Russians launch charm offensive to woo City investors

Russia's deputy prime minister yesterday pledged that the Kremlin would not re-nationalise companies privatised in the 1990s, in an attempt to reassure foreign investors alarmed by the imprisonment of Russia's richest man.

Russia's deputy prime minister yesterday pledged that the Kremlin would not re-nationalise companies privatised in the 1990s, in an attempt to reassure foreign investors alarmed by the imprisonment of Russia's richest man.

Alexander Zhukov promised investors attending an annual economic forum that "deprivatisation will never take place," as he laid out the new government's economic strategy for the next four years. Asked about the impact of the imprisonment last October and forthcoming trial of Mikhail Khodorkovsky, the founder of the oil giant Yukos, Mr Zhukov said that "no serious consequences for the economy occurred."

"The Russian government will do everything to again show that there will be no procedures for nationalisation or deprivatisation," he said.

Conference delegates generally agreed that Mr Khodorkovsky appeared to be a special case, having overstepped the mark by breaking the unwritten Kremlin rule of taking an active role in opposition politics.

Fears that he was first on a Kremlin "hit list" of oligarchs who would soon follow him to jail on tax evasion charges, have proved unfounded. However, the business community will still be watching the future ownership of Yukos, amid complications in its demerger with Sibneft, Russia's fifth-largest oil producer, and whether Mr Khodorovsky's trial is fair and in open court.

The broader question for investors is whether Mr Zhukov, who is one of four key liberals driving the Kremlin's economic policy in the new government, can deliver on his reform promises.

The deputy prime minister pledged further reforms of the banking sector and taxation, and to cut red tape and limit government intervention.

Digby Jones, the director-general of the Confederation of British Industry, said legislation "does little to reassure the public on its own" and must be followed by concrete acts. Mr Jones's Russian counterpart, Igor Yurgens, who heads the Union of Industrialists and Entrepreneurs, agreed that the new government was "for the moment declaring very good things: a liberal programme, democratisation, deregulation and the property rights. So let us give them a chance and the credit."

He added that he was "cautiously optimistic" about prospects for foreign investors.

Lord Browne of Madingly, the chief executive of BP, which set up a joint venture with TNK last year, said that in the long term, Russia is "the best place to be."