President of Russia Dmitry Medvedev: Good afternoon, dear colleagues, ladies and gentlemen,
Let me share with you my impressions of the summit. I want to say immediately that in my view we have achieved everything that we set out to accomplish. The results are there for all to see. Of course the most important thing we’ve done is discuss ways to overcome the global crisis and to construct a new, more up-to-date financial architecture. It’s true that we discussed the same things in London, and before that in Washington, but the difference lies in the fact that we have made some important progress. We are no longer discussing the outlines or directions that development should take, but have focused instead on some very specific things.
There have recently been some encouraging signs of an upturn in the global economy and in national economies. And Russia is no exception, although we have seen only very small indications of an improvement in the situation. As you know, some countries have experienced an increase in their gross domestic product, and Russia was one of them according to the results for this past summer. Of course ultimately the figures for the whole year will be poor – the recession will take its course. Nevertheless, things are changing, so what we discussed today is not just a rapid response to problems associated with the crisis, not just using more money to support the economy, but an exit strategy from the crisis, even if there is still general agreement that the moment for beginning to implement this strategy has not yet arrived.
What we have agreed and noted in the long communique on what we accomplished is that we are preparing an exit strategy but at the same time continuing to use measures to stimulate national economies. That’s where we are now.
I think that by our next meeting the situation will be different, and the question of implementing an exit strategy will have already moved up the agenda. Anyway, we all hope so.
We focused on major issues like reforming the Bretton Woods institutions. This included dealing with an important and sensitive issue that has been unresolved for a long time now, namely the redistribution of quotas for the International Monetary Fund and World Bank. There are results in this regard, although I should say frankly that at the beginning of our negotiations it was very much up in the air. This demonstrates a number of things in my view. It shows the responsible attitude that various state leaders have shown concerning their international obligations. Because it would have been easier to go our different ways and say that the question required more thought. In spite of that, we got results. Someone had to compromise. In the end we agreed that five percent of the votes would be reallocated within the International Monetary Fund — a compromise figure that everyone finally agreed to — and three percent within the World Bank.
Of course our ministers of finance will continue to work on this, but it is a very important contribution to the creation of a new configuration of the international financial system.
Another issue that in my view is very important and very interesting is the joint monitoring of the state of the economy, that is, an analysis of the macroeconomic situation in the national economies, not only by the International Monetary Fund, which is what we have today, but by other countries as well. I spoke on this subject not so long ago at a conference in Yaroslavl, and wrote an article about it as well. The point is that the current situation is one in which we all become hostages, we might say, to changes in the macroeconomic parameters of the world’s largest economies. In order to see this coming well in advance, we must commit ourselves to studying the situations in our respective countries. This is quite a revolutionary change, but the G20 has agreed to it in principle, so we can now implement the idea of joint monitoring of conditions — the macroeconomic parameters — in the national economies.
This will create a more effective early-warning system for potential crises. And we hope that such recommendations will not simply be stirred into the mix, but will be subject to the most intense scrutiny by the various countries wherever they detect an adverse trend in the economy.
Another result of our efforts concerns the new format. In fact we have decided to institutionalise the G20 itself, to consider the G20 as something other than simply a forum for times of crisis, but rather as a permanent economic forum that devotes itself to important economic decisions regarding the fate of the global economy.
A year ago this seemed absolutely impossible. In and of itself the idea arose as a result of reaction to the crisis. But today this decision was made, and the G20 has now assumed its full rights. This is also very important. But it means that other formats must be reinforced as well. Because the G20 is of course is a collection of the world's largest economies, that’s true, but there are more than twenty countries and twenty economies in the world. Therefore, we need to think about how to reinforce the interaction between the G20 and other countries that do not belong to this club.
Here I think the best way to proceed is to use various powers of the United Nations as the best and most legitimate way of accommodating people’s interests. And my speech and those of my colleagues at the General Assembly session explicitly evoked this idea: the number of those in favour of collective responses to the challenges of our times is growing. I hope that the period has passed in which countries sought to marginalise the UN by dismissing it as the most inefficient and useless structure ever created. Anyway, in my view the world’s leaders, including the U.S. President, spoke in favour of this idea of a collective response.
