Website of the President of Russia: Videos: Meetings and Conferences

Presentation of letters of credence by foreign ambassadors

2015-03-20T17:59:23+04:00

Vladimir Putin received letters of credence from 14 new ambassadors to the Russian Federation. The ceremony took place in the Grand Kremlin Palace’s Alexander Hall.

The President received the letters of credence of Else Nizigama Ntamagiro (Republic of Burundi), Marat Tazhin (Republic of Kazakhstan), Antoine Somda (Burkina Faso), Ibrahim Suleiman Mohammad al-Darat (State of Libya), Smail Allahua (People’s Democratic Republic of Algeria), Rudiger von Fritsch (Federal Republic of Germany), Saud Ben Abdullah Zaid al-Mahmoud (State of Qatar), Jaime Giron Duarte (Republic of Colombia), Zaheer Aslam Janjua (Islamic Republic of Pakistan), Pablo Anselmo Tettamanti (Argentine Republic), Imomudin Sattorov (Republic of Tajikistan), Kilifoti Eteauati (Independent State of Samoa), Margaret Anne Louise Jobson (Jamaica), Matlotliso Lineo Lydia Khechane-Ntoane (Kingdom of Lesotho).

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Speech at presentation by foreign ambassadors of their letters of credence

President of Russia Vladimir Putin: Ladies and gentlemen,

I wish you a warm welcome and congratulate you on the start of your responsible and honoured diplomatic missions in Russia. It is our shared desire for your work to be fruitful, serve to advance and continue political dialogue, and increase our trade, economic and investment ties and cultural and humanitarian contacts. You can be sure that the Russian authorities, agencies and public will give you all the needed help and support in this work.

Just recently, we marked the 70^th anniversary of the opening of the second front in Europe in Normandy. We spoke a lot then about the lessons from that terrible war and about the threats we face today. Sadly, there is no denying that many crises have built up in global affairs today. There is dwindling trust and imbalances persist in the global economy and finances. The development gap between countries continues to grow. It is clear that only by working together can we address and resolve today’s many challenges and risks.

“Russia is consistent in supporting greater openness in global affairs and resolving problems through political and diplomatic means, be it the situation in Syria, the Iranian nuclear programme, the situation on the Korean Peninsula, Afghanistan, the Middle East, or the current tragic developments in Ukraine.”

Russia is consistent in supporting greater openness in global affairs and resolving problems through political and diplomatic means, be it the situation in Syria, the Iranian nuclear programme, the situation on the Korean Peninsula, Afghanistan, the Middle East, or the current tragic developments in Ukraine.

We are particularly concerned about the situation in Ukraine. We want to see a complete stop to the bloodshed throughout the entire conflict zone, especially along our border. The anti-constitutional coup in Kiev and attempts to force the Ukrainian people into an artificial choice between Europe and Russia have pushed society into division and painful internal confrontation.

Ordinary people are suffering the most from this conflict. Blood is being spilt in the southeast of the country and a genuine humanitarian disaster is unfolding, with tens of thousands of refugees forced to seek shelter elsewhere, including in Russia. Journalists carrying out their professional duties have been deliberately persecuted and have lost their lives. Diplomats too have been attacked in violation of all norms and conventions, as was the case of Russia’s embassy in Kiev and consulate in Odessa.

Ukraine must return to the road of peace, dialogue and harmony, but most importantly, it has to ensure a lasting ceasefire as an essential condition for holding substantial negotiations between the Kiev government and representatives of the southeast regions. We will make a genuine effort to facilitate such a peace process.

I want to note that Russia has always been a reliable energy supplier for European countries. At the start of this week, I visited Austria, which in 1968 became the first Western European country to sign a contract for Russian natural gas imports. For nearly 50 years now we have guaranteed stable energy exports to Europe, have honoured all our obligations, and will continue to do so.

Ladies and gentlemen, the heads of 14 diplomatic missions are here today. As is tradition, I will try to say a few words about Russia’s relations with each of your countries’ representatives, economies, people engaged in humanitarian ties, and our bilateral relations in general.

Russia and Burundi enjoy friendly relations. We will continue to expand this mutually advantageous trade and economic cooperation and build up our ties in other areas too, in particular, helping to provide training for specialists from Burundi.

The Republic of Kazakhstan is our key partner and strategic ally. We value greatly the open and trusting nature of our relations with Kazakhstan in all areas of bilateral ties and on the international agenda. We will continue to develop cooperation with Astana in all areas defined by the Agreement between Russia and Kazakhstan on Good-Neighbourliness and Alliance in the 21st Century. It is in our common interest to continue the Eurasian integration process and establish the Eurasian Economic Union, which will start work from January 1, 2015

We want to continue developing our ties with Burkina Faso and enrich them with concrete projects in various areas. That Burkina Faso’s embassy in Moscow is resuming work is certain to help us in these efforts.

We place great importance on developing ties with Libya. We support the Libyan authorities’ efforts to stabilise the situation in the country and achieve national consensus. We want to restore close ties in trade and energy and expand opportunities for military-technical cooperation.

Our cooperation with Algeria is picking up the pace. In particular, we are working together actively in the energy sector, on a bilateral basis and through the gas exporting countries’ forum. We are also ready to build up our work together on anti-terrorist activities.

“Russia has always been a reliable energy supplier for European countries.For nearly 50 years now we have guaranteed stable energy exports, have honoured all our obligations, and will continue to do so.”

We place great value on the accumulated potential in our relations with Germany and on our high level of trade and economic cooperation. Germany is one of the European Union’s leaders and one of our most important partners in efforts to strengthen peace and global and regional stability. We want to continue developing the full range of multi-faceted cooperation and ties. In particular, we see as very important the reciprocal Russian and German Language and Literature Years in 2014 and 2015.

We wish to continue rapid restoration and development of full-scale cooperation with the State of Qatar. The priorities for our cooperation include energy, investment, ensuring security in the Persian Gulf, and seeking peaceful settlements to the conflict in Syria and other hotbeds of tension in the region.

We have longstanding friendship and cooperation with Columbia. We hope that these ties will continue to develop under the new Columbian Government headed by Mr Juan Manuel Santos. There are some good prospects for deepening our ties, especially in energy, machine-building, the mining industry and agriculture.

We place great importance on developing cooperation with the Islamic Republic of Pakistan. This is because Pakistan plays an influential part in the Muslim world in general and also because it is in our common interests to stabilise the situation and create conditions for sustained development in South Asia. Russian companies are ready to carry out promising projects, including in the energy and metals sectors, in sectors that have developed with the help from Russian specialists. Of course, combating terrorism and drug trafficking are also important areas for our cooperation.

Argentina is one of Russia’s key partners in Latin America. I will visit Buenos Aires in July and hope then to have the chance to discuss the full range of current bilateral and international issues and outline mutually advantageous joint projects in the energy sector, including nuclear energy, machine-building, and military-technical cooperation.

Russia has a close strategic partnership with the Republic of Tajikistan. Our political, economic, humanitarian and other ties are growing fast. The recent exchange of ratification documents bringing into force the agreement on the status and conditions for location of the Russian military base on Tajikistan’s soil was clear evidence of just how strong our friendship is. We are ready to take part in the Shanghai Cooperation Organisation summit that will take place in Dushanbe in September this year.

Real opportunities are opening up for cooperation with the Independent State of Samoa, in particular in closer coordination of efforts to ensure the security and sustainable development of countries in the South Pacific.

We want to deepen our cooperation with Jamaica and improve the legal basis for our relations. We hope to implement successful mutually advantageous projects and develop tourism between our countries. Jamaica is becoming an increasingly popular holiday destination for Russians.

Our relations with Lesotho have livened up of late. I hope that our ties will become more stable. We have good potential for working together in areas such as healthcare and education, and also in the mining and diamond industries.

Ladies and gentlemen, I want to say again how much we value our good relations with the countries you represent, and we will do all we can to continue their development. I hope that you will help in this during your important mission and work here as ambassadors in Moscow.

I wish you success and thank you for your attention.

Meeting with heads of leading international news agencies

2015-03-20T18:00:26+04:00

Vladimir Putin had a meeting with heads of leading international news agencies.

The President, among other things, expressed his satisfaction with the work of the St Petersburg International Economic Forum. He noted that one of the discussions dealing with fuel and energy came up with proposals to stabilise the global energy market.

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President of Russia Vladimir Putin: Thank you for your interest in Russia and the St Petersburg Economic Forum. Speaking of which, we can see that this interest is growing every year.

This year the media coverage of the St Petersburg International Economic Forum is wider than over the previous two years. It is very good news.

We established good rapport with our partners in all areas of production, from all sectors of the economy. Just now, I had a very informative meeting with heads of major global fuel and energy companies.

I think their session is not over yet, though they are probably approaching the end. They are sharing opinions on the state of the global energy industry, coming up with proposals on measures to stabilise the global energy market. I asked them to develop proposals regarding Russia as well.

Generally, we are very pleased with how cooperation with our partners is going. Many of them have had a presence in Russia for years. They have significant assets, which increases capitalisation of companies and helps them get access to financial markets.

Some members of the Russian-speaking audience inquired about further improvement of Russian laws, including fiscal policy. We will discuss it with them in early June.

Coming back to this meeting, I would like to repeat that we are very glad you are interested in working in Russia. I would like to congratulate your colleague, Mr Mikhailov, on the 110^th anniversary of ITAR-TASS, the largest news agency in Russia. It is a brand known all over the world. I hope that with Mr Mikhailov at the wheel, the agency will take on a new lease of life – also in international collaboration.

I’m impressed with the attendance of this meeting. Your agencies make up about 80% of the global information flow. Your influence on the global and national news agenda cannot be overstated. You have great influence that is dispersed by your colleagues throughout the mass media – both print and online media outlets. I hope that today we’ll be able to discuss some current issues and talk about building relations with Russian government institutions and your colleagues in the Russian market.

I think this is all I want to say for a start. Thank you very much. I suggest we begin an informal question and answer session. I hope you have questions, we can discuss them, and I will try to give you comprehensive answers.

Please.

Sergei Mikhailov: Mr Putin, thank you very much for the opportunity to have this meeting. I think it would be fair to give the floor to Florence Biedermann from France Presse, the oldest French agency with an almost 200 year history, as the only woman at this table. It just so happens. Go ahead please.

Florence Biedermann (retranslated): Mr President, you will soon go to France to attend the 70^th anniversary of the allied landing in Normandy. Will you hold separate meetings with the heads of state that will be present there? And may I ask you one more question on a different subject. Will you consider the elected president in Ukraine legitimate?

Vladimir Putin: The first point. The trip to Normandy will be restricted to the occasion on which we will all meet. Indeed, the President of France has reaffirmed his invitation and it was, of course, accepted with gratitude. During World War II our countries were fighting Nazism together. As you know, Soviet and Russian peoples contributed much to the altar of this common victory and so it is quite natural that we all meet in Normandy. We are to give credit to our allies in the coalition – the Americans, the British and the French. We remember French Resistance fighters and the direct participation of the French in World War II, including the legendary Normandie-Niemen.

Will there be any meetings on this occasion? As far as I understood, the French President would like to hold a separate meeting to discuss issues of bilateral relations and the international agenda. Naturally, I’m open to any talks. If the schedule of the French President permits, I’ll be pleased to meet with him and discuss subjects of mutual interest. This is the first point.

Your second question is about recognition or non-recognition of the election in Ukraine. I replied in detail to this question yesterday. One of your colleagues tired me out trying to approach this issue from different angles. I’ve already answered this question and can repeat what I said.

I believe it would have been more logical to fulfil the agreements – at least in narrow format – that were reached by President Yanukovych and the opposition on February 21 of this year. There was no point in calling into doubt from the very start even some aspects of the legitimacy of the future Ukrainian authorities on the grounds that a presidential election cannot be held with the legally operating Ukrainian President. This is an obvious fact – it’s enough to open the Ukrainian Constitution to see what is written there.

In this context it would have been more logical and, in my view, more serious to first hold a referendum, then adopt a constitution and then hold elections based on the new fundamental law. However, the current authorities in Kiev and those people who control the power have decided to follow a different course. They want to stage the election first and then deal with constitutional amendments. It is unclear for the time being what amendments they have in mind – this is always an issue of debate and certain agreements in society.

You know what I think? The people who are controlling the power in Kiev and the main presidential candidates are still different people. Maybe those who are in charge today are not interested in the new president being completely legitimate. This may be the case. After all, they are engaged in a serious internal political struggle. In the end it’s up to Ukraine, its domestic business. I can just repeat what I said yesterday: we’ll respect any choice made by the Ukrainian people.

Florence Biedermann: As far as I understand, President Yanukovych will remain the legitimate President, even after the election. I’m talking about legitimacy.

Vladimir Putin: You know, we can all read. Let’s open the constitution and read it. We are grown-up people, we can read. Take the Ukrainian constitution and read it. It says that there are four legitimate reasons when an incumbent president has to go. They are: death, a serious health condition, impeachment – and there was no constitution-based impeachment – and resignation, when the president hands in his resignation to the Parliament. So we either stick to the constitution or dismiss it.

My point is they should have dealt with this issue first. But the current Kiev authorities had a different plan. All right. In any case, we are interested in stabilising the situation. What are they saying now? They are going to adopt a new constitution. If so, a newly elected president might still be a temporary figure or, on the contrary, he or she will take over all the power. Beyond doubt, both scenarios will only aggravate the political struggle in the country.

As I said, we will by all means respect the choice of the Ukrainian people and will cooperate with the authorities that will come to power as a result of the election.

Sergei Mikhailov: Please, colleague from Xinhua, which means “New China”, by the way.

Vladimir Putin: Yes. Excuse me, I would like to ask Florence: are you satisfied with my answer?

Florence Biedermann: Yes, I’m satisfied.

Vladimir Putin: Merci beaucoup.

Sergei Mikhailov: Please, Mr Zhou.

Zhou Xisheng: First, I would like to start by congratulating you on the successful talks with Chinese President Xi Jinping. The joint declaration on their results states that China-Russia relations advanced to a new level.

What I wanted to ask is how relations between Russia and China can play, as you have said, a bigger role in promoting stability in international relations and the development of our two countries?

My second question is how do you expect the upcoming 70^thanniversary of the victory in World War II to impact the situation around the world and how can we celebrate it?

Vladimir Putin: The meetings in Shanghai several days ago and the documents that were signed prove without any doubt that relations between the People’s Republic of China and the Russian Federation have advanced to a new level. Over the recent years, we noted on numerous occasions the high level of cooperation between our countries, but with the results that were achieved in recent days in Shanghai and the agreements that were reached, we have every reason to believe that yet another step has been made in enhancing our trust-based dialogue and bringing our strategic partnership to new heights.

This is not just about the gas supply contract, although it goes without saying that this was a landmark achievement, and experts were right to point it out. For Russia, the importance of this deal is comparable with the decision by Soviet leaders and heads of the Federal Republic of Germany to enter into the famous “gas for pipes” contract back in the 1960s. Today, Russia makes the necessary products on its own, including large-diameter pipes and big pipes. For Russia, this is an opportunity to gain a foothold in the Asia Pacific Region and its large market. As you know this contract is valued at $400 billion. It will make gas infrastructure development across Russia’s Far East and Eastern Siberia economically viable. This is what matters the most for Russia with respect to this contract.

For the People’s Republic of China, this contract is expected to reduce energy deficit, which is also crucial. As I said yesterday, we share the concerns of China’s leaders regarding the need for reducing air pollution in major cities. As we all know, natural gas is the most environmentally friendly hydrocarbon resource. We really hope that our cooperation will help improve the environment in major Chinese cities.

The next step would be to enter into a similar deal for the so-called Western Route. The first contract is about delivering gas to the eastern part of China, while the second contract could target the west. The first contract will be served by Kovykta and Chayanda deposits that hold a total of 3 trillion cubic metres of gas, which is expected to last 30 years. To tell you the truth, we are confident that it will last at least 50 years. Deposits that could serve the Western Route are located in Western Siberia. This project is expected to be cheaper. Since all the main issues regarding price calculation, price formation and government support and benefits for this project have already been addressed by both sides, the second project, if greenlighted by China, could be implemented even faster than the Eastern Route project. Of course, it will all depend on the People’s Republic of China and its need to develop specific regions. So this is a separate topic.

That said, our cooperation does not boil down to energy and hydrocarbons. We continue active discussions on nuclear power, ambitious cutting-edge projects in the energy sector, including renewables. We attach great importance to cooperating in high technology, aircraft construction, space exploration and medicine. Joining efforts on monetary and financial issues is very important for both China and Russia.

There is no secret that the People’s Republic of China and the Russian Federation have large foreign currency reserves. China ranks first globally in this respect. It is of utmost importance for us to ensure that these funds are placed rationally and safely. We must join efforts in finding ways and means to ensure that, especially bearing in mind the challenging global economic environment and market turbulence we are currently witnessing. We must ensure and guarantee that these reserves are safe and used rationally and efficiently. Using national currencies, the yuan and the ruble, in international settlements is another topic. We have made the first modest steps in this direction and we will continue exploring opportunities for working together in this segment.

We also discussed many other opportunities including in agriculture, trade and regional cooperation, and we are committed to further promoting them. Significant advances were achieved in all those segments. I would like to commend the President of the People’s Republic of China Xi Jinping on the special role he played in facilitating these agreements. It was his direct support that paved the way to some of the visit’s achievements.

Sergei Mikhailov: Next question. An agency you must know very well – DPA, which accounts for 95% of the German market. All German daily newspapers use DPA. Go ahead please, Mr Mauder.

Ulf Mauder: Yes, I can even say 100%, which is something we are proud of. I will try to speak Russian now. Thank you for this opportunity. There are concerns in the West, Germany included, mostly related to Russia’s political course, the reliability of partnerships and trust. We have been discussing these issues at the forum. As for natural gas, this is probably the biggest issue between Russia and Germany now – whether there will be enough gas left for the West, given your big contract with China. You might also speak about what this would mean for your other projects – the South Stream pipeline and the additional Nord Stream lines. They will have to… Or do you not speak about these anymore?

There is a second question too. We have already talked about Ukraine. I am very interested to hear your assessment of Russian-German relations. You often talk on the telephone with Chancellor Angela Merkel. What can you say about the German Government’s response to the Ukrainian conflict?

Vladimir Putin: Let’s start with the economic issues. As for our relations with our Chinese partners and friends, and our relations with our European partners, including Germany – once we begin executing our contract with China, that country will become an equal consumer of Russian gas, just like Germany. Russia will supply similar volumes of the fuel to both customers: Germany currently consumes about 40 billion cubic metres of Russian gas annually, and China will buy around 40 billion too.

Yet, if we implement the so-called second project with China, where Russian gas will be shipped to them along the Western Route, China will become our largest gas partner. The first contract, which uses the Eastern Route (I’ve already mentioned this but I’ll repeat it to make sure everybody understands), will not affect Russia’s supplies to Europe in any way. It involves gas extracted from new fields in southern Yakutia and Irkutsk Region, which are not even used yet. We will have to tap these new fields, build all the field facilities and pumping stations, arrange pipeline transport, connect them to the power supply and build roads – it’s a huge project. I already said that it would be the biggest construction project with Russian investment, totalling $55 billion, and with our Chinese partners contributing another $20 billion to build the facilities on their end. This has nothing whatsoever to do with Europe. The second distribution route is only being discussed with our Chinese colleagues. It is at the negotiation stage and no contracts are envisaged yet. But I think it will be implemented eventually. That project will use the resources of Western Siberia, which is where all the gas currently supplied to Europe, including Germany, comes from. However, you shouldn’t be concerned about this either, because – sorry, my figures might not be precise – Gazprom produces about 440–450 billion cubic metres a year now, and they can still raise production to 650 billion cubic metres. This area holds sufficient reserves. We’re not producing more because we don’t have customers for such a large volume of gas, but once we have them, this level will be fast and easy to achieve. We’ll boost production.

