 There are new opportunities, if we analyze what has happened in Serbia recently, if we look at the Danube initiative of the European Union, so many reasons to be here. If I would choose a motto for this meeting, I know usually people said, young man, go west. I would say today, entrepreneur, go east and start your journey here in Vienna. Mr. Chancellor, can I invite you to open this meeting? Mr. President, thank you very much for the compliments. Excellencies, heads of governments, Vice Chancellor, distinguished guests. It's a great pleasure for me to welcome you today on behalf of the Austrian government. Central Asia and Europe have a lot of common interests and are faced with many common challenges. Enhanced and more effective cooperation between both regions is therefore highly important and Austria is very pleased to host this important event. Thank you very much. Both regions were hit hard by the crisis. Now growth is picking up again and we must ensure that this growth remains sustainable. Innovation has a key role to play in this context, coupled with education, research, development and promoting social standards as you mentioned. Sustainable growth also requires sustainable and responsible energy policy based on energy efficiency and safe and secure energy supply. The terrible disaster in Japan has again shown us that it is necessary to rethink nuclear energy production on a global level, with the ultimate goal of fading out of nuclear energy. As early as 1978, the Austrian people decided not to produce nuclear energy on its territory. It was a referendum and people decided it. Currently we are working on a strategy to phase out all energy imports from nuclear sources by 2015. But therefore it is necessary to talk about green technologies and green technologies offer a visible and sustainable alternative to energy generated by coal-fired or nuclear power plants. Nuclear is one of the leading countries in the European Union in producing energy from renewable sources such as hydropower. The share of renewable energies in our overall energy consumption already amounts to 30% and we plan to extend it to 34% until 2020. The latest findings have shown that renewable energy sources could provide up to 77% of the world's energy needs by 2050. Investment in clean technologies will not only increase energy security but also promote employment and development. Thus fostering prosperity and social balance. But dependence on certain fossil fuels like natural gas will of course not end overnight. And in the context of ensuring supply security, the Nabucco pipeline for example, a very important project for us is one of the strategic important projects for Europe. Nabucco will bring natural gas from Central Asian and Caspian regions via Turkey to Europe. And this pipeline will thus not only help to diversify European gas supply and improve energy security but also contributes to strengthening the relations. It's a project which is very important also to strengthen the relations between Europe and the Central Asian and Caspian regions. In this spirit, I wish you a fruitful exchange of views and every success for the meeting all the best. I invite the federal president Dr. Fischer to address us. Presidents, Prime Ministers, Excellencies, Ladies and Gentlemen. First of all, I want to extend to all of you a very heartfelt welcome. We are thankful and proud that this important meeting, this important conference takes place in Vienna. Knowing that Vienna has a great tradition as a host city, as a meeting place, as a place to come together, have dialogue, talk to each other. And therefore it's a great pleasure to be present today at the opening of the World Economic Forum on Europe and Central Asia. This meeting of the WEF will reinforce Vienna's tradition that I just have mentioned and described. A tradition is internationally accepted place for global dialogue between different nations, religions, cultures, civilizations, etc. It's almost 20 years that the successor states of the former Soviet Union have gained full independence. For them, Austria's capital Vienna was one of the footholds in Europe when developing their own international profile. I would even say one of the first footholds in Europe. The then Austrian government established very quickly diplomatic relations with the emerging states on the territory of the former Soviet Union. And contacts at the highest level took place quite soon after independence. The countries of Central Asia have moved from the periphery of the European neighborhood to the center of a new global architecture. Central Asia has taken on a new importance for Europe which seeks to promote stability and economic development in the region. Connecting Central Asia with Europe is necessary to provide the region with access to markets and to help boost its prosperity. Austria's economic activities in the region, so limited in scope, I know that, have developed since including investments in the health and energy sector. We want to extend our proven record of engagement in the Danube and wider Black Sea region. We are satisfied that the European Union strategy for the Danube region, which was an initiative of Romania and Austria, is now well underway as a European project. Synergy is created by the new strategy for the Danube region will benefit the whole region. The Danube strategy is the second macro regional strategy after the Baltic Sea strategy, but it is the first, including also non-European member states. We look forward to the adoption of the European strategy for the Danube region in two weeks by the European Council under the presidency of Hungary. Distinguished guests, ladies and gentlemen, Central Asia has a key role to play in meeting global energy demand growth over the next decades. By bolstering Central Asian countries, oil and gas