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Russia: Look To Domestic Investment, Says American Financier

St Petersburg, 19 June 1998 (RFE/RL) -- Russia needs more domestic investment to pull itself out of its financial crisis, rather than seeking increases in foreign direct investment. That's the opinion of a leading Moscow-based Western investment banker, Boris Jordan. Jordan spoke to reporters in St Petersburg this week (Wed, Jun 17).

"I believe that the biggest problem precipitating the current crisis is that Russian capital is not invested in its own country," said Jordan. But the government needs to provide the proper conditions to instill confidence in - and attract Russian capital back - to Russia, he said.

Jordan is head of MFK-Renaissance and Vice President of the holding company Interros-prom. Both firms are part of Vladimir Potanin's Uneximbank empire.

According to different estimates, Russians hold up to 200,000-million dollars abroad.

In Western countries, about 80 percent of investment is from domestic sources - but, in Russia, it is the other way around, with most investment coming from foreign sources, said Jordan.

Jordan, a U.S. citizen, who has been a leading banking and business figure in Russia during the 1990s, was in St Petersburg on a charity mission to provide support for the restoration of the grave site of 18th century Generalissmo Alexander Suvorov in the Alexander Nevsky Monastery.

But reporters at this week's charity event were less interested in Jordan's generosity than his opinion of the current financial crisis.

On this topic Jordan said that the "crisis is not short-term, because it is driven by global trends that are significantly effecting markets everywhere negatively, especially emerging markets.

He added that all efforts by the Central Bank to raise the refinancing rate to support the ruble will be in vain, unless the government carries out substantial reforms.

Yet, Jordan expressed his faith in the new government. "I think the Kiriyenko government is the most progressive I've seen of any Russian government, and willing to begin the necessary reforms."

Jordan is a descendant of a long line of Russian military officers, who originally came to the Tsar's court from Germany in the mid 1700s. His grandparents left Russia after the Civil War, during which his grandfather was an officer in the White Army.