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06-17-2005 RBC News - Russia is just one step away from a financial crisis, deputy prime minister Alexander Zhukov told a government meeting on Thursday. This time, the problem is an inflow of oil dollars, the Gazeta newspaper reports. Raising spending, the finance minister fears to lose control over inflation, failing to fulfill its promises on improving living standards in the country. But most government officials disagree, seeing lack of investment as a more dangerous symptom. There are two main categories of budget spending - social spending and inflation spending – and the government raised both, promising to increase public sector wages 1.5 times and raise average pensions 1.87 times over the next three years. Salaries of civil servants and military wages will be increased 15 percent next year. RUR 380 will be allocated for federal investment programs next year, and another RUR 70 billion will go to a new investment fund, designed to finance priority infrastructure projects. Government investment will more than double in 2006 compared with this year. To raise the necessary funds, the government increased threshold oil price used in forming the stabilization fund from $20 to $27 per barrel. This generated $326 billion in budget revenues, but at the same time weakened the role of the stabilization fund as a tool for sterilizing excess liquidity and curbing inflation. And curbing inflation was named the government's priority for the next three years by finance minister Alexei Kudrin. However, inflation remains high. The government has recently reviewed its inflation target for this year from 8.5 percent to 10 percent. According to the Central Bank, inflation stood at 7.1 percent in January-May.

RBC, 16.06.2005, Moscow 14:46:49.Finance minister Alexey Kudrin considers Russia's dependence on high oil prices to be similar to "drug addiction." The finance minister voiced this opinion at today's Cabinet meeting. Kudrin noted that the inflow of foreign currency into Russia was not related to growth in the country's export potential but was due to high oil prices. Russia's dependence on high oil prices "should be viewed as drug addiction," Kudrin said. He added that in other countries such situation was called "Dutch disease." The minister believes that this is just a "more sophisticated term for drug addiction." Furthermore, "We all know the consequences of overdose," Kudrin emphasized. At the same time Prime Minister Mikhail Fradkov has noted that healthy way of life was the best way to fight drugs. "Our economy should be less dependent on these factors and should develop more actively," Fradkov pointed out.

10.06.2005 17:45 MSK Alexei Makrushin, Ksenia Yudayeva Vedomosti - Lately, an interesting discussion has appeared in Russian public discourse. More and more often, the topic of maintaining the nation's integrity is being discussed. This happens in such a tone that one gets the impression the country is on the verge of collapse. In the conditions of a vertical system of power, the return to a problem more typical of the early Yeltsin era seems rather strange... But the fact that the issue is brought up in the first place forces us to look once again not only at the political, but the financial relations between the center and the regions, as the main mechanism holding the country together.
The history of fiscal federalism in Russia has gone through several periods. Yeltsin's call to "take as much sovereignty as you can swallow" made it necessary for the federal center to build up individual relations with each region. De facto decentralization was much deeper than de jure. Regional leaders got real power with undetermined authority and responsibility that seriously exceeded their financial capabilities. Russia inherited a rather uneven regional division from the Soviet Union, leading to the necessity of redistributing considerable financial means among the various regions. In these conditions, the wellbeing of each region depended on the negotiating power of each governor in the struggle for money from the federal center.
Later, after "buying" the separatist regions the federal center started rewarding loyal allies, which quickly turned opposition governors into formidable business managers. The lack of formal rules and institutes not only failed to guarantee fair distribution of financial resources, but also led to a loss of stimuli for developing an independent taxation base in the regions. But it also led to the improvement of the services offered by budget organizations.
With the arrival of President Vladimir Putin, the situation began to change drastically. Hefty political resources and a lack of any responsibilities for the regional elite allowed Putin to radically resolve the problem of governors - first they were removed from the Federation Council, and now they will be appointed by the federal center. The financial trails to the regions became much more formalized, while regional legislation was brought into line with federal laws. A new budget bill was passed, and a separation of powers occurred between the federal center and the regions.
According to the new budget law, most of the financial help that goes to the regions is distributed through three foundations.
By analyzing regional budgets, one can discover, however, that full formalization remained unattainable. Until recently, regions had a loophole allowing them to use negotiations to get funding from the federal center, including loans. In practice, regions get loans for agricultural achievements, for the salaries of civil servants, to prepare the region for winter. This means that in most cases, loans are given out to cover planned expenses, not unpredictable ones. In principle, from the economic - but not political - standpoint there is nothing wrong with this: the federal center acts as insurance. And, in an underdeveloped financial system, this is not the worst way out. A bigger economic problem is low financial discipline in the choice of patronized regions and in the administration of the financing. But here the situation is improving as well - if in 2002 nearly 13 billion rubles in loans were not returned to the federal center, in 2003 and 2004 most of the regions not only returned the loans, but paid off their long-term debts.
But now, in place of budget loans come subsidies to help balance the regional budgets. Such subsidies have been offered since the middle of 2002. But the way they are distributed has an informal character.
In this way, a tendency - albeit not a striking one - towards negotiated federalism has reappeared. How could it have developed a "vertical of power" scheme? As strange as it may seem, in contemporary Russia the main threat to budget federalism is from the federal center. First of all, the vertical of power, having de facto destroyed all mechanisms of checks and balances, allows for the methods of financial distribution to be changed rather easily. Secondly, by appointing governors, the federal center becomes less and less impartial in its budgeting policy. Having done away with regional governor elections, the center takes all responsibility for the failures of regional administrations. There is a major temptation to financially help out the governors who have not been effective. Meanwhile, appointing "cronies" to regions that were up until then relatively independent from the center must be accompanied by additional financial aid. It becomes even harder to withstand the temptation to use transfers to manipulate elections....
For the sake of objectivity one should note that Russia is not likely to completely avoid the influence of political factors in the formation of financial transfers. Regional inequality and the necessity for the federal center to act as an "insurance company" objectively push the federal center to return to the old way of individual negotiation. The existence of the power vertical, meanwhile, creates the illusion that all this will not play on the effectiveness of the system.
Unfortunately, short-term and long-term aims of the center are not the same, and such a policy is doomed. Only by keeping up strict institutional limitations can we maintain a balance between effectiveness and fairness (equality). If Russia does not stop its return to negotiated federalism soon, it risks reliving the mistakes of the past in a new stage of history.

