President of Russia Dmitry Medvedev: Good afternoon, colleagues,
A tragedy took place yesterday: people have lost their lives in a plane crash. Before we start our work, I propose that we honour their memory…
Colleagues, I thought it important to meet with you to discuss the current situation in the world and in our country following Georgia’s act of aggression on August 8.
You represent the most active and one of the most influential sections of Russian civil society and you have business and also personal contacts with colleagues both inside Russia and abroad. Your position is very important today for the state and for the whole of society.
I will not analyse now the events that have taken place. I have already done this a number of times. I note only the indisputable fact that the regime in Tbilisi started a real war against the Ossetian people, and it was only thanks to Russia’s action that this war was stopped. To our sorrow, it has brought grief to Russians, Ossetians and Georgians – to everyone, and has cost lives and left thousands of people homeless.
Russia not only had the possibility but also the duty of ending this bloodshed and protecting its citizens and peacekeepers. There was no other order I could have given as Commander in Chief. I am sure that in this situation any leader of a state that values itself would have made exactly the same decision.
I want to emphasise that all of our actions at that time and subsequently have complied strictly with international law and the peacekeeping mandate that our forces had. The main task now is to ensure that there are no repeats of this military adventure. You realise that events could have gone a lot further. Furthermore, South Ossetia and Abkhazia have proclaimed their sovereignty and Russia has recognised their independence. We are in the process of establishing diplomatic relations. This week, I will sign the corresponding special agreements on building friendly ties with these two new subjects of international law. Naturally, these agreements will also contain a military component.
I hope the recognition of these two new states will open up new opportunities for Russian business to work with them. What needs to be done now is to rebuild damaged buildings, installations and infrastructure, build new facilities, and provide humanitarian aid of course.
In this context I think it would be a good idea to establish a fund to aid the people affected by what has happened in South Ossetia. I hope that the businesspeople here will take up this initiative. We could discuss it together with other organisations – the Public Council, non-profit organisations, non-governmental organisations – and decide on specific areas of work.
I am sure that the Russian business community can also make a contribution to explaining the real situation and real causes of what happened, and to strengthening Russia’s position abroad, especially given the campaign that is going on today.
Colleagues, we all realise that the tragic events in South Ossetia have exacerbated what was already a difficult situation on the financial and other markets. Over these last years we have become increasingly aware of how directly we are affected by problems in the world economy, which is not going through the best period at the moment. We need to keep moving forward steadily nonetheless, continue resolving the priority tasks before our country. I said not long ago at a meeting with the Government Cabinet and with the main players on the stock market, and I say again now that I am sure that Russia has all the conditions it needs for economic growth.
Of course, any military and political crisis inevitably creates economic problems and makes doing business more difficult. I know you are worried about where we will go from here in developing our economic ties and building our relations with the countries of Europe, the United States of America and other countries. As I have already said, we will do everything we can to continue mutually beneficial cooperation. There is nothing else we need. And we will take measures to protect our business’ property abroad.
Protecting Russian business interests not only at home but also abroad is one of the state’s priorities in general. I spoke about this when I set out the five principles underpinning Russia’s foreign policy. I think we all realise what kind of consequences attempts to shut us out of this or that market could entail. Nothing disastrous would happen to the state or anyone here today (to some degree it would simply serve to boost the domestic market’s development), though it is not something we seek of course.
The stock market fall and the outflow of foreign capital have shed light on another serious problem, namely that our presence on the Russian stock market and financial market is still too small. I am referring here to state financial institutions, private insurance companies and pension funds. All around the world these are the players who stabilise the general situation on the financial markets. We need to address this situation in competent fashion now, make use of the resources we have built up and work actively on creating new institutions.
The goal of establishing an international financial centre in Moscow has not been taken off the agenda and indeed has only become more relevant than ever.
Continued efforts to develop small and medium business are also a task of strategic importance. I want to stress that we will carry out all of our plans in this area: legislative and organisational plans. Internal modernisation remains our priority.
The long-term national development concept for the period through to 2020 will be revised to take into account the latest events. It should contain additional support measures for small business and provide for general support for Russian companies working in key economic sectors.
The country’s competitiveness at this stage depends on how fast we can carry out technological modernisation. This is clear today. In this respect, we need to increase considerably our investment in research and development. The state is ready to provide incentives for spending in this area but with the understanding that the business community will provide the bulk of the financing.
Another issue is that of continuing to develop economic freedom. There must be no doubt in anyone’s mind that we will keep working on lowering business risks and freeing our people, our entrepreneurs, from administrative hurdles. Moreover, we need to create the conditions for a new wave of investment, and here we place our hopes above all on Russian investors, though we welcome foreign investment too.
I think we can discuss taxes – this is always a subject of interest for business. My position is that overall there should be no major additional taxes, though there are a number of issues we still need to settle, including the question of an effective rate for the consolidated social tax. I would like to hear your thoughts on this matter.
As for lowering taxes, this question is being discussed at the moment and it is not a straightforward issue of course, especially when we have situations like the one that took place in August. I think, though, that we will soon definitely settle this matter.
Another question is joining the World Trade Organisation. You know that things have effectively come to a standstill at the moment. It is clear that the events of August have brought about a moment of truth not only in international relations but also in the foreign economic situation. I would like to say once again that we want to join the WTO and we think this is the right decision, though we want to do so on conditions we find acceptable, of course. The WTO is not a ‘gold star’ but is a set of rather complex obligations, and if we take on these obligations we want to do this in civilised fashion and not be pressured into thinking we have to take on some kind of additional obligations as well.
In conclusion, I want to say that we will of course remain open and ready for equal cooperation. We do not want any confrontation or isolation. We have already tasted more than our fill of these things in past decades. But at the same time we will of course protect our interests which, when you look at it, do not really contradict anyone else’s interests at all.
Regardless of what happened in August and the military decisions made, our economic policy principles will not change and nor will our priorities. We do not need militarisation or a nationalised economy. What we do need is order. The state will ensure this order while at the same time maintaining the basic values, rights and freedoms stipulated in our Constitution and main laws.
Our most important tasks at the moment are to protect property rights, strengthen the judicial system and address the corruption issue. We will certainly take all the necessary decisions. I will soon hold a meeting of the Council for Prevention of Corruption and we will introduce the necessary laws to the State Duma. In other words, our development priorities remain unchanged and no one should hope for any change of direction.
These are just some of the issues before us. I am sure you also have other concerns you want to raise. Colleagues, I am ready to listen to all of your concerns and have a now traditional discussion of all of these issues with you.