I was at the Renaissance Capital conference in June for what is one of the best annual gabfests on the calendar. Except this year it was a lot different from conferences in the past.
The first change I noticed is that it's expanded and moved venue from the Russian Chamber of Commerce and Industry building on Ilinka, a stone's throw from Red Square, to Gostiny Dvor, the newly built exhibition hall next door.
I miss the old venue, a classic Soviet-era building complete with Corinthian columns that reeks of the Soviet-era labour meetings that were held there. It was a fun venue where everyone was thrown in together to create a vibrant frizz of conversation and a chance to literally rub shoulders with the great and the mighty. Boris Berezovsky famously appeared at the meeting in 2000 just before fleeing the country to self-imposed political exile. Investors at the back of the room heckled him with questions such as: "why does everything you invest into end up being worth pennies?" Media mogul Vladimir Gusinsky was supposed to show at the same meeting, but had already fled the day before. You had the sense of seeing Russia's politics being played out in front of your eyes and the floor of hall was abuzz with speculation on what the newly-elected president Vladimir Putin would do next.
And the talks were good too. A stream of speakers used the event as a forum to lay out plans and it was one of the very few events in the year where the Russian government attempted any sort of PR - in that the government would come out an meet investors face to face and try and convince them of necessity of what they were up to.
Finally, there was always an element of entertainment. Rencap CEO Stephen Jennings always made the effort to include a few off-agenda speakers with something to say. Gorbachev was inspiring close up. Neil Armstrong spoke about three years ago, which struck me as an odd person to invite, but ended up giving a highly interesting speech about "risk taking" which, he said, was the thing he had in common with investment bankers. My personal favourite was Edward Lucas, the famously acerbic Economist correspondent who spoke on his last day in Moscow in 1996 and told a room with billions of dollars invested in Russia they were all "idiots" to put their money in Russia. (He was wrong and the investors were right, but the Economist seems to love the fact people are talking about it more than getting it right and people still talk about Lucas and his books.)
This year was very different. Gostiny Dvor is huge so there was little shoulder rubbing. Also, Jennings caved into investors' pressure to ban press from the first (and most interesting) day. Apparently the investors don't like sharing the hall with the press, as the speakers won't "really" say what they think if they know every word will be in the papers the next day.
But the biggest difference was the fact that the main piece of the conference was a long series of cabins that lined the short walk to the presentation tent. Senior management sat in each one from either a major or up-and-coming Russian company. Investors spent most of their time swanning from meeting to meeting - one CEO I know from a Russian bank said he'd done 40 meetings in two days. And the press was banned from entering these areas too. "This is what a real conference is about," said the African-sunned Jennings when I finally pigeonholed him for a few minutes at the entrance.
And he is right. The point with the Rencap conference in the mid- and late-1990s was that investors came to find out what was going on in Russia at the big picture level. They had no idea who Putin was nor much understanding of the to-ing and fro-ing of the warring oligarchs. Now the whole story has traded down a level to the details. The same people (and it is the same people, as at least half the audience has been going to this do as long as me) now have an extremely good idea of what is going on at the big picture level; what they are interested in now is talking to individual companies about their individual plans.
To give you an idea of just how significant these meetings were, trading on the RTS practically came to a halt for those two days, as almost all the big investors were sitting sipping tea in one booth or other in Gostiny Dvor having a chat.
I almost feel sad, because for a reporter Russia has lost much of its excitement. Several people, including Jennings, said this conference was much like any big conference anywhere else. But this is testament to the progress Russia has made and to how much of an "emerged" as opposed to "emerging" market it has become, which is what it is all about.
As few are now interested in the big picture, in many ways the talks in the presentation tent at the end of the hall were irrelevant - but not quiet. The policy positions of most of the members of government who spoke are well known and the CEOs on stage could only use the event to announce some new titbit of news that everyone would have heard in a day or two anyway. However, this year's guest speakers were former UK PM Tony Blair and the grand man of real politik, former US secretary of state Henry Kissinger. Both men came to the conference after dinning with both Putin and Medvedev. Famous as Neil Armstrong is, these two speakers are in a different class and in no way irrelevant to the Russian story.
What surprised me with these two speakers was that both said more or less the same thing: there is a historical necessity for the West to form a strategic alliance with Russia, as it's a relationship the former can't afford to ignore, which seems to be counter to what is happening on the ground. Kissinger went further than Blair, saying there was a chance for conflict (either diplomatic or physical) if this relationship was botched. "Leaders around the world are facing some of the toughest challenges any leader in recent history has faced," said Blair, who only left office a year ago. "Power is shifting east and today it is shifting fast; not just to China, but to whole region of the Middle East, Central Asia and Russia."
Blair said that the world has not seen a change in the geopolitical balance of power since the UK gave way to the US as the dominant world power in the 18th century. "Power relations are undergoing a very profound change in the 20th century and the question is, what will be the political consequences?" asked Blair. (It was the first time I had seen him in action in the flesh and he is a very impressive speaker indeed). "In the face of this pressure and the changes currently underway the question is do we open up our countries even further... or do we get frightened and close our countries and economies. For me the issue in the 21st century will be not a choice between political left and right, but one between open and closed." As a dyed-in-the-wool liberal, Blair says we have no choice but to meet these challenges by opening up more and rolling with the punches. And this from the former head of a nominally socialist party.
He went on to say that politicians should not be afraid of the sovereign wealth funds, but should welcome the investment they bring as a way of creating more wealth for everyone. "We must engage in a strong strategic relation with the east and invest with our partners in the east," said Blair. "This is a huge economic opportunity and once we understand this, it would be a profound strategic mistake not to engage."
Kissinger made much the same points, albeit a more cerebral way. His main point was that the European states he studied at school were in the process of disappearing and what had come to replace them - the EU - was not yet fully formed. However, newly rising states, like China and Russia, were states in the traditional 18th century sense and this imbalance was the cause of tension. "European states are in the middle of transferring some of their sovereign power to European Union bodies in Brussels. At a technological and economic level this has worked well," said Kissinger. "But for national loyalty (and the commitment and dedication it can evoke in the people of a state to that state) [the success of this process] is much less pronounced."
He painted a picture of Europe stuck half way between a past it had renounced and a new future it had not achieved, and as a result it was very difficult for the EU to ask its peoples for the sacrifices needed for success. At the same time the newly arising states like Russia can engender a sense of pride amongst its people, who were humiliated in the collapse of the Soviet Union, and mobilise this force to great effect. Both men specifically mentioned the obvious return of confidence in the Russians they dealt with both at street level and in government.
The upshot of this change in the way the world is run is that the effects of policy in any government has goes far beyond the national borders. "Solutions to the world's problems today (like terrorism) can't be solved by any one political solution," said Kissinger. "When we come to write the history of this period the key element will be about a shift in power from the Atlantic to the Pacific and Indian Ocean."
"The Russia I see today is so different from the one I got to know [when I was in office]. I see it in terms of an evolution and as it undergoes these changes it suffers an identity crisis, as the country needs to redefine its role in the world. Russia needs to go its own way and I believe it has done so in a democratic fashion. There will be the inevitable difference of opinion, but for the first time in history Russia has become an integral part of the global economy."
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