Russia Courts Swedish Investors

ReutersPrime Minister Mikhail Kasaynov greeting King Carl XVI Gustaf at the airport Monday.
Deputy Economic Development and Trade Minister Arkady Dvorkovich on Monday urged a delegation of Swedish investors to spend more in Russia, showering them with promising economic plans and forecasts.

Dvorkovich said economic growth would reach 5.5 percent or even 6 percent this year if growth rates of the past two months hold. The target in this year's budget is 4 percent.

Dvorkovich also said at the forum, timed to coincide with a royal Swedish visit, that investment into the economy may grow 8 percent.

He added that even a drastic fall in oil prices would not upset the economy and force the government to default on debt. He said a default would only loom if oil prices fell sharply to late 1990s lows of $10 a barrel and remained depressed for three years. Oil currently sells closer to $20 a barrel.

If oil stays stable, Russia will meet all payments and may even have little foreign debt left by 2010, he said.

Dvorkovich, after outlining government plans for banking, tax, land, judicial and pension reforms, told the Swedish businessmen that the investment climate in Russia would continue to improve. He said a plan was being drafted to set up industrial zones with special benefits like tax breaks for foreigners. The plan would be presented to the public in the near future, he said, without elaborating.

The Swedish delegation, which included leaders from several trade associations and companies such as Volvo, Electrolux and Ericsson, appeared impressed.

"You have answered all our questions," Soren Gyll, president of the Confederation of Swedish Entrepreneurs, said at the end of the presentation, to other participants' applause.

The volume of trade between Sweden and Russia, which had been sliding since 1997, rose by 20 percent year on year to $1.4 billion in 2000. Russia exported about $900 million worth of commodities to Sweden, mostly raw materials, an 18 percent increase from last year, the ministry's Center for Strategic Research said in a statement.

However, Dvorkovich said he hoped the structure of Swedish-Russian business would undergo a qualitative change as Swedish giants launch local production.

"If, for example, producers of house appliances pay taxes here, this would bring Russia billions of dollars in revenues," he said.

Russia is planning to export to Sweden more value-added goods such as car parts, furniture and textiles, the Center for Strategic Research said.

The investors forum came hours after Sweden's King Carl XVI Gustaf and Queen Silvia arrived for a weeklong official visit.

President Vladimir Putin welcomed the royal couple at the Kremlin, saying the visit "will be a success in many different directions."

During the week, the couple plans to meet with government officials and scientists to discuss the country's environmental situation, as well as go sightseeing in Moscow. Carl XVI Gustaf and Silvia also intend to fly to St. Petersburg, Arkhangelsk and Murmansk before heading back for Stockholm.