As for the planned supplies to China over the Western Route, we have not agreed on this yet, but the volume will certainly be less than 200 billion cubic metres. The additional 200 billion cubic metres of gas we can produce will certainly be enough to supply to China and to increase supplies to our European consumers, and even to meet the growing needs of the Russian economy.

As I said, it is very important for us. As soon as we finalise the eastern project we will be able to connect the pipelines in Western Siberia and European Russia, and in Eastern Siberia and the Far East. As a result, we will be able to deliver gas between Russian regions – and eventually, between European consumers and the Far East and the Asia-Pacific. I believe it will be a breakthrough in the global energy sector. Economic issues will be much easier to tackle, without any political implications.

Reliability is key. Even in the most critical times during the Cold War, the Soviet Union never – I want to stress this – never cut off supplies to Europe, including Germany. And the Russian Federation is doing the same. There was one incident in 2009 when illegitimate – I want to stress this – and unfair requirements from Ukraine, a demand for an unbelievable price cut for the Ukrainian supplies, resulted in Ukraine’s refusal to transit Russian gas to Europe.

You know, you can either write about these facts or hold them back as it often happens. But we all understand: Russia is interested in supplies to reliable customers who will pay the agreed price. Do you think we would stop delivering gas to Europe when this would only damage our interests? Nonsense, it would be suicidal. But when Ukrainian partners refused to transit our gas and just stole it from the transit pipeline, what were we supposed to do? Stop delivering gas to Ukraine. You have to pay for what you get. And now we can see that, despite the fact that the 2009 contract took a great deal of effort to agree, we are experiencing new problems.

The contract is clear and it was published online a long time ago, by Ukraine. It might be complicated for an average person but experts will have no trouble understanding it. All you need to do is read it. Russia has not breached this contract, not in the slightest detail.

Now we hear that they could even damage our pipeline or stop paying again. What do they mean, stop paying? They have not paid us since last July! Our Ukrainian partners stopped regular payments last July.

Now they are saying we must reduce the gas price. Why is that exactly? There is nothing about price cuts in the contract. If we want to act according to market rules, they must fulfil their contractual obligations. We do, in full.

These are the facts. We gave them a discount of $100 per 1,000 cubic metres at some point as a payment for our fleet’s base in Crimea. Let’s say, there are those who don’t recognise Crimea’s accession to Russia as democratic. Perhaps, they have their own reasons not to recognise Crimea’s right to self-determination. Let’s not go into that right now.

So what happened? We were supposed to start paying for the Russian fleet’s presence in Crimea after 2017 because until then, there was an agreement between Russia and Ukraine. We paid $95 million a year to station our fleet in Crimea. By the way, we already paid $95 million for this year. Starting from 2017, we were to agree on further payments. So we agreed to make a $100 discount on gas as a payment for our fleet’s presence in Crimea, and we were to start supplies at this discount price in 2017, in 2018 even. But in fact, we gave them a discount in 2010, as soon as the agreement was signed. Why? Just because our Ukrainian friends asked us to do this as a measure to support the Ukrainian economy. So, we have been paying for our fleet’s presence in Crimea for over three years now: 2010, 2011, 2012, 2013 and the first quarter of 2014. But if these terms were to come into force only after 2017, it means we have actually already paid for 2018, 2019, 2020 and the first quarter of 2021. And that’s not all. The contract providing this discount is valid until 2019 while we already started paying for 2021. How can they possibly even complain? We have been unbelievably generous and extremely cooperative with our Ukrainian partners. This is the first point.

Now the second point. We saw that last year the Ukrainian economy was not doing well at all and starting in July, as I’ve already said, the former government stopped regular payments for the required amount despite our very warm relations with them.

Under the contract we could have instantly switched to the advance payment format. The contract states directly that if payment for the previous month has not been made in full, we can introduce advance payment for the following month. In other words, they would pay us up front for gas and we would supply them with the amount they paid for. This is very simple, but we didn’t do this. We wanted to help our customer rather than lose it. We waited through August, September, October and November but still wanted to help our customer. But there were no full payments – just partial all the time.

Then they asked us to give them additional aid. First, they asked for a loan – $3 billion in the first tranche so they could pay the 2013 debt. They told us it is difficult for them to pay even the price they had been paying and asked us for an addition discount – minus another $100 (thus, the price was established at $268.5 per 1,000 cubic metres). They guaranteed full regular payments at this price. Gazprom agreed to this but on mandatory observance of the condition to make regular current payments every month. They paid in January, paid half in February but nothing in March – zero, even at the lowest tariffs and with all the discounts. At that point we told them (the new government had already come to power): “Look, we’ve agreed with you that if you don’t pay in full, we’ll cancel all the discounts.” And this is what we’ve done.

I’d like to emphasise that there is nothing political in this. After all, we cannot supply our resources for free to a 45 million-strong country. I said at the session yesterday – we’ve already supplied Ukraine with about 10 billion – I think 9.8 billion – cubic metres of gas for free. This was a free shipment and it amounts to what we deliver to Poland in a whole year. This is simply unprecedented.

Today our partners are telling us they won’t pay until we give them discounts again. First, they have no right to demand this – the contract doesn’t envisage such demands and it is valid, and second, we’ve agreed that we’ll give them discounts if they make regular payments.

But I’ll surprise you even more now. We’ve already told the new authorities: “All right, we understand your predicament and we’re ready to meet you halfway and discuss potential discounts if you pay at least for the debt that you accumulated when these discounts applied – before April1, 2014. You’re asking us for a lower price but pay at least what you owe us for the period when the discounts were valid.” But they are refusing to pay this as well.

There is a limit to everything. We’ll see what will happen after the new government is formed, after the election. But to make sure no one accused us of plunder, Gazprom warned, and I did too, that under the contract Gazprom will switch to the advance payment format. I sent a letter to the heads of state and government of those countries that receive our gas and then sent them another letter to this effect. Some European leaders replied: “Please be patient, just wait a little longer. Ukraine will receive its first IMF tranche and will pay you.” But it hasn’t paid. They’ve swallowed our money – three billion – without paying a single dollar; they’ve received money from the IMF and haven’t paid anything either.

So, we’re ready for a constructive dialogue but it should rest on a civilised market-based foundation rather than some unjustified demands and ultimatums.

Now I’d like to say a few words about our relations with the Federal Republic. We have full-fledged relations and I think they are very important both for Russia and the Federal Republic of Germany. Based on tentative estimates (I’ve already quoted this figure), some 300,000 jobs in Germany have been created as a result of our bilateral economic cooperation, not to mention our energy contacts. Therefore, I firmly believe that we should be very careful in approaching our relations and should keep them immune to the current political circumstances. Nobody knows who is right in these political disputes. I certainly believe that we are right.

As for our positions in negotiations, we are executing our contact with the Chancellor. I have very warm relations with Ms Merkel – at least up to this day – both on the personal and business planes. We’ve always managed to find points of contact and reach a compromise on disputable issues. We intend to do so in the future. Thank you.

Sergei Mikhailov: Mr Putin, let’s get back to Asia. Our colleagues from India represent Press Trust of India (PTI), the largest media agency in India. Mr Chandrasekar is Executive Editor. You gave him an interview a few years ago. Please.

Vanakambadi SUNDARARAMAN CHANDRASEKAR (retranslated): Thank you, Mr President. I have a short question on Ukraine related to India. The Indian Government did not support the sanctions and other measures that Europe and the US Government took. What is your reaction to that?

Number two. We have a new Government elected in India, and as I understand you congratulated the newly elected leader. He spoke of the importance of cooperation with Russia in his address. What is your reaction to that?

And number three, on the Kudankulam nuclear power project. Have all the issues been resolved on units 3 and 4? The nuclear liability clause, has it been resolved with India? Thank you.

Vladimir Putin: Regarding the first question, you know my opinion about the sanctions. I believe they are totally counterproductive, not based on a fair view of the existing issues and are motivated by the wish to impose the development of international relations on Russia that would contradict both international law and our mutual interests – even their own. Clearly, it would be against Russia’s interests.

Some of the recent events in Ukraine directly threaten our interests, first of all with regard to security. I’m talking about Ukraine’s potential accession to NATO. As I said earlier, such an accession could be followed by the deployment of missile strike systems in Ukraine, including Crimea. Should this happen, it would have serious geopolitical consequences for our country. In fact, Russia would be forced out of the Black Sea territory, a region for legitimate presence in which Russia has fought for centuries. And those who started the coup in Kiev – if they are indeed experts – should have thought about the consequences of their unlawful ambitions.

I hope this precedent, although with its negative implications, will eventually restore a responsible attitude to the rule of international law and encourage the parties to work on agreements and consider each other’s lawful interests through negotiations, without using force to resolve disputes. Supporting a coup that is against the Constitution is exactly what I see as using force.

What happened there? I was talking about this yesterday. We were in the middle of a constructive, though complicated, but totally diplomatic discussion. Yes, we tried to persuade our European partners that the Association Agreement between Ukraine and the EU in the proposed form would pose a certain economic threat for us. We tried to convince both Ukraine and Europe. But, as I said yesterday, we were told that it’s none of our business and a third party must not interfere in the relations between Ukraine and the EU.

We had documented evidence to argue that they were wrong and that Ukraine was part of a free trade area as a CIS country, something that would directly concern our interests. We were told that no, you are not a party in this process, we are not going to discuss it with you.

Eventually, when we managed – I will stress it, by absolutely diplomatic and civilised means – to talk the Ukrainian officials into holding further talks with Brussels, our Western partners encouraged an unconstitutional regime change. This is exactly what I call resolving disputes using force. And we responded to this force. Why? I told you why. Because the interests of the Russian nation and the Russian state were at stake. Those who started this should have thought of that.

I will repeat it again, there are many negative aspects to this. But I hope that this will prevent us all from even more serious incidents and conflicts.

Speaking of India’s stance, we are, of course, grateful to the Indian Government and the Indian people for their level-headed stance. I’m glad the Indian Government considered the historical and the current political aspects in approaching this issue. I’m glad they based their opinion on these fundamental principles, including the importance of Russia-India relations.

We appreciate it. I said this to the former Prime Minister and confirmed it to the newly elected leader in a recent telephone conversation that we will continue to fulfil all of our previous agreements in the economy, culture and defence. Our countries have an extensive range of partnership projects. So far, and I mentioned this yesterday to the representatives of Indian business community, the trade turnover is fairly modest. Increasing it will require a cooperative effort. But the prospects are great, I would even say massive. We will do what we can to make these prospects reality.

Thank you.

Sergei Mikhailov: Mr Putin, you know the next participant of this meeting well: John Daniszewski from Associated Press, the United States.

If I’m not mistaken, in two years Associated Press will celebrate its 170^th anniversary, and John has been working for AP for 35 out of these 170 years. Go ahead, John.

John Daniszewski: Greetings, Mr President. It’s been more than two decades since the end of the Soviet Union, and during that time many roots and shoots of cooperation and contacts have grown between Russia and the United States. Russians are living and doing business in America, American law firms, banks and oil companies are active here. The world has changed.

But now we have this breach over Ukraine. Where do you think we’re going? Is it the beginning of a new Cold War? Is that something that needs to be avoided now?

Vladimir Putin: I would not like to think of it as the beginning of a new Cold War. No one is interested in that and I don’t think it will happen.

The crisis in Ukraine is still unfolding. I have just outlined my vision. It is true that we interact with the United States using many tools.

To be honest, John, such interaction is efficient only when these tools are actually used. If certain platforms were created to promote joint efforts, these platforms should not be about just getting together for a cup of tea or coffee. Such platforms are expected to pave the way to solutions and compromises. However, if Russia’s only benefit is that it has been allowed to be present during discussions, Russia can’t accept this role.

I think that we have every right to put the question this way. We always take heed of our partners’ interests, and almost every time our answer is ‘yes’. There are certain red lines that we can’t allow to be crossed. Ukraine and Crimea are such a red line.

I’ve already elaborated on this subject, but since you represent one of the world’s largest news agencies, I will reiterate: where are the guarantees that the government coup, this another colour revolution that happened in Ukraine, won’t be followed by NATO’s arrival to Ukraine?

Nobody has ever discussed this issue with us in the past two decades. I’d like to emphasise that nobody has conducted a meaningful dialogue with us on this. All we heard was the same reply, like a broken record: every nation has the right to determine the security system it wants to live in and this has nothing to do with you. Take the issue of missile defence systems. What haven’t we proposed, what options of cooperation haven’t we come up with! But the response has been the same, like a broken record: these systems are not intended against you. But when we start proving, documents in hand, that these systems are intended precisely against us because all antimissiles deployed in certain areas can reach the launching pads of our ground-based ballistic missiles, the dialogue comes to a halt. There is simply no substantive discussion. Who will guarantee that tomorrow some missile defence elements do not appear somewhere in Crimea, or would have appeared if the people of Crimea hadn’t voted for joining Russia in the referendum? There are simply no guarantees.

So, you’re right in saying that you have many tools for conducting dialogue and seeking solutions. But these tools should not be used pursue the agenda of only one country but to search for compromises that would be acceptable to all participants in this process with due consideration for each other’s lawful interests.

Dmitry Peskov: I beg your pardon. We’ve been on the air for almost 45 minutes. This is a live broadcast.

Vladimir Putin: If our colleagues want, we can go on. Go ahead.

Dmitry Peskov: Live?

Vladimir Putin: For God’s sake! Please go ahead. Whichever you want – live or otherwise.

Sergei Mikhailov: All right.

Vladimir Putin: Please.

Sergei Mikhailov: Now we have Spain and the EFE news agency, which can deservedly call itself the biggest agency in the Spanish-speaking world. Jose Antonio Vera, you have the floor.

Jose Antonio Vera (retranslated): Thank you, colleague. Mr President, it seems from your words that you do not think tomorrow’s election in Ukraine will substantially change the situation. In other words, you have little hope that the election could help to resolve the situation. What’s more, if the election does not take place in the eastern regions, which it seems will be the case, you are worried that the West might impose new sanctions. If this happens, how would you respond? Do you think that Russia might encounter international isolation? Finally, do you see any threat to you personally and to your policies? It seems unlikely that tomorrow’s election will be able to turn the situation around. Some believe that this election could lead to new concerns in the West and new unrest in eastern Ukraine. Do you think Russia will end up in international isolation? Do you think this is possible? Are you prepared for possible political measures against yourself personally?

Vladimir Putin: I make my decisions based on only one principle, and that is the interests of Russia and its people. It was the interests of our country and people that demanded that we make an adequate response to primitive and unprofessional attempts to act against our interests using force, and our partners should have taken this into consideration earlier.

As for isolation, first, we think that we are in the right in this dispute both in terms of substance and in legal terms. I have already cited the Kosovo precedent as an argument for our position. As you know, Kosovo’s decision on state independence was taken by its Parliament, and in Crimea the decision on state independence was based on the national referendum that asked people if they wished to remain a part of Ukraine or join the Russian Federation. Only after the vast majority of Crimea’s voters – more than 90 percent – said that they want to join the Russian Federation did the Crimean Parliament declare state independence.

Let me note too that the Crimean Parliament that took this decision was formed on the basis of Ukraine’s laws in all legitimacy before the crisis related to the power change in Ukraine and the problems with Crimea began. The deputies were elected earlier and this was a legitimate body that had the right to make such a decision. Of course, you can choose to ignore all of this and feign not to notice or understand particular people and circumstances. But we are in the right and no one will convince me that based as it is on our lawful rights and interests and in accordance with international law, we should change our position on this matter.

Second, I think that isolation of a country like Russia would be more illusory than anything. It is not possible. You are in a position to analyse who takes what view of events and who takes what attitude towards Russia today. Yes, we have a lot of interests with Europe and the United States, a lot of trade. Trade is lower with the USA – only a bit over $27 billion, but we have trade worth $440 billion with Europe. We are thus mutually dependent on each other. We can probably cause quite a lot of damage to each other. But who needs this when there are difficulties as it is in the global economy? This is all the more so as our position is fair and people in Europe can see this for themselves. If you were to conduct a public opinion survey in Europe I am not at all sure that the vast majority of people there support their governments on this matter, and I have every reason to believe that many people support our position. In the end, it is the people who are the source of power.

So as far as possible consequences go, they would be negative for everyone and could provoke turbulence in the European, Russian and global economies, and this is not in anyone’s interest. Yes, this could cause damage of course, if they really start taking crazy measures of some sort, but I do not see any grounds for doing so.

A package of sanctions was imposed in response to our actions in Crimea. I think this is unjustified and unlawful, but it has been done. Now we are told that things depend on Russia taking certain steps and acting or not acting with regard to Ukraine overall. But what steps, what action? What is it we have done in Ukraine that we are now being held responsible for? First we were told that our special forces are fighting there, then everyone realised that we have no forces there. Then we heard that Russian instructors were present there. Then they looked into the situation and established that no instructors are there. So what’s the problem? Are we supposed to cater to others’ political and geopolitical interests? We will not do this.

But we want and are ready for cooperation as equals. I think that a large part of the European public and the American public too share this desire. Many people in government circles in these countries understand the situation very well in fact and do not really want confrontation, and there are no grounds for confrontation.

Go ahead.

Sergei Mikhailov: We now come to Italy’s biggest news agency ANSA and Giuseppe Cerbone, its CEO.

Giuseppe, go ahead with your question.

Giuseppe Cerbone (retranslated): Thank you, Mr President, for receiving us here in your native city. Tomorrow is election day in Europe, in Europe’s biggest countries. Today, with nationalism and populist tendencies on the rise, I would like to know your views on what sort of relations between Russia and the European Union are possible, and what sort of relations, given the growing trade between Russia and Europe, would be advantageous for both sides. Thank you.

Vladimir Putin: Nationalism and trade. I’d be grateful if you could repeat your question.

Giuseppe Cerbone: Yes, of course. What I wanted to ask was, do you think that the growing nationalism and populism in Europe could affect in any way your views on trade with Europe in general and with individual countries? I hope this makes the question clearer.

Vladimir Putin: Growing nationalism and populism is not our problem, you know, but is a common problem. We have these issues to address here in Russia too, but I hope you do not think that Russia is to blame for the growing nationalism and populism in some European countries. This is the result of domestic policy mistakes, mistakes in ethnic policy and labour relations policy.

I doubt there’s any need for me to repeat commonplace knowledge that bringing in migrant labour to solve this or that economic problem often runs up against the opposition of local people who worry about losing their jobs, incompatibility of cultural traditions, and, to be frank, migrants’ failure to observe the cultural traditions of their host countries. But, guided by their own notions of justice and tolerance, the authorities in some countries, in many countries, do not take timely measures needed to address these threats.

Many years ago, I said to many of my friends in Europe that if you continue this way and do not take into account public sentiment in your own countries, a rise in nationalism will be inevitable. This is what is happening now. True, those were private words I spoke back then, in personal friendly conversations, but what I spoke of then is what we are seeing now.

Russia in this respect is not an exception. We are seeing similar problems here and we have not always managed to make timely and competent responses to these issues. But as far as this could affect our relations with European countries, especially our economic ties, I do not see any big threats. I think there are no dangers here.

If you take our relations with Italy, for example, we have very solid, very good ties built on a pragmatic approach. It seems to me that there is general consensus in both countries about our relations. No matter what party holds power in Italy, they all seek to develop relations with Russia. I think the Italian people sees that Russia in the same way seeks to develop ties with your country.

That is not mention the humanitarian side of our relations. We have tremendous respect for Italy’s cultural heritage and for what is happening today in humanitarian sectors such as arts and education. We have great respect for and interest in all of this, and this is a tradition in our country’s cultural life. In this respect we have a lot in common.

Our economy is showing quite energetic growth and our trade with Italy is growing, which says a lot. In many sectors Italy can offer us things we do not find in other European countries. For example, developing small and medium-sized business is one of our problems, but Italy is one of Europe’s leaders in this regard. Italy has made a big contribution to this sector in Russia, and we are grateful for this and will of course do all we can to support this work, as in other sectors too, including energy.

