To the first, the spoils: Western investors venture back to Russia

Fri Jun 17, 2016 4:25pm EDT
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By Gleb Stolyarov and Katya Golubkova

ST PETERSBURG (Reuters) - Western investors are jostling with each other for position in Russia in anticipation of the moment when sanctions imposed over the Ukraine crisis are softened and they can do lucrative business again.

Most are not yet coming with money and specific deals - at least, not in the same numbers as before the crisis - so the objective instead is to win favor with the Kremlin by being the first to turn back toward Russia.

"Look how many American investors are here, not to mention the Europeans," Sergei Chemezov, head of the state conglomerate Rostec, said at Russia's biggest annual investor show this week, held in St Petersburg.

"They understand that we have an enormous market. And whoever comes here first, they get all the spoils," said Chemezov, who used to work with President Vladimir Putin in the Soviet foreign intelligence service.

Two years ago, the United States and the European Union imposed sanctions on Moscow over its annexation of Ukraine's Crimea region and its support for a separatist rebellion in eastern Ukraine.

Western governments say in public that the sanctions will not be eased until an internationally brokered peace deal on eastern Ukraine, the Minsk agreement, is fully implemented.

But many diplomats say in private that deal can never be implemented - not only through Russia's fault but also because the conflict is intractable. At the same time, European economies are stagnating, leaving businesses anxious to get back into the lucrative Russian market.

Pressure has therefore been building inside Europe, according to officials with EU member states, for governments to move beyond the Ukraine impasse and lift some of the sanctions, perhaps within the next 12 months.   Continued...

Participants of the St. Petersburg International Economic Forum 2016 (SPIEF 2016) arrive at the Expoforum convention and exhibition centre in St. Petersburg, Russia, June 16, 2016. REUTERS/Vladimir Smirnov/TASS/Host Photo Agency/Pool