In my speech to the General Assembly session — I hope you paid attention to this — I talked about the need of a unifying agenda, taking into account the interests of all countries in an emerging, multipolar, international system.
I also drew particular attention to the fact that the speech of the President of the United States of America, Barack Obama, stated that in contemporary life it is impossible to imagine a situation in which one country dominates the world. This is an important claim to make.
The Security Council of the United Nations has become another important forum. The initiative came from the Americans and we support it. The resolution that was passed is a very good one. It makes a significant contribution to resolving the issues of nuclear non-proliferation and disarmament. It is also important that in the whole history of the UN this is one of the few occasions when the Security Council of the United Nations was attended by the leaders themselves. The leaders voted, raising their hands in favour of the resolution. This reinforces the framework of the UN and UN Security Council, and that is a good thing.
We have agreed with our American partners and with other countries to participate in the preparation of the summit on nuclear safety in Washington. It will be held in April 2010. This also constitutes a contribution to the overall agenda.
We held talks with the President of the United States of America. This is already our third meeting in a short period. I’m sure that you will have questions, but I want to say that of course his visit to Moscow enabled us to adopt a plan of action for establishing a bilateral commission on cooperation. Now we are engaged in its implementation. We designated the ministers of foreign affairs to coordinate this work, that is, Mr Lavrov and Mrs Clinton. We have considered different issues. We talked about replacing the START Treaty with a new instrument. There is a feeling that we are making progress. We will try to find time to prepare a new document by the deadline.
Of course we discussed the prospects for further cooperation in light of the U.S. administration’s decision to renounce the deployment in Eastern Europe of missile defence capabilities. This solution opens up new possibilities for creating an up-to-date system of missile defence in the interest of all civilised nations. Like us, the Americans have ideas on this score. I hope that in the course of negotiations between experts this advice will come into play.
I would like to single out a topic that has now become number one in the news — I mean the problem of Iran. As you know, two days ago we made a statement to the effect that we were prepared and united in our determination to negotiate a comprehensive and long-term agreement to resolve the Iranian nuclear issue. However, today the situation has taken a serious turn. You know that in their recent letter to the IAEA the Iranian authorities acknowledged the construction of a new enrichment plant. Information that for several years Iran has been constructing an enrichment plant near the city of Qom, without the authorization of the IAEA, is of course a source of grave concern for all participants in the summit and for Russia in particular.
The construction of this plant is contrary to UN Security Council demands that Iran suspend all enrichment-related activities. Along with the other participants in this debate Russia believes that the IAEA should immediately examine this situation and conduct an inspection. In the framework of the commitments that Russia has made as a member of the IAEA, we will work to facilitate such a test and we are ready to assist in this process. In turn, we urge Iran to cooperate fully with the IAEA on this issue.
I think this is now a very important subject. The information that Iran is building a new processing plant only reinforces our desire to achieve concrete and verifiable results as soon as possible.
As you know, on October 1, 2009, there will be a meeting between the group of six — Russia is also a member of the group of six — and representatives of Iran. This meeting will provide Iran with an opportunity to show its good intentions and its willingness to find a negotiated solution to this problem. I think that we can expect that at this meeting Iran will provide evidence of its intentions to use nuclear energy for peaceful purposes.
I thanked the President of the United States for the stimulating atmosphere of the summit and for its efficient organisation, and for choosing Pittsburgh as the venue for the summit. It is a city with a troubled past that in recent years has become a modern and well-developed centre. This is certainly an example of how modernisation can change a city's appearance and the quality of life of its inhabitants. This is no doubt why it was chosen as the venue for the summit of the 20 leading economies.
I am ready to answer your questions.
Question: Good afternoon. Mr Medvedev, you talked about decisions concerning areas on which the G20 would focus. That is, it will deal with economic problems. In that case what is left for the G8 to do and how exclusive will this preoccupation be? That is, will the G8 continue to discuss economic problems or will it discuss something else that has not yet been defined? And is there a desire to link the G20 and the G8? That is, will they be held in conjunction?
Dmitry Medvedev: Okay, thank you.
