Given on January 24, 2011.
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President of Russia Dmitry Medvedev: I apologize for the delay – it was because of the recent events at Domodedovo Airport. I just had a working meeting with the heads of law enforcement agencies, and the Transport Minister.
Considering the location and other indirect indications, this was a well-planned terrorist attack aimed at killing as many people as possible. Currently medical personnel are treating those in need; there is a large number of injured.
All instructions have been issued, we have an algorithm for this kind of emergency effort in our country because we know firsthand what terrorism is. We have introduced special security measures at virtually all transport hubs. Everyone has been affected by these measures because security demands very careful inspection of luggage, but it is a forced measure, and sometimes it is crucial, simply vitally important.
Remark: From my experience, I can say that in many airports the luggage inspections take longer and are a lot more serious than in our country.
Dmitry Medvedev: You are absolutely right. We can use Israel, and the US as examples. Our legislation was amended following the events that happened some time ago, when terrorist attacks were committed on airplanes departing from various airports, including Domodedovo Airport. It became much tougher, but unfortunately – and that is our biggest problem – we do not always enforce even the most important legislation. I therefore instructed the Prosecutor General to investigate the enforcement of these laws at Domodedovo Airport. The airport is good, everyone recognises that, it is new and modern. But what has happened shows that there were clearly breaches in security, and everyone who makes decisions here, including the airport management, will answer for this.
This is an act of terror. This is grief. This is a tragedy. I hope that law enforcement agencies will be able to quickly reconstruct the course of events and conduct an investigation.
But, we met to talk about economy, let’s do that.
Question: Thank you, Mr President, for finding time for this meeting.
This week you will take part in the World Economic Forum annual meeting in Davos. It’s the first time in the Forum’s history that Russia will be represented at the top level. Why did you want to take part in the Forum personally and what are you going to talk about in your address at the opening ceremony?
Dmitry Medvedev: Because of the recent events, my agenda in Davos will most likely be shortened. But the important issue remains the same. I made this decision to take part in the Forum as the President of the Russian Federation, because I think that it is a very important international forum where we could present our position. We established a very good forum in St Petersburg. I think it is very successful and well promoted. But we still need to talk to our colleagues – foreign heads of state and government, businessmen — in other places. Davos is the most popular place, and I think that Russia should be represented at forums like this at its top level.
The first time I attended Davos Forum as Deputy Prime Minister, and I liked the right kind of atmosphere there – absolutely casual and relaxed. At the same time you can easily run into a major or not so major businessman, a president or a prime minister, and ask him about things. We are not going there to chat with people or even solve serious but specific problems.
Our task is to promote Russia's potential, talking openly about our strengths and advantages both in the spheres of economy and legislation. But we also should be talking in the same open fashion about our flaws and weaknesses, about the unsolved issues. I think that only such an open dialogue can help people understand the current state of affairs in Russia.
And we are indeed expecting more investments, we are hoping for quick growth and recovery from the crisis. Without jumping ahead to my future speech, I'd like to say now that it will certainly be addressed to everyone interested in developing economic relations with Russia, in investing into Russia, in setting up joint ventures, in looking for new growth points, and ultimately in working together with us on the modernisation of our economy. It's a global forum, and although Russia is an important player on the global economic market, the recent experience shows that only coordinated decisions by a group of countries can yield tangible results. I will talk about the world we are living in, about things we are doing, about problems and challenges of past decades, and what are we taking with us into the second decade of the 21st century.
Question: If we talk about the challenges of the last decade, then on the global scale the main issue has probably been the global financial crisis. The annual meeting in Davos plans to discuss closer cooperation between countries in order to respond effectively to events of this kind. What Russia has to offer in terms of such cooperation?
Dmitry Medvedev: In general, global tools are a very complicated matter, because there are things you need to reach an agreement on, and I was quite a convinced sceptic as regards these global tools because the countries are just too different, the interests are just too different, and everyone has problems of its own. But the recent crisis convinced me that even the most different states are still capable of coming to an agreement, of working out the most global economic policy on the planet's scale and of exerting influence over it, and of making some unpleasant decisions. Russia is a part of this global process. We are offering our ideas, some of them address the future of the international financial institutions and what is known as the financial world order, all the way down to setting up new Bretton Woods institutions.
