Global Russia Business Meeting10-11 April 2011, Limassol, Cyprus

a Horasis-leadership event

under the patronage of the President of the Republic of Cyprus

Report

Horasis is a global visions community committed to enact visions for a sustainable future(http:/www.horasis.org)

Co-host:

Government of the Republic of Cyprus / Cyprus Investment Promotion Agency

Co-organizers:

ALPHAZIRKEL Forum for Family Entrepreneurs

Association of Cyprus International Banks

Association of European Business

Cyprus Chamber of Commerce and Industry (CCCI)

Cyprus Employers and Industrialists Federation (OEB)

Cyprus International Business Association (CIBA)

Cyprus Russian Business Association

Cyprus Shipping Chamber

Moscow International Business Association (MIBA)

Moscow Investment and Export Promotion Agency (MIEPA)

Russian European Chamber of Commerce (RusCham)

Association of Orthodox Business Leaders

The U.S. Russia Center for Entrepreneurship

Young Presidents’ Organization (YPO)

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Co-chairs:

Igor Agamirzyan General Director, Russian Venture Company, Russia

Sheikh Saif bin Hashil Al-Maskery Chairperson, Nawras, Oman

Bo Inge Andersson Chief Executive Officer, Gaz Group, Russia

Akaki Beruchashvili Executive Vice President, Gazprombank, Russia

Jeffrey Chen Chief Executive Officer, Neopac Lighting Group, Chinese Taipei

Carla Cico Chief Executive Officer, Rivoli, Italy

Edouard Cukierman Chief Executive Officer, Catalyst Fund, Israel

Sachin Dev Duggal Chief Executive Officer, Nivio, Switzerland

Daniel Duku Chief Executive Officer,Venture Capital Trust Fund, Ghana

Alan Hassenfeld Chairman of the Executive Committee, Hasbro, USA

Natalya Kaspersky Chairman, Kaspersky Lab, Russia

Rajive Kaul Chairman, Nicco Group, India

Anil Kumar Chief Executive Officer, Ransat Group, United Kingdom

Dmitry Loschinin Chief Executive Officer, Luxoft, Russia

Munir Majid Chairman, Malaysia Airlines, Malaysia

Jacques Jean Sarraf Chairman, Malia Holding, Lebanon

Cvetka Selsek President of the Board of Directors, SKB, Slovenia

Alexey V. Ulyukaev First Deputy Chairman, Bank of Russia, Russia

Main Sponsors:

Bank of Cyprus Marfin Laiki Bank

Knowledge Partners: Media Partners:

Baker & McKenzie Cyprus Quarterly REVIEW

B-Nursery International Cyprus Broadcasting Corporation (CyBC)

J&P Group International Herald Tribune

Vestnik Kipra

Upcoming Horasis events:

Global India Business Meeting Naples, Italy, 26-27 June 2011

Global Arab Business Meeting Ras Al Khaimah, UAE, 9-10 October 2011

Global China Business Meeting Valencia, Spain, 7-8 November 2011

Horasis Annual Meeting Zurich, 25-26 January 2012

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Table of Contents

Foreword 6

The Shy Russian Giant 20

Cyprus:The EU Gateway for Russian Firms 36

Limassol Summit Focuses on Cyprus-Russia Financial Prospects 40

UN Envoy: Cyprus Problem Can Be Solved 42

The 2011 Global Russia Business Meetingtook place in Limassol, Cyprus

The Le Meridien Spa & Resort – venue of the 2011 Global Russia Business Meeting

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ForewordThe current state of the world is rathergloomy: it is witnessing the negative impactsof Japan’s massive earthquake and nuclearthreat; there is residual uncertainty every-where following the global financial crisis of2008; and the political turmoil in Libya andother parts of the Arab world have leftadditional imprints on the global economy.Doubts about the direction of monetarypolicy in some major developed countriesare contributing to a gloomy outlook for theworld economy. In today’s volatile environ-ment, nobody knows for sure which wayour economies and security structures willturn.Will this period bring relative stabilityor usher in an era of stagnation?

The second Horasis Global RussiaBusiness Meeting which took place from10-11 April 2011 in Limassol, Cyprus, wasboth opportune and relevant in the wake ofthis volatile global environment. A largenumber of CEOs from Russia came togetherwith leaders from around the globe to discussRussia’s and the world’s current economicand political state.The Global Russia Busi-ness Meeting provided a valuable and timelyopportunity for leaders from government,

business and academia to meet and exchangeviews and ideas on the way ahead for Russiaand the world.

This report encapsulates the outcomes andobservations that emerged from the meeting.We hope you find it to be an insightful andtimely guide to how the Russian and globalleaders present in Limassol addressed theimplications of the current economic,political and social challenges. More than350 participants from 30 countries attendedthe Global Russia Business Meeting, includingthe following co-chairs: Igor Agamirzyan,General Director, Russian VentureCompany, Russia; Sheikh Saif bin HashilAl-Maskery, Chairperson, Nawras, Oman;Bo Inge Andersson, Chief ExecutiveOfficer, Gaz Group, Russia; AkakiBeruchashvili, Executive Vice President,Gazprombank, Russia; Jeffrey Chen, ChiefExecutive Officer, Neopac Lighting Group,Chinese Taipei; Carla Cico, Chief ExecutiveOfficer, Rivoli, Italy; Edouard Cukierman,Chief Executive Officer, Catalyst Fund, Israel;Sachin Dev Duggal, President and ChiefExecutive Officer, nivio, Switzerland;Daniel Duku, Chief Executive Officer,Venture Capital Trust Fund, Ghana; AlanHassenfeld, Chairman of the ExecutiveCommittee, Hasbro, USA; NatalyaKaspersky, Chairman, Kaspersky Lab,

Igor E. Manylov, State-Secretary, Deputy Minister of Economic Development, Russia

Cypriote President Demetris Christofias – Harnessing Russia’s Global Momentum

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Russia; Rajive Kaul, Chairman, NiccoGroup, India; Anil Kumar, Chief ExecutiveOfficer, Ransat Group, United Kingdom;Dmitry Loschinin, Chief Executive Officer,Luxoft, Russia; Munir Majid, Chairman,Malaysia Airlines, Malaysia; Jacques JeanSarraf, Chairman, Malia Holding, Lebanon;Cvetka Selsek, President of the Board ofDirectors, SKB, Slovenia; Alexey V.Ulyukaev, First Deputy Chairman, Bank ofRussia, Russia.

The Global Russia Business Meeting wasorganized around what we believe to be themajor drivers of growth and forces that willshape the new order: they will impact boththe financial economy and the real economy,in Russia and the world at large. Also, as a

new economic stimulus programme wasannounced by President Dmitri Medvedev,participants explored the changing political,economic and commercial circumstances inRussia and what they imply for the country’sfuture prospects.The assembly of Russian andworld leaders brought together under theauspices of the Global Russia Business Meetingsought to contribute to progress towardstability in both a conceptual and a practicalway.As Igor Agamirzyan, General Director,Russian Venture Company, Russia, put itduring opening plenary:‘The 2011 GlobalRussia Business Meeting occurs during a timeof pronounced volatility – and heighteneduncertainty – in the global economic system.New strategies are necessary to address newopportunities and risks’.‘It now remains tobe seen if some of the main constraints onRussia’s economic growth can be removed,’added Alan Hassenfeld, Chairman of theExecutive Committee, Hasbro, USA.

The general sentiment was that Russia hasbeen emerging strongly from the globaleconomic crisis.Will Russia and its companiesplay a more pronounced role in this newemerging global order? And will this openup new opportunities for foreign players toshape and define economic development?These were only two of many questions thatwere raised during the different discussion atthis year’s Global Russia Business Meeting.

Arrival of Demetris Christofias, President of the Republic of Cyprus

The opening plenary with Marios Garoyian,President, House of Representatives, Cyprus

Charilaos Stavrakis, Minister of Finance, Cyprus, with Phidias Pilides, Chairman,Cyprus Investment Promotion Agency (CIPA)

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Participants reached consensus that• the Russian economy is expected to

perform strongly in the years ahead.The growth prospects in Russia seem tobe more compelling than those beingobserved in Western Europe and the US.

• diversifying the economy is key.Themodernization of the Russian economywill reduce the country’s dependence onnatural resource exports and lead to theemergence of knowledge-based industryclusters, as well as massive technologicalinnovation in industry and aided by itsinfrastructure development.

• Russia’s influence as an internationalinvestor and reliable partner of the G20 isgrowing.Also, Russia is going to welcomemore Foreign Direct Investment as wellas trade. Russia and the world wouldbenefit if Russia joined the WTO.

At the Opening Dinner of the Global RussiaBusiness Meeting, Igor E. Manylov, State-Secretary, Deputy Minister of Economic

Development, Russia, painted a lucid, inspi-rational grand vision for the future of theRussia economy. He emphasized moderniza-tion – President Medvedev’s new economicpolicy – including the establishment of anationwide incubator for technology andinnovation (Skolkovo – a Russian equivalentof Silicon Valley), pronounced deregulation,reducing red tape and administrative pressu-res, a more conducive environment forsmall-and medium-sized enterprises, a morereceptive foreign direct investment climate,and WTO accession.‘Russia will catch upquickly,’ he said,‘with a growth rate of some6 to 7 percent. As before, we are interestedin and will continue to work for membershipin the World Trade Organization. Our choiceis the continued integration of Russia in theworld economy.’ He also said that ‘internatio-nalization is vital for the transformation ofthe Russian economy into a modern andinnovative economy.’

In his special address, Demetris Christofias,President, Cyprus, noted that Russia’seconomic exchange with Cyprus has risensharply in recent years.‘The prospects for

‘The prospects for Russian-Cypriotrelations are very good’Demetris Christofias, President, Republic of Cyprus

‘Russia will catch up quickly.Our choice is the continued integrationof Russia in the world economy’Igor E. Manylov, State-Secretary,Deputy Minister of Economic Development, Russia

Valery Gulev,Managing Director,Gazprom E P International,Russia, in discussion with President Christofias

Alan Hassenfeld, Chairman, Hasbro, USA making a pointwhilst Ilya Ponomarev,Vice Chair of the Duma, looks on

Guy Spier, Managing Partner,Aquamarine Capital, Switzerland

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Parag Amin, President and Partner,Radiqal, USA, hosting the panelon technology pioneers

Russian-Cypriot relations are very good.This Global Russia Business Meeting aims atimproving the cultural and economic dialoguebetween the two nations and gives a furtherboost to the already existing cordial relations.The ties between Cyprus with Russia ‘havealways stood apart,’ the President added.‘We have a very special strategic partnershipwith Russia, which has stood the test of timeover the last half a century.’ He also reportedthat Cyprus is a popular destination forRussian capital, and Russian tourists havebecome the island’s second-largest numberof visitors behind those from former colonialpower, Britain.

