Invest now, Russia says - warning signs loom

Jan 23, 2013, 3:57 PM EST

DAVOS, Switzerland (AP) — Is Russia a haven of promise for the bruised global economy? Russian officials insist it is — and are bringing out the vodka in snowy Davos to change the minds of critics who say "nyet."

Prime Minister Dmitry Medvedev and a bevy of top Russian officials and CEOs are trying to make the case at a forum for the world's business elite that Russia is the place to invest in 2013.

Russia will leading the G-20 and is preparing to host the Winter Olympics in Sochi next year. Its debts and unemployment are low, its economy keeps growing, its CEOs are optimistic. It's blanketing the World Economic Forum at Davos with events, parties and press releases.

But business executives burned by state interference or pervasive corruption in Russia argue that things aren't as good as they look. And even Davos organizers warned in a report this week that Russia could grow more risky — and not less — in the years to come.

Medvedev sent a mixed message Wednesday, courting investors and insisting that his country is misunderstood — all while criticizing European energy regulations and visa policies and reiterating promises on political freedoms in Russia that have long gone unfulfilled.

The European Union is pressuring Russia to apply EU rules to the European operations of gas giant Gazprom, just as Russia is struggling to maintain its dominance of Europe's gas market.

"We are seeing new barriers erected in the way of efficient work. And it is very sad because they are retroactively changing the rules of the game," Medvedev told a crowd that included CEOs with assets in Russia, the leaders of non-governmental organizations and a few critics of the Kremlin.

"I would like to use the occasion to criticize my European partners. Because they listen, but don't always hear us," he said, highlighting the pressing issue to Russians of visa-free travel to Europe.

Obtaining visas is a big hurdle for many Russians doing business in Europe.

Medvedev bristled at any criticism of Russia — in particular the Davos report on the risks ahead for its economy, saying its scenarios for Russia's future are "not realistic" and insisting that the economy wouldn't collapse if oil and gas prices sink. High energy prices have been key to Russia's economic successes over the past decade and have given President Vladimir Putin extra weight in global affairs.

The Davos report warned that Russia needs "significant changes in its domestic institutional environment" to keep the economy growing.

Alexei Kudrin, a former longtime Russian finance minister, called the report "a serious lesson, a serious signal to the powers in Russia."

Others talking about Russia at Davos predicted that the country's leadership is unlikely to change on its own. More likely, they said, is bottom-up reform, stemming from street protests or from a growing middle class that wants more accountable politicians.

The son of jailed Russian tycoon Mikhail Khodorkovsky issued an appeal to Davos participants to press the Russian delegation to eradicate corruption.

"All Russians are proud that our country is playing a more significant role in world affairs, obtaining accession to the WTO and winning the right to host the 2014 Olympics," Pavel Khodorkovsky wrote.

"But as long as Putin's authoritarian regime doesn't stop suffocating independent political activity, limiting the work of NGOs, taking heartless measures like the ban on adoption of Russian children by U.S. parents ... Russia will never take the place it deserves as one of the leaders of the world."

Russia's role as Olympic host got another black eye after a top Russian crime lord was gunned down last week in Moscow in what police described as a war between two powerful mobs over lucrative construction projects, allegedly including ones for the 2014 Sochi games.

Medvedev, who often presents a friendlier face to the outside world than Putin, said Russia needs to improve its image. A World Bank report on the ease of doing business in 2013 ranked Russia as 112th of 185 countries.

"We have set forth very ambitious goals, for the year 2020, to be one of the top 20 countries in terms of ease of doing business," he insisted.