Ulf asked before about the Nord Stream and South Stream infrastructure projects. Italy is taking equal part with Germany and France in the South Stream project. Of course we will carry out this project. If we encounter further problems with South Stream and Brussels keeps creating obstacles for the project, we will look at other possibilities such as going through countries that are not EU members. This would simply mean that the European Union ends up with yet another transit country. I don’t understand why those people in Brussels are doing this. But we are committed to carrying out the Nord Stream and South Stream projects, if we can do so without hindrance.

Incidentally, we built the Nord Stream pipeline but are not allowed full use of the OPAL [Baltic Sea Pipeline Link] system. We are allowed only half-capacity use. Why is this? It’s just nonsense. We invested billions of dollars in the construction to bring the resources to Germany, but once on German soil we can only work at half capacity because they let us into the OPAL system only to this limit and then only as an exception on the basis of a decision by Germany’s government. But to be honest, this is nonsense. It is quite hard to work in these conditions, but we will continue our efforts of course, continue to seek agreement with our partners, including the Italians.

Thank you.

Sergei Mikhailov: Mr Putin, the legendary Reuters agency, now Thomson Reuters, is the world’s largest news agency publishing across 130 countries in 19 languages and producing over 1,000 photos daily. Paul Ingrassia is Editor-in-Chief for Reuters, and a Pulitzer Prize winner, which should be given special notice. Please.

Paul Ingrassia: Thank you Mr President for having us here today. I must point out that I’m the Managing Editor, not the Editor-in-Chief; I didn’t mean to be promoted on the spot.

My question is this. Some commentators in the West have said that they believe your ultimate goal is to recreate much of the former Soviet Union. Or as much of it as it is possible. What do you have to say about that?

Vladimir Putin: Is that what you think or what they say?

Paul Ingrassia: This is being commented fairly widely, not by a majority of commentators but by some important commentators in the West. In any event, I just would like your thoughts on the question.

Vladimir Putin: It is a misconception. I think it is a propaganda tool rather than actual fact. They are trying to label us recreators of an empire, of the Soviet Union, who want to bring everybody under control. This has nothing to do with reality.

I have already said this, and I’ll repeat it. We never even thought of annexing Crimea, for example. We never had any such plans. It is part of the post-Soviet space, but I will be honest with you, our security services are not present there.

You see, we have a completely different vision of the relations in the post-Soviet space. It was actually Russia that proposed creating the CIS at the time. It was Russia that agreed with and encouraged the independence of the former Soviet republics in the post-Soviet space.

What is our ambition? Our ambition is to integrate within the post-Soviet space but not because we want to restore the Soviet Union or an empire but because we would like to use the competitive advantages of these states that are now independent. We have a common language for interethnic and inter-state communication, which is the Russian language. We have a common transport and energy infrastructure that we inherited from a united country. Our companies are strongly connected. There is a good level of research collaboration in science and education that could be used for success in global markets and to help our nations prosper.

We are now working on an agreement to establish the Eurasian Economic Union. Please try to look at this document from within, with an expert eye, without any bias. Just analyse it. Is there anything in it about recreating an empire? There’s nothing. The union’s only objective is economic cooperation.

Why not use the legacy of the previous generations to become more successful in tackling modern challenges? Certainly, we’ll do that.

By the way, the stubborn refusal of the Brussels bureaucrats to establish contacts with the Customs Union and the emerging Eurasian Economic Union is surprising. It is no secret that they always refer to some procedural and legal regulations of the European Union when they refuse to have anything to do with both the Customs Union and the emerging Eurasian Economic Union because Belarus and Kazakhstan are not members of the WTO yet.

They could keep them outside the WTO forever, only to go on refusing to deal with the Eurasian Economic Union. I think they are doing it on purpose. Why? Because, apparently, the European Commission in Brussels sees this integration as some kind of threat to its competitiveness.

I think this approach is totally wrong. They should think not about possible threats but about the possible advantages that are obvious in collaboration between the European Commission (the EU) and a new integrated entity. Why do I believe there are more advantages than threats? Because the Eurasian Economic Union is based on WTO principles, which helps our partners in Europe work with both Belarus and Kazakhstan.

Also, it is a market of over 170 million people. It is a big market in terms of consumption. There are even more advantages in energy issues because Kazakhstan is an oil producer. Belarus could also play a marked role in these processes as it is in the very centre of Europe and back in the Soviet times it was referred to as the Soviet Union’s assembly line.

I think we should steer away from political clichés and make sure that politics does not interfere with economic development and social issues.

Sergei Mikhailov: Our colleague from the Land of the Rising Sun. Hiroki Sugita, Kyodo News, Japan. Your question, please.

Hiroki Sugita (retranslated): You said Russian-Chinese relations have reached a new stage. Japanese Prime Minister Shinzo Abe would also like to elevate relations with Russia to a new level of strategic partnership. What do you think this strategic partnership with Japan should be like?

They say, Mr President, that you may visit Japan in the near future. I hope you will, but when do you plan to come and what could be the aim of your visit?

Also, Mr President, I’d like to ask you about the four northern islands. You said you want to resolve this by Hiki-wake – a term for a draw in judo. Have you changed this position? Could you also explain the meaning of this Hiki-wake, please? What is your position on this now?

Vladimir Putin: We’ve already said this – both Chinese President Xi Jinping and me – that we don’t make friends against someone else. Russia has its own relations with Japan and China has its ties with Japan as well. Incidentally, your Chinese colleague said we should commemorate the 70^th anniversary of the end of World War II. This concerns all countries that were involved in these tragic events one way or another. We should remember them and give an objective assessment of this global tragedy. But today nothing should prevent us from moving forward.

I consider it absolutely counterproductive to juxtapose our relations with any country, including China, to ties with third states. We have no reason to limit our relations with Japan. Let me assure you that China, for all the complications in its relations with Japan, is developing them itself.

It has simply never occurred to us – either us or the Chinese – to set some conditions for each other in developing bilateral relations. We have never done this and are not doing this now. Both we and our Chinese friends behave exclusively as partners. We are not setting up any blocs; we are simply upgrading our relations and that’s all. This is natural because we supplement each other.

It would be also natural for us to expand our opportunities with Japan. When I spoke about our readiness to discuss the islands issue… Let me remind you that at one stage both Russia and Japan froze these talks. Later, after the 1956 declaration we resumed negotiations and it was ratified by the Japanese Parliament and the USSR Supreme Soviet. This declaration (I think this is Article 9) reads that the Soviet Union is ready to consider the transfer of two islands to Japan. Nothing is said about the terms of such a transfer or who will exercise sovereignty over these islands, but the transfer is mentioned there.

These two islands, as well as all four of them, are a subject of complicated negotiations. We’ve inherited this issue from the past and it is a cause of tensions in our relations. Both Russia and Japan are sincerely interested in resolving this problem. Let me emphasise that Russia wants to resolve it as well. What does Hiki-wake mean in this case? If I knew the final answer we would have signed all the documents by now. But the final answer is not yet here and we can only arrive at it through hard joint work. But in principle it means that the solution should not infringe on the interests of either side; it should be an acceptable compromise and neither side should feel the loser. This is not a simple formula but if we keep thinking about it and moving forward, nothing is impossible.

Are we ready to hold such talks? Yes, we are, but we were surprised to hear recently that Japan has joined some sanctions. What does Japan have to do with any of it that it had to suspend negotiations on this issue? So we’re ready for talks but what about Japan? I don’t know, so it’s a question I’d like to put to you. Go ahead, please.

Sergei Mikhailov: Our colleagues from Canada. Mr Kirk, Canadian Press national news agency. The agency was established in 1917, which was a memorable year for Russia.

Malcolm Kirk: Thank you, Mr President. It’s a privilege to be here today. I would like, if I could, to turn your attention to the Arctic for a moment. I think that we know that the Arctic may contain perhaps a quarter of the world’s undiscovered energy resources. So it’s obviously a potential source of significant wealth and probably of strategic military importance as well. Canada’s government is laying claim to the North Pole and our Prime Minister has ordered his own Government to draft an international claim for the mineral resources lying beneath the ocean floor at the North Pole. Russia too has made claims of its own regarding sovereignty of the Arctic seabed and I believe Russia has even planted a titanium flag on the ocean floor. Something that I think prompted a fairly strong reaction from other nations. But I’d be very interested to hear your view of Canada’s sovereignty claims in the Arctic north.

And just one other question, if I may. Our Government has also been very critical of you and Russia in its handling of the situation in Crimea, has described it as aggressive and imperialistic. I’m curious what your response would be to our Prime Minister’s characterisation and whether you intend to have any discussions with him in France during the D-Day celebrations. Thank you.

Vladimir Putin: As for communicating and holding meetings, if the event’s host, President Hollande, doesn’t change anything, I will certainly come, and I do not intend to shun anyone. I will gladly talk to any of my colleagues, including the Canadian Prime Minister.

You know, there is something surprising about it for me. Let’s say, the Canadian Government criticises Russia. Where is Canada and where are Ukraine and Russia? I understand that it could be about global arguments, but still even the United States has little to do with Ukraine. Neither Canada nor the United States have as many national interests vested in Ukraine as Russia does.

I’ve already said this, but I’ll repeat it for you one more time: I think that our partners in the United States and Europe employed brutal and unlawful methods in Ukraine by prompting a government coup and thereby threatening our fundamental national interests in terms of security, as well as the economy. For this anti-constitutional coup was followed, and we clearly heard it, by calls to strip national minorities of their language rights and join NATO, which means the possible deployment of NATO troops, ballistic attack systems and missile defence capabilities. We would have found ourselves in a radically new environment, which prompted us to take certain steps, including those aimed at supporting the aspirations of the people of Crimea to join Russia. We believe that in the face of such power politics we delivered an adequate response along the same lines. I hope that it will never happen again in any other circumstances or places.

Besides, I’ve already said in response to a question by your Spanish colleague, and I can say it again: we are adamant that Russia’s position was the only right option and that Russia acted in full compliance with international law. If I’m not mistaken, Article 1, Paragraph 2 of the UN Charter stipulates that the purpose of the United Nations is to ensure the nations’ right to self-determination.

We vigorously oppose attempts by international players to interpret international norms exclusively to suit their own agenda based on their interests in any specific global environment. In Kosovo, they said that acknowledging the right of a nation to self-determination was the right way to go, while in Crimea they turned everything upside down and started talking about territorial integrity, which is also mentioned in the UN Charter. We must find a way to reach common ground by agreeing to act in one way or the other and refraining from saying that white is black and black is white. We are calling for restoring the primacy of international law in global affairs.

As for Canada’s position, it is traditionally aligned with that of the US administration, so we’re not surprised. We are ready for a discussion, including with the Canadian Prime Minister. We have talked about many issues with him on numerous occasions. If such a discussion is needed and wanted, we are ready for it.

Regarding the Arctic, there are mechanisms that were devised within the United Nations. Only recently, Russia used legal procedures envisaged by international law to claim certain parts of the Far Eastern continental shelf. We are using exclusively legal means, and we are committed to doing so in the Arctic as well. You may have noticed that Russia had very lengthy talks with its Norwegian partners and friends on shelf delimitation in the North and Barents seas. These talks took almost a decade. Such matters are always very complex, especially when oil and gas reserves are involved. Nevertheless, we were able to reach common ground, and I think that it will benefit both countries, since conditions were created for joint economic efforts in this region. In my opinion, this is the best and the wisest way to resolve all the issues in the Arctic.

There are other tools, purely regional ones, and we’ll be using them to achieve accord and mutual understanding. As for the flag planted on the Arctic seabed, this was not a government move. It was rather an emotional act. I don’t see it as anything that far out of the ordinary. Americans once landed on the Moon and planted the US flag there. We haven’t quarrelled with them over that and never imagined they would claim ownership of the Moon. Fortunately, our space cooperation with the United States is thriving.

Sergei Mikhailov: Thank you, Mr Putin. Here is another news agency – British and Irish, with a 150-year history – Press Association, and its CEO Clive Marshall. Your question please, Clive.

Clive Marshall: Mr President, UK-Russian relations deteriorated significantly last week over the Ukrainian developments. Cameron said Britain may have to prepare for a very different – meaning worse – long-term relationship with Russia. He supported the sanctions against Russia and deployed fighter jets to the Baltic region. Prince Charles, according to some reports, compared you to Hitler last week. How would you comment on this?

Vladimir Putin: This reminds me of a good proverb: You are angry, therefore you’re wrong. Please pass on my words to the Prime Minister and to Prince Charles. He has been to our country more than once. I didn’t hear him say this, but if these words indeed were said, it is certainly unacceptable. I’m sure he understands that as a man of manners. I met him personally, as well as other members of the Royal Family. This is not how monarchs should act.

But over the past few years we have seen so much that nothing can surprise me anymore. In my work, I will not be guided by what they say about me. I will be guided, as I said, solely by the interests of the Russian people. I hope that our colleagues in Great Britain will keep that in mind and will remember that when searching for solutions to any controversial issues we are always guided by international law. Only if we respect international law and interpret it consistently will we be able to find solutions to the most difficult issues.

As for our practical issues, I would say, should our British partners be guided by their national interests – like I am – and not by other considerations, I’m sure this will soon become a thing of the past and we’ll be able to continue positive cooperation like we did before, maybe even reach some new heights, and can start thinking about what is to be done in order to make our future cooperation more effective.

<…>

St Petersburg International Economic Forum

2015-05-12T16:15:06+04:00

Vladimir Putin took part in the plenary session of the 18^th St Petersburg International Economic Forum. The Forum is taking place this year under the theme of Sustaining Confidence in a World Undergoing Transformation.

The Forum, which has been an annual event since 1997, brings together heads of state and political leaders, Russian and foreign business leaders, members of the science and academic communities, the media and civil society representatives.

* * *

President of Russia Vladimir Putin: Ladies and gentlemen, I welcome you to the International Economic Forum in St Petersburg.

I am pleased to welcome here today our traditional old friends and new guests too, the heads of major Russian and foreign companies, representatives of leading international business associations, everyone who has long-term, strategic priorities with Russia and who shares the idea of partnership in the interest of global development.

We value highly this desire for cooperation and dialogue. We value your independent and responsible position that is free from short-term considerations of the moment.

Consistency and openness are always met with reciprocal steps and mutual trust. Trust is above all about finding compromises, mutually acceptable solutions, and working and acting together. This idea is the main theme of this year’s Forum – Sustaining Confidence in a World Undergoing Transformation.

The world is indeed changing very fast. We are witnessing colossal geopolitical, technological and structural shifts. The unipolar model of a world order failed, and this is clear to everyone today, even to those who still try to operate within the familiar reference system, try to maintain their monopoly, dictate their rules in politics, trade, and finance, and impose their cultural and behavioural standards.

The global economic upheavals of 2008 were a vivid example of the profound crisis in a development model built on unification and domination, or attempts to dominate in any case. This should serve as a serious lesson to make us see and understand the world in all its diversity and make a sober assessment of the new reality and full complexity of relations as they are emerging today.

But instead, we often come up against an unwillingness to listen to new global development leaders, take alternative points of view into account, and not just in word but in essence change the working principles of the key international financial institutions in accordance with the changing situation in the world. Reform of the IMF is at a standstill and the Doha round, which was supposed to set modern new and fair rules for world trade, is practically going nowhere.

Ladies and gentlemen, this is an economic forum but there is no avoiding a few words on politics. Politics influences economic processes, and in this respect I note that inability to find compromises, unwillingness to take into account partners’ lawful interests, and blunt use of pressure only add to chaos and instability and create new risks for the international community’s continued development.

Does anyone gain from disruption to regular cooperation between Russia and the European Union? Does anyone gain from the seeing our joint work on important issues for everyone such as nuclear safety, fighting terrorism, trans-border crime and drug trafficking, and other priority issues come to a standstill? Will this make the world any more stable and predictable? Probably not.

Surely it is clear that in today’s interdependent world economic sanctions used as an instrument of political pressure have a boomerang effect that ultimately has consequences for business and the economy in the countries that impose them.

I understand very well the concerns of foreign businesspeople who have invested billions of dollars in Russia, earned an excellent reputation here and are doing successful business in our country. I understand the representatives of engineering and machine-building companies for which Russian contracts have become a big growth source, or the European tourism industry, which to a large extent has been focusing on Russian consumers.

And now, for the sake of a failing political course, successful businesses have to suffer losses and relinquish to competitors this huge market and the positions they had built up?

We cannot change the logic of global political and economic development. As I said, the world is multipolar. People want to decide their own futures and preserve their own cultural, historical and civilizational identity.

At the same time, the geo-economic map of the world is changing. New economic growth centres are emerging, new trade and investment routes are forming, new integration organisations are developing and strengthening, and there is greater demand for collective leadership that can draw up common decisions, not imposed by any one party, but decisions reached through consensus and agreement.

The desire of many major economies and regional associations to expand interaction and establish new cooperation ties, including within BRICS, the G20 and the SCO, is also there for everyone to see.

Russia and its neighbours are implementing a large-scale Eurasian integration project. The focal event for the member states of the Customs Union and the Common Economic Space this year will certainly be the signing of the Treaty on the Creation of the Eurasian Economic Union in Astana on May 29.

The treaty will take force on January 1, 2015. The goal is to create a common market between three countries with a total population of over 170 million, with free movement of capital, goods, services and labour.

Conditions will be greatly improved for business, for joint investment and cooperation projects, and for a coordinated macroeconomic policy and operation in foreign markets.

Colleagues, ladies and gentlemen,

I am sure that our foreign partners will find it easier to work in our common market, in particular, because this integration model is based on WTO principles.

We hope that, given the cooperation of our partners, we will complete the involvement of Armenia in this integration association soon. We are also working on the integration of Kyrgyzstan. We believe that there is a good outlook for cooperation between the Eurasian Economic Union and the EU. Until recently, our colleagues refused to deal with the Customs Union, arguing that the EU is ready to cooperate with each individual member state but not with their association. This is strange logic, because we are willing to work, and we are working with individual EU countries and with the EU as an association. I don’t understand why our approaches should be different.

I’m happy to see many businesspeople from Europe in this hall who are willing to work with Russia. I’d like to emphasise that we value this pragmatic and mature approach on the part of European business leaders.

Europe has traditionally been Russia’s major trade and economic partner. We sincerely hope that it will remain so in the future, with new opportunities emerging for business cooperation and the removal of obstacles to trade and investment.

This is why we are urging the EU and European countries to work consistently towards a new basic partnership and cooperation agreement between Russia and the EU. We believe that this document should include a large and maximally concrete chapter on trade and economic relations.

Of course, we should also strengthen stability and ensure predictability in such strategic sphere as energy security. Russia has always been proud of its reputation as Europe’s reliable energy supplier. Current gas supply risks, which we can see, cannot be blamed on Russia. Everyone here knows that the blame rests with the transit country, Ukraine, which is abusing its status as the transit country for Russian gas supplies to Europe.

This is a paradoxical situation. Ukraine says it recognises the provisions of the gas contract signed in 2009. By the way, that contract was signed by people who still hold the same positions in the Ukrainian government. After signing that contract, Ukraine honoured it for a few years, but now it has refused to pay and demands a discount that is not stipulated in the contract. They cite a difficult economic situation. We are aware of this. Moreover, we are acting like good partners, offering help. You know that last year we issued a huge loan to Ukraine, $3 billion, and also a discount for the first quarter of this year on the condition – I want to emphasise this – that Ukraine will repay all its debts and provide current payments.

Ukraine has not repaid its debts, which have grown, and has stopped making current payments, even with a discount. I say again – they aren't even paying the discount price.

So, the question is: Where is our money? How was the multibillion aid spent?

Since the conditions were not met, Gazprom reverted to the full-payment system as stipulated by the contract, so this is nothing new. We did everything according to the agreements reached when the aid and discounts were provided.

Yes, there are problems, but I believe that they are solvable. All we need is a constructive dialogue. This was my vision that I presented in my address to European leaders.

Unfortunately, we have not received a clear response so far. However, we expect an adequate and balanced reaction from our counterparts, which would line up with our common interests – the interests of Russia, Ukraine and European countries.