BRIEFLY 15.06.2005 17:18 FC Info News - Capital flight from Russia over the past four years has reached $100 bln. Fitch Ratings, which produced this sum, claims that capital flight is caused by the threat of expropriation of the companies’ funds. Companies do not just export capital that could have been used to develop their business in Russia but also replace it with external financing, the agency’s report says.

14.06.2005 12:19 MSK MosNews - U.S. Secretary of State Condoleezza Rice said in an interview with the MSNBC television channel that positive changes are taking place in the Russian economy and a real middle class is emerging in the country. Rice took part in the popular TV show "Hardball with Chris Matthews". During the interview she noted that a lot of good changes have taken place in Russia over the last few years. Rice mentioned furniture store lines as proof that the population's purchasing power is growing and the nascent Russian middle class is expanding. "The longest lines are at the furniture stores, Chris, and do you know why? Because people are really buying apartments, buying housing and furnishing it. The middle class [in Russia] is booming," Rice said. The U.S. state secretary said several times that the "middle class is developing in Russia", but stressed that it is necessary to solve the problem of "inequality in wealth distribution" between large cities and the rest of the country. "It [middle class] is developing in the cities, but when you go to the province, it's a different story altogether," Rice said, adding that "even Russian authorities speak frankly of this problem". She also added that it is necessary to develop small businesses in Russia and to guarantee the rule of law that would be conducive to its development. "The rule of law is necessary not only for the attraction of large businesses, but also for the creation of a business culture in which Russians themselves will begin establishing small business enterprises and move the country forward," said the head of the U.S. foreign policy agency.

09.06.2005 14:17 MSK MosNews - Russia will take down the barriers placed in the way of foreign investments, the head of the Russian Economy Ministry German Gref, who was speaking at the second Russian-Chinese investment forum in St. Petersburg on Thursday, June 9. "It's not only investors from China who experience problems in Russia," Gref said, quoted by RIA Novosti. "Investors from other countries face problems too. We shall consistently eliminate all possible barriers and hurdles that are facing investors who wish to put their money into the Russian economy." The Russian economy minister stressed that it is necessary to create a favorable investment climate in Russia, decrease the levels of corruption and lower administrative barriers. Speaking of Chinese investments, Gref noted that there is no large-scale Chinese investment in the Russian economy. "Considering that the corporate cultures of our two countries have a very high potential level of compatibility, we still lack the experience of mutual investment cooperation. This is a complex problem that has to be resolved by our two countries together," the minister said.

