shutdown president obama declares a state of emergency along the u.s. eastern seaboard. and the republic of qazi a looks to its newly elected president to rebuild the nation's economy lies in ruins after years of struggling to maintain independence. will have his hands full as he leads the country through the next five years. more for you in less than thirty minutes in the meantime our two looks at what can be done to modernize russia's infrastructure much of which is stuck in the country soviet past on the money is next. hello and welcome to our in the money where 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 you know our team here in the studio with me he's director of strategic development for a.b.b. in russia also live cousin yet chairman of the board of directors at barclays corp michael franca he's an analyst at ferus 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 now one percent excellent and in a way we've got a lot of opportunity to improve our position in a way like this project has a lot of challenge so you're starting from a low base and you're saying not so low but it's not enough yes in any way we we are ready we are ready to help but exactly how did it all last with projects in this case because of course the position what you have now and we have idea what it will be in next time and of course not but maybe not enough like all projects

around we start from this position and they have to improve that situation ok with a little bit you're optimistic no wait are you what about in your sector you're in the electricity sector i think we have number of targets one target would be to bring in newest technology because of the really have to benchmark against top wall to project. this technology it definitely help to rebuild the russian infrastructure this is once and cannot. be true should consider it so where . what part of contract is the most critical to develop this infrastructure because you know most of g.d.p. generated by our own guess so probably look at oil and gas a little bit later and if you go back to you. the upside for russia now in building its infrastructure is that it introduces new technologies or uses new technologies

where they don't where if you're looking at technologies that exist today from the one nine hundred sixty s. and now you go into twenty first century make a jump. we move very fast very fast maybe and so it that complicated to understand enough why i would like to as fast as possible to prostitution about all kinds of technology what we need. to understand is that enough we understand maybe later not now for opposition to think we do our best michel if i can go to you what is the 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 has been having a problem with inflation with the exception of the great turn down 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 increases but not infrastructure spending

increases so basically spending on infrastructure is not so bad for inflation just simply increase pensions ok michael 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 coffers in that he can go it alone or it can't i think it i think that government can go it alone in my view it's better to share the risk with an asterisk just because investors have the. expertise and they know how to build proper objects how to manage them how to make profitable this project and how to manage costs so that is why i think that vital and. tracked private companies through their infrastructure and 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 that

come in because we have to remind our audience here we're looking at multibillion dollar projects here we're looking at stadiums we're looking at freeways we're looking at all kinds of things because an 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 for example there's political support financial support and there's a little support so from the political support we see. the government has in its recent budget it's committed for the development of infrastructure in certain sectors for example the government has stated that the developer of development of transport facilities. as a priority 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 equivalent of silicon valley. in addition to that there is there's the state probably transition project which is going to see shares in. utilities and infrastructure companies being sold. on the financial side there's the development of the investment fund which will provide for state code financing and infrastructure projects both the regional and national importance. there is the development of special economic zones and i'm sure everybody has heard recently at the economic forum in st petersburg the government that there's going to be the developed investment fund which is going to make funds available for high growth high growth sectors 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 there is. ok stephen stephen you've given all the great pluses of selling in the 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 of these projects involves a huge amount to be require huge huge amount of investment even at the regional level you're talking of projects in the tens of millions where is it projects at 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 investment and that their investment there to get that. investment is going to be guaranteed that there are protections there for them to me how if i go to you back here in the studio when you look at your search. city sector how much of a problem is it when you're there is a huge investment in this in the sector here but there are price controls and things like that how do they bounce it out because obviously an investor is going to come here and want to get the best return they can possibly get but in the state

will say but this is a social concern and it's a really huge one at that ok how do they balance it out do we are there guarantees how do they do it i think not enough investment probably in that industry yet the reason i say so because of productivity efficiency of industry should be improved it should be definite improvement in the complex or percs ok well 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 the trees we generate in russia is lost due to substandard electricity transmission infrastructure i mean that is huge i think even more is lost so the matter is how to apply the newest technology what technology should be selected from. how best experience us from global for global

