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City news
Two Parallel Narratives of Russian Modernization
06.21.2010 19:27

The St. Petersburg International Economic Forum Thousands of business types, government leaders and their entourages — think tankers, brisk personal assistants and, yes, journalists — descended on this city of seemingly eternal vistas last weekend for what has become a new annual ritual, the St. Petersburg International Economic Forum.

Here, in their proudest and most palatial setting, the Russian government (heavily composed of men from St. Petersburg) meets Davos Man, that creature of the market-driven 1990s and early 2000s who also inspired much of the lurching journey to capitalism that has occurred here.

As befits the home of Pushkin and Dostoyevsky, there are thus two parallel narratives. One is of the world economy, market regulation and imperfect global governance. The second is of Russia, and of human quests not measured by percentage points, bond spreads and exchange rates.

There was plenty of fodder for the first narrative. Late in the proceedings, on Saturday, came word of China’s newest mini-turn in its long dance toward revaluing its currency, a move clearly timed for next weekend’s Group of 20 summit meeting in Canada. The Russian finance minister, Aleksei L. Kudrin, told journalists that China’s move had little immediate effect on his tasks.

And they are enormous. President Dmitri A. Medvedev presided over this year’s meeting with a well-received message: We’ve changed. We want foreign money, we will ease capital gains tax, “we are on the hunt for solutions.” There was much talk of a new Russian “technopolis,” which Mr. Medvedev, who is off to the United States and especially Silicon Valley right after Canada, wants built outside Moscow.

At 44, Mr. Medvedev may be the man to yank more Russians into the 21st century. He boldly fixed a goal of getting 90 percent of Russians onto the Internet, with 60 percent on high-speed broadband by 2015.

He and his smart advisers obviously want not just to school Russians in technology but also to open the borders and cumbersome visa procedures so that, as Mr. Medvedev put it, foreigners might come here to realize their dreams and make it “their second home.”

So far, foreigners have flocked to Russia mostly to make money. And money has been made, by several outsiders and a certain elite of Russians now long past the thuggish behavior of the 1990s. Now they live a charmed life as remote from the middle and lower classes of their land as Wall Street high fliers are from the new poor in the United States.

To underscore how much he wants, especially, to open up to Europe, Mr. Medvedev finished the summit meeting with a warm exchange with President Nicolas Sarkozy of France. “Nicolas” and “Dmitri” vowed to get the G-20 to pay attention to their joint desire for market regulation. Then they signed a bevy of agreements that set the seal on Russia’s strategy of making deals with individual European powers — first Germany, then Italy, now France — which has helped hinder a united approach in Europe to its dealings with Moscow.

Two years ago, the Russians were flying high on soaring oil prices. Even when Lehman Brothers collapsed that September, Mr. Kudrin may have been well briefed, but the government’s public line was that it was all an affair for evil speculators on the West, and that the consumer party could continue.

The Russian government wised up over the winter of 2008-9, tapped into the billions they had socked away during the oil boom and got through a tough year in which G.D.P. sank 8 percent.

Better times are palpably here. Jim O’Neill, the Goldman Sachs analyst credited with inventing the BRIC acronym for the new economies of Brazil, Russia, India and China, said he would not be surprised by growth of 7 percent or more in Russia this year.

Mr. O’Neill was, however, realistic, weighing vaunted Moscow government goals against government inaction in the 70 percent plunge in the Russian stock market during thex crisis. “It’s easy to talk,” he said. “You’ve got to do.”

Another longtime connoisseur of Russia, Klaus Mangold of Germany, was even tougher. He heads the influential committee that oversees trade relations with the East in Germany, Russia’s biggest European business partner. “Russia cannot go further” depending only on raw materials, he said bluntly. “This is a deadlocked situation.” Without more technology from Europe, and better relations with Europe, talk of modernization is empty.

Mr. Mangold detects that Russian business partners are “increasingly unhappy” with their government. German businessmen, more accustomed than Americans to doing business via statesmen, mutter about corruption and the lack of legal rights in Russia — despite the excellent ties, say, between Vladimir V. Putin and former Chancellor Gerhard Schröder.

For foreigners, the St. Petersburg forum is a useful one-stop shop to meet top Russians. But even some of those Russians, speaking privately, are not quite sure of its point: they can meet each other easily in Moscow, and deal with foreigners as they wish.

Which brings us to the Russia outside of percentage points. In St. Petersburg, one of Europe’s five largest cities but still remote from the pace of Madrid or even Warsaw, the biggest event this weekend was not the forum, but the annual street party at which pupils and students celebrate graduation.

The wealth in Russia is often so drained by corruption that it is a trickle by the time it reaches the people. On this occasion, St. Petersburg’s rulers spent quite lavishly to conjure up a laser and firework show all along the embankments. The Cirque du Soleil performed. Hordes of teenagers, but also many other inhabitants, crowded the bright streets of the white nights.

By any standards, it was a festive occasion in a stirring city, where the ghosts of revolution and World War II siege still swirl. Mr. Medvedev and his men from St. Petersburg will need to conjure much more such spirit and enterprise if they are to succeed this time in their oft proclaimed goal of modernizing Russia.

News source: NYTimes.com
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