 Hei, wrth gwrs. Welcome to this round table, a no table, the round table without a table on the future of Russia. My name is Charles Grant from the Centre for European Reform in London. We've got five very distinguished panellists. We're going to hear from them all because we have only an hour for the whole session and many distinguished experts in the audience. No speeches allowed, just a brief opening question from me to each of our panellists. And then we'll have plenty of time for discussion from the floor. Now, if you want to put in a question, you can email to me on rusheratwef.ch or you can send a tweet to hashwef underscore rusher. And your comments will come in and we'll take some of them. But you're allowed to stick up your hand the old fashioned way if you prefer as well. I think there's at least four questions I hope we touch on today. One is the politics with Putin's third term. What does that auger for political and economic reform in Russia? Does the recent chill in US-Russia relations matter? I think we need to talk about energy as well with the restructuring of the Russian energy industry recently announced and the dip in the oil price. Let's talk a little bit about energy and whether a falling oil price is good or bad. Thirdly, we should talk about privatisation because the government does, I believe, plan to privatise various things. Will this transform the economy? What will happen there? And finally, with Russia just entering the World Trade Organization, I think we should talk about the WTO and its impact on Russia. I'm going to turn first of all to Rustam Minikhanov, the president of Tata Stan. I'd like him to give us perhaps his thoughts on whether the return to power of Putin is good or bad for reform in Russia. What do you expect to see in terms of reform in Putin's third term? I will speak from my own side as a regional leader, to express my personal opinion of a regional leader. What can we say? Vladimir Putin is a person with vast experience. He has already served two presidential terms. And of course, he's got a vast experience of managing his government. The fact that he's back as a president for the Republic of Tata Stan and for me personally, this is an understandable person. He's a person we can read who sets clear tasks. We're therefore welcome it. The Republic of Tata Stan supports Putin's policies and many processes that are underway in the country at large, touch upon our republic, and that's all thanks to the relationship between us and all thanks to President Putin's attitude towards Tata Stan. We have large-scale projects. The Republic of Tata Stan is one of the most dynamically developing regions and all our initiatives, petrochemicals, oil refining the new oil refining complex we have commissioned were supported by federal leadership of Russia. The world student games that had used to take place in Kazan, the World Cup in 2015 and 2017, Kazan is part of all these huge undertakings and of course Putin's part in that is huge. I don't know. People have different attitudes to Mr Putin. They paint him in different colours but my personal relationship with him, my personal meetings with him show that he's a man I can read. He speaks clearly and he does what he says. He's a man who wants to change our country, wants our country to be powerful, stronger. We, of course, join him in these wishes and endeavours. We're there for support, Putin's policies. Thank you very much. Elena Popova, you work for an NGO in Moscow. You probably have a slightly different view of Putin's return but as you're part of civil society, tell us, do you think that civil society has the potential to change Russia and also you know the small enterprise sector well? Do you think small companies can do a lot to transform Russia? My point of view is that the huge question is not who but why. The answer is that we got a new civil society and we got a lot of crowdsourcing, crowdfunding projects and we can help each other and this is a huge, huge reaction on the Putin selections. I didn't get any words about who is Mr Putin, why is Mr Putin and so on and so forth. The main question is the economy of my country. I am there, I walk there, I didn't emigrate to any other country. I have my own business there. I have a virtual incubator for women and startups and this is the hugest one in Russia. I have a virtual incubator for social entrepreneurship and I can develop all this stuff. But the main question is that we should destroy all this corruption structure at all with the help of small enterprises. That's why we should decrease but not increase taxes. We should help with the credit for them. We should help with good promotional sphere for them. Okay, thank you. Let me turn now to Andrei Kostin, the boss of one of the biggest banks in Russia. The Russian economy famously is quite unbalanced. It's very dependent on natural resource exports. Needs to do more to develop service industries manufacturing. Your bank will play an important part in rebalancing Russia. How significant do you think are the privatisation programs that the Russian government has announced? Will they transform Russia? Are you optimistic about their potential? It's extremely important, though it will not solve all the problems of the Russian economy including the problem of modernisation. But privatisation is very high on the agenda for Medvedev personally, for Medvedev government. And actually later this week the Russian cabinet will meet to decide the exact timetable for further privatisation. It looks like that we expect quite a broad privatisation. There's about 850 companies on the list. But there's a very short couple of issues which arise from this problem. First of all, how this privatisation is to be done. Because we had a bad experience in the 90s when so-called culturalised auctions or whatever provided the ownership to very specific groups of businessmen in Russia without paying much for this. Definitely there is a number of influential businessmen in Russia who would like to repeat this. And I think that will be extremely