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SPIEF: A window into Europe, Asia or both?

‘From here by Nature we’re destined
To cut a door to Europe wide,
To step with a strong foot by waters.
Here, by the new for them sea-paths,
Ships of all flags will come to us –
And on all seas our great feast opens’

 Pushkin – The Bronze Horseman

When people ask me to describe the difference between St. Petersburg and Leningrad in a few words, I always suggest that they look at the origins of the city’s two faces.

Leningrad was borne in the flames of the Bolshevik revolution and the name paid tribute to one of the most tragic and controversial people in the history of the country. However, St. Petersburg was envisaged as a merchant port and a centre of commerce for the Russian Empire back in 1703. Few but the experts recognise that the port of St. Petersburg was on par with other great merchant ports of Europe at the dawn of World War I. However even fewer realise that long before then, the moors and swamps on the banks of the river Neva formed the starting point of the trade route between the Vikings and the Byzantine Greeks, making it one of the most lucrative trading routes of medieval Europe. As such, I find it only natural that the country’s most significant international event, the St. Petersburg International Economic Forum (SPIEF), is hosted by my hometown (18-20 June) and is in its 19th year.

A number of major papers, including the FT, were quick to report that this year’s SPIEF will be returning to “business as usual”, suggesting that the current level of political pressure on international business leaders to abstain from participating is significantly lower than last year. However, one might argue that the damage has already been done, and that this year’s activities under the city’s trademark ‘white nights’ will differ greatly from previous years. 2015 will inevitably see more of an eastward focus; Russia’s pivot towards Asia has been the subject of several of my posts (12 and 3). Even a quick glance at SPIEF’s programme leaves no doubt as to the focus of the event and in fact, three out of four opening sessions are Asia-specific. As the Russia & India Report recently noted, the Chairman of the Forum Sergei Belyakov has stressed the growing importance of Asian ties, both economic and socio-political. These ties are said to be so significant that the same foundation which runs SPIEF is increasingly promoting its sister event to be held in the industrial city of Krasnoyarsk, which by Siberian standards is a stone’s throw away from China, Kazakhstan and Mongolia.

This year’s Forum follows the signing of a cooperation agreement in March between SPIEF and its Asian counterpart, the Boao Forum for Asia (BFA), an event widely covered by the Chinese publication People’s Daily and RIA Novosti in Russia. Held since 2001 in Boao, on the Chinese island of Hainan, the event has started to emerge as a “must-attend” for the “who’s who” in the Russian investment community, similar to what the French Riviera’s MIPIM has been for Russian real estate. Furthermore, quite a few attendees took notice that the Chinese resort is in many respects as established as its European counterparts, that look to lose as much as 40% of Russian business this year compared to 2013. The BFA also organises numerous sub-forums and meetings relating to Asian issues, the next of which will be held in Sydney in late July and is focused on growth, strengthening SPIEF’s Eurasian reach.

In my opinion, it would be short-sighted and misleading to attribute this change in focus only to the current political issues that saw some major Russian borrowers effectively shut off from western capital markets. It is more likely that the current crisis forces Russians to properly assess the country’s unique geographical and cultural position between Europe and the East, and start to realise the enormous benefits that may come from the successful shared knowledge between the Russian and Asian markets.

In particular, attention should be given to the Chinese ‘Silk Road Economic Belt’ initiative and the Russia-backed Eurasian Economic Union, as the synergies of these two major initiatives could bring considerable disruption not only to the emerging markets (EMs), but also to the more established European markets. As Russia Beyond the Headlines reported, signs of fruitful cooperation are developing, not least because the presidents of both countries agreed to harmonise these initiatives back in May.

Furthermore, a recent interview in Rossiiskaya Gazeta with Sergei Karaganov, Dean of the Faculty of Global Economics and Politics at Moscow’s Higher School of Economics, also addressed this very subject. Like many analysts in Russia, Karaganov is realistic about the need for a healthy balance of cooperation and competition between visions for Eurasian connections. However he is also optimistic regarding the likelihood that Russia, China and their other partners will succeed in creating a ‘Greater Eurasia’ (‘Большая Евразия’) development area by playing to their respective strengths. This year, SPIEF could help to bring about this objective, and offers a chance for key players to discuss the implementation of specific projects, such as the recent financing agreement between Russia’s Sberbank and the China Development Bank (Wall Street Journal).

Echoing Pushkin’s masterpiece, St. Petersburg is playing host to the world this week. I find this passage from The Bronze Horseman particularly apt:

‘Then on the widest Square of Peter,
Where with his glass a new pile glittered,
Where on its porch, too highly placed,
With their paw raised, as if they’re living,
Stood two marble lions, overseeing.
On one of them, as for a race,
Without his hat, arms – tightly pressed,
Awfully pale – no stir appeared –
Evgeny sat’.

The lions in The Bronze Horseman are due to welcome the participants of SPIEF this year (and hopefully for many years to come).  However, their placement within the city could prove tricky for non-locals, as over the years both the name of the square and the function of the original palace which they guarded have changed. These days they mark the entrance to the Four Seasons Hotel in St. Petersburg that was fully booked for the event months in advance. Those attending who are particularly keen could try climbing on a lion’s back to take a selfie, mimicking Evgeny’s famous pose. For those who are unable to attend SPIEF this year, there will still be an opportunity to experience at least part of its atmosphere and to get a glimpse of the lions, as Bloomberg TV will be broadcasting the event from the top floor of the hotel.

However, a more interesting question is whether the business leaders in attendance should be wary to the same degree that Evgeny was about the foul weather. The only difference being that Evgeny was concerned about the flooding and storms, but today we are bracing ourselves for further turbulence in the EM’s capital markets.

In my humble opinion, they should not look with prejudice to the Asia pivot of SPIEF 2015. Perhaps Asia has been underestimated in Russia’s previous plans regarding economic development, and a more balanced Eurasian outlook will prove better in the long run, not only for Russia and the EU but also for China and other major Asian economies. Russia’s transcontinental focus, highlighted by the events at SPIEF, may see St. Petersburg not only as a window into Europe, but Asia as well.

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