Russia will showcase its resurgent economy to the outside world at a Davos-style forum in St Petersburg this weekend even though relations with the West are at their lowest point since the end of the Cold War.
Over 200 CEOs from the world's leading companies will attend the get together, featuring heavy hitters like steel magnate Lakshmi Mittal of Arcelor Mittal, David O'Reilly of Chevron, Royal Dutch Shell's Jeroen van der Veer and Muhtar Kent of Coca-Cola.
"We were pleasantly surprised," Deputy Economy Minister Kirill Androsov said of the turnout. As a Chicago Business School graduate, Androsov may be better placed than colleagues with KGB or Communist Party background to polish Russia's image.
The CEOs will meet President Vladimir Putin on Sunday and are expected to voice their concern with the treatment many international corporations, especially in the energy sector, receive from the Kremlin.
Royal Dutch Shell and its Japanese partners had to sell control in the Sakhalin-2 project to Gazprom, and BP's Russian venture TNK-BP is on the verge of losing its licence for the giant Kovykta gas field.
The Kremlin's actions are seen by many analysts as a drive to restore state control over major energy resources. The Kremlin tacitly admits this by saying Western energy firms did not develop the fields in a way beneficial for Russia.
Androsov denied Russia's disagreements with the West over energy issues, the fate of Kosovo, a proposed US missile shield in Eastern Europe and the murder of former spy Alexander Litvinenko in London will overshadow the forum.
"The sheer number of participants allows me to say that even if it affects the forum it does so in a positive way.... foreign politicians and businessmen will use the forum as a platform to develop dialogue," Androsov said.
Russia hopes the forum will also give fresh impetus to the country's stock market, down 5 percent this year and lagging other emerging markets, even as the economy steamed ahead at a rate of 7.8 percent in the first quarter.
Chris Weafer, chief strategist at Alfa-Bank, says Russian stocks began underperforming in April, when tensions flared with European Union member Estonia over Tallinn's decision to move a Soviet war memorial. "What is very important, especially for investors looking at Russia, is ... to try to get a better sense of whether the recent rhetoric is just politicking or whether it is much more deeply rooted," commented Weafer.
Rory MacFarquhar, economist at Goldman Sachs in Moscow, said Russian markets could shake off the "feelbad" factor if the Group of Eight summit in Germany goes better than many fear.
Russian authorities are keen to show business as usual as they promote St Petersburg, Putin's hometown, as the "economic capital of the world". In April Russian officials and major executives, apparently on Kremlin orders, snubbed an alternative economic forum in London. Alexei Miller, CEO of gas monopoly Gazprom, Russia's largest company, will not come to the St Petersburg forum after he was hospitalised with a kidney ailment last week.
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