Question: A session on modernisation in Russia is scheduled for Thursday, and though, unfortunately, you won’t attend it, it would be interesting to learn what successes in this area you were going to tell the international community about.
Dmitry Medvedev: I don’t think we have any outstanding achievements, but there are several positive things. First, I don’t hear anymore that everything is fine, that we have a specific policy and if we continue doing everything as we have planned, things will work out. Members of different parties, from the ruling party to opposition, understand that we won’t be able to achieve anything without modernising the economy and relying only on hydrocarbon resources. That’s crucial! Because once the crisis was over and raw materials sector started to recover, some already started rubbing their hands and saying, that everything was fine, that oil was already at $100, and that everything would be fine just like in 2007. It won’t. I hope that most Russians have already realised it: we have exhausted the growth potential in the raw materials sector. And I believe that this is the main positive result of the first steps of modernisation process.
The second thing is just as important: we have outlined specific areas. We are not just saying that we need to modernise our industry and introduce new technology. It would have been very Soviet-like. We have identified five modernisation priorities. All of them are known, and progress is being made in each of these areas. There is nothing spectacular about it, but there is progress. We are building medicine producing factories; and some of the new medications can already be found in the pharmacies. And these are normal medications at reasonable prices. We are dealing with communications, creating super computers and digital models. We are already doing this on a regular basis.
Third, we managed to change our legislation by focusing on economic modernisation, and primarily on industrial modernisation. What do I mean? Some three years ago nobody was dealing with technical regulations. We were somehow missing out on the fact that it was hampering everybody’s work and that out-dated regulations were creating fettering circumstances. What I had to do is force our Government, our business associations and organisations to get down to this work. As a result, an up-to-date law on technical regulation appeared. Plus, I actually pushed through the decision that the EU legislation can be applied in Russia. Yes, this demonstrates that we have underdeveloped legislation. But it’s better to have an opportunity to make use of those laws without wasting time, rather than wait until we adopt our own laws.
Finally, there are important consolidating projects – Skolkovo, for example. Skolkovo won’t solve all the problems, of course; it won’t stir the whole country. But we must show how innovative business should be organised — the way it’s done all over the world. We have a lot of science cities, all of them are good ones – brilliant scientists, enthusiasts work there. But the way things are organised is often Soviet-like; something that is non-viable in a market economy environment. It means we should create a new model. So, these are the modest results of modernisation.
Question: Experts, including those close to your Executive Office, believe that modernisation is stalled by the inefficiency of our government and institutions. Is it possible also to conduct an administrative reform as part of modernisation?
Dmitry Medvedev: If we had other government institutions, starting from the president and the government and finishing with municipal agencies, we probably would need no modernisation. If they were in a state like similar institutions in the European Union. But we are in Russia. So, if your question is whether government institutions always have a positive impact on modernisation, my answer would be — no. They hamper modernisation, and these are flaws of our state power, from the bottom to the top. But we don’t have another one, and it can’t be changed overnight. State power is not an abstract institution. It’s a set of people with their habits, wishes and flaws. We talk about corruption very often. It’s easy to catch one corrupt official barehanded and punish him publicly. But it’s the whole system that is affected by corruption, not just one person. Sadly, several thousand people have been convicted in corruption cases just over six months of the last year, including some high-ranking officials. But nobody’s scared. This is a result of mismanagement, and there’s no doubt about it. I agree with you.
Question: So, you admit that modernisation of other institutions will still be needed?
