find out what's really happening to the global economy with much stronger or no holds barred look at the global financial headlines tune in to cause report on are . you watching r.t. live from moscow a look at the top stories levy is rebels and nato were closing in on colonel gadhafi his hometown words believe he might be hiding it while western countries waste no time in securing big business and the war torn country. russia puts forward a u.n. resolution calling for dialogue to broker peace in syria the document is to counter a document proposed by the u.s. and european states which moscow says is siding with anti-government protesters. and a british court is accused of trying to gather world war two veteran eighty five year

old has been jailed for recording a court hearing but activists claim the real reason was he's speaking out against the russian fishery. for the top stories here in art's you'll be back shortly with more updates for that we'll look at what can be done to modernize russia's infrastructure much of which is stuck in the country's sofie past. for the full story we've gotten from the biggest issues get a human voice ceased to face with the news makers on our t.v. . hello and welcome to on the money with the business of russia is business i'm peter all about today we're talking about infrastructure and the building of the new russia. to discuss this issue i'm joined

by your our team here in the studio with me he's director of strategic development for a.b.b. in russia also a cousin yet chairman of the board of directors at barclays corporation michael our franca he's an analyst at paris and steven cousins he is partner in the p.p.c. group in the moscow office of c.m.s. oh ok we're never going to go to you first give me the bad news just how bad is russia's infrastructure in two thousand and eleven. ok not the one percent excellent anyway because a lot of opportunity for all opposition anyway like these projects there's a lot of challenge so you're starting from a low base and you say not so low but it's not enough yes in any way we we are ready we are ready to play exactly how we realize this project this case with up of course as he said what you have no idea what it will be in next time course not but

not enough time like all projects are out we start with this position and they have to improve the situation ok with a little bit you're optimizing or you know what are you going your sector if you're in the electricity sector i think we have number of targets one target we're going to bring in new was the call because obviously we have to benchmark against top world. brings our exports. is this technology from the old to rebuild russian history which this is once and as a think we. should consider it so we're what part of come through is the most critical to build up this infrastructure because. g.d.p. generated by all of the gas so probably will get oil and gas in a little bit later and it will go back to you. is the upside for russia now in building its infrastructure is it introduces new technologies or uses new technologies we really don't where if you're looking at technologies that exist

today from the one nine hundred sixty s. and now you're going to twenty first century make a jump. we move very fast very fast maybe and so it took i believe to understand enough that's why i would like to as fast as possible to cross the persian about all kind of knowledge of what we need. to understand is it enough we understand maybe later not now but our position the. best michel if i can go to you what if he economic implications of all of this when you know there's a whole lot of money out there the state has a lot of money are you worried about issues like stoking inflation because russia always says i've been having a problem with inflation with the exception of the great turned out in two thousand and eight. i think that the main issue of inflation is the monetary base and how many money are printed so basically in my view inflation is increasing when pensions and government spending increase

a lot and infrastructure spending creates this so basically spending on infrastructure is not so bad for inflation just simply increase pensions ok michael when he stay with you again there's so much cash out there is there any need and what i want to talk about it later for in foreign investment i mean if the government has enough money in the car for he can go it alone or it can't i think. i think the government can go it alone but in my view it's better to share the risk with us just because. expertise and they know how to build proper objects how to manage them how to make profitable this projects and how to manage costs so that is why i think vital and social to. attract private companies to the infrastructure ok let's talk a little bit more about foreign investment later stephen if i can go to you is the this stage creating. the best possible legal environment for foreign investors the

committee because we have to remind our audience here we're looking at multibillion dollar projects here we're looking at stadiums are looking at freeways we're looking at all kinds of things because of the enormous amount of money and take a long time to build is the state doing the right thing when it's trying to attract foreign investors i think it is i mean i think the government has been taking certain steps to encourage foreign investment in a number of from a number of angles example there's political support there's a financial support and it's losing support so from the political support we see the government has in its recent budget it's committed for good to the development of infrastructure in certain sectors for example the government has stated that the developer of development of transport facilities. there's a priority as is the development of health care and education infrastructure and also infrastructure in relation to technology so for example everybody's heard

about the development of skolkovo which is going to be the russian or the equivalent of our silicon valley but. in addition to that there is there's the state privatization project which is going to see. in. utilities and infrastructure companies being sold. financial side goes the development of the investment fund which will provide for state code financing infrastructure projects both regional and national importance. the development of special economic zones and i'm sure abuse heard recently at the economic forum in st petersburg the government announced that there's going to be able to get investment fund which is going to make funds available for high growth hydro such as such as i t. health care and infrastructure and then on the legal side you know what we've seen is that there has been there's been legislation adopted in relation

to the concessions laws and in relation to financing so we've seen. ok stephen stephen you've given all the great plus there's a new selling in investment in this country in a great way tell me what the obstacles are because i'm the great contrarian all the time what's the downside what do they still have to do what i think the downside are these projects involve a huge amount of they require huge huge amount of investment even at the regional level you're talking of projects in the tens of millions and where is it projects in a federal level you're talking talking about hundreds of millions so investors need to be sure that there's going to be a return on upon their personal and very best moment. investment is going to be guaranteed that there are protections there for them we have i got you back here in the studio when you look at your search related. tricity sector how much of a problem is in your lives in huge investment in this in the sector here but there are price controls and things like that how do they balance that out because obviously an investor is going to come here and want to get the best return they

