President of Russia Dmitry Medvedev: Colleagues, ladies and gentlemen,
I am very pleased to have the chance to spend this morning with you.
Today is an exceptional day for me, though to tell the truth, I forgot about it, but it is exactly two years since the presidential election took place in our country, and thus two years now that I have been working in this new quality.
It is even more pleasing to see such a large number of French and Russian businesspeople here today. When I was told that this meeting would take place at nine in the morning and that the crème de la crème would be present, I was a bit disbelieving really, because I thought to myself, what normal businessperson is going to attend a meeting with a president, even the Russian president, at nine in the morning. But I was wrong, and this is very pleasing. It shows just how close our business ties have become.
I hope that this state visit and the Year of Russia in France and Year of France in Russia events currently taking place will help to activate our commercial ties. Russian-French relations today are quite simply unthinkable without our economic relations.
Of course we have a very rich tradition of cultural exchange and we have very important, very powerful shared pages of history. We know each other well, but over these last 20 years our economic cooperation has developed at an unprecedented pace.
To quote one figure that we have not yet heard today, our bilateral trade increased five-fold over the pre-crisis period from 2003 to 2008. This is a good rate of growth. But trade is not the only component of our relations.
Accumulated French investment in the Russian economy has reached a good level. The latest data puts it at more than $10 billion, of which around half has been invested not in commodities sectors but in processing, which, from our point of view, is especially valuable.
I hope that the goals my colleagues spoke about here, namely, increasing French investment in Russia and also Russian investment in France will continue to make progress.
The most progressive kind of ties, and I completely agree with this view, is not just to buy goods, work and services from each other, which we will continue to do, of course, but reciprocal capitalization, reciprocal investment in each other’s assets.
This really is the way to cement our relations. Every time we meet we sign new agreements developing precisely these kinds of ties. Yesterday, in fact, we signed just such an agreement.
We have other great achievements too. This year marks 35 years of our bilateral gas cooperation. As a former chairman of Gazprom’s board of directors I cannot but mention this fact. Eight years I spent on the Gazprom board and I can tell you that this was serious work. We have come a long way today from simply supplying gas. We now supply around 10 billion cubic metres of gas and are involved in joint projects together in the European Union and on other countries’ markets.
It gives me great pleasure to say that we are advancing together in big projects such as two with which you are all familiar – Nord Stream and Southern Stream. Yesterday we signed another agreement in this area. I think in the current situation this makes an excellent contribution to implementation of our joint business plans.
Other agreements were signed as well, such as agreements between Russian and French banks, agreements on energy contracts, and on energy swaps between INTER RAO UES and Electricite de France. A whole package of other documents was signed too during this visit. I think this sets an excellent example.
We look forward to seeing everyone here in St Petersburg, everyone who wishes to attend the big forum [St Petersburg International Economic Forum] that we usually hold in St Petersburg in June. This is a good event. I hope that by then we will have another initiative ready, something that we have been talking about lately, and something I discussed with President Sarkozy yesterday. I am referring to the Partnership for Modernisation of Russia initiative.
What is it all about? It is an initiative that I proposed at the EU-Russia summit in Stockholm [on November 18, 2009], an initiative that I hope will enable the Russian economy to adapt faster to modern life. As you know, one of our development goals today is to modernise our economy, because, as I see it, economic growth fuelled by commodities exports, if it has not already exhausted its potential, is no longer so relevant for us whatever the case today.
In general, there are positive shifts in our economy, although overall results are not yet especially impressive whether in Russia or in France, but the situation is showing signs of calming down now. During our discussions just now we agreed that this is an as yet fragile state of calm that will probably need some more serious reinforcement.
President Sarkozy and I agreed yesterday to work more actively within the G20 to bring about real change in the international financial architecture rather than preserving the system we have now, based on the Bretton Woods agreements, which date back a long way now and are the source of much criticism, but nevertheless, many countries still seem wary of touching them.
I think that in this respect we need to be more active, go on the offensive, but this is probably a subject for discussions elsewhere. In any case, this is certainly an issue that we will discuss at the G20 summit.
I invite all of you to come to the International Economic Forum in St Petersburg. I am sure it will be an interesting event. If you have questions it will be my pleasure to answer them.
Question: Mr President, on behalf of all of the French companies represented here today, thank you very much for spending this morning with us.
Many projects have been mentioned. You also spoke about your vision of stable development and environmental protection as part of Russia’s modernisation policies. Can you tell us about how you think cooperation with France and other European countries can help us to create a common space, a European or even global space sharing a common vision on gas emissions and stable development within the framework of the future conference on improving the climate?
Dmitry Medvedev: I think the discussion that took place was very energetic and interesting. I heard many challenging things from the Russian participants in any case and also from the French entrepreneurs. I will not make any comments, but will try to answer your questions.