industry, it will be possible to spur wider economic integration and development. Our Prime Minister just has referred to that problem. I would like to highlight one particular important challenge, namely to put the emphasis on diversification strategies in order to enhance foreign investment and competitiveness. Among many other factors, a stable, reliable and predictable institutional framework as well as functioning state structures are key and keys to improving the conditions not only for foreign investors but also for domestic business actors and the population at large. I am convinced that global governance structures have to be improved in order to accomplish one major goal, the equal sharing of the benefits of globalization. An economy moving beyond our control would create anxiety and mistrust in politics. International institutions have been established to shape the economic future of the regions. Finally, I would like to warn against the widely held misconception about competitiveness. There is no real choice between social protection on the one hand and competitiveness on the other. Economies that put a strong emphasis on social coherence equip people to adapt and thrive. A society neglecting social protection is an insecure society and insecure societies are near to unstable societies and instability creates problems for democracy. So, I once again welcome you here in Austria, Vienna. I wish your discussions much success. I hope you feel well here and I hope you will take home with you good impressions from this meeting and from your host country. Thank you very much. Mr. President, Mr. Prime Minister, thank you for your opening remarks. Many of the issues you mentioned like the energy question Central Asia certainly will come up in our discussions. And I couldn't imagine a place which is more inspirational compared to where we are here in Vienna. And I just want to remind you when I was preparing myself for this meeting and looking again at the history of Austria, there is practically no city, no place who has contributed in the last two, three hundred years so much to global inspiration, to global culture. In some way to innovation because that's the theme of our meeting here compared to Austria. Just think of all the musicians. Musician is innovation. So, let's play the orchestra on the script of Amadeus Mozart, which means let's be innovative but harmonious during the next two days. Thank you. We don't have a lot of time to waste. The new competitive power is up there. It's not the matter if they're going to bypass us. I think the risk is they're going to run us over. In Europe, it's clear we're a mature high-cost economy. We have to innovate through technology to prosper, to survive, to create jobs, to create investment. This region can't compete on the basis of price. It has to compete on the basis of quality. There are so many examples of innovation. It's the largest ever scientific collaboration on the largest ever experiment. Europe should actually set itself up to become the champions of the green economy. Central Asia is still seen as something of a mystery. The population of the Kazakh capital has doubled over the last ten years. We don't engage with these countries. These countries will turn eastwards. In Central Asia, there needs to be much more flexibility around labour markets. It needs innovation. It needs change. It needs to be able to respond to the opportunities that are going to come. And I think it's highly important that they also look very strongly towards Europe. We have a region that stretches from Lisbon to Vladivostok. Russia, Caucasus and Central Asia have got a huge amount of potential. It's a project to develop a high-tech research and production hub that will become Russia's Silicon Valley. The European Union is still the world's largest trading bloc. The world's largest integrated market. If you look at where Europe and Central Asia stand, you can see the opportunities. How can we actually create a fusion of Europe and Central Asia? The meeting in Vienna will create an opportunity for East to meet West. To build something completely new. Discussions are at the fundament of actions. There are very few barriers. There has never been a better time to do this. A new start. Ladies and gentlemen, we come to our opening session and I have the great pleasure to welcome First, Michaela Asavov, the Prime Minister of Ukraine, Hermann Graf, Chairman of the Board and Chief Executive Officer of the Sperbank Russian Federation, co-chair of this meeting, but also former Minister of Economy of the Russian Federation. Sir Michael Rigg, Chairman of the BT Group, United Kingdom, also co-chair of this meeting. Michael Spindeliker, Vice-Chancellor and Federal Minister of European and International Affairs of Austria and a technology pioneer, Andrew Thompson, Chief Executive Officer of Proteus Biomedical USA. I hope that we have this panel conducted in a very fast and interactive way. And my first question to the panelists would be, after this introduction, what do you actually expect as an outcome of this meeting? And Prime Minister, would you like to start? Thank you very much for giving me the floor. I heard very interesting words of greeting from the President and Chancellor of Austria. Words to the effect that there is a certain idea about stability and economic development. For our part, we know much about political instability and how over the last 20 years this has prevented us from engaging in reforms to ensure close in the prosperity of our people. Not to mention further economic development. Talking about reforms, we perfectly well realize that that's something that our people find it hard to accept and that leads to instability. Pension reforms, for example, which may involve pushing back the retirement age despite all of our efforts to