Russia confirmed its turn to the East at the World Economic Forum in Davos in Switzerland, this year, presenting its projects in the Far East and telling investors about the condition of national economy under sanctions and amid a record low oil prices.

The World Economic Forum, the annual meeting of influential political and business elite, was held in a situation that one of the participants of the forum, head of Credit Suisse Tidjane Thiam described as “the worst start of the year in the history of financial markets.”

The opening of the forum coincided with a drop in oil prices below $30 per barrel, which caused another round of the ruble fall.

On the eve of the forum Russian President Vladimir Putin joked that in such a situation ministers must “work at home”. In 2009, Putin, then as Prime Minister, headed the Russian delegation in Davos, back then it was also the time of a sharp drop in oil prices. This year’s delegation was headed by Deputy Prime Minister Yuri Trutnev, who is also the presidential envoy on Russia’s Far East.

“I need to promote the investment space of the Far East. We created it, it works, but the world knows little about it. In my opinion there is no better place than Davos to promote it. That is why skipping the forum would be strange,” – Trutnev said.

Although the fourth industrial revolution was announced as the main topic of the forum, the participants mainly discussed the decline in oil prices, the issues of the Chinese economy and world security, in particular the worsening of relations between Iran and Saudi Arabia.

Any investments are welcome

Head of the International Monetary Fund (IMF) Christine Lagarde named the four main risks for the world economy: the slowdown of economic growth in China, decline in commodity prices, lack of proper coordination of monetary policies of central banks and the situation on the emerging markets.

Chairman of Russia’s Central Bank Elvira Nabiullina, who was invited to the forum, suddenly canceled her visit, staying in Moscow to attend the board meeting of the Finance Ministry to discuss the situation on the currency market.

Russia’s turn to the East is the result of the deterioration of relations between Russia and the West following the events in Ukraine in 2014 and the economic sanctions that deprived a number of major Russian companies and banks of an option to borrow money on Western capital markets.

In the last two years, Russia has actively explored new markets of the Asian-Pacific Region and the Middle East by signing a number of multi-billion dollar transactions involving investments in infrastructure projects and agriculture.

One such transaction was closed at the Davos Forum. The Russian Direct Investment Fund (RFPI) and one of the leading port operator DP World of Dubai World signed an agreement to invest $2 billion in Russian ports.

Speaking during the debate on the future of Russia, Trutnev said that a turn to the East in the context of Russian policy should be seen as a reversal of the country itself to its Far East, which occupies 36% of the territory and needs investments.

“I would rely on a position of a well-known Chinese leader, who said that no matter what color the cat is as long as it catches mice. We welcome any investments,” – Trutnev said.

At the forum, Vladimir Dmitriyev, head of VEB, the bank, which already finances the joint Russian-Chinese projects in the Far East, expressed his skepticism about the overdevelopment of relations with China.

“We should not overestimate the desire of our Chinese partners to build cooperation with Russia. They are pragmatic enough” – Dmitriev said, suggesting that Russia’s cooperation would not be “unlimited and free”.

Doubting effectiveness of sanctions

Trutnev said that at the forum meetings many officials of the European Union questioned the usefulness of anti-Russian sanctions and signaled the possibility of their mitigation.

Speaking at the forum, US Secretary of State John Kerry also said that the lifting of sanctions against Russia is possible after the agreements achieved by the Normandy Quartet for a peaceful settlement in the east of Ukraine are implemented.

“Opinion on the extension of sanctions is very heterogeneous. Many of our colleagues said that sanctions are disadvantageous not only to Russia, the sanctions are not beneficial to the European community,” – Trutnev said.

Former Russian Finance Minister Alexei Kudrin said in an interview with TASS that, in his opinion, Western countries can mitigate the sanctions early next year. He added that many Western businessmen and politicians in Davos privately expressed hope for a speedy lifting of the sanctions.

“Today I have a more optimistic view regarding the easing of sanctions. They will not be canceled immediately, but this year or early next year we may see a movement, which means some sanctions can be mitigated or eliminated,” – Kudrin said on the sidelines of the World Economic Forum in Davos.

Two of the largest Russian banks, Sberbank and VTB, which are under Western sanctions, took part in the Davos forum, organizing special events about Russia. At those events the heads of the two banks convinced investors that Russia will be able to overcome the crisis.

“The crisis is when at 7 am instead of a cup of coffee you need a glass of vodka. I’m still happy with my coffee in the morning, so I did not reach that stage,” – head of VTB Andrey Kostin said when opening a traditional breakfast of VTB on the sidelines of the forum.

Expected growth in oil prices

The Russian delegation in Davos also included head of Lukoil oil major Vagit Alekperov and owner of the Rusal aluminum company Oleg Deripaska.

Alekperov took part in a meeting of the heads of the largest oil companies that was held on the sidelines of the forum.

“We discussed the current topics, the forecast of supply and demand. And everyone tend to think that in the second half of the year we will still an upward trend in oil prices,” – Alekperov said.

This view is also shared by Christine Lagarde, who said that the IMF is watching the growth of demand for oil in recent months and predicted a rise in prices in the near future.

On the third day of the event the price of oil began to rise, adding optimism and confidence to the Russian participants.

However, Kudrin, who held a number of meetings with experts from the oil market, called on the Russian authorities to abandon the hope that oil prices will rise again in 2-3 months and to determine the long-term strategy of reforms.

“Russia should realize one thing. We must abandon the hope of higher prices for oil and make it irrevocably,” – Kudrin told TASS.