06-09-2005 The Moscow Times - By William Dunkerley - Is the possible acquisition of Izvestia by Gazprom a deal or a joke? Last week, it was announced that the state-controlled gas monopoly was about to purchase control of Izvestia from ProfMedia, which also owns Komsomolskaya Pravda and other media properties. Now the focus in the media has shifted to the motivation for the potential sale. Various observers are asserting that it is another attempt by President Vladimir Putin to get more control over the press. Gazprom's takeover of NTV in 2001 was widely viewed as an assault on press freedom by Putin. Could the Izvestia deal be the next step in some master plan? Let's apply some reality testing to that proposition. Izvestia has a circulation of about 235,000. By comparison, its sister paper, Komsomolskaya Pravda, has a circulation in the millions. For this reason, the suggestion that Izvestia's sale would mean a takeover of the print media sounds more like a joke. Yet while the potential sale would not necessarily result in complete control of the press, could it be a good business deal? It sounds like Gazprom may get Izvestia at a good price. Georgy Bovt, a former Izvestia managing editor and current editor of Profil magazine, said ProfMedia paid $40 million when it acquired its stake in Izvestia. How much will Gazprom pay? This has not been officially announced. But $10 million to $20 million is the speculation among publishers polled by Vedomosti. Buying a newspaper property for half price or better sounds like quite a deal. Now, let's reality test that, too. Izvestia is certainly a good name, recognized by all. But, is it also a good business, one worthy of Gazprom's investment? In developed countries, newspaper profitability comes from advertising revenue. Circulation revenue usually just covers the cost of distribution and perhaps promotion. In the United States, for example, newspapers average around 58 percent advertising content. That provides enough revenue to pay professional wages to staff, to pay market value for rent and printing services -- to avoid relying on the subsidies that are so common in Russia -- and to produce profits that will offer a return on investment for owners. How much advertising is in Izvestia? On the positive side, Izvestia has been improving as a product lately. It has added color, a weekend supplement, an improved opinion page and other features. Yet there seems to have been little concomitant gain in advertising. This may be a sign that the advertising, editorial and circulation departments are failing to function according to a unified plan. A leadership vacuum at the top is a frequent cause of this kind of uncoordinated activity. Thus, if we analyze the deal as a purchase of a profitable business, at first glance, it does not make a lot of sense. What's more, it is hard to understand why the gas monopoly would want to expand its role in the media business. In 1996, when Gazprom acquired a 30 percent stake in NTV, then-CEO Rem Vyakhirev explained that he planned on using the television network to communicate with his 1 million shareholders, which was why Gazprom was buying in. The present Gazprom management may have a similar goal in sight for Izvestia, but not all shareholders are on the same page. Investment fund Hermitage Capital, a Gazprom minority shareholder, has been critical of the rising costs of the gas giant's non-core business activities. Buying a newspaper that may be on shaky financial ground certainly could reinforce that concern. Regardless, perhaps the discussion of the Izvestia sale has done some good by focusing public attention on the need for Gazprom to finally get out of the media business. Following the takeover of NTV in 2001, Putin characterized Gazprom's role as an interim one. It has been quite an extended interim period. However, there is actually good business sense behind the idea of holding the Gazprom media properties until now. Earlier, media advertising was largely not a tax deductible business expense for Russian companies, due to tax laws left over from the Yeltsin era. A private-sector initiative successfully advocated for a change in the Tax Code. Thus, in mid-2002, advertising finally became a legitimate business expense in Russia and is now fully tax deductible. In part as a response to this improved business regulation, there is now an advertising boom underway in Russia. As a result, foreign publishers are flocking to the Russian market, companies like Sanoma, News Corp. and others. Many believe that Russia is the world's fastest-growing ad market. What better time could there possibly be for the Kremlin to make good on the promise that Gazprom would be just a transient player in the media market? Now is the time for Gazprom's media holdings to go up for sale. Gazprom is in no position to take the admirable editorial improvements started by the Izvestia staff and translate them into success in business terms. The company has displayed an absence of business acumen in the media field. Over the course of its stewardship of NTV, the channel has lost value as a brand and lost its reputation as a source of independent news. It remains successful because of the favorable ad market. Thus, Gazprom could sell its media holdings now and not experience the impact of the mismanagement of its media brands. On the other hand, if Gazprom stays in the media business despite the current opportunity to get out at a propitious time, it would certainly look like the company was more interested in propaganda than profits. But this is a fool's game. Russians are smart, literate people. They can recognize phony news stories that are bought and paid for. Indeed, many viewers and readers are upset by the hidden advertising and other distasteful content that is all too often foisted upon them. In increasing numbers, media consumers have been calling for the reinstitution of regulation to end this nonsense. Moreover, newspapers that are felt to be pure propaganda render poor value to advertisers because these outlets engender distrust. If all Gazprom managers really want is to be propagandists, not businesspeople, then the joke is on them.
William Dunkerley is an independent media business consultant working in Russia and other post-communist countries. He contributed this comment to The Moscow Times.