Businesspeople make up nearly 100 percent of the audience here. You know, I’m not talking about the debt (which has grown to $3.5 billion by now). But, in fact, we have provided Ukraine with almost 10 billion cubic metres of gas free of charge. This is our annual supply to Poland. How many of you would deliver the same amount of goods for the same amount of time for no money? It is ridiculous. There must be boundaries that we just can’t cross. I will repeat once again: I hope that we can reach an agreement on friendly terms as neighbours. They want discounts. We ask them to repay the debt at least for the discount period. But they refuse to repay even this amount. What are we supposed to do?

At the same time, we intend to expand the horizons of our development and open new promising markets. This concerns energy, investment, industrial collaboration and non-energy exports.

For Russia, as a Eurasian country, it is natural to be highly interested in the Asia-Pacific region. It is both a huge market and an important source of growth for Russia’s Far East and Eastern Siberia.

Just the other day, top-level talks between Russia and China ended. We kicked off a new stage of our comprehensive partnership and strategic collaboration. Our economic relations are also moving forward. In the course of my visit, we signed over 50 agreements concerning both our governments and businesses. Their total value is in the tens of billions of dollars.

By 2020, we plan to double our mutual sales turnover and reach $200 billion. Currently, in the country ranking, China is our top economic partner with a turnover of around $90 billion.

We intend to gradually increase the share of settlements in our national currencies, rubles and yuans, and to form integrated investment and banking institutions. Such a network would provide funding to major global projects in infrastructure, mineral deposit production and processing, machine and aircraft engineering, and knowledge-intensive production. We are also moving towards building a strategic Russian-Chinese energy alliance that would serve as the main framework for guaranteeing the energy security of the entire Asia-Pacific region.

We understand pretty well that this economic partnership could be a powerful incentive to the development of both countries. Taking into account the scale of the Russian and Chinese economies, this could also be a significant factor of global growth.

Let me stress that during my visit to China we agreed on natural gas supplies from Russia for an impressive $400 billion. We calculated the gas price according to a standard formula that is based on the market price of oil and petrochemicals.

Two newly discovered gas fields, Kovykta and Chayanda in eastern Russia, will provide resource potential for these supplies. The confirmed extractable reserves of each of these fields are 1.5 trillion cubic metres of gas, which is 3 trillion in total. We agreed on supplies for 30 years but, in fact, there is enough gas for 50 years. We will also be able to improve the provision of gas supply in Russia, of course.

It is not final, but over four to six years Russia will invest some $55 billion. We will build helium-processing plants and plants for the chemical utilisation of natural gas. We will also build new infrastructure – not only gas, but also road and energy facilities. We plan to create thousands of modern, technology-intensive jobs. Colleagues, I would like to stress that this will be the largest construction project in the world – no exaggeration. China, on its part, plans to invest $20-$22 billion in their infrastructure.

The mining and metals industry – such as pipe production – will also receive a new impetus as will the domestic provision of gas supply, which is very important to us. It is a chain. Pipes are required for building gas facilities. Pipe production will support the metals industry, while metal production serves as a stimulus for miners.

The next stage would be our collaborative work on the western corridor of supplies with Chinese partners. These are supplies from the reserves of Western Siberia. As a result, we will have an opportunity to connect eastern and western gas infrastructure.

In the country ranking, China, along with Germany, is becoming a major consumer of Russia’s natural gas. Once the western corridor project is realised, China will surely become our number one consumer. I know that one of our Chinese colleagues’ motives is environmental improvement in big cities. We know well that using gas in big cities is environmentally much more beneficial.

Ladies and gentlemen,

Russia is changing. The quality of life is improving. Things are getting better, from social issues to healthcare and education. Just now, at a meeting with leaders of global businesses, we discussed some of the problems. Our colleagues pointed out that in the modern world, things like education and healthcare are important aspects of productivity and efficiency. I will remind you that experts and business analysts that assessed the long-term prospects of our economy, including our labour market, argued not long ago that the negative demographic trends in Russia would only get worse, resulting in serious problems. So what have we achieved?

Despite existing challenges, we have the figures to prove that Russia managed to overcome this problem, to make progress in resolving this historical challenge and ultimately to find a way out of the demographic trap, as experts called it.

Last year, for the first time since 1991, there was natural population growth in Russia. The increase is small so far, but we can see a positive trend. For the first time, the average life expectancy in our country reached 71 years. True, it is not the best figure in Europe, but it is a positive development.

Mortality is gradually decreasing, including cardiovascular mortality. I’d like to stress that we currently have the lowest maternal mortality rate in the entire history of our country, including the entire Soviet period and modern Russia.

We have reached a qualitatively new level on many living standards – for example, average income. These demographic and social development changes were achieved in a very short period, while many other countries take decades.

We know that there are still many unresolved issues. The economic situation, for example, is ambiguous.

Of course, we can show results. I’ll give you a few examples. Last year, over 70 million square metres of housing were built in Russia, which is the highest figure for the past two decades. The construction industry, as we all know, is the driving force in any economy.

And the Russian construction industry continues to demonstrate pretty good results. As of the end of February 2014, some 8.7 million square metres of housing were commissioned, which is 33% higher year-on-year.

Growth in the consumer market has been good, up 3.2% since the beginning of the year.

Many industries, including non-energy ones, have attracted sizable investments. For example, last year, investment in vehicle production grew by 26.6%, while machinery and equipment production received 21.6% more investments, and electrical equipment — 17.2% more investments.

In 2013, Russia received almost $64 billion in direct investments, or almost $80 billion if we count the Rosneft and TNK-BP deal, which speaks for itself. It is the best result over the past five years. Foreign rankings place Russia in the third place in the world in terms of direct foreign investment. The role of the Russian Direct Investment Fund in building strategic alliances with foreign investors should not go unnoticed.

Also, I would like to mention the growing volume and better quality and structure of Russian exports. For instance, last year, exports of Russia-produced machinery to the EU grew by over 20%. The absolute figure is still modest, but we can see a positive trend.

At the same time, economic growth slowed in Russia on the back of both external and, to be honest, domestic factors such as systemic imbalances, the build-up of economic inefficiencies and lopsided economic development.

This slowdown, with growth rates below global GDP growth, is a very serious issue for Russia. We must certainly confront this challenge.

We have outlined this course of action, this strategy, and some of these measures are already being implemented. Today, I will also announce a number of additional initiatives.

The gist and logic of our actions are to facilitate major breakthroughs in the national economy.

What is this all about?

The structure of exports must be completely and swiftly overhauled. Our goal is to ensure that annual growth of non-oil and gas exports exceeds 6 percent. To get there, we will introduce new tools for supporting Russia’s non-energy companies on global markets.

At the same time, we will be proactive in promoting import substitution in accordance with WTO rules and our commitments within the framework of the Eurasian Economic Union, which is currently being created. It goes without saying that we will promote import substitution only in promising segments where we can and should be competitive.

The next element is facilitating investment, above all in technological and industrial upgrades.

We intend to focus on modernising professional training and promoting quality growth on the labour market. By 2020, highly skilled workers should account for at least one third of the country’s workforce.

The National Council for Professional Qualifications has been established with input from Russian businesses. In the next two years, this council is expected to devise over 800 new professional standards in line with the needs of the present-day economy. Of this total, 400 standards are expected to be approved in 2014, which is a major effort. I would like to reiterate my call to our business colleagues not to slow down. These standards will be used to prepare new professional training programmes and qualification requirements.

Professional standards will be mandatory for state agencies and state-owned companies. The Government has already drafted amendments to the Labour Code to this effect and is expected to submit them to the State Duma by June 1, 2014.

We will soon hold a special meeting with Government Cabinet members to discuss the important issue of improving labour mobility so that people can move to another place to take up a job, including help with renting an apartment.

This is a matter of principle, and without addressing it we will hardly see any state-of-the-art production facilities emerge in the near future in new industrial zones and promising regions.

Now I’d like to speak in more detail about our measures to improve the business climate and encourage investment. We’ve already made substantial progress in simplifying the registration of property and companies as well as customs and taxation procedures. The Government has established an exhaustive list of permits for construction and considerably reduced the number of approvals. Although there are still many problems in this area, and those involved in construction know all about it, progress has still been made.

All in all, the roadmaps on the National Business Initiative (NBI) provided for the elaboration of about 160 draft laws aimed at improving Russia’s business climate. The plan was for these drafts to be adopted before 2018.

Then we adjusted the schedule and set the task of completing this work before the end of 2015, although I think even this substantial change is plainly inadequate. An investor shouldn’t have to wait and needs the best business conditions now, not sometime in the future. Given the need for higher growth, I believe it is necessary to submit to the State Duma the whole package before the year expires, and I will ask MPs to review them as soon as possible.

Improvement of the business climate directly depends on the regions and municipalities where investors take their projects. The introduction of regional business standards has already improved law-enforcement practice and largely changed the motivation of regional management teams by orienting them towards dialogue with business.

Now we’ll take yet another step forward by launching national ratings of the investment climate in the regions. In effect, this is a mechanism for assessing the NBI’s implementation and standards in every region based on the opinion of the entrepreneurs working there. But national ratings are not just an evaluation system; they should become an effective instrument for making systemic changes at both the federal and regional level and for promoting the best managerial practices.

The results of the first pilot ratings in which 21 regions took part have just been released to the public (I think you know this already). I’d like to congratulate the winners – the Kaluga, Ulyanovsk and Kostroma regions, the Republic of Tatarstan and the Krasnoyarsk Territory.

Starting next year, all regions will take part in these ratings, which will give us an overall picture of the business climate at the regional level.

At the same time, I think it is necessary to develop measures to encourage the regions to improve the investment climate, and I’d like to ask the Government to offer relevant proposals.

Friends,

The experience of our leading regions shows that competent work with investors and support for industrial and high-tech projects has allowed them not only to ensure high growth rates but also to substantially upgrade their production base and enhance labour productivity. In the last few years our carmakers, food industry and metallurgy have been considerably modernised.

Large amounts are currently being invested to re-equip the defence industry, which is producing not only military hardware but also a big range of civilian products. We do understand that even major projects won’t lead to consistently high growth rates. Russia needs a genuine technological revolution, serious technological modernisation. We must carry out the largest technological upgrade of our enterprises in the past half century.

What are we going to do to make this happen? First, we’ll expand access to cheap investment resources. This is easier said than done, but it is still one of our main goals. To achieve this we’ll actively introduce the mechanism of project financing, first of all in industry. It will allow us to grant investors long-term loans on easy and flexible terms. The final cost of such loans should not be above the inflation rate plus one percent. The Government and the Central Bank know about this and have received instructions. They should submit relevant proposals in the next few days.

All legal acts required to launch project financing should be adopted before the end of this year.

Second, it is essential to create convenient conditions for opening new businesses, those that start from scratch on new sites. These so-called greenfields will enjoy tax breaks based on their total capital investment. The math is simple – there are no shortfalls in budget revenues, since the enterprises do not yet exist, but when they mature and start working in real earnest, the tax base will expand and new jobs will appear.

Third, the capitalisation of systemically important Russian banking and financial institutions will be increased, partly by converting subordinated loans into preferred shares. This will allow banks to grant more loans and reduce interest.

Fourth, the procedures for selecting investment projects and granting state guarantees will be substantially simplified and the time for relevant decision-making reduced.

Fifth, I’ve already spoken today about import substitution. I’m confident that by upgrading industry, building new enterprises and localising competitive production in Russia we’ll be able to considerably reduce imports of many goods and return our market to our national producers. I’d like to emphasise that we’ll do this without violating standards of international trade or imposing any restrictions or barriers. I’m referring to software, radio-electronic equipment, the textile industry and, of course, food industry.

I believe it’s necessary to promptly analyse opportunities for competitive import substitution in industry and agriculture. By next autumn, we will be able to see which goods can be purchased for government and public purposes solely or preferably from Russian producers and companies from the Customs Union member states. When I say “Russian producers” I also mean companies with foreign participation but operating in Russia and in compliance with Russian laws.

We will develop a whole set of measures to support domestic companies that can make competitive products. One of the measures is to establish a special fund for the development of Russian industry.

Sixth, we will develop a strategy to support companies that use the best available, environmentally friendly and safe technology. I also believe it is necessary to localise production of equipment in Russia based on the best existing technology. My task for the Government is to submit their proposals shortly.

Seventh, we must make sure that the outdated equipment and so-called “dirty” technologies are retired. We have to make it economically imprudent and unprofitable to use them.

In 2015, we will re-evaluate all production facilities. Also in 2015 and 2016, we will assess workplaces at industrial enterprises, transportation and communications companies. The purpose is to identify facilities that use outdated equipment, have dangerous or unsafe working conditions, or pose potential environmental hazards and risks. We will impose additional taxes on outdated production facilities. Even though this is a difficult and unpleasant measure, it has to be done. Another task for the Government is to develop resolutions on financial incentives for production upgrades by the end of the year.

We will also accelerate the introduction of modern environmental standards that will directly influence and motivate companies to adopt modern eco-friendly technology.

Eighth, all the measures aimed at providing a technological upgrade to the economy must be fully funded. I am requesting that the Government allocate the necessary resources when drafting the federal budget for 2015 and the 2016–2017 planning period. This work must start well in advance, even now, because we have already begun the budgeting process.

Next, infrastructure and, in particular, lifting infrastructure restrictions for regions and entire industries is our biggest priority. As you remember, at the previous forum we declared our intention to invest some of the money from the National Welfare Fund in infrastructure projects that also involve private investments and resources.

Reconstruction of the Baikal-Amur Mainline and the Trans-Siberian Railway will begin this summer as well as construction of the first leg of the Central Ring Road that will run through the Moscow Region and the newly incorporated areas of Moscow.

Both projects underwent a public technology and pricing audit that involved leading global experts. They will require massive investments and are potentially huge construction projects. Currently, the railway carries around 58 million tonnes of mineral resources a year from the major fields of the eastern range. Experts estimate that this amount will double once the capacities of the Baikal-Amur Mainline and the Trans-Siberian Railway have been enlarged. This project will receive around $16.5 billion.

The first section of the new ring road, the Central Ring Road around Moscow, will be around 50 kilometres long. The total length will be around 340 km. This project will cost some $9 billion.

We plan to significantly increase the scope of work in energy, railway, car and telecommunications infrastructure. Our immediate goal is to double the construction and upgrading of federal and regional motorways. I would like to remind the Government of the need to keep to this goal, which could require public-private partnership and extra-budgetary investments in infrastructure.

Our country has repeatedly demonstrated its ability to tackle large-scale projects. Successful initiatives have inspired the nation to work even harder. We are now united by an ambition to build a dynamic, prosperous and wealthy country that is respected in the world and open to an equal and constructive dialogue.

The Russia that we dream of is being created right in front of our eyes. I believe that the civic energy and solidarity inspired by a shared goal will help us solve the tasks we’ve set for ourselves. We will surely accomplish what we have set out to do. We value partnership and sincere friendship. We are willing to collaborate and continue working together.

Thank you very much.

Cnbc Anchor Geoff Cutmore: Mr President, thank you very much for your address, and I think there was a lot in there that we can come back to on the economy. But I think it would be useful at this point for me to ask you a few questions about Ukraine.

Obviously, Ukraine is going into presidential elections at the weekend. An awful lot has been written and an awful lot has been said about your position on Ukraine, but let's be honest, most of it not by you. A lot of those who have written have said you are nostalgic for a Russia of the past. President Obama said you are on the wrong side of history. Those who have written and spoken widely talk about you rebuilding the past and wanting to create a buffer state between NATO and the EU, and yourself.

Can I ask you, what has motivated your actions through this crisis?

Vladimir Putin: I was expecting us to focus on economic issues, but let's talk about this as well, if that′s what you want.

Here′s what happened. I’ll break it down for you briefly.

Ukraine was supposed to sign an association agreement with the EU. Using absolutely modern diplomatic tools, we proved that the proposed document is at least inconsistent with Russian interests since the Russian and the Ukrainian economies are closely intertwined. We have 245 Ukrainian enterprises working for us in the defence industry alone.

Imagine that we stop taking products from them tomorrow. What will happen to their enterprises? Most of them will just stop working. You can′t buy Mi-8 engines in the West. They just don′t make them there. Or, similarly, you won′t be buying engines for vessels, as they are not used in the Western industry. On top of this, it′s next to impossible to make it into the Western market. You know it and I know it. There are many other elements, so I won′t take your time listing them. We used our numbers to prove that this document will cause a lot of damage. We proposed – I want to emphasise this and I want you to hear me – holding a discussion with us on these issues and trying to find solutions in an absolutely civil manner.

What did we get in response?

They told us to mind our own business. Excuse me, I don′t want to hurt anyone′s feelings, but it′s been a while since I heard anything that snobbish. They just slammed the door in our face telling us to mind our own business.

Well, then, if it is none of our business, we tried to convince our Ukrainian partners to take a look at the possible outcome. President Yanukovych decided to postpone the signing and hold additional talks. What came next? A coup d’état. No matter what you choose to call it, a revolution or something else. It’s a coup d’état with the use of violence and militant forces. Who′s on whose side now? Who is using which tools from the past or the future?

It′s imperative to be very careful with regard to public institutions of emerging nations because if you are not things may slide into chaos, which is exactly what happened in Ukraine. The civil war and chaos are there already. Who benefits from it? Why would they do it, if Yanukovych agreed to everything? They had to go to the voting stations instead, and the same people would be in power now, only legally. We, like idiots, would be paying them the $15 billion that we promised, keeping gas prices low for them and continuing to subsidise their economy…

Let's face it. We are all adults here, right? Intelligent and educated people. The West supported the unconstitutional coup d’état. It did in fact, didn′t it? Not only by way of the infamous cakes, but through informational and political support and what not. Why did it do so?

All right. And now you think that it′s all our fault? We proposed a dialogue and were denied it. What's next? The last time I was in Brussels we agreed to keep this dialogue alive. That was before the coup. Mr Ulyukayev (he is sitting there across from me), a man of respect, speaks decent English, has absolutely market-driven brains, one of our top specialists in the economy, went for consultations. Ask him about it after the session is over. I won′t dwell on it now. But there were no consultations. Nothing but slogans.

What's next? They made a coup and don′t want to speak with us. What are we supposed to think? The next step will take Ukraine into NATO. They never ask us about our opinion, and we have found out over the past two decades that there′s never any dialogue on this issue. All that they ever tell us is, ″It′s none of your business, none of your concern.″ We tell them, ″A military infrastructure is approaching our borders.″ ″Don′t worry, it's not aimed against you.″ So, tomorrow Ukraine may end up being a NATO member, and the next thing you know, it will have a US missile defence complex stationed on its territory. No one ever talks to us on this subject, either. They just tell us, ″It′s not against you, and it′s none of your concern.″ You see, we are tired of this kind of discussions where nothing gets discussed. We start having concerns regarding economic and security issues. What are we supposed to do in this situation?

The people in southeastern Ukraine, including Crimea, were scared by such developments, and Crimean residents expressed the desire to hold a referendum on possible accession to Russia. What have we done in this situation? We have just secured their freedom of expression. And I′m here to guarantee you (this time, I believe, you will agree with me, and the vast majority of the people in this auditorium will agree as well, and people all over the world understand what it′s all about, there are no fools, actually) that if we did not do what we did in Crimea, Crimea would have it much worse than Odessa where people were burned alive. And there are no explanations, no real condemnations by anyone. It′s still not even clear who did it, I mean the tragedy in Odessa. Now you tell me: who is acting in the old way, and who is acting based on current realities?...

Geoff Cutmore: Mr President, I think we've all been astonished at how quickly relations between apparent former friends have broken down as this crisis has escalated. There is an opportunity here for statesmanship. There is an opportunity for you to step up and say something. Is there something you can do at this stage, or at this point, to encourage pro-Russian groups in Ukraine now to reduce the level of tension and the violence, to allow the democratic process to go ahead on Sunday, and perhaps come back to a settlement or a resolution that would be acceptable to you?