wrong for Russia if privatisation goes this way. I think the Medvedev government understands the importance of her transparent and open privatisation process which will include the foreign investors. Secondly of course there will be a position to this process. I see that certain influential members of business community also trying to postpone the privatisation in certain areas like energy sector for example. And the third of course that the market is not very favourable for privatisation today as we see there is a lot of problems for many companies to be listed in the market today. So I think those who should take into account how much we can sell. But coming back to my first statement, yes privatisation is very important. There are leading companies on the list including VTB which the government announced ready to sell up to 100% stake. It includes other blue chip companies in Russia so the answer is yes. I think it's very important for Russian economy though again it will not resolve the issue but will be a very big step toward the right direction. Right. Let me turn now to Fatih Birol, the chief economist of the International Energy Agency. International Energy Agency. Fatih, we've heard about privatisation but another part of the Russian government's agenda is to restructure the energy industry. We've had some signs of that. How significant do you think that will be? More generally, do you think the falling oil price is good news for Russia because it might force it to take some of the structural reforms that it's been avoiding? Was it bad news because it will make it harder to fund the budget? Thank you. First of all, I don't think that the prices have fallen, they are 99%. It may be low for Russia but very high for Turkey, I can tell you that, or for many countries. Now the structural problem for Russia is, and I don't think that the Russian policymakers take it so seriously unfortunately, it is very much relying on energy revenues. This year, with the current prices, Russia will make a handsome $400 billion from oil and gas import bills which is about 25% of the GDP. I know that the Russian president recently made a statement, similar to previous statements, that they want to diversify the economy. This will be very wise and if it is implemented of course, and there are two major risks today to justify why diversification is important for Russia. One, currently Europe, the main customer of Russia in terms of gas, is going through very difficult times in terms of economy and European gas demand in the year 2011, as a result of the low economic performance, declined about 10% and went back to the level of 2010 years back. So there is no gas demand. And therefore, the exports from Russia, which is again the main customers Europe, is affected from that. This means there is a vulnerability for Russia vis-à-vis the economies of the others. This is the one structural problem. Second, more importantly, a key topic which is being discussed in this forum since yesterday, in fact the private part of the forum. There is a shale gas, unconvention gas revolution taking place in many countries in the world, in US, China, Australia. And there are new competitors with substantial amount of gas export potential are coming. New Russia's are coming with different type of gas. So, therefore, the market for Russia may be tightened and there will be a pressure on Russia as it will not be the only dominator in terms of the gas markets. So this again highlights the vulnerability to the new technologies in the energy and to put Russia behind the queue. So these two elements highlighted there is an urgent need in Russia slowly but surely diversified its economy. This is the one point I wanted to make. And the second and the final point I want to make is that you mentioned modernization. In terms of energy, it means using energy more efficiently. And Russia today uses energy as inefficient as many sub-Saharan African countries efficiency levels. So in order to produce one glass, the amount of energy Russia uses is about five times the European use for the same glass, five times more energy. So, therefore, Russia is putting, throwing a lot of money out of the window by investing the energy because of how the technology is put in place, the regulations are rather poor and insufficient and the prices are highly subsidized as a result of that. So I think these two subjects for Russia at the energy front is at stake, namely restructuring the economy, go away from the energy, look at the other options and second, modernize the energy use and use it more efficiently. Before I bring in Dennis Moritzoff, let me just turn back to Mr Mini Karnoff, the president of Tata Stan, having heard what Fatih Birol has just said. Do you think in your republic you can do more to promote energy efficiency? Are you worried at how inefficiently perhaps in your republic like other parts of Russia energy is used? What can be done? Are prices too low? Will your citizens in your republic be happy if prices are raised as Mr Birol says they should be? To be honest, Russia does have a lot to do, has to work very hard on its energy consumption. Not just energy consumption, resource consumption has to be modernized. But you have to understand that we lived in a totally different political system. We had a totally different country. We had no problem with supplies of gas, oil, metal etc. It was a planned economy and things just fell from heaven. Now today in Tata Stan, starting from the year 2000, we've been adopting energy conservation programs and since then twice we have adopted energy and resource saving and efficiency programs. As our GDP grows, and I remind you it grew by six, seven, eight percent at the moment, our rate of growth is about five percent. But as we grew, our energy consumption has not increased so this energy saving program has borne fruit and we are managing to stay energy neutral with our growth. Another very important segment is residential sector and utilities. You cannot change it overnight. We need different standards in terms