First of all, on the problems of environmental pollution, climate change and sustainable growth, on the one hand, these are very complex issues. As one of the participants in the Copenhagen [Climate Change] Conference I can say quite frankly that the conference was a complete failure. Since then, we have made practically no progress at all, and we must not close our eyes to this fact.
Unfortunately, different countries take completely different approaches to these issues. In the case of Europe, however, there is a certain consensus. The united Europe, France and Russia all share practically the same views here. We have very close policies. The Russian Federation, like the European Union, is a party to the Kyoto Protocol. We are all reflecting on how to move forward.
What do we need to do for this to happen? At the G20 summit not so long ago [in Pittsburgh in September 2009], and again during the summit with the European Union [in Stockholm], I said one thing that I think is very true indeed. The thing is, any Green Growth and development of a new and energy-efficient economy is possible only when we can put it on a business footing, get business involved.
So far, all the calls to cut emissions, protect the environment and prevent climate change were always just fine intentions and nothing more until businesses began to show an interest and only then real opportunities began to appear. This is why, despite the Copenhagen conference’s failure, I think that we do have good prospects in these areas, even though we have not yet managed to bring about a rapprochement in the positions of Europe on the one hand, China and India on the other, and the positions of Latin America, Brazil above all, as well. But I do think that we have quite good prospects for making progress on this.
Regarding our own economy, as my colleagues have already said, we see energy efficiency as an absolutely vital issue for our country. One of the first executive orders that I signed as president was about energy efficiency. We have set the goal of reducing our economy’s energy consumption by 40 percent, but we can achieve this goal only by working together with our partners in other countries.
France has built up considerable experience in this area, and we would like to draw on this knowledge and invite businesspeople from France to cooperate with us in re-equipping our industry and developing modern, energy-efficient cities.
This is a big and complex issue, but it is vital for us. We are the richest country in energy resources, but we probably perform worse than others when it comes to the way we use our energy. We have put a lot less efforts into this than the circumstances actually demand. This explains why this issue has become so important to us now. We hope that we can organise real cooperation with you in this area. The legal and regulatory framework is entirely in place for this. If anything further is needed I am ready to get personally involved and propose amendments to the laws.
Question: Mr President, you have a broad modernisation plan before you, in which we have noted two points in particular – improving your people’s quality of life, well being and healthcare, and guaranteeing Russia’s food security.
I built my business from scratch in 1966. Our goal is precisely to improve the everyday lives of workers, schoolchildren and hospital patients. We employ 380,000 people in more than 80 different countries. We work in catering, providing meals at various sites, and every day we organise meals for more than 50 million people.
Incidentally, we will be working on the Soyuz programme too [a human spaceflight programme]. We have been contracted for 42 years now at the Guyana Space Centre. Of course, we are not scientists, but the personnel need good conditions in which to live and work and we contribute to this by organising their meals.
We have been operating in Russia since 1993. At first we had big losses, but we wanted to develop our business in your country and we have managed to break even in our performance now.
We employ 3,050 people, of which only four are foreigners. This means that we have invested a lot of money in training personnel. We are present in 25 cities, in Moscow and St Petersburg, of course, but also in Siberia, in Yakutsk, Magadan, and in the Far East, in Yuzhno-Sakhalinsk and Khabarovsk. Our major clients – big Russian manufacturers — are also present here today.
Mr President, I think that in many respects we share the same goals. In the case of things like catering and the issue of special meal coupons, this is a very effective system, especially when combined with a special system of tax breaks for both companies and employees. In 21 of the countries of our presence governments have therefore passed special laws in this area.
This system is in place in many countries but not yet in Russia. My question, Mr President, is, will you support this law? This draft law is due to be discussed in the [State] Duma very soon, in May.
I have a second question too. On January 21, 2010, you approved the Our New School [national educational initiative] and declared two priorities. The first of these priorities is to protect and develop pupils’ and students’ health, including through the school catering system, which would make it possible to ensure that they have hot meals. We are interested in developing enterprises to produce this food in various cities.
In Yaroslavl Region, for example, we have a project to build a facility producing 50,000 meals a day. My question is, will you support this project? If you support our project, we are willing to assist and we can bring our experience of operating in many different countries throughout the world to Russia and help to build and manage this facility.
Forgive me, Mr President, if my questions are rather audacious, perhaps, but I just want to say once more that we are very proud to have this chance to meet with you, and very proud to be working in Russia. We want to make our contribution to developing your economy and to your great country’s social development.
Dmitry Medvedev: If you set up your first business back in 1966, I am sure your company has travelled a long way indeed since then. In 1966, I would not have been able to make use of your company’s services because I was only one year old at the time, but I realise what a great many events have taken place since then.