Vladimir Putin: You know, we believe, have always believed, and I′m absolutely convinced that all conflicts (we have said this many times and keep repeating this formula) end with negotiations, and the sooner they start, the better. Thus, we always encouraged opposing sides to start direct contacts soon. The first contacts took place, including with our direct participation. Unfortunately, the situation is further exacerbated by the fact that the Kiev authorities continue their punitive operation in southeastern Ukraine. The fighting is still on. Look, they are already using artillery, armoured vehicles, and tanks. Shells hit houses and kill peaceful people, people without weapons in their hands. Of course, we hope that these direct contacts will bring positive results. I'm counting on it.

But, without a doubt, the violence must be stopped no matter where it comes from before such results can be achieved.

Geoff Cutmore: You have said we are a room full of adults, so let's have an adult conversation. President Obama has accused you, as you know, of untruths when it comes to supporting some of the separatist groups in Ukraine…

Vladimir Putin: Who made him a judge? He′s not a judge. Why doesn′t he get a job in the judicial system then and work there?

I think that your wording was a bit off. I don′t think Mr Obama is accusing me of anything. He has his own perspective on certain processes, I have mine.

So what exactly you are interested in regarding his stance?

Geoff Cutmore: President Putin, you appear to now accept that the election will take place on Sunday – at least, this is what I read, but as I said to you at the beginning, I read an awful lot about what you think, but I don't hear it from you necessarily directly. Can I ask you, just to put this on the record for your audience here: Do you accept the legitimacy of the election that is going to take place on Sunday in Ukraine?

Vladimir Putin: There you go again! Time and again. Who found this guy and brought him here? You know, we realise that people in Ukraine want their country to get this drawn-out crisis over and done with, and, without any doubt, we will respect the choice of the Ukrainian people. Of course, we will keep track of the events.

You know, it would be much wiser to do as President Yanukovych and the opposition agreed in Kiev on February 21. They agreed to hold a referendum, to adopt a new constitution and, based on the new constitution, to form administrative and public bodies of authority, including a parliament and president. Presidential elections will be held in Ukraine soon. I′m not sure if you′re aware of it, but, strictly speaking, no presidential elections can be held under the current constitution, as President Yanukovych hasn′t left presidential office in a constitutional manner. There are only four ways to bring a president down under their constitution: death, and I believe that they wanted to destroy him; a disease that precludes him from performing his duties; impeachment (impeachment was not conducted in accordance with the constitution); and personal resignation, which the president must submit to parliament in person. None of this has been done, and, strictly speaking, he′s still president under the constitution.

Why create new problems that may lead some to think that future elections in Ukraine are illegitimate? Wouldn′t it be easier to hold a referendum, ensure human rights in the east and south of Ukraine, explain how these rights will be guaranteed, enshrine it in the constitution, hold elections and feel good and confident about themselves with the mandate to rule the country issued by the nation? But those who are in power in Kiev today have chosen a different path. I want to make it clear that we also want things to calm down eventually, and we will respect the choice of the Ukrainian people.

Geoff Cutmore: The frontrunner at the moment in the voting I'm told is Mr Poroshenko. He has told CNBC that he would happily engage with Russia if elected. Is he a man that you could do business with despite his desire for stronger ties to Western Europe?

Vladimir Putin: This is a business forum, right? Let’s not mince words. They owe us $3.5 billion. If they want better terms, they should first pay back the money. Only then we will start talking.

Geoff Cutmore: You'll forgive me, Mr President, if I have one more go on this before I move you on. I'm not quite clear whether I heard you say that you will accept and work with the outcome of the election.

Vladimir Putin: I told you. I’m not kidding or being ironic. We want peace and reconciliation in Ukraine. We want the country to finally overcome this crisis. We are sincerely interested, without any irony, in peace and order across our western borders in the fraternal nation of Ukraine. Even now, we are cooperating with the people holding power. We will by all means cooperate with the newly elected institutions after the election.

You know, just to be clear: I hope that after the election, all military action will immediately stop and be replaced with negotiations. Can you imagine us sitting around a table and talking while civilians are being attacked?

They must make at least some progress. You have heard about the arrests of journalists. They arrested our journalists and have been keeping them within those “Gestapo walls” for three days now. We don’t know what is happening with them now. All access to them is blocked. What kind of election rules do they have? We can see that it goes against all modern standards. Well, any election is better than nothing at this point.

Geoff Cutmore: Mr President, can I move you on to the international reaction? I think in 2009, we were all very excited to see the reset in relations with the United States. Today that reset lies in tatters. What went wrong?

Vladimir Putin: You know, it is the result of unilateral action. Some of the United States’ allies agree to play by the ′either you're with us or against us′ rule. First, the US goes ahead and does something and then uses these allies to create a coalition to put a good face on things. Russia doesn't work that way. Agreements must be made well in advance, in strict compliance with international law and with consideration for each other’s interests. Only in this case can we promise a reliable partnership.

Geoff Cutmore: So given the level of hostility at least that seems to be played out in the international media, is there a road back in the relationship with President Obama and this current administration?

Vladimir Putin: First, we did not ruin this relationship. Second, despite the tension and perhaps diametrically opposed approaches to some critical situations, we still continue this collaboration.

For example, our American partners announced they would suspend military cooperation. Really? And where exactly did we cooperate before? Well, maybe in anti-piracy patrols. We are ready to continue. Do you think nobody needs us? Of course, they need us.

The US is interested in continuing military transit to Afghanistan. They say they will suspend military cooperation but they did not suspend transit of their military cargo via our territory to Afghanistan and back because they can’t do without it.

By the way, we did not refuse to cooperate. We are still working together on the Iranian nuclear programme. Only recently, I met with the President of Iran in Beijing at a well-known international event. We spoke of the possibility of further joint action that would involve Iran but take into account the US approach to the Iranian nuclear issue.

Syria is another pressing and unresolved issue. We see this issue in a different light, but we still cooperate and we hope to find some points of contact here.

As I said in my speech earlier, nobody is forgetting about the counter-terrorism agenda we share. We continue to work on this. There are many overlapping areas of partnership beneficial for both the United States and Russia.

We are not going to isolate ourselves, but we can’t make people like us. Still, we hope that common sense and an understanding of their own interests will encourage our partners in Europe and the United States to continue working with Russia.

Geoff Cutmore: If I could just ask one more question on this situation now with Washington: Did President Obama misunderstand the depth of feeling in Russia about Ukraine and the situation there, or was the relationship already breaking down over things like the Snowden affair?

Vladimir Putin: Speaking of Snowden, I said it before many times. Technically, we have nothing to do with this. He happened to end up in Russia due, in my opinion, to the lack of professionalism of the US officials that tried to apprehend him. I know because I used to work for the security services.

Why did they have to scare the entire world? If they were willing to force planes with presidents on board to land, they could have forced the plane with Mr Snowden to land anywhere. They scared the whole world. The plane arrived in our transit area and then nobody wanted to accept it.

If the US security services had not scared everyone, the plane would have taken off and flown to any country. They would have forced it to land and Snowden would be sitting in a zindan or some other prison. But they scared everyone and he stayed in our transit area. What were we supposed to do? Russia is not a country that extradites fighters for human rights. (Applause)

Thank you for this response. It’s true, I’m not being ironic. Mr Snowden believes he is fighting for human rights and he has devoted his life to this. He is very young. I don’t know how he is going to live. I’m not kidding. How is he going to live? For now, he is in Russia. But then what? He chose this fate himself, you see? We only gave him asylum. He is not our agent. He did not give away any secrets, although the rascal really should have given us something – we gave him asylum after all. But he won’t tell us anything. He uses channels that only he knows of and makes statements when he thinks it’s necessary, and that’s it.

Returning to Ukraine, you know what the problem is? For us it is an issue of vital importance while the US only dealt with Ukraine only superficially. I was personally involved and many of the top officials present in this auditorium were personally involved, because it is vitally important to us. I don’t think it is for the States.

But in the long run, we should rebuild mutual trust and be attentive to each other’s interests. I’m not just saying that. You know it yourself if you specialise in international affairs. It is in the news every day. We constantly expressed concern over the enlargement of NATO but our concerns were ignored. They just said, “Every nation has the right to choose how best to protect itself.”

Of course, every nation has the right. Why don’t we have the right to evaluate events from the standpoint of our security? There are many ways to protect yourself. For example, the United States could have just signed a bilateral treaty on friendship and collaboration, including military collaboration. How is this treaty different from a country’s accession to NATO? There is no fundamental difference. The only responsibility they can impose on the alliance members is to contribute money to the joint military budget, which they don’t do anyway. Do you know that the spending of the alliance members is far less than that of the United States? The US always pushes them but with little success.

The same is happening with the missile defence system. They keep saying it is not directed against us.

President Medvedev, who did very much to advance relations with the United States (it was his initiative after all), said: “Well, let’s sign some document, even a trifling legal document saying this is not directed against us. Just write on this paper what you are saying verbally.” No, they refused pointblank. So, what kind of dialogue is that? Just generalities. If we have the guts to talk with each other openly and honestly and to consider each other’s lawful interests, our relations will certainly change for the better. But I’m an optimist and I’m still confident that the situation in Ukraine will settle down in some way and we’ll find the strength to normalise our relations.

Geoff Cutmore: Mr President, I'd like to move on to the economy, and I'd like to talk a bit about the business conditions in Russia, and how some of the sanctions that have been imposed from the West may be having an impact. And I'm pleased that we have with us a panel of international businesspeople who work very closely with Russian companies and have their own investments here. So I'd like to involve them, and I'd like them to feel comfortable also asking questions of you. Perhaps you can offer some guidance to them as to how they work here in Russia.

Last year, Angela Merkel sat on this stage with you. She appeared to be a bulwark against sanctions driven mainly from Washington, and yet ultimately, the sanctions were imposed. Today, many companies are wondering how they're going to get funding, what implications it has for the extension of credit from foreign banks. Can I just ask you very briefly, just to give us your thoughts on what the immediate impact has been so far of the sanctions that have taken place on the economy?

Vladimir Putin: I’ve expressed my view on what’s been happening in Ukraine. I think to a large extent responsibility for everything that took place there lies with our European and American partners. They supported this coup d’état and plunged the country into chaos, and now they want to shift the blame to us and make us clean up the mess they made. This is what the sanctions are for.

But for the time being all the sanctions target my friends, people who are close to me personally. These sanctions are designed to bust them, as our intellectuals say, to punish them for God knows what. If I were in such a position I would have taken the matter to court a long time ago because they have nothing to do with the events in Ukraine or Crimea. And whom have they selected? Two Jews and one Ukrainian, can you imagine? Are they kidding?

Yes, these people are my friends and I’m proud to have such friends. They are true patriots and their business is oriented towards Russia. Have these sanctions done damage to them? Yes, they have. If I’m being honest, they have. But they are seasoned entrepreneurs and brought all their money back to Russia, so don’t worry about them too much. But still, they have sustained some losses.

I think this is unfair and illegal, which is the main point, because sanctions may be imposed on a country only by decision of the UN Security Council and it has not taken any decisions on this score. In this context these sanctions are absolutely illegal and certainly deteriorate relations between our countries. We are being told now that there might be a third round of sanctions, and I have to wonder what for.

Okay, our partners didn’t like something about how the crisis was unfolding, including Crimea, and so they imposed sanctions. Now we are being blamed for something else and told that second and third instalments will follow. I don’t quite understand – in connection with what? Quite recently there was an earthquake in Thailand that resulted in loss of life. Maybe we are to blame for that as well? Civil war is breaking out in Ukraine, but what do we have to do with it?

Understand that these are improper means and they are certainly destabilising our economic relations with the United States and Europe. While our trade with the United States is $27.8 billion, it is $440 billion with Europe. The difference is huge, as we can see. I even suspect that our American friends (and they are smart guys, aren’t they?) pushed for sanctions to gain some competitive advantages in trade and economic ties with Europe. I don’t see any other serious motives. I simply don’t understand this but hope that common sense will prevail and there will be no damage to our trade and economic ties. After all, we are doing everything we are supposed to do on our side.

Has there been real damage? There has. What damage has been done to the economy? Well, our companies no longer have access to resources they had before and some systemic things have deteriorated. But for the time being this is not having a serious, systemic negative influence on our economy, and I hope it won’t in the future.

Geoff Cutmore: If I could ask our panellists to join us in this conversation – Khaldoon, maybe I can start with you, from your perspective. You run effectively an investment business. What are the challenges now coming to the Russian market, not only because of some of the near-term sanction issues, but maybe some of the longer-term structural challenges as well?

CEO and Managing Director of Mubadala Development Company Pjsc Khaldoon Khalifa Al Mubarak: Well first of all, I'd like to thank President Putin for his kind invitation. It's a pleasure to be here. Thank you for organising this forum. It's really wonderful to be in St Petersburg in May.

Russia is a very important market. And for us, it is a market that is very promising. We look at markets around the world. We look at areas and countries where we can invest sustainably for the long run. Today, we have a focus on Russia. Why? Because we believe in the fundamentals here. We have a great partnership that we've established here in Russia through RDIF. Any country, any market we enter, we like to find partners that match our skill set, that match our view in terms of how to operate, how to run businesses, how to invest. And we found that in RDIF. We found an institution that has good governance, a good management team, a supervisory board, an advisory board that runs very well, a high level of professionalism. We found a set of partners from around the world, from China to Korea to Japan, Europe, the Middle East, that also share with us the same set of values. There is an integrity in the way this business is run, there's a belief in the opportunities in Russia. And more importantly, we invest together dollar for dollar. And that's a very important thing for an institution such as ourselves. We look at investments from a risk-adjusted perspective. We have a premise in terms of having downside protection, in terms of any investing we look at. These are all very attractive fundamentals for us, and accordingly, Russia and our partnership with RDIF present an attractive proposition to someone like Mubadala.

Geoff Cutmore: Can I – Shiv – bring you into this conversation? SUN Group has been in Russia, what, since 1958? It's a 112-year-old family business. You have assets in Russia at this moment. But the tightening in liquidity that we've seen partly as a result of sanctions, but partly also I think as a longer-term structural issue of funding through the banking system here. To what extent is that hindering your ability to expand your operations, or indeed, perhaps to sell assets that at this point in time don't fit your business mix?

Vice-chairman and CEO of Sun Group Shiv Vikram Khemka: Thank you. I'd also like to thank President Putin for having me here. It's wonderful to be in St Petersburg. I am proud to say, I was here for the first forum 18 years ago. It's really a wonderful thing to see how it's grown and developed into a major global platform for discussion about a global agenda.

In terms of our own business, we've been here since 1959. I moved to Russia to live here in 1990. My father sent me here. I spent 22 years here, I have many friends here, and I'm very pleased, I feel partly Russian. We have a business here, we've done various things over the years in various sectors. We have a mining business at the moment in Chita, in Chitinsky Oblast . Unfortunately the current tightening in the global markets means that any financing that was going to come in from the West, or from global investment sources, has taken a much more cautious approach – not because of sanctions, but because, I think, of the threat of sanctions. So there's a certain nervousness for people to enter this market. However I think there are institutions in Russia – Sberbank, VTB, VEB – great institutions that have been created in the last 15 years or so. And we believe that we will find solutions within the domestic context to continue with our financings and to continue to build a business.

Geoff Cutmore: Thank you. Fredrik, Telenor is investing in a telecom partnership effectively here. You have been, again, in Russia for many years. The company has a long experience of this marketplace. But again, I have to raise the question with you: If you were to put money today into Russia as a foreign businessman, to what extent would that threat of sanctions issue be a deterrent, or is it something else about the flow of capital out of the economy at the moment that would deter you? Or would indeed you feel happy to rush in?

President and CEO of Telenor Group Jon Fredrik Baksaas: Also from me, thank you for the opportunity, and also thank you for the frank speech from Mr Putin on this occasion. And there have been other occasions as well that there have been issues to address. But Telenor has a long-standing relationship to Russia, and we are neighbours in geography, so it came naturally when things started to happen here in the beginning of the 1990s. We did our first investment in 1992, and today we hold roughly a third, a little bit more, in VympelCom. And it's been a tremendous development in the economy over those 20 years-plus, no doubt about that.

But how do we move from here? And of course, without this experience right now, would we have done the same under these conditions? Maybe, because we are neighbours, but also maybe not, because of the underlying issues that were so well-described by my colleague. So I think it's a more difficult situation for newcomers. We are here, we have been here for many years, we are naturally taking business interest on how do we move from here. And my question to both the Government and President Putin would be elements to which you referred in your speech, namely, how to put the economy back in growth. How can the technology be used for that purpose? The digital economy is coming up at great speed. There are plenty of issues, but there are also plenty of potentials, both for reforms to the economy, and to put greater productivity into the economy. And aspects of that will of course be important to listen to.

But we also have to be frank and understand that the situation in Ukraine does need a negotiated dialogue solution, and I hope that platform will be established as soon as possible, that we can move forward in that direction and be optimistic in that direction.

Geoff Cutmore: Okay, thank you very much for your comments. Mr President, I'll come back to this if I might, because I'd just like to get Patrick to talk a little bit about the infrastructure side of what's going on. You referenced it many times in your presentation to us – Patrick Kron, of course, from Alstom, a major engineering business in power and transport.

Chairman and Ceo of Alstom Patrick Kron: Thank you, Mr President, and thank you for the invitation, both to the panel as well as for the participation in this great forum. I'm a regular participant, and I find it year after year extremely fruitful.

Yes, our company is involved in infrastructure, power generation and transmission, and rail transportation. And we are active in Russia through localisation, plants, and through partnerships with great partners.

I'll come back to what has just been said. For me, there is a key element, obviously, which is economic growth. We see currently – it's not Russian-specific – a slowdown in economic growth. And in this context, usually, unfortunately, investments are cut, or harmed. In your speech, you mentioned a number of large projects, and I would like to get your views on what will be the policy in infrastructure in general. This is a heavy industry, and for economic actors to move, you need strong signals and some visibility. So I'd be happy to hear what will be, in spite of the constraints on budgets and spendings, the policy in preparing the future.

Geoff Cutmore: So if I could wrap those two questions together, Mr President, and ask you just to comment.

Vladimir Putin: I have already listed these measures and wouldn’t wish to come back to them. I’d like to make the point that we are facing several problems and at least two of them are very serious – we must ensure the necessary economic growth rates and change the structure of our economy. We talk about these problems all the time. It is clear at the expert level, as we’ve said many times, that we cannot provide the required economic growth just by expanding the production of hydrocarbons – this is no longer enough because there are no customers. Gazprom, for one, has produced 460 billion cubic metres of gas and can well produce 660 billion. But we can no longer ensure the required growth rates in this way alone because we cannot continuously step up the pace as we did in the early 2000s.

The price [of oil] has reached a certain level – about $108-$109 per barrel – and it is maintaining that level, but we cannot produce the necessary growth rates by increasing sales because we need structural changes, as we are well aware.

Everything I’ve talked about today, all eight or nine points I made, is about making sure these structural changes happen. There is probably no need to repeat this now, and we may return to this later, but we’ve established a very good dialogue with our business community to keep abreast of all problems. We don’t just meet for tea – both the former and the current governments have established mechanisms of regular contact whereby representatives of our business community take a direct part in drafting decisions both on laws and bylaws.

The business initiative I spoke about is essentially a package of measures aimed at ridding the economy of red tape, adopting more effective and balanced decisions in the economy and the training of personnel (this is a joint effort with the business community, and business agencies are now drafting proposals for us on qualifications – I’ve spoken about this as well). A whole package of measures is aimed at this goal, and I hope we’ll carry them out with your cooperation.

Geoff Cutmore: Thank you very much for your answer. Of course, we all know that you have just come back from a trip to Shanghai, and you have signed, while you were there, a significant gas contract with the Chinese government. So at this point I'd like to invite on the stage Mr Li Yuanchao, the Vice-President of the People's Republic of China. He is to come and address us. So, if I could ask you please to come up on stage. If you could move to the end?

This of course is a significant deal that runs over 30 years, and has been, what, a decade in the negotiations.

Thank you very much. Please.

Vice President of the People’S Republic of China Li Yuanchao (retranslated): Mr Putin, participants of the forum, ladies and gentlemen. It is a great pleasure for me to be in Russia, its northern capital and attend the 18^th St Petersburg International Economic Forum upon the instructions of the President of the People's Republic of China Xi Jinping. On behalf of the Chinese Government, I would like to congratulate you on this successful forum.

