Krasnoyarsk forum seeks anticrisis solutions via brainstorming sessions
Unlike the pomp and great expectations of 2008, when the Krasnoyarsk Economic Forum (KEF) served as a platform for then-presidential candidate Dmitry Medvedev to eventually present his long-awaited highly optimistic presidential programs of intents to the Russian business elite, the atmosphere at this year’s forum was, however, subdued by the ongoing global economic crisis, as the ghost of the recalcitrant international financial collapse overshadowed all the conference’s events and deliberations.
Indeed, the global economic crisis and its negative derivatives were ubiquitous throughout the conference hall and environs as they donned the official names of keynote addresses, experts’ recommendations, discussion groups/sessions, CEOs and government officials’ speeches as well as the decoration stands, speakers’ presentation slides, etc. And, more obviously, the crisis even changed the forum’s traditional paper-presentation format, as leading local and foreign business executives and top government officials opted for ‘brainstorming sessions,’ where the conference guest speakers and other invited high-profile experts compared notes, exchanged ideas, shared experiences and deliberated on the best anticrisis strategies capable of lifting the Russian economy and businesses out of the cataclysmic financial doldrums in the shortest timespan.
Deputy Russian Prime Minister Alexander Zhukov: "The current global financial crisis, which has been negatively influencing the Russian stock market and financial sector, could not help, but impact equally negatively on the general situations in the domestic economy and, consequently, on both industrial and regional labor markets."
Though the absence of the Russian president and prime minister was conspicuous, the forum still, however, boasted several other heavyweights from the ruling political elite, evident in the presence of Deputy Russian Prime Minister Alexander Zhukov, Arkady Dvorkovich, the economic adviser to the Russian president and several other top federal and regional government officials, including Anatoly Kvashnin, the Russian presidential envoy in the Siberian Federal District, which includes the host city of Krasnoyarsk. As expected, the business community was also more than adequately represented at the forum, with Norilsk Nickel Board Chairman Alexander Voloshin, Vnesheconombank President-cum CEO Vladimir Dmitriev, Troika Dialog (TD) Managing Director Andrei Sharonov, SUEK CEO Vladimir Rashevsky, Naumir President Mikhail Mamuta, Renaissance Capital Group Board Chairman Steven Jennings, Russian Development Bank Board Chairman Sergei Kryukov and CEOs of other major Russian and foreign corporations in attendance.
Anticrisis ‘brainstorms’ in action
The summiteers were split into several roundtable discussion groups, titled “Brain Storm: the Krasnoyarsk Scenario on Anticrisis Ideas Bank.” Each group was tasked with reviewing the impacts of the current global crisis on specific sectors of the Russian economy and presenting well-researched practical recommendations on ways to mitigate the negative impacts as well as map out realizable exit scenarios from the crisis. According to the organizers, the groups’ findings and recommendations would be submitted to the Government Commission on Increasing the Stability of the Russian Economy and Anticrisis Commission, which are both headed by First Deputy Prime Minister Igor Shuvalov, who will table them on the government’s agenda for further deliberations and adoptions.
All speakers lauded the change in the forum’s presentation format, calling the ‘brainstorming sessions’ an effective communication model that allowed all participants to air their views, thus creating a ‘invaluable discussion platform’ for deliberating on the current negative trends in the economy. “This format has enabled us to enrich our ‘bank of ideas’ through dialogs, and it is particularly important to note the main underlying thesis of most of the speeches, which is that we should not move backward after the crisis, but strive to go relentlessly forward,” Dvorkovich noted.
Troika Dialog Group Managing Director Andrei Sharonov: "However, more challenges still lie ahead, as the quality of banks’ assets is increasingly worsening both in the retail and corporate segments."
And, speaking on the Kremlin’s new anticrisis strategies, Dvorkovich gave the business community serious food for thought by calling on CEOs to work more effectively and stop their practices of soliciting further financial support from the government. This stems from the Kremlin’s plans to switch from its proposed policy of supporting certain selected troubled companies in favor of implementing more systemic measures to prop up the whole economy and provide more practical support to the general population. In other words, the government now wants the so-called ‘oligarchs’ to support their business empires themselves, rather than waiting for the Kremlin to offer them more bailout cash. This stance differs from the official view aired by Shuvalov at the Russian Forum organized earlier this year by TD, where he inferred that Kremlin would henceforth help only selected companies, based on their financial and social importance in the regional and national economies. “This change in anticrisis policy, according to TD, “means that the Kremlin is becoming increasingly more reluctant to offer more bailout money to private businesses, including even the so-called ‘systemically or strategically’ significant corporations.”
