Revolution. The ceo of a Company Teaching the world to code. And we are live in ukraines capital to see why voting next week and could be a dangerous endeavor. Lets start with the recovery in europe. Standard poors raising spains Credit Rating. Fitch also boosting greeces rating. David tweed joins us with more. What is the update behind the numbers . I want to start with greece. I am going to read a couple of lines from the fitch upgrade. They are still below investment grade, but moving in the right direction. Remarkable progress on the fiscal front. The most challenging adjustment for greece is behind it, says fitch. There are problems still, but they have managed to have a primary surplus and start Interest Payments in 2013. There is a funding shortfall also say theyy will fill the gap. Just hold that thought. Spain, standard poors, i will read you something from the upgrade. It is because of the improving Economic Growth and competitiveness as a result of spains structural Reform Efforts in 2010, including the 2000 well they were market reforms 2012 labor market reforms. I want to put that in context and asked what would have happened to these countries if they had gone out of the euro and currencies had to have dropped, as many people prescribed. They would have seen an increase in exports, but would they have done the Structural Reforms that they needed to do to make their economies competitive . I think them being within the euro, the euro itself has acted like a crucible that has made it essential for companies to take really tough decisions and put these reforms through. I think that is what we are seeing now. It truly is a sign of progress. Rating level. A b four years ago, i was with Francine Lacqua for the first overnight meeting where they bailed out greece for the first time. A lot of progress there, which you have covered every twist and turn. German Business Confidence numbers, ifo coming out. We were expecting confidence to decline, but we are a little bit shy of forecasts. What do you make of the numbers . A little bit shy of forecast. The interesting thing is to look behind the reasons for that. What i want to know is what german businesses there are 7000 businesses which are surveyed here. What they are doing in reaction to what is going on in the ukraine and russia. Are they delaying investment . Are they delaying plans for employment . We are going to speak to the president of ifo later in the program and these are the sorts of questions i want to hear the answers from him about. The other thing that has been going on in the German Economy, that i think is quite interesting, it looks like we are seeing the first signs of a rebalancing going on. We got the pmi yesterday. Still above 50, but the interesting thing was going on with the services. They were really very strong. Is that a rebalancing of the German Economy, something that mf, the unitedi states has been asking for . It will take longer before we find out the answer to that, what we could be witnessing the beginning of a trend. David tweed, our european editor for us, in berlin. The National Economic forum in st. Petersburg, president putin will address Business Leaders later today. Ryan chilcote is there as well. To those what did those who have shown up look to hear from the president later . I think they want to hear that this that business is going to be good in russia. I think they realize that the easy way to do that right now is to hear conciliatory comments from the russian president about ukraine. We have ukrainian elections coming up on sunday. The u. S. , germany, and the European Union have threatened sanctions if they feel that russia has interfered with that election. They are going to be listening for conciliatory language. Will they recognize the election . Just his tone, in general, on the ukrainian authorities. The last thing that anybody here wants is more sanctions. The address from putin, what else is on todays agenda . We are trying to look at russian business from a couple of angles here. We are going to talk to the deputy finance minister here in russia. They have just come out of talks with visa and mastercard. Russia and visa and mastercard have been in a conflict now for a couple of months, ever since they declined to service the credit cards of some of their clients in the country on the back of u. S. Sanctions. There was a short suspension. It was long enough to rile the russians. Rules,plemented some new including visa and mastercard having to pony up collateral to the russian government to prevent them from doing Something Like that again. The visa ceo said the amount of collateral was too high and it ran into the hundreds of millions. As far as he was concerned, on those conditions, it did not make sense to continue to do business in russia. Those conversations have continued. Another round of them just ended here at the forum. We will talk to him about that. We will also talk to the ceo of megaphone. Inobile provider here russia. How is he navigating this crisis . We heard a lot of ceos talk about how borrowing costs have gone up on the back of the crisis. Rin will join us later in the day. Resident couldnt will sit down president putin will sit down to dinner with some investors. It will be a busy day at the economic forum. You have been speaking to people on and off air ahead of the ukrainian elections on sunday. What is the best hope among attendees at the st. Petersburg interNational Economic forum for a resolution in the wake of this weekends elections . Hope ofnk the best people here is that the in the first round, because there could be a second round, a president that the russians feel that they can deal with more than the current leadership, which russia has been very clear, is not a legitimate power