China commends the St Petersburg International Economic Forum, which became an important platform bringing together international elites to discuss global economic issues. It is evident that the primary purpose of the forum is to promote mutual understanding and facilitate joint development efforts. Mr Putin has just delivered a remarkable speech. The way you have addressed relevant issues was profoundly touching for us. China values this forum highly.

The global economy is currently undergoing fundamental changes. Swift economic recovery is not around the corner. On this backdrop, the topic of this forum, Sustaining Confidence in a World Undergoing Transformation, is even more relevant.

I’m deeply honoured to share with you some considerations as to how we can work together to overcome the challenges of change and bring about development for all.

First, we must reinforce trust in the spirit of openness and promote openness in the spirit of trust. With globalisation rapidly moving forward, openness is the only way towards prosperity and development, while trust is an important prerequisite for cooperation. In the aftermath of the Second World War, 13 national economies demonstrated aggressive growth during the following 20 years by choosing to open themselves up to the outside world.

Life teaches us that protectionism is the biggest obstacle to a global recovery. Initiatives by President Xi Jinping to promote international efforts in protecting and developing an open global economy are in tune with present-day needs. It is high time that we open ourselves to each other to bring about global development, join efforts in fighting protectionism and enhance economic cooperation by building a single global market and creating a free, open and just economic environment.

Second, we need reforms to promote innovations. Promoting reforms is about innovations. Thirty years of reforms in China taught us that reform leads to innovation, since it stimulates creativity and bold decisions. Today’s innovations, ideas and approaches, new science, technology and institutions provide an additional impetus and set new requirements. It is no accident that reforms were key to economic recovery and prosperity during the latest international financial crisis, while innovations in research and development were crucial in improving economic competitiveness. Although some progress has been achieved in the global economy, remaining focused on reforms and innovations is still relevant. It is time for us to step up efforts to coordinate macroeconomic policies, accompanying domestic reforms with efforts to reform global economic governance to bring about a new economic world order that would be fair, rational, stable and civilised, balancing the interests of all countries.

Third, we must all win from cooperation, and therefore develop cooperation in the spirit of mutual benefit. All countries across the world are opting for cooperation in the face of global challenges. The purpose of any cooperation effort is to benefit everyone. This is the only way to ensure long-term sustainable growth. The global economy has now become so intertwined that success or failure of one are bound to affect everyone. This means that we are bound by common interests, that we must promote mutually beneficial cooperation in the long run and pursue common interests. China’s initiatives to create the Silk Road economic belt and Silk Road on the Sea in the 21^st century are aimed at expanding cooperation between countries along these routes and bringing it to a new level in the spirit of mutual gain and benefit.

Fourth, we must strengthen peace through development, and use peace to protect development. This year is marked by commemorations of 100years since the start of the First World War and 75years since the start of the Second World War. History teaches us that development is a foundation for peace, and peace is a prerequisite for development. Ensuring peace means promoting development and the happiness of the people. Development should be viewed as a national priority by all countries of the world. Global economic development should be interconnected, balanced, inclusive, and sustainable. We must work out a new security concept based on mutual trust, mutual benefit, and equal cooperation. We must overcome disputes and join efforts in creating an environment conducive to peaceful development.

As President Putin said, economic cooperation between China and Russia is an important factor for sustainable and stable economic growth. Several days ago, President Putin and President Xi Jinping held a successful meeting in Shanghai and reached important agreements on the comprehensive expansion and strengthening of bilateral cooperation, thereby bringing strategic cooperation and partnership between China and Russia to a new level.

I think that both countries should move forward along the lines traced by their heads of state, strengthen strategic and economic cooperation and promote bilateral relations in the spirit of equality, trust, mutual support for mutual prosperity and eternal friendship. This would serve the peace cause around the world.

Friends,

China views deeper reforms as a key factor of global economic growth and sustainable development. In 2013, China’s economy grew by 7.7 percent, and added 7.4 percent in the first quarter of 2014. The situation is stable and keeps improving. Reform and development in China create opportunities for the whole world. By actively standing up for peace, cooperation and mutual benefit, China is committed to mutually beneficial openness. We will join efforts with all countries in responding to the challenges of change in the pursuit of prosperity and global economic development. Thank you for your attention.

Vladimir Putin: If I may – you know, I would like to add to the speech of our colleague. As both President and Prime Minister, I have signed and attended the signing of many documents but, honestly, I don’t remember – even during my time – so many powerful documents signed in the course of just one visit. I will agree with our Chinese colleague who said that even with the advanced level of Russia-China relations we had before, with the signing of these documents and the agreements we reached during this visit, our relations with China are indeed entering a higher and qualitatively different stage. Of course, we are thankful to our Chinese partners and President of China Xi Jinping for his personal contribution to these issues.

Geoff Cutmore: Patrick, this again figures in your part of the world, it's an energy deal involving a great deal of infrastructure. China is an economy that also has, if the Vice-President will forgive me for saying so, some challenges at times with capital and allocating capital in the right places, and creating the right opportunities for international businesspeople to come and engage in operations. Could you just say a few words, perhaps, on how you see now the relationship between Russia and China, and maybe some of the benefits for international businesspeople like yourself who work in this sector?

Patrick Kron: I try to exercise our modest talents downstream, not really in this field. But you mentioned China, we are very active in China, and we try to be active in Russia as well. You know, sometimes, it is easy to do business? Actually, the conclusion is, the only countries where it's easy to do business are the countries in which you are not in – every one, everywhere, it's difficult to do business, you have to adapt to the reality. We have strong challenges, strong competition, et cetera. I agree with what was said in terms of protectionism. I think open markets are a must for the way we do business. We look for open markets. At the same time, we look for fair treatment. Mr President mentioned that in the development of infrastructure of Russia, companies are welcome, whether they are foreign equity-owned or whether they are domestic players. We are very happy to hear that, and we try to do that, both in Russia and in China. But I hope that in spite of the high level of commitments taken in this visit, there will still be some opportunities for us, Mr President.

Vladimir Putin: You see, these infrastructure plans and projects… My colleague on the right said when I cited some figures – quite impressive figures, investments of $16.5 and $10 billion. Of course, both the technology and experience of our partners will be in demand. Russia is a good market for our partners to put their capacities to use.

Speaking of our plans with China – and I’m not mentioning gas although, as I said, it will be the largest construction site in the world, with $55 billion invested by Gazprom alone – these include construction of a helium plant, a plant for the chemical utilisation of natural gas and infrastructure. Of course, at this scale our partners will definitely have a chance to use their resources and assets to gain profit.

Geoff Cutmore: You talked a lot in your presentation about opportunity and engagement, I think, in Asia, and I want to continue this theme just a little bit more as we run down the group. Gentlemen, very quickly, because we're very close to wrapping up. But if I can start here, and just get perhaps a few thoughts on India, with the new government, the Asia opportunity, as it comes to Europe, in essence, and things change there, and maybe just run down the group and get a few comments.

Shiv Vikram Khemka: Thank you. Well, first of all, I'd like to say, about China, it's a great country, but mostly it's a great civilisation. And I believe that China's growth is something that India very much admires. And I find that Russia, China and India have a destiny, a common destiny together, in Asia. However, I feel that, unfortunately, although we have a very strong political relationship between India and Russia, a very strong strategic relationship between Russia and India, unfortunately our trade relationship and our investment relationship, don't match up to what it should. Our relationship, just to give you an example, between India and China today is $80 billion of two-way trade; with Russia, it's less than $10 billion. That shouldn't be the case. We need a reset. And I think this is a great moment to do that.

Mr Modi, our new prime minister, first of all got a landslide mandate in India. And I think 551 million people voted out of 800 million voters, and asked for change, asked for growth, economic growth in our country. We still have 600 million people that are functionally illiterate, we have huge issues with water, with housing, all kinds of other issues. Every year we add 20 million people to our country. Every seven years we create Russia in our country, in terms of population. We need help, we need support, and we need to integrate globally, in that. And I think Russia can play a very important role in that connection.

How can we do that? I think we need to restructure, and rethink about our engagement. Because evolution is not going to get us there. To go from 10 billion to 12 billion is not the solution. We need to find a way to go from 10 billion to 30 billion, and from 30 billion to 100 billion over the next 10 years. And the question is, how do we do that? And I think that needs a reset.

Geoff Cutmore: Thank you very much. Gentlemen, I apologise, but just can I get very few words from you? If I could start with you, Jon Fredrik.

Jon Fredrik Baksaas: You can get a short one on India, I'm not a specialist on India. But we do have $3 billion played into telecoms in India as well, and that's more or less the size of the exposure to the Russian economy. And I think that Mr Modi's coming has created great expectations as to his ability to run through economic reforms, which are highly needed in the direction that was just mentioned. And the potential there is just phenomenal, under the right structures and the right means.

Geoff Cutmore: Thank you very much indeed for keeping it brief. And Khaldoon.

Khaldoon Khalifa Al Mubarak: The Silk Road, historically, has always been a route that kept us close to countries like China and India – historically. Today as a trade relationship, the UAE has a very strong relationship, trade-wise, with both India and China. Of course, we'd like to strengthen these ties from a trade perspective with Russia too.

From an investment perspective, we have been traditionally conservative. We look at investment platforms in countries where we can see a growth story, but also a risk-adjusted return, I repeat that again.

We are trying hard in China. I think it'll be an area of growth for us, an area of a lot of potential in the future. If you look at the next 20, 30, 40 years, especially for investors like us, long-term investors, we have to be in China, we have to be in India and we have to be in Russia.

India is a little bit more complicated, because the investment platform there, the investment environment there, is a bit more complicated. But we will keep trying, and hopefully with partners like Shiv over here and others, we will be successful.

Geoff Cutmore: Sir, thank you very much indeed for that.

So what I'd like to do here, I think traditional for us, to throw forward and be optimistic about the future, and just talk about some of the larger themes. So if we can wrap with that, Mr President. When I was in Moscow in April speaking with Mr Ulyukayev in the front row here, I also met with some young entrepreneurs, some young Russian business people, who've been very excited about the last two decades of engagement with the global economy. And I have to say that they were a little down of heart, and they saw what they thought was some of the unwinding of that interconnectedness that has taken place over the last two decades. I wonder if I could ask you, how does that damage get repaired, if it is indeed damage? How do we prevent the rollback of what's perceived by the young businesspeople in this room to be the engagement that now is rather stunted?

Vladimir Putin: We need to work together to build trust. This is basically why we are all here today. The motto of this forum is building trust, which is only possible through negotiations that take into account the legitimate interests of all parties. This is exactly what Russia intends to do. We hope for a positive response from all our partners.

Geoff Cutmore: The young people, of course, inherit what we leave. And my sense is, from the ones that I've talked to here, they aspire to the safety of a just legal system, they want to have the freedom to criticise the Government without retaliation, and if that means the use of social media, they also would like to use Facebook and Twitter and all these other things. Do you share these goals and ambitions for the young people of Russia?

Vladimir Putin: I believe it is not just a goal but a key priority. I understand what you are implying. You are talking about possible restrictions in online activity. We don’t have any restrictions when it comes to expressing oneself or using modern technology for one’s own development or for business development.

I would like to stress this. We do listen to any criticism regarding recent legislative decisions. We have strong experience in implementing these laws.

What am I talking about? Did we impose restrictions? We did. What are their objectives? Their objectives are to ban propaganda of paedophilia, child pornography, promotion of suicide. Excuse me, but first of all, there are plenty of restrictions of this kind in legal systems of many countries, including Europe and the United States. Moreover, in certain cases these restrictions are even tougher than in the Russian law. Our restrictions are far more liberal.

And also, excuse me, but what kind of society is it that cannot protect its children? I think a society like this would simply die out. We will not go down this path.

But this doesn’t mean that we are going to seriously restrict the exchange of information or do anything that goes against the modern development trends. We will make sure this doesn’t happen. By the way, we are working on this right now. The Government is developing measures to fund broadband internet across the country, up to every single village in the most remote regions. I would like to stress that our practical steps are aimed at fully employing modern technology.

Geoff Cutmore: You'll forgive me just for asking one more on this, because we have obviously seen – and this is what our panel is ultimately about – how we steer a path through what has been a troubled period of time for the planet. And we have seen in many occasions, where there have been difficulties, social networks getting closed down, or banned. And they have become, like, I suppose, the telephone was for my generation, the way that people communicate today. So no ban on Facebook, no ban on Twitter, no ban on the Russian equivalents, regardless of what's on them.

Vladimir Putin: Firstly, we are not going to ban anything. Secondly, we have no right to criticise those who do that. Every country’s case has its particularities and we are not here to judge. We are not planning anything like this. We plan to develop modern communications and I hope that we will never come back to the times when the Kalashnikov was the only means of communication.

Geoff Cutmore: Mr President, can I ask you then just to share with us your global view, if you like, how you see the world as it stands currently – the trends, the opportunities, the challenges?

Vladimir Putin: You mean in terms of industry? Our Minister of Communications is here. He can answer this question better than me. The higher up you are, the less you need to know. (Laughter.)

But if you are talking about qualifying bloggers as mass media… Is it what you are talking about? Be direct. Our people are straightforward. You can say exactly what you want to say. This practice exists in some European countries, in the UK, in Germany and the United States. It is nothing unusual, but until now there has been a gap in our legislation and now we are closing it. These regulations do not contradict any global trends. Everything is absolutely reasonable.

Geoff Cutmore: I should rephrase my question, it really wasn't a question about technology at all. In fact, what I'm asking, as we come to the close, really, of this session, is just to give us a statesman's view of how you see the world developing from here.

You talked a lot in your speech about the tensions between the old world order, the new world order, the connection with Asia and other G20 economies, the challenge of what was a G8 now being a G7 – and I don't know where Russia… whether Russia attends the next meeting coming up… But there are so many big issues that I think it would be useful to get your world view on, if you just share with us.

Vladimir Putin: This is a difficult task. It could be a topic for another forum, for roundtables and panel discussions. But generally, I hope, despite occasional problems, that humankind will have enough common sense, and that experience of the past decades and even centuries, including tragic experience (our colleague from China mentioned that we are approaching the 70th anniversary of the Second World War and the anniversary of the First World War), will eventually encourage the world to resolve any disputes through negotiations that would take into account interest of the parties.

Geoff Cutmore: So let me wrap up here – thanking you once again for having us here, inviting us to be your guests. And if you could just leave our business community with a message before we wrap things up.

Vladimir Putin: My message would be very simple. Think about the benefits and possible dividends you would derive from working in Russia. Don’t let the pressure and blackmailing prevent you from going your way, and you will succeed. And we will help you with that.

I would like to say thank you to our moderator. I don’t know what you do for living but, on the one hand, you are a frightful person. (Laughter.) On the other hand, you are very talented. You managed to create a to-the-point, while at the same time, very interesting atmosphere for discussion.

Thank you very much.

Meeting with participants in the CEO Global Summit

2016-02-27T18:12:49+04:00

Vladimir Putin met with heads of major Russian and foreign companies and business associations at the CEO Global Summit, which is part of the St Petersburg International Economic Forum.

The summit of global business leaders was organised by the Russian Union of Industrialists and Entrepreneurs.

* * *

President of Russia Vladimir Putin: Good afternoon,

To start, I believe Mr Shokhin will say a few words.

President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin: First, thank you Mr President for finding the time in your busy schedule to meet with the heads of global companies.

We have called this event the Global CEO Summit at the St Petersburg International Economic Forum (SPIEF). This is already a continuation of a certain tradition. Last year we held the B20 Business Summit on the forum’s sidelines, and you met with leading Russian and world entrepreneurs to discuss recommendations for you as the G20 President, and for your G20 colleagues.

Last September we had an opportunity to bring these recommendations to the G20 leaders. We’ve decided to continue this tradition and this year we convened this Global CEO Summit to continue discussing the world’s economic agenda.

The global economy remains fragile and many measures, including those adopted in St Petersburg, are still being elaborated and their implementation is fairly complicated. This is why business should continuously renew this discussion to make adjustments and provide new recommendations.

The second area we’ve discussed is conducting business in Russia, primarily systemic issues of improving the investment and business climate.

Obviously, we couldn’t discuss all questions at our panel sessions, but the St Petersburg Forum has many other options for panel discussions, so more specific issues will be reviewed (and some have already been reviewed) today and tomorrow.

In addition, on the forum’s sidelines we held many bilateral business meetings with our partners, bilateral business councils and Russia-based foreign business associations.

We didn’t just discuss problems, but tried to determine some priorities, conducted interactive voting and determined what key issues could help improve the economy (in the opinion of Russian and foreign business).

Traditional areas are represented by investment, infrastructure, financial regulation, trade, employment, social investment in human capital, transparency of government management, anti-corruption efforts and some other issues. I’d like to ask my colleagues to report on the discussion of these issues.

But before they do this, I’d like to make the point that the development of public-private partnership has been described as the main issue in infrastructure investment. As for energy security…

Incidentally, we brought this item back to the agenda in 2006. Energy security was the main issue during the G8 summit in St Petersburg. For some reason it left the agenda of these forums but we believe it’s time to bring it back.

So, for energy security it is essential to regulate the power industry based on the real-life risk assessment and return on investment. In other words, economic policy should be built not on some hypothetical assumptions but on real risk assessment.

The main priority in financial regulations – as it was a year ago when we discussed it – is to prevent the adverse impact of financial reforms on long-term investment. We don’t need more regulation but we must make it more efficient and conducive to economic growth. As for employment, first and foremost it is necessary to pursue macro-economic policy that stimulates the creation of productive jobs. In international trade, struggle against protectionism continues to be at the top of the list.

During the last six years of the G20’s existence, this has been the number one priority, but the fact that it remains on the agenda means that far from all has been done in this area, even compared to our expectations. In particular, I’m referring to the implementation of the WTO agreement signed in Bali in the end of the past year.

Equal access to government and municipal purchases is the main goal of the efforts to achieve transparency and counter corruption. Indicatively, this is a topical issue not only for Russia but also our foreign colleagues.

As for Russia’s priorities in creating a favourable climate at home, the most important priority is the development of small and medium-sized business. The main task here is to remove the barriers for small companies by simplifying registration and improving regulation. Incidentally, today we presented the national rating of investment climate in various regions, and this issue was also discussed in detail there.

The second priority in improving the investment and business climate in Russia is to reduce regulation. Above all, it is necessary to get rid of redundant procedures and check-ups by monitoring and supervisory bodies and ensure their transparency.

With this, I’ll finish my account of our activities. As hospitable hosts we’d like to give the floor to our foreign guests. I’d like them to continue our discussion. First of all, I’d like to give the floor to our guest from India – the elected President of the Confederation of Indian Industry (CII).

President Designate of the Confederation of Indian Industry Sumit Mazumder: Thank you, honourable presidents.

I am going to talk about infrastructure, as he told you. Among the G20 countries, the emerging markets are still struggling, and they haven’t quite recovered. For the G20 countries as a group to prosper, it is important that even the emerging countries prosper so that as a group we prosper. And it needs inclusive prosperity.

So I have one suggestion, which is that if some sort of a robust multilateral investment framework can be built, and the governments extend special cooperation, and a proper mitigation process for losses be drawn up, then the required funding for these emerging markets would come, and it would really help the G20 countries to be prosperous in the long run. Yes, he talked about private-public partnership – that is working quite well in India. But there are other issues that require looking into. This is one suggestion.

The second point I’d like to make is that by 2020, there will be more people retiring from the job market than entering the job market, whereas India will have an excess of working-age people. I believe 65 percent of the population in India at that time would be the working population. And it is estimated that by 2026 the shortage in the world market would be about 45 million people, whereas India will have an excess of 56 million people, so it is very important that these people are properly trained and made ready for this opening. And this will happen once the infrastructure is at the same level as the mature markets. And this is important for the entire group of the countries, for their own good, because India could also be the manufacturing base for a lot of the countries.

These are the two suggestions that I have, Mr President. Thank you.