can possibly get within the state will say that this is a social concern and it's a really huge one at that ok how do they balance it out to meet the other guarantees how do they do it i think not an awful probably in that industry yet the reason i say so because of productivity efficiency of in the situation. the true government employment in the carpark or percs in your sector what is the if efficiency in efficiency right now because what was it we were talking before the program something like up to forty percent of all actressy generated in russia is law student substandard electricity transmission infrastructure i mean that is huge i think even more is warthe. it's hard for our plies the newest technology what they're called you should be selected from the how or best experience was from global or from.

back to your question about rates. it's different rates different three so probably have been out of our lives somehow but it's a little bit outside of probably practical competence how many such as if you can see should be improved some are particle or technology exists to improve what's maybe fifty percent and michael if i can go to you if we don't look very globally in investors looking at infrastructure in russia what is the sexy sector or sector is right now. so i think first of all it's. toller are the building. there are a couple of projects underway there is the. other odd and from moscow to st petersburg and i think that is primarily a way of international investors to put the. infrastructure there in as well as

invest in russian railways all right if i go back to you here. in your search you what is the biggest challenge win for investors coming here in working with the state because the state is a huge regulator of the electricity grid and things like this i mean what is the state doing to help your sector and your business actually if you work through some . of so. recognize a problem government moving in the right direction on the march away of mr medvedev are highlighted some of the problems greek. gods are. tariffs about greed over all poor regions this of rather include all the thinks that should be considered our same one mr clinton mentioned about

what we need to develop a low rise building because it's so critical for regional development if we are think about regional development itself and port of the game for all of the earth for the whole industry for the whole society and then if we do you start you know you know i've traveled around russia there and meet an enormous amount of needs an upgrade a huge upgrade where do you start you start with the roads do you start with how do you prioritize these things and don't just do it from a business point of view but i mean when you say you the state and looking at you know what do you do first. i think from some a lot of question that's where important yes because. there are a lot of questions a lot of problems what's not one hundred percent understand collegio for foreign investors how the sort of girl that's how it's possible to manage it and i think a lot of technical problems and then i talk with our partners from our foreign its investment bankers because

a lot of pleasure how it's managed i was done it was the girl and she was the plan was the schedule khalid's collect money keep in mind it was a guarantee i think but important to make one hundred percent ceased and regulation laws and rules and improvements and license and one hundred percent are obvious for investors and will structure i think it's just step but i don't think you will go to those other steps here after a short break we'll continue our discussion on russia's infrastructure state with our team. world. marks among the last city. mark simone ross.

muslim efficiency. mark simone comfort. month woman maneuverability most in aviation she said to the marks moscow's most famous here show on technology update gear on a larger we've got the future coverage. as you know song was sixteen years old when he committed these murders that's not inside the song so are some upbeat honest for his crimes song is being no rational person can deny their own hands and is being honest and will be honest. as ours must be executed for the brutal committed this is punishment this is not. imagined. that is the. cause we've been immersed know me whatsoever. and i didn't come here just just.

came here to pay for mercy. this time for this man. martin. and my that is now. welcome back up on the money time people well and today we're talking about russia and its infrastructure but first let's have an overview of russia's physical plant . from electricity wastage on

a massive scale to logistics bottlenecks substantive housing in public buildings and legendarily bad roads there is barely a percent of russian life unaffected by the infrastructure generally seen as amongst the worst in the world the government has committed to radically transforming russia's infrastructure but he's bringing billions of dollars of its own to the table but also needing the expertise offered by goodwill investments i think for an investment is absolutely crucial not only because it brings fresh capital and those investors can invest alongside. the russian pals but also because they bring now how abeyance are a key part of the drive being used to provide a lasting infrastructure a legacy for cities across russia industry players say this will help ensure outcomes and timeframes it is quite clever all done from the government to run for such events things. like the impacts like soccer

world championship like. me like and like it was their putting themselves and everybody around on the present them something. so and with that pressure of course and with the money of the money. and with the president you have to you can do a lot beyond these electricity systems logistics masoud roads are all said to be a whole industry the global experience shows russia can expect a major economic dividend business also seeing significant upside infrastructure has been well every way in the world. because we're starting from such a low level because they such a huge. fantastic infrastructure investment will boost russian g.d.p. growth for the coming decade creating thousands of jobs and underpinning spending

but if it is handled properly the longer term benefits will include more efficiently do sticks and transport more reliable energy and a more economically competitive russia james on the money. ok i'd like to go back to steve in what we just heard there were very rosy report in my say it which go back to the issue of just transparency and confidence speakers as we talk about the olympic games in football and all that these are huge huge projects over a long period of time do investors have the confidence that this government the next government in the next government after that we're all going to keep their word because there's always the issue of confidence when they're investing in russia i think that's right. and i think that when investors thinking about projects in russia be awesome sells a number of questions because obviously they've got to balance up the risks of

