Peter the Great built St. Petersburg as Russia’s “Window to the West,” opening up landlocked Muscovy to Europe.

But from the East, here came China’s President Hu Jintao, looking like a Chinese emperor in a business suit. President Hu addressed rows upon rows of business suits gathered at the St. Petersburg International Economic Forum.

Chinese President Hu Jintao, left, and Russian President Dmitry Medvedev attend the economic forum in St. Petersburg on Friday, June 17. Last year, China displaced Germany as Russia's largest trading partner. AP: Dmitry Lovetsky

This annual summer solstice gathering, sometimes called Russia’s Davos, is a good place to take Russia’s temperature.

Despite occasionally chill winds blowing across the Gulf of Finland this weekend, it looked like Russia is getting hot again.

Two years ago, when I last attended, the Kremlin was literally giving away tickets. In the midst of a frightening nine percent economic free fall, the government was desperate to have warm bodies filling the seats.

This time, in addition to getting the supreme leader of China, the forum drew an impressive range of international corporate executives. Participants could listen to Eric Schmidt, executive chairman of Google, talk about “The World According to Google,” or Neil W. Duffin, president of ExxonMobil Development Company, talk about “New Paths to Energy Security.”

If traveling to the Russia Forum is a leading indicator of foreign investment flows, the list of American executives coming to Russia’s “Northern Capital” was impressive.

After the economic forum, participants could enjoy St. Petersburg White Nights summer solstice celebration of fireworks over the Neva River on Saturday night. Photo: James Brooke

The roll call included the chairmen of Alcoa, Cisco, PwC International, Johnson & Johnson, International Paper, United Technologies, Morgan Stanley Bank, Bank of New York Mellon, Goldman Sachs Asset Management, and Ernst & Young. Also present were presidents of Caterpillar, Sony Music, and the Boston Consulting Group, and the CEOs of Citigroup and of Deloitte Touche Tohmatsu.

“I am picking up a sense of optimism,” said Ed Verona, president and CEO of the U.S.-Russia Business Council, fresh from a half hour meeting between American corporate executives and Russian President Dmitry Medvedev, the forum host.

A new factor, he said, is Russia’s concerted drive, with American technical assistance, to join the World Trade Organization this year. “Russia is on the verge of becoming a member of the WTO,” said Verona, whose Russia experience includes serving as vice president of ExxonMobil’s division in Moscow. “All this leads to more predictability, more transparency. And that is good for business.”

The new faces at the Forum were Asian and were from high tech industries, said Andrew Cranston, Russia senior partner for KPMG. Cranston, another Forum veteran, said that Chinese and Indian investors now join American and European investors in treating the St. Petersburg event as the “must attend business event” for Russia for the year.

Under the heading of “Expanding Technology Horizon” the rich list of panels indicated the Kremlin’s serious interest in diversifying Russia’s economy away from dependency on exporting raw materials to high tech, and in building on its historic educational and technical strengths.

Foreign visitors to St. Petersburg found a city at its prettiest since the outbreak of World War I, almost 100 years ago.

Russia’s ruling tandem, President Medvedev and Prime Minister Vladimir Putin, are local boys, having grown up in St. Petersburg.
They have funneled billions of dollars into building a ring road around the city, restoring the city’s neo-Classical core, and building the world’s largest cruise ship terminal. This weekend, five massive ships were docked, allowing thousands of foreign tourists to enjoy the annual White Nights festivities.

Norwegian Sun, one of five international cruise ships docked at St. Petersburg's new cruise ship terminal, the largest port of call terminal in the world. Photo: James Brooke

On Thursday night, Sting, the British rocker, gave a public concert in Palace Square, in front of the Hermitage. On Saturday, it was the annual Red Sail fireworks marking high school and university graduations. Organizers had to wait until 2 am, when it was barely dark enough to unleash a spectacular fireworks display over the Neva River.

As recently as 2007, most foreign investors skipped this annual shindig, preferring to attend a rival Russia investment conference in London.

Then, in a shrewdly calculated move, the Kremlin sabotaged the London conference.

Russian authorities waited until the maximum number of investor participants had paid their multi-thousand dollar attendance fees for the London conference. Then Kremlin aides yanked the rug from underneath the London conference: they ordered all Russian ministers and oligarchs to stay home.

The London investment conference is no more.

John Varoli, a former Bloomberg reporter in St. Petersburg, has witnessed the sea change over the last decade.

“I told them I am standing here, with an oligarch on my left and a minister to my right,” Varoli recalled of calls to Bloomberg editors a decade ago. “And I still could not get them interested.”

This time, Bloomberg had news terminals strategically located around the Forum. It had two camera crews trolling for interviews, and a financial talk show hosted by Ryan Chilcote, a Russian-speaking Bloomberg TV reporter.

Offered a spot as one of six panelists on a 75-minute technology panel, Peter Grauer, chairman of Bloomberg L.P., grabbed it, flying from New York to St. Petersburg.

Russia’s Davos has come of age.