of heat conductivity, insulation, metering standards and systems. All of that takes time in the last four years. We have refurbished 9100 blocks of flats and there's just half of what we need to refurbish to be more energy efficient. We cannot do it any quicker. From 32 trillion tonnes of oil that we produce, we refined only seven last year we commissioned a new plant. It's become 14 million tonnes so we don't just refine crude oil. We would like to reduce the risks. But we have decided for ourselves that will expand petrochemical industry and there are many projects like that in Russia. But in order to build a refinery, it takes two years to design it, three years to build it, one year to commission it, so five to six years it takes to build such a facility. The new standard now from 2015 of fuel oil will be taxed more severely and that will mean that will incentivize deeper oil conversion, deeper refining, getting rid of these heavy, dirty products and going into lighter products. Russia needs time. You know, Russia is a behemoth. We cannot turn around in a moment from being communists. We cannot become market capitalists overnight. We cannot revise and review everything overnight. Huge projects are underway. We're building new residential spaces, following new building standards. But that takes time. In terms of price for crude oil, the price will be as it would be, would never really fall. Shell, gas and heavy bitumen oil will not reduce the price a lot because these are very costly industries, very costly technologies. The price for traditional oil gas may fall a little bit but not on any large scale. So, we, for instance, we have huge deposits of bitumen oil, heavy oil. We're working on technologies to produce it. I think hydrocarbon resources of Russia are huge and we have to be, we have to be focusing on refining, on petrochemicals and refining and we should really look at gas chemical interest. We should not depend on exports of national gas so much. I agree with experts. We must be more active in developing gas chemical complexes. Thank you very much. As you say, it will take a long time to change Russia but one thing that might speed up the change is the WTO. Dennis Morozoff, you're an executive director at the European Bank for Reconstruction and Development. You've watched Russia negotiate for 18 years before it decided finally to join the WTO. Is this going to help to speed up modernization, change, rebalancing within Russia or should we not get too excited about it? Thank you very much. First of all, this is true that it's not going to be very easy and fast to change Russia and to exactly right that it took us, not 18 but like almost 19 years to negotiate the term of the session to the WTO and finally we are joining the club right after 19 years of negotiation. According to the working party report which was approved by the ministerial conference in December, Russia agreed to lower average tariff to 7.8% from current 10% as of June 2011 for manufactured goods. The average tariff will be cut from 9.5% to 7.3%. It was a big debate in Russia if it's good for Russia to join the WTO or not because of course some industries and producers will suffer for actually more competition. I would say that first of all Russia managed to negotiate quite a good terms of a session. First of all tariffs would be initially declined to mid 2007 level and anti crisis protection for the sectors is to be lifted. Russia managed to protect its most vulnerable sectors, auto producers in the agriculture by attending seven and eight years transition periods and when we talk about for example insurance sector, insurance companies will be able to open 100% subsidiaries in Russia only after nine years from Russia joining the WTO. So is it good or bad of course my personal position this is very good because Russia joining the WTO would enhance competition and reduce the cost of imported goods which is immediately beneficial for Russian consumers and might promote industries to modernize. It would also help Russia to improve its institutions and first of all when we talk about customs administration it will be much more efficient and Russia has already agreed to reduce custom clearance fees by almost two thirds, I mean maximum custom clearance fees and also in terms of government procurement it will help a lot to build institutions. Also clear rules on investment and resolving trade disputes could stimulate investments in the mid term and this should be achieved and give quite significant increase in GDP growth in the short term by 28% mid term by 3% and in the long run by 11% according to the World Bank and this should be achieved through the more efficient location of resources and greater competition. So and I believe this is very good and it will help actually Russia to modernize and improve competition and rebuild public institutions so it's a very good achievement. Glad to hear such an optimistic view. Do your predictions for the benefits of WTO membership apply kind of whatever happens to governance in Russia or are you working on the assumption that governance will improve? Yeah, first of all I believe that governance will improve anyways because it's one of the implications of the current stage of economic development of Russia. So Russia is in transition as you named this session and this is absolutely correct because first of all Russia achieved a lot during the last 20 years and it was a huge development since 1991. Also Russia achieved a lot coming back to the first question if it's good or bad if Mr Putin's coming back. First of all he's not coming back because he didn't leave. He always stayed there and he was pretty much engaged but if you remember Russia how did it look like in the late 90s Russia actually was on the edge of the collapse, of the political collapse, economic collapse. Russian government achieved a lot during the last 12 years of course on the back of the increased commodities and all gas prices but in the meantime Russian GDP doubled over the last 10 years. Russian middle class increased