industry plan. back to your question about rates. it's different rates is different so probably it should been out of my life somehow but it's saw a little bit outside the forward technical competence our message if you should be improved some particle or technology already exists to improve what's maybe even fifty percent. michael if i can go to you if we this look very globally invest investors looking at infrastructure in russia what is the sexy sector or sectors right now. third thing that first of all it's the tall tower or the building that is there are a couple of projects on the way there is the. taller order and from moscow to st petersburg and i think that is primarily their way of international investors to participate the infrastructure build in as well as invest in russian railways.

i mean if i might go back to you here. in your set you what is the biggest challenge win for investors coming here in working with the state because the state is the huge regulator of the electricity grid in things like this i mean what is the state doing to help your sector and your business actually if you look what the recent of mr putin and mr medvedev say. recognize a problem government moving in the very direction the worm on the march eleventh mr medvedev highlighted some of the problem of this group. of. tariffs about greed over all for regionals this include all the things that should be considered our same one mr putin 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 the gas for the whole industry for the whole society and if we do you start you know and i've traveled around russia there in needs 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 low regulation it's very important yes because. there are a lot of questions a lot of problem what it's not one hundred percent understand fully for foreign investors how it's sort of lies how it's possible to manage it and i think a lot of the technical problems and then i talk with so partners from foreigners

and western some banks has had a lot of question how it's manage how it's going to it was the current year what the plan was the schedule halid so collect money how this keep money has a guarantee and think but important to make one hundred percent believe system regulation laws and rules and improvements and license and one hundred percent around is for investors in infrastructure i think it's just step but ok we'll go to those other steps here after a short break we'll continue our discussion on russia's infrastructure stay with our team. song was sixteen years old when he committed these murders that's not to say that song so or said not be honest for his crimes song is being punished no rational person can deny that saw has been punished is being honest and will be honest.

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there clouds childhood was all rich shadowed by this tragedy. they still feel the fear they faced. and remember every second of the slightness. it will remain in their memories and hearts forever. and as you saw. innocent victims. a little angel on our cheek. welcome back up on the money time people 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 substandard housing in public buildings and legendarily bad roads there is barely a facet of russian life i'm affected by infrastructure generally seen as amongst the worst in the world the government has committed to redick lee transforming russia's infrastructure base bringing billions of dollars of its own to the table but also needing the expertise offered by global investments i think foreign investment is absolutely crucial not only because it brings fresh capital and those investors can invest alongside. russian partners but also because they bring now how abates 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 that i think is quite clever or done from the government to

run for sarge events since events like your lympics like. shit like that where you as our income. they're putting themselves and everybody around on the big pressure to do something. so and with that pressure of course and with the money and for the money. and with the present you have to you can do a lot beyond these electricity systems logistics persued roads are all said to be. industry globally experience shows russia can expect a major economic dividend with investors also seeing significant infrastructure has done well every way in the world. because we're starting from such a low level because they such a huge. that we're going to be invested there so here. we expect that the returns will be fantastic infrastructure investment will boost russian g.d.p.

growth for the coming decade creating thousands of new jobs and underpinning spending but 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 blake on the money. ok i'd like to go back to stephen what we just heard there were very rosy report in my say but you know 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 but investing in russia i think that's right. and i think that when investors thinking about projects in russia they are since i was a number of questions because obviously they've got to balance out 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. foreign exchange rates and of course that they're also concerned about the question of corruption. but you know i think what we've seen is that president medvedev has taken steps to and this anti corruption program which i hope is 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 moscow st petersburg toll road the one i've been sober bypass and of course talk of

