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20-th Int'l Economic Forum on in St. Petersburg

The St. Petersburg Economic Forum (SPIEF) kicked off on June 16. The total number of participants has reached 10,000 people. The business program of the Forum, which includes about 100 different events, has attracted about 200 experts and businessmen from over 30 countries.

For the first time in two years, high-ranking officials of the European Union and chief executives of top multinational companies are visiting this event in a sign of weariness about European sanctions against Moscow. European Commission President Jean-Claude Juncker is the highest-ranking EU official to visit Russia since 2014. Jean-Claude Juncker’s participation in the SPIEF 2016 indicates the EU’s interest in renewing and strengthening dialogue with Moscow.

Another high-profile speaker is Italian Prime Minister Matteo Renzi. Last June, Russian President Vladimir Putin was warmly welcomed in Italy, meeting with Italian officials and Pope Francis. UN Secretary-General Ban Ki-moon, Kazakhstan’s President Nursultan Nazarbayev, Austria’s Vice-Chancellor Reinhold Mitterlehner, and Cuba’s Vice-President of the Council of Ministers Ricardo Cabrisas Ruand are on the list of distinguished visitors. The CEOs of world’s largest companies are also among the attendees, including: Exxon Mobil Corp.’s Rex Tillerson, BP’s Bob Dudley, the chairman of the board of Nestle S.A. Peter Brabeck-Letmathe, CEO of Royal Dutch Shell Ben van Beurden and many others. Commenting on the upcoming event, Michael Harms, the Executive Director of the German Committee on Eastern European Economic Relations (Ost-Ausschuss der Deutschen Wirtschaft), said that for many German companies, the SPIEF has become a major economic conference in Russia. «German representatives are willing to participate in it to find out more about the current economic development of Russia and meet Russian business partners. This year the German Committee on Eastern European Economic Relations is represented by many member companies», he told media reporters.

This year’s meeting clearly signals an emerging movement within the EU to ease economic sanctions on Russia. The punitive measures have not affected much Russia’s economy while triggering a Russian import ban on meat, vegetable and dairy products from the European Union, dealing a heavy blow on agriculture-dependent nations such as Greece and Italy.

The US has pressured Europeans not to attend the event.

Leading the push for western penalties on Russia over Ukraine two years ago, the United States has left behind Turkey, Japan, Poland and South Korea to become Russia’s No. 5 trading partner outside the post-Soviet space.

While the EU bears the brunt of the sanctions war with Russia losing 100 billion euros ($112 billion), US companies led by Boeing Co., Cargill Inc. and Yum! Brands Inc. have been investing for the long-haul and gaining market share. Europe has suffered from the sanctions while the US has fared better than every other major Russia’s partner but China.

This June, Boeing opened a training and research center at the government-backed Skolkovo Technopark. Last year, the company struck a $7.4 billion deal to sell 20 747-8 freighters to Moscow-based Volga-Dnepr Group. The company had no net orders since 2014. Boeing also won Congressional approval to resume buying Russian rocket engines to launch US satellites through a venture with Lockheed Martin Corp.

The US lawmakers did not bother about the fact that the purchase is an outright violation of the sanctions regime strictly observed by Europeans. 

Russia’s ban on EU farm products delivered a heavy blow to European farmers.

The United States agricultural giant Cargill and restaurant chains like Yum! were quick to seize the created opportunities. Cargill " href="http://www.cargill.ru/wcm/groups/public/@csf/@russia/documents/document/na31934457.pdf" target="_blank">is finishing a $200 million sunflower plant in the Volgograd region, southern Russia, and in March announced plans to build an animal-feed facility in the city of Efremov, central Russia.

Yum! has opened over 400 KFC outlets in Russia since 2014.

With the European economy going through hard times and threatened by Brexit, the EU is coming under increasing pressure to resume business as usual with Russia.

The annual Forum comes just weeks after the Russian government sold Eurobonds for the first time since 2013, despite the US administration’s warning banks away from participating in the deal.

On the very first day of the forum’s work, former President of France Nicolas Sarkozy called for the removal of sanctions. «We have enough problems, we cannot afford to suffer», he explained his position.

«I generally believe sanctions probably do not accomplish what they are meant to do, and I think it harms business, and I’m a big believer that trade between nations builds bridges between countries», said BP chief executive Bob Dudley.

The sanctions policy has proven to be ineffective. This is an undisputable fact. While the US and the EU insist publicly that sanctions will remain in place, there are strong signs that tensions have started to ease. Evidently, US and European politicians have failed to convince businesses to break ties with Russia. The success of SPIEF testifies to the fact.

Last modified onSunday, 19 June 2016 15:12

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