Editor-In-Chief of Kommersant Azer Mursaliyev: At a recent international bank forum in St Petersburg, the head of the Central Bank stated that the lowest GDP drop is behind us. Can we expect any optimistic statements at this forum as well?
President of Russia Dmitry Medvedev: Human beings are optimists by nature, and this is probably why we have been able to survive for thousands of years. Naturally, as soon as we see signs of improvement in the economy, we also hear statements about it. For my part, I feel that the time for an optimistic appraisal has not yet arrived, although there are some trends within the global financial and economic system that send positive signals.
Recently, at a meeting held to honour Russian Entrepreneurship Day, I said that all this talk about having hit rock bottom is the latest fad among the analysts. If it affected the actual state of affairs, I would be willing to give an official statement that we have hit rock bottom. But reality is quite different. It is far more important to look at how we will get out of the crisis. The experts are discussing several possible models. According to the first model, we will get out of the crisis the same way we got into it: abruptly. A corresponding graph would therefore resemble the letter V. According to the second model, a graphic representation of the crisis would resemble the letter L; we would overcome the crisis at a very slow rate. And finally, the most pessimistic model presumes that another recession awaits us, and our economic pattern will follow the shape of a W, or even three or more Vs. In any event, my sense is that the current path of this crisis is not nearly as bad as our most pessimistic predictions at the end of last year and the beginning of this one.
The purpose of the St Petersburg Economic Forum today is not only to talk about the current patterns of economic development and meet with leading businessmen. It also serves to form a more or less realistic view of our current state of affairs, to listen to global experts on these issues, to talk with CEOs of the world’s largest companies, and to look toward the future with greater clarity. Given this context, it is difficult to overrate the importance of the St Petersburg forum. There are few global forums of this size; we have Davos, our forum, and forums in Asia. They are spaced over the course of the year, and given how quickly the situation is changing, it is important to meet regularly, to ensure that everyone is on the same page. It is good that this forum is attended by the heads of large companies as well as heads of state.
Azer Mursaliyev: When did you, personally, realise that we are in a crisis?
Dmitry Medvedev: I think it would be simplest to say that even as far back as a year ago, I spoke out on behalf of Russia at the St Petersburg forum, where I warned our colleagues about the negative trends appearing in the global economy, particularly within the economies of specific countries, namely the United States. My speech at the time was perceived almost as political: Russia was seen as striking out at the United States, because the Americans were criticising Russia. Unfortunately, subsequent developments showed that we were right. Still, we were not the only ones a year ago who saw this coming. What is truly unfortunate is that nothing was done about it. The negative trends had started to form in 2006. In 2007, stock indexes had already begun to change sharply. In 2008, the mortgage system in the United States came crashing down. That was in the summer and early autumn. And it was in autumn that we witnessed the crisis of the global financial system, which was manifested first and foremost in a lack of liquidity. That was the last signal that a crisis had befallen the entire planet, although its development was such that you did not need to be a major economist to forecast its imminence.
Still, if we are speaking openly, I must say that no one could have predicted the scale of this crisis and its effects on the global economy. It is now clear to us not only that security in the modern world is globally connected, but also that the economy has become completely globalised. We also see that the problems in one large country with a leading economy can spill over quite quickly to affect other economies, as well as the global economy overall.
Azer Mursaliyev: Is this an economic and financial crisis, or is it a crisis of the existing global economic and financial system?
Dmitry Medvedev: I think that this kind of reasoning is very theoretical (scholastic). The crisis has affected the entire world economy, and the entire global financial system. Without a doubt, the depth of this crisis, its intensity, harshness, and severity are related to the fact that the global financial architecture turned out to be flawed. It was flawed, first of all, because it had been designed to fulfil completely different goals, and second, because it was formed a long time ago, 50–60 years back, to serve a much smaller number of global players. In fact, some of the new global players had no part in making up the rules of the game, for obvious reasons. Today, it is clear to everyone that the shortcomings of the Bretton Woods system were a major contributing factor in the onset of this crisis. This leads to a pragmatic conclusion: we need to create new financial architecture.
Azer Mursaliyev: At the last G20 summit, you suggested several ideas. Will you continue to promote those ideas – for example, at the next G20 summit?
