California Gov. Arnold Schwarzenegger extolled Russia on Monday as a "gold mine" for foreign investors, but some of the U.S. high-tech executives in tow during his visit to Moscow remained wary about the realities of doing business in the corruption-plagued economy.
Schwarzenegger brought a delegation of mostly Californian business leaders and venture capitalists to help them establish connections in Russia, which is striving for investment to create a Silicon Valley-style technological hub in the Moscow suburb of Skolkovo.
"The potential for growth is so extraordinary, it's like looking at a gold mine," a beaming Schwarzenegger told a conference of U.S. businessmen. "All you've got to do is to go in there and get it."
Analysts and investors, however, warned that Russia needs to offer more transparent rules for business and to reform its corruption-tainted judicial system to attract more foreign investment.
"The government should set the rules of the game, but let the players play the game," said Franklin Pitcher Johnson, co-founder of the Asset Management Company, a venture firm in Palo Alto, California.
President Dmitry Medvedev, who visited Silicon Valley in June and announced a daring project to boost his nation's high-tech prowess, acknowledged that graft poses a major challenge.
"In our country, corruption isn't seen as something shameful, it's part of everyday life," he said, before adding that the government is working on a set of moves to step up the fight.
The anti-corruption watchdog Transparency International ranked Russia 146th out of 180 in its 2009 global corruption index.
Schwarzenegger didn't address any of those concerns, putting emphasis instead on Russia's vast potential.
"The Russian people are extraordinary when it comes to ingenuity and technology and sciences," he said earlier.
Officials from Google Inc., software-makers Oracle Corp. and Microsoft Corp., biotechnology company Amgen Inc. and fuel-cell technology startup Bloom Energy accompanied Schwarzenegger on his trip.
Viktor Vekselberg, a Russian energy and metals tycoon who the Kremlin put in charge of the Skolkovo project, said Monday that it will need up to 200 billion rubles ($6.7 billion) over the next five years, half of it provided by the state and the rest coming from the private sector. "This project will only be successful if hundreds of independent companies join in," he told The Associated Press.
While there was no word on any plans from the U.S. delegates to invest in Skolkovo, a top Russian official said the $1 billion purchase of a software company in Silicon Valley could be completed before year-end.
Anatoly Chubais, head of Rosnano, a state-run corporation that promotes and finances high-tech projects, would not name the company or provide any other details, saying only "projects can be lucky or unlucky."
Schwarzenegger, meanwhile, faced criticism for his weeklong trade mission last month to China, Japan and South Korea, which came in the midst of a monthslong deadlock over solutions to address California's $19 billion budget shortfall.
Schwarzenegger signed a new budget into law Friday after it passed both houses of the state legislature. It came 100 days into the start of the fiscal year.
"I'm very happy that the Democrats and Republicans came together finally to approve the budget so I could come on this trade mission," Schwarzenegger told Medvedev at his out-of-town residence.
The two share a chirpy friendship that was evident when Medvedev drove Shwarzenegger from the Kremlin to Skolkovo in a vintage Soviet limousine: a cream-colored Chaika designed in the 1950s. The president also whimsically offered the former actor a job as Moscow mayor. The Kremlin is currently mulling over four candidates to take over from Yuri Luzhkov, who Medvedev fired last month.
Schwarzenegger said he was thrilled to be back in Moscow, which he first visited while starring as a Soviet anti-narcotics policeman in the 1988 blockbuster "Red Heat."
"I never thought at that point that I would be back as governor," Schwarzenegger said. "It's really fun to be back here and meet the president."
He reminisced about his teenage adoration for Soviet weightlifting champion Yuri Vlasov, who he said inspired him to take up bodybuilding in the early 1960s.
"He was a very well-educated man, with tremendous strength, this monster guy," Schwarzenegger said with a meditative smile. "And I said to myself _ that's what I want to do when I go up."
Although Russia is known as a birthplace of many computer experts _ including Google co-founder Sergey Brin _ only a handful of Russian software companies have succeeded in the West.
Associated Press writer Vladimir Isachenkov contributed to this report.