08/06/2005 (15:09) RZD News - Investment in Russian projects by the European Bank for Reconstruction and Development (EBRD) now stands at around 4 billion euros, representing roughly 25% of the entire EBRD investment portfolio for 27 countries, a bank official has announced. On average, the bank invests 1.25 billion euros in Russian projects annually, the new chief of the EBRD's Moscow office Victor Pastor said at the 'Corporate Finances in Russia' conference on Wednesday. EBRD investment came to about $1.6 billion last year, given exchange rate fluctuation, so Russia alone accounts for about a quarter of EBRD business, reports Interfax. The EBRD is a presence in virtually all economic sectors - from financial institutions to transportation to industry, Pastor said. The bank now has 250 projects in 41 of Russia's 89 regions, "not only in Moscow," he said.

June 6, 2005 RIA Novosti - Yukos case made oil giants pay taxes - experts say Moscow - Russia's oil giants began to pay taxes in the wake of the Yukos trial, said guests of the Vremena program on the ORT channel, discussing the consequences of the Yukos case and last week's sentence of Yukos senior managers. On May 31, the Meshchansky court of Moscow found the former Yukos CEO, Mikhail Khodorkovsky, and the MENATEP head, Platon Lebedev, guilty pursuant to six articles of the Criminal Code and sentenced them to nine years in prison each. Political scientist Vyacheslav Nikonov said tax collection had tripled in the past year. "Major oil corporations began to pay more. They gave up the loopholes [in the tax law] that they used before," political scientist Igor Bunin said. According to him, capital flight trebled and even quadrupled last year. "There are pluses and minuses," he concluded. Boris Titov, the chairman of the Delovaya Rossiya (Business Russia) limited company, pointed to positive business consequences of the Yukos case. He said it put an end to the era of "wild capitalism" in Russia. "Today business is reassessing its mechanisms. Today business understands better that taxes have to be paid, and not avoided by optimization schemes. Today business is different," Titov said. According to him, business has learnt the social lesson of Yukos. "Business now pays more attention to how society treats it as well as the authorities and the state," the entrepreneur said, adding that business had begun to develop social partnership with the state and civil society. Igor Bunin cited the Russian Public Opinion Center, saying that only 8% of the respondents found Khodorkovsky's sentence to be a blow to democracy, 29% saw it as bringing law and order, and the others remained indifferent. The experts said these results testified to people's negative attitude to oligarchs and entrepreneurs in general. As for the reaction the Khodorkovsky-Lebedev sentence caused in the West, experts asserted that Russia would not be excluded from the G8. "It does not depend on McCain or Lantos [a U.S. senator and a U.S. congressman who came out for excluding Russia from the G8]," Nikonov said. "It does not even depend on the U.S. administration. It depends on the G7 as a whole." He said the U.S. administration did not advocate Russia's isolation. Andranik Migranyan echoed him by saying that the U.S. needed Russia as a partner on many crucial issues, for example, Iran and North Korea. Alexander Shokhin, the chairman of the coordination council for Russian entrepreneurship unions, said it was not only business but also the state that learnt the Yukos lesson. "The state has realized that it can do nearly anything in the economic, political and other areas. And the main goal today is to use these opportunities," Shokhin said. "The state is faced with choosing the model of state and economic development. Hopefully, it will choose reforms, economic and democratic alike," he said.