a port in st petersburg ok but what about you know michael if i go to you when you look at investors looking investing in companies here what is the sentiment when they look at these long term projects is that it's 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 there a growing confidence that it is a good idea considering what we just heard from stephen. i think that performing the threat is a good idea to buy a long infrastructure bonds so basically. obligations through other than equity just because of. the undeveloped in russia so basically it's several companies a trade of all in russia which you can invest and which equity can participate so that is why in my view of the only way to invest is that buying bonds well what about you i mean in investing in the. electricity sector is the government doing the right thing this is far as you're concerned given confidence because we've all agreed here this is a very long term. trajectory in investing because it's such

a huge amount of money definitely it's a question of how to improve for a few. for us in this country reiterating korea and we thought we're here we're here for about fifty one hundred people over here in russia five facilities for the afflicted facilities for us definitely very interesting is that the government focusing on to really recognize. chances to improve energy efficiency is huge from industry to greed to the whole infrastructure it would define the russian competitiveness in the global marketplace if exactly where i want to go in and what about you because this is what really gets down to is that it's a very competitive world out there in india if you don't pay attention you fall very far behind ok and there's a rush is neighbors something about china investing huge amounts of money into its infrastructure me 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 and a lot of people say it would say they needed to do a decade ago can it catch up. i thought ok go ahead steve go ahead but 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 and in the ninety's of course russia russia had one of the most distressed budgets in europe so understandably the government deferred spending and investment in public infrastructure but now as 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 new infrastructure or developing existing infrastructure is going to be the cornerstone of economic and regional to growth in the country you know when you think about that i mean if they doing the right

things looking far enough ahead because as we just heard in iran 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 so probably i think it's all budget all the first of all the country will focus on these because it's very important for our military polish now of course we have a free market and it isn't possible to control all resources all cancer just exactly infrastructure and of course the concentration of construction to results and investors where depend how its competitors how it's profitable and my idea is necessary to make more profitable more interest for investors or for nation or foreign or some vested interest in this case it will be enough money in now enough interest in enough results it's

a microphone go back to you. on this program on the money and 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 ah. always get down to oil and gas i think in that case where actually reached the level of g.d.p. is not growing even if the oil price is still high so i think that there is an understanding within the government that further growth is possible only if you're invest enough into existence for a structure and build an infrastructure so there is my view on the oil price lng stephen if i go back to you it was mentioned earlier in this program is could be a whole slew of privatizations how can that be a trigger for foreigners to come in invest here because it is pending on the percentage that is proved privatized with the sector and things like that the state looking for are for the nothing head to make sure they find the right mix for

foreigners to get involved in this privatization process or 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 toe into the economy a toe into these infrastructure projects. because the scope for development is huge right if you take a look at the critical sectors the transport there is water management there's waste management 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 michael fine go to you will the sochi games and getting prepared for that world cup without be the litmus test for russia's infrastructure for the world to showcase itself. i think it should be actually but

unfortunately the regulations of the construction market didn't change at the point expected by the industry so basically when we are going through a giant building and china project as a lympics we actually have to move on the new standards to introduce new requirements to help these project and to help all over the infrastructure and all over the construction industry in russia unfortunately in such an impact against it if it didn't happen but i hope that two thousand and eighteen football championship will help to improve standards and improve new requirements for the construction and i mean i'm going to be the last word to you looking forward to the olympics for infrastructure definitely it's a very important project and for all suppliers so it's oh it's a blessing but i have to agree with previous speakers that it's exactly really

important what sort of hovered pollution going to be new technology going to be applied for entire russia for cars a regional definitely 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 and stay with our team. twenty years ago just country. disintegrates it. began a journey. where did it take. great

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a little. small scale. libyan rebels are ready to storm the doppies hometown under a nato air field in a desperate effort to find the fugitive colonel that's as european governments start their own fire for oil deals in the cards for. the world war two veteran is leading a campaign to expose corruption and british courts is losing this battle for another little against a six month jail sentence is this man standing. in the eye of the storm in new york braces itself for the fall supposed to be and i mean that's all public transportation is shut down for the state of emergency declared. and the republic of causeway looks to its newly elected president to rebuild the nation's economy lies in the blue and suffering here some struggling to maintain pedants.