Panels at the Global Russia Business Meetingexplored a wide range of topics, covering thefuture role of entrepreneurship and diversifi-cation, technology and the creation of aglobal financial center. Ilya Ponomarev,Chairman, Hi-Tech Subcommittee of theRussian Duma, Russia, said:‘While Russia’seconomic strength for the last decade hasbeen built on the might of its energy sector,the government is currently attempting tosteer the economy to high-value addedservices and manufacturing of high-techproducts.’Also, the financial crisis has helpedus focus our businesses by removing productsthat had weak sales: we are streamliningoperations and shifting to efficient growth,’

said Vladimir Chouikov, Chairman, GotekGroup, Russia. Carla Cico, Chief ExecutiveOfficer, Rivoli, Italy emphasized that thecrisis fostered greater regional cooperationbetween Russia and the world – and perhapseconomic integration.

‘While Russia’s economic strength forthe last decade has been built on themight of its energy sector, the govern-ment is currently attempting to steerthe economy to high-value addedservices and manufacturing of high-tech products’Ilya Ponomarev, Chairman, Hi-Tech Subcommitteeof the Russian Duma, Russia

The co-organizers gather during the welcome reception Carla Cico, Chief Executive Officer, Rivoli, Italy

Antonis Paschalides, Minister of Commerce, Industry and Tourism,Cyprus – Cyprus-Russia double tax treaty producing results

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Bo Inge Andersson,Chief Executive Officer,Gaz Group, Russia

Bogdan Vacusta, Director,World Blogging Forum, Romania

The special plenary focused on Russia’s eco-nomic outlook. Clearly, the Russian economyhas been recovering from the crisis. In 2010,more than one million jobs have been createdin the country. According to Bo IngeAndersson, Chief Executive Officer, GazGroup, Russia, industrial production willgrow at more than 8%, while GDP growthis estimated at 4%.‘In 2011, I forecast thatthe rouble will strengthen, while inflation willbe below 8%,’ said Andrey Mikhailov,Director, Parliamentary Center, Russia. Forall the macro-economic difficulties anddespite the natural calamities that hit Russiain 2010, positive things prevailed, MunirMajid, Chairman, Malaysia Airlines, Malaysia

commented.’ Sheikh Saif bin Hashil Al-Maskery, Chairperson, Nawras, Oman,argued that the most promising sector inRussia’s economy is its small and mediumbusiness.

Proponents of contrasting visions of Russia’sfuture debated over what kind of economy willemerge. Russia is certainly at a crossroads –the country faces the challenge of expandingits predominantly one-sector economy intoother areas.‘One important approach is toprovide more incentives to encourageentrepreneurship’, commented FiliosZachariades, President, Cyprus Employersand Industrialists Federation, Cyprus.‘Willthe government’s vision of a confident Russiaboasting a diversifying economy win out?Or will Russia weaken from over-reliance oncommodities and a shrinking population?’asked Edouard Cukierman, Chief Execu-tive Officer, Catalyst Fund, Israel. Sessionparticipants split on predicting whether Russiawill successfully diversify its economy.Participants also broadly disagreed on whether‘Russia would suffer if oil prices drop, orwould it use low oil prices as a catalyst for

‘Europe sufferes from a lack ofvisionary politicians as the presentones seemed only to muddle through’Munir Majid, Chairman, Malaysia Airlines,Malaysia

Costas Erotocritou, Cyprus Bar Association, Suren O.Vardanyn, Moscow Investment Promotion Agency,Joachim Reidiess, Dr.Wirth Group, Germany

Igor Agamirzyan, General Director, Russian Venture Company,Russia – the global economic outlook for 2011 remains uncertain

Mark Gazit, Chairman,CIGATE.ASIA, Israel

Maria Kalinicheva,Deputy Director,Russian Standard, Russia

Arrival of His Beatitude Chrysostomos II.,Archbishop of New Justiniana and all Cyprus

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economic reform’, as Leonid Koshelev,Chairman, Jet 2000, Russia predicted.

Antonis Paschalides, Minister of Com-merce, Industry and Tourism, Cyprus, spokeat a special plenary on Russia and the World.‘Russia has established itself as an importantglobal economic player.What are the pros-pects for Russia’s global trade, technologyand investments?’ he asked.The Ministeraspired to advance the rapidly emergingcooperation between Russia and Cyprus –economic and also strategic – and to anchor itin formal agreements. Alexander Downer,Australia’s former Minister for ForeignAffairs and currently the United NationsSpecial Envoy to Cyprus supported Russia’sbid to join the World Trade Organization(WTO):‘An important step in reachingtrade potential is for Russia to join theWTO,’ he said. On Cyprus, AlexanderDowner stressed that Cyprus is strategicallyvery important.‘There are all sorts of positiveimplications that should flow from an agree-ment between the Greek and the TurkishCypriots,’ he opined. Igor E. Manylov,State-Secretary, Deputy Minister of EconomicDevelopment, Russia sent the message thatglobal and regional trade talks need to bereenergized. On Russian-Cypriot relations,he stated that new double-taxation agreementwill allow Russian companies to increaseinvestment flows into Cyprus. On Russia’s

economic masterplan, he shared his visionon building an open, competitive economyat an international level.

A special panel focused on how attractiveRussian companies might be to internationalinvestors and the possibility of their shift toa global level. Christos Mavrellis, FormerMinister of Finance of Cyprus;Vice-Chairman,CIPA, Cyprus, said ‘a top priority for 2011is to improve the investment climate in Russia.Foreign investors do come to Russia but notas actively as one would wish.The rules forforeign companies investing in strategicindustries of the Russian economy will beeased shortly.’ ‘Russia maintains an openand liberal foreign investment climate,’added Suren O.Vardanian, DirectorGeneral, Moscow Investment PromotionAgency, Russia.‘A good example is thegovernment’s approval of PepsiCo’s pur-chase of a controlling stake in Wimm-Bill-Dann, one of Russia’s leading producers ofjuice and dairy products. Still, obstacles forthe free flow of foreign capital are persisting’.‘We have to remove bureaucratic barriers forbusiness,’ underlined Alexander Sivak,

‘An important step in reaching tradepotential is for Russia to join the WTO’Alexander Downer, United Nations Special Envoyto Cyprus

Hartmut Schwesinger, Managing Director, FrankfurtRheinMain GmbH, Germany and Igor Makarov, Partner, Baker & McKenzie, Russia

Sachin Dev Duggal, Chief Executive Officer, Nivio, Switzerland –one of the meeting co-chairs

Pavel Shashkin, Executive Secretaryof Synodal Department,Moscow Patriarchate, Russia

Natalia Kardash,Editor-in-chief,Vestnik Kipra, Russia

Chairman, New Technologies Company,Russia. Among other things he mentionedwas the upcoming visa regime simplificationfor foreigners: the introduction of so-calledstart-up visas.‘We need highly qualifiedspecialists to work and live in Russia.Innovations are impossible without properlegislation,’ said Sachin Dev Duggal,President and Chief Executive Officer,nivio, Switzerland.‘The Russian govern-ment should be working in this direction.We are a European country and we need to have a common market with Europe’,concluded Igor Makarov, Partner,Baker & McKenzie, Russia.

The Russian government has made it apriority to turn Moscow into an internatio-nal financial center that could compete withLondon, New York and Hong Kong.Garegin Tosunyan, President, Associationof Russian Banks, Russia, told the GlobalRussia Business Meeting that the city neededto develop its laws to make them ‘convenient

and comfortable for all stakeholders.’Moscow will also need to lure specialistsfrom other world financial centers and offera broader range of investment products,Andrey A. Serebryakov, FoundingPartner, Effective Capital Group, Russia,said. Efthimios Bouloutas, Deputy ChiefExecutive Officer, Marfin Popular Bank,Cyprus, said he supported the developmentof ‘a real financial center in Moscow,‘butthat it must be transparent.’ On financialmarkets, Oltmann Siemens, Chairman,Interleaseinvest Group, Austria, observed adearth of Russian companies going public.‘Just 14 companies went public on the Rus-sian market in 2010.‘We have to improvethe market for initial public offerings if wewant to make Moscow a world-class financialcenter,’ said Hans Jochum Horn, DeputyChief Executive Officer, RenaissanceGroup, Russia. Boris Zenkov, Chairman,Linkos Holding, Russia, said that the finan-cial sector ‘is on the right track but there is alot of work to be done. Meanwhile, there isroom for everyone, but state banks will stilldominate.’

‘We have to improve the market forinitial public offerings if we want tomake Moscow a world-class financialcenter’Hans Jochum Horn, Deputy Chief Executive Officer,Renaissance Group, Russia

‘We need highly qualified specialists towork and live in Russia. Innovationsare impossible without properlegislation’Sachin Dev Duggal, President and Chief ExecutiveOfficer, nivio, Switzerland

Alex Shapiro, Managing Partner,Ashfort Capital, United Kingdom

Panayiotis Hadjipandelis,Chief Financial Officer,Holy Archbishopric of Cyprus

Natalya Kaspersky, Chairman, Kaspersky Lab, Russia – what wereally need is to position Russia as a global technology leader

Anil Kumar,Chief Executive Officer,Ransat Group,United Kingdom– Russian companies increasingly move into global markets

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A major theme discussed at the meeting wasthe significance of technology to improveproductivity and boost the Russian economy’sknowledge base.The Russian variant of theSilicon Valley, called Skolkovo, is a plannedhigh technology business area which willincubate new technologies – a center pointof Russian President Medvedev’s moderni-zation strategy.‘What we really need is toposition Russia as a global technology leader.Innovation does not come without R&D.Russian companies have to invest more intoreal breakthroughs than just being me-tooinnovators,’ said Natalya Kaspersky,Chairman, Kaspersky Lab, Russia.The Yo – a new hybrid car that is due to come on themarket in 2012, is ‘a good example of howRussian entrepreneurs can chart out highlyinnovative products.The car is in line withPresident Medvedev’s call on business toinnovate and help the country economy weanitself of a reliance on hydrocarbons for energyand transport,’ commented Photis Savvides,Chief Executive Officer, Cyprus Telecommuni-cations Authority, Cyprus. Sergei Millian,Russian American Chamber of Commerce,USA, concluded that ‘the Russian govern-ment clearly wants the corporate sector tocreate its own intellectual property.’

The panel on Russia’s Natural Resourcesemphasized the strength of Russia’s resour-ces sector. Valentin Romanov, ExecutiveDirector; SUN Group; Russia, explainedthat ‘Russia’s vast resources give the countrya real global clout. It has the world’s biggestresources of gas, and in terms of oil produc-tion – though not capacity – it is numbertwo in the world, rivalling Saudi Arabia.’The country is ‘coming out of the globaleconomic crisis due to its strong exportearnings from oil and gas,’ according toValeriy Gulev, Director General, GazpromE.P. International, Russia.‘I do not agreewith those skeptics who claim that Russia hasturned into a raw-material donor. Russia haspotential in many sectors,’ replied KhawarQureshi QC, Head, McNair Chambers,Qatar. Petros G. Doukas, Chairman,Capital Partners, Greece, added a geopoliticalelement to the discussion:‘Energy is traditi-onally the key field of the Moscow-Brusselspartnership. By 2020, Russia will accountfor half of all gas supplies to Europe.‘In thenear future,’ Artak Tovmasyan, Chairman,Sozvezdie, Ukraine predicted, ‘gas will bein demand all over Europe.That is why allgas transportation systems both current anddeveloping will be crucial.’ Russia has abun-dant supplies of energy, but the logistics ofgetting them to European markets arefraught with complexities.The security ofsupply is a major concern for Europe, whileRussia wants to be sure that demand fromEurope is strong.‘Europe is joined to Russia

‘Russian companies have to investmore into real breakthroughs thanjust being me-too innovators’Natalya Kaspersky, Chairman, Kaspersky Lab, Russia

Alexander Borisov,General Director,Moscow International BusinessAssociation, Russia

Jacques Jean Sarraf, Chairman,Malia Holding, Lebanon – theturmoil in the Arab world have leftimprints on the global economy

Alexey K. Pushkov, Director, Institute of ContemporaryInternational Problems, Russia, making a point on globalization

During the welcome dinner

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in a relationship of interdependence. Allsides have an interest in keeping transportroutes open and establishing new reliableones,’ concluded Gil Feiler, Chairman,Info-Prod, Israel.

