London can justifiably argue its case for being the strongest global financial centre. Perhaps this is why London not only does not see Moscow’s pretensions to becoming a major financial centre as a threat, but the UK capital has shown its willingness to help Moscow achieve that status. City Week welcomed Alexander Voloshin, who has been given the challenging task of making Moscow’s financial dream a reality.
Mr Voloshin gave an upbeat but realistic assessment of the difficulties facing Moscow. Two key words in his argument are “modernisation” and “diversification”.
Most observers of the Russian economy agree that for too long the economy has been too dependent on revenues from natural resources, especially oil and gas. Much more attention should be paid to other sectors, such as manufacturing, agriculture and, in general (because this covers all sectors), the development of small and medium businesses or enterprises (SMEs).
Yet part of the problem faced by Russian entrepreneurs who want to create a vibrant SME sector in the country was illustrated by the session on Russia at City Week. The session, in which Mr Voloshin made his keynote address, was entitled: “Financing Russia’s Modernisation Programme”. But the two examples of “financing” which were then given were of huge projects for Gazprom (the gas giant) and Lukoil (the oil giant). Even some of the panellists seemed agog at the number of billions of dollars being discussed.
The Russo-British Chamber of Commerce is a bilateral chamber, helping not only British businesses work in Russia, but Russian companies into the UK market. One reason why few Russian companies operate in the UK is that Russian SMEs find it exceedingly difficult to get hold of the necessary finances to grow their business.
It’s amazing what an entrepreneur can do with a loan which is just a fraction of the figures bandied about by the oil and gas giants. One of the biggest failings of the Soviet system was that it set out to crush initiative. Ultimately, this is a major reason why history will judge the Soviet system as having failed. But the entrepreneurial spirit is alive and well in Russia.
Fast forward to the 21st century and see the way in which Russian entrepreneurs have created imaginative and exciting businesses. But look also at the way in which those businesses are too often prevented from flourishing because of a lack of sensible financing and a stifling bureaucracy – much of which is pre-revolutionary, but which was honed under the Soviet system.
“Modernisation” and “diversification” have to be key words in Russia’s development – not only in the next few decades, but starting now. More than 95pc of UK businesses are classified as SMEs (generally, a small business employs fewer than 50 people, a medium one fewer than 250). Until the Russian economy comes anywhere near that figure, “diversification”, and therefore “modernisation” will remain a myth.
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