Dmitry Medvedev: Of course. And all those actions should be complementary, if not done simultaneously. I don’t mean that the whole of our political system has to be replaced. After all, it is still young; it has shortcomings, as well as advantages. It means that while carrying out economic reforms, we should always pay our attention to political institutions. But I don’t think that changing political institutions and putting them in order will give us a new economy. It’s an illusion that we’ll get good officials, who won’t be taking bribes, a government that won’t be interfering with the economic life, courts that will always be consistent and will pass only just and motivated verdicts, — and that a welfare society will be created. There is no direct relation, these are different success factors. You are aware of rather tough and sometimes authoritarian societies that are very successful in terms of economy, where there is little corruption, and things are developing according to a pretty optimistic economic scenario, but political institutions are poorly developed in such countries.
Remark: You are always talking about the threat of corruption and about the need to fight it. It has reached such a scale that it’s practically destroying the country. But for now all these efforts look segregated, and not very systemic.
Dmitry Medvedev: When I became president, there were people who tried to talk me out of addressing this issue, literally saying, why are you taking this upon yourself? You won’t be able to get rid of corruption in a year or two, even in one presidential term. I understand this. At some point people will start getting tired, thinking – well, decisions have been made, but corruption is just as bad as it was before, we still have to give bribes. But if we continue to think this way, we will never start fighting corruption. I think that I did the right thing bringing this issue to the top level. No matter what people say, we have started the battle. It is true that there has been very little success so far, but we could look at it from different angles.
First time in the millennial history of Russia we have adopted anti-corruption legislation. We have a Council for Countering Corruption, other agencies that monitor this situation. We have adopted a number of mechanisms from other countries, income declarations, for example. Some people said everybody would lie in their declarations, claiming lower incomes. What was my response to that? Yes, some people will, but this will teach them a certain procedure anyway. When a person signs official papers while owning a house which was not declared, and operating a car registered under his mother-in-law’s name, and possessing other assets entrusted to a friend, subconsciously such a person will feel uneasy about the whole thing. That’s the first point. Secondly, people will legalize their income wherever they can, because every rational individual would want to have a clear financial record. We have no liability for failure to explain the sources of funds for buying two houses, for example. But this income declaration practice still makes people more disciplined. And we need to revisit the issue, as I did recently, when I ordered to check if these declarations accurately represent the properties legally owned by respective officials.
Another issue is the conflict of interests. I first ran into this problem some eight years ago when I was part of the Presidential Executive Office. In case of a conflict of interests, a person must report his property interest if he has one. This property interest could be quite lawful, but it collides with the duties of a government employee, and the person has to report that. We haven’t been successful here so far. There have not been any reports. We set a committee, but it doesn’t produce results. Apparently people are afraid to report this conflict of interests, even though there is nothing bad about it. Therefore I instructed certain agencies to check all aspects of this system once again. We cannot always easily implement everything that works in other countries.
As I was examining the terrible situation with corruption in our country, I found several reasons for that. There are historical reasons, which everybody always refers to – taking bribes has never been a shameful thing in our country. In the middle of the 19th century there was even a book published, “The Right Bribe-Taking”. This reflects the public mentality. Besides, we had a very quick transition from a totalitarian to a generally rather liberal society. 80 years, a full lifetime of one generation, passed from the 1917 revolution until the return to modern economy. Unlike even Eastern European countries we started to build a new economy from scratch, we had no one to lean on. This quick transition affected people, and not in the best way. They got very simplistic ideas about economic justice, the market, and ways to make money.
Remark: And about success, as success is now measured with money.
Dmitry Medvedev: You are absolutely right. I am not an idealist, but any economic doctrine, any economy model should be moral as a whole and only in that case it can be successful. In our country these moral standards were shaken in the 1990s and even in the past decade, so any financial success was perceived as an absolute value when one can do whatever one pleases to make money as far as one is able to then sort it all out with authorities or colleagues. But it is different everywhere else in the world where the factor of morals is very important. That is why corruption-related offences are not so wide spread there
Remark: It is very alarming that the capital drain last year was at the same level as during the financial crisis. This is a sign of a bad investment climate. And now even smaller-scale capitals are fleeing the country, which is even more alarming.