Anil Kumar, Chief Executive Officer,Ransat Group, United Kingdom, highlightedthat Russian companies ‘would increasinglymove into global markets.’VimpelCom’sacquisition of Weather Investments – ownerof Egypt’s Orascom Telecom and the Windmobile brand – symbolizes Russian firms’rise to global eminence, creating the world’sfifth-largest mobile operator group with anetwork footprint spread across all cornersof the globe. Akaki Beruchashvili, Exe-cutive Vice President, Gazprombank,Russia, indicated that the Russian govern-ment will reform the judiciary and betterenforce private property rights.‘We areworking very hard to protect investments inRussia,’ he said. He also highlighted that theglobal financial crisis did not make Russia turntowards protectionism and isolationism. Onthe other hand,‘we hope that Russian firmswon’t be limited by protectionist measureswhen moving ahead globally,’ addedSocrates Lazaridis, Chairman, Athens

Stock Exchange, Greece.‘Russianfirms are emerging as global corporations,reaching a level playing field with theestablished Multinationals of the West, withcorporations from Asian as well as with theleading firms of the Arab world,’ JacquesJean Sarraf, Chairman, Malia Holding,Lebanon, explained.The expansion ofRussian companies into emerging marketslike Africa and Asia is yet another facet ofthe globalized economy. As these companiesget bigger, they need to start thinking aboutglobal positioning, and more and more, theyare seeing foreign markets as more than justplaces to trade their products and services –they are establishing R&D facilities,manufacturing sites and hiring local talent.’‘If Russia wants to become a globaleconomic power, it should be able toproduce planes and not only fighter jets.

‘The Russian government will reformthe judiciary and better enforceprivate property rights’Akaki Beruchashvili, Executive Vice President,Gazprombank, Russia

Hellen Song,Managing Director, La China Capital,China, speaking about China’s growth momentum

Gil Feiler, Chairman, Info-Prod, Israel, Natalia Kardash, Editor-in-chief,Vestnik Kipra, Russia,Artak Tovmasyan, Chairman, Sozvezdie, Ukraine

Jochen Wermuth, President,Wermuth AssetManagement, Russia

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Tony Cowling, Chairman,TNS, United Kingdom

Here our country should not fear formingalliances with foreign companies,’ concludedSymeon Kassianides, Chairman, HyperionSystems Engineering, Cyprus.

‘By creating more efficient managementstructures, Russia can unleash its humancapital to realize its full economic potential,’said Victor Sedov, President,The U.S.Russia Center for Entrepreneurship, Russia.Also, while in the past the country’s strongeducational legacy has been a positive factorin its outlook, there is concern about asystematic degradation that could become adrag on economic progress and prosperity.Roberts Idelsons, Member of the Board,M2M Private Bank, Russia, suggested that‘educational institutions had withered con-siderably after the collapse of the SovietUnion, and that reform was critical to thecountry’s future.’ Jochen Wermuth, ChiefExecutive Officer,Wermuth Asset Manage-ment, Russia flagged up demographic declineas a serious issue facing Russia in the futureand felt that Russia’s declining population iscrucial to understanding the country.

‘The country’s low birth rates are alarming,’he asserted,‘and the country faces difficultdemographic realities unless birth rates risesignificantly.’

‘The BRICs (Russia, Brazil, China and India)now stand at simultaneous inflection pointsthat suggest both complementary and com-peting interests,’ pinpointed KonstantinGuselnikov, President, Lotus Capital,Russia. Increasingly, the BRICs are buildingthe showcase projects that once were mainlythe pride of the U.S. and Europe.‘Just asrailways and highways transformed Americainto an industrial superpower, the 21st-centu-ry building boom is laying the foundations forthese rapidly growing economies to join thetop leagues,’ added Rajive Kaul, Chairman,Nicco Group, India. Russia’s relations withChina in particular are critical, and muchwill be defined by the strategy that Russiadevelops for its long-term ties.The improvingrelations between Moscow and Beijing standto spread into the infrastructure realm.Thefirst oil pipeline linking the world’s biggestoil producer, Russia, and the world’s biggestconsumer of energy, China, began operatingin early 2011. According to Hellen Song,Managing Director, La China Capital, China,‘this newly opened pipeline will allow a rapidincrease in oil exports between China andRussia.’And,‘Russia welcomes direct invest-ment from China in an effort to expandbilateral cooperation on trade and finance,’said Guy Spier, Managing Partner,Aquamarine Capital, Switzerland.

‘The Russian software industry isvibrant and world class’Symeon Kassianides, Chairman, Hyperion SystemsEngineering, Cyprus

‘This newly opened pipeline will allowa rapid increase in oil exports betweenChina and Russia’Hellen Song, Managing Director,La China Capital, China

‘Russian firms are emerging as globalcorporations, reaching a level playingfield with the established Multinatio-nals of the West, with corporationsfrom Asia as well as with the leadingfirms of the Arab world’Jacques Jean Sarraf, Chairman,Malia Holding, Lebanon

Rajive Kaul, Chairman, Nicco Group, India, on the Russia-India nexus

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Daniel Duku,Chief Executive Officer,Venture Capital Trust Fund, Ghana

Konstantin Guselnikov,President, Lotus Capital, Russia

China used the 2008 Summer Olympics as acatalyst for infrastructure development thatwould benefit the country in the long term.Now Russia is giving itself a makeoverbefore it plays host to the 2014 WinterOlympic Games and the 2018 FIFA WorldCup.The investments related to both eventsare just a part of the broader infrastructureeffort under way as Russia strives tomodernize itself. Along with the transporta-tion, communication and power investments,Russia is also building schools, hospitals,housing and other social infrastructure.‘Aswe have seen in China, Brazil and elsewhere,huge infrastructure investments typicallypays off in terms of economic growth,’reasoned Mark Minevich, President,Going Global Ventures, USA.The develop-ment of the construction sector, especiallyhousing construction, has an enormous socialimpact because it triggers the developmentof other sectors.‘The banking sector is readyto grant more loans for construction pro-jects,’ said Daniel Duku, Chief ExecutiveOfficer,Venture Capital Trust Fund, Ghana.

Presently most prominent in the banking,energy, financial services and propertysectors,‘Russia is an extremely importantnation for the economy of the island’, saidPhidias Pilides, Chairman, CyprusInvestment Promotion Agency, Cyprus.‘Cyprus is effectively the offshore financialservices center for Russia,’ added ChristosStylianides, Deputy Chief ExecutiveOfficer, Marfin Popular Bank, Cyprus.‘Russia is keen to ensure that Cyprus is notused as a tax evasion center – or, at least notfor much longer,’ commented DimitryLabin, Chairman of Cyprus Commission,Moscow Chamber of Commerce andIndustry, Russia. A tax agreement was oneof the key accords signed during PresidentMedvedev’s visit to Cyprus in October2010.‘The old cultural and political connec-tions between Moscow and Nicosia, thefiscal regime and the very low Cypriot taxrates attracted Russian investors to Cyprus.They set up offshore companies and imme-diately re-injected their money into Russiavia Cyprus,’ said Alexey K. Pushkov,Director, Institute of Contemporary Inter-national Problems, Russia.

Participants of the Global Russia BusinessMeeting were candid about the prioritiesRussia must pursue. In the closing, partici-pants reflected on the key take-away ideasfrom the meeting, calling for fundamental

‘Africa is the last frontier yet Russiahas had a long relationship with manyof its countries’Daniel Duku, Chief Executive Officer,Venture Capital Trust Fund, Ghana

Dimitry Labin, Chairman of Cyprus Commission,Moscow Chamber of Commerce and Industry, Russia

Chiara Corazza, Managing Director, Greater Paris Investment Agency, France and Leonid Khanik,Founder, Concept Club, Russia

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Julia Stonogina,Vice President,International Association of Business Communications, Russia

Boris Zenkov, Chairman,Linkos Holding, Russia

shifts in business models and governmentpolicies to address the dependency of theRussian economy on natural resources.‘Thekey to economic growth is innovation – wehave to turn Russia into a hotbed ofinnovation,’ proposed Leonid Khanik,Founder, Concept Club, Russia.‘The 2011Global Russia Business Meeting deliveredanalysis and insights needed to address risksand opportunities and achieve durable finan-cial stability and more even, sustainable econo-mic growth,’ declared Glenn Proellochs,Chief Executive Officer, B-International,Switzerland.

His Beatitude Chrysostomos II., Arch-bishop of New Justiniana and all Cyprus andFr Georgy Roshchin,Vice President,Moscow Patriarchate Department for ChurchSociety Relations, Russia, addressed thefarewell dinner on 11 April. ‘The globaleconomic crisis has been a crisis of values

and trust,’ emphasized the Archbishop.‘We need to address moral concerns and weneed to build trust. Money imposes a hugeresponsibility upon its owner,’ he continued.Fr Georgy Roshchin told participants that‘the current global crisis might be a goodopportunity for soul-searching and spiritualreflection.’ He voiced his wish that businessleaders develop the right attitude towardssociety at large.

‘We need to address moral concernsand we need to build trust’His Beatitude Chrysostomos II.,Archbishop of NewJustiniana and all Cyprus

‘The Global Russia Business Meetinghas certainly provided us with a solidplatform to communicate, collaborateand exchange ideas on a variety ofsubjects ranging from globalization tofinancial trends and issues’Phidias Pilides, Chairman, Cyprus InvestmentPromotion Agency, Cyprus

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Jeffrey Chen, Chief Executive Officer, Neopac Lighting Group,Chinese Taipei, synthesizing the results of the meeting

His Beatitude Chrysostomos II.,Archbishop of New Justiniana and all Cyprus – Rethinking Values, Building Trust

Akaki Beruchashvili, Executive Vice President,Gazprombank, Russia – on the intrinsic businessmodels leading to success

Fr Georgy Roshchin,Vice President,Moscow Patriarchate Department for Church Society Relations, Russia

Sergei Millian, Russian AmericanChamber of Commerce, USA

Mark Minevich, President,Going Global Ventures, USA

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The meeting closed on a note of optimismand called for a strong collaborationbetween private and public sector initiativesto address Russia’s economic challenges. AsDeepak Premnarayen, Chairman, ICSGroup, India stated, the strong engagementof leaders joining the Global Russia BusinessMeeting showed ‘the importance of Russiaand entrepreneurial spirit of people who seeopportunities.’ Still, at the country, regionaland global levels, we now stand at a point atwhich existing practises are no longerenough,’ as Alexander I. Ageev, DirectorGeneral, Association of Orthodox BusinessLeaders, Russia, put it. Jeffrey Chen, ChiefExecutive Officer, Neopac Lighting Group,Chinese Taipei, reminded us that ‘the worldcommunity should remember that an effec-tive model can only be built collectively.’

