29 June 2016. PenzaNews. Russian and foreign experts continue to discuss and analyze the results of the 20th St. Petersburg International Economic Forum (SPIEF 2016) that brought together more than 12,000 participants from 133 countries and saw record growth in the number of investment agreements signed.

Photo: Valery Sharifulin/TASS

“The Forum’s most important outcome is that it has once again confirmed its reputation as one of the largest, most respected, and desperately needed platforms in the world for direct and open discussion between representatives of the state, the business community, academia, and the expert circles from around the world of the current challenges facing the global economy and financial sector. The number of Forum participants continues to grow year after year: another testament to Russia’s enduring role as a crucial global business and finance hub. We highly value the interest and, more importantly, the trust of Forum partners, guests, and participants,” Advisor to the President of the Russian Federation and Deputy Chairman and Executive Secretary of the SPIEF Organizing Committee Anton Kobyakov said.

According to him, 1,300 companies, including 880 represented by executives, participated in the Forum. A total of 356 official documents were signed at the Forum; the total value of signed agreements was about 1,5 trillion rubles.

According to the analysts, SPIEF 2016 demonstrated the crisis of sanctions policy and the desire of Europe to establish contacts with Moscow. In particular, Italian Prime Minister Matteo Renzi spoke in favor of closer cooperation with Russia.

“It is obvious that there are certain problems in relations between Europe and Russia and it is clear that we both have a reasonable ground to think about the past and why this problem ever occurred. I find it fundamentally important […],to take joint efforts and make an attempt to solve this problem looking to the future and to everything that unites us. […] Italy is at the forefront to affirm our presence not only in Russia but also Kazakhstan. All that can be done together, we will be happy to do. We respect the brand ‘Made in Italy,’ but we like the idea of ‘Made with Italy’ — including in the agricultural sector, the areas of technology and innovation,” he said speaking at the plenary session of the St. Petersburg International Economic Forum.

Russian President Vladimir Putin also pointed out the need for a constructive dialogue and cooperation.

“Incidentally, current geopolitical tensions are related, to some extent, to economic uncertainty and the exhausting of the old sources of growth. There is a risk it may increase or even be artificially provoked. It is our common interest to find a creative and constructive way out of this situation,” the Russian leader said.

According to him, the creation of more extensive Eurasian partnership could be promising direction of further cooperation.

“We are aware of the impressive prospects of cooperation between the EAEU and other countries and integration associations. Over 40 states and international organizations have expressed the desire to establish a free trade zone with the Eurasian Economic Union. Our partners and we think that the EAEU can become one of the centers of a greater emergent integration area. […]Now we propose considering the prospects for more extensive Eurasian partnership involving the EAEU and countries with which we already have close partnership – China, India, Pakistan and Iran – and certainly our CIS partners, and other interested countries and associations,” Vladimir Putin said.

Commenting on the Forum results, Simeon Djankov, Senior Fellow at the Peterson Institute for International Economics, former Deputy Prime Minister and Minister of Finance of Bulgaria, pointed to the participation of senior EU officials in it.

“SPIEF 2016 was significant with the presence of several top European politicians like European Commission’s president Jean-Claude Juncker, Italian Prime Minister Renzi, former French President Nicolas Sarkozy. This suggests Russia and the European Union are coming closer together in discussing ways to alleviate economic sanctions,” he told PenzaNews.

According to him, some movement in the direction of sanctions lifting can be expected in the next 6–9 months.

“It is better to have open communication channels and use the St Petersburg Forum as a platform for debate on common issues like trade, climate change, economic growth. In that sense the Forum was successful,” he said.

From his point of view, the forum was a good venue to warm up economic relations between Russia and the European Union.

“This is needed and will be helpful as a start of further discussions. These discussions have to be more detailed and cover areas of common interest, for example ways to open up public procurement for each other’s companies,” the economist added.

According to Velissarios Dotsis, Enterprise Greece CEO, SPIEF was a first class opportunity to Russian as well as foreign companies to present important projects and as a result underlined the importance of boosting the global business dialogue.

“Within the framework of SPIEF, many interesting discussions have taken place, addressing economic issues that the world is facing as a whole. Of particular significance during this year’s venue, was the focus on tourism, through a special session entitled ‘New Horizons in the Tourism Industry.’ The participation of high level executives in the session, in particular, Secretary General of the World Tourism Organization (UNWTO) Taleb Rifai and the head of Russia’s Federal Tourism Agency Oleg Safonov emphasized the major significance of tourism in the global economic scene,” Enterprise Greece CEO said.

According to him, SPIEF remains one of the most influential economic forums globally, by setting new trends and bringing together entrepreneurs and leaders from all around the world.

“Enterprise Greece, as the national Investment and Trade promotion agency of Greece, is there to follow innovative insights, promote the country as an investment destination and be part of the global business mind setting,” Velissarios Dotsis said.

