Sunday, June 8, 2008

Weekend's Featured: Russia Blames US for Current Crisis

Russian President Medvedev Blames US Policies for Current World Economic Woes.

Russian President Dmitry Medvedev on Saturday blamed "aggressive" US policies for the world's current economic woes and put forward Russia's growing energy power as a possible solution. "It is precisely the gap between the United States' formal role in the world economy and its real capabilities that was one of the key reasons for the current crisis," Medvedev told top business executives in Saint Petersburg.

The current downturn happened in part because the "aggressive financial policies of the world's biggest economy led not only to the failure of corporations. The majority of people on the planet have grown poorer," he said. He went on to tout Russia as a zone of stability able to help the world economy and took a swipe at the US enthusiasm for biofuels, blamed by some analysts for a global rise in food prices.

"Russia is a global player. We understand our responsibility for the fate of the world and want to participate in forming the rules of the game, not because of so-called imperial ambitions, but because ... we have the resources." While Russia offered global energy security, others "emphasised the production of biofuels -- and we've seen the results of that," he added.

But US Secretary of Commerce Carlos Gutierrez rejected the criticism, telling reporters at the forum that while Medvedev had made "some very powerful statements," the world was experiencing a "downturn" rather than a crisis.

This was Medvedev's first major economic speech since taking over as Kremlin chief last month after Vladimir Putin's eight-year presidency during which Russia became an increasingly strident critic of US foreign policy. The conference venue of Saint Petersburg -- a port in northern Russia often referred to as the country's "window on Europe" -- allowed this top global energy power to present itself as a pillar of stability.

Speaking at a meeting of the chief executives of top companies, Medvedev bragged that Russia had a legal system comparable to that of Europe and a better foreign investment law than the United States. "I think the predictability and readiness of our legal system is quite high," Medvedev told investors following criticism of a new law adopted last month that restricts foreign investment in economic sectors including energy. "I think that our oil and gas sector has become more civilized," he added.

"There seems to be a very open dialogue with the new leadership of Russia," said Muhtar Kent, the head of the Coca-Cola Company and one of the participants at the meeting, adding that the talks had been "business-like."

The president also said on Saturday he would turn Moscow into a major world financial centre and told investors not to be afraid of growing investment by Russian companies abroad, saying it was not "speculative or aggressive." Under his predecessor Putin, Russia's economy expanded steadily on the back of soaring energy export revenues. But international experts say it has recently shown signs of overheating.

There is also growing concern about foreign investment risk because of the fate of TNK-BP, a Russian-British oil company riven by infighting between BP and its Russian partners, and also facing tax probes from the authorities.

The dispute is seen as a test case of Russia's approach to foreign investment under Medvedev after several high-profile rows between his predecessor and major foreign investors in the energy sphere. "The resolution of this dispute... will send a very strong signal, positive or negative, about the environment for investment in Russia," Andrew Somers, head of the American Chamber of Commerce in Moscow, said at the forum.

Gutierrez said: "What interests companies and what the world is looking at is how the problem will be dealt with.... What the international community would like to see is that it is dealt with in a manner that is transparent."

Robert Dudley, the chief executive of TNK-BP, was due to address the forum on Sunday as part of a line-up of energy leaders, including the heads of BP, Chevron, ConocoPhillips, ExxonMobil and Shell. Dudley said that he had "no indication" that there could be a change of ownership at the company amid speculation that state gas monopoly Gazprom was planning to buy a major stake.

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