Dmitry Medvedev: Of course. It is our direct responsibility to our country, to our people, and to future generations. We are not fully cognisant of the fact that right now, in spite of the crisis, the foundation is being laid for a new global financial system, which may also function for thirty, forty, or fifty years. The weight of this responsibility lies with the leaders of the countries that are participating in forming this system. That is why we must firmly promote our suggestions.
In fact, there is nothing strange about our suggestions. 70% of our suggested plan of action consists of what our partners in Europe, the United States, the Asian region, and Latin America are doing already. Specifically, it calls for a fairer financial establishment, more effective rules, more clarity and transparency on the part of international financial institutions such as the IMF and the World Bank, and perhaps, the creation of new institutions, if at some point we deem it necessary. It calls for greater corporate transparency, a modern international system for monitoring the financial state of individual countries, the development of a system of international auditing, and a modern, non-unilateral system for accounting and reporting, which would be accepted not only in nations abiding by systems of common law, but ones abiding by civil law systems as well. The suggestions also include many other ideas, which are supported by nearly everyone. That is why we were able to agree on nearly everything, first at the meeting in Washington, and then on a much more specific memorandum in London. This has already been said before, but everyone was pleasantly surprised that such different countries were able to agree on such a large, serious, concrete document calling for the creation of very large monetary funds. Just twenty years ago, it would have been impossible to imagine all these countries working together on economic issues. These were truly good results.
Today, the major challenge is transforming the model we created into a series of concrete actions. But we have many ideas that we are currently promoting on our own or jointly with somebody else, such as the idea of using the ruble as a reserve currency. Clearly, this idea is important to us, but not simply because we want to market a new regional currency. If we can create an international financial system based on a greater number of regional reserve currencies, then our world will be more stable. Today, we have the US dollar, the euro, the yen, the pound sterling, the Swiss frank, and – well, frankly, that’s all. But there are many more markets. The dollar has always held a dominant position. It is not in great shape, let’s be honest, and its prospects raise a lot of questions; indeed, the same can be said of the prospects for the entire global currency system overall. That is why our goal is to make it more flexible and, at the same time, more stable.
We have come a long way. I recall when, at the beginning of this century, I was working in the Presidential Executive Office. We were discussing the time it would take to turn the ruble into a convertible currency. There were different points of view. Why should we do it so quickly? Do we really need this? Can we really do it? Because even then, the idea of the ruble as a freely convertible currency seemed laughable to many people.
But now, we have gotten used to the idea that the ruble is convertible, that we can exchange it for other currencies, and that its convertibility is assured nationally and is almost assured abroad. We did it. But for now, the ruble is not so popular as to be stocked up in reserves – and achieving this is our next challenge. Naturally, we must reach this goal by creating normal economic conditions in our country, with our economy returning to a normal state. At the same time, we must motivate other countries to reserve their money in rubles. This is possible because even now, a number of countries (including CIS nations) trade with us using rubles, and do so with pleasure, despite the fact that we have had problems with the ruble and were forced to weaken it somewhat. Nonetheless, rubles are already being used in reserves. And in my view, the best way to motivate the use of the ruble as a reserve currency is to settle our accounts for basic commodities in rubles – first and foremost, for fuel payments. As soon as energy markets begin using rubles, we will be able to talk more seriously about achieving this goal.
But that is not all. We have an idea that has been discussed quite broadly, although it has not yet made it into any memorandums in a finalised form: the idea of forming a supranational currency. Clearly, we are not talking about any kind of practical application of this process, especially not one involving the release of new global banknotes or coins. But the idea of an electronic currency, which would be accepted by the entire global community, is entirely possible. After all, if we look at the decisions we made at the G20 summits, such as those on borrowing from the IMF, particularly through the use of special drawing rights – that is the prototype of a global currency. Suppose that these special drawing rights are adopted by the G20, and that other countries join us as well; in essence, this would represent a prototype of global settlement of accounts in a single currency. That would be good, because we need to have a different support system. Even under the best possible circumstances for the development of the American economy, or other economies, we cannot be hostages in a situation where the stability of the global currency is dependent on the macroeconomic situation in a single country. That would just be dangerous, and would simply be absurd in today’s world. The risks are too high – the crisis has demonstrated this fact.
