EBRD President Sir Suma Chakrabarti on Monday urged foreign investors to engage in Russia, despite the challenges in the country and its sometimes uneasy relations with foreign partners. He highlighted the many opportunities there.
Speaking to an American audience at the U.S. Chamber of Commerce in New York, Sir Suma said Russia was intent on becoming more and not less integrated into the global economy. “There are still good reasons to engage with and invest in Russia,” he said according to a speech prepared for delivery.
Russia is the largest recipient of EBRD investments. Since its inception the Bank has provided finance of more than €23 billion in over 700 successful projects in the country. The EBRD remains committed to continued engagement with Russia in order to fulfil its task of supporting economic change and promoting democracy.
The President said that, while Russia remained heavily dependent on natural resources, there was large potential for investment in other sectors. “Russia knows that it is overwhelmingly in its interest to diversify its oil and gas economy.”
In the speech, President Chakrabarti highlighted a recent EBRD report – “Diversifying Russia” - which concludes that the Russian economy is still far too dependent on its output of oil, gas and other commodities. “In fact, the share is higher, today, than it was fifteen years ago. Diversification is both urgent and overdue,” he said.
Referring generally to the opportunities that were open to U.S. and other investors in Russia, Sir Suma said Russia had growth potential.
“There is still a huge pent-up demand for consumer goods and a middle-class with growing spending power,” he said. “This expanding middle class was demanding higher quality products that could often only be manufactured in Russia by western companies.”
Sir Suma said it was important not to ignore potential challenges in investing in the Russian economy, not least the prevalence of corruption which had a serious impact on the Russian business climate.
But he noted that the expertise in Russia the EBRD had built up in over 20 years of investment in Russia meant the Bank was a reliable partner for foreign investors seeking to engage and for helping to navigate the challenges.
For its part, the EBRD remained determined to work with foreign investors so it could carry out its own mandate of promoting economic change, not just in Russia but in the rest of the former Soviet Union and Eastern Europe.
Sir Suma said the EBRD was convinced that supporting economic change helped underpin democratic development. “Every project helps us keep moving down that road. Over time, economic transition underpins the evolution of stronger institutions which are needed to ensure the checks and balances on which all democracies rest. That is a goal which requires patience, the work of decades, but is worth pursuing”.