Speaking seriously, catering and meals is a very down to earth and essential matter in every respect. If we are talking about food, who better to work with than France, given that you are renowned for having the finest cuisine. Many of our businesspeople here today came to Paris not just to meet with the Russian President, but also to sample your culinary delights.
You have raised two issues. The first is a law that, as I understand it, would create special tax provisions for meal coupons used by company employees. This is a question that should be addressed not just to me but also to Russian companies, and French companies present in Russia too. Are they ready to accept these measures? If I’ve understood the situation correctly, you said that this law should be a voluntary matter for businesses.
Is this correct? In other words, this law would not set strict regulations on the situation. If this is the case, we could indeed look at how to incorporate these proposals into our legislation. If we are talking not of some kind of rigid model imposed on our businesses, but about a system of incentives this is something we can look into. I will instruct the Government, or rather, I hereby instruct the Government to examine this matter.
[Deputy Prime Minister] Mr [Alexander] Zhukov is here, and he is in charge of the social sector in the Russian Government. Relations with trade unions come under his responsibility. The trade unions together with the entrepreneurs give him no peace. Mr Zhukov chairs the Tripartite Commission [for Regulation of Social and Labour Relations] bringing together the authorities, the entrepreneurs and the trade unions. I expect proposals from the Government on this matter. I do think the idea is interesting, and I think it would be entirely possible in Russia.
On the question of hot meals in schools, I vote for it with my both hands. I started promoting this issue when I was still in the Government and as first deputy prime minister I supervised reforming national schools and introducing a system of hot meals. Unfortunately, the system is not in place everywhere. I just visited two of the Russia’s North Caucasus republics [Kabardino-Balkaria and Karachayevo-Circassia] and saw that not every school pupil has access to hot meals. What are the reasons for this? The problem is partly due to obsolete facilities, but also to the absence of systemic methods for resolving this issue.
We have been addressing this problem, introducing the new [school catering] system in a number of pilot regions – Moscow, St Petersburg, Kazan and several other cities. I am sure that you have good expertise too. If anything is needed for spreading it throughout Russia, I am ready to get personally involved because I think this matter is essential for our children and young people. You can therefore count on me as fervent supporter of this idea.
Question: Mr President, as you know, we are involved with Russia in building the Moscow-St Petersburg highway subject to a concession agreement – the first of its kind in Russia.
I just want to say that our contacts are continuing and work is underway. We are moving ahead with our partners and with your executive office, and so the situation in general is very good. I want to bring to your attention that, a few weeks ago, the European Bank for Reconstruction and Development (EBRD) expressed a not very favourable opinion on the fact that 14 oak trees would be cut down in order to build this highway. Jokes aside, I think that the EBRD’s participation in this project is very important. What does this bank exist for if not to invest in and finance these kinds of infrastructure projects?
My question therefore is, can we be sure that the EBRD will get rapid responses to the questions it raises, and that some serious political pressure will be brought to bear on this bank in order to ensure that this project is carried out?
Dmitry Medvedev: I have some experience dealing with the EBRD. Back when I was just an ordinary person, at the start of the 1990s, I visited the EBRD to discuss financing for a big project in St Petersburg – the construction of a new [Pulkovo] airport terminal.
I acquired good experience of dealing with the officers there, met the EBRD officials and had the chance to talk with American lawyers, which for me, as a young practising lawyer, was also very interesting. But we did not get the money.
Putting pressure on the EBRD is no easy matter, but I will look into the situation and see if there is any way that we could help this project along and help secure the decisions we need from the EBRD. In any case, I cannot but agree with you in asking why otherwise does this bank exist at all?
As for the oak trees, it would be a shame to cut them down, of course. The question is, when were they planted and are they of any interest to anyone.
Response: They were planted 130 years ago.
Dmitry Medvedev: 130 years ago? Is it really necessary to cut them down?
Response: The EBRD will judge.
Dmitry Medvedev: It is good that the EBRD is concerned with Russia’s environment. We will look into the subject. In any case, this project needs to go ahead. Thank you for updating me. I will ask my aides to sort out the situation with the oaks.
Question: Mr President, I address this question to you also as the law professor that you are.
Our companies pay a lot of attention to legal protection of their projects. The laws passed thanks to your efforts have indeed given French companies operating in Russia greater confidence. But problems can arise in cases where the rights are breached.
Many entrepreneurs share the impression that not all disputes in your country are settled in the courts. Could you please tell us about what you are doing to ensure that our companies, in cases where we need to resolve disputes, can do so in Russian courts, and can place their trust in these courts?