This idea has potential, despite the fact that some of my colleagues in the G20 are not discussing it very actively right now. Still, our Chinese colleagues, for example, think that this is an entirely viable option. That is already a good start. What’s most important is that we must not shy away from discussing this issue. I have specifically designated two topics that are not being sufficiently discussed in the global arena, but which are very important.
Azer Mursaliyev: Have any of the potential risks of turning the ruble into a regional currency been measured?
Dmitry Medvedev: Of course they have, and we cannot prescind from the possibility that entry onto a global financial platform, including through our currency, could create problems. Still, the experts do not foresee any major risks at this time, as far as I know. If other states hold part of their gold and foreign currency reserves in rubles, this will not make our economy weaker; it will make it stronger, for a clear set of reasons. But the most important thing I want to say is that the crisis has not swept this goal off the agenda. Perhaps in some ways, it has made it more difficult, but in other ways, it has made it easier, because today, resorting to foreign borrowings has become much more difficult, and many countries are signing bilateral currency swaps [when domestic currencies are used in bilateral trade]. Brazil and China, China and Belarus. I think that we, too, can think about creating similar reciprocal positions – for example, the ruble against the yuan. This could help the situation.
Azer Mursaliyev: Today’s elite has formed in the continuous growth environment. How well are its members able to adapt to this situation of decline?
Dmitry Medvedev: Not fully, for obvious reasons. We had the sense that this growth would continue forever. At the same time, the major economists understood that the market economy is cyclical, and that growth is always followed by decline. But it is quite clear that many people were completely flabbergasted by how rapid, intense, and severe the fall turned out to be. The elite not only in our country but all around the world were not fully prepared for this – I mean both civil servants and business communities. But the elite are elite because they learn quickly. That does not mean that we must act conservatively and overcome the crisis without changing any posts. On the contrary, if the crisis demonstrates that a given manager is not up to par, we must find an effective replacement. In this current difficult setting, we cannot leave him or her time to warm up. For those who are able to adapt quickly, that’s great. But those who cannot should look for a different job. I am referring to the managers, the people who are making decisions, and I mean all of them: managers within the government, managers within companies, and regional managers. I have many staff changes, and in all likelihood, there will be more in the future. Otherwise, we won’t be able to move forward.
Azer Mursaliyev: Do you recall how in Soviet times, the hardest-working individuals would be awarded the title of Strike Worker (Udarnik) of Communist Labour?
Dmitry Medvedev: Yes, of course.
Azer Mursaliyev: With this crisis underway, are we seeing any Strike Workers of Capitalist Labour?
Dmitry Medvedev: Actually I think that capitalist udarniks appeared in the period before the crisis, particularly during the time of original [capital] accumulation. There weren’t that many of them, but they managed to quickly make a handsome fortune, which is what happened in other countries, as well. I am not saying this judgementally, but as a simple statement of fact. Now, the issue at stake is not the need for new udarniks, but rather, the need for all of us to be more effective, so that we may step up to this challenge. As everyone knows, the crisis creates not only problems, but opportunities as well. We need to take advantage of the challenge before us.
I can tell you quite honestly that I am not happy with our economic structure. We were aware of this even before the crisis. When we talk about the need to take action – to spend less, for example – I think that only addresses part of the problem. And we certainly won’t resolve matters by cutting any programmes, especially social ones. What we really should have done is diversified the structure of our economy to a greater extent. If the economic structure were different, there would be a larger number of sectors contributing to our national wealth. If our labour efficiency were higher, if we had different technologies, and if we were more energy-efficient, then clearly, we would have a different outcome. Things might also be better had we developed our national market more actively.
We entered the crisis with the same raw materials structure that we had in the past. Naturally, as soon as oil and gas prices dropped, we began to have problems. Our economy’s one-sided structure is reflected in the figures we are seeing today. The GDP has fallen significantly. Between January and April of this year, it has dropped by nearly ten percent. The industrial production index has fallen by nearly fifteen percent, and capital investments have fallen by over fifteen percent. These are clearly the consequences of the skewed structure of our economy, as well as a rapid flight of venture capital. We will pull ourselves out of this crisis; however, the same situation could repeat itself several years down the road. The patterns governing this crisis are not fully clear, and nobody knows when we might have another one like it. Thus, we must begin creating a new economic structure now.
