RBC's investment conference took place in Gstaad, Switzerland on March 20-23. Prominent businessmen, politicians and public figures including Viktor Gerashchenko, Boris Nemtsov, Mikhail Delyagin and Ella Pamfilova were among its speakers. During three days spent at the ski resort, 200 participants of the conference met to discuss the main trends in Russian-Ukrainian relations, assess the investment climate and share the secrets of implementing IPOs in theory and in practice. The unofficial part of the conference was way more pleasant: mountain skiing, a tour around Montreux where Nabokov used to live, taking a balloon ride, Chivas Regal degustation and Anita Tsoy's concert.

Ukrainian presidential advisor Boris Nemtsov gave Ukraine as an example when discussing the investment climate in Russia. In his opinion, "the orange revolution" helped the country to shape its development strategy and a national idea that can be worded as "we are Europeans and we want to live in Europe." So, Russian business should not worry that privatization results will be cancelled in Ukraine. Ukrainians understand that if they act like barbarians they will never be accepted in Europe.

Russian businessmen seem to be absolutely un-afraid of such a scenario: they simply consider it impossible. "I liked Yushchenko from the very beginning," deputy general director of RusAl-Management Alexander Livshits agreed with Nemtsov. "I met him several times; he is a good and trustworthy person." Livshits added that Ukraine should have been happy that such an impressive amount of investment was pouring into Russia. "We came to the city of Nikolayev five years ago. Salaries tripled there since then. We invested over USD100 million in production and intend to invest the same again."

Nemtsov named two fundamental factors that make Russian investors bring their money to Ukraine. First of all, it's a new political order and a new president with oligarchs behind them, which gives businessmen reasons to count on equal conditions for everybody. Secondly, it's an old order in Russia. "Russian business feels uncomfortable in Russia today," Nemtsov stressed. "What else does it have to do? Either to establish offshore companies, which is banal and obscene, or invest in Ukraine, where everything's clear and predictable."

As far as real numbers regarding Russia's investments in Ukraine are concerned, they are impressive indeed. According to preliminary estimates, 16 asset purchase deals were made by Russian companies worth USD759 million in former USSR republics in 2004. Almost 20 percent of this amount, USD139 million, were Russia's investments in Ukraine. And this became possible despite the fact that it is not that easy to run business in Ukraine now. 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." Ukraine has the strategy but lacks development tactics. Russia is just the opposite: it has development tactics but is missing the strategy. All speakers of the conference did emphasize that outlooks for the Russian economy in general and in particular its investment climate suffer from the government being unable to make key decisions.

From time to time, Russian officials give reasons to hope for soonest change. For example, soon after the closing of RBC's investment conference, President Putin met with Russian businessmen and said that the period of limits for privatization deals had been reduced to three years.

It seems as if he listened to the participants of the Gstaad conference, as they were calling for drastic changes. Chairman of Barclays Capital Hans Joerg Rudloff was daring everybody to decide on the fundamentals of investment policies. Alexander Livshits voiced demands of Russia's big business. There were four main issues on the agenda that defined the future of Russian corporate giants on the global scale: "We need macroeconomic indices (everything related to inflation and the ruble exchange rate) to be predictable; we need tariffs to be predictable; we need stable taxes, too. Finally, we need tax discounts for investors. Russia is the only country that doesn't have that." Unlike many others, Livshits sounded optimistic. "Russian business is hard to kill," he said. "It's not easy to scare it. After the 1998 events, it can get used to anything. Just tell us, what is it we have to get used to?"

Mikhail Delyagin, the academic head of the Institute for Globalization Studies, talked about an almost hopeless situation that Russia found itself in after "Putin's five-year rule." He pointed to a whole lot of worrying trends: the current situation on global markets no longer does for economic growth; inflation doesn't go down; capital flight adds pace; the stock market barely reacts to good news; investments in oil production sink; non-export companies perform badly; second-tier companies can "barely survive." On top of that, company owners are unprotected, law-enforcement institutions do anything they want, and the people in general are very poor. You can be sure crisis is just around the corner. This is a political problem and the only way of solving it is to upgrade the political system of Russia, Delyagin emphasized. Unfortunately, he didn't specify how to accomplish that. He changed his suit for a T-shirt saying "Khodorkovsky GO HOME" and went skiing.

Unlike plenary sessions, seminars were not about such global issues. Nevertheless, they were important too: how to attract long-term investments to Russian business, which industries are the best to invest in, how to get companies prepared for foreign IPOs. The debates proved that things are not that bad in our country.

Commenting on research prepared by the Russian economy ministry and the Advisory Council for Foreign Investments in January 2005, director of the ministry's investment policies and state investments department Svetlana Ganeeva noted that "how we value ourselves is one thing and what foreigners think about us is a completely different thing."

In particular, foreigners think the following. The majority of respondents (80%) characterize their business in Russia over the past two years as successful, pointing to a hike in sales volumes and profit. All in all, almost one third of them (30%) consider economic changes with regards to foreign investors. More than a half (52%) of respondents expect the investment climate to improve in Russia over the next couple of years. One interesting fact is that 70 percent of investors think they have enough true information to make balanced decisions regarding investments in Russia. Among the most reliable sources of information, foreign investors mention other foreign investors, international financial organizations, information provided by investment banks and analysts, and international business associations. The most unreliable sources are Russian officials, the Russian media and Russian business associations, top foreign managers say.