From his point of view, important highlight of this year’s event, amongst other, was Ban Ki-moon’s call for strengthening communication between Russia and the West.

“That brought a positive census for all sides, pointing out on the importance of enlarging smooth global business ties,” the expert said.

Leon Aron, Director of Russian studies at the American Enterprise Institute, also stressed the SPIEF promotes strengthening of Russia-EU economic relations.

“The Forum was helpful in keeping a business dialogue between Russia and the West. As to the sanctions, throughout history business has been anti-sanctions and so were many at the Forum. But in this case, the issues are far more elevated and ‘political’ for businesses to have much influence on the sanctions,” the analyst said.

According to him, oil and gas are by far the most attractive Russian assets for Western business interests.

“The main results of the SPIEF were the validation of the conventional wisdom vis-à-vis economic relations with Russia: oil and gas are still of interest – as a few deals between Western companies, on the one hand, and Gazprom and Rosneft, on the other, attest – but the uncertain and in many respects increasingly toxic domestic investment climate plus the shadow of the sanctions make Western investors skittish,” Leon Aron added.

In turn, Liza Ermolenko, Emerging Markets Economist at Capital Economics, said that not all the agreements, concluded during the Forum, may be implemented.

“While on the face of it the amount and value of various deals signed during SPIEF seems significant, many of these deals are preliminary and often it takes a long time before they are actually enforced – in fact, many agreements signed at similar events never actually see the light of day,” the expert explained.

However, according to her, political implications of the Forum seem more significant.

“This is for two reasons. First, the fact that many senior European officials and business leaders came to the forum this year is an indication of shifting sentiment towards Russia in Europe. Although it looks almost certain that sanctions against Russia will be renewed, recent events suggest that there is an increasing possibility that they may be eased or lifted altogether over the coming months. And second, the rhetoric of Russian official has noticeably softened in a sign that Russia’s leadership is also ready for dialogue and is keen to restart cooperation,” Liza Ermolenko said.

According to Evgeniya Voyko, Research Fellow at the Financial University under the Government of the Russian Federation, the Forum showed that Russia’s relations with the EU countries are of selective and bilateral nature.

“There isn’t any integral perception of the European Union by the Russian political circles, and this is understandable – since post-Soviet Russia, it was easier for Moscow to build relations with individual EU countries, rather than the whole institution. The contracts are signed, but there is some predominance of the European bureaucracy approach - the European Commission does not allow the national elites to overcome the sanctions regime and to enter the pre-crisis rapprochement with the Russian Federation,” the analyst explained.

However, according to her, Europeans are trying to find options for cooperation with Russia.

“The economy and business in Europe both need it, but in terms of high politics it is of situational character, and there is no complex process of transition towards the removal of sanctions. The rhetoric of European elites suggests that in the medium term this regime will remain, in spite of its potential mitigation. There is expectation of improving relations with Russia in Europe, however they are not ready to take the first step. They are waiting for Moscow to do it, despite the fact that Russia’s sanctions against the West became the reactive measures to the imposed EU sanctions,” Evgeniya Voyko said.

Meanwhile, in her opinion, the process of lifting the sanctions against Russia would not be momentary.

“The pressure will be weakened gradually, and when the majority of the EU governments improve their relations with Moscow despite the sanctions regime, the decision of sanctions cancellation will probably become imminent on the European bureaucracy level. However, we should remember that the EU is not entirely independent in this regard – the will of the American leadership will be heard here as well,” the analyst added.

In turn, Amitendu Palit, Economist, the Institute of South Asian Studies in the National University of Singapore, called SPIEF 2016 an important effort by Russia to build alliance with Europe at a point in time when both Russia and Europe are looking for new sources and opportunities for economic revival.

“Russia has been affected by economic sanctions imposed by the West, and EU is trying hard to recover from the effects of the banking and financial sector crisis that had set in from 2008. The most important message coming out of the SPIEF is the willingness on part of both Russia and EU to work together for economic revival,” the expert said.

Among major announcements, a significant one was the proposal to have a Eurasian trade and economic partnership that would have the Eurasian Economic Union at its core and would not only include Europe and Russia, but would also include large emerging markets like China, India, Pakistan, Iran, he said.

“Such a trade agreement has the potential to become one of the most significant in the world, not only economically, but also geo-strategically,” Amitendu Palit stressed.

From his point of view, the St. Petersburg Forum can help mitigate sanctions regime in the future.

“While lifting of sanctions were not announced, the fact that European businesses showed the willingness to participate in the SPIEF 2016 in large number demonstrates the possibility that sanctions might increasingly be considered unnecessary and businesses might start lobbying accordingly. […]The SPIEF 2016 marks the beginning of a new phase of deeper economic partnership between Europe and Russia. It might also mark the beginning of greater economic globalization for Russia and more opening up,” the economist said.