Billionaires who came to Switzerland's Davos for the World Economic Forum in January have been extremely concerned with Russia's war against Ukraine, calling it a major geopolitical risk that the global economy faces.
This
also pushed the International Monetary Fund, a reform-driven lender that
oversees world’s economic growth, to cut its
forecast for 2015 and 2016 by 0.3 percentage points. Now it expects the
global economy to grow by 3.5 this year and by 3.7 percent in 2016.
Denis O’Brien
“The
U.S. and Europe have the wrong approach on Russia,” said Denis O’Brien, head
of Hamilton, Bermuda-based Digicel Group Ltd., the largest telecommunications company
in the Carribean, according to Bloomberg. “The big issue here is whether the
EU, U.S. and IMF will help Ukraine prevent a default. If Europe doesn’t
stand firm with the Ukrainians, the country will melt down.”
O’Brien,
56, who has attended Davos for more than a decade, said the trade relationship
between Russia, EU and the U.S. is the biggest geopolitical issue nowadays.
Oleg Deripaska
Oleg Deripaska, 47-year-old
head of Russia’s giant aluminium maker Rusal, agrees with O’Brien. “Russia
is in a very hard economic situation,” he said while in Davos.
“Everybody is forecasting the downturn and I think these forecasts will
come true.”
Interview with Oleg Deripaska in Davos © Archie Goodwin’s YouTube channel
Calling
the Russian government and central bank executives “cosmonauts” who
should be delivered to a new “space station to make their comments from
there,” Deripaska, whose fortune reaches $7.3 billion, goes on:
“The central bank and the government
want to reach a 0 percent inflation, but 0 percent inflation can be only be at a
cemetery where no one needs anything anymore.”
The
construction industry experiences a severe crisis, since after the 2014 Winter
Olympic Games in the Russian city of Sochi there is an obvious lack of demand,
according to Deripaska. “The crisis will involve all the industries,”
he admits.
He
doesn’t think Russian President Vladimir Putin’s plan on substituting the
imported goods will help. “Substituting the imports with a 30 percent
interest rate? Who will handle such a risk?”
“Right
now, we’re between 1993 and 1995 in terms of our economic hardships,” he
concludes. “There’s only one positive thing: it will be getting even
worse.”
Aleksey Mordashov
Receiving
his first job at Severstal, a Russian steel behemoth, in 1988, Aleksey Mordashov was
promoted to the chief executive officer position in 1996 and has occupied it since then.
The 49-year-old,
whose fortune is estimated at $7.6 billion, says he remains optimistic
regarding Russia’s economy. “What’s happening there now is a general
macroeconomic correction, while correction in general is very helpful,” he
admits.
Interview with Aleksey Mordashov in Davos © Bloomberg TV
“All
the national producers became more competitive because of the exchange rate
(ruble fell by some 50 percent amid sanctions against Russia). We have relative
financial stability,” Mordashov emphasizes.
The
impact of the economic sanctions is very limited and affects only offshore oil
and gas exploration and some banks, according to Mordashov.
He
even foresees Russia reaching new economic equilibrium in 2015 that will become
a start point for growth. “We have free market economy in our
country,” he adds.
What looks
like a “free market economy” to Mordashov seems to be nothing but a derivative
of global oil prices plummeting some 50 percent. The aggressive stance on
Ukraine won’t make Russia’s economic life any easier, too.
Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected].