Rashevsky — who presented the keynote address at the forum, titled, “The Krasnoyarsk Scenario: Anticrisis Scenario,” where he traced the causes of this crisis, reviewed its impacts on economies and highlighted different exit scenarios for the Russian economy and corporations — specifically called on the government to ‘reprioritize its development plans and strategies,’ taking into consideration its declining revenues caused by the crisis and its related negative consequences on the Russian and global markets. “Against the background of worsening economic indices, the government needs to redefine its projects with the aim of selecting areas, such as housing and infrastructural communication projects, requiring top-priority attention,” he noted. “When this is done, then other projects in the pipelines should be reviewed and, if necessary, scaled down, to avoid disproportions in the economy.”
Other findings from the forum
In his address, Kvashnin called for a radical overhaul of the Russian economy and society as a part of the ongoing government’s policies aimed at making the country one of the world’s five largest economies. “Now, for the first ever, Russia has set itself a goal of joining the world’s top-five largest economies in the first quarter of this century. This is why, now in times of crisis, we need to urgently execute comprehensive technological modernization, not only in the raw-commodities sectors of the economy, but also, and more importantly, in the processing segments.”
Sergei Aleksashenko, macroeconomic studies director, Higher School of Economics: "The underdevelopment of civil and legal institutions is preventing Russia from effectively combating the current crisis and its negative impacts in the country. This is why it is necessary to radically reform the civil and legal institutions."
Another finding at the KEF is the growing recognition of the small- and medium-scaled enterprises (SMEs) sector by both the federal and regional governments as a potential driver of economic recovery and also as one of the few industries realistically capable of mitigating the negative effects of the rising unemployment rates in the economy. “Surprisingly, we have seen that regional authorities are now becoming keener on supporting the SMEs,” TD said. “This is not the first time we have heard them claim that SMEs are their top priority, but this time, having spoken with representatives of the regional governments, we have seen a real commitment to support smaller businesses.”
The reason for the abrupt change in perception of the ‘usefulness’ of the SMEs among regional and federal leaders is simple: while big industrial enterprises are laying off thousands of workers, the SMEs appear to be the only sector capable of helping to absorb jobless people, thus reducing the rising unemployment rates along with its associated social problems. However, the only danger could be the rampant corruption in the country that could kill the SME’s noble initiatives, according to experts. “The main issue now is whether the government will be successful in tempering administrative pressure on SMEs, which, unlike the bigger corporations, are not asking for any support from the government, except for the simplification of the existing regulatory mechanisms, less corruption and more reasonable taxation polices in the SME sector.”
Better government and corporate transparency was also one of the key issues discussed at the forum. Almost all speakers noted the importance of restoration of trust and policy transparency, calling it ‘an absolutely necessary condition’ for the successful realization of all the anticrisis measures being adopted today. 
“Restoration of trust and transparency in the society, business and government is fundamental to the successful implementation of all anticrisis measures,” Sergei Aleksashenko, director of macroeconomic studies at the Russian Higher School of Economics, said. “It is very important to continue this dialog aimed at achieving these goals; otherwise, we shall pay too high a price for failing to do so.” And, continuing the trust restoration issue, TD says such a move will, however, imply a major change in the entire ‘social behavioral model’ among Russian ruling business and political elites. “Prior to the crisis, the Russian government and society had a sort of ‘social contract’ that implied “economic growth in return for no political claims,” TD noted. “This model has been broken by the current crisis, and we now see that the public is looking for greater participation in the political process, as it is not receiving the desired income growth.”
Optimistic future conditional on immediate actions
TD’s Sharonov noted that the two-day brainstorm sessions had reviewed more anticrisis measures than were previously projected. “From all these deliberations, one thing has become crystal clear, and that is the urgent need to adopt painful decisions based on a clear political will.”
In a related development, Dvorkovich said he sees one possible solution to the crisis in substitution of Russia’s current ruling elite, especially the bureaucrats, with a new one. “Such substitution will on its own constitute a big stimulating factor for economic growth.” And, commenting on the government’s ability to function effectively in conditions of global economic downturn, the presidential adviser was very critical in his assessment of the government’s handling of the crisis, noting the “level of preparedness of both the government and society to live through a dawn-out period of crisis is very low today.”
From his side, Zhukov stressed the need to continue the ongoing searches for the best exit scenarios from the global crisis, noting that such scenarios must be founded on priorities and practical feasibility. “It is impossible to map out ‘original’ exit scenarios from a crisis, a reality that underscores the need to appropriately prioritize goals, resources and necessities,” he said. “And, this is exactly what the government is doing.”
SUEK’s Rashevsky called for an immediate reboot of the Russian economy so as to build a new and stronger foundation for more sustainable growth and financial prosperity in the post-crisis era. “We need to reset all the functioning mechanisms of our economy in the shortest timespan and lay a new foundation capable of ensuring long-term growth and more sustainable development perspectives in the economy,” he said, adding in a more optimistic tone, that, “if such steps are taken immediately, then, when we shall meet again at this forum in three years’ time, we shall be talking not about crises, but about multibillion investments into joint projects.”
Web design,