Dmitry Medvedev: I recently talked about it with Minister of Economic Development Elvira Nabiullina. When large capitals flow out of the country, it could be because businesspeople acquire major foreign assets or want to buy something expensive for themselves which might not be a truly right thing to do but is nevertheless generally understandable. But if small capitals are siphoned away, it is rather a systemic problem requiring serious attention. That’s why Ms Elvira Nabiullina and I discussed further amendments to legislation, aimed at improving the investment climate, which is also a difficult task.
On the whole, things don’t look that bad. We are making a rather quick come-back after the crisis. GDP has even grown by 4%, so given that we lost 0.5 to 0.7% GDP due to wild fires last year, this figures look pretty good compared to the rest of Europe. We were able to curb unemployment and in fact brought it down to the pre-crisis level. The state is fulfilling all its social commitments so no one has the right to throw stones at the government in this respect. At my meetings with the Government at the most difficult period we reviewed the options of reducing such commitments, but we realised that living standards in the country are so low and pensions are so moderate that if we cut social benefits, then why bother developing the economy and modernising economy at all? So, we maintained all our social commitments.
In this respect the situation is not that bad. But there are some alarming things as well. You just mentioned capital drain and investment climate. On a long run this is just as alarming as some short term negative tendencies in the economy, which we can battle rather quickly.
Remark: Many of our prominent experts say that the strategy of smoothing the crisis over actually hurt the economy, because the crisis did not purify our economy, did not make it healthier, as it potentially could have. There are still inefficient industries, imbalance between sectors, employees have not left inefficient industries.
Dmitry Medvedev: It is easy to make those assumptions. I would be happy to be able to maintain economic and social stability and at the same time see this long-awaited economic purification after the crisis. It didn’t have the effect we expected, and we kept a lot of inefficient industries. But I think this is better than sacrificing people’s wellbeing in order to get a more efficient economy. This is absolutely unacceptable in Russia for different reasons.
Remark: Mr President, the events in Kushchevskaya village, as they are described in media, make one wonder if the vertical of power which has been formed in the recent decade, in this particular place turned into corporate solidarity, where everybody is covering for everybody. We think this situation would have been less likely to happen in the context of real political competition, which is a good mechanism for self-purification of society.
Dmitry Medvedev: We definitely need political competition, there’s nothing to argue about here. It’s a kind of vaccination against authoritarian and totalitarian trends and a way to settle differences. I agree that having competing forces eventually makes the situation healthier, but only eventually. You mentioned Kushchevskaya and, unfortunately, we have such examples in other places where authorities merged with business, and business merged with organised crime. But municipal authorities often see stiff competition among different candidates running for mayor. The United Russia does not always win, other forces also do so. In fact, there is political competition at the lowest level, but unfortunately, it does not bar crime from access to governance. Of course, competition – if it complies with the law – won’t make the state weaker. I believe that in principle we should be moving towards creating a society based on balanced representation of several parties, replacing one another to eliminate current issues.
Probably, opposition in Russia is not very strong now, but it does exist. What prevents opposition parties in the parliament from raising such issues and attracting the attention of law enforcement agencies and, eventually, of the country’s leaders?
Question: And what guides you when you allow the United Russia using your image and quotations in their campaigns?
Dmitry Medvedev: The president does not belong to any party, but still I cannot forget that the United Russia supported me during my election campaign. So, I am grateful to it for the support it gave me then and is giving me now. Let us not forget the time when President Yeltsin could not push practically a single initiative through the parliament, as all of them were blocked by the opposition.
Question: Don’t you think that this undermines the chances of other parties for political competition?
Dmitry Medvedev: No, I don’t think so. We all influence each other, it’s a two-way street. While you enjoy support, you should agree to it. If the image of Medvedev or Putin evoked an allergic reaction in most of the people, then such image would rather damage the party’s reputation.
Question: Last year outrageous cases of corruption became public: I am talking about possible participation of the Interior Ministry officers in the theft of 5 billion rubles from the budget, about the Daimler case where public servants and government agencies are involved, about alleged misappropriations in the course of the East Siberia — Pacific Ocean oil pipeline construction. All those cases have been made public, so, what will happen next? Don’t you think that covering such loud cases is necessary to create an atmosphere hostile to corruption in the country?