06-06-2005 RBC News - The trial of Mikhail Khodorkovsky, the former chief executive of oil company YUKOS, and his partner, head of Menatep Group Platon Lebedev, was not the last case against oligarchs in Russia, Vladimir Kolesnikov, deputy prosecutor general of Russia, told the Sunday Evening program on NTV. "We have more cases in store. This case is not the last," Kolesnikov warned. Asked why other oligarchs were still at large, he said: "Unfortunately, some of them fled. We were too humane, and they managed to escape." He said new legal proceedings would be initiated shortly, similar to the case against YUKOS security chief Alexei Pichugin, convicted of organizing several contract killings. Mikhail Gorbachev, ex-President of the Soviet Union, in this weekend's interview with the British Sunday Times, expressed surprise that Khodorkovsky was seen as a hero in the West. If Khodorkovsky, with his gift to evade taxes, had operated in the United States, he would have been jailed long ago, Gorbachev remarked. According to some estimates, Russian businessmen had evaded about $1 trillion in tax, the former president added.

MOSCOW, June 6 (RIA Novosti) - The rates of consumption A commission of the International Monetary Fund (IMF) said consumption in Russia grew considerably faster than the economy, and, therefore, inflation would go beyond the level projected by the government to reach at least 13.7% by the end of the year, the Noviye Izvestia daily said Monday. IMF experts monitor the state of the Russian economy on an annual basis. In the mid-1990s, their conclusions were essential for Russia to get regular IMF loans. However, because Russia made an early repayment of its $3.3 billion debt to the IMF last January, Russian authorities can feel more confident when talking to the IMF and can consider its recommendations as non-binding advice. Head of the IMF mission in Russia Paul Tomsen announced the basic points of the IMF report on Friday. The government of Russia was advised to limit expenditures in the budget sphere and finally begin reforms. Also, the IMF experts severely criticized the tax innovations of Russian government officials. Russian specialists had varying views on the IMF report. Analyst Anton Struchenevsky from Troika Dialog brokerage agreed with the IMF's conclusions. He said that the Yukos case, tax claims against major companies, and vague economic policy have led to slower economic growth and an imbalance between internal demand and internal supply. As a result, prices have started to rise. Sergei Nikolayenko, an expert from the Economic Analysis Bureau, said, "Despite the fact that the IMF said household consumption was on the rise, this consumption is still insufficient because it started from a very low level." Former Russian Finance Minister Alexander Livshitz said because citizens have started to earn more, authorities should encourage households to both spend and save money. "The first option is to let U.S. currency appreciate to allow people to save some money in U.S. dollars," Livshitz said. "Authorities should also think about how to support unit investment trusts. They can also think about issuing government securities for citizens and raising deposit interest rates at state-run banks."

