Somebody immediately put a memo on the Russian president’s desk – “Next time you want to withdraw a high ranking delegation to a business conference at the last minute as a political gesture, try to measure the costs vs. the benefits!”
The opening day at the Russian Economic Forum in London could certainly have used some stronger representation from the state! Ouch! From a Rosneft boardmember nonetheless!
Russia’s financial boom will come to a painful end “in the near future”, a leading London banker with long experience of the country warned on Monday.
After seven years of growth, Russia was reaching its capacity limits in an expansion fuelled by credit, much of it from foreign markets, said Hans-Joerg Rudloff, chairman of Barclays Capital, the investment banking arm of Barclays .
“It is a boom which is not sustainable and I have to warn people … there will be downturns. There will be more difficulties,” Mr Rudloff told the Russian Economic Forum in London.
Mr Rudloff said: “Financial markets will always react excessively … There’s no soft landing after such excessive rewards and … I would say the last seven years [have been] rewarded somewhat excessively and … the present boom will be penalised somewhat excessively in the near future.”
“There is going to be a bottleneck in infrastructure в that’s the business for tomorrow in Russia,” said Jean Lemierre, head of the European Bank for Reconstruction and Development.
“The profits from oil and gas shouldn’t be used only to import consumer goods, but to invest and produce,” he said. “Russia needs to invest more and be more open.”
With officials from Rosneft and Gazprom canceling appearances at the last minute, the tone of the conference tended to steer away from the country’s lucrative oil and gas sector.
Rudloff praised President Vladimir Putin’s strong hand, faulting journalists for presenting an unfairly harsh picture of the country. “Economic development is only possible in strict frame and order,” he said, comparing contemporary Russia to post-World War II Europe.
“Let’s move away from the consistent cheap criticism by many journalists who don’t have the slightest idea what is going on in the country,” he said.
In a question-and-answer session, a Dow Jones journalist accused Rudloff of failing to recognize various recent missteps in the country — from the shutting off of gas through Belarus to the unsolved killings of journalists. His comment was met with loud applause from many of the 400 journalists in the audience. Rudloff’s answer with an appeal to “be fair” was met by equally thunderous applause from Russian delegates and foreign investors in the hall.