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. Last Updated: 07/27/2016

Foreign CEOs Say Russia Is On Track

ReutersVideo screens showing Putin speaking at the St. Petersburg forum Sunday. He was standing on a stage to the right.
ST. PETERSBURG -- Foreign investors are brimming with praise for Russia's economic course after a St. Petersburg forum during which they got to quiz President Vladimir Putin behind closed doors.

Hundreds of foreign business leaders attended the St. Petersburg International Economic Forum over the weekend, and more than 100 of them sat down with Putin on Saturday evening.

"President Putin is doing a great job, and all investors are very positive about investing in Russia," Nand Khemka, chairman of Sun Group, said after the Saturday meeting. "The meeting has been a great success and well-participated."

Putin delivered a speech calling for investment into shipbuilding, aviation, high technology and other sectors, and the foreign executives asked him around 10 questions, said Matthias Lufkens, a spokesman for the World Economic Forum who attended the meeting moderated by Klaus Schwab, founder and executive chairman of the World Economic Forum.

Putin did not sidestep any questions, said Lufkens, adding that no "controversial" questions were asked.

Christophe de Margerie, chief executive of French oil major Total, said he was "happy" with the meeting. "The president is very open and straightforward," de Margerie said.

"We'd like to invest more. We'd like to be more active with our partners," he said, referring to talks with Gazprom to develop the giant Shtokman gas field. Last year Gazprom told Total and four other foreign companies that they could not own a stake in Shtokman. De Margerie said a one-on-one meeting with Putin would have been even better. "It's not easy to change the views of people, especially in front of your competitors," he said.

Orit Gadiesh, chairwoman of the U.S.-based consultancy Bain & Co., said Putin opened his remarks by saying, "Now that the press have gone, let me be very honest with you."

She said the executives had mainly wanted to know about Russia's strategic industries, which include oil, gas, aviation and banking, and whether they would be liberalized or come under greater state control over time.

"I found his approach to be very direct," Gadiesh said. "He explained why [strategic industries] were important and why they take this approach with them."

The banking sector was the only area that Putin promised to open up, she said.

Putin also told the executives that Russia's energy sector was much more open than in energy producers Norway, Mexico and members of OPEC.

Among the participants was Jeroen van der Veer, chief executive of Royal Dutch Shell, which sold a controlling stake in the $22 billion Sakhalin-2 energy project to state-controlled Gazprom after coming under tremendous state pressure last year. At the meeting, Van der Veer stood up and thanked Putin for helping Shell reach a satisfactory agreement, the Financial Times reported. The Sakhalin-2 deal was a "satisfactory outcome at an acceptable price," he told the newspaper.

The foreign executives appeared not to have challenged the president on sensitive issues such as the state's apparent selective application of the law with some companies.

The forum followed a warning by British Prime Minister Tony Blair in the House of Commons last week "that people in Europe will want to minimize the business that they do with Russia" if political relations continue to deteriorate.

Hans Jorg Rudloff, the chairman of Barclays Capital, and Peter Hambro, executive chairman of Peter Hambro Mining, have criticized Blair's comments as "unbalanced" and "damaging" to foreign business interests in Russia, the Financial Times reported Tuesday.

Daniel Thorniley, senior vice president at the Economist Group, told the forum that Russia had to wrestle with prejudice constantly.

"Business in Russia is the best-kept secret in the world," Thorniley said.

"More rubbish is written or spoken about Russia than any other country on earth," he said, accusing media outlets like The Wall Street Journal and CNN of scaring foreign businessmen into thinking they will be murdered in Russian hotels and see their companies seized by the Russian mafia. "I am surprised that many of you survived the night," he said, drawing laughter from the audience.

Former German Chancellor Gerhard Schroder, who now advises Gazprom, called for closer cooperation with Russia and said the country was a reliable hydrocarbons supplier.

Jean Lemierre, president of the European Bank for Reconstruction and Development, said historical issues should be handled with greater caution. "History is not easy. Be respectful to what people feel," he said, apparently referring to a dispute over Estonia's decision to relocate a Soviet war memorial.

James Wolfensohn, former World Bank president and chairman of Citigroup's international advisory board, said in a cautiously worded speech that people of his generation had to readjust their thinking about Russia.

"There's still a sense of uncertainty because of prejudice from the past about this country," he said. But "the strides that you've made in terms of opening up are tremendous."

Ernst & Young chairman James Turley said he was optimistic about developments in the country, but said more needed to be done to tackle corruption and other problems. "At the end of the day," he said, "an answer to the question, 'Is Russia reliable?' is 'Yes, but ...'"

Staff Writer Simon Shuster contributed to this report.