Russia: Economy Is Focal Point for Putin's Foreign Expert Club

President Vladimir Putin

President Vladimir Putin acknowledged Thursday that he had to make a difficult choice when he approved the purchase of TNK-BP by state behemoth Rosneft, as the decision contradicts the government's policy to reduce its presence in the economy.

But he made it clear that the government had to intervene after numerous requests from BP to help resolve a long-lasting dispute between the shareholders of the Russian-British joint venture.

"Both the government and I had mixed feelings when the idea of this project appeared," Putin said at a meeting with the members of the international Valdai Discussion Club, referring to the intention by BP to sell its stake in the joint venture.

A move by a state-controlled company to increase its market presence "at the cost of its foreign partner" raised doubts, Putin said, adding that at the time there were concerns that Rosneft might subsequently take over the second part of TNK-BP, owned by the AAR consortium. "This, in general, is not in line with our trend to reduce the growth of the state sector," he said.

Rosneft announced earlier this week that it would acquire 100 percent in TNK-BP from BP and AAR in two separate deals totaling $61 billion.

When TNK-BP was founded in 2003, the Russian authorities weren't opposed to BP's holding a controlling stake, Putin said, adding that he warned that the 50-50 joint venture wouldn't function properly.

He recalled that the shareholders had promised at the time to settle possible issues peacefully, but they ended up being involved in continuous struggles that eventually turned into "hand-to-hand" fighting.

The Novo-Ogaryovo international Valdai Discussion Club meeting was the final part of a four-day forum in which about 100 members of the club participated, having gathered in St. Petersburg on Sunday to discuss possible scenarios for Russia's development over the next two decades.

Among the issues discussed by the club this week were the creation of a favorable business climate, development of competition in Russia, stimulation of domestic investment and the fight against corruption.

The participants also  touched on issues of Russia's integration into Europe and the development of alternative industries to oil and gas production.

Members prepared a report containing recommendations for the government on how to proceed with reforming the country based on the pace of Russia's current economic growth and the prospects for its economic development.

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