Dmitry Medvedev: We should not only cover, but also finalize those cases and inform the public about it. In a number of cases, I concede that we may not feel like doing so. As for the Daimler case, for example, I’ve been reported that the Russian side has not been provided with the information regarding concrete persons involved, who could be profiting from purchasing equipment. But still, this case may have good prospects: intermediaries have been found and are being called to account. Whether they shared the kick-backs with any officials or not is yet to be proven. If we manage to get to the core and they give evidence against officials from the Defence Ministry, from the Federal Guard Service, those officials will go to jail. That’s the current stage of the investigation.
As for the other cases you’ve mentioned, further investigation is also required. There was much ado around the ESPO pipeline, but I have not seen any evidence so far. Still, as the subject has attracted public attention, a comprehensive investigation of all the circumstances should be carried out – both by law enforcement agencies and the Accounts Chamber. Let them deal with it and inform the public on an obligatory basis.
Question: At a recent meeting with members of the Civic Chamber you admitted that our judicial community has turned into an ironclad corporation, incapable of self-purification. Those were your words. What plan would you propose to change the situation?
Dmitry Medvedev: We have done many goods things making sure those courts and judges are protected from any interference by different forces. At the same time, I think that we need to take a more pragmatic approach to this situation. Can you imagine that in the US or some European country a judge would go out to lunch with an attorney in one of his cases? I don’t think so. He would risk losing everything, therefore he would never do that. We have this sort of thing happening all over the place. I am not saying that this is necessarily a sign of corruption. But there should be legal patterns that would remove any concern about a judge’s professional behaviour.
Judges are a separate category of people in power, and we should respect them. But they cannot be immune to any kind of control. We have a number of ideas in this respect, and they are being developed.
Remark: We know that there is an idea to allow investigative activities in respect of judges, which would remove their immunity. At the same time, there is a proposal to appoint judges for a lifetime, or, on the contrary, make this an elected office.
Dmitry Medvedev: Let’s not get ahead of ourselves. Different ideas could be considered, but we cannot lean towards any extremes. If judges could be manipulated through law enforcement agencies, it will be another extreme. I will try to find some optimal mechanism in the current situation.
Question: At the same meeting you talked about the fact that people don’t trust judges and the judicial system. Doesn’t the fact that questionable decisions are made on some high profile cases make the situation worse? For example, in the decision on the Khodorkovsky and Lebedev case their economic activities were interpreted in an absurd way that could scare any businessperson. Should judges be held responsible to the public for this broken trust?
Dmitry Medvedev: I have already said what I think about the judges’ responsibility. They should be held responsible and disciplined if necessary, in some cases even through criminal prosecution. By the way, last year judges were found guilty in a number of criminal cases. Of course, unjust sentences break trust towards the judicial system and even the whole legal system, no doubt about that. But I hope that you don’t expect me to comment on the sentence in the Khodorkovsky and Lebedev case, which has not even come into force yet.
Now regarding the general atmosphere. I am more concerned about the whole picture than separate aspects. And this picture is not quite satisfactory to say the least. Many businesspeople, including the ones you mentioned, are serving terms for economic crimes, sometimes very long terms. So if we talk about checking the lawfulness and grounds for such rulings, it should be done in respect to a large number of these kinds of crimes. I demanded clarifications from the Prosecutor General’s Office, because some businesspeople who were convicted of relatively minor embezzlement, fraud and money laundering, are serving 10 to 15 years in prison, which is harsh.
So it is not right to only talk about Khodorkovsky and Lebedev when we discuss the situation in the judicial system. We need to look into how criminal legislation is applied in the area of economic crimes.
I have begun to change this practice. First of all, we don’t always have to jail people right away, so that they are pressured by investigators in the pre-trial detention centre to testify in a certain way. That’s why I proposed alternative measures of restraint which are being discussed right now and include bail, ban on travel, house arrest.