It is noteworthy that we were able to control our most difficult problems – first and foremost, I am referring to the banking sector. We were able to preserve public trust in the banks through the actions of the government and the Central Bank at the turn of the year, keeping the banking system in balance (not a single depositor lost money). It is very important to ensure that people remain calm. Maintaining the non-financial sector – the real economy, however, has been harder. Some of the necessary measures are taking longer to implement, and not all approaches have been effective.
There have also been some positive changes. Inflation, for example, has slowed down. During the first four months of last year, inflation grew by 6.3 percent. During the first four months of this year, however, it grew by only 6.2 percent. This disinflation is partially due to a decrease in money supply. As a result, we are counting on this year’s overall inflation to be lower than previously forecast, which is very important for lowering interest rates, an issue that is relevant both to businessmen and average people. At this time, I do not know what the outcome will be at the end of the year, but in any case, this is a good trend. And there’s more good news: in the first four months of this year, real wages have decreased by only one percent. This is very important; it is a sign that in spite of all the damage stemming from this crisis, things are not as bad as they could be. And it is up to the authorities, the Government, and the President to maintain this positive trend.
Azer Mursaliyev: Not long ago, there was a push to create state corporations, which were intended to serve as an economic driving force. But today, because of the crisis, there are doubts as to whether this will work. What happens now? Should state corporations continue to be created, or should they be dismantled?
Dmitry Medvedev: I don’t believe we ever intended for state corporations to serve as driving force for the economy. In any case, I don’t think that this is the right approach to reforming our economic structure. It is true that we decided to use state corporations in certain individual sectors, but they should only be temporary. A corporation serving housing and public utilities needs, for example, was intended to be in place for five years. After that, having achieved its purpose, it should be disbanded, while the problems it addressed should be fixed by normal companies, without involving any special government structure. Other kinds of corporations, dealing only in business, should ultimately be privatised (except, perhaps, Rosatom, which is not merely a company, but also a regulatory body, considering the special nature of the nuclear sector). I believe that ultimately, state corporations should be turned into joint stock companies.
Azer Mursaliyev: Does Russia have any non-priority sectors?
Dmitry Medvedev: Naturally, we should not have too many priorities. I will give you an example. Some time ago, we declared several priorities in the social sector, and created national projects. I feel that this was a good experiment. In spite of the high cost and some compromise decisions we have made, we were able to push things in the right direction for education, public health services, agriculture, and housing. Thus, I feel good about the method of achieving specific economic goals by outlining priorities. However, we should only have a small number of priorities at one time. Just recently, we created an IT commission and were discussing the fact that we cannot declare everything a priority, because if we do, nothing will get done. We need to focus on three or four goals and work hard to achieve them. Here, perhaps, we should try an approach favoured by the Chinese. They believe in the creative power of numbers. A reasonable quantity of priorities is set in advance. As far as Russia is concerned, I think our key priorities are fairly clear: energy (the well-being of our economy depends on it), IT, the defence sector, and agriculture. These priorities alone are enough to catapult our economy into the 21st century.
Azer Mursaliyev: For years now, there has been a certain division of labour throughout the world. Perhaps we should give up certain kinds of production and focus on sectors that are more promising?
Dmitry Medvedev: First of all, we have a large, mighty country. We cannot create an economic structure where we specifically refrain from engaging in certain types of production, simply because we have good results in other sectors. We have a vast territory. We have a large population. It’s true that our economy is not well-diversified, but we do have a foundation remaining from Soviet times. It may not be perfect, and it may be difficult to make progress in certain areas today, but nevertheless, we must appraise our abilities and not shy away from competition in sectors where we used to have an advantage.
Ten years ago, it seemed impossible to me that Russia’s automotive industry could be modernised, given its lag behind the competition, a lack of promising models, and an enormous choice of foreign vehicles. But I was wrong. I now feel that we can indeed modernise Russia’s car industry. The latest business projects in this sector have been quite successful. Granted, the crisis is currently blocking everyone. Sales have dropped, and plants may be slower in fully launching new auto lines. But the fact that we are currently making different models is nevertheless a positive step toward creating our own Russian automobile. After all, we are not inventing something out of nothing. We began with assembly, but we’ve progressed to local production of individual auto parts. These are good steps toward creating our own car models, either partially or fully.
