 regions joined them. Also in attendance were heads of over 600 leading global companies and more than 100 billionaires.
In total, 1,245 journalists covered the forum’s meetings and events, with leading Russian and international TV channels, including Bloomberg, Reuters, CNBC and CNN, broadcasting live reports from the forum.
No politics, just economics
This year, the forum organizers took the name of the event literally and kept the agenda strictly business, avoiding any discussion of global political or security issues. Many participants thought this decision was a mistake, however, since global politics and economics are so intertwined.
The forum’s keynote was the Global Growth Agenda plenary session, which featured an address by Russian President Vladimir Putin. During the 40-minute speech, Putin made it clear that although the Russian government would take the interests of private business into consideration when making economic policy, the government itself would be strengthening its presence in the economy.
The Russian leadership sees an increase in public spending and an expansion of the social safety net as part of the modernization of Russia’s socio-political system and an important step towards a trajectory of rapid economic growth.
A catalyst for investment and international contracts
The forum has traditionally been a platform for deal making between Russian regions and businesses and their foreign partners. The number and volume of agreements signed this year along with the geographic spread of the countries, industries, and service sectors involved make clear the attractiveness of Russia’s economy for foreign companies. Throughout the three days of SPIEF, 101 contracts and memorandums of intent were signed worth a total of 9.5 trillion rubles ($288.9 billion). This is 31 times higher than last year and 47 times higher than in 2011.
The signed contracts also reveal a great deal about which Russian economic sectors are attractive for foreign investors. Not surprisingly, deals between energy companies accounted for the bulk of the contract volume. An agreement between Russian oil major Rosneft and Chinese energy giant CNPC actually accounted for 90 percent of the total deal amount. This contract, which involves supplying oil to mainland China for 25 years, is valued at $270 billion.
Also during the forum, Russian gas monopoly Gazprom signed an agreement to purchase the Marcinelle power plant in Belgium and specified construction dates for the underwater portion of the South Stream pipeline in a contract with the Italian oil giant ENI.
Several groundbreaking political and economic decisions were announced at the forum. Among the most important ones is that Gazprom will soon lose its monopoly on Russian natural gas exports. This privilege has now been extended to independent producers, including Russian natural gas company Novatek, that are ready to start producing and exporting liquefied natural gas. What’s more, 20 percent of Novatek’s LNG project now belongs to China’s CNPC.
Bringing together the Business 20
Since Russia holds the G20 presidency this year, the St. Petersburg forum provided a platform for the meeting of the Business 20 – an international forum of companies and business associations based in the G20 countries.
Participants in the B20 summit, which took place on the first day of SPIEF, developed recommendations for the September G20 meeting in St. Petersburg. Those recommendations include stimulating and improving the efficiency of investments in infrastructure projects; promoting government transparency and fighting corruption; and developing special certificates showing companies’ commitment to fighting corruption.
The recommendations were later presented to Putin.
Since the Business 20 is a group in the making, the meeting itself and Putin’s participation were no less important than the decisions made there.
From a CIS discussion club to the BRICS’s ‘Davos’
SPIEF has evolved dramatically since its inception in 1997 as a meeting place for experts, entrepreneurs, and politicians from the Commonwealth of Independent States (CIS) countries. In the first years, they met at the Tavrichesky Palace, the headquarters of the CIS Inter-Parliamentary Assembly, to discuss problems of the crisis-ridden post-Soviet space. The Russian president or government ministers occasionally attended the forum, but the stars of global politics and business had no idea it even existed.
Well aware of the limited potential of CIS integration as subject matter for a major international meeting, organizers eventually adapted the meeting’s agenda, prioritizing the problems of developing countries –including the difficulties involved in reforming planned economies. SPIEF took on its current format and character in 2007.
Today the agenda at SPIEF is determined by Russia’s Ministry of Economic Development. The event focuses on the state of the global economy, with an emphasis on the BRICS and the Customs Union member countries. Other important topics include problems with global monetary and financial systems, the energy market, infrastructure development and encouraging investment in Russian regions.
SPIEF is trying to style itself as a Davos for the BRICS countries, and it has done so quite successfully.
Russia’s accession to the W.T.O. in August 2012 affected the agenda of this year’s SPIEF. A premise that was far from obvious before has become self-evident: A Russian company that is successful at home is likely to become successful internationally as well. Russian companies have no alternative to the strategic goal of improving competitiveness, which is simpler and less expensive to do within the W.T.O.
There are still opponents to the W.T.O. inside Russia who perceive the country’s accession to the global trade club as a sign of an imminent economic apocalypse. However, their pitch at the forum failed to elicit much enthusiasm from most participants.
The forum’s agenda is now dominated by next-generation matters, such as the W.T.O.’s impact on the Customs Union between Russia, Kazakhstan and Belarus, the outlook for the Eurasian Union, and streamlining customs regulations.
José Ángel Gurría, secretary-general of the Organization for Economic Cooperation and Development (O.E.C.D.) was one of the 2013 forum’s brightest stars. Russia is counting on becoming a member of this prestigious international organization in 2014, and debates on the implementation of O.E.C.D. standards in Russia’s executive and legislative bodies’ activities have completely replaced the discussions of joining the W.T.O. and the consequences thereof.