I don’t yet have the answers for the questions you’re asking. To this point we have only discussed this new configuration, but it is clear that the G20 will be retained as an economic forum for one very simple reason: with all due respect to the member countries of the G8, they cannot resolve all our economic problems today. Whereas the G20 in fact can, because all our work enabled us to make some very important decisions, some of which as I have just said have been made very recently, even today. Therefore, despite the fact that the G20 is defined as a permanent forum, the G8 can of course go on having useful meetings, but in all likelihood its focus will change. Of course nobody has ever forbidden any countries from discussing economic issues when they get together, but the G8 without the G20, without the other 12 countries, cannot solve all the global economy’s problems today — that is obvious.
Regarding the number of forums, that is a separate problem, and there have admittedly been many of them. Everyone pointed this out. And we should certainly strive to minimise them. But this year it was justified, because we were at the epicentre of a crisis. That’s why we had two G20 summits and one G8, not to mention meetings in other formats, of which there were quite a few and there are more to come. I believe that we must work at eliminating some of them, but that is a question for the future. So far, according to the communique that we just released, we have a G8 and a G20 with our colleagues planned for next year, but let's see how events unfold. Someone has floated the idea – which in my view is a very good one – that we should have a G8 meeting during the G20 summit. This can also be discussed. We’ll come up with something.
Response: Thank you. But we don’t mind if the forums multiply.
Dmitry Medvedev: You don’t mind?
Response: Yes. We like to travel around the world.
Dmitry Medvedev: I don’t doubt it. But we have a somewhat more complicated task. Of course it’s fun to travel around but there are too many things waiting to be dealt with back home.
Question: Mr Medvedev, today the G20 made some important decisions about limiting bonuses for bank executives. Will these decisions be implemented in Russia? Will special legislation be required? And generally speaking, in your view have the top bank managers become more modest in their demands over the last six months?
Dmitry Medvedev: Thank you.
In fact this issue was discussed and included in the communique. In order for this to become compulsory for everyone, we must issue the appropriate directives, including those involving our domestic regulators, the Central Bank and other institutions responsible for banking regulation. So although at this point we haven’t worked out all the details, generally speaking as far as the responsibility of the bankers and of employers as a whole is concerned, in my view they have recently shown some responsibility. If you recall, we talked about this when we were in London. Since then some changes have occurred.
This does not mean that there are no problems. Of course there are problems, all those unpleasant exceptions when bonuses, salaries, and dividend payments are in no way connected with the results of economic performance, but are simply means of quickly obtaining revenue to fill managers’ pockets, while the fate of the actual company is completely ignored by both the employer and the managers.
So we have to monitor these processes. And by the way, in my opinion, this should apply not only to banks. We need a responsible policy for all our business entities, especially in a crisis. It is particularly important to develop a system in which remuneration is directly linked to the work being done and its actual outcome. Not to fictitious results, not to some disputable figures, but to the genuine results of the specific economic performance. This problem is very complicated, but it’s very important that we resolve it.
Question: The crisis showed that it’s not just the world economy that finds itself in an impasse. According to Barack Obama’s speech at the UN General Assembly, the U.S. seems to be trying to exploit the structure whereby if it cannot stop the process, in this case, the process of the collapse of a unipolar world, then it must be the leader of such a process. Including even on climate change, the very existence of which the U.S. denied up until recently. What do you think will come of this?
And the second question: I understand that the issue of tax havens and non-cooperative jurisdictions in effect did not come up today. Does this mean that the problem is solved? Particularly in relation to Russia: the fact that there are Russian companies, sometimes large companies, registered offshore and owned by anonymous owners — what does this mean? Is it a lack of patriotism, a failing in legal enforcement, or a lack of conscience on their part?
Thank you. Forgive me if I took too long.
Dmitry Medvedev: No, that’s fine.
With regard to what is happening. In my opinion, this is exactly what we talked about some time ago, a year ago and even earlier: in effect, the collapse of a unipolar world. Now everyone is aware of this. It’s good that the United States of America has recognized this as well.
