Russian President Vladimir Putin championed domestic reform and international integration when he first took power in 2000.
Mikhail Svetlov/Getty Images
Russia once had ambitions for Moscow to be an international financial center.
But its annexation of Crimea in 2014 unleashed a rash of sanctions and curbed foreign investments.
Russia’s now cut off from the international community, which is crucial in building a knowledge economy.
It was only a decade or so ago that Russia was working towards its grand ambition of making Moscow a global financial hub.
At a 2010 conference in St. Petersburg, then-President Dmitry Medvedev said the country’s interest in becoming a global financial center was “obvious,” the BBC reported at the time. Russia needs “a developed and globally competitive national financial system” to modernize the economy, Medvedev said.
“The Kremlin was advancing a lot of efforts to make Moscow an international financial center,” said Hassan Malik, a senior sovereign analyst at Loomis Sayles, a Boston-based investment management consultancy.
“Various Russian politicians, including Putin, talked about making Russia an international financial center for years,” Malik, who lived in Russia from 2005 to 2008, added to Insider.
Over the next 10 years, Russia started to lay the groundwork for its vision. There were official efforts to elevate the profiles of Moscow and St. Petersburg, and the Kremlin pushed to make the ruble a global reserve currency, Malik said.
As a large and resource-rich economy, Russia — despite its risks — was an attractive investment destination. Global financial powerhouses such Goldman Sachs and Citibank set up shop in Moscow. The Big 4 accounting firms — PwC, KPMG, EY, and Deloitte — were also in the country.
But Russia’s illegal annexation of Crimea in 2014 and its invasion of Ukraine in 2022 have thrown its financial hub ambitions into peril.
In the months since the invasion, countries have slapped Russia with sweeping sanctions. Major banks and international financial institutions have pulled out of the country en masse. The big 4 accounting firms have all pulled out of Russia or begun the steps to do so, as have Goldman and Citibank. What’s more, the war has not only jeopardized Moscow’s standing as a finance hub: It also marks a reversal from Russian President Vladimir Putin’s efforts early in his reign to modernize the economy.
Economic expansion and reform in Putin’s early years
Russia’s economy wasn’t always moving backward.
When Putin came to power as Russia’s president from 2000 …read more
Source:: Business Insider