significantly and right now we have a different agenda and from my personal point of view the fact that Russian middle class is increasing, the fact that people are getting much more engaged. They want to be involved in the political process and we saw that since December 2011 elections this is a very good and positive development. And Russia is changing, Russia is changing economically, Russia is getting more independent and mature and it will bring new agenda and issues that Russian government will have to deal with that. I'm also very optimistic that Russian government will also have to introduce significant political reforms in years to come in order to comply with the current stage of the country's development. Well that's very interesting to hear that optimist. Before I bring in our other panellist to see if they agree with you on your optimism I have one tweet coming in from Bulent Cheleby. Well I gather it's about the difficulties of importing products into Russia legally and you want to know what's being done about this. I think it follows on from Mr Morozoff's comments on governance. Would you like to explain your question and is there a microphone for Mr Cheleby? I mean importing products into Russia following the legal rules and the certifications and paying the tariffs and things like that. I mean that's what we do but our competitors don't and they end up having a significant cost advantage because of that. And I'm just kind of curious as to if there are any actions that are being taken to normalise all the stuff so that we can all do business in compliance with the Russian laws. So your question is really what's being done to tackle corruption. That's part of your question. Well we don't have a spokesman. I can take this question actually. Okay well quickly yes. Yeah first of all it's quite difficult to comment because I never important goods in Russia illegally. So running two largest Russian companies before that actually always did it legally. So that's why it's quite difficult to comment. But first of all joining the WTO Russia will have to leave certain will have actually to improve customs administration. As I told the maximum customs fees will be decreased by two thirds. And as I remember in March this year then President Medvedev signed anti corruption plan for the next two years for years 2012 and 2013 introducing concrete measures that should be achieved in order to decrease the level of corruption in Russia and also with regard to the customs regulations. Yeah first of all it will be like special education programs for customs officers. I don't know if it's going to help or not but at least when people will be educated about it and when they will have a clear understanding what applications are. This is actually good to hear. And also as I remember there are like certain concrete measures actually addressing these problems and you can check it on the criminal website. OK well very yes. You know the main the main question of that we don't have any rules because these rules are changing in the process. And this is a huge challenge for everybody because we don't understand how to play in this game. And this is a huge challenge for the whole economy because our economy isn't effective at all and we should change a lot of things like to make it more transparent for everybody to make it more understandable for the foreign players. And my questions for foreign investors. So why are you not so active in Russia. What are you afraid of. So this is the main question for everybody. And we try to make our economy more effective for small businesses to develop our own stuff inside the country not outside the country. OK. Well if there are people in the room who are foreign investors in Russia we'd like to hear from them. But let me turn to Andre Kostin. We've talked already about privatisation. Do you think privatisation in itself can help to improve governance reduce opportunities for corruption. And do you do you see the government. Are you as optimistic as Mr Morotsoff that the new government in Russia is really trying very hard to improve governance. Well not necessarily because what we see in some Russian private companies or listed companies with no government participation sometimes much worse in corporate governance than in state run companies. So I think there's a question of general improvement of corporate governance. On the other hand I would like to say that in Russia on one hand we have too much state. If we talk about the direct involvement in the economy. So the state owes the banks and companies. On the other hand I think that we definitely need to strengthen the mechanism of government regulations. You know that's what works in America definitely the anti monopolist committee is much stronger vehicle than in Russia. And the same applies to other Russian institutions. So in Russia the businessmen prefer to find access to Mr Putin Mr Medvedev to resolve this issue rather than go to the whatever committee which exists in Russia in order to strengthen his case. So I think that should be definitely improved that we should have privatised economy but with a better regulation on part of the government offices which we should do it in a proper way. Fatih Birell what would be your advice to the Russian government on how to handle its energy industry. You observe energy industries all over the world. You've seen that the government is planning to privatise parts of it but there's some questions as to whether the state will really loosen its grip or not. What would be your advice to people in Russia? So there are many things that one could suggest the Russian government to consider but I can perhaps say two of them. The first one is again I insist on this energy efficiency thing. This is not only an ideological thing this is not for the environment which is very important but let's put it aside. It's a money story. It's a finance story. I imagine that today Russia makes most of the revenues from gas exports and today Russia exports 180 BCM just put in my 180 units. If Russia brings its