make this a gentler, model process, nevertheless most people are worried about it and that in turn gives rise to instability. Do we need to strike a balance then between instability and the need to try to reform through? It's very indicative that here in this country the authority seemed to manage the funds and the topic for this forum is also much interesting that is expanding the frontiers of innovation that is to help us to overcome the financial crisis toward all of the threats to the two worlds and to foster security. This is very important ever since it has been ever since 1999 long we achieved independence and despite all of the dissension in the country and any number of hours committed we have had any number of possibilities made available to us in the Ukraine ever since the early 90s, which at the time when we left the Soviet Union we were one of the most developed from the Soviet Union. But we now do have a common last year presidential election and the administration of the country has clearly committed itself to far going reform and democratization, economic reform and social change, a change in the judiciary system and as such we hope to create some of the most liberal climates in Europe with some of the lowest tax rate to the whole of our population. We've taken on considerable risks but we've done so knowingly because we know how important it is to modernize our economy. We have to engage in energy savings and energy efficiency. We have to be more careful by the way that we explore energy sources much depends on our partners and our strategic neighbor Russia from whom we import virtually 100% of oil and gas and other energy sources. These last years have been a dig in back in some of the years that we had today 15% budget deficit back in 2009 that is it was about a 15% drop in the GDP there was very high inflation over one year we saw triple growth in state debt, a public debt in just one year. Whereas now the public debt is down to 3% and last year we had a growth rate of 4% increase in GDP that was in positive with a 15% in debt rate earlier. Now we need to use that to a minimal weight. It's not all that simple in terms of people who have done something similar understand what it's involved. Of course we look to the IMF for assistance and they came through at a critical time they enabled us to engage in the stabilization now despite the tremendous debts we've incurred nevertheless the trade is able to honor its external debts and we think that by the end of this year and next year we will have a very specific plan to honor as to how we can pay off our debts we don't see any major problems in that regard. I spoke about the need to stimulate the growth. We have a tremendous preference for those companies that will be investing resources in programs like energy savings. They will be completely exempted from tax if they do take on the energy savings agenda and none of the major national programs have also been elaborated to support state or energy purposes to explore alternative sources of energy diversified supplies and indeed we have just built a major power stage. The construction actually has been going on for some time but it's slated for completion this year we want the largest in work. The problem with diversification which the chancellor himself we've mentioned as far as energy is concerned is extremely important for us as well. We are currently depicting 100% on supplies coming to us out of Russia. Well that's good but it's not that good in other cities. That is the only oil gas network that can supply us with the limit and occasionally we have had the problem that the prices are not what we would deal with optimal which is why we are taking important steps to ensure that we can perhaps obtain energy from other countries. There is the amount of gas which should involve 10 billion cubic meters of gas as a potential we are dealing with islamic Asia and other central Asian countries in towards this end is not a secret to anyone as to why we are doing so this is to benefit directly our own country. Another interesting project is the open world project which involves setting up a new technology network on the basis of the Fujian technology which would be used first to cover education our country has a tremendous transit potential there are a number of European corridors they are transit through we have heard a reference to the Danube strategy but Danube also transit some country we visit the Black Sea and we are doing what we can to expand the expansion of the canal and to increase the shipping we are involved in picking structure we have set a number of ports that we stand for the plan so we are welcoming this initiative from you and have to work with it as part of the European 12 transport corridors we are also investigating just how we can improve transport corridors by the end of the year and to those part of next year we hope we can complete this project which would enable us to provide access from the South we are also welcoming such a world transport project that would take up one as far as Vienna also Moscow, Vienna routes that we transit through Ukraine which would be critical as far as we think we have had over the last several years something we would like to see and we also support the idea of multi-molded transport centres also again expanding the railway network as far as Vienna I recently met with the Austrian Chancellor we appreciate it just to help complicated this project because we are nevertheless welcoming as we are happy to participate in it even take on some of the funding Ukraine has good technical there is an excellent scientific and technical basis indeed there are the expertise available to us to invest some 200,000 young people are headed into universities every year that's a tremendous potential that could be taught and