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. Last Updated: 07/27/2016

Kiev Welcomes Russia's Business Elite

Ukrainian President Viktor Yushchenko rolled out the red carpet for some of the top names in the Russian business world Monday in an apparent attempt to soothe concern that his Western-oriented administration would turn its back on Russia.

"We welcome the flow of capital to Ukraine, regardless of its geography, as long as it is honest capital," Yushchenko was quoted as saying by Interfax.

After the meeting, LUKoil CEO Vagit Alekperov said the oil company would invest $500 million in Ukraine before 2011 and predicted that "Russian business will make large investments into Ukraine's economy in the near future," Interfax reported.

"Today I leave Kiev with complete certainty that the investment we will make will also be safeguarded," Alekperov said.

In a two-hour meeting, Yushchenko met 20 representatives of leading Russian companies, including Alekperov, Sistema co-owner Vladimir Yevtushenkov, Basic Element board chairman Oleg Deripaska and AvtoVAZ president Vladimir Kadannikov, said presidential spokeswoman Irina Gerashchenko.

"The meeting was a success. Russian businessmen were able to get firsthand information on what Ukraine's leadership plans to do to improve the investment climate. Yushchenko pledged that Ukraine would not waste any chance to attract investors," Gerashchenko said by telephone from Kiev.

The meeting appeared to be a conciliatory gesture from Yushchenko, who fought a bitterly waged campaign last year against Viktor Yanukovych, whom the Kremlin unabashedly backed as its candidate.

"Yushchenko wants to make clear that Russian business is not going to be treated any differently than German, U.S., Japanese or [other foreign] business," said Marco Groen, managing partner of Ernst & Young in Kiev.

Despite a chill in relations since Yushchenko's electoral victory in December, Russia is still Ukraine's No. 3 trade partner after Germany and Belarus. In 2004, the volume of bilateral trade stood at $17.7 billion, nearly $5 billion up from 2003.

During Monday's meeting, Yushchenko reiterated the status of Russia as a strategic partner for Ukraine, Gerashchenko said.

"The goal of the visit is to meet the new government and president and talk about various subjects including the property issue," a representative of Tatneft said before the meeting.

Tatneft general director Shafgat Takhautdinov flew to Kiev, the representative said. Tatneft and the Tatarstan government control UkrTatNafta, a company whose privatization is under scrutiny by Ukrainian authorities.

Yushchenko was swept into power on promises to fight corruption and roll back privatizations conducted in an illegal manner.

Yushchenko's prime minister, Yulia Tymoshenko, caused a stir among investors last month when she announced that some 3,000 past privatizations were subject to investigation. That figure was wildly out of sync with Yushchenko's earlier estimate that "dozens" of privatizations might be challenged, and Tymoshenko later said her comments had been blown out of proportion.

"The new government's goal is to calm investors -- those who already invested in the country, as well as those who are considering it," said Alexei Makarkin, political analyst with the Center for Political Technologies in Moscow.

Yushchenko "said that there is no such word as 'reprivatization' in his vocabulary but emphasized that conditions on how some privatizations were carried out nontransparently, tailored for particular clients -- will be reviewed," Gerashchenko said.

Yushchenko has consistently mentioned the controversial privatization of Kryvorizhstal as one of the deals he plans to revisit.

Although Russia's Severstal bid $1.2 billion last year, the plant ended up going to Viktor Pinchuk, son-in-law of then-President Leonid Kuchma, and Ukrainian billionaire Rynat Akhmetov, for $800 million.

"There will be no more than 30 such companies and Russian businessmen are aware of that," Gerashchenko quoted Yushchenko as saying.

Foreign direct investment originating in Russia totaled $377 million between 1999 and 2003, well behind the United States' $1 billion.

Analysts estimate that actual investment from Russia is higher, but it is difficult to track because it often arrives via other countries.

Monday's meeting was meant to clarify the "rules of the game" and highlight that the country has stable property rights, Makarkin said.

How much capital the attendees of the meeting have invested in Ukraine is secondary, said Igor Yurgens, vice president of Russian Union of Industrialists and Entrepreneurs, Russia's big business lobby. "What's important is Yushchenko's insistence on zero tolerance for corruption and his drive for [Ukraine's] democratization, which means economic liberalization," he said.

Observers agree that Yushchenko has a six-month honeymoon to implement reforms. Two months into that period, investor confidence has not waned, Groen said.

"Foreign investors continue to be optimistic about Ukraine," he said.

Yushchenko is scheduled to meet with President Vladimir Putin in Kiev on Saturday.