energy efficiency level technology in line with Europe let's say UK in ten years of time Russia would save at home 180 BCM on top of that. So it means Russia would double its gas exports without increasing the production just saving the wasteful energy at home and selling it outside. So this is a very simple mathematical economical story. Save at home and save it outside. This is one. Second, Russia now has to develop new and more challenging oil and gas fields. The new generation of the fields including Arctic will come in the picture and this would need according to our estimates about 100 billion US dollar of investment each year for oil and gas investments and up to date new technologies because they are more challenging than the existing ones. Therefore I do not think that Russia can bring this money bring the technology only with the state owned or state directed industries. There is a need to get the multiple players there from outside of the country in line with the Russia's rules and regulations and any signal, any wrong signal given to the private investors would be definitely in the medium term getting back to Russia in terms of lack of investment therefore not being able to increase the production. So I think Russian policy makers should be careful what kind of signals they are giving to the private investors in terms of energy industry. You are implying that they are not giving entirely the right signals at the moment? I think there is a substantial room for improvement there. Right, right, I think you are probably right. I would like to encourage people to come up with some questions. Ah, we have suddenly got a whole load of questions. No, those are statements. On questions coming through to my machine I have only got one but people can either tweet, email, put up a hand or give me a bit of paper. I am going to bring in Lord Mandelson in a second into the debate we have with us and I gather there may be a Mr Simono from GDF who would like to contribute. Do we have him in the room? No, maybe he is not in the room after all. Time to put up your hands or to send a tweet if you would like to ask a question. Is that the gentleman behind me who I can't see because he is behind me? Would you like to ask a question and introduce yourself? Thank you. The PE ratios in Russia are less than half than in the rest of the industrial world. Is this being addressed, is there any concern to do measures to change this? Okay, would you pass the microphone to Eric Berdloff from the EBRD? I thought you wanted to ask a question. Sorry, sorry you don't. Okay, in that case we will have a question over here. Yes, please. Yes, I am George Sussman from GDF Suez. I have one question for the lady. You are asking investors what problems they have. I am a business angel so I invest my own money in small businesses. I understand. There are some hidden obstacles we believe in certain fields, for instance in the field of infrastructure or water or energy efficiency. Those are the rules, the regulations or the rules between the states and the federal government. Another one is the legal system and the protection of foreign investors. These are two things that are not too much talked about but that can make a very big difference because if you have to invest for the long pull, you need to have some stability in the system so I wonder if anyone could comment about that. Okay, we will come back to our panel in a second. Let's take a few more questions. There was a hand over here and then we got a few tweets coming in as well. Roland Nash from Vernau Capital in Moscow. There is one area where Russia is undoubtedly a world leader and that is talking about reforms. We have been talking about reforms for the last 15 years and not only that, we have been talking about the same reforms. Diversification away from energy, privatisation and so forth. We have a new government in Russia now and I think actually a pretty good government. Does the panel think that this time around it is going to be different and we will move on from talking about reforms to actually implementing some of these really quite difficult reforms? That is the key question. Let's take one more point from Lord Mandelson. Would you like to, as a former trade commissioner who dealt with Russia a lot, perhaps you have a particular view on whether WTO membership will really make a difference or not? Let's hear your view. I think that once Russia is in the WTO and operating as a normal member of the WTO over time, and I mean over years, there will be a very positive beneficial process for Russia. I think Russia will reap huge advantages, not because there are going to be events or that people can push buttons and pull levers and see dramatic changes happening overnight. By means of a process, progressively Russia's economy and its trading links and the investment will all be normalised. I think normalisation of Russia's economy, the way in which markets operate, the way in which the state should play less of a role, not that the state should play no role, there should be a sort of more normal mixed economy operating in Russia in the way that it does in the rest of Europe. But I think Russia also has to be very conscious, and you may have touched on this, Charles, before I came and I'm sorry I wasn't here at the beginning of the discussion, but when TNK BP sort of erupts all over again, I think Russia has to be deeply conscious of the impact this sort of behaviour has on the international investor community. It suggests that an international investment in Russia will not take place or operate or enter or exit in a normal way. And where there are not normal conditions and normal rules and normal conditions of behaviour operating, confidence will drop. And as members of the panel have already indicated in an area like the energy sector, but there are other natural resources and related sectors where Russia's potential is absolutely huge, but where it needs international investment technologies, management expertise to come in and help realise that potential. What sort of