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. Last Updated: 07/27/2016

Business World Cautiously Optimistic After Election

Hoping a new pro-government parliamentary coalition will smooth the path for business, economists and entrepreneurs expressed cautious optimism at the array of potentially business-friendly forces taking shape.

The Unity, or Medved, party and Sergei Kiriyenko's Union of Right Forces, two blocs who traded on their support for the Kremlin and Prime Minister Vladimir Putin, won nearly enough of the vote to overpower the Communists and other leftists - favorite scapegoats in the past for budget and taxation wrangles on the floor of the Duma.

"The Duma has been a major obstacle to reform, opposing the issues [the Kremlin] has put forward," said Peter Westin of the Russian European Center for Economic Policy. "Now, we could have a situation where the legislative process goes much differently. ... We could see a completely new Russia."

"We think the market will take these results as a positive sign, as they should guarantee a smooth political process," United Financial Group said in a report Monday.

Now, as political platforms are converging on the center and even Communists speak of promoting foreign investment, hopes are high that peace between the Kremlin and the legislature will mean fresh attention to business concerns - namely the convoluted tax system.

"It is important for the parliament to support the [federal authorities]," said Svyatoslav Zhuravlyov, an entrepreneur who voted for Unity at a polling station in southwestern Moscow on Sunday. "We are tired of every party pulling in its own direction."

Polls ordered by the Vedomosti newspaper of 260 leading local and regional businessmen that carried out over the two weeks leading up to the poll showed support for the Kremlin backed Unity party rising sharply in the two weeks before Sunday's ballot, mostly at the expense of Moscow Mayor Yury Luzhkov's Fatherland-All Russia party.

The resurgence of the Union of Right Forces was in many ways even more welcome to the business community.

The unexpectedly high overall support for Kiriyenko in Sunday's vote came from the hidden sympathies of Russian entrepreneurs, managers and company owners, said Andrei Grigoryev, editor of Kompania magazine.

"Russian business tried to show its ideology, to advance its ideology in parliament," Grigoryev said. "That's important, and it's really great."

Unity's economic platform has so far been ill defined, but party leaders have promised to defend Russian business interests.

Scott Blacklin, president of the American Chamber of Commerce in Moscow, said he expected Unity to line up behind Putin's recent promises to protect foreign investors and resist pressure to undo privatization.

Energy sector executives and analysts were especially upbeat, especially because a more constructive Duma could bring further progress on legislation on production sharing agreements, or PSAs, Reuters reported.

This in turn should raise investor confidence and give a boost to both foreign and domestic investment in the sector.

"This would augur well for tax reform, it would augur well for a more investor-friendly regime here," Richard Freeman, chief representative in Russia of Texaco, told Reuters.

"Any country needs foreign investment. Russia ... needs new money as well as a more efficient use of internal money.

"With a fairly large pro-government bloc in the Duma this should help government policy, and all the government needs to do now is to enact the right policy," he said.