I feel that the same is true for electronics, as well as the textile and consumer goods industries. We should not think of ourselves as having exited this market. I will give you an example from the IT sector. We are known for our strong programmers; we produce high-quality, world-renowned software products, and we are almost unable to make hardware. We could simply say, “let’s just work with our brains and let someone else make the hardware in other countries.” But things don’t work that way. If we are unable to implement ideas into hardware, then it is quite likely that sooner or later, we will lose the entire segment. There are plenty of countries willing to buy our technologies, but uninterested in buying our competitive hardware. They just want us to sell them the idea, and leave it at that. But this is less advantageous. An idea that is not implemented into hardware ultimately remains just an idea. I believe that we are entirely capable of producing our own computers, televisions, and home appliances. If we cannot make good Russian toasters today, then down the line, we will not be able to write good software, either.
Azer Mursaliyev: What Russian brand or product could find itself in demand across the globe? I don’t mean oil or gas, which will always be in demand, but rather, something we produce ourselves.
Dmitry Medvedev: I certainly hope that we are not a single-brand nation. I want our energy brands to be popular, but I would like to develop our IT brands as well. They should be promoted both abroad and within our own country. Think of all the national campaigns that encourage people to buy American-made goods, or buy New Zealand brands, or buy Russian products. Today, perhaps, they do not mesh well with the fight against protectionism. Still, campaigns of this kind are useful for a country. I would like for there to be as many Russian brands as possible, so that when a Russian consumer has the choice between a Russian brand and a foreign one, he or she would choose the national brand.
I would like to improve Russian brand recognition in the sectors that have been designated priority sectors. For example, I would like our IT brands to be recognised worldwide, same as the Japanese, European, and American brands. I would like for our food products to also be perceived in the same way, because Russia is an enormous agricultural nation. We have nine percent of the world’s arable land. We hold twenty percent of the world’s water reserves. We can feed not only ourselves, but the entire planet, or at the very least, our neighbouring countries. We also have some very good brands in the arms sector. The entire world recognises our tanks, our missiles, and our Kalashnikovs. However, this does not mean that having gained a place of prominence in the sector, we will retain it forever. If we do not work to create new, modern weapons, we will be replaced, regardless of our glorious history. There are certain sectors that we never left, where we must work hard to maintain our position. These include aircraft manufacturing, nuclear energy, and many others.
I certainly do not want Russia to limit itself to promoting two or three highly recognised brands. Even in sports and culture, we should be known for more than just hockey and ballet. We have had some great accomplishments in other sports as well, including ones that are entirely new to us. Who would have thought, twenty years ago, that we would become so good at tennis? But we did, and this means that we can master other sports as well. To be quite honest, I was surprised to see the rebirth of the Russian film industry at the beginning of this decade. It seemed as though it would be very hard to compete against Hollywood and the world’s other major film industries. And yet, people began to attend our films. In fact, our films have been quite successful at the box office; they have higher receipts than major Hollywood blockbusters. We should not underestimate ourselves. We should not shy away from new challenges.
Azer Mursaliyev: Will the concept of energy security change?
Dmitry Medvedev: We are the world’s largest energy producer and exporter. So in effect when we create a concept of energy security we have to think about global issues. And even when we hosted the G8 summit, energy security was the main topic. Like everything else in the world, energy security, which for a long time seemed so solid and stable, has shown that it has problems. Recent conflicts have illustrated this very clearly. Things that once seemed absolutely obvious to us are no longer. There are new players in the game. Some of the old rules and approaches in the energy sector no longer apply. The notorious Energy Charter is not working, I mean even beyond Russia, which has not ratified it – it really does not work at all. For example, the conflict with Ukraine about gas showed that the mechanisms built into it are not applicable in such situations.