signal is given to the international investor community when we see the sorts of actions and behaviour of the Russian side of these individuals who I think are acting, not only in a way that is sort of completely un conducive to any sort of normal good commercial business investment relationship with a company like BP, I think they're doing colossal damage to their own country, to Russia itself, because of what it represents and the message it sends. So I'd be interested in the panel's views on that. OK, well that's a lot of questions we've had coming in, and I don't have the tweets, they've finally come through on my small screen. We've got a few tweets as well. Let's start off with the questions we just had. One on PE ratios, one on the obstacles to investment in SMEs, one on from Roland Nash, will the new government be really serious about implementing reform and then Peter Mandelston's warnings on Russia not treating foreign investors in a normal way? Let's start on my right and work on the table. Dennis. Yeah, maybe just a few quick comments. On the relation of the Russian companies, where we are, and this is the outcome of a number of problems that we have today. First of all, and the biggest problem for my personal point of view is very little diversification of the Russian economy. As Mr Birrell said, over 61% of Russian exporter revenues came from oil and gas sector last year. So that's why the Russian economy is not diversified and it's very vulnerable. And what we saw during the last couple of weeks when the oil price dropped from $150 per barrel to $100, Russian ruble depreciated against American dollar by, I believe, 14%. And Russian stock market collapsed by almost like 25%. And the biggest question is like, why it still produces or the largest bank suffered from it? Because like the whole Russian economy is so much dependent on oil and gas revenue that it really affects overall business climate in Russia and overall valuation of the Russian company. So first of all, we have to diversify. Second, definitely we have to improve corporate governance. And of course, like Russia has to introduce better practices in order to treat foreign investors better than it does right now. But also, as Mr Coiterson said, a number of Russian companies and private companies stationed with corporate governance is even worse than the state companies. And for example, I used to work for many years for Narisse Knickel. And today when Mr Pattain, with all my respect, is chairing the National Corporate Governance Council. And in the meantime, everyone knows what is going on in Narisse Knickel. Maybe it's a bad signal for investor community how Russia seriously taking this issue. On Mr Madison's comment introducing bad practices, I would also argue that when BP decided to do the transaction with Rosneft, they probably didn't reach the stock shareholders agreement first, right? And they just decided to go to the Russian government to make a deal without respecting the rights of the Russian shareholders and partners. And basically, this is exactly the practices that foreign investors sometimes introducing on the Russian market. So it's not like black and white and it's always true. BP's not perfect. Elena? I should answer firstly for that question because I totally agree that our government talks a lot but never act like that. And this is the thing that we should change with the dialogue with civil society, small businesses, enterprises, investors, foreign investors. And this is a huge question how can we build this bridge between myself, my government and you for example. Because you ask me, I live in my country but you live outside and we need to build a huge economy like inside country, outside country and earn a lot of money. Because our family would like to eat a lot and this is a huge question. And the second thing is that a good signal is that a lot of people start to talk a lot about legal systems. And it's not about just legal system at all. It's all about how it works so now it doesn't work. And we should act like we know the laws and we know how to act like according to this laws. And we should start from ourselves firstly I think so. And now it's a good signal, please come to me and we can have a dialogue. And I have a dialogue with our government, with our civil society, with small businesses and maybe in this case we can influence on some processes inside my country. But the third thing is that I'm sure that our government now is a technical thing. It's not about the personalities, it's about the whole structure. And the whole structure is an old structure. And the modern world should influence on how we change it, the change, you know, the diversification of economy. The change the dialogue, the change the principles of our economy at all. And this is a structure not about like certain so-names. I think I will start from the corporate governance, not only corporate governance, but also the governments on the level of the state and also of the municipal power. This is also a huge gap and we have to admit that we have to educate people. We should not just call this as a new system of governance, we have to educate people. The whole program are garish, where together with the government we decided to teach people. And also we have the corporate programs and we use here the experience of Singapore and we have agreement with Singapore. So that's why this process is a very long-term process. If somebody thinks that today we talk about this and tomorrow we already have the effective system of governance, this is not the case. We have to teach our youngsters for them to be integrated into the world community, for them to know English language. And in this regard, I think that in the case we have the wish, we will have improvement, but this needs time. With regard to the smaller, medium enterprises, we have to understand why, yes, smaller, medium enterprises means middle class. But we always were saying that to be rich is a bad thing. So that's why just to change mentality of people and to make people to be