The Global Russia Business Meeting as well asthe other Horasis meetings offers opportu-nities for senior business leaders to channeltheir ideas and proposals to stimulate eco-nomic growth. For two years now this inter-national event has attracted delegates fromRussia and countries all over the world.Themeeting has earned the praise of investors,businessmen and policymakers alike, whoappreciate the opportunity to gather todebate topics and exchange ideas.

Horasis is using its unrivalled history ofpartnership with global corporations tocreate a powerful platform for cooperationbetween emerging and developed markets.From the first meeting in 2005, annualgatherings have been held around the globe.The flagship events are the Global ArabBusiness Meeting, the Global China BusinessMeeting, the Global India Business Meetingand the Global Russia Business Meeting.Horasis has engaged business leaders fromall around the world to enact visions for asustainable future.

On behalf of Horasis, I would like topersonally thank Demetris Christofias,President, Republic of Cyprus, whogenerously agreed to act as patron of the2011 Global Russia Business Meeting. Mythanks go also to CIPA – the meeting co-host– as well as to the co-chairs, main-sponsors,co-organizers, knowledge partners, meetingsupporters, and media partners.This GlobalRussia Business Meeting was a unique expe-rience which would not have been possiblewithout the dedication and enthusiasm ofour partners, members and participants.

It is our hope that the meeting will continueto serve as an important conclave for stimu-lating thought and creative solutions.Horasis looks forward to welcoming youback to next year’s edition of the GlobalRussia Business Meeting.

Dr. Frank-Jürgen RichterChairmanHorasis:The Global Visions Community

Participants gather for a session

Christos Stylianides,Deputy Chief Executive Officer,Marfin Popular Bank, Cyprus

Steve Varsano, Chairman,The Jet Business, USA

Scott E. Rickert, Chief Executive Officer, Nanofilm, with Leonid Koshelev, Chairman, Jet 2000 and Tony Cowling, Chairman,TNS

Preparing for the next panel

Exchanging business cards Alan Hassenfeld, Chairman of the Executive Committee, Hasbro,USA, sharing a light moment with Frank-Jurgen Richter

Sergey Filatov, Editor-in-chief,Business World, Russia

Timo Hammarén, Counsellor,Delegation of the European Unionto Russia

Alexander I.Ageev, Director General,Association of Orthodox Business Leaders, Russia,with Christos Mavrellis,Vice Chairman, CIPA

Rajive Kaul, Chairman, Nicco Group, India andDeepak Premnarayen, Chairman, ICS Group, India

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The Shy Russian GiantBy John B. Kidd, Lecturer,Aston Business School

The second Global Russia Business Meetingwas held in Limassol in the glorioussurroundings of sun, sea, and we could havea glimpse of Cyprus in the springtime.Wewere greeted formally by Phidias Pilides,Chairman, Cyprus Investment PromotionAgency (CIPA) who explained that Cyprushad a long relationship with the Russianpeople and with Russian businesses that wasemphasised by Russian President DmitryMedvedev’s visit to Cyprus in early October2010 that signalled a new level of bilateralcooperation. He welcomed us to the island,and said he was looking forward with inter-est to the forthcoming discussions. Soonafter this warm welcome Frank-JürgenRichter, Chairman, Horasis, Switzerland,our conference convener called for us toobserve the virtual ribbon cutting ceremonyto declare the conference open: thereafter,having partaken of our reception refresh-ments and opened conversations with oldand new acquaintances we moved on theinitial dinner.

Our welcome to Cyprus and to this meetingin particular was further addressed overdinner by Demetris Christofias, President,Republic of Cyprus, who again noted hishopes for deeper and more fulfilling relation-ships with Russian businesses and indeedtourists who might come to enjoy the delightsof this wonderful island. In agreement IgorE. Manylov, State-Secretary, RussianDeputy Minister of Economic Developmentalso said that in Russia he and others wouldbe working hard to cement these deeperrelations since the trade turnover betweenthe two countries amounted to $1.67 millionand the accrued investments of the Cypriotsin Russia reached nearly $52 billion, inclu-

ding $38 billion in direct investments.The business sessions began next day at 08:00with the Breakfast Sessions covering fourdiscussion topics: Modernising Russia;Investing in Cyprus;The BRICs – Engines ofglobal economic growth; and Geopolitics andRussia. I chose to listen to the discussions onthe BRICs that were chaired by Alexey K.Pushkov, Director, Institute of Contempo-rary International Problems, Russia. He, byway of an introduction, noted that it was notclear that the BRICs were indeed ‘engines’ forglobal growth as they were nations withoutfully common boundaries with Brazil beingtotally isolated from the rest, though in eachcase the border regions of Russia/China andIndia/China were at the limits of our usuallyimagined commonality having deserts,mountains and long distances separating theborder from the respective capitals. Even so,their economic relationships and foreignpolicy objectives were such as to challengethe previous depths of American influence.This grouping of strong economic players hadeven broached the idea of raising a basket ofcurrencies to challenge the US dollar as aglobal reserve currency – so what might beour expectancy of the future of the BRICs?The general discussion was opened by

John B. Kidd, Lecturer,Aston Business School, United Kingdom

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Sergey Filatov, Editor-in-chief, BusinessWorld, Russia. He noted the usual ‘big’statistics of the BRICs having over 25 % ofthe world’s land coverage and 40 % of theworld’s population and holding a combinedGDP (PPP) of 18.486 trillion dollars. Evenso, many might see the BRICs as a networ-king group especially with their relations tothe UN Security Council discussions, ratherthan a distinct global power. Fairly up todate statistics on all the BRIC nations may befound in Wikipedia1 which also notes theoriginal Goldman Sachs report of 2003 that‘created’ this grouping as an academicexercise and so began an interesting andcontinuing story. In 2007 Goldman Sachsresearchers enlarged the original concept ofthe BRICs and suggested a further set of‘developing BRICs’ – again see the Wikientry for these references. Rajive Kaul,Chairman, Nicco Group, India reminded usthat South Africa was a good candidate forentry to the BRICs group (ie we will nowhave to write BRICS, though for the purposesof this meeting we will stay with the olderacronym); and that the resources of the BRICswere not homogeneous – with China (beingmanufacturers), India (service providers)and Russia, Brazil (raw materials providers),and though they did have a certain amountof inter-BRIC trade much of it was asdeliveries to China: it has become globallycentral.We must take care in structuringour discussions of similarities and differences.Hellen Song, Managing Director, La ChinaCapital, China suggested she focus on Chinaas others had amply covered the BRICs intheir introductions. China, with its largepopulation has to maintain a delicate balancebetween consuming its own large primaryresources and/or importing from elsewhere.It does import substantial raw resource, butalso semi-finished goods that are assembledand re-exported. In so doing it has accrueda large deposit of cash that is now beinginvested abroad. However, most of itsexports are of low-end goods, and so fardoes not contain much added intellectual

value. This is to change according to thelatest five-year plan as Ministers look toraising the wealth of its peoples by increasingthe Intellectual Property of goods originatingin China: some will be exported but muchwill be bought by the growing middle classthat will have a larger disposable income.Toaid this development China will more fullysupport its entrepreneurs, even to promotetheir initial foray overseas via Singapore orHong Kong as first steps in outside trading.Michael Sarris, Former Minister ofFinance, Republic of Cyprus noted howCyprus fulfilled a role akin to Singapore butfor Russian trade, especially in the bankingsector. While he noted the increased tradefrom the BRICs he was happy that [low end]imports from China continued to help theCypriots maintain a lower cost of living.Yet, as there is an imbalance within theBRICs and between them and some othernations, some smoothing must take placegradually (we don’t need more financialshocks).Thus China in particular must findsome way of bettering its collaboration withothers that may offer hints to, say, theRussians who today hesitate to ventureoverseas. Konstantin Guselnikov,President, Lotus Capital, Russia continuedthis theme asking how the BRICs will con-tinue to lead? Russia is big on resourceexport (of oil and gas which is well known,but also in minerals) yet it wants and needsto find a new route to be innovative. Forinstance, as China is consuming more foodproducts, then Russia might raise its foodoutput – but for this change to occur the Stateneeds to plan and publish new strategic aims.Deepak Premnarayen, Chairman, ICSGroup, India reminded us of a further imba-lance in the statistics – the demographics ofIndia and China were different. Roughly theaverage age of the two nations is similar andIndia is pouring a lot of cash and effort intotraining, and giving ‘skills sets’ to its youngpeople; China’s population is aging muchfaster than the Indian.Thus in the relativelynear future it might be India that is the

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intellectual and manufacturing powerhouseof the BRICs but the BRICs had a groupresponsibility to be effective in its resourcesbalancing. Alexey Pushkov reminded us ofSamuel Huntington’s Clash of Civilisations?and its contrast with Francis Fukuyama’s TheEnd of History ... that we were indeed in ‘themess’ that these two authors described, andit was being played out as we were meeting.The discussion was opened to the audienceand we noted that the present expositions ofeconomists only continued the models ofthe past, whereas we need some new modelto guide our future relationships.

The conference then moved to the openingplenary session on Russia and World Econo-mic Outlook wherein discussants were tofocus on “The global economic outlook for2011 remains uncertain despite Russia’scontinued economic success.What are thenear- and long-term perspectives in thischallenging environment?” The session waschaired by Frank-Jürgen Richter whocalled first on Ilya Ponomarev, Chairman,Hi-Tech Development Subcommittee of theRussian Duma. He raised the issue of‘mixed signals’ that tend to confuse – henoted that sometimes inward investors didnot wish to work in accord with the localrules: yet he agreed that if rules were setand changed often no one knew what wasapplicable in any circumstance and neitherthe insider or outsider could proceed withconfidence especially if officials arbitrarily

applied rules that had been amended. Hecommented that the high levels of corruptiondid not aid progress as it also confused theprocesses of joint ventures and/or thecreation of new ventures in Russia, byRussians, who wished to be innovative.Alan Hassenfeld, Chairman of theExecutive Committee, Hasbro, USAannounced he would be somewhat contro-versial in addressing this topic. He said thatonce the globe was discussed via a ‘north-south divide’ [indeed there was a well recei-ved paper delineating ‘The Brandt Line’ as avisual depiction of the North-South dividethat was proposed by the German ChancellorWilly Brandt who described the global re-source imbalance in 1980]. Alan Hassenfeldsuggested now there was the 1% - 99 % riftbetween rich and poor, young and old, andthere was a general despair. One of theprimary causes could be solved if the USsorted out its own house before commentingand directing other nations on their behaviour;and it ought to do this well inside the nextfive years as it is an urgent task. MunirMajid, Chairman, Malaysia Airlines talkednext and almost inevitably mentioned therising cost of oil and of aircraft fuel in parti-cular. Of course he is well qualified on thistopic as both a chairman in the airline industryand as Director of the Southeast Asia Inter-national Affairs Programme at the LondonSchool of Economics. It is well accepted, hesaid, that a $10 rise in the price of oil causesa 0.25 % fall in global GDP. This is an acute

