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. Last Updated: 07/27/2016

World Economic Forum Storms Into Town

Moscow is in for a climate change.

More than 300 of the world's leading business figures begin descending on Moscow this weekend for a two-day round table organized by the same group that made Davos, Switzerland, ground zero for anti-globalization activists.

But while police are bracing for scores of protesters and snarling traffic, organizers of the World Economic Forum are hoping for direct action of a different nature.

"This meeting is aimed at delivering tangible results in [Russia's] business climate," said Thierry Malleret, the forum's director for Europe and Central Asia.

The forum, the first major gathering of international business leaders since the Sept. 11 attacks in America, officially opens at the Marriott Grand Hotel on Monday with an address by President Vladimir Putin.

The list of participants includes Prime Minister Mikhail Kasyanov, Finance Minister Alexei Kudrin, Economic Development and Trade Minister German Gref and dozens of other top government officials and heads of leading Russian enterprises. Jean Lemierre, the president of the European Bank for Reconstruction and Development, the largest foreign investor in Russia, leads the private-sector contingent, which includes ExxonMobil vice president Neil Duffin and Deutsche Bank CEO Hubert Pandza.

Using the theme "Advancing Further Into Positive Territory," the forum hopes the meeting will provide a platform for Russian business and government to hammer out specific plans to increase foreign and domestic investment.

"It is structured in such a way that people will truly interact, brainstorm, make recommendations, put them down on paper and follow them up later," Malleret said in a telephone interview.

Local analysts said that no major deals need to be announced for the forum to be a success -- just getting this kind of global focus on Russia's economy is a boost in itself.

"A meeting organized by the WEF is useful because it's prestigious and it puts Russia on the map of potential investors," said Alexei Moiseyev, senior economist at Renaissance Capital. "All of a sudden their mindsets change and they realize Moscow is not as cold an environment as they thought it was."

The blueprint for the forum will be a report on global competitiveness released by the forum last week, which ranked Russia 63rd out of 75 countries. The rankings, which put Finland at No. 1, were based half on technology level, one-quarter on the quality of institutions and one-quarter on macroeconomic conditions.

In that report the WEF identified the lack of capital investment -- foreign, domestic, direct and indirect -- as one of the main reasons for Russia's relative uncompetitiveness. The forum said that Russia will fall $30 billion short of the estimated $70 billion it needs in annual capital investment to maintain current productivity levels.

Poor intellectual property rights protection, the lack of public access to the Internet, the high level of organized crime and the lack of access to capital markets also contributed to the low ranking.

Despite these factors, the report highlights some positive aspects of the country's economic advancement, including its low chance of recession, its high employment rate and its real exchange rate.

"Russia has made quite a bit of progress in the last 24 months," said Peter Cornelius, director of the forum's Global Competitiveness Program, in a telephone interview from Switzerland. "But it is essential to deal with the issues in this report in order to re-launch and sustain the economy. I think the report will be used as a platform to discuss real steps to increase competitiveness."

The first order of business is the launch of a new report on competitiveness -- specific to Europe -- to be followed by presentations on the economy and a series of workshops on investment barriers.

Topics will range from the restructuring of the banking sector, deregulating and de-bureaucratizing the economy and the promotion of responsible corporate practices.

Malleret said he's confident more than hoopla will emerge from the event. For example, Russian companies will have an opportunity to commit to a code of conduct for corporate governance, designed by the forum and Troika Dialog to measure the fairness of business practices. As an incentive to weed-out bad companies the WEF plans to introduce companies with good governance to financial investors. Five Russian companies signed up for the code at the forum's annual meeting in Davos earlier this year.

But the forum won't ignite major structural reforms because they are already in motion, analysts said. They point to the recent passage of legislation that eliminates much of the bureaucracy involved in doing business here, commitments to reform the banking sector and increased wages for judges and state workers as evidence that the Russian government is working to improve the business climate.

"The meeting won't introduce any new ideas to the government because those in the government know what needs to be done in terms of restructuring," said Peter Westin, a senior economist at Aton.

"We now have a government that is operating independently of foreign advice, like the IMF. It now needs less advice and more PR. That's what this meeting will provide."