What will come of this? I think that we really should end up with something better than what we have. So the question here is not about who will lead. If someone is actively engaged in climate issues, including the United States — well, thank God. Because before in the United States there was no desire to engage with climate issues. Now they do want to engage with this, which is wonderful. Because as you know on climate issues there is no such thing as a unilateral decision. This has been our position for a long time: if after the expiry of the Kyoto Protocol every country does not agree, then we too will refuse to take part. As far as climate is concerned, it’s all or none.
We can only welcome such changes. So if countries are now becoming more cooperative, what’s wrong with that? It’s great. It’s much better than a unipolar world, where no one is listening to each other, and there’s an elite group, to which all the others keep comparing themselves. Let's really try to listen to and learn from each other.
Now, in regard to tax havens: this topic was discussed, but at the last summit we came up with various solutions and lists of so-called non-cooperative jurisdictions. We are currently monitoring them. Those who begin to cooperate will be removed from the list.
But in fact the problem is bigger than that. It is not as simple to resolve as it seems. Entrepreneurs will always be on the lookout for places to register their companies where there is a preferential tax regime. That’s not the problem. In the final analysis this is a question of national policy for every country. Until we have a unified global tax system there will be some countries with high taxes and some countries with lower taxes. And we cannot prohibit entrepreneurs from registering their companies in these countries. But it is crucial that these countries reveal this information, that they do not try to hide it but rather surrender it so that the tax needs of the state can be met, as per the relevant agreements. The country that a given company comes from is the country whose citizens are the owners of the business. That is the most important thing. And of course in the future we must create a system where it will be clear what belongs to whom. At the moment, incidentally, humankind has taken a definite step forward in this direction. Information about those who profit from any business can now be discovered fairly easily. Now there are no faceless companies in the narrow sense of that word, none whatsoever. But we still need to restore order in the sense of fiscal accountability and a desire to give information to the country in which you live, the country whose nationality you are.
In my view that is much more important. And as for different tax regimes — perhaps they are not so bad for business.
Question: Mr Medvedev, let me return to the topic of Iran, which today took a new turn. Can you tell me how surprised Moscow was by the information about the construction of this second plant, and if Iran does not provide evidence that their nuclear programme is peaceful in nature by October 1, what steps is Moscow prepared to take in this regard?
Dmitry Medvedev: Judging by what has been said, the construction of the new plant was a surprise to everyone. It was built in secrecy. Everything follows from that. That is the worst aspect of the situation.
As for how other countries should react: if by the deadline already indicated, if during the meeting of the group of six Iran demonstrates its willingness to cooperate, I have already said that I think we have to create advantageous conditions for Iran and a system of incentives, so that it can begin to collaborate. There is a position that advocates tit for tat measures and other incentives. Incidentally, we discussed all this with the President of the United States of America. If these incentives do not work and cooperation does not develop, then other mechanisms come into force, and we also talked about those.
Question: Mr President, you said that work on the START-2 treaty is likely to be completed earlier than scheduled. So are you planning to visit the United States at the end of the year again in order to reciprocate with a state visit? And would you please share your impressions of America: did you like it, and if you did, what did you like about it?
Dmitry Medvedev: Of course our challenge is to complete our work – we agreed on that. We have made a good start and now we are working at the expert level. Our delegation left with a broad mandate to conduct these negotiations in Europe. Let's hope that by December we will be able to agree, even though of course this process is very complex. Although the Americans’ original position is pretty clear to us, and they in turn understand our position, it’s a question of the positions converging and some more general things that we can agree on. So the chances of success are good and I think it would be in the interests of the United States, Russia and all humankind.
Do I have to visit the United States for this purpose? That is a separate issue, but we can resolve these issues anywhere: we can do it in Russia, we can do it in America, we can do it in Europe, as long as the agreements are ready to be signed.
As for my impressions of the United States: this is not my first visit here, so I wasn’t overwhelmed by anything, but it’s interesting for me to visit America. It has the world’s biggest economy, it’s a very powerful country, in which there are very different cities. We visited two of them. Although I’ve been to New York several times, this is the first time I’ve been to Pittsburgh. I can say that I simply like New York. It’s a city that radiates a great deal of energy. I would compare it with Moscow in terms of the pace of life, the style of life. I am comfortable in Moscow and in general I find New York interesting.