clearly our task in government is to ensure that this is not so simply to this other European country we have a tremendous number of specialists who have finished work of their diplomas in our universities but then they move on to other countries we'd like to have them stay at home and do something for us and we have 20 of things that need to be done in the transport sector and space exploration we are the beginning of the international initiative on the territory of Central Central and Eastern Europe of the Czech Republic and Czech Republic and Slovakia like Austria the Czech Republic and the Baltic one of the main ways in which we hope to be able to collaborate with our partners will be to have put together these common scientific and technical program as a member of the international community international community international community we'd also like to see how we can best to complete the financial crisis we need to stabilize external trade foreign trade but now we're moving towards an established of a free trade area that we can join with the EU talks on the way and we're also looking to create drama treaty for free trade area with CIS country we have as an example some of the leaders of CIS countries here among us and we know that there is a general feeling that a treaty could be signed in could have signed in May and that's never important although the EU appreciates that we too want to have a free trade area just ever so greatly about global challenges we are all aware of the energy in food prices the unprecedented price in food prices last year for example the rising cost of wheat the price of wheat in the double we see a nearly doubling of world prices and it's difficult for normal economy to cope with such challenges how we to react because it's not something that perhaps without taking its toll I think they probably need to see what we can do to limit the risk factor I had an interesting discussion the other day with Vladimir Putin about gas and oil prices and I gave him my view I said with the coal prices we're also going to see about gas prices how can we see this as a stabilizing factor is it really considered normal that the prices could more than double in the space of a year as to the food market we are prepared to participate we ourselves are major producers and in this sense we would be ready to cooperate with us and sense our vision and do think of it we would I see that I and perhaps I was stepping the limit here I tried very hard to stay within the limit then I just wanted to see how interesting it is for me to be able to participate and wish you all very much success and we have very much forward to having this forum in Kiev next year thank you very much thank you Mr. Prime Minister I think you should be commanded on what has been achieved in a relatively short time we speak here a lot of Central Asia and I just would like to highlight again the presence of the presidents and prime ministers of most of the or practically every Central Asian country we are really very much appreciating not only appreciating your participation is essential we speak about Europe, about Central Asia but there is one partner who is essential and that's Rasha Hermann would you like to address this issue thank you very much I would like to thank our Austrian partners for such good organizing this meeting and I think that this topic is very important and we get very relevant this discussion thank you very much second I will set for Klaus thank you very much Klaus for creating very nice possibilities for our countries from Central Asia for very good advertising our investment climate our possibility for the new businesses for innovation and I will speak Russian the first thing I want to do is to promote the tremendous job we are doing together with Klaus since the first time we have assessed the competitiveness this was a joint publication sponsored by the World Economic Forum and these partners one of the largest consulting companies in Russia yesterday I was looking in detail at this and all of the countries feature in here this is an extremely professional coverage here this is a very good partnership that we enjoy very good partnership with World Economic Forum and those specialists I just wanted to put two figures before we begin the discussion that I found in this survey labor productivity in Russia amounts to 47% of the average weight in the OECD countries the second figure what it mentioned is the Russian they were spending because both that is half the amount of productivity as the Indian or Chinese I would tell you just to fill out the picture a little bit more one would need to cite the figure from our own macroeconomic national research survey that is for Russia about 30% of Russian companies have under gone only on when some modernization of all refurbishment some 20-30 years ago and now it is seen as a priority that they invest in modernization for the basic the capital base so as to provide modern day technological facilities the figures speak for themselves and they respond to two possibly three key questions which are that that the central Asian countries need to engage in comprehensive modernization of the industrial potential there is no alternative to this that may be the first point at the same time as we engage in modernization one has got to create some system for innovation this is not something that happens subsequently it has to happen in tandem with innovation one gets significantly enhanced labor productivity and also takes us to new competitive markets at the third point conclusion question is the tremendous possibility that is there for investment for countries for companies in western Europe in the United States for entrepreneurs in this market they will say there is no better time to invest the markets are growing the huge and if we just