REN TV: News of the Day – June 9, 2008

A hedge between keeps a friendship green?

President of Cyprus Dimitris Christofias is due to sign the so-called ‘anti-offshore’ documents in October in Moscow. The visit’s rehearsal was held in Limassol in July: the country’s president met businessmen to discuss the prospects of the Russian economy in light of the financial crisis. “The authorities of Cyprus will introduce policy that will make it simpler for Russian companies and banks to do business in the republic,” the president indicated.

Dimitris Christofias, President of the Republic of Cyprus:

“Cyprus is an excellent bridge connecting Russia and the European Union.”

Currently, the amount of accrued investments in Russia that came directly from Cyprus or via the country exceeds $40bn per year.

Companies choose Cyprus for reinvesting funds in assets that were taken out of the country earlier. “Cyprus is an overseas nursery for the new type of Russian business!” one could hear this nostalgic notion behind the scenes at the conference. At the same time, local legislation is being crafted to be in harmony with the European legislation, and this is also a challenge.”

Yury Rovensky, RBC’s General Director:

“You could hear a lot more positive things coming from Russian speakers compared to the speeches of business people representing Cyprus and Greece’s financial circles who attended the conference. Perhaps this can be attributed to the fact that we are discussing ways to counter the crisis, paying attention primarily to emerging markets.”

Offshore companies certainly played a central role in the 18th business conference organized in cooperation between RBC and Otkritie Financial Corporation, but the national economy was among the most acute topics for conference participants. People kept pondering the same question: “Would Russia be able to sustain the blow of the global crisis?” As it turned out, the country was in fact managing to weather the crisis: the Bank of Russia registered a new wave of capital inflow – about $4bn-$5bn per month, against the background of multibillion write offs by western banks. At the same time, Deputy Economic Development and Trade Minister Andrei Klepach assured us that the government would bring inflation down to 7 percent by 2011.

Andrei Klepach, Deputy Economic Development and Trade Minister of Russia:

“The economic policy is obviously becoming more stringent. However, there is a fine line here that we cannot cross, otherwise this move would backfire and economic growth would stop altogether. Using various instruments for strengthening the country’s competitiveness is extremely important for us, even more so than it is for Europe…”

More than 200 business people expressed views on the topic ‘How to avoid financial crisis’ at the conference. Just as RBC’s General Director Yury Rovensky had promised, participants were unable to come up with a single right answer that would work for everyone. The trend has already been set, however: in the financial sector, just like in a jazz piece, the down beat is always followed by an up beat.