Dmitry Medvedev: Actually, this is an issue I wanted to raise myself at the end of our meeting, but you have come to my aid. Indeed, as a former practising lawyer and someone who has spent most of my life dealing with legal issues and is still doing so now, only instead of studying and applying the law I am drafting it (which is also important and interesting challenge), I cannot but agree with what you said. Our country offers immense economic advantages and has huge potential, but we have not yet built a developed legal and judicial system. This is the truth and there is no sense in trying to hide it.
Over this recent period I have proposed changing the approach to the rule of law not just in the business world, which had in any case long since woken up to the fact that it needs quality laws and a modern and effective court system in order to settle its problems. Most important is to change the way ordinary people see the law. I have spoken about this many times at home, and I say it again here before this esteemed audience: our fundamental problem is chronic disrespect for the law.
The way out of this situation is to change the way the huge mass of people in our country see the law. This includes businesspeople, NGO members, ordinary citizens, politicians, law enforcement officials, and even the judges too. What do we need to do to bring about this change?
We need to build a quality legal framework. I think that we have drafted and passed some good laws over these last years. We need also to ensure that lawyers, law enforcement officials and judges could work in normal conditions, so that they can remain independent, not come under pressure from the authorities or from businesses. This is a rather complex task because we are still feeling the ripples from the upheavals that took place within our [social] system in the 1990s, but it is an achievable goal. I think that the law itself cannot be totally conservative, including the laws aimed at protecting businesspeople.
I have submitted to the State Duma a breakthrough draft law softening criminal liability provisions concerning economic offences. I think this was a step we had to take now because our criminal and criminal procedure legislation is also part of the legal system, and in some cases, unfortunately, these laws are being manipulated.
We need to be part of the mainstream in modern approaches to the law. In this sense we find it quite easy to work with European countries and with France. We share quite similar legal systems, and the Napoleonic Code was, in its time, the basis for developing the Russian Empire’s civil legislation and the subsequent codification of our civil laws.
We will therefore continue to work on improving our laws, and we will also continue to improve the legal situation and status of judges. After all, if we want judges to enforce the law in quality fashion they must know that they are protected and independent. This means that we need to pay them well, pay them a high wage, I think.
We have made some progress on this. Court personnel and the judges themselves are earning much higher wages than people in other areas of the law enforcement system, but this is still not enough. We need to learn in practice how to run a high-quality judicial system, manage it not through specific instructions on particular cases – this is completely unacceptable – but through the use of modern legislation and by taking such decisions as are necessary to support the court system.
Moreover, in cases where there is little trust in a particular judge, the court system needs to have the resolve to dismiss such judges. We need to make fuller use of the arbitration procedures widespread in Europe, especially in the business world.
I remember how I came to Paris in my time to take part in arbitration hearings. The arbitration courts formed by the business community itself are a very successful example of how the law can be applied without actually going through the state courts. What is important is that the decisions then need to be enforced, and then we really will see an improvement in the law enforcement situation in our country.
To be frank, I am not happy yet with what we have at the moment, but at the same time I think that we are moving in the right direction. Over the last 1.5–2 years we have made progress in this area. The law enforcement officers, judges and lawyers in general all share this feeling that changes are taking place now.
I hope that in the future we will not have problems with the way laws are enforced in Russia’s courts, though, for objectivity’s sake I can remind you that when international contracts are concluded the parties often agree that any disputes will be settled under the law and in the courts of a third country. This practice will also continue, of course.
The task of building a modern and high quality legal system and court system remains very much on the agenda for Russia. This is something I will supervise personally because I believe it is one of the top priorities in our development and one of the main components for modernising our society.
Question: Mr President, thank you very much for coming here and sharing your views with us. We have marked in our schedules a trip to St Petersburg for the economic forum in June. I know that you have just come back from Vancouver, and we will be getting together in Sochi in four years time. I think this is the right moment to mention this programme and remind ourselves of the close links between business and sport.
Dmitry Medvedev: Actually, I was not in Vancouver, but we certainly do look forward to seeing everyone in Sochi for the 2014 Olympics. I hope that we will put on a better performance in 2014 than we did in Vancouver. In any case, we will make every effort to do so.
We have some good examples to follow. The Canadians put on a brilliant performance at these Games, taking almost all the medals, and the Americans also performed well. Our big task now is to get the infrastructure ready in Sochi. In this respect we hope that French businesses will also get involved and take part in building Olympic facilities. We hope to continue this kind of cooperation.
Dear friends, thank you all for giving one-and-a-half hours of your morning to meeting here in this warm venue – warm in the literal sense too. I hope that we will indeed continue to build close economic and human ties. I hope to see you all again in St Petersburg to continue our discussions, and do not forget that this is the Year of Russia in France and the Year of France in Russia, after all.
Thank you for your participation.