Copy China and invest abroad, says Medvedev

Copy China and invest abroad, says Medvedev

By Catherine Belton in Moscow

Published: January 31 2008 19:19 | Last updated: January 31 2008 19:19

Dmitry Medvedev, Russia’s most likely next president, called on Russian business people on Thursday to copy China and go on a global buying spree of foreign companies to bolster the economy and cut dependence on technology from abroad.

In his first speech to Russian big business since being named by Vladimir Putin as his preferred successor, Mr Medvedev pledged Kremlin support for companies seeking assets abroad.

“This is a very important task. The majority of powerful countries are engaged in this. Many of them are very active, like China. And we should be active, too,” he told a conference for Russia’s most influential business lobby in the southern Russian city of Krasnodar.

“This will allow us to re-tool Russian enterprises with technology, boost their production culture and grant them the opportunity to diversify investments and win new markets,” he said.

Mr Medvedev, a first deputy prime minister and a protégé of Mr Putin’s from St Petersburg, is also chairman of Gazprom and has overseen the energy group’s aggressive push to win new markets and distribution assets in Europe, and most recently in Africa and South America.

He has also witnessed first-hand the western backlash against Gazprom’s expansion drive and claims that the Kremlin has used the group’s hold on European energy markets for political ends. The European Commission last year drafted a proposal to block Gazprom from controlling energy networks in the European Union.

Mr Medvedev, however, was sanguine about opposition abroad to the growing reach of Russian companies. “This is not a reason for hysteria,” he said. “We should quietly and measuredly forward our interests and convince people that investments from Russia are effective, transparent and necessary for the countries involved.”

He said Russia could only improve its image with the presence of a strong state. “It’s not possible for a country to have a good image when business is strong but the population is poor or, for example, when business is strong and state power is weak.”

Mr Medvedev, a softly-spoken lawyer from St Petersburg, is almost certain to become Russia’s next president since Mr Putin named him as his preferred successor in December. A survey published on Thursday by VTsIOM, the state-owned pollster, predicted he would win 71 per cent of the March 2 vote.

Russia’s $1,300bn economy is flush with cash from 10 consecutive years of economic growth fuelled by high oil prices and a consumer boom. In the first half of last year, Russian companies invested $36.8bn abroad.

The government in the meantime has hoarded the nation’s windfall oil revenues in a $157bn fund known as the stabilisation fund, which on Thursday was split into a reserve fund, to cushion the budget from falls in the global oil price, and a more growth-oriented national wealth fund.

But plans to invest the $32bn National Wealth Fund in global equities and corporate bonds have been put on the backburner amid fears over the global market downturn and infighting about how best to invest the fund.

Sergei Storchak, the deputy finance minister in charge of overseeing the fund, is in jail charged with an attempt to steal public funds. His arrest has been seen as part of a Kremlin struggle over control of the funds.