Today, I was at the St Petersburg International Economic Forum, where I made a few contacts, looked around the stands (the busiest of which seemed to be that of Kalashnikov), and learnt among other things that St Petersburg is hosting four games in the UEFA Euro championship next year. The very nature of such occasions tends to be positive, as they’re attended by people wanting to do business with one another. Despite all the talk of Russia’s isolation, people of many nationalities were present. And despite the somewhat stagnating nature of the Russian economy, there was a lot of money on display, which contrasted rather with the poorer living conditions of ordinary people which my students and I saw on an outing later in the evening.
While at the forum, I attended a couple of panel discussions. The first focused on US-Russia relations and included a somewhat upbeat presentation of the state of the Russian economy and Russian-US economic ties. US investment in Russia was rising again, we were told, though judging by the speaker’s graph it’s still well below what it was before 2014. The session contained a lot of encouraging talk of the desirability of dialogue and exchange, coupled with repeated acknowledgements that relations are plagued by mutual misunderstanding. Hope was expressed that meetings like this might help to reduce these misunderstanding, but as one delegate told me afterwards, that would take a lot of time. I tend to agree. Despite the current political troubles, it’s clear that there are people on both sides trying to improve relations, but as yet they’re not making much progress.
Of course, a certain amount of happy talk is to be expected at an event where the Westerners are self-selected non-Russia bashers. A bit more downbeat, however, was a panel I attended in which a bunch of Russian economists discussed how their country could reach the target declared by Vladimir Putin of making Russia’s economy the 5th largest in the world.
To my surprise, when asked, about half the audience raised their hands to say that they thought that growth rates of 5-6% were once again possible. (I am not so optimistic). But subsequent speakers (though I admit that I didn’t hear them all as I had leave early) were more sceptical and pointed to structural problems that made such growth unlikely.
One panelist, for instance, spoke of a fundamental lack of trust in Russian society as a hindrance to effective business. This included a distrust of business by the state. There were repeated complaints that businesses were under legal ‘pressure’ from the state. One speaker went so far as to make the politically9 impossible demand that the Russian Constitution be amended. The Central Bank and Financial Ministry had the wrong legal priorities, he said. They piled up money in the name of macroeconomic stability while having little interest in increasing incomes or promote growth. This seemed a little harsh, but there is perhaps something to the complaint that Russian economic institutions are extremely conservative. The extent to which such conservatism is constitutionally entrenched is an interesting question.
Overall, then, what I got from the SPIEF was that:
1. There are definitely elements in the Western business community who are keen on improving relstions with Russia. As there’s money to be made in the process, that’s no surprise.
2. The Russians are capable of putting on a glitzy show and are actually pretty keen to patch things up with the West. The idea that they want to wreak chaos among us is decidedly odd. They clearly don’t.
3. Despite all that, the chances of Russia being able to obtain the rates of growth required to converge with the West aren’t very good in the short to medium term.
I’d be very happy to be proven wrong on that last one. We shall see.