President of Russia Vladimir Putin: I want to start by once again welcoming the global business leaders. I think, as Mr Shokhin [President of the Russian Union of Industrialists and Entrepreneurs] mentioned, this is the first time such a summit is taking place as part of the Forum.

We have many common problems. When I say ‘we’, I mean the global economy and its impact on the world, including on the Russian economy.

Our colleague from India spoke just now about some problems that are purely global in nature. Let me take advantage of the fact that the floor was given first to a representative of Indian business, and to note the longstanding friendship between Russia and India.

I just had the pleasure of speaking with the leader of the party that won the election, with the man who will be Prime Minister very soon. We agreed to press on with our undertakings and plans already underway, already in progress, and create new opportunities for work together too. We will discuss all of this at a meeting very soon.

In this context, we should note that India has very large labour force and many people looking for work. This does create a big problem of course. Young people make up more than half of India’s population. How many voters do you have? I think it is close to half-a-billion people. Such figures are impressive. Our country is not exactly small, but when you hear figures like this you cannot help but be impressed.

What you talked about is linked to open borders of course, visa-free travel and the right to employment. We have long since been discussing these issues with our Indian friends. I think that the existence of some restrictions is understandable. They are linked to the need to protect our own labour market.

But we are moving in this direction all the same. We are making it easier to enter our country and will continue to do so on a parity basis. We have an increasing number of joint projects, including in hi-tech sectors such as nuclear energy, as we all know, and in this situation exchanges of highly skilled people obviously make particular sense and become more important.

I think you would agree though, that this is a rather narrow sector. People working in nuclear energy know that in order to develop the sector and ensure reliable safety of the projects we carry out, we need to use top-class specialists, at the initial stage at least.

What the Russian Federation does when it undertakes these kinds of projects is to not just provide the power units or build production facilities, but establish the whole sector, and this includes training local personnel.

This is just the clearest example, but we work in similar fashion in other sectors too, in the military technical cooperation sector, for example. We are working with you to develop advanced military technology such as the well-known BrahMos missile that India’s armed forces use.

In this case, we do not limit ourselves to simply delivering a good. The missile is a joint product and is our joint intellectual property. The project also involves personnel training. We have organised this kind of work with our Indian friends in this sector and will continue to do so.

As for hiring labour on a mass scale, this is possible too in certain areas and in the case of big projects, including joint projects such as the infrastructure projects that you mentioned.

We have a large number of infrastructure projects in the pipeline. For the projects in which we plan to invest money from the reserve funds – these are above all infrastructure projects – we do not rule out the possibility of using foreign labour.

Alexander Shokhin: I’d like to give the floor to our Canadian colleague, CEO of Kinross Gold Corporation Paul Rollinson.

Kinross Gold Corporation Ceo Paul Rollinson: Hello. Thank you, Mr President. I’ve been asked to speak on the theme of investments. And we’re a mining company, so I’ll make my comments relative to the mining industry.

I would say we’re proud. We have been active in Russia for almost 20 years now, and we are the largest foreign investor in mining thus far. We’ve recently invested over $3 billion in the mining sector.

Our two mines are located the Far East, Chukotka. And our experience has been a very positive one, and there’s been a lot of cooperation with the government and improvement in the regulation. But we think there is more that can be done to attract more foreign investment in mining.

And the benefits of that, of course, are that it would provide addition jobs, train human talent, and of course provide additional revenue for governments.

We have three specific recommendations in that regard. Number one, please consider the strategic limit for minerals, the size or the elimination.

We also think there may be a possibility to simplify the claim-staking process. There’s a pilot project currently underway, but it hasn’t been rolled out in all regions. And lastly, there are ways to facilitate the process to move from exploration to mining.

I would further suggest that, we would think that a way to come at this would be on a pilot basis – to pick one region or a couple of regions where there is good mining prospectivity, such as the Far East Federal District, and roll out these suggestions on a pilot project.

And if we were to do that, we see four potential benefits. First of all, it would reinforce the government’s strategic focus on economic and social development in the Far East. It would attract, we think, more mining investment into the Far East. The government would still retain control over its subsurface resource. And lastly, we think this can be done with very little to no cost to the government. Thank you.

Vladimir Putin: We’d be very grateful to you if you could formulate these proposals concretely. In cooperation with our business community and various business entities, we’ve been working on this particular agenda and on ways to simplify various administrative procedures. Many decisions have been made in the area of customs regulation, incorporation of companies and regional administrative practices.

Of course, this is probably not enough, and we’ll continue working on it. Your recommendations will be most useful to us. I say this without any exaggeration or irony. We’re working on these proposals in conjunction with our business community. Some of them are being drafted, others have been adopted and still others are being formulated.

We can discuss simplifying access or application filing procedures as well. We believe we have a fairly liberal approach to these issues. We don’t have any bans whatsoever, as I′m sure you know. We allow everything, if I may put it this way – we don′t have any subjects that are off-limits in cooperation with our foreign partners.

There are certain rules on so-called national resources or national mineral deposits. This doesn’t mean that access to them is banned to foreign investors. It merely means that decisions on this issue should be approved by the government commission.

Working in Russia, you must be aware of these issues. So, if you believe there are any problems, we have government members here, top Russian leadership, so please tell us what exactly is making things difficult for you. There are deadlines for reviewing such applications and they are being observed, just like yours, but we′re ready to give more thought to this question.

Regarding simplified procedures on prospecting and production after a permit is issued, these decisions are usually interlinked. If we issue a permit for prospecting, we proceed based on the premise that the company that invests resources and money into this phase of work should receive a production license as well, although current Russian legislation does not explicitly provide for this.

This concerns the need to ensure the public interests with regard to future investment. We want to prevent a situation whereby a company that has invested relatively small funds into prospecting will in effect start dealing in its licensing options.

Still, the licensing power should belong to the Russian Government. As you have said, the Government should monitor this process. But maybe we have overlooked something. Please formulate your ideas in more detail, and we will be happy to consider them.

Alexander Shokhin: Thank you.

I’d like to give the floor to Mr Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, France.

chairman and CEO of Schneider Electric Jean-Pascal Tricoire: Mr President, good afternoon. Thank you very much for meeting us this afternoon. My company Schneider Electric is specialised in systems, in equipment and software for energy management and energy efficiency.

Under the guidance and with the support of your teams, we have invested a lot in Russia. We employ now 12,000 people in your country, developing manufacturing technology here in the country.

So after so much investment, my question goes naturally to your energy plans. I would like to ask you if you could explain to us where you see your priorities in the field of energy – which sector, which installation, in which geography.

I would like to know if you could give us some colour about this agreement that you signed this week between Russia and China. And as it is one of specialities of my company, if you could tell what is the specific place of energy efficiency in your energy vision for Russia. Thank you.

Vladimir Putin: Energy efficiency should be our primary concern, not only in Russia but also for any company in any other country. It is one of the key elements of success in any sphere, in any business or project.

Of course, we will try to ensure maximum efficiency in accordance with modern standards in all areas of work concerning energy. What should we focus on?

We are certainly considering such promising energy sources as renewable energy, hydrogen energy and solar energy. We are working on these projects. Our companies allocate funds for this and also receive government support for such projects.

At the same time – as an energy expert, you should know this – everyone understands that energy consumption will be growing in the next 30 years, while the structure of primary sources of energy will not change. Therefore, we will focus on the production of hydrocarbons and the development of nuclear generation.

Nuclear energy currently accounts for 16% of the Russian energy balance. If my memory serves me correctly, the figure is over 80% in France. So there is still room for improvement, and we have a comprehensive development plan.

We intend to increase the share of nuclear energy to at least 25% of the total energy balance. This will require us to work hard to build new capacities. We plan to build around 20–25 large power units, or as many as were built in the entire history of Soviet nuclear generation.

Of course, we – I am referring to Russia and France – are both partners and rivals, but in a positive sense. The issue concerns the production of generating equipment and the supply of nuclear fuel to the global market.

I believe that we have certain advantages, because we offer full-cycle services, including the removal and recycling of fuel waste. Our capabilities in this area are considerable, and we can offer its services both to our companies and to our foreign partners. Our nuclear companies have a big portfolio of contracts for decades ahead.

As I have said, we not only supply and sell nuclear generating equipment, but we are also building a whole new industry, which includes research and personnel training. We intend to continue improving our nuclear sector as a science. We take part in international projects. We intend to build the best and safest modern nuclear power stations.

As for hydrocarbons, their prices will not decrease. I think this is obvious, because what’s left is difficult to access or is located in areas that lack the proper infrastructure. This is the situation in Russia and also elsewhere, as you are aware.

So there are downsides, but there are advantages as well which lie in the fact that this area of business is a fairly safe investment.

Where are the most promising and significant opportunities? Of course, they are on the shelf of the Arctic seas. The amount of reserves there is colossal, just planetary. I′m referring to Yamal Peninsula and the Arctic. As you may be aware, some of the projects are already underway. The first ever gas was produced on the Arctic shelf. This successful project is operated by Gazprom.

We will by all means develop all our eastern provinces and work on the shelf. I′d like to point out that our companies use the latest environmentally friendly technology. I always cite this example (we are now trying to replicate it). The head of LUKOIL is present in this auditorium, I visited their platforms on several occasions and I saw them work.

Not a single speck of waste is dumped into the sea. All waste is processed: packed up, taken to the shore and processed there, you see. It's so impressive. Almost all our companies work on the shelf like that. I am proud to note that in this regard Russian companies are ahead of their foreign counterparts. Perhaps, only a half step ahead, but still ahead.

Regarding the deal which you just mentioned between Gazprom and its Chinese partners, it′s a major deal, and you're probably already familiar with the numbers. It is designed for 30 years, although there are enough reserves for, I believe, 50 years. They′ve been underestimated. The recoverable reserves in two fields that we are about to commission — Kovykta and Chayanda — are 1.5 trillion cubic metres of gas per field, so 3 trillion combined. I will speak about this during the session.

And in fact, as I’ve mentioned, there's even more there. The contract was signed for 30 years, but I believe that the production may last at least 50 years. Gas will be supplied to the People′s Republic of China and to domestic consumers as well. This is important to us.

This is a multi-faceted project, because it gives us an opportunity, with a market as large as China and with supplies in the amount of 38 billion cubic metres of gas annually … This makes the project commercially viable and thus gives us an opportunity to develop our eastern provinces, build an extensive gas supply network for neighbouring regions, and later move on to the second phase.

This is what we refer to as the Eastern Route from Eastern Siberia, but we agreed with our Chinese friends that the Western Route with the resource base in Western Siberia will be the focus of our next phase. The infrastructure development in both parts of Siberia will give us an opportunity to link the Russian Far East with Eastern Siberia, and Western Siberia with European Russia.

We will then have a single gas supply system in Russia which will vitally improve gas supplies across Russia and give us an opportunity to diversify gas supplies westward when there’s need for that, or eastward as the global market dictates.

Remark: Colleagues, since Mr Putin provides very detailed comments, please ask fewer questions in your remarks, otherwise many participants won′t get the chance to speak.

Vladimir Putin: That′s quite a subtle message directed at me. I hear you.

Remark: I'm afraid my colleagues might rough me up for doing so. No, Russians won′t do that, they are well-mannered, but I′m not sure about our Western colleagues. I′d like to turn it over to Chairman of Boston Consulting Group Hans-Paul Buerkner, on the subject of financial regulations.

chairman of the Boston Consulting Group Dr Hans-Paul Buerkner: Mr President, Russia has made enormous progress, and the Russian economy has made enormous progress during the first decade of the new millennium, and has become a strong member of the global economy. Now is the time to move Russia and the Russian economy to the next level, and there are enormous opportunities, but also there are strong challenges.

The key levers for really moving the economy to the next level are: continuing openness; secondly, increase competition; and thirdly, the strengthening of institutions to ensure the rule of law. And by really providing a level playing field for many players – start-up companies, small and mid-sized companies, large corporates – they will have opportunities to bring a lot more innovation, more productivity, higher efficiency, not only to the economy overall, but to the different industries.

And it will mean that there will be both domestic, and of course, foreign players, to really help ensure that there is strong growth over the next decade and more. This is of course also true for financial services. Obviously, financial services play a very important role, not just in mobilising savings, creating strong capital markets, but also, I think, providing funding for start-ups, for small and mid-size companies, and for the large corporates.

And in order to ensure that the financial sector plays a strong role, it's important to have quite a number of large players; not just two, or a couple of national champions, but to have a broad sector, and a broad range of institutions that really can play that role, the mobilisation of funds in capital market creation, and also in the funding of different companies of different sizes.

Now, the central bank is doing a very good job in trying to clean up the banking sector, really closing down those institutions that are destroying trust and destroying values. So that's one part. But I think it's important to have a broad range of institutions. Secondly, I think it's also important to ensure that pension reform is being accelerated, so that there are funds for long-term projects.

The second element in the financial service sector is to ensure the application of global standards. So it's very good to see that Russia is applying Basel III going forward, so that we all have the same playing field. And we should also make sure that we do apply the same standards.

And thirdly, financial services, like every other industry, like every other sector, will have to change fundamentally, because of digitisation. And there's a huge opportunity, for Russian institutions, but also institutions in general, to really move financial services to a different level of quality, efficiency, productivity, by having digital payments, digital banking, digital financial services overall. And here, Russia can really jump to the forefront – Russian institutions – and play a very strong role.

So overall, we, at BCG, and I'm personally very confident, that with increased and continuing openness, increased competition, and the strengthening of the institutions to ensure the rule of law, Russia will indeed, over the next 10 years, move to a completely new level of performance, and really build on what it has achieved over the first 10 years of the century. Thank you very much.

Vladimir Putin: As I understand, this is not a question but an opinion, a recommendation. I’d like to point out that we’re working in all these areas – support for start-ups, and expansion and consolidation of the financial system as a whole.

You’ve mentioned yourself the uneasy efforts of our Central Bank – let’s put it straight – on the reorganisation of our banking system. We all understand how painful it is to reduce the number of financial institutions that are ineffective or even dangerous for their clients because they are unable to honour their commitments to these clients.

This is a difficult job – both socially and politically, and it puts certain pressure on the budget, because when the Central Bank makes such decisions we compensate clients' losses from the budget. We had to draft relevant legislation for this, and we’ve done this. We had to develop the practice of applying such laws and finally start this heavy job of bank resolution.

We had to do this to make our financial system viable and efficient. You know that we have about a thousand banks. Now probably the figure is a bit lower – 950, I think. On the one hand, this is a good thing. As a financier you are well aware that this is not a prerequisite for efficient performance. So we’ll continue this work and, of course, we are open to cooperation with companies like yours.

As for attracting finances, including foreign funds, I’d like to point out… One of our colleagues has already spoken here about attracting investment. Last year our country was ranked third in terms of attracting foreign direct investment. I’m going to speak about this issue at the plenary session and I will cite some specific figures. But it goes without saying that we cannot and should not stop at that, and we will continue to move forward.

In this context, support of our efforts, including the work of the Direct Investment Fund that we established a few years ago and that is doing fairly well… We’re cooperating with practically all major global funds and will continue this practice. In this context, the work of such agencies as yours is much in demand. Naturally, it is necessary to come to terms and find partners at the corporate level, and we’ll always welcome this. Thank you very much.

Alexander Shokhin: Now I’d like to ask our Turkish colleague Erol Kiresepi, Santa Farma President and CEO, to speak about employment and social issues.

But I’d like to remind you, colleagues, that the official start time of our plenary session is 2.30 pm. Several thousand people will criticise us if we delay. So, please mind the time.

Vladimir Putin: You won’t be criticised but I will, because nobody will know why I didn't arrive on time.

Chairman and Ceo of Santa Farma Erol Kiresepi: Mr President, looking to the priorities in the area of employment and labour mobility, the votes, which have been given to you, came not so distant between the first and the third priority on the list, with only a little less importance on the second. This doesn't mean that the second is much less important.

The first priority was to introduce macroeconomic policies that promote employment and creation of more productive jobs. The flexible labour markets that offer a diversity of work contracts are an essential part of an enabling environment. A diversity of work contracts allows our companies to react rapidly to market changes and quickly create jobs. Flexibility is a necessary element for competitiveness. It's clear that the government's main responsibility is to support business, to create new jobs, with the adoption of new dynamic and flexible policies. The right policies will encourage the private sector to increase their employment capacities. It is important for the government to be in touch with the market in order to analyse its needs.

The second priority, which took less of the votes, Mr President, was to ensure trans-border labour mobility in response to the business and labour market needs. Governments should adapt immigration policies in line with labour market needs. Labour mobility is becoming a main challenge for the business community.

The labour market welcomes immigration according to their needs. However, in this process, the adaptation of immigrants to the host country, language problems and social benefit issues should be taken into account by the governments. Well-organised labour mobility will be beneficial not only for the host country, but also for the global labour market.

Mr President, to reach our goals in both priorities, we should also make employability a top priority in national education and training systems. Skills and competencies are the key determinants of an individual's place and mobility in the labour market. That is the reason why we must make employability a top priority in national education and training systems. I should also add that strategies to increase employability have to focus also on lifelong learning, which is a shared responsibility.

We must consider increasing growth and employment by creating an economy based on knowledge and innovation. In the recent terminology, they call this ”smart growth.“ This requires improving the quality of education, strengthening research performance, promoting innovation and knowledge transfer throughout the world, making full use of information and communication technologies, and ensuring that innovative ideas can be turned into new products and services that create growth and quality of jobs.

Now, coming to the SMBs, I will not tackle the subject, I will leave my colleague, Mr Koch, to tackle it within his subject. Thank you, Mr President.

Alexander Shokhin: Mr Koch, Chairman of the Board and CEO of Metro Group, Germany, will speak about the development of small and medium-sized business and trade.

Management Board Olaf Koch: Good afternoon, Mr President. Small and medium-sized enterprises typically are the backbones of large industries, and they create a lot of value. In the Russian Federation, they are up to 90 percent, as I know. In our business in METRO, we are supporting independent business people. They are the small guys running produkty stores, restaurants, hotels. And we very much appreciate the effort that is now on the political agenda, because we believe this is not only value creation for those small, independent business people; actually, it is quality of life that can be increased.

So actually, therefore, my question to you would be, what's your personal view on what can be done on top of it? For example, less bureaucracy, less regulation. And more support, so that these people can really grow. We are serving millions of them today; we just invited 14,000 to the METRO expo last month, and shared with them the experiences. And I can tell you, I think there's huge momentum, and huge potential, in the Russian Federation for that.

And that brings me to the other subject – and I just want to share that with you – we have been on a capital market transaction, preparing it since September of last year, where we shared our equity story, and our conviction about the value that can be generated in Russia. Until February this year, we were actually on a road show, and telling people… And I can tell you that the demand, and the excitement, about what can be done in Russia, is completely shared by a lot of people. So we have been promoting that.

But one of the concerns that I need to tell you about – because I think it would not be right not to do so – since March and April, since Crimea and Ukraine, there has been a lot of concern, frustration and lack of trust. So one of the concerns is really, how can trust be re-established? Thank you very much.

Vladimir Putin: This is truly the most important question. The main motto of this economic forum is restoring trust. As for the burning issues you mentioned regarding Ukraine and Crimea, it was this very lack of trust that caused them.

Where did the Ukrainian crisis come from? What caused it? This crisis emerged after President Yanukovych postponed the signing of an association agreement with the EU. What followed? A government coup backed by our US and European partners. What next? Chaos, and now we’re witnessing a full-fledged civil war.

All initiatives taken in the post-Soviet space and generally around the world, and in the former Soviet Union in particular, should be very cautious. We must exercise extreme care when dealing with the foundations of the state. Otherwise, as I said, it leads to chaos and political instability followed by economic turmoil.

Regarding Crimea, we are absolutely open in this respect. We have nothing to hide. We really ensured that Crimea's residents can freely express their will. They came to the polls and voted for their future. You can’t force 80 percent, in fact almost 90 percent, of voters to cast ballots, right? They could have refused to come, but they didn’t, and 96 percent opted for a “yes” vote.

