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The Right For Global Recognition, Page 3

The investment in construction has tended towards stagnation, constituting 8% of total direct investment. This can be explained by two reasons:

  • Growth of investment in construction can only be based on population income growth and on growth of demand in developing business. For this to happen, investments ate needed in production and services.
  • Despite the rapid growth of investment in construction is impeded by a lack of proper investment project including the reconstruction of the historical center of the city.

The USA and Finland remain the most stable investor countries in St. Petersburg. Finland's share varies between 10% and 22%, that of the US -between 18% and 35%. The statistical data for the first quarter of 1999 confirmed the growing role of the USA (the proportion of the country's investment reaching 53%).

Other counties have demonstrated investment surges during various periods. Their companies have heavily invested for short periods (the Netherlands: Unilever's investment in cosmetic production in 1995; Germany: Knauf investment in construction materials production; Great Britain: Rothmans investment in tobacco production in 1997).

Late 1998 - early 1999 has been marked by a growth of investment from tax-haven countries (investments from Cyprus, Luxemburg, and to some extent from the US cannot be traced to any country). To some extent this tendency is a reflection of the fact that Russian capital, exported from the country for reasons of economic instability has started to come back through St. Petersburg.

What spheres of the city's economy will be, in your opinion, among the most attractive/or investment in the nearest future?

Forecasting the prospects of the investment process's development in 2000 and 2001, one can say the following:

The distribution of foreign investments among industries will probably follow the same pattern. Shortterm projects in telecommunications, trade and catering will remain among the most attractive.

Import-saving production projects will remain the most attractive for investors in production. The light industry and food sectors, electronics and electric appliances, building materials and fittings and timber processing will continue attracting the attention of investors. Investments in automobile construction, resource-saving and machine building (including electric) for the extraction of raw materials and export-oriented production in general will become more attractive.

We cannot exclude a growth of interest in the development of the transport infrastructure of St. Petersburg, mainly in port facilities. Projects will be carried out in developing property

One of the most important tasks set before your Committee is Petersburg's integration with the Baltic countries. That region, now being one of the centers of global economic growth, is of prime importance for us. What is the input of St. Petersburg into the development of this integration process?

The role of St. Petersburg in the Baltic Region grew markedly in 1996-1999. Our international activities developed along the following lines:

  • St. Petersburg's proposed the Baltic Initiative, which includes the promotion of several international projects: «St. Petersburg as Russia's European Gate», «The Baltic Bridge», «A Clean City», «The Ringroad», «South-West Treatment Facilities», etc.;
  • Active participation in discussions of the European Union Northern Dimension political plans and the action plan;
  • Founding a network of permanent Forums, where St. Petersburg plays a leading role:
    • major Baltic cities conferences;
    • traditional meetings of the «Baltic Trio» - the Governor of St. Petersburg and the Mayors of Helsinki and Stockholm;
  • Promotion of the Eurasian (East -the Baltic Sea) direction in collaboration, i.e. using the role of St. Petersburg as a link between the Baltic Sea States, the CIS and Asian countries.

St. Petersburg places a very high priori-ty on collaboration in the Baltic Region and in the North of Europe. Our main objective is stable growth based on regulated competition and reasonable conservatism.

The Baltic collaboration is continually developing, especially in the spheres of culture, social security, environment protection, the economy and trans-portation.

Vivid examples of that in the sphere of culture are the Days of Turku in St. Petersburg, a monument to Pushkin unveiled in Narva, the RFS «Mir» visits to Archus and Portsmouth.

In the sphere of environmental protection, we think it is important to collab-orate in the construction of water treatment facilities in the South-West of St. Petersburg, processing toxic industrial waste the setting up of an International Center for Environmental Safety in the Baltic Region, the elimination of oil spills, providing nuclear power plant safety

In December 1998, the Government of St. Petersburg signed an agreement on cooperation in social sphere with Denmark. The following projects have been or are being realized with the aid of Danish funding:

  • A war veteran center has been opened;
  • A shelter has been opened for the homeless;
  • The Raufhus Hospital is carrying on with the Infant Habilitation project;
  • À $10 million project involving the construction homes for 125 officer families who had come from the Baltic States has been finished.

In the spheres of the economy and transportation, we think that the pro-jects «the St. Petersburg Ringroad», «The Baltic Bridge» transportation cor-ridor, «The Northern Sea Route» trans-portation corridor, «The Arctic Bank of Reconstruction and Development» and other bilateral projects can be carried out within the framework of «EU Northern Dimension» program.

St. Petersburg is the largest beneficiary of non-commercial technical assistance rendered by separate countries and international organizations, and, first and foremost from the European Union.

The amount of technical aid coming from all the countries of Western Europe in 1999 remained at about the same level, though the USA is gradual-ly decreasing its activities in providing technical assistance to Petersburg. In 1999, the USAID office in Petersburg, which controlled such projects, was closed.

Thus, in terms of two-way programs, important events were the opening of an ecological information center, cre-ated jointly with the Netherlands and

Finland, the introduction into service of a gas boiler through the resources of the Danish government, and the opening of the first Russian laminated surfaces production line (the Dutch PSO program).

1999, in St. Petersburg, through the leading donor - the European Union (the TACIS program) - a series of pro-jects with two year timeframes were implemented, their total value from 1998 amounting to fifty million Euros. They included projects in transport (30% of the total volume of financ-ing), education and the training of personnel (24%), ecological protec-tion and atomic energy (21%), struc-tural rebuilding and the development of enterprises (8%), social provision (7%), telecommunications (6%) and healthcare (4%).

Among the major TACIS projects in St. Petersburg in 1999, the following are worthy of special attention:

  • The restructuring of ÎÀÎ Izhorskie Zavody ('Izhorskie Factories')
  • The development of a teleport
  • The development of a North-western transport corridor
  • «A comprehensive regional and municipal policy»
  • Treatment of toxic waste in St. Petersburg and the Leningrad Oblast (the Krasny Bor complex)
  • Requalification of retired officers (500 people)

The importance of cooperation with the Baltic countries can be seen in the fact that 40 % of the city's trade turnover comes from external trade in that region.

Petersburg holds a special position in the Baltic Region due to the fact that it has extensive connections with the states of the Caucasus, India, Central Asia, China and other Asian countries, with India and China being the two biggest importers of industrial prod-ucts from St. Petersburg.

Thus, I would define the role of St. Petersburg as that of the organizer of the great axis - «the Baltic Sea - East».

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