Donald Trump is no help for Vladimir Putin in making glitzy forum great again

Moscow: With an admirer now in the White House and Russia’s longest recession in two decades finally over, Vladimir Putin’s annual investment showcase in his native St. Petersburg was supposed to be different this year.

Modelled on the World Economic Forum (WEF), the St. Petersburg conference, which starts on Thursday, has yet to recover from 2014, when the heads of major Wall Street banks like Citigroup Inc. and Goldman Sachs Group Inc. were pressured by the Obama administration to cancel over Putin’s annexation of Crimea.

Under Donald Trump, US attendance will still be weak, more because of tepid economic growth than concerns over Ukraine-related sanctions or the probes into possible Kremlin collusion with Trump’s presidential campaign. The US ambassador plans to show up this year.

“Positions have morphed from ‘don’t go’ to ‘don’t get photographed’ to ‘we don’t care,”’ said Chris Weafer, a forum veteran and a partner at Macro Advisory in Moscow. “The economic case for companies to attend just isn’t there.”

While Putin has restored the Kremlin’s geopolitical swagger with military forays into Syria and Ukraine, his economic record has been less impressive of late. Russia’s economy has slowed every year since 2010, even before the crash in global oil prices triggered a recession that lasted almost two years, and it’s only recently limped back to growth.

The main event of this year’s forum, aside from Putin’s keynote speech, will be the panel discussion that he and Indian Prime Minister Narendra Modi will participate in. The moderator will be NBC News television journalist Megyn Kelly, in what’s become a tradition of selecting Americans to perform that role.

No relief

Any initial hopes of sanctions relief from the Trump administration have been buried in the swirl of revelations that have led to a federal probe of alleged links between the US billionaire-turned politician’s election campaign and Russia that now threaten to engulf his son-in-law, Jared Kushner.

For now, the Kremlin will have to be satisfied with incremental progress, such as US ambassador John Tefft’s plan to attend the forum, according to Alexis Rodzianko, who runs the American Chamber of Commerce in Moscow.

Foreign banks, which once dominated in Russian Eurobonds, continue to avoid the event. The government last week hired VTB Group, a state-run lender, for the country’s first Eurobond sale of the year. In 2016, Goldman Sachs and at least five other US lenders that were approached by Russia dropped out of the bidding to organize a bond sale after Washington warned them off.

“The banks will be there in some form, but will keep it low key,” Rodzianko said. “This matches a survey we did after Trump’s victory. The expectations of businesses with feet on the ground in Russia were for no significant improvements. I’d be very surprised if senior executives from oil majors aren’t there—and just as surprised if they tell journalists their plans.”

Tillerson, Woods

Among the roughly 200 accredited representatives of US companies, most are regionally based and only a handful are chief executives. And one of the most prominent CEOs expected to attend, according to a person familiar with the matter, isn’t even listed on the program: Exxon Mobil Corp.’s Darren Woods. Woods’ former boss, secretary of state Rex Tillerson, ignored the Obama administration’s advice last year and resumed attending the forum.

The heads of several European oil companies, including Total SA, Royal Dutch Shell Plc. and BP Plc., are listed as panelists on the forum’s schedule, unlike their American counterparts.

Even politically, the forum has less firepower than in years past. The main speakers at the plenary session, aside from Putin and Modi, will be Austrian chancellor Christian Kern and, according to organizers, the pro-Kremlin president of Moldova, Igor Dodon. The opening ceremony will feature United Nations secretary-general Antonio Guterres.

Fewer leaders may mean more substance, according to Dan Russell, the head of the Washington-based US-Russia Business Council.

‘Let’s See’

“It may be better to have a key decision maker for emerging markets attend than a CEO,” Russell said by phone. “Everyone loves to see well-known Davos-level participants attend the forum, but if you want to get practical stuff done, give me someone who focuses on business in Russia.”

Putin is widely expected to run virtually unopposed in the presidential election next year, and foreign investors may be taking a wait-and-see approach to whether the Kremlin plans to shift from geopolitical concerns to prioritizing economic development. There are currently competing reform proposals prepared by former finance minister Alexei Kudrin, economy minister Maxim Oreshkin and the Kremlin’s business ombudsmen, Boris Titov, vying for Putin’s blessing.

“Actions speak louder than words,” Macro Advisory’s Weafer said. “The prevailing attitude is let’s see what reform policies will be implemented after the elections and, perhaps more importantly, who will implement them.” Bloomberg