owners, this is not just easy task. And I'm speaking in real terms now, yes, for instance, the 26% of our population lives in rural areas. So that's why for them to get credits, it means that we have to explain that this is a good thing for this process to start. And secondly, each forms of economy, I'm talking about the family farms or I'm talking about the small and medium enterprises, how to become an entrepreneur, maybe in the West, this is simple. But if you are, you were not being taught in the school on this, if you were not being taught in university on this, if you do not have any knowledge on this, how to do this, how to become an entrepreneur, so state should stimulate this. For instance, I applied to the park and my friend can help me, but with some other citizens they could not be able to get this help. So that's why we have to establish industrial parks, techno parks. And this should be not only the state policy, we have to change mentality, we have to increase awareness of people. We should not bring fish to the table of citizens, but we have to teach them how to catch fish. So the process is very slow. So, for regard to the WTO, of course, this would be the huge challenge, but without this, this is not possible, because we have to understand that more we go, less we get, 153 countries, if I'm not mistaken, are members of the WTO, and they are benefiting on this, why Russia should not get these benefits. And we have to pass this through. And then we will be the full-blaged members. I forgot the last question. Well, I'll give you a chance to come back later. So you can talk, answer it later if you remember it. Andre Costin, perhaps you should answer the question on why PE ratios are so low in Russia, but you might want to answer some of the other questions as well. I'm not answering the question about reforms. The problem is that when things are good, nobody needs reforms. When things are bad, there's much more urgent things on the agenda rather than reforms. I think it will be extremely important that Russia will not miss a chance, particularly if the economy improves, global economy, and there will be a better time for reforms. And I think that if 60% of what the Russian government is now thinking of achieving is achieved, I think it will be a very good result for Russian economy. I think it's vital, vital, modernisation is vital, what my colleagues said about changing the nature of the economy, if less dependence on energy. I mean that is a vital, absolutely question for Russian economy. And I think both Putin and Medvedev understand this necessity, whether they'll be able to realise this program. I mean we have to see, we hear of course very much hope that Putin will be in a position to do this and he will have enough, I would say, political intuition to understand that his future also depends on how successful the reforms are. So basically I think that is a key issue for Russia, for other issues in the investments. I think there's many things which create problems for investments, some of them were mentioned. I think still investors are overheated on other big countries and I think underestimated the opportunities in Russia. I think there's probably too many concerns which don't exist. On the other hand we have the same list of problems like corruption, like red tape, like others, which unfortunately are not resolved and I agree with the person who just raised this issue that we were talking a lot even within the context of Davos on this subject, but we're doing much, much less. And I think here also that's the focus for government, that's the focus for the agenda of Mr Putin for his third term. Fati Birol, perhaps you have a comment on Peter Mandelsen's statement or any other? Two things. One, our colleague mentioned that the Russian government talks about reforms but never implements them. So I work with many governments in the world so just to tell him that Russia is not the only country in the world. So there are many countries like that in the world so you can be relaxed on that side. Coming on the energy issue, I think this is a very serious, an energy investment, a very serious issue for Russia. Today Russia is and will remain the cornerstone of the world energy system. Huge oil, gas, coal, hydropower, uranium resources. But to hear the resources doesn't mean anything if you don't get the right investment, right time and develop those resources. And in Russia there is one danger. You don't need to be energy expert here but energy, the oil and gas fields are like human beings. They are very productive in the beginning of their lifetime. They come to a peak and then slow down and they decline their production. So very strong in the beginning plateau and then declines. In Russia many of the major gas fields are in decline now. And in order to compensate that decline and increase the production, Russia needs huge new generation of development of oil and gas fields and this requires huge amount of investment 100 billion per year and second new technologies to be in place because these new fields are much more challenging geologically compared to previous ones. And yet I believe recent developments show that the Russian government doesn't give the right signal to the private investors to come and invest in the country. And at the end of the day this may well turn out to be many investments are deferred which is a bad news for the country's exports and production and therefore the revenues picture. So I think there is a need to pay more attention to how to treat the investments especially in the energy sector. Thank you. Now I know Dennis wants to come in. I'll bring in you and then I got a couple of tweets about China but firstly Dennis. Just very quick comments. There was a question about whether original authorities have an opportunity to improve investment climate and to attract investments. Yes indeed and Ylaboga for example is one of the best examples because we support foreign investments and also in the Tatarstar region and Ylaboga is the case so where foreign investors want to