The 11th international conference "Russian and Ukrainian Business under New Conditions: Risks and Prospects" took place in Gstaad, Switzerland on March 20-23. Its participants criticized the government and business too.

Around 200 top figures of the Russian and western business world got together at the mountain resort to talk about the latest tendencies in the Russian economy and relax. The main two topics of the conference were the crisis of Russia's political system, and the problems of misunderstanding between foreign investors and Russian businessmen. Risks for Russian and Ukrainian business, the relations between the two nations, and the problems of making investments and conducting IPOs were touched upon as well. Bureaucracy was named the main factor slowing down economic growth.

Putin's five-year rule. Head of the Globalization Studies Institute Mikhail Delyagin was the first to take the floor. In his opinion, we should expect a system crisis in a couple of years: "The foreign situation no longer fosters economic growth, the inflation rate isn't going down, and capital flight is increasing. The stock market barely reacts to good news. Even investments in oil production surge." According to Delyagin, all that the reforms of the past 15 years had turned into was the liberation of bureaucracy from public control and responsibility. "This is why there's no surprise that the disease is getting stronger. Compared to 2003, when everybody was complaining about corruption, now they are pointing to the government racket. To solve this problem, we have to improve Russia's political system." Delyagin didn't say how to do that though. But he seems to expect a "Russian miracle," i.e. an economic boom in 2009.

Chairman of the board of directors of YUKOS Viktor Gerashchenko complained about Russia getting more difficult to manage. "Cutting the number of ministers could turn into a total disaster for the country. I know ministers have always been so overloaded with work that their deputies have had to wait for two weeks to meet with them. I object to this reform. There are many things being done hastily, which prevents the country from making any headway," he said. Alexander Livshits, the deputy general director of RusAl, was angry about what's happening in the sphere of tax legislation most of all. "What's the point of having low tax rates, if the procedure itself is a mess. Big business needs neither money nor indulgencies. We want to get the same things from our government as our foreign competitors do from theirs." Livshits voiced only four main demands. First of all, predictability of all macro-indicators, connected with inflation and the ruble rate. Secondly, clear tariff policies, then stable tax legislation. "Above all, we need profit-related investment privileges," he emphasized. "Only Russia doesn't have them." Livshits didn't say anything about the upcoming system crisis. "Russian business is hard to kill. It is hard to scare. We went through the 1998 crisis and can get used to anything."

BAD business. The government was not the only one blamed. Arnaud Leclercq, head of eastern and central European activities at Credit Suisse Bank, stated that the number one problem with Russian companies was that they had no idea how to deal with foreign partners. He expanded on total misunderstanding, the conflict of ideologies, and cooperation difficulties. The expert advised Russian businessmen to learn a new language and business culture. To do that, they should buy western companies and watch how business is run in practice, or, begin with a theory and get a degree at a western university. "You should be able to explain what's happening in Russia. And this is where you need to create alternative media channels," he suggested. "Moreover, you need to build a relationship with top western businessmen to lobby your interests." Until now, there was not much heard about top Russian business figures in the West, Leclercq said. Russian businessmen are the best characters for jokes, even though they can afford the best British football clubs.

Ukraine's perspectives. Boris Nemtsov, aide to Ukrainian president Viktor Yushchenko, expanded on the differences between Ukraine and Russia in this sphere. "The main result of the Orange Revolution is that we now have a national idea. All the rest is a matter of time." In his opinion, Ukrainians have clearly voiced their desire to live in Europe to the rest of the world. For this very reason, Russian businessmen should not worry about cancellation of privatization results in Ukraine. Yushchenko's government understands that they will never be admitted into Europe if they act like barbarians. In Nemtsov's opinion, the new political order in Ukraine is quite favorable for the development of economic ties between Ukraine and Russia, despite bad personal relations on the part of the two presidents. "There are no oligarchs behind Viktor Yushchenko," Nemtsov ensured the audience. "All businessmen can count on equal conditions." The following facts prove Russia's great interest in her neighbor. In 2004, 16 deals involving the purchase of assets in former CIS republics were made by Russian companies, totaling $759 million. Almost 20 percent of this amount went to Ukraine. The recent meeting between Vladimir Putin and Viktor Yushenko is worth mentioning here too. "On top of that, Russian business seems to feel uncomfortable in Russia now. It is looking for a 'softer' climate," Nemtsov was voicing his thoughts. "Offshore business is a banal and obscene thing to do.

That is why Russian businesses will invest in Ukraine, the country where everything is clear and predictable. And in Ukraine you can make even more money than in Switzerland." Nemtsov mentioned high metal prices, and over 10million labor immigrants working in Russia and Europe among the main economic growth drivers of Ukraine. "These people bring money into the country, ensuring the stability of the national currency."

However, Ukraine sure has problems too. The number one problem is corruption. Russia was rated 90th and Ukraine - only 122nd on the Transparency International list in 2004. "Compared to Russian officials, who take bribes and do something, Ukrainian officials get their money for doing nothing," Nemtsov said, commenting on the ratings results. "In any case, the success of Ukraine is a chance for Russia. Ukraine will serve as an example for us if its reforms succeed and the country does away with oligarchic capitalism and corruption. If the reforms fail, Russia won't have any chances either." "As usual, the most interesting things were discussed in the lobby," a participant of the conference reported, wishing to remain unnamed. "All levels of Russian society are unhappy with policies being enforced from the top. There are plenty of issues that we would like to discuss with the government."