By Pavel Gagarin

“Russia is waiting for foreign strategic investors.”With these words, Vladimir Putin greeted representatives of international business who had gathered in late June for the Economic Forum in St.Petersburg. Putin had a difficult task at the Forum. He tried to convince the investors that the investment climate in Russia was improving. The government is being given tasks to improve the conditions for investing into the Russian economy and to decrease the levelof bureaucracy and opacity in state governance. The investors were also promised a new large-scaleprivatization.

Putin spoke convincingly, but many investors still believe that even such a powerful person is not in a position to destroy the endemic system of corruption in Russia. At the same time, many investors are hoping that the crisis will force the government to actively pursue reforms.

A lot of speakers at the forum mentioned the fact that Russia is not an ideal country. Economists and businessmen tried to find an answer to the question,"Where is the ideal place for investment?". Certainly, the fast-growing Russian market has many advantages and its potential is attractive. But it is also clear that the creation of a new, impeccable reputation may take some considerable time.

Foreign investors are concerned about their prospects in the Russian energy industry. They declared this at a closed meeting with President Putin. International energy companies E.ON, Enel and Fortum have acquired several major assets in the electricity industry during the course of privatization in Russia. Over these years, the investors have faced a lot of problems, many of which they could not resolve. In general, foreigners seem to have the same problems as Russian companies, including liberalization of tariffs in the electricity industry and the modernization of assets.

Putin promised the businessmen that all these issues will be addressed within the framework of the continuing reforms in the electricity industry. He also drew the attention to the courageous behaviour of investors who invested tens of billions of dollars into generating capacity in Russia during the crisis.

It should be noted that foreign companies have clear advantages over their Russian counterparts.

Strategic investors often bring with them not only money, but modern technology and experience in the organization of production. They are therefore able to form new relationships between business.

Pavel Gagarin is Chairman of the Board of Gradient Alpha Investment Group. He established the Group in 1995 and has headed its activities since then. Under his leadership the Group has developed its consulting, auditing and investment businesses. Since 2007, Gagarin has been Chairman of the advisory council to the Legislative Commission of Moscow City Duma (Council). He also takes part in drafting legislative initiatives for the Russian federal government.