talk about the three Kazakhstan, Russia and Belarus the attempt to integrate is to create their own economic space and lift any particular obstacles to trade we can already be talking about some 200 million people strong with a fairly facilitated trade regime talking about the Ukraine because it was decided it might be the largest in the economic market after the in Europe and the spare bank that I had is one of the largest in the region and we ourselves actually don't look to us to Europe and we are taking actually we are concentrating more on our own development process and we are taking a count of Central Asian and Eastern European potential for extracting better investment questions and said that what do we need to do to ensure more sustainable trade for a number of countries that are reaching the most important thing is to ensure diversification diversification and innovation to some extent are seen to be synonymous for our countries but for that we need to have a competitive economy which if you look at this report you will see 12 basic principles defining what that should be the first of which which is seen to be such a vague term but it's quality institutions good institutions that's something that governments are not as happy to take on but unless you have good institutions in place you cannot ensure the subsequent phases the third is central is the macroeconomic environment we have seen what is imbalanced there is a macroeconomic policies that have led to problems even for developed and relatively stable countries this has led to a complete instability in those particular countries but for whole region macroeconomic policies within the scope of macroeconomic policies is crucial the fourth and fifth components are the accounts and primary education sectors this is very important in fact it's interesting that this is a very important concept our point is from the ages of 3 to 10 how very much we can do to form our future generation so that they to innovation then we the next point would be the higher education is Mr. Yardvich said those who graduate from universities we're talking about 200,000 new cranes in Russia they're a huge portion of our population that graduate from university or college and one of the leaders in the field in Europe the sixth condition which bearers the subject mention is the effectiveness of the good and circuses that is when I say competitive because that's the basis for developing innovation if there's no competition there is no innovation then the next subject would be how effective the labor market is to what extent it can be mobile and that's effective eighth three that is how developed the finance market is I represent a company that is working on the operating of the finance market I would say that this is crucial for any innovative activity to innovation with no capital input there can be no innovation the ninth as that would be the market and how attractive it can be made to be one of the most attractive in the world one of the competitive features could be the competitiveness of companies that is something we can't necessarily pride ourselves on if we leave out the innovation potential one particular factor we can't really say that there's much to pride ourselves in terms of the competitive component which is sort of the combination among the other factors that would be the mobility of the labor market the quality of the educational system but I think the most important to the providing factor is the extent to which government has managed talent because it is the talent that is the real key to ensuring innovation for the economy I think on that last point I would conclude my brief intervention simply by saying that among these twelve different factors I think any government has got to tackle these and engage in the discussion if they really truly much is there I see you have already taken the right conclusions out of the report and I want to thank you for the great cooperation I'm looking forward by the way for next week when we will discuss more in detail the report at the SPF the St. Petersburg International Economic Forum where I also thank you for the cooperation I would also draw your attention that we just published the report and it has to do with your last point it's the future of governments and what is expected from governments in the future for those who are interested the report is available and you can ask my people and I want to thank also here Robert Greenhill under whose responsibilities the report has been elaborated now let's continue with a business voice what do you expect and I have to remind unfortunately the remaining speakers that we are very short in time but Sir Michael what do you expect as an outcome? Thank you and I'll be very short I think we all know we've just been through the deepest economic crisis for many decades and probably the most global and what's key everywhere is growth and growth is synonymous with innovation and we won't increase employment we'll create social unrest as we go through fiscal cut backs this is a critical time that business needs to step forward and what I see here is not only the discussion we're going to have here about innovation and how you generate innovation but where you generate it I come from the far west of Europe the further west you are in Europe at the moment the lower the growth the further east you go the higher the growth so I think for many of us learning more about central Asia to come to your point and the resources what it's planning in various areas in education are critically important to us understanding so that we can continue to take advantage of and invest in those markets and create growth and jobs and I think the bottom line is that class Thank you Sir Michael before I think the Vice Chancellor should have the last word now Andrew you are a