Manthos Mavrommatis, President, Cyprus Chamber of Commerceand Industry, Cyprus and Glenn Proellochs, Chief ExecutiveOfficer, B-International, Switzerland

…envisioning the post crisis world economy

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issue in the airline industry as fuel is 35 % ofits running cost while the best of full-serviceairlines might have only an 8 % profit margin.He was further concerned that while theglobe still did not have a strong rebound ingrowth, most of the European economy wassomewhat weak. It suffered from a lack ofvisionary politicians as the present onesseemed only to muddle through. Bo IngeAndersson, Chief Executive Officer, GazGroup, Russia explained that although herepresented a Russian automotive firm hewas in fact an American of Swedish birth.He noted that the automotive industrysupported 1/3 of global GDP, and whilesales in Russia are presently lowered there isample opportunity for more sales (and thetransportation infrastructure is rapidly im-proving) so one may soon see multiple carownership per household.The Russianstrategy is to rebuild its automotive industrywith both the ingress of overseas manufactu-rers (such as Volkswagen, Ford and GeneralMotors) and its indigenous firms, of whichGaz is increasingly profitable. On the otherhand, Igor Agamirzyan, General Director,Russian Venture Company, Russia remindedus that Russian production was similar inkind to those of the Chinese – too close tothe lower end of added intellectual value, andits exports were mainly ‘simple’ products –oil, gas and minerals. Even so, Russiaremained a strong global economic forcewhich needed to diversify and to innovate.In part, he suggested, Russia, even with its

great strength in technological prowess hada lack of good managers as most lackedcompetency.There was thus the doubleneed to be both innovative and to be able todevelop and exploit its innovations – for thelatter, Russia seemed to have no governmentstrategy to promote what might be called“Russia Inc.”

Richter, from the chair, then asked panelliststo consider how Russia could better linkBusiness and Government? Ponomarev saidhe wished there to be less evidence ofgovernment involvement, yet conceded thata top-down approach has to be taken toinstigate a knowledge-based economy.Therehas to be guidance and incentives to initiatenew business processes, but it might bethought that the government was tooinclined to consider the Russian future tocontinue as a [simple] oil and gas exporter:that has to change as such a policy will notinvolve the people, nor will it increase gene-ral wealth. Majid agreed saying ‘politiciansare the worst managers’. In democraciesthey are too interested in survival [throughthe next elections] which was a similar,through different, process in non-democraticstates. Instead, it was business that keptnations progressing despite the ‘help’ of itspoliticians – who ought to be better trainedto understand the broader picture.Andersson looked to the automotiveindustry to offer financial support to thegovernments so in turn the governments can

Charilaos Stavrakis, Minister of Finance, Cyprus, on the need tostrengthening global financial institutions

Petros G. Doukas, Chairman, Capital Partners, Greece, Harald Einsmann,Vice Chairman,Tesco,Christos Mavrellis, Former Minister of Finance of Cyprus

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plough back cash into development projects,while not forgetting to maintain and developa broad infrastructure. Agamirzyanreturned to the issue of confused signals setby the Russian Ministries: sometimes it evenseemed that a rule set one week was over-turned the next and a new rule developedthat might even be contradictory to thefirst. This fluidity left officials bewilderedand business people were at risk if differentofficials applied rules set in different weekspossibly causing firms to halt progress.Marios Garoyian, President, House ofRepresentatives, Cyprus summed up theplenary. He reiterated the success of theCyprian-Russian ventures which will bereaching to the long term, especially in thefinancial sector.

After the networking coffee break we cameto the four Boardroom Dialogue Sessions –Rethinking Russia’s Competitive Edge;Russia’s Natural Resources; DesigningRussia’s Entrepreneurial Ecosystem andManaging Investments in Russia. I chose tolisten into the first of these discussionschaired by Glenn Proellochs, ChiefExecutive Officer, B-International,Switzerland – he was to probe the questionof ‘what are the new business models that willunderpin the Russia’s competitiveness in thefuture?’ First to speak was Carla Cico, ChiefExecutive Officer, Rivoli, Italy who said thatshe had worked in many countries but notRussia though it was a little tempting to

engage her firm there. However she felt therewere too many bureaucratic barriers toovercome as well as issue of bureaucracy toconfront and if possible, avoid. She furthernoted that there was only a small middle classat the moment that would constrain herbusiness; and that may be of concern to manyoutside firms observing the large Russianpopulation. And why she asked, did Russiaconcentrate its resources in high-technologyresearch rather than in agriculture and infra-structure? Alexander Borisov, GeneralDirector, Moscow International BusinessAssociation, Russia confirmed the largebureaucracy in Russia as well as the low levelof middle class (~20 %) that is too small toinfluence Russian social life. Even so, thereare many foreign firms who have come todominate some of the Russian commercialsectors and who have had more success inRussia than local firms and who have modi-fied product their lines to suit local tastes.Local firms are too apathetic sometimes, socontinue to lose market share and they con-sider the lack of middle class as symbolic.Sometimes too the fact of Russia having aphysically huge geographical reach providedits own barriers. Later a comment from theaudience noted that from medieval daysEuropean nations, in particular Italy, hadsupported the notion of individual townshipsand supported their development, whereasin Russia there seemed too much concentra-tion on Moscow or St Petersburg. Borisovconcurred with that comment but countered,

Russian Ambassador to Cyprus Vyacheslav D. Shumskiy with participants

Costas Ioannou, Chairman, Natural Gas Public Company of Cyprus and Harris Thrassou, Chairman, Electricity Authority of Cyprus

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saying that many in Russia have known littlepeace for decades so it may not be unusualfor the state to be overly protectionist, withundue oversight from the police or other lawenforcement agencies. He would like theyounger Russians to travel outside to acquirethe knowledge of and the habits of the morefree nations and to import these back toRussia so the old Soviet mentality may besuperseded. Wolfgang Lehmacher, Pre-sident Emiritus, GeoPost Intercontinental,France reminded us that he had set up abranch of the French Postal service in Russiarelatively easily by playing straight and withinthe rules (he offered no bribes for any speed-up during the processes of consideration andimplementation). He did accept that often thebureaucracy involved in getting a businessvisa or other official permissions is excessive,and tends to incur bribery. He thinks thetime for Russian brand awareness will comesoon as a few are respected internally inRussia. Further, he thinks any businessmodels set in Russia recently will need to besecuritized thoroughly and be built into astronger theory which incorporates anti-bribery regulations. Mikhail Treyvish,Chief Executive Officer, OmniGrade, Russiasaid his business was one of monitoringcustomer behaviours with respect to largeorders as some Russian business was indeedglobal and needed all the efficiency aids theycould acquire. However, he also said thatmany firms were not in good shape and stillworking with the old Soviet mentality (of the

‘cold war’ and of being behind a protectingwall). In many cases the market economydrivers were weak and most firms had onlya small experience in the market place so donot perceive the standard problems nor theirsolutions. Manthos Mavrommatis,President, Cyprus Chamber of Commerceand Industry noted what might have beenchallenging for the Russian firm was seen asan opportunity for the Cyprian firm whichthey grasped after the opening up of Russiain 1991. In retrospect he said it may havebeen better to focus less on Moscow and tohave reviewed opportunities in other largetowns where now the Russian governmenthas hinted at desiring stronger heartlandsgrowth.Therefore opportunities are readyfor Cyprus especially as there is a realisationthat Russia has more to offer than just oil andminerals – sectors such as hospitality andtourism beckon. Dmitriy Lisenkov,Managing Director, Russian Corporation ofNanotechnologies, Russia suggested the mainrisk for their firms is to become confused bythe divide of poor/rich or young/olddimensions of their demography as well asreceiving the confused messages during theirforthcoming Presidential election process.Some Russian managers think operationsoutside are indeed easier than inside Russiawith all its complexity, as the outside is morestable. In some ways it is seen that there is lessfreedom now ‘… than in the old Russiandays…’ but wishing for the past blinds us tothe ways of making the future better and

Mikhail Treyvish, Chief Executive Officer, OmniGrade, Russia,making a point on Russia’s competitiveness

Ilya Ponomarev, Chairman, Hi-Tech Subcommittee of the Russian Duma, Russia

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removing the great depression that sits onmany Russians.

The final plenary session of the morning fol-lowed and was chaired by Phidias Pilides,Chairman, Cyprus Investment PromotionAgency - CIPA, Cyprus discussing ‘Russiaand the World – what are the prospects forRussia’s global trade, technology and invest-ments?’The first discussant was Igor E.Manylov, State-Secretary, Deputy Ministerof Economic Development, Russia who notedthat Russia managed to avoid the deeperaspects of the financial crisis; none of theirbanks needed a rescue package for instance.However as with the rest of the global eco-nomy Russia suffered from a severe reductionof its inward FDI, and confusion in its localfinancial institutions as the rapidity of the fallshit them also; and later they suffered from alarge fall in the sale of fuels as the globaldemand rapidly fell. Nevertheless Manylovsaid they have progressed strongly into land-ownership reforms as there was a legacy ofmessy regulations that needed to be clearedup to allow faster progress in future develop-ments, such as agri-business includingforestry which in general has a poor outputrecord. He also introduced the Russian 2020Energy Plan2 which in the long-term willrationalise state energy policy aiming forenergy safety, energy effectiveness, budgeteffectiveness and ecological energy security.Of course, the attainment of these guidinglines and strengthening of control under the

energy development call for forming and therealization of the main components of stateenergy policy. Also there was an under-standing by government of the need toderegulate – as an aside; we might think thiswill open up further avenues for corruptionso the government in other departments willhave to remain diligent. Manylov concludedby noting that one of their prime aims is tocreate territories that encourage a rapiddevelopment cycle of R&D into realisableprojects.To this end there would be incen-tives offered such as zero or low taxation,fast Visa processing for outside employees,and low customs fees. Presently severalprojects are underway, even one in thefinancial sector aligned to the experiences inCyprus. Antonis Paschalides, Minister ofCommerce, Industry and Tourism, Cyprusspoke next supporting the previous speakerby noting several new joint projects wherethe two countries, though of greatly differingcharacter, were cooperating such as intourism and hospitality management. Hethought there was a good opportunity notjust in overseas tourism by the Russianpeople but also for the development ofregions in Russia with its outstanding naturalbeauty.Yet, as Cyprus is a member of the EU,it could support the ventures of Russia byopening its knowledge base to new venturesthat would be compatible with the needs ofthe EU. Or by aiding the developments insideRussia in its science parks: for instance,Cypriots might help them be somewhat more

Munir Majid, Chairman, Malaysia Airlines, Malaysia,on the global economic outlook

Proponents of contrasting visions of Russias future debated over what kind of economy will emerge

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open as with Silicon Valley in California andthus more attractive to outsiders in terms ofthe quality of both work and living environ-ments. Alexander Downer, UnitedNations Special Envoy to Cyprus was thefinal speaker in this session and he notedthat he would address a different issue – thatof unification across the island. As SpecialEnvoy he was intimately involved in the issue,from the local viewpoint up to the globalviews expressed at the UN Security Councilwherein he applauded the support of Russiain this unification process. Russia is in fact avery strong advocate for unification – which,said Downer, would most likely be bi-zonaluntil such a time that a further as yetunknown solution would be sought. Hereminded us of the enormous geographicalreach of Russia: we forget, he said, that aswell as being a European power (also thoughits strong relationship with Cyprus) it is aPacific power also. It is strongly representedin many discussions involving the nations inthe Pacific Rim.Their politicians must bequite busy.