Pittsburgh is different. I understand that it’s a city that had its problems in the 60s and 70s, and that managed to change, change for the better. It is proud, modern, beautiful, and was absolutely closed down. I almost never saw any people due to security measures and I can sympathise with our American partners in this regard.
So it’s interesting for me to visit America. There are still many places that I would like to visit. Let’s wait and see.
Question: Mr President, the United States has changed its plans concerning missile defence in Europe. Does Russia still plan to deploy Iskander missile systems in Kaliningrad Region at the present time?
Dmitry Medvedev: If you remember, I presented this idea during the Presidential Address to the Russian Federal Assembly, that is, our Parliament. At that time I said: we will put Iskander missiles in Kaliningrad Region to counter attempts to create a third missile deployment area. Given the fact that this decision has been rescinded, of course I have decided not to position Iskander missiles in that part of our country.
Question: Your article Go Russia! has had a great deal of resonance in Russia. During your visit and your talks with foreign leaders, did you get to discuss the ideas in this article? Generally speaking did any suggestions come in from abroad? And what sort of proposals did you receive?
Dmitry Medvedev: So you’re asking me if I received responses from abroad, including from foreign leaders? It may seem surprising but I did. Of course I won’t name names so as not to put anyone in an awkward position, but I really did discuss aspects of this article with my colleagues. I won’t pretend that I didn’t enjoy this, because I was counting on a certain resonance, of course first and foremost in our country. But the fact that it was noticed abroad, including by my colleagues, the leaders of various countries, at least shows that there’s an interest in Russia and in the plans of Russia's leadership to change our country. And this means a lot to me, because we are ready to listen to various ideas, including ideas that are formulated beyond our country, as long as they are reasonable ones. And that was the sense of my message to the citizens of our country, but if we receive feedback from abroad we will pay close attention to it too.
Response: So there were some responses?
Dmitry Medvedev: There were.
Question: And can you tell us what they said?
Dmitry Medvedev: No. They said it was very interesting, that they liked it. But I’m not going to go into detail.
Question: Mr Medvedev, you haven’t said a lot about progress made on reforming global financial architecture at the summit during those discussions. Perhaps you could specify in more detail which of your proposals were supported and which were not supported? Thank you.
Dmitry Medvedev: Thank you. Of course there’s a lot to be said about this and I just talked about those things that I think are very important both for our country and for other countries as well. Because, to go back to the issue of redistribution of quotas, when this process began, no one believed that we would ever agree. This is indeed a very important point and, incidentally, has a direct relevance for Russia, though perhaps to a lesser degree since we, as a responsible country, occupy a certain position. But this decision is nevertheless of great importance for several other developing economies. And so we devoted a lot of time and attention to it. Our assistants worked hard as did the so-called sherpas. By the way, I would like to say a special thanks for their hard work, because had it not been for their selfless labour and late nights we would probably not have come to an agreement. Because after all state leaders cannot spend as much time discussing technical details.
The second thing that I said and that is in my view very important is Gordon Brown’s proposed initiative on monitoring. We have accepted it. And I think that if we implement it we shall have a situation that is much more transparent than the one we have today.
Once again let me stress that it is not the IMF that is going to conduct an analysis of how things are working in a given economy. That’s what it does now. We are thinking rather that we should monitor each other and talk about problems that exist. In my view this is very interesting and very important.
With regard to a number of other issues, we have made progress on some of them, yet on others we have not moved as quickly as we would have liked. On the issues of financial regulation, financial reporting and auditing, unfortunately to this point the progress has not been as fast as we expected. There has been some movement and the experts are working away, but we should be able to move faster. That’s a fact. We need to further discuss one of our initiatives, I mean the idea of a greater number of regional reserve currencies. The good news is that this idea is now coming into its own. Nobody is rolling their eyes or saying: ”Oh, and why? It is pointless. We have the dollar and the euro. What else do you want? These already cover everything.” Now this idea is finally becoming evident.
Another thing is that in order to ensure the establishment of additional reserve currencies or, say, use the ruble as a reserve currency, we need conditions to be ripe and for the ruble to become attractive. This is a challenge for us. But in and of itself this idea has already found a greater number of supporters and is being discussed. So many things have been done but of course I cannot say that we accomplished everything we laid out in Washington or what we agreed on in London. This is also true.
