Big Business Adopts a Tougher Tone

VedomostiVekselberg addressing the RSPP meeting in the President Hotel on Tuesday.
The country's most powerful business lobby has called for greater help from the government in expanding abroad and less for state-controlled companies, while complaining about the Kremlin's lack of interest in establishing a real dialog with business.

The criticism from leaders of the Russian Union of Industrialists and Entrepreneurs at a meeting of its management bureau Tuesday suggested a move away from the largely compliant stance it has taken in relation to the government in recent years.

"Big private companies are only emerging, while the state-run firms, which enjoy 100 percent support from government bodies, don't play by the market rules," said Viktor Vekselberg, a major shareholder in metals giant RusAl and Russian-British oil joint venture TNK-BP.

The organization used the meeting to present a set of proposals for cooperation between the public and private sectors, as well as calling on the government to support the international activities of Russian businesses.

"We talked about laws formulizing consultation between the state and business at a meeting with [then President-elect] Dmitry Medvedev in April," RSPP president Alexander Shokhin told the meeting.

"But it seems that the president's directives take time to be put into action, so we still need a law to regulate consultations between the state and business."

The organization's proposals include obligatory consultation between state officials and business representatives and the creation of a governmental body to defend entrepreneurs' interests.

Shokhin said foot-dragging on implementing the proposals had already had a negative effect.

"As a result of this lack of cooperation, business is not taking part in the Russia-EU summit in Khanty-Mansiisk," he said, warning that the government would not be able to implement obligations related to its planned WTO accession without the support of business.

"There is the risk that Russia will be only a passive member of the WTO when it enters the organization if business doesn't participate," Shokhin said.

Softening his approach a bit, he then suggested that entrepreneurs should at least try to be accredited to decision-making government bodies.

Both Shokhin and Vekselberg stressed that cooperation between the state and the business community was vital to the prospects for Russian businesses abroad.

"Participation in intergovernmental meetings is the only way to promote our business abroad," Vekselberg said.

Shokhin said it was particularly vital to give businesses a clear indication of countries that the state wanted them to stay clear of, suggesting that the government could create a sort of "black list" of countries where it does not want Russian businesses to invest. "We do not want to learn about trade or political sanctions in the press," Shokhin said, adding that the entrepreneurs were also looking for some insurance from the government on political risks abroad in the form of budget backing, as well as favorable loan conditions for exporters.

The harshest warning, however, came from Vekselberg.

"The time has come to consolidate our efforts, and if we don't, we will all be crushed, one at a time," he said, without elaborating.

Deputy Industry and Trade Minister Andrei Dementyev, meanwhile, dismissed the idea of permanent consultative structures between business and the government as the unnecessary creation of "new bureaucratic structures."

But Deputy Economic Development Minister Andrei Klepach told the meeting that there was room for improvement in conditions for exporters.

"With the current gap between the imports and the exports, we will get a negative trade balance by 2011 to 2012," Klepach said. "We do need a plan to cooperate with business on that."

Russian exports are growing at a rate of about 4 percent per year, while imports are increasing at a rate of about 26 percent to 30 percent, according to the statistics from the Economic Development Ministry.

Kremlin spokespeople declined to comment on either the proposals or criticism coming out of Tuesday's event, while calls to government press secretary Dmitry Peskov went unanswered.

The comments were unusually bold from a body that has been subdued since the arrest in 2003 of former Yukos CEO Mikhail Khodorkovsky, then the country's richest man. Khodorkovsky's subsequent trial and conviction to eight years in a penal colony were seen as an attempt to bring big business to heel.

But changes in the country's leadership, with Medvedev moving into the Kremlin and former President Vladimir Putin becoming prime minister, may have brought a change.

"Russian big business is enjoying the current political stability and a degree of comfort, so it feels free to offer some delicate criticism of the Kremlin," said Alfa Bank chief strategist Ron Smith. "The place of business in society is becoming less and less uncertain."

Smith said a delay in the government's reaction to the RSPP proposals was likely the result of the recent elections and changes. He also warned not to overestimate any shift in the relationship between the state and business.

"Now the Kremlin is ready to consider all proposals, but it is still defining its position," Smith said. "But the Kremlin with Medvedev in the chair is no weaker than the Kremlin with Putin in the chair."