CEOs use Obama visit to press Russia on rule of law

By Dmitry Zhdannikov

MOSCOW (Reuters) - U.S. businessmen are expected to use a Russia-U.S. business summit on Tuesday to press Moscow to rein in corruption and improve conditions for western companies operating in the country.

But industry sources say they see little hope of major changes coming out of the summit, which will be held alongside a meeting between Presidents Barack Obama and Dmitry Medvedev.

"It looks like the Kremlin doesn't really want this discussion and Russian business is not very keen either," said one industry source.

Russia's trade with the United States was worth just $36 billion in 2008 -- the same amount as with Poland -- and Americans rank only 10th on a list of direct investors.

U.S. businessmen say corruption, a weak rule of law and the bad experiences of some companies in Russia deter both trade and investment.

"Stability and sanctity of contracts -- this is what worries us, given what happened to some Western firms in Russia," said an industry source with a major U.S. firm.

Medvedev, like his predecessor and now Prime Minister Vladimir Putin, has promised to crack down on corruption.

But U.S. businessmen say they have seen no real change in an opaque system which tends to favor Russian companies.

And in a sign of unease about the business summit, industry sources say the list of executives who will meet Obama and Medvedev may be cut to 10 from each side from 18 and access for media may also be restricted.

They also said the meeting could be moved to the Kremlin from a luxury hotel, in a further indication that Russian authorities wanted to keep a tight grip on the talks. The Kremlin declined to comment.

"NO TRUST" IN JUDICIAL SYSTEM

The list of U.S. executives attending the summit will feature names familiar with the hazards of investing in Russia.

The chief executive of U.S. oil major Chevron, David O'Reilly, was close to buying Russian oil firm YUKOS before its owner Mikhail Khodorkovsky was arrested and sentenced to 8 years on what his defense described as politically motivated charges.

O'Reilly has kept his criticism of Russia low profile unlike his peer from ExxonMobil, Rex Tillerson, whose Sakhalin-1 project was banned from selling gas to China.

"There is no trust in Russia's judicial system today, and that must change if it is to attract major foreign investment," Tillerson told Medvedev at an economic forum last year. Tillerson is sending his deputy to Moscow for the Obama visit.