We then broke for lunch reconveningafterwards at the plenary session chaired byFrank-Jürgen Richter when he asked usto consider ‘Envisioning the Post CrisisWorld Economy – What is Russia’s role inthis post crisis economic order?’The firstspeaker was Rajive Kaul, Chairman, NiccoGroup, India who reminded us of some ofthe statistics about India, with the globe’s

largest middle class and with a populationthat was very young overall (~40 % are under24 years old). His first contrast was with thedemographics of China wherein he concededthat their economic growth was a continuingphenomenon; but that soon its aging popu-lation would hamper this growth while Indiawould become stronger (we were told thatearlier when Deepak Premnarayen had saidthat soon India would become the power-house of the BRICs). However, turning toits relationships with Russia, he said India hadhad a long relationship which is continuingin several sectors, for instance in high tech-nology and even in the design and manufac-ture of the next 5th generation militaryfighter airplane. In other sectors he notedsynergies, in pharmaceuticals where Indiacould supply more to Russia; and in telecomsas well as IT; even in the gems and jewelleryindustries where India is the globe’s largestfinisher of these items. But, and importantly,businesses need much more clarity andsimplification of ‘the rules’ as well as a realstability in the relevant laws so they may beapplied transparently. Alexey K. Pushkov,Director Institute of Contemporary Inter-national Problems, Russia then spoke of thelack of new models of the global economy –it was the old ones that continually resurfacedand this may be an issue as we consider theUS recovery to be fragile, if not ‘empty’ as itstill has a large problem with the financingof its housing market.Thus there is a con-tinuing global uncertainty that does not allow

Frank Schauff, CEO,Association of European Business, Russia –Russian firms have been using distinct models of globalizing their organizations

Colin Hill, Executive Chairman, Hill & Associates, Hong Kong SAR and Amir Yaar, President, CIGATE.ASIA, Israel

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easy investment in Russia with its ownacknowledged problems of bureaucracy. Inaddition there is a wider political instabilityas Iran may proceed to the building of anuclear bomb and the US will inevitablyreact so creating a large uncertainty in theGulf Region and its supply of gas and oil.We are indeed on the verge of a new worldorder as the BRICs are being enlarged withthe addition of South Africa (we will thenwrite BRICS) who will act at the highestglobal levels and question US hegemony.Jacques Jean Sarraf, Chairman, MaliaHolding; Chairman, Lebanese RussianBusiness Council, Lebanon then took up thediscussion with a closer view of the Medi-terranean/North African accord (MENA).The Lebanese have always had a perhaps anodd attitude of “if it’s high risk, let’s go for it”.But now the present rapid change across theArab world has modified this older attitudesince so much is altering with so much in-stability that risk is not easy to compute.Even so, he like some others in this globalbusiness meeting considers that it is busi-nesses that will aid the direction of change,more so than governments. However, hehopes that Russia continues to play a strongrole in promoting stability in MENA, not justwith respect to the oil and gas supplies but towider commercial and political issues, and toinclude Cyprus as a pivotal player. DanielDuku, Chief Executive Officer,VentureCapital Trust Fund, Ghana provided a slightlydifferent view, that of the African states. He

said that ‘Africa is the last frontier’ yet Russiahas had a long relationship with many of itscountries especially after Putin took upleadership though the Russian financialinvestment is much smaller than that ofChina. Hopefully in the future there mightbe stronger ties with the Russians. SurenO.Vardanyn, Director General, MoscowInvestment and Russia Export PromotionAgency chose to emphasise that Russia is aEuro/Asian state so understood the attitudesof many cultures. However, looking inwards,it must more fully develop its hi-tech abilitiesin its new ‘Silicon Valleys’ and all outsidersmust be made welcome to come to Moscowand these centres. Through joint develop-ment re-export can be a possibility sogrowing a global brand image that could befinancially attractive for all sides. CharilaosStavrakis, Minister of Finance, Cyprusrounded off this discussion noting the longstability of Cyprus and its economic growthwhich was quite attractive to Russia in parti-cular. Even so, there were indications of someinstability across the EU so careful choice hadto be made when considering investing. Hereflected that Russia in the 1980s lost its wayand was down-graded by the internationalrating agencies (Standard & Poor’s forexample), but now Russia has bounced backexhibiting growth and with a more outwardlooking investment climate from whichCyprus has benefitted as a gateway toEurope.

Kieran Ring, Chief Executive Officer,Global Institute of Logistics, USA

Andrey A. Serebryakov, Managing Partner, Effective Capital, Russia and George Piskov, Chairman, Uniastrum Bank, Russia

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We moved then to the Boardroom DialogueSessions of which there were four: Made inRussia; Building Innovation Capacity; DrivingGrowth through Sustainability; and Scorecardon Logistics and Infrastructure. I chose toreview the second group’s discussion chairedby René Seifert, President, Level 360,India. He made us aware there were manydefinitions of ‘innovation’, then called firston Igor Agamirzyan, General Director,Russian Venture Company, Russia. He saidthat there was now some pressure set in placeby the Russian President to be innovative, andseveral centres ‘of innovation’ have been setup. But Russians were very poor in movingfrom the laboratory (where there was oftengood innovation across several sectors) tocommercialisation (which Western firmsseem to manage – some better than others,of course). Now in Russia there must be arenewed focus on Intellectual Protection,the lack of which causes inventors to benaturally secretive. The greatest issueperhaps is seen in our (Russian) lack ofbusiness planning abilities – for these skillswe need to attract outsiders, and in turnmake their entry as easy as possible. Heunderstands well the outsiders’ claims ofexcessive ‘red tape’ and continually varyingrules applied arbitrarily by officials whichlimits even the sales of western goods inRussia let alone the direct employment ofbusiness managers to aid the commercialisa-tion of Russian products. He reiterated thefact that various ‘Russian Development Plans

to 2020’ have stressed many legislativechanges needed to make development easier.Sergei Millian, Russian American Chamberof Commerce, USA said he hoped that Russiawould soon become a full member of many‘Chambers’ and discussion groups at a globallevel as this would ease the coalescence ofboth sides’ differences, and allow fasterglobal progress to be made on many issues.He noted that in the 1980s the US openedup ‘Techo Centres’ with large injections ofpublic money (or Government grants, etc).For instance, the beginning of the Internetwas a DARPA/university project; and SiliconValley and other similar high technologycentres were initiated by freely given grants.These centres became ‘hot beds’ of innova-tion as well as developing a high level ofsocial conversation and interaction. Russiahas to be able to respond in a similar way,and to do this has to take the step towardsmore freedom and transparency in thesecentres allowing ad hoc meetings to beconvened without ‘government spies’ beingomnipresent. Russia must also create agreater awareness of ‘Made in Russia’ so theproducing managers become proud of theirown brands, which thus creates a greaterstrength when moving to export. BogdanVacusta, Director,World Blogging Forum,Romania continued this theme of opennessand transparency by discussing the nature of‘blogs’ and ‘social media’ as a force fordevelopment and innovation.There was anelement of innovation in developing these

Edouard Cukierman, Chief Executive Officer, Catalyst Fund,Israel, making a point during the closing plenary

Alexey K. Pushkov, Director, Institute of Contemporary International Problems,with Michael Sarris, Former Cypriote Minister of Finance

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new media, but the greater good may in factcome from their innovative use – in researchinteraction, in commercialisation, and inbrand awareness campaigns. If given thechance, no doubt Russian society wouldrapidly take up Twitter, Facebook and themany ‘apps’ on mobile devices both forprivate use and for business use – it is thegovernment that has to reconsider its atti-tude towards greater openness. AndreyMikhailov, Director, Parliamentary Centre,Russia accepted that it was difficult to createmuch motivation (… for innovations) as therewas too little support from government,although they do intervene positively insectors they have deemed to be of strategicinterest – like IT: so Russia now has a verytechnically skilled IT workforce.Magnanimously he noted that Russia was notthe first state to have ministers favour oldtechnology instead of a disruptive new one,so he is pleased that the EU is becomingstronger in settling Russian patent disputes,and thus Intellectual Property rights will bebetter protected. Symeon Kassianides,Chairman, Hyperion Systems Engineering,Cyprus agreed that the Russian softwareindustry was vibrant and world class and ingeneral its IT sector has been involved withthe ‘standard’ Russian resources of oil andgas but more breadth is needed.There arethe legal frameworks to consider for theprotection of current projects and the needto move from a search for instant profits tolonger-term horizons of 5 to 10 years – but

vitally there is the need to alter the Russianeducation framework to allow a more creativesociety in the future years.This is itself along-term project as innovative changes inteaching regimes take 20 – 25 years fortheir results to become apparent in thosechildren just being born as of today. AlanHassenfeld, Chairman of the ExecutiveCommittee, Hasbro, USA continued thediscussion about ‘ideas’ and suggested weought to support a climate of ideation (theprocess of creating new ideas) which dependson many social factors, not just an injectionof cash to support innovators, though that isa positive first step. It is important to allowboth incremental innovation as well asdisruptive innovation… and to create anopen questioning or judgment of whetherthe idea is better that the existing state, andwhether it will be viable in the future, andwhether the new product has widespreadappeal. Furthermore, as some will say laterin this meeting, it is not a disgrace to fail.The best of innovators fail as this is thenature of the process. Suren O.VardanynDirector General Moscow Investment andExport Promotion Agency, Russia stressedthat even intergovernmental agreements canbe useful – such as those between the USand Israel for the joint development of manyproducts as they give the researchers a goodbacking for their financing and futurecommercialisation. In Russia it is still the casethat inventors loose all rights to their productif they move abroad, but there is little

Symeon Kassianides, Chairman,Hyperion Systems Engineering, Cyprus

Takis Hadjigeorgiou, Member of the European Parliament and Sven Behrendt, Managing Director, Geoeconomica, France

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guarantee that remaining in Russia will leadto implementation of their ideas, so manybecome despondent. It is quite evident thatthe Russian government must re-regulate tosupport its scientific community if it wishesto develop on a broad front in the future.Sachin Dev Duggal, President and ChiefExecutive Officer, nivio, Switzerland gave animpassioned speech about the mechanismsused to support innovators. In his opinionone must take the attitude that inventionshave a ‘long tail’ in so far as they may nothave instant success. Most need severalground-works to be put in place, so financialpay-back is in the longer term.There must bean acceptance of academic research as bluesky stuff for the sake of academic freedom;not all research has to be aimed at the shortterm. Often a special education is needed,one that commends exploration withoutcriticism, one that accepts cultural differen-ces, but always with support and mentoring.Business managers must not only promotethe successful, but also those who ‘did notquite make it’ but thus exhibit potential –the promotion is a way by which manage-ment can offer support (but if there are toomany failures the management must questionthe guy…). On that exciting note we leftfor a coffee break and later to attend furthergroup discussions.