So we have proposed a new idea. I presented it a few months ago and discussed it quite recently with our European partners. At least outwardly they have shown a willingness to discuss this idea, because they understand that if at least some states don’t work out a common approach, then these general rules will not work. I would especially like to emphasize that this is by no means just a Russian problem involving, say, energy relations with Ukraine, or with other countries and energy resources other than gas. Because of our global interdependence and the fact that the main sources of energy now travel through pipelines, this is a matter of general concern. For this reason we have no right to flinch away from trying to solve it. And when I hear from our partners, for example, that we need to address the issue bilaterally, I think they are mistaken. Because ultimately this affects everyone. We must make every effort to create a workable, effective framework for energy relations on all fronts – in gas, oil and nuclear energy. Some of these technologies are directly related to global security and have considerable relevance for nuclear non-proliferation, environmental issues and other things with which humankind has to come to terms.
Azer Mursaliyev: What about your appeal to the authorities not to make life a nightmare for business? How would you evaluate the response to this?
Dmitry Medvedev: There has been some effect but the situation has changed very little. By “some effect,” I mean the following: on my instructions the law on protecting enterprises which prohibits frivolous and relentless inspections was passed. It is already in force and now the question is to make sure that it is rigorously applied. This is a question relating to the survival of our entire economy, because without small business there can be no fully functioning, normal economy. But we are realistic enough to know that one law is not going to resolve everything. The country has a huge number of people who have been in positions of power for a while now and become accustomed to sucking money out of business under a variety of pretexts. Moreover, because of certain traditions, because of our much discussed legal nihilism, the creative possibilities for circumventing such legislation are limitless, for both these administrators and of course for businesses as well. The crisis has made all this that much clearer.
Among other measures taken I would cite the one that allows people to buy back rental housing. Such a mechanism should work. I am not a big fan of taking the gloomy view and saying: “All these new-fangled mechanisms don’t work, we were wrong to try them, it’s our fault, please forgive us.” Let’s see if they can work. The power is in our hands. We need more such mechanisms and more effective ones, and to create a business culture. We’ve forgotten far too quickly what things were like. For example, if we compare doing business in 1990 and now, the comparison is not exactly in favour of the 1990s. Although sometimes people like to wax nostalgic about the outlaws associated with that period, in the economic, administrative and legal sense working conditions were terribly difficult. To put it simply, it was dangerous even to engage in business. I know this firsthand, since I was quite actively engaged in business during those years. Now we have created a legal structure for entrepreneurship. Of course it’s far from perfect.
Azer Mursaliyev: In this crisis situation is it feasible to take on projects like the 2014 [Winter] Olympics in Sochi, the 2018 FIFA World Cup and the recent Eurovision Song Contest?
Dmitry Medvedev: These are very different projects. Some are pure entertainment and perhaps they are bound up with just our country’s image. On the other hand, they give our people a chance to enjoy themselves, which is no bad thing, even in a crisis. And some of them, like the Olympic Games in Sochi, are about more than our image. Of course there is an image component in all of this. Obviously it is delightful when your country wins a competition or hosts the Olympics. Everyone watches with great pleasure and cheers their country on. But the Olympics are also about spending money and attracting more investment. And not just to promote a city, but in order to develop it properly, to create a functioning infrastructure. Sochi, our main resort, is not the most accommodating city in the world. And the Olympics provides us with an opportunity to transform Sochi into a world-class resort. At the same time we are creating jobs for a very significant number of people and making the facilities for those wanting rest and recreation that much more accommodating and up to date. Some of the sports facilities can be relocated to regions that do not have them. We are considering the idea of transferring to other regions some of the skating and ice hockey facilities that will be built. That would also be a good thing.
The APEC summit in 2012 in Vladivostok? Vladivostok is a beautiful city, very beautiful indeed, but it is now on life support. It doesn’t even have acceptable sewage facilities. Everything there is very old and dilapidated. And in order for the city and for the Primorye Territory more generally to grow, we need further investment. Where is it going to come from? This is where the APEC summit comes in. Hotels and a university will be built. Roads need to be repaired, the reservoir has to be done properly. These are problems that have piled up over decades. Sure, international events are just an excuse to deal with these things, but they are a good excuse.
Azer Mursaliyev: What is the reason for creating so many presidential commissions? Aren’t there enough tools and mechanisms to implement our objectives or think-tanks with creative people who can deal with our problems?