06-03-2005 Kommersant -
Sergey Ignatyev is counting on cheaper cucumbers
Predictions
At the International Banking Congress in St. Petersburg yesterday, Central Bank Chairman Sergey Ignatyev and his deputy, Andrey Kozlov, talked about urgent problems – inflation and the outlook for the financial system. Not only has the Central Bank failed to beat inflation, it appears that the banking system will be shaken again in the very near future, if not from Russia's accession to the WTO, then from a default caused by the population's inability to pay off consumer loans. At the start of the congress, Central Bank Chairman Sergey Ignatyev announced he was predicting "an abrupt slowdown of inflation in the very near future." But he was unable to sustain this optimistic note for long. According to Ignatyev, this year's high inflation rates are being caused by factors unconnected with monetary policy, and therefore the Central Bank is not responsible for them. His reasoning was curious: "Rates for housing and municipal services increased 27.7 percent, while consumer prices for meat rose 10 percent; and prices for fruit and vegetables rose faster than usual." Now, Ignatyev is counting on the harvest to lower inflation. Like the bureaucrats at the Ministry of Finance and the Ministry of Economic Development and Trade, the Central Bank chairman is hoping that inflation will retreat under the onslaught of cheap vegetables. Bankers commented cautiously on Ignatyev's announcement yesterday, trying at all costs to avoid the fruit and vegetable theme. However, some of them did not conceal their readiness to do anything for the Bank of Russia's sake and help it and the government fulfill the inflation plan. "We'll all go out into the fields and help with the harvest," the president of the International Bank of St. Petersburg, Sergey Bazhanov, told Kommersant. But the fact that the Russian financial authorities have nothing but the prospect of seasonal price reductions to offset price increases testifies to their helplessness. Meanwhile, the increase in noninterest budget expenses portends nothing but an acceleration of price increases. Ignatyev cited a series of encouraging figures. For example, "Monetary growth is continuing its downward trend. Whereas the M2 for 2004 grew 51 percent, in the last 12 months (May 1, 2004, to May 1, 2005), it grew only 32 percent. Other indicators that include foreign currency are also growing slowly." But the chief banker was forced to admit he had not been very successful in fighting inflation. According to the Central Bank's estimate, in the first four months of 2005, "the real effective ruble rate increased 6.7 percent, whereas strengthening of the ruble is not supposed to exceed 8 percent for all of 2005." Therefore, "it will be extremely difficult to reduce inflation to 8.5 percent and not allow a sharp strengthening of the ruble." "But I'm still not losing hope," Ignatyev continued, stressing that, in the long term outlook, monetary policy would actually be the governing factor influencing inflation rates, but that other factors would determine the short-term outlook. Ignatyev's next statement was evidently supposed to show the Central Bank's unlimited opportunities to control both the ruble rate and inflation. "The Central Bank could have compensated for the effect of nonmonetary factors, for example, by sharply curtailing the purchase of currency and by a steep revaluation of the ruble," he noted, but added that "this measure would have led to a reduction in economic growth and would have caused problems for a number of credit organizations." The Central Bank chairman had one more bit of good news for bankers in reserve. As Ignatyev noted, the Central Bank "is recording a reduction in abrupt inflows and outflows of short-term capital in connection with the decreasing attractiveness of speculative operations." This was achieved "through conversion to a bicurrency basket as an operational guideline for rate policy, which enables banks to maintain stable liquidity." That was the end of the Central Bank's optimism. First Deputy Central Bank Chairman Andrey Kozlov advised that, within five years, Russia could run up against the limits of the population's financial resources to pay for loans taken out because of rapid growth of both the consumer lending market and the risks. "Many countries have gone through this, and I would not like to see Russia get into the same situation," Kozlov noted. The expansion of consumer lending directly by commercial outlets without the involvement of banks worried Kozlov most of all. In his words, commercial outlets pay less attention to the borrower's financial stability than banks, which makes for riskier loans. In order to avoid repeating the experience of many countries, Kozlov suggested that both politicians and academics evaluate the situation so that there would be time to take measures and that all market participants would feel comfortable. Later on, it was learned that the banking sector would be reeling without consumer loans too, as soon as Russia joined the WTO. Kozlov said that competition from Western financial institutions was not the only threat to Russian banks. He suggested that "if some economic sector is too open, it can become degraded or even disappear completely, which would result in decreased demand for banking services."

02.06.2005 10:42 MSK MosNews - Russian authorities can destroy any business just like they are currently destroying Yukos, the oil company's CEO Steven Theede said on Wednesday, June 1, speaking at a conference dedicated to investment in the Russian fuel and energy complex which is taking place in Paris. "I can very well understand why highly esteemed oil companies are still looking to Russia with interest and enthusiasm, but I want to warn them - if something like this happened to Yukos, it can happen at any time with any other company," the Interfax news agency quoted the Yukos executive as saying. Theede also addressed the Russian authorities with a plea to stop the attack on Yukos. "We here, at Yukos, simply want to produce oil, like a stable and effective company. A decision on whether or not to preserve Yukos can be made only by the Russian authorities. I admit that all of their actions over the last 19 months give us very little hope for our future, but it is still not too late to change the course and let the company and its shareholders work toward long-term success," Theede said. The Yukos CEO also informed the conference's participants that in an attempt to shield itself from the Russian authorities, the oil company filed two suits - one to the European Court of Human Rights and the other one to the Moscow Arbitration Court.

MOSCOW, June 1 (RIA Novosti, Andrei Malosolov) - U.S. Secretary of Commerce Carlos Gutierrez is impressed by how fast Russia has transitioned to the free market and entrepreneurship, he told Prime Minister Mikhail Fradkov at their meeting here Wednesday. Gutierrez said that it took the United States 200 years to perfect its free market economy, while Russia managed to transition within just a few years. He called Russia's progress "considerable" during the last 20 years and said that even the U.S. administration has faith in Russia's future. Gutierrez said he believed that Russia's economy was one of the most promising in the world. He also spoke highly of several Russian ministers with whom he met while here. He specifically mentioned Economic Development and Trade Minister German Gref. Gutierrez is here for talks on the accords signed by Russia and the United States during the Bratislava summit in February. The main focus of the talks is trade and energy.