invest. From talking to doing I personally believe that there are many professional people in the current government and one is coming from also Tatarstan Nikolai Nikiforov. I know that he did a lot in Tatarstan seriously. He's very young, he's very passionate, he's very engaged but also he did a lot. So I saw it myself and I believe that he will be able to implement the same what he did in Tatarstan and Kazan on a federal level and I'm really looking forward to it. Also the final question of valuation of the Russian companies we also have to keep in mind the current macroeconomic environment all those bad expectations that we have today and how we can talk about valuation of the Russian companies when 10 years treasury yield is 2.5% of course investors are putting money out of the emerging markets actually and taking them to the safe heavens. So this also implies and affects valuation of the Russian companies. Okay we got time for a couple of final questions and a tweet from Neil Hardwick given the difficulties some investors face in Russia do the panel believe that future investment monies are more likely to come from countries with similar market structures like China and then Todge22, whoever he or she is says wasn't China's successive liberalisation the better approach than Russia's overnight democratisation. And Daria behind me, you want to ask a question? Yes, microphone please, the lady behind me. Good afternoon, my name is Daria, I'm representing Moscow hub of global shapers I just wanted to make one observation I've been participating to several forums and sometimes it's seen that Russia is just some topics regarding Russia are discussed in like several sessions for instance today I've been to like huge major topics regarding the corruption, regarding the building financial centre and I was so surprised that like no seniors were there like no Russian seniors were there and I'm not blaming anybody, I just wanted to send the message that like we are Russians who started abroad we came back to our country really ready to do our best to promote our country to share our experience with our generation like with our peers I would say abroad just take it from here. If the gentleman next to you wants to keep to 20 seconds you're welcome to have the floor, very quickly. Well it's very difficult, Armen Sarkisian, former Armenian Prime Minister I would like to two things, one related about the recent stories with TNK and loaned old stories with TNK, BP and so on and so forth I have a feeling that at the end of the day there is something which I will call it magnifying coefficient to Russia on the PR whatever happens in Russia is a little bit magnified especially if it's a bit negative one in the world press somehow the same time parallel what's happening in the sales of the shares we saw what happened with the share price of Facebook nobody interpreted that in a dramatic or huge corruption or bad or something philosophical so who can change, reduce this magnifying coefficient from 10 to 1 then Russia becomes a normal country I think only Russians can do that I think Russia is missing a huge opportunity of representing, presenting and talking to the world and telling the right story that's number one, number two another 20 seconds I think for me Russia is not half full or half empty glass like here the one you have here it's half full though with a great potential to become full full if full there are many directions in several sectors that can repeat the success of a country like Turkey 10 years ago nobody will believe 15 years ago that this country will have a huge boom a lot of people ignored the industrial potential of this country what has changed I think what came to this country is low end order dynamism and openness to the world and I wish this to Russia as well thank you very much now we've run out of time but I'd like to give our panellists just one sentence each let's go in reverse order Fatih Birol last sentence from you if I have to pick one line I would like to see that Russia will develop its natural resources energy resources in a timely manner for the benefit of its own economy its own people but also for the rest of the world and to do this Russia needs to attack investments in a bad way very quickly it needs 100 billion dollars per year full stop just worth answering the question you raised I mean whether investment from China and other countries like Gulf will come to Russia the answer is yes whether Russia can repeat the Chinese model the answer is no okay President I want to say that we have to be more open and this is a chance to bring investors and we are dealing with this now actually I'm sure that Russia should be presented like in the foreign markets with the face of young people not 55 plus because I'm so sorry but it's true I would like to change anything which should be presented by young people up to you know 25 years old because they can change a lot they live the real life and they suffer a lot from the structure from the systems, from the credits and so on so forth and they are the owners of the small enterprises and this is my real life thank you for men 55 is just for one 25 so it's a balance yeah also I should say that first of all I'm very positive definitely Russia is in transition we have great opportunities and we have a lot of room to improve but we have really good Russian government and when Alona is saying that Russia is not represented by young people the same Nikolai Nikifor of Minister of Information Technology is 29 years old and still he has done already in Tatarstan a lot Mr Dvarkovic is only 40 who is deputy prime minister Alexander Novok Minister of Energy is 41 so we have very young intellectual people who are very good professionals working in the Russian government right now who understand not only the problems that we have but also they know how to overcome them and make our life better so I'm very positive and I'm looking forward to big changes I'm glad to finish on a positive note thank you to all our panellists for a lively constructive discussion