because they came into office through parliamentary approval, effectively on the back of a revolution. There could be some kind of negotiation between the russians and the ukrainians themselves. There has been very little of that. This is a question i put to the russian Prime Minister when i spoke with him exclusively earlier this week. A fronte identified runner in those elections, the man that is most likely to be ukraines next president , as someone they could do business with. That is what everyone is hoping for. Maybe there can be negotiation through that leadership in ukraine. Thanks a lot. Ryan will join us again shortly with the Russian Deputy finance minister, something to look forward to. Lets get to another one of our top stories. German Business Confidence data came out a few minutes ago. German Business Confidence fell in may by slightly more than economists had forecast. We are joined by the president of the ifo interview for his first televised interview of the day. Thank you for speaking with us. His numbers a little bit worse than economists are looking for. What is your outlook for the Second Quarter . Well, it is unclear, but the indicator went down everywhere, in retailing, wholesaling, construction, and the german industry, manufacturing. Is primarily the expectations and we think it is because of the crimean crisis. And that leads me to my next question read with question. With the elections taking place on sunday, is there a risk that a crisis within ukraine could continue to dent sentiment among german businesses . Yes, of course. Even though the direct exports to russia are not so important, the general climate could be affected negatively. But my feeling is that the worst of the crisis is over. Genevahave some talks in. The feeling is now it has calmed down. When we asked the firms a couple of weeks ago, at that time, there was a peak of nervousness. This is shown in the data. I would say the economy makes a little pause at the moment. It is not a turnaround. Before we speak of a turnaround, we want to see three months in a row and we do not have that yet. So i would not be overly pessimistic. For so long, the story in the european recovery has been a divergence between the core and the periphery. The numbers showing up lately show a divergence even within the core. For example, yesterday, we saw a slowdown in french services. The German Economy appears to be maintaining its momentum. At what point will a slowdown in neighboring countries touch as france start to weigh on the German Economy . France is germanys biggest trading partner. France does have enormous problems with its industry. It has lost its competitiveness in the euro. Germany has become more competitive. France is very dependent on Southern Europe. Where it is sending its products to be to. And the banks providing credit to the Southern European economy. France is in a situation that affects germany too. On the other hand, the german exports are more going to the rest of the world. Germany is very diversified. So the influence is limited. We have hot water and cold water. The hot water is in germany. The cold water is in Southern Europe and france. To speak about an average is very difficult. To talk about your exports to the rest of the world, they are influenced and affected by the strengthening euro, which, to be fair, has come down from its highs of a few weeks ago. Would you say now and is there a sense among the Business Community that we have seen the highs for the euro . That the action that the ecb is expected to take next month will push the euro further lower . We will see. ,hen quantitative easing comes that, in itself, means that the euro will decline. Investors,t foreign they will bring the euro to the Exchange Market and the euro value will decline if that is done. That indeed could happen. And it would strengthen the european economy. Thus far, we have seen the opposite. The euro has gained strength 2012, when the rescue operations were announced, because the Collateral Damage of these risky operations is that not only do investors from inside europe, from Northern Europe, come to Southern Europe, but from all sides, they come to your to europe and wanted by uye currency in want to b the currency in order to invest in government bonds and what have you. It is difficult to find the right mix in europe. Thank you so much for your time. An interesting interview. We always talk about the core and the periphery. I never thought we would talk about europe in terms of hot and cold. There is no lukewarm. North netherlands, of course. Colleaguesof our printed a terrific story yesterday called the ikea of Northern Europe economics creek saying that the leaders, mario draghi, in particular, are adopting a scandinavian model for these rates. Deflation,oes have of course. Coming up, russias recovery. We will head back to st. Petersburg and speak with the Russian Deputy finance minister. That is right after the break. Stay with us. It is day 2 of the st. Petersburg interNational Economic forum and one key topic on top of the agenda is russias stalling economy. Lets get back out to ryan chilcote, standing by for a first on bloomberg interview with the Russian Deputy finance minister. Take it away, ryan. He has just come back with a mastercardh visa and executives. Russia has been locked in a serious dispute with visa and mastercard ever since those companies introduced or declined to service some of their credit cards in a very brief suspension that turned heads in russia and riled russian politicians. Thank you very much for joining us. The visa ceo said that the conditions that russia is talking about introducing, there is already a law, in order for and to stay, are too dear if russia is going to stick to its guns on the amount