PREDICTABILITY FOR BUSINESS

Asked about the most important thing in the strategic planning of his business, any person engaged in business, be it a small, medium-sized or large business, will answer clearly and without hesitation - the predictability of the political authorities of the country in which the business is conducted. The rest is secondary. You can adapt to negative market conditions, currency instability, expensive financial resources, etc. It is possible to calculate all this with some accuracy and build an optimal model of development, but only if you understand the processes taking place in the country.

Listening to the emotional speech of Philippe Pegorier, who was waving his arms, I could not help smiling and saw the same friendly smiles in people sitting next to me. In the hall, where the InvestRos international conference to ensure growing investment in Russia was taking place on 11 March in Moscow, there were representatives of various businesses, government officials and legislators. Each of them had his own understanding of the Frenchman. Some agreed with his arguments and some did not. But everyone nodded sympathetically. And Pegorier said simple things. We are Europeans, but doing business in Russia, we are part of this country and its people. We are apolitical. We are only interested in economic benefits. If you think that we vultures preying on the wealth of Russia - ok, no problem. Enact laws that do not allow us to do this. If you consider us your partners, let us feel it through the same laws. But keep your word! We do not understand it when the head of state calls on us to believe in the country and the State Duma adopts conflicting laws almost every month. We then run around for a long time with the question "What does a law or an amendment to it mean?"

In May 2014, Philippe Pegorier was elected chairman of the Association of European Businesses (AEB), the largest foreign business associations in Russia. Currently, it includes more than 650 European companies. Russia is the third trading and economic partner of the European Union after the US and China. The EU accounts for almost 50 per cent of the turnover of the Russian Federation. The EU is also the largest foreign investor for Russia. The duties of the chief of this association include assistance in the integration of European business into the Russian market. And he'd love to, but is confused about questions himself. He clearly demonstrated it in his speech. As an oriental man, I understood his gestures almost unmistakably.

It is a coincidence, but in his speech the Frenchman recalled the same May of last year. In a month that is memorable personally for him, the Russian president spoke at the St. Petersburg Economic Forum. The slogan of the forum was "Building trust in the era of change" and Vladimir Putin called on foreign businessmen not to succumb to pressure and work with Russia on the basis of their own benefit.

The representative of European business also spoke about their own benefit on 11 March of this year. He just called on Russia to make up its mind about its own benefits. Then it will be easier to find a common language. In everything.

I would be wrong if I did not say that the investment conference showed a positive trend in the attempts of the Russian authorities to solve the problems that have accumulated in the economy over many years. Both the legislators (and the conference was held under the patronage of the State Duma) and business representatives unanimously noted the emerging turn in the attention of the state towards small and medium-sized businesses.

Many years of parasitism on high oil prices led to the fact that not a resource-based economy, but a resource-based colony's economy has taken shape in Russia. This is when products worth 1.5-2 dollars are made for one dollar of raw materials. For comparison: in Australia - it is 6 dollars, Canada - 8, the European Union - 11 and US - 13.

There are countless forecasts by different experts about the inevitable collapse of the Russian economy in its present structure that does not meet modern challenges. The growing flight of capital coupled with the rapidly dwindling foreign exchange reserves of the country and the declining Reserve Fund are evidence of this. Russia will not be able to withstand sanctions reinforced by the "well-timed" collapse of oil prices. Unemployment on the one hand and the rapid growth of the shadow sector of the economy on the other, real wage cuts, inflation and the like, as it were, are nothing compared with what is to come...

The fresh February forecast of the US analytical firm Stratfor for the next 10 years is completely unique. Here Russia's prospects look, frankly, disappointing - not only the economy but state education as such will collapse. But let's not particularly believe George Friedman who once promised the collapse of the Chinese economy after the 2008 Summer Olympic Games in Beijing. Especially as in recent months, along with the negative international forecasts about the prospects of the Russian economy, there have appeared positive notes. Explanations are different.

For example, in the Doing Business-2015 ranking, which is compiled by the World Bank, Russia rose by two levels - to 62nd place. The greatest impact on its final rating came from the indicators "Registration of companies" (rise by 54 positions - from the 88th to the 34th), "Lending" (rise by 48 positions - from the 109th to the 61st) and "Permission for construction" (rise by 22 positions - from the 178th to the 156th).

Analysts of the British research centre Capital Economics assess the likelihood of a financial crisis in 25 countries with developing economies once in six months. They take into account five parameters: the dynamics of the stock market, trade balance, level of external debt, the debt burden of the private sector and the real exchange rate. If a country goes above 5 points (out of the maximum 10), then it is in a pre-crisis state. So with its 3.3 points Russia takes only 20th place. The "leaders" are Venezuela (8.3 points), Bulgaria (6), and China and Thailand (5.7 each).

This rating indicates that in its current economic situation, Russia is not threatened with a default, although last year, it was close to it with 5.5 points.

Well, another piece of fresh news, and from one of the three international rating agencies, on whose conclusions the favourable or negative attitude from international financial institutions depends. Fitch may revise and increase Russia's investment rating in April, Bloomberg reported.

In mid-January, it downgraded Russia to the lowest rung of the investment grade BBB- with a negative outlook. By the way, two other rating agencies Moody's and Standard & Poor's downgraded Russia to the "junk" level.

According to Fitch experts, the volume of reserves exceeding 360m dollars is sufficient to contain the crisis, and the increase in the balance of payments and a more realistic budget are supportive factors for the rating.

The agency believes that Russia has a strong starting position and by April it will be able to decide whether these positive factors had an impact on the situation.

There are many recipes for the economic recovery of a country - any country, in any situation, no matter how disastrous it is. Despite all the difficulties in relations with Western countries, Russia is not in deep isolation. They want to build business relations with Russia, and in turn, Russia is in dire need of investment now - both external and internal.

"The main problem is the complete lack of confidence in politics in general. There is no strategy or daily policy. How many decisions are made haphazardly: on trade fees, on the removal of offshore zones, on pension savings, on additional control over tax bills in foreign currency, on the authority of law enforcement forces, etc. Investors are very tempted, and they weigh all these decisions: this is not clear, this is scary, this is going to work against us, here administrative or law enforcement pressure will increase, but targeting (control over the rate of inflation) seems to be good and the preservation of capital movements is good too. For a medium-term situation there are more minuses than pluses. Hence, the investment will be reduced. So for a start, it is possible to adopt not a well-thought out strategy, but at least demonstrative actions, sometimes even excess measures, to increase confidence. Otherwise, no one will take other serious measures in earnest," these are the words of the former finance minister and now one of the presidential advisers, Aleksey Kudrin. These are the trends in the mood of the business and political elite of Russia.

I suppose that even though they silently listened to Frenchman Pegorier, who talked about predictability (read trust), they agreed with him deep inside. And those to whom these words at InvestRos were addressed made conclusions.