St. Petersburg Forum

St. Petersburg Forum
Russia’s annual St. Petersburg International Economic Forum will take place from May 24-26 this year. Approximately 15,000 guests from over 70 countries including..

Russia’s annual St. Petersburg International Economic Forum will take place from May 24-26 this year.  Approximately 15,000 guests from over 70 countries including CEOs, investors, and diplomats, are expected to attend the summit, which is one of the largest in Eurasia.

Moscow was recently ranked fifth on a list of European cities most attractive to investors, compiled by Foreign Direct Investment Intelligence (a division of Financial Times)

Background

The St. Petersburg International Economic Forum (SPIEF) was first held in St. Petersburg in 1997. Since 2006, the SPIEF has been chaired by the Russian President. SPIEF is one of the largest forums of its kind in Eurasia. In 2017, it attracted over 14,000 participants from over 143 countries and 1,100 companies. The forum claims to be a “leading global platform for members of the business community to meet and discuss the key economic issues facing Russia, emerging markets, and the world as a whole.” Indian Prime Minister Narendra Modi was a chief guest at the forum.

Sanctions on Russia

Major sanctions were imposed on Russia by the W est after the Russian military intervention in Ukraine in 2014. The US has imposed a number of sanctions on Russian entities for their involvement in Ukraine, Syria, and their interference in the 2016 US Presidential elections. Washington claims that these sanctions would ensure that the entities benefiting from destabilizing activities will face consequences.

On August 2, 2017, the President signed into law the “Countering America’s Adversaries Through Sanctions Act. The law limited the amount of money Americans could invest in Russian energy projects and made it more difficult for US companies to do business with Russia. Additionally, under this act, any country trading with Russia’s defense and intelligence sectors could also face sanctions.

Earlier this year, the Trump administration provided the Treasury Department with a list of about 210 Russian businessmen and oligarchs deemed close enough to Russian President Vladimir Putin to be targets for new sanctions. In April, the US imposed measures on at 17 senior Russian government officials, the state-owned Russian weapons trading company Rosoboronexport, and Russian Financial Corporation Bank.

Analysis

The St. Petersburg International Economic Forum 2018 will take place on May 24-26, and will include several visiting dignitaries including French President Emmanuel Macron, Japanese Prime Minister Shinzo Abe, and oil ministers from OPEC countries. According to Russian media, 40 investment groups valued at over $13.5 billion, will also be attending.

Despite recent diplomatic tensions between Britain and Russia, the UK will also be represented," Governor Georgy Poltavchenko told reporters. "In other words, despite the recent rhetoric the interest of business as well as among world politicians is still high in regard to the forum," Poltavchenko said. The CEO of the Russian Direct Investment Fund (RDIF), Kirill Dmitriev expressed similar sentiment. "The assumptions that the Russian economy will be isolated were proven incorrect,” he told reporters.

French President Emmanual Macron is expected to conduct talks with President Putin while in St. Petersburg. According to Kremlin reports, the two leaders will discuss Iran, Syria, and Ukraine. “If France wants to be respected, it must talk to everyone but also be capable of acting when red lines are crossed,” Macron said in a recent interview. “I want a strategic and historic dialogue with Vladimir Putin to tie Russia to Europe and not let it turn in on itself.”

France’s oil and gas giant Total is among numerous European companies looking for exemptions from US sanctions on Iran. The energy sector may be a key focus at the forum. It has been announced that Saudi Arabia's Minister of Energy, Industry, and Mineral Resources Khalid al-Falih and the UAE Minister of Energy and Industry (and current OPEC president) Suhail al Mazroui, will meet Russia’s Energy Minister Alexander Novak on the sidelines of the conference to discuss the impact of US withdrawal from the Iran deal. The RDIF has invested billions of dollars in oil projects in UAE and Saudi Arabia. Iraqi Oil Minister Jabar al-Luaibi will also be attending.

According to a report by S&P Global Platts, Shell's Ben van Beurden and BP's Bob Dudley are also expected to attend the event. “Both companies are involved in major hydrocarbons projects in Russia and have consistently defended a "business as usual" approach since sanctions were introduced,” the agency noted.  

Meanwhile, US envoy to Russia Jon Huntsman recently backed out on giving a speech at the forum’s Russia-US panel session, where Viktor Vekselberg, a Russian oligarch recently sanctioned by the US, is also a participant. However, "I will be meeting as many people as possible to discuss the road ahead," Huntsman said in a video posted to twitter. “Mutual isolation will only drive us apart… Dialogue is our only path to progress.” Vekselberg is allegedly connected to a $500,000 payment linked to Trump’s personal lawyer Michael Cohen.

Assessment

Our assessment is that the upcoming St. Petersburg International Economic Forum indicates that the Russian economy is far from isolated. Sanctions from western countries make a significant political statement, and have had an impact on the Russian economy. However, Moscow still holds the interest of the business community. We believe that the turnout for this event could be a boost for Putin, who was recently elected for another six-year term as President.

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