of collateral the russian government wants and moving the operations onshore, then it is better for visa to exit. Coming out of this meeting, do you get the sense that these and mastercard are going to leave russia . We are absolutely continued to continue to work with visa and mastercard. They have over 200 million cards issued in russia. A lot of people use their products so we want to continue to work with them. The transactions which happen reasons which are beyond related to the card rules. Sure to ensure weervices domestically have to be certain that people can continue to use those cards in russia. Making transactions on russian soil. This is essential. It is done in a number of countries. You mentioned france and turkey would be two of those places. Resume only resume only presumably any interest of their Financial System as well. You asked for 100 million of capital. Ideais an unprecedented that you could use to punish them as if they stop servicing credit cards because of sanctions. That is what the law says. Whatever interest it is from visa, it is about 250 million and whatever it is from mastercard. Are you going to come down on your collateral . That is about right. Let me give an example. High fines for jobbing your chewing gum on the pavement. Gumor dropping your chewing on the pavement. Same here. This find is not here it is tore to motivate Companies Move their russian settlements in russia. Tricky one. They thought they were just following sanctions. You would be punishing them for complying with u. S. Law. We are not punishing them. We just want a structure that is more proper. That is the only way for us. Sure that those statements continue to happen. How bad would it be for russia if visa and mastercard left or stop servicing russian credit cards . My understanding is it is not just the 200 million credit , not just that, but interbanking transactions, an atm card from one russian that moneyther, almost always goes through the United States, through visa and mastercard. How bad would it be if they would pull out . How many credit cards do you have . I have about five or six. Questionback to your we look at very strategic plans. People using their cards in atm something,hat is those transactions have not been stopped because those transactions are being conducted thank you very much. Unfortunately, we have to leave it there. Fresh out of the meeting with visa and mastercard. Thank you so much. We will have more from the st. Petersburg interNational Economic forum coming up later on the pulse. We will also bring you an exclusive interview with the ceo of megafon. Stay with the pulse. We will be back in two. Lets see what is happening on the markets. Jonathan ferro has your asset check. You, be quite honest with across the continent, it is a little bit boring. We are higher. They are green, but it is very marginal. Can we get the six weeks of gains . It looks like we might, but only just. In london, down. 2 . The big ipo today is saga. Morning, thes price range, the bottom of the pence per i at 185 share. Elsewhere, lets check out the euro dollar. Yesterdayh pmi data showing contraction across many of those regions. Ifo, todays german Business Confidence shows that german Business Confidence was in a delicate situation as well. You can see the dollar falling rising, rather, and the euro falling. 10 days until the big one, june 5. Executiveup, chief officer of russias secondlargest wireless officer, megafon, talks about the sanctions on russian businesses and the economy. You can follow me on twitter and join in on the conversation on the pulse. Megafon ivan tavr welcome back to the pulse. Live from bloombergs European Headquarters in london. Im mark art and. To european economies have been upgraded. Two european economies have been upgraded, greece and spain. Index hasn stock pared its losses losses. Has leftce in ukraine 16 ukrainian soldiers dead. The government in kiev accuses russia of trying to destabilize the nation before sundays ballot. Will the election harold a fresh start . Phone live by the kia. Ev. The latest information i have today, of the five District Election Commission offices, these are the offices that run the voting, one of them is still operational. The heads of two of them have been kidnapped and released. The other two have been sealed. Ballots have been taken by armed separatists. About 90 of the would be holding stations around the city are now not open and not likely to be opened by the time the election starts on sunday. Sorry, continue. There atgood situation all. The intimidation of these election workers is going to be a major barrier to having a sustainable vote that is recognized by the outside world. Concerns, how credible those elections can be. Ive been speaking to the osce which is the International Observation mission. They did not have an active role. They are there just to monitor and observe. It is very clear that if the if the voting doesnt take place in large numbers, it will be easy for people such as the russian government to say the people in that region to not care about being part of ukraine. Longterm, that will be damaging to the credibility of any new president of ukraine. Their willarks there in tf. Kiev. Cracks it is a threeweek extension. It was requested by the french state. They want to get a better deal siemens moreive time to come up with a rival bid. Approved. Informally have endorsed but not formally approved. Siemens is considering whether or not theyre going to make a formal bid. They get more time to look at tom to see whats they might bid for. The french government clearly prefers the siemens bid. Their new rules in france, the has new decrees to block some of these proposed takeovers. At the same time, everything appears to be going against