The afternoon Boardroom Dialogs offeredfour choices: New Frontiers for OverseasInvestments; Managing Globalisation;

Moscow as a World Financial Centre; andRussian Technology Pioneers. I chose toattend the last group which was chaired byParag Amin, President and Partner, Radiqal,USA. He urged panellists to tell us how theycompeted in world markets.The first speakerwas Jost Doerken,Vice President, SAS,USA who described his product modestly asdata management, though he expanded onthis to have us note that now there wereterabytes of data that firms needed to haveanalysed very quickly to note trends, or formanagerial discussions with their “… whatif?” questioning of different scenarios. Hedoes a considerable volume of business inRussia (not surprising, as SAS is one of asmall handful of analytic firms with highcapacity potential). He was concerned thatif Russian firms wished to be globally com-petitive then they needed to be really inno-vative, not just imitative. He also acceptedthat Russian (IT and software students) werebrilliant but they had no business awareness,and had limited abilities to ‘explore out-of-the-box’ – an ability needed in global brandcompetition. Natalya Kaspersky, Chair-man, Kaspersky Lab, Russia followed andconfirmed these facts, accepting that for herwell-known brand of software that wasrunning in 95 countries at first her firm hadno ability in marketing and so had limitedsales range. It was only after employingoutsider staff to plan business expansion andto undertake global marketing schemes thatthe firm expanded and became a famous

Thanos Michaelides, Chief Executive Officer,Thanos Hotels, Cyprus

Thomas A. Kazakos, Director General, Cyprus Shipping Chamber and William Moon, Chief Executive Officer,Thuan Thao, Korea

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Brand. However, the description of originwas often hidden in the earlier marketingdays as “Russian” was often synonymouswith “enemy”. She does not greatly leverageher products as customers do not wish forover-complexity; and even now, with herwell-known [Russian] products the marketingis hard work. More generally she feels thatother Russians, even with good products, maybe too diffident, too shy even, to ventureoutside Russia. On the other hand MarkMinevich, President, Going GlobalVentures, USA was not restrained in offeringsuggestions to better ones business develop-ment. It is necessary he said to have a goodfit between product offering and perceivedneed by the client, and the seller must bealways focused on the customer’s needs, tolisten and to deliver.Yet, as Doerken hadmentioned, one must also be careful toeducate since a potential purchaser, almostby definition, will have little knowledge ofthe powers of one’s latest software offering.There was some interactive discussion be-tween the panellists and the audience whichamply filled the time remaining. One itemof note was from the Chair – Parag Amintold us he maintained a very brief but tightsoftware portfolio, and these had been chosenbecause they had few competitors and alsothere were quite high barriers to entry. Evenso, product maintenance was of paramountimportance.

The closing plenary discussion on LeadingChange in a Globalised World was chairedby Frank-Jürgen Richter – he askedpanellists to consider the key building blocksand the intrinsic business models that, intheir opinion, lead to success. First to speakwas Akaki Beruchashvili, Executive VicePresident, Gazprombank, Russia who sug-gested firms ought to be more open andacquire assets outside their home country.He conceded this may be difficult for Russianfirms as there were still too many barriersto transparency and to openness, such asopaque rules and the long Visa applicationprocesses.Yet, on the whole, he wasoptimistic for the future. Anil Kumar,Chief Executive Officer, Ransat Group,United Kingdom said one must understandthe local culture, in fact understand howboth the seller culture and the buyer culturewould interact. He noted in one of hisventures his 1000 domestic staff were happyto continue working mostly in their localways and not be forced to totally alter tomeet the ways and demands of the newoperator from outside.This is quite a subtlepoint as we will note in the summary below.Kumar also said he was firmly against bribesin any country, especially as a way of businessas these had become part of the rent-seekingby many local officials. Carla Cico, ChiefExecutive Officer, Rivoli, Italy, said she didnot yet work in Russia though hadexperience in the other BRICs countries.She said she was not a philosopher, but that

Nicos Syrimis, President, Institute of Certified Public Accountantsof Cyprus, Cyprus

Minister Igor E. Manylov with UN Special Envoy Alexander Downer and CIPA Chairman Phidias Pilides

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understanding the other’s culture was fardeeper than simply learning to speak thelanguage, though a language facility was ahelp. Another aspect for success is thepresence of a strong middle class as it is theywho can exert influence on their government,and they too can induce and alteration of theincoming product to better suit local needs.Next, Natalya Kaspersky, Chairman,Kaspersky Lab, Russia reiterated that Russiansdid not know how to commercialise theirideas and had not learned that they neededto hire outsider staff. Of course to do thatthe social situation of the outsiders needs tobe better constructed and the bureaucracyneeds to be minimised.While she understood‘glocalisation’ she felt it did not often applyto many Russian firms as there was still toomuch fear of the Russians as “… the enemy”from the days of the Cold War and the Sovietera. Sadly, too many Russian officials reflec-ted attitudes of the Soviet time so hamperedgrowth and innovation. Jeffrey Chen, ChiefExecutive Officer, Neopac Lighting Group,Taiwan, noted that Russia had borders with16 countries so had to manage many differentcultural and behavioural differences. Perhaps,similar to its relationship with Cyprus, Russiamight consider Taiwan as a “… gateway to thePacific”. In his opinion,Taiwan would be agood hub. Sachin Dev Duggal, Presidentand Chief Executive Officer, nivio, Switzer-land again gave an impassioned speech sayinghe was encouraged by the progress of theBRICs (BRICS) but saddened that not as

much innovation had taken place as heexpected.Too many firms simply sell in a‘price arbitrage’ mode without looking forreally innovative products that would sellglobally.What is needed in many places, notjust Russia, is better teaching for youngpeople so they will more naturally becomeexplorers of novelty rather than just followersof rules. Russia is too inward looking,perhaps from the protectionism of “… theWall” and that during the years since its fall,and the break-up of the Soviet Union theyhave not allowed innovation to grow; or untilnow, be encouraged by the government.Without more openness, a revision of itsregulations and a greater freedom acrossmany aspects there will be fear expressed onthe part of inward investors and that willnot generate greater wealth for the mass ofRussian people. Edouard Cukierman,Chief Executive Officer, Catalyst Fund, Israelnoted that their market has always been smallso producers always look outside.Yet someof their more recent developments inengineering and IT have been considerablyaided by Russian immigrants: it was a successbuilt on cultural integration. InevitablyRussia has a different mode of attractingventure capital than Israel, but also it is lessvigorous in that task. It must become moretransparent.

Participants listening to the remarks of Minister Igor E. ManylofWhat are the prospects for Russia’s global trade, technology and investments ?

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We completed our day of discussions overdinner when we were first addressed by HisBeatitude Chrysostomos II., Archbishopof New Justiniana and all Cyprus who ex-pressed his joy and appreciation of thisgathering of Russians, Cypriots and manyothers who had brought to the discussiontable many good ideas. He blessed themeeting. Fr Georgy Roshchin,Vice Presi-dent, Moscow Patriarchate Department forChurch Society Relations, said how pleasedhe was to hear such optimism mentioned bymany speakers. He expected all of us mightinfluence our respective businesses andgovernments for the better. He too blessedus for the future.

Throughout the meeting many delegatesmade adverse comments about the levels ofbureaucracy that seemed to be endemic inRussia.The issues were raised by Russiandelegates and outsiders alike, but both groupswere hopeful that in future the level ofbureaucracy would be reduced. Corruptionis a global and long-standing problem, and itseradication is not aided by loudly accusing‘the others’. For instance, the accusationsagainst US firms like Xerox, Enron,Worldcom shows us that some judiciary arewilling to stand up and help to clean-up badacts. Now they may have to act againfollowing the WikiLeaks denunciations byJulian Assanage and his followers accusing awide range of enterprises of dubious acts andoperations3. Even the election of govern-

ment officials in the US is perceived assomewhat corrupt by the average American.4

Russia however seems about to change forthe better.

Russia wishes to become more transparent.On 16th February 2011 Prime MinisterPutin said 5

Russia’s development strategy through2020 should be finalized in an open,transparent way, Russian Prime MinisterVladimir Putin said on Wednesday. “Themain priorities will remain higher livingstandards, innovation and market institu-tions.The work of the expert groupsshould be open and democratic, with allreasonable approaches and alternativestaken into account. Nothing must berejected out of hand without a construc-tive and professional discussion. Allproposals will be submitted to a publicdiscussion, which will further increasepublic trust. Further, it is also critical totake into account all the mistakes thathave been made and will have been madeby late 2011, when the strategy shouldbe ready.”

These aims are suggestive of changes that maybe taking place in the general managementof Russia and indicative of its re-awakening.It will take some time to alter the ways ofRussian business.This is not only a matter oflessening diktat, and reorganising rules andregulations, but also one of changing thebehaviour of its managers.This will be a

Hans Jochum Horn, Deputy Chief Executive Officer,Renaissance Group, Russia

Khawar Qureshi QC, Head, McNair Chambers, Qatar, talking about Russias Natural Resources

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slow process, and it will not fundamentallyalter individual attitudes as they are veryslow to change. After all, this is the basis ofdistinguishing cultures one from the other.On the other hand, organisational andregulatory change can alter individuals’perception of their position in society andraise their hopes.

Kets de Vries et al (2004)6 said -The historical roots of Russia are in athousand-year-old absolute monarchy …which did not provide the best environ-ment for the free expression of the self.Russians are reserved; they don’t showmuch of themselves, at least not tostrangers.… The first organisation we becomeaware of is the family: if the family tellsyou ‘be careful, don’t open up too muchto the outside’, this will have implica-tions later when you are working in anorganisation.The assumption is: becauseyou don’t know the person, he or shemight turn out to be dangerous. Buildingtrust takes quite a long time.

The author notes the Russian is rather likethe fabled Russian bear which can exhibitbouts of frantic activity as well as longperiods of somnolence. The Russian peopleoften hope their leaders will give the ordersthat they may quickly fulfil before returningto a form of somnolence. But don’t befooled – they are awake, and watchful.

The modifications of the regulationsimpacting on the Russian peoples and theraising of their hopes are only part of theprocess of modernization. Another vitalaspect is in increasing the awareness of eachside of the other in work relationships, whichis not only an internal matter for Russians,but also one of outsiders with their relation-ships with Russians. I wish to emphasise thatit is only through an intimate cultural aware-ness that a fulfilling business can develop.Otherwise we will see a continuation of the‘arms length contractual relationship’ inwhich the majority of the Russian employeessimply ‘keep their heads below the parapet’rather than developing a trusting relation-ship. In part this is what His BeatitudeChrysostomos II., Archbishop of NewJustiniana and all Cyprus referred to whenhe addressed us during the final dinner:‘Weneed to address moral concerns and weneed to build trust. Money imposes a hugeresponsibility upon its owner.’

I think we see signs that the bear is awakening.Some delegates in Cyprus suggested theRussian is timid, and is shy; being unconfidentin themselves and their product. But I feel,from the general tenor of the meeting, thatthe future looks bright for Russia – the shygiant is wakening.