true entrepreneur from nothing something which has great potential and already great recognition how do you see the situation is can you find the same context the same environment as you do in the United States here in Europe would it have been possible to do what you did here that's a very interesting question so I'm an entrepreneur I have spent 22 years in Silicon Valley I've spent my whole career starting and developing technology based healthcare companies I think it's fair to say that I left Europe because the environment when I grew up was not particularly socially stable in the United Kingdom and it didn't seem to be conducive to entrepreneurship where I went to on the western coast of the United States in the Bay Area was very conducive to that and has enabled me to do some very interesting things with my life particularly because they have an incredibly fluid entrepreneurial capital market I think it's fair to say now the world has changed substantially and the western United States has some of the features that Western Europe had in terms of its tax and other structures that I observed when I was growing up and Western Europe now is a much more attractive place to think about basing an entrepreneurial company and I will tell you that many European countries have visited our company and asked us whether we would actually locate in Europe so it's a very interesting thing but isn't the main difference still between Europe and Silicon Valley if Silicon Valley I speak value because it produces value the main difference is if you don't succeed in Europe in your first venture you are regarded a failure and you are stigmatized if you don't succeed it's your first time in Silicon Valley you are vindicated I think that's possibly true I think it's important to understand the nature of the entrepreneurial personality successful entrepreneurs are somewhat autistic we don't actually care what other people think if we did we wouldn't be entrepreneurs entrepreneurs are very comfortable dealing with failure and they have to be so I don't think that the idea that failure is celebrated is such an important effect I think the most important things that entrepreneurs want are to be valued and to be rewarded and to know that if they are successful they get to keep their rewards and they want the chance to make impact and so from my perspective I think it's really important for policy makers to understand people like me are very very mobile and so if you create the right environment you will find all kinds of people coming to your place and space to do business and in my company which is a small company we have people from 24 different countries working in our company Mr. Fitzekanzler maybe to introduce you to introduce you let's remain in English to introduce you I think for some of our foreign friends I should say one of the specific aspects of Austria is a coalition of the two main parties and you are heading the second party so you are not only vice chancellor you are the chairman of your party you have recently been elected congratulations so how do you react to the discussion which we have? First of all thank you very much Professor Schwab you have been mentioning the question in the beginning what should be the outcome of this conference and of course I think I would like to concentrate on that if you have a look to Central Asia and to Central Europe of course you will find a lot of diversity but I think at the end we will see that this diversity is the main reason for cooperation in the future because if you have a look to Central Asia to all the Black Sea region you will find you have a lot of resources today but you will run out of resources I don't know 20 30 years from now we have not much resources in Europe we are living in an aging society we have more and more expensive workforce and we have a need of course for cooperation if you have a look to the Austrian economic situation we are dependent on export of course 60% of our employees are dependent on Austrian export so I think this is the main reason why we should cooperate what we have and this is our main asset I think is we have well educated, well trained well experienced population in Austria all western Europe and I think if you compare these assets you need of course modernization like Mr Graves said before you need innovation we could bring such innovation and investment in those countries and at the end of the conference I would like to see where are the opportunities do we have a real clear picture what is needed for Central Asia for the Blexi region what is needed from our point of view and how could we in this region cooperate much more than before I think if we find some answers to that question this conference will be successful let's take at the end of this session or let's quote a very famous Austrian economist it's Schumpeter and Schumpeter coined the notion of destructive innovation and I think it was mentioned by several of the speakers that innovation reforms cause pain so I don't know who wants to take the final word just to explain what for him destructive innovation means can we is the population ready for innovation because it means very often first pain it means reforms it means destruction maybe since he is from your country Vice Chancellor please respond to this question thank you very much for this opportunity I think of course you have to convince your people but if you are talking about that if you are informing if you are discussing if you are reacting to that what also your population is thinking then you can convince people I think if you have a look to my population in Austria they are very much I had a lot of links with all the eastern countries and if you are going there you will find signs of architecture and from culture where we are linked together very intensive but of course