Civil G8 2006

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Exporters and importers of energy resources will debate industry issues at the Russian Economic Forum in London An interview with Mikhail Margelov, Federation Council international affairs committee chairman


Less than two weeks remain until the Russian Economic Forum opens in London. Besides the plenary sessions, the agenda also includes more than 20 roundtable meetings on business issues. Which discussions will be the most lively?
Less than two weeks remain until the Russian Economic Forum opens in London. Besides the plenary sessions, the agenda also includes more than 20 roundtable meetings on business issues from the market of IPOs to electric energy, public utilities and corporate reputation management, from business risks in Russia to trends on the oil and gas market, private banking services and Russian-Ukrainian cooperation. Which discussions will be the most lively? We asked Mikhail Margelov, chairman of the Federation Council's international affairs committee.
Question: The roundtable meeting in which you participate at the forum is dedicated to chairmanship of Russia in G8. Our country claims the role of guarantor of global energy stability. Do you think this claim has been accepted by Western political and business community?
Mikhail Margelov: Not a single country can guarantee global energy stability all alone. This stability is ensured on the hydrocarbon market situation on which equally depends on behavior of producers and consumers. Along with this, in modern terminology the matter is usually not about energy stability but about energy security. Russia claims a role of a great energy power, which actually speaking corresponds to its current importance for the global oil and gas market.
I think that the claim of Russia for importance in global trade in energy resources is accepted by political and business community of the West. However, we need to bear in mind that consumers, that is the West, and hydrocarbon producers, in this case Russia, may have different notions about energy security. It is important for exporters to have more or less permanent demand for energy resources. For the US, for example, since the times of the oil crisis of the 1970s the notion of "energy security" has been merged with the notion of "energy independence." The West considers the main condition of energy security to be diversification of sources of obtaining of hydrocarbons and the ways of their delivery to the places of consumption. Another condition is taking into account of appearance of new large consumers in Asia, first of all, China and India. Their participation in negotiations about prices and volumes of supplies is necessary. The third condition is reliability of supplies and security of transit including protection from terrorist attacks and looting of raw materials. Experts also point at integration of market players as a factor providing for its stability. Naturally, Russia shares these notions.
The West was confused by the gas incident between Russia and Ukraine. There was probably not a single speech dedicated to energy topics that did not mention it. I think that this is, as usually, seriously exaggerated because since then there have been no complaints from Europeans about reduction of gas supplies from Russia. It does not make sense for Russia to provoke energy hunger. Moreover, planning pipelines to the West and to the East bypassing transit countries Russia strengthens common energy security. The fewer the borders the more reliable the supplies.
Question: On which issues does Russia have yet to persuade its G8 partners?
Mikhail Margelov: From the economic standpoint, no persuasion is necessary. It is impossible to argue with arithmetic, and according to macroeconomic parameters Russia is inferior to partners. Besides, obstacles suddenly appeared on the path of Russia's entrance into WTO although it were not we but some WTO member states that were the leaders according to the volume of counterfeited products. Another reason due to which the US postpones its agreement with our entrance is access to the Russian market of banking and financial services. I believe that these obstacles will be this way or the other surmounted.
Naturally, there is no polemic in the political field on the level of heads of the states. There is an unfavorable background in Western press regarding the old pretexts like deviation from democracy, support of the President of Belarus and interference into affairs of Ukraine and even restoration of Russian Empire. We do not even need to comment on these statements.
Question: Hence, which issues do you expect our Western colleagues to raise at the forum?
Mikhail Margelov: At their forums, business executives usually do not operate abstract concept notions like "democracy," "liberalism" and "freedom of speech." From any meeting they need to get something more practicable than a result of an ardent discussion as to whether governors should be elected or appointed. They will talk about access of Western banks to our market. They will talk about the plans of diversification of transportation of Russian hydrocarbons. They may be interested in the possibilities of Russia to participate in the market of liquefied natural gas. They will argue about tax policy, about methods of combating of inflation and about expedience of nationalization of the oil and gas sector. Business executives have very "mercantile interests."
Question: What kind of role should Russian business play in development of the national projects?
Mikhail Margelov: In some cases it is expedient to make budget projects into separate national projects. Then there will be a kind of small State Planning Committee of the USSR. However, the problem of any state planning committee is the fact that it cannot take into account all economic relations in principle. They may plan housing construction but will definitely forget about some piping and valves. In reality five-year plans have never been fulfilled because not a single plan was balanced. Our curator of national projects recently complained about bad administrative discipline of the actors.
In the Soviet era, the poorly-adjusted gears of the planned economy were greased by shadow entrepreneurs. Now we have a legal private sector without which our "state planning committee" projects cannot do objectively. As to attraction of foreign participants to the national projects, I think the way is not blocked for them. The state will definitely leave such areas of these projects where competition is inevitable to private business executives. So, you are welcome!
Question: Organizers of the Russian Economic Forum in London note that one of its main themes will be the spirit of enterprise among the new generation in Russia. What do you think it means?
Mikhail Margelov: Actually, the "spirit of enterprise" is a term coined by Max Weber. Some people maintain that Russia's capitalism isn't the Weberian type. I haven't yet heard anyone define what kind of capitalism it is. The active part of the youth in any political system always has an enterprising spirit. They wish to outpace the others and live better lives than their parents. They seek to acquire knowledge and practical skills.
It is said that this is an obligatory quality of the young. This is just another matter that political systems either support this spirit or kill it or force young people to seek their fortune overseas.
Question: Is it easy to be in politics for young people in Russia and in the West?
Mikhail Margelov: Being in politics is difficult for everyone, always.
Question: Which issues do you consider it necessary to raise at the Russian Economic Forum?
Mikhail Margelov: First of all, these are probably problems concerning WTO accession. Then there are problems of Eastern Europe: is this a bridge or a wall between us and old Europe? There are issues of just prices of energy resources for consumers in the CIS. There is Eastern direction of the energy policy of Russia. There is energy market and situation in the Middle East.
Question: As a rule, the forum in London gathers representatives of the business elite from Russia and Britain. It is clear that London is financial center of Europe and a Mecca for Russians. At any rate, which other countries and regions do you think should be represented?
Mikhail Margelov: It is high time to invite business executives at least from Germany, China and India. I understand that organizational problems may arise, but the direction is clear: expanding the circle of participants, not in general but at least taking the agenda into account.
Translated by Pavel Pushkin

Expert opinion

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