Dmitry Medvedev: Yes, I think you’ve put your finger on it, because these commissions have been set up to perform specific tasks. And there is nothing to be embarrassed about in all this. Some commissions have been created while others have been eliminated. In some cases, they simply help the President fulfil his constitutional functions, with regard to citizenship status, pardons and so on. A number of commissions are related to economic cycles, cycles in the best sense of that word. Let’s say that our attempts to create an innovation economy and upgrade our technology are not producing results. Nothing is moving, no one is working on this, and business is not motivated to innovate. So I decided to create such a presidential commission, just to attract more attention to this subject, to get our hands on at least one administrative mechanism that will enable the president to oversee it directly. I hope that this commission will not last forever. We have to get the process started and then I hope it will take on a life of its own. The idea that there should be some kind of unlimited involvement on the part of the Kremlin or some other administrative office is simply wrong. But sometimes an initial push is necessary. So a number of these commissions will perform their tasks and disappear. Others will remain. For example, such large deliberative bodies as the Council for the Disabled are involved in administering the government’s main social tasks and these issues will need to be dealt with constantly, on an uninterrupted basis.
Azer Mursaliyev: How would you comment on recent decisions to reform the Constitutional Court? The Constitutional Court has dealt a lot with the economy recently. Given the relatively important role that the government plays in Russia’s economic life, don’t you think that the Constitutional Court’s increased dependence on state power might be fraught with certain dangers?...
Dmitry Medvedev: No, I don’t think so. All decisions I make are taken only after a detailed analysis of their effects and when I have full confidence in their necessity. And this is that much more true of decisions concerning the major governmental authorities and the underpinnings of our political and federal structure. If we are talking about the relatively small changes in the activities of the Constitutional Court, I would draw your attention to a number of things. First, we are not talking about changing the role or the jurisdiction of the Constitutional Court. The Constitutional Court will continue to deal with those cases which it has always dealt with. We are talking about the means by which the Constitutional Court is administered. Secondly, I wish to draw your attention to the fact that as of now all those in charge of Russia’s highest courts will be chosen in the same, standardised way. Namely following the recommendation by the President, the Federation Council will choose those who will be in charge of the Supreme Court, the Supreme Court of Arbitration and the Constitutional Court. This is a common procedure. Third, the Chairman of the Constitutional Court has up till now been elected for three years. Now he or she will be elected for six years. This period coincides with that of the President’s tenure and in this sense the Chairman’s independence is also better ensured. Fourthly, this is the way that leaders of the Constitutional Court are chosen in most other countries. By the way, in some countries the Chairman of the Constitutional Court is simply appointed by the President. But when I discussed this matter with my colleagues (and I have consulted with the Chairman of the Constitutional Court as well), I rejected this idea since, in my opinion, it did not really correspond to our sense of democratic procedures.
But the fact that all the heads of the highest courts will now enjoy the same legitimacy is a good thing. By the way, the same is true for the Chairman of the Constitutional Court. It is often said that the President and the executive branch have the power to influence the courts. Of course we have to take this into consideration. But we have to guarantee that the Chairman of the Court has the necessary freedom to coordinate the work of the court and not think that at any moment his colleagues could prevent him from working for purely subjective reasons. In my view that is the degree of independence that these new changes give him. So I believe they have been carefully thought through. They seemed necessary to me and the decisions have been made. Today I signed the law that I have just been explaining to you.
Azer Mursaliyev: Will you continue the process of transferring part of administrative functions from Moscow to St Petersburg?
Dmitry Medvedev: I think this task is less important at the federal level than the challenge of strengthening the regions and giving them a priority in the making of public policy. But in some cases, partial redistribution of these administrative functions within Russia may be necessary. To this point we have only one example and that is moving the Constitutional Court to St Petersburg. In my opinion, it was a reasonable move to make. Might there be another such example? Let’s wait and see – I would never rule anything out. But such things should not be an end in themselves. In the final analysis, the country’s capital is a well-established mechanism built to cope with the challenges it faces. The question is rather the effectiveness of exercising certain functions.
For our country, the largest in the world, it is essential that every citizen feel that he or she is a member of a large and very powerful nation. This is what holds us together. And this can be achieved when important decisions are taken not only in Moscow, and when important events, forums and sports competitions are held not only in the European part of our country, but throughout its territory. This is much more important than the dispersion of these structures we are talking about. That is what strengthens the state and binds it into a unified whole – this and the existence of a common information space.