1 (http://en.wikipedia.org/wiki/BRIC)

2 http://ec.europa.eu/energy/russia/events/doc/2003_strategy_2020_en.pdf

3 See Russian support for Assanage at http://www.guardian.co.uk/media/2010/dec/09/julian-assange-nobel-peace-prize

4 http://www.sourcewatch.org/index.php?title=Campaign_finance_(U.S.)

5 MOSCOW, February 16 (RIA Novosti) (see -http://en.rian.ru/russia/20110216/162634978.html)

6 Kets de Vries M F R, Shekshnia S, Korotov K & Florent-Treacy E (2004) New Russian Business Leaders. Cheltenham, Edward Elgar

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Cyprus:The EU Gatewayfor Russian FirmsBy Phidias Pilides,Chairman, Board of Directors, CIPA

I am particularly pleased that Cyprus waschosen as the host of the second GlobalRussia Business Meeting. Cyprus and theRussian Federation maintain close andfriendly relations, continuing regular andconstructive discussions on a variety ofpolitical, economic and business issues. Bothcountries have always relied on the supportof each other in the international arena and Ibelieve that this will deepen and expandeven further through actions that wouldincrease certainty among the businesscommunity.The Global Russia BusinessMeeting has certainly provided us with asolid platform to communicate, collaborateand exchange ideas on a variety of subjectsranging from globalization to financialtrends and issues.

It should be pointed out that despite theeconomic crisis, Cyprus remains one ofRussia’s important economic partners andthat Russian companies have a strong hold inthe Cyprus market, strengthening evenmore our investment activity.

The Cypriot-Russian co-operation isparticularly successful in the field ofeconomic and business relations. Cyprusand Russia experience a close knit businessrelationship as evidenced by the fact thatForeign Direct Investments (FDI) intoCyprus from Russia have exponentiallyincreased in the past couple of years.Specifically, in 2007 Russian FDI flows intoCyprus amounted to 279 Million Euros; in2008 they amounted to 736 Million Eurosand in 2009, to 1.5 Billion Euros.That is anastounding 439% growth in only threeyears, from 2007 to 2009, despite the globalfinancial crisis.

In the case of Russia, Cyprus FDI flows intoRussia amounted to 1358 Million Euros in2008 and 317 million Euros in 2009.Theseflows focus on Financial IntermediationServices; Real Estate and Business Activities;Trade and Repairs; and Transport andCommunications.We expect that both FDIand economic growth will continue to growin the future in line with the current trendsexperienced both in the international,Russian and Cypriot economies.I would like to emphasize that the recentsigning of the Protocol between theRepublic of Cyprus and Russia Federationwill further contribute to the strengtheningof the existing solid bilateral investmentrelationship; while at the same time it willact as a catalyst of new investmentopportunities between the two countries.

This signature was the highlight of a seriesof negotiations that had as their principalaim to improve the business relations andthe flow of trade between Cyprus andRussia by amending the existing tax treatyto take into account developments in the taxlegislations of both countries and combatingtax evasion by ensuring that the treatyprovisions are benefiting genuine businessrelations.

Phidias Pilides welcoming participants on behalf of the Cyprus Investment Promotion Agency

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Both countries support each other andactively attempt to find opportunities forpartnership.The implementation of theProtocol will not only enhance the businessenvironment, but also will benefit otherareas of growth. An event such as the GlobalRussia Business Meeting enhances therelationship and provides a strong platformfor further collaboration.

Cyprus provides Russian investors with awide range of rewarding opportunities invarious sectors, particularly in the areas ofBanking and Financial Services, InvestmentFunds, Shipping, Energy as well as thedevelopment of large-scale andinfrastructure projects. It is expected thatthese sectors will continue to grow in theshort-to-medium term in line with currenttrends.

Cyprus established itself as an internationalbusiness, financial and services center thatcan cater for the specific needs of eachinvestor and provide customized qualityservices that enhance the ease of doingbusiness.

Over the years, Cyprus has succeeded inconsolidating its position as one of theEuropean Union’s most advantageousinternational and financial centers. Itsunique geographical position serves as anatural bridge linking Europe, Africa andAsia and has assumed an even greaterimportance following the country’saccession to the European Union in 2004and the European Monetary Union in 2008.

Moreover, the fact that Cyprus hastraditionally established strong political,economic, trade investment and cultural tieswith Europe and many countries in itsregion and beyond, sets the island as alocation for entrepreneurs wishing toestablish their business or use it as a hub toaccess the European Market.We are

working hard to achieve sustainablemacroeconomic growth, price stability andto create the conditions for the maintenanceof a strong and vibrant economy.

International investors can also benefit froma plethora of other competitive advantages,such as an attractive corporate tax of 10%,the lowest in the EU, and a network ofDouble Taxation Treaties with more than 45countries; a friendly business environment;an advanced transport andtelecommunications infrastructure; highly-educated and skilled multilingual workforceas well as high standard of professionalservice providers.

Foreign inward investment is recognized asa major contributor to our country’ssustainable economic development andsocial prosperity. Our investment policy isvery liberal and offers significant benefitsand many niche opportunities to investorsacross all sectors. Cyprus is activelysupporting the development of high value-added, technology-based sectors thataugment the island’s innovative capacity,international competitiveness and status as aknowledge economy.The island strives toboost investment in areas such asinternational banking and financial services,shipping and ancillary services, and businessservices as well as in large development andinfrastructure projects.

Azamat Abdoullaev, Managing Director,EIS Intelligent Systems, Russia

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Cyprus is well aware of the importance ofco-operation in the political, economic andbusiness field with Russia in order to copesuccessfully with the challenges as well asthe changes happening rapidly in the world.In this effort, we look to Russia as a well-trusted partner and collaborator.Thismeeting has allowed us to work with keyrepresentatives of the Russian public andprivate sectors for the exchange ofinformation, ideas as well as theidentification of other areas of growth.

I would like to conclude by pointing out thatthe benefits and opportunities the Republicof Cyprus presents to the global businessand investment community are tangible,substantial and safeguard overseasconfidence in our economy as a financial andbusiness center. Lastly, as the internationalbusiness roadmap evolves, it is certain thatCyprus and Russia will continue toexperience fruitful business collaborationboth in existing and future opportunities.

Lou Marinoff, Professor of Philosophy,The City College of New York, in discussion with Alexey K. Pushkov

Boardroom dialogue on branding

Demetris Christofias meeting with participants

Marios Garoyian, President, House of Representatives, Cyprus –Russia is one of the most important economic partners of Cyprus

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Session on Modernizing Russia – How can capital and ideas transform the Russian economy ?

Francis Hoogewerf, President, Hoogewerf & Co, Luxembourg, Leonid Koshelev, Chairman, Jet 2000, Russia,Andreas E. Mach, CEO,ALPHAZIRKEL, Germany

Sheikh Saif bin Hashil Al-Maskery, Chairperson, Nawras, Oman,on sustainable growth

During the welcome reception Victor Sedov, President,The U.S. Russia Center for Entrepreneurship,Russia, moderating the panel on entrepreneurship

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Limassol SummitFocuses onCyprus-RussiaFinancialProspectsBy Financial Mirror,April 13, 2011

‘Global Russia Business Meeting’, one of thebiggest meetings of business leaders andsenior government officials from Russia andworldwide, took place in Limassol with 300leading personalities from 30 countriestaking part.The conference was hosted at theinitiative of the Cyprus Investment PromotionAgency (CIPA), in an effort to promote theisland as an attractive business and investmentdestination.

Frank-Jürgen Richter, President ofHorasis Global Visions Community, theorganiser of the conference, said that ‘it isvery important to meet and discuss thefuture of our economies and ways to restoreconfidence, as well as how Russia can con-tribute to overcoming the global financialcrisis’. He said that ‘many of the entrepre-neurs participating in the conference areready to invest and rebuild our economies’and added that most Russian companiesinvesting in Cyprus are using the island as amedium, channelling their investmentabroad. Asked about the financial crisis,Richter said that ‘the crisis is over’, eventhough some countries in Europe, likeGreece, Spain and Portugal, continue tohave problems. He said finally that there aresigns of recovery in these economies.

CIPA President Phidias Pilides said that thefocus of the conference was on the prospectsand challenges of Russia’s economy, addingthat this is an issue of concern for Cyprus,with Russia being its main business partner.

He added that the conference was attendedby high level representatives from largeorganisations, as well as a delegation of theRussian government and Gazprom.

Former Finance Minister Michalis Sarrissaid in his statements that the focus was onemerging economies and their contributionto the recovery of global economy. He notedthat the services sector in Cyprus may also beof use for countries such as China and Brazil,whose economy is expanding throughoutthe world.

Manthos Mavrommatis, President of theCyprus Chamber of Commerce and Industry(KEVE) stated on his part that strengtheningfinancial relations between Cyprus and Russiamay take many forms. He further noted that‘it is clear that the Russian Federation is notonly Moscow and St. Petersburg’ and addedthat Cypriot businesses should also focus onlarge cities of Russia’s vast hinterland.‘TheRussian government’, he said,‘wants to de-velop the interior of the country and improveits infrastructure’. He added that the Cypriotbusiness community is following theseprospects, looking for ways to benefit fromemerging growth prospects. Mavrommatisconcluded that financial relations with Russiaare not limited to the financial sector, as wasthe case until today, but added that the deve-lopment of Russia’s economy creates moreopportunities in sectors like tourism.

Participants taking notes

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During the networking lunch

Continuing discussions during a coffee break

At a breakfast session

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Alexander Downer, United Nations Special Envoy to Cyprus – the Cyprus problem can be solved

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UN Envoy:Cyprus Problem Can Be SolvedBy Famagusta Gazette,April 12, 2011

Abandoning the effort to achieve a solutionto the Cyprus problem on the basis of a bi-zonal, bi-communal federation would meanabandoning any hope of reunifying theisland, UN Secretary-General’s SpecialAdviser on Cyprus Alexander Downer hasstressed. In his address at the Global RussiaBusiness Meeting held Monday in Limassol,Downer referred to the efforts undertakenin the context of the direct talks between theleaders of the two communities in Cyprusaiming at achieving a solution on the basis ofa bi-communal, bi-zonal federation whichwill reunify the island, divided since the1974 Turkish invasion and occupation.

Downer said that a solution to the Cyprusproblem is difficult to be achieved due tothe history of the island, the distrust andsuspicion existing between the twocommunities. He also said that convergenceshave been achieved on some issues discussedduring the direct negotiations while someother issues are more difficult to reach anagreement, bringing as an example the issueof property.

The top UN envoy on Cyprus expressedcertainty that the Cyprus problem can beresolved on the basis of a bi-zonal, bi-communal federation, adding that countriessuch as Russia and its colleagues at theUnited Nations Security Council have alwaysbeen interested in solving the problem andreunifying the island. Moreover he expressedthe opinion that there is no other formula tosolve the Cyprus problem than that of bi-zonal, bi-communal federation.

He said that not everybody in Cyprus likesit, adding that some dislike it. ‘Abandoningthe effort to achieve a solution based on abi-zonal, bi-communal federation wouldmean abandoning any hope for reunificationof the island,’ Downer warned. In conclu-sion, Downer referred to the important roleRussia in the world economy and to thecooperation between Cyprus and Russia invarious sectors of the economy.

Musicians welcoming participants

Continuing discussions over the farewell dinner

Registering participants View from the main venue

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