ExpoGlobus.com

The countries of the Middle East possess considerable financial resources, and before the crisis they energetically invested throughout the world, but particularly in the CIS countries. For example, the investment fund Dubai World in recent years signed several agreements of intent to carry out a number of major projects in Russia; however, the projects never reached implementation. And not because of the crisis that had started.
Former British Petroleum adviser, now chief executive of British firm Khaznah Strategies Ltd, Peter Kaznacheyev believes that the main reasons for the low level of investment are an ignorance of existing opportunities and an inability to follow the logic of the situation due to cultural differences.

“You have a good knowledge of the business situation in the CIS, you have spent the past few years in Britain, and now you are a frequent visitor to the Middle East. How do you view the problem of business communications in this triangle?”

“Mutual investments of two mega-regions, the CIS and the Middle East for the moment are at a very low level. It is untapped territory, there are very big prospects here. Because both regions have long experience of oil and gas field development, and the economy of Russia, Central Asia and Azerbaijan on the one hand and the Middle East on the other are substantially dependent on energy exports. At the same time businessmen from these two regions have virtually no interaction, yet their co-operation could be very worthwhile indeed. One of the tasks of our company is to facilitate business communications between businessmen in the oil and gas sector from the CIS and the Middle East.”

“Do Russia and the Middle East not have enough in common, enough points of connection to begin working together?”

“When there is experience of activity in a particular sphere then a lot of things make sense in business. The countries of the Middle East, for example, understand far better than the non-oil economies how to produce oil and gas, how to distribute flows of funds according to the price of oil, how to avoid serious risk associated with changes in energy prices. Because they have been dealing with this for many decades. So it would seem logical, when assets are available, to invest them in something with which you are familiar, something you know how to run and manage. Basically that is how it works, only not between the CIS and the Middle East.”

“And why not, in your opinion?”

“It is not that Middle-Eastern companies and governments have no interest in investing. They invest worldwide, buying up a considerable amount of shares in the financial sector, in infrastructure — ports and so on. They diversify as much as possible. But at the same time their preference nowadays is to invest in the West. The number of oilfields in Russia, Central Asia and the Caspian Sea owned by Middle East investors can be counted on one hand. Why? For two reasons. First, stability. Second, the West is clear to them culturally, because they have been dealing with it for a long time. Both at home, in their own countries, and on a global scale. Many businessmen from these countries have been educated in the West, and send their children to study in the West. From generation to generation their business has been tied to Western business culture.”

“Do you believe there are good prospects for the development of economic relations between the countries of the Middle East and Russia, and, more broadly, the CIS?”

“There are certain problems which need to be solved a step at a time. The first serious problem is insufficient knowledge of the opportunities existing today, for example, in the Caspian region and Russia. And related to this there is a sense of not knowing what to start with, what to choose for investment. For those who have experience of working in Russia like, for example, the large Western oil and gas companies who began investing in Russia 10 or 15 years ago, this stage has already passed. The second problem is ignorance of how decisions are taken in Russia. I mean not just decisions made at a federal level, concerning, say, issues to do with regulation of the oil and gas sector, but also how decisions are taken at a local level. Ignorance of how the Russian economic system, the managerial system works as a whole. All this is quite complex.”

“You could call it the bureaucratic side of the question.”

“Yes. And the other problem is that it is unclear how to deal with Russian business. For example, unlike other countries in which foreign companies can own shares independently, today in Russia that is virtually impossible. A Russian partnership is needed. It is unclear with whom and on what terms this sort of business will survive, and, most importantly, how it will make a profit. And can it? These are all questions to which the majority of Middle-Eastern businessmen have no answers. These questions have no answers for many East Asian businessmen too — Chinese, Japanese, Korean, Malaysian. Indeed, often Western businesses do not have the answers either. Because the situation in Russia, and, say, Kazakhstan is changing constantly. And for a business, manoeuvring between these changing conditions is very complicated. In one cycle of change you could make big money, in the next you could lose everything. It is not easy to understand the logic of what is going on in the CIS — in Russia, Kazakhstan, Azerbaijan and other countries rich in energy resources. That is why people and companies specialising in navigating through these conditions are needed. There are numerous specialised institutes to promote the development of business relations between the Middle East and the West, or between the CIS and the West. For example, there are consulting companies, research centres, public relations agencies, marketing advisers and so on. There exist no virtually such structures to establish relationships between business in the CIS countries and the Middle East. So we are trying to close this gap.”