making investment into the country so they want to look at the strength of the legal and regulatory framework and. they also take a look at a number of not correct anomic factors for example interest rates inflation taxes. it's torn exchange rates and of course they're also concerned about the question of corruption. but you know i think what we've seen is that president we didn't has taken steps to an anti corruption program which i hope it's going to give encouragement to foreign investors. but i think the other thing that investors are looking at projects that have actually been undertaken here in russia at the moment for example in two thousand and ten in april two thousand and ten we saw the financial close of three major infrastructure projects being the first stage of the most recent petersburg toll road the one i've been sober bypass and of course in st petersburg ok about michael fine go to you when you look at investors looking

interesting into a company's here what used to be sentiment when they look at these long term projects is it just too rich for my blood you know i don't want to get into it's such a long long term commitment or is it a growing confidence that it is a good idea considering what we just heard from stephen. i think there. is a good idea to buy long infrastructure bonds so basically. obligation through other than equity just because of. the undeveloped in russia so basically several companies are traded on russia which you can invest and which can pretty big so that is why and i view the only way to invest is the buying bonds ok what about you i mean you're investing in the. electricity sector is the government doing the right things as far as you're concerned giving companies because we've all greediness is a very long term. trajectory in investing because it's such

a huge amount of money there from the question how to improve for a future. for us in this country reiterating that we are here for about fifty one hundred people over here in russia for i've pursued this for one afflicted and that's it for us there from the play very interesting that the government focusing on. a recognised. chances to improve energy efficiency is huge from industry to greed to the whole infrastructure. it was a different russian competitiveness in the global market so if that we were going to what about you because this is what that really gets down to is that it's a very competitive world out there and if you don't pay attention and you fall very far behind ok and there's a rush is neighbors something about china investing huge amounts of money into its infrastructure i mean what is the connection there i mean is there it's an imperative or is it just the right thing to do because if russia doesn't do it

start doing it now a lot of people would say they needed to do a decade ago can it catch up. ok c.p.a.'s you know i think i think it's absolutely critical that the investment is made into infrastructure at the moment because you know as we discussed earlier basically the problem is russia is running down the infrastructure it inherited upon the collapse of the soviet union back and in the ninety's of course project russia had one of the most distressed budgets in europe so understandably the government deferred spending and investment in public infrastructure but now it's russia comes out of the economic crisis there's going to be economic growth which is going to lead to a demand for infrastructure and a new infrastructure or developing existing infrastructure is going to be the cornerstone of economic and regional the growth in the country you know when you think about that i mean it would be doing the right things looking far enough ahead

because as we just heard and i agree i visited the soviet union and there's a lot of this country today that still looks like the soviet union i think for example in time of soviet union where a lot of concentration about some of the technology and dust and some program i think it's all budget all the forces so the country will focus on these because it's very important for our military approach now of course with a free market and it isn't possible to build that all resources all cancer just exactly can infrastructure and of course the concentration of construction to results and worse is going to depend on how its competitors how it's profitable and the nigerians know so you can make it more profitable more interest for investors or for nations are foreigners and west was in this case it will be enough money now or enough interest and enough results in my profile go back to you. on this program

on the money i we always ask one question no matter what the topic is is it all about oil and gas i mean high oil prices the state will have enough money to invest wherever it wants is it all. always get down to oil and gas i think that we are actually reached the level of when the g.d.p. is not growing even if prices so high so i think that there is an understanding within the government that the further growth is possible only if you're invested into existence for structure and to build an infrastructure so there is my view on the oil price going even if i go back to you it was mentioned earlier in this program as could be a whole slew of privatizations how can that be a trigger for foreigners to come in invest here because it pending on the percentage that is true privatized with a sector and things like that the state looking for are for the not to head to make sure they find the right mix for foreigners to get involved in this privatization

process so i think it's definitely a step in the right direction i think what's important here it goes back to what you were saying before is that now is the time is right to allow foreign investors to get a towing to be economy a toe into these infrastructure projects. because the scope for development is huge right if you take a look at the critical sectors this transport this water management those waste management the soft social infrastructure projects like schools and hospitals and of course electricity. so i think it's right that the. companies can position themselves now to get into the market so they can further then develop their market share ok me and my microphone go to you will the games and getting prepared for that world cup without being a litmus test for russia's infrastructure for the world just to showcase itself. i think it should be actually but unfortunately the regulations of the construction

aren't people change that that was expected by the industry so basically when we are going through a giant building india and china project as a lympics we actually have to move on to new standards to introduce the new requirements to help these projects and to help all over the infrastructure and what were the construction industry in russia unfortunately in sochi olympic games and it didn't happen but i hope that two thousand and eighteen football championship will how to improve standards and improve the new requirements for the construction let me on the give you the last word are you looking forward to being one picks for infrastructure. it's a very important project from from all suppliers and so it's a place but i have to agree with progress because it's exactly where the importance

of what the regulation hovered pollution going to be how you technology going to be applied for employee russia for as a regional because and we be talking about this topic in the future i want to thank my guests and i want to thank our viewers for watching on the money see you next time in staying with our team.