Nevertheless, I wouldn’t be true to myself if I didn’t point out certain negative things here. There should be a balance between interests of the prosecuted businessperson on the one hand, and the investigation, on the other. At the moment we are trying to find this balance. In any case, I see this as a positive change. After this law was adopted, in 26 Russian regions taking businesspeople into custody has not been applied even once. None. And the number of arrests on the national scale was down by 20%.
Question: For business it’s extremely important. It’s no secret that the following way of profiteering was very popular among “turncoats” – initiating a criminal case to force people to pay to avoid prison: they were kept in jail until they gave the money. And another essential practice, a very important one for business, the practice you have stopped is police participation in tax cases and documents withdrawal. I remember that you revoked the right of the police to independently initiate criminal cases on tax crimes without the participation of the Federal Taxation Service. But currently the State Duma is discussing amendments to the draft law On the Police Force introduced by you, and again there is a chance that such right will be returned. Will you be following it so that this law does not become a step backwards from the point of view of the interests of society and business?
Dmitry Medvedev: Of course, I am following it and will continue following this draft law until it is approved by the Federal Assembly. In my opinion, it will no way become a step backwards, because it is for the first time that we are creating such a powerful law regulating the operation of the police, a law which has the utmost judicial power. That’s the first point.
Second, most concerns are imaginary. For example, we’ve seen concerns about the right of the police to enter a building, which led to a public discussion. I gave the instructions to check whether it is so or not. We’ve checked everything – it’s not true. What raised concerns was the fact that the law contains a more detailed wording. And that is good. The more detailed wordings are the less bulky departmental instructions are, meaning less room for arbitrariness. When we started codifying the rights of the police, it looked like they received what they had not had before. That is not so, we simply consolidated everything into one document.
As for tax crimes, nothing has been added as compared to current legislation. During a meeting with the police officials and business circles — I’ve had such a meeting as well — businesspeople paid attention to it. I think it was at the meeting of the State Duma Committee, where a balanced decision was taken.
It looks like we are having an interview on legal issues with you, rather than on economic ones.
Question: Let’s talk about the economy. It looks like such large-scale projects as Skolkovo Innovation Centre, the 2014 Olympics, the Football World Cup, the APEC Summit, the International Financial Centre in Moscow are just an attempt to modernise certain regions, when all the other aspects have to catch up with the project – infrastructure, finance, construction, roads and even legislative changes. Is that really so?
Dmitry Medvedev: The impact of large-scale projects consists not only in showing off and proving how cool and strong we are – though sometimes it’s also important to make the nation feel really successful. The primary goal is to help the residents of a big region, and there is nothing to be ashamed of. By the way, we are not the only ones to do so.
I recall how Japan ran a G8 summit on the Okinawa Island, the least developed island in the whole country. They invested about 1 billion dollars, which was an enormous amount at the time, and developed the infrastructure there. Can we say it was a bad thing to do? I think not.
We all have been to the Far East, and we all know of its deplorable condition. It’s indeed very undeveloped and lacking even some basic infrastructure. There is no waste water facility in Vladivostok. Even if there weren’t anything like the APEC Summit, we would then need to come up with it in order to invest funds into that region. Russia is a country that is hard to run. Everything at once just can not be done. Therefore we need to prioritise, we need this kind of targets for further development.
Question: Mr President, it is very tempting also to ask you…
Dmitry Medvedev: The usual question? Who is going to win the presidential election of 2012?
Question: No, we’ll try to come up with something less trivial.
Dmitry Medvedev: Thank you for that.
Question: Mr President, your presidency term is approaching its end, and although it is too early to sum things up yet, there’s one thing we’d like to ask: what will be your own assessment criteria of your performance as president?
Dmitry Medvedev: You know, I don’t think these will be any kind of outstanding criteria. In the very first place it is the living standards of our people. It is about our success or failure to overcome the crisis which occurred during my presidency term, and it is about our ability to respond to all the critical challenges and threats our country faces, including the combat against crime, terrorism, and extremism. And another criterion is people’s trust. No matter how trivial it may sound, people’s trust is paramount for any politician.