Question: I have a question more about life.
Dmitry Medvedev: About the truth.
Question: Mr President, yesterday at a meeting with students [at the University of Pittsburgh] you said that you did not have any supernatural presidential ambitions. Now you have been president for more than a year. How has your perception of this position changed? And in your opinion, what is the biggest positive aspect to the role of president and the biggest drawback?
Dmitry Medvedev: I really did not have any superhuman presidential ambitions. By the way, in my humble opinion, an individual who has incredible presidential ambitions from the very beginning can never become president because these ambitions devour him from the inside. As president you must remain calm about everything. During this time – almost a year and half since I’ve been working – of course my understanding of this position has changed. Before I had worked in the Presidential Executive Office, I directed the President’s [electoral] staff, in other words I knew the job of President but in order to really understand what the work consists in you need to try it on for size. This is absolutely obvious.
I can say that this is very difficult work and I think it is unnecessary for me to prove to you that you can never be disconnected from work, as we say, and this is quite a difficult thing. I once tried to compare it to other government posts which I previously occupied and came to a simple conclusion: in any other case or position there is always the possibility of approaching a decision as follows: ”In the end the boss is here so let’s let him take the final decision.“ Incidentally, this is not from any kind of laziness but rather a useful thing so that when you cannot solve a problem at the end of the day you can call the main boss and say: ”Please look at this. What should we do: this or that?“ And he will answer: ”This is what you should do.“ But in my situation this is impossible to do – there is no one to call. So of course something may be a trifle, but it can nonetheless become important.
On the other hand, this is offset by the fact that you're doing very serious work and you realize that your actions often affect the country’s success on many different fronts, ranging from domestic political and economic to international. And this gives one strength even during difficult business trips like the present one, that we are on for five days already. And this actually helps.
Question: And the biggest bonus and biggest drawback?
Dmitry Medvedev: The biggest bonus is probably the scale of the tasks at hand and the opportunity to participate in their resolution. That is important for everybody. The biggest drawback? I think the answer is obvious: the complete lack of free time.
Response: I also wanted to transmit a request from a student who was too shy to give it to you yesterday.
Dmitry Medvedev: Go ahead.
Response: The one who asked you about Russian entertainers, do you remember?
Dmitry Medvedev: Yes. Who does she want to see?
Question: Maxim Galkin, Ivan Urgant and Timati.
Dmitry Medvedev: Fine. I would ask the staff of the [Presidential] Executive Office present here to organize this somewhere: Galkin, Urgant and Timati. But does she not want to see Netrebko or, say, Malkin?
Response: There was one for request — Tea for Two — but that is from another girl.
Question: If I may, I would like to return to a question about the IMF. You said that a five percent reallocation of quotas is a compromise.
Dmitry Medvedev: We suggested seven.
Question: Can you say whether this compromise is somehow based on economic fundamentals or was it just the mathematical average between the different positions?
Dmitry Medvedev: It was a compromise.
Question: And you also said that it became understood that someone had to give. Can you specifically say who?
Dmitry Medvedev: You want me to reveal all the behind the scenes arrangements behind the agreement.
I understand that this is interesting. In fact, we thought that seven percent was really more fair and a number of large developing economies felt the same way. But if we are talking about the decision which was taken it was a compromise that satisfied everyone. Because a number of countries – above all European ones – would rather seriously lose out from a five percent redistribution, so we had to find a point which would suit everyone, restore justice, or create a new fairness equilibrium within the IMF.
This point was found and, as usually happens, through difficult negotiations. Five percent was considered a sufficient number. And tonight we just agreed to three percent within the World Bank. As in all negotiations there are questions of diplomacy, tact, ability to persuade and, ultimately, responsibility for the decisions you are taking. I think we found a good solution. Incidentally, in turn we have a specific bill on the redistribution of quotas which was previously established and which we must now carry through to the end. I gave instructions to ratify it.
On this positive note we should conclude the news conference. Dear colleagues, I would like to thank you for having accompanied us during these long and difficult events. I heard that you are interested in travel so we will also take this into account when making our foreign policy plans. (Laughter).