This is just the objective truth. If we hadn’t done it, a tragedy would have occurred far worse than what we are currently witnessing in certain cities of Ukraine, in Odessa, where unarmed people were forced inside a building and burned alive. Almost 50 people perished in flames and another 50 went missing. Where are they? They were actually also killed. We prevented this from happening in Crimea, and I think that it was the right thing to do. What we are asking from you is an unbiased, impartial perspective on these developments.

How can trust be restored? By working together and engaging in dialogue. For instance, up until now Russia has been unable to work out a comprehensive partnership agreement with the European Union, stumbling into one issue after another. At the end of the day, we were offered to join consultations on Ukraine’s association with the EU, but we haven’t seen any consultations so far.

Russia’s Economic Development Minister Alexei Ulyukayev went there. He is liberal and pro-market in every sense of the word, in a good sense that is, but he came back empty-handed, bringing only slogans.

We really hope that a substantive, as diplomats say, dialogue will start at a certain point. Engaging in direct talks and finding mutually acceptable compromises while respecting each other’s legitimate interests is the only way to create a trusting environment.

As for small and medium-sized businesses, this is also a priority for us. I must acknowledge that, although we have done a great deal in recent years, it is still not enough. The development of SMEs in Russia still falls short of our needs. I won’t cite any figures in this respect.

We have developed a system for supporting SMEs on the regional and federal levels. When allocating funding from the federal budget, we channel it into the regions since SMEs operate locally, so regional authorities have a better understanding of whom to support and how.

What else should be done? Of course, cutting red tape is essential, and we have done a lot in this respect, albeit not enough. What have we done? We streamlined business registration procedures, access to utilities and other networks, and, as I already said, reduced the burden on companies operating on foreign markets from customs bodies.

These initiatives concerned banning companies established by customs services from operating in this segment. We also took many other decisions. What else is there to do? Ensuring access to cheap funding, low-interest loans, is essential. This is perhaps the most challenging objective, but addressing it is the only way to ensure fast and efficient growth for our SMEs.

Alexander Shokhin: Mr Putin, we have quite a few people who wanted to say something or ask a question, including President of Indonesia’s Chamber of Commerce and Industry Suryo Bambang Sulisto, Chairman of the Confederation of Finnish Industries (EK) Ilpo Kokkila, Carlsberg Group President and CEO Jorgen Rasmussen, who co-chairs the EU-Russia Industrialists' Round Table, Chairman of Global Counsel Lord Peter Mandelson, who served as the European Commissioner for Trade for many years, and many other colleagues. That said, your protocol service is telling us that it’s time for you to leave for the next event.

I would like to thank you, Mr Putin, for your detailed answers and comments. We understood that you intend to elaborate on many issues during your speech at the plenary session.

Colleagues, everyone who wanted but was unable take the floor are invited to come to SPIEF’s media centre after the plenary session where you will have an opportunity to share your views with the world.

Thank you, Mr President. I would like to return to my initial statement. I hope that this forum will become a permanent part of the St Petersburg International Economic Forum.

Vladimir Putin: With great pleasure. Thank you very much to everyone for coming here and joining our discussion on Russian and global issues. I think that this discussion will benefit all of us. In any case, this is a very positive signal for enhancing cooperation with Russia.

As for the questions that were not raised or were not answered, such as the question on the labour market, I will address some of them in my remarks. I will share, among other things, Russia’s plans for the near future regarding measures to develop the national economy.

Thank you very much!

Meeting with heads of National Paralympic Committees

2015-03-20T18:00:31+04:00

Vladimir Putin met with heads of National Paralympic Committees. The meeting took place over lunch.

The President thanked the meeting participants for their active contribuition to the Winter Paralympics in Sochi. Mr Putin stressed that Russia will continue to encourage the organisation of major sports events through the International Paralympic Committee, and is ready to share its experience in holding the Paralympics with other countries.

* * *

President of Russia Vladimir Putin: Mr President of the International Paralympic Committee, heads of the National Paralympic Committees, friends,

I am happy to welcome you all and once again thank you for your active support in holding the Winter Paralympic Games in our country, in the city of Sochi. Russia truly strived to hold this event at the highest level and for it to strengthen the spirit of the Paralympic movement and its values, not just in Russia but throughout the world.

We very much wanted the athletes, members of sport delegations and guests to feel at home in Russia’s athletic capital. We wanted all our guests to learn about our culture, Russia’s traditions, its unfailingly kind attitude toward friends and its hospitality, and I hope we have been successful.

I do not want and cannot sweep difficult issues under the rug and would like to thank everyone for the fact that the Paralympics remain unpoliticised and the complex circumstances we are all aware of have not reflected on it. And I want to assure you that Russia was not an initiator in those circumstances.

The organisation of the Games in Sochi has essentially set new, highly modern standards for holding such major competitions. What has been particularly important for us is that it has also created new standards for urban planning. Our goal was to create the most comfortable conditions possible for people with disabilities. It was important for us from the very start that our Paralympians, together with foreign experts, should participate in this planning from the very initial stages. Naturally, they know first-hand what it means to live in truly difficult circumstances, and were able to not just overcome them, but achieve success, becoming an example of uncrushable will and faith in themselves and their abilities for millions of people. They deserve our most active support and they will receive it from us.

Here in Russia, we have given the development of Paralympic sports particular attention in recent years, and as a result, more and more disabled individuals in our nation are choosing sports and regularly engaging in fitness activities.

Naturally, I hope you have noticed – it is impossible not to notice – the high level of mastery among Russian athletes. As you can imagine, I am particularly pleased to note that they have a solid lead in the overall score count and have been performing outstandingly.

This true breakthrough in the Russian Paralympic movement and Paralympic sports has become possible in part thanks to the active, fruitful cooperation of the Russian Paralympic Committee, our athletic federations of disabled individuals and their foreign colleagues. We highly value your cooperation and we want to assure all of you, dear colleagues, and you, Mr President, that Russia for its part will always support initiatives from members of the Paralympic family.

We will continue to support holding major athletic events in our country organised by the International Paralympic Committee, friendly meetings with Paralympians from various nations, and efforts to develop the Paralympic spirit in all areas, including for children and women with various disabilities, as well as athletes with particularly severe disabilities.

Naturally, we will be pleased to share our very solid experience – our experience of holding competitions of this level and rank. I am not just referring to creating transport infrastructure, logistics and the necessary athletic infrastructure, but also attracting the attention of a wider public and the media to such events.

Incidentally, the television broadcasts of the Paralympic competitions in Sochi have been some of the most extensive in the history of the Paralympic Games. This is certainly very important. The Paralympians’ courage and dignity inspire and gives hope to millions of people. Supporting the ideals of the Paralympic movement, the work that unites us all, plays an exceedingly important role in the life of Russian society and society overall.

We intend to continue participating in the Paralympic movement very actively and very much hope, Mr President, that this movement towards each other will continue. We will do all we can to support the very spirit and idea of the Paralympic movement.

Thank you very much.

International Paralympic Committee President Philip Craven: President Putin, colleagues and friends from the national Paralympic committees and from the international federation, and also, colleagues in Sochi,

What a beautiful day.

I know you’ve referred to the record-breaking games here already in Sochi. And we have four days to go. These Games are definitely on course to be the most successful Paralympic Games ever. They’ve exceeded all our expectations, and I’m sure that when you do meet with the differing presidents and secretary generals from the national Paralympic committees’ table, they will confirm that to you.

Ticket sales have gone past the 300,000 mark, breaking the previous record of 235,000 in Vancouver. More media are covering these games than ever before. And as you said, Mr President, there is more TV coverage than any other Games – a record of 76 countries and 10 territories are taking TV pictures.

I’ve been asked several times in interviews, what is the most inspiring fight or moment that I’ve already experienced. Of course, it’s the performances of the athletes that are quite amazing. But even more importantly, the performances of the crowds, which have been absolutely amazing – primarily Russian spectators watching Paralympic sport for the very first time, supporting all the 45 nations as they compete and do amazing things. I know already you’ve visited the Shayba Stadium and I’m just wondering whether you might be there again later on this afternoon.

However, it’s been written down here for me, it’s termed a cauldron of noise. And so as not to make comment with regard to the United States of America, I will say for one certain match so far.

Well, this cauldron of noise was termed slightly different in London, by the mayor of London, Boris Johnson. He went to the swimming and called it a wall of noise. The very same thing is happening here. As you’ve already said, these Games will have many legacies. Transformation in the attitudes and perceptions of Russians and people all over the world. The barrier-free environment, which will then be spread to all of Russia. I would like to thank you and your deputy prime minister Dmitry Kozak for your commitment for that to take place in legacy format.

And I’d like to come back finally to our national Paralympic committees and our sports. And the strength of our organisation is our members. And our members are our national Paralympic committees, our sports, our regions, and of course our friendly federations. And it’s a great, great pleasure to see so many of you here today. And on behalf of them, I would just like to thank you for what I’m sure will turn out to be a wonderful lunch and a wonderful opportunity to interact. [In Russian:] Thank you.

Meeting with International Paralympic Committee members

2014-03-07T22:40:31+04:00

Ahead of the Paralympic Games opening in Sochi, Vladimir Putin met with International Paralympic Committee Governing Board and Honorary Board members.

President of Russia Vladimir Putin: Ladies and gentlemen, friends,

I am very happy to welcome you to Russia, to the hospitable city of Sochi, which is hosting the opening of the XI Paralympic Games today.

Our nation is hosting this prestigious event for the first time and, as I hope you have already seen, we have tried to do everything we can to create the best possible conditions for you and the athletes.

I want to stress the special role of the International Paralympic Committee in preparing for the Paralympic Games and thank its President, Sir Philip Craven, as well as all the curators and participants in our common Paralympic project, for their active cooperation and assistance.

We value the good relations and complete mutual understanding we have built with you over these years of working together, and naturally, count on them to become a good, solid foundation for our joint activities in the future.

We believe the legacy of the Paralympic Games in Russia, in Sochi, will promote the development of the Paralympic movement overall and help attract many individuals with disabilities to sports and active integration in society.

Greater Sochi is fully prepared to host the Games, and thanks to our common efforts, it has become a worthy example of implementing the principles of a barrier-free environment and setting new standards in urban planning that take into account all the needs of people with disabilities.

The International Paralympic Committee President and I have just toured several facilities. He said, “Yes, it’s very good here, but you have a lot of work ahead throughout the entire country.” I must say this is true: an enormous amount of work still needs to be done throughout the entire nation. The Paralympics will certainly provide great momentum for the development of adaptive sports in Russia, first and foremost among young people.

The government’s increased attention in this area is starting to garner results. The number of people regularly engaging in sports and fitness is constantly growing, and the courageous Paralympians’ example will become a very serious, powerful additional impetus for them.

I have no doubt that the Paralympic Games in Sochi, which will include 1,600 participating athletes and delegation members from over 40 countries around the world, will be just as interesting to spectators and sports fans as the Olympics. We have already sold more tickets to the opening of the Paralympics than the opening of the Olympic Games.

We all understand very well that the Paralympians’ athletic competitions are not just an unbelievably captivating, amazing display. They are, first and foremost, clear evidence of the heights that individuals can achieve, even when they find themselves in difficult life circumstances. It is an affirmation that real strength lies in a person’s character, dedication and positive attitude.

I want to once again thank everyone who participated in preparations for these competitions, for your active assistance and support. I hope that your visit to Russia will leave you with very happy, warm memories and feelings, and that the upcoming Games will provide us with many thrilling, memorable, exciting events.

Thank you.

Meeting of the Valdai International Discussion Club

2015-03-20T18:16:07+04:00

Vladimir Putin took part in the final plenary meeting of the Valdai International Discussion Club. The theme of the club’s anniversary session is Russia’s Diversity for the Modern World.

Excerpts from transcript of the meeting of the Valdai International Discussion Club

President of Russia Vladimir Putin: Good afternoon, friends, ladies and gentlemen,

I hope that the place for your discussions, for our meetings is well chosen and that the timing is good. We are in the centre of Russia – not a geographical centre, but a spiritual one. [Novgorod Region] is a cradle of Russian statehood. Our outstanding historians believe and have analysed how the elements of Russian statehood came together right here. This is in the light of the fact that two great rivers – the Volkhov and Neva – acted as natural means of communication, providing a natural linkage at the time. And it was here that Russian statehood gradually began to emerge.

As has already been pointed out, this year the [Valdai] club has brought together an unprecedented list of participants: more than 200 Russian and foreign politicians, public and spiritual leaders, philosophers and cultural figures, people with very different, original and sometimes opposing views.

You have already been conferring here for a few days now, and I'll try not to bore you unduly. But nevertheless, I will allow myself to state my views on subjects that you have touched on during these discussions in one way or another. I am not only thinking about analysing Russian historical, cultural, and governance experiences. First and foremost, I am thinking of general debates, conversations about the future, strategies, and values, about the values underpinning our country’s development, how global processes will affect our national identity, what kind of twenty-first-century world we want to see, and what Russia, our country, can contribute to this world together with its partners.

Today we need new strategies to preserve our identity in a rapidly changing world, a world that has become more open, transparent and interdependent. This fact confronts virtually all countries and all peoples in one form or another: Russian, European, Chinese and American – the societies of virtually all countries. And naturally, including here in Valdai, we strive to better understand how our partners are attempting to meet this challenge, because we are meeting here with experts on Russia. But we proceed from the fact that our guests will state their views on the interaction and relationship between Russia and the countries that you represent.

For us (and I am talking about Russians and Russia), questions about who we are and who we want to be are increasingly prominent in our society. We have left behind Soviet ideology, and there will be no return. Proponents of fundamental conservatism who idealise pre-1917 Russia seem to be similarly far from reality, as are supporters of an extreme, western-style liberalism.

It is evident that it is impossible to move forward without spiritual, cultural and national self-determination. Without this we will not be able to withstand internal and external challenges, nor we will succeed in global competitions. And today we see a new round of such competitions. Today their main focuses are economic-technological and ideological-informational. Military-political problems and general conditions are worsening. The world is becoming more rigid, and sometimes forgoes not merely international law, but also basic decency.

[Every country] has to have military, technological and economic strength, but nevertheless the main thing that will determine success is the quality of citizens, the quality of society: their intellectual, spiritual and moral strength. After all, in the end economic growth, prosperity and geopolitical influence are all derived from societal conditions. They depend on whether the citizens of a given country consider themselves a nation, to what extent they identify with their own history, values and traditions, and whether they are united by common goals and responsibilities. In this sense, the question of finding and strengthening national identity really is fundamental for Russia.

Meanwhile, today Russia’s national identity is experiencing not only objective pressures stemming from globalisation, but also the consequences of the national catastrophes of the twentieth century, when we experienced the collapse of our state two different times. The result was a devastating blow to our nation’s cultural and spiritual codes; we were faced with the disruption of traditions and the consonance of history, with the demoralisation of society, with a deficit of trust and responsibility. These are the root causes of many pressing problems we face. After all, the question of responsibility for oneself, before society and the law, is something fundamental for both legal and everyday life.

After 1991 there was the illusion that a new national ideology, a development ideology, would simply appear by itself. The state, authorities, intellectual and political classes virtually rejected engaging in this work, all the more so since previous, semi-official ideology was hard to swallow. And in fact they were all simply afraid to even broach the subject. In addition, the lack of a national idea stemming from a national identity profited the quasi-colonial element of the elite – those determined to steal and remove capital, and who did not link their future to that of the country, the place where they earned their money.

Practice has shown that a new national idea does not simply appear, nor does it develop according to market rules. A spontaneously constructed state and society does not work, and neither does mechanically copying other countries’ experiences. Such primitive borrowing and attempts to civilize Russia from abroad were not accepted by an absolute majority of our people. This is because the desire for independence and sovereignty in spiritual, ideological and foreign policy spheres is an integral part of our national character. Incidentally, such approaches have often failed in other nations too. The time when ready-made lifestyle models could be installed in foreign states like computer programmes has passed.

We also understand that identity and a national idea cannot be imposed from above, cannot be established on an ideological monopoly. Such a construction is very unstable and vulnerable; we know this from personal experience. It has no future in the modern world. We need historical creativity, a synthesis of the best national practices and ideas, an understanding of our cultural, spiritual and political traditions from different points of view, and to understand that [national identity] is not a rigid thing that will last forever, but rather a living organism. Only then will our identity be based on a solid foundation, be directed towards the future and not the past. This is the main argument demonstrating that a development ideology must be discussed by people who hold different views, and have different opinions about how and what to do to solve given problems.

All of us – so-called Neo-Slavophiles and Neo-Westernisers, statists and so-called liberals – all of society must work together to create common development goals. We need to break the habit of only listening to like-minded people, angrily – and even with hatred – rejecting any other point of view from the outset. You can’t flip or even kick the country's future like a football, plunging into unbridled nihilism, consumerism, criticism of anything and everything, or gloomy pessimism.

This means that liberals have to learn to talk with representatives of the left-wing and, conversely, that nationalists must remember that Russia was formed specifically as a multi-ethnic and multi-confessional country from its very inception. Nationalists must remember that by calling into question our multi-ethnic character, and exploiting the issue of Russian, Tatar, Caucasian, Siberian or any other nationalism or separatism, means that we are starting to destroy our genetic code. In effect, we will begin to destroy ourselves.

Russia’s sovereignty, independence and territorial integrity are unconditional. These are red lines no one is allowed to cross. For all the differences in our views, debates about identity and about our national future are impossible unless their participants are patriotic. Of course I mean patriotism in the purest sense of the word.

Too often in our nation's history, instead of opposition to the government we have been faced with opponents of Russia itself. I have already mentioned this; Pushkin also talked about it. And we know how it ended, with the demolition of the [Russian] state as such. There is virtually no Russian family that completely escaped the troubles of the past century. Questions about how to assess certain historical events still divide our country and society.

We need to heal these wounds, and repair the tissues of our historic fabric. We can no longer engage in self-deception, striking out unsightly or ideologically uncomfortable pages of our history, breaking links between generations, rushing to extremes, creating or debunking idols. It's time to stop only taking note of the bad in our history, and berating ourselves more than even our opponents would do. [Self-]criticism is necessary, but without a sense of self-worth, or love for our Fatherland, such criticism becomes humiliating and counterproductive.

We must be proud of our history, and we have things to be proud of. Our entire, uncensored history must be a part of Russian identity. Without recognising this it is impossible to establish mutual trust and allow society to move forward.

Another serious challenge to Russia's identity is linked to events taking place in the world. Here there are both foreign policy and moral aspects. We can see how many of the Euro-Atlantic countries are actually rejecting their roots, including the Christian values that constitute the basis of Western civilisation. They are denying moral principles and all traditional identities: national, cultural, religious and even sexual. They are implementing policies that equate large families with same-sex partnerships, belief in God with the belief in Satan.

The excesses of political correctness have reached the point where people are seriously talking about registering political parties whose aim is to promote paedophilia. People in many European countries are embarrassed or afraid to talk about their religious affiliations. Holidays are abolished or even called something different; their essence is hidden away, as is their moral foundation. And people are aggressively trying to export this model all over the world. I am convinced that this opens a direct path to degradation and primitivism, resulting in a profound demographic and moral crisis.

What else but the loss of the ability to self-reproduce could act as the greatest testimony of the moral crisis facing a human society? Today almost all developed nations are no longer able to reproduce themselves, even with the help of migration. Without the values embedded in Christianity and other world religions, without the standards of morality that have taken shape over millennia, people will inevitably lose their human dignity. We consider it natural and right to defend these values. One must respect every minority’s right to be different, but the rights of the majority must not be put into question.

At the same time we see attempts to somehow revive a standardised model of a unipolar world and to blur the institutions of international law and national sovereignty. Such a unipolar, standardised world does not require sovereign states; it requires vassals. In a historical sense this amounts to a rejection of one’s own identity, of the God-given diversity of the world.

Russia agrees with those who believe that key decisions should be worked out on a collective basis, rather than at the discretion of and in the interests of certain countries or groups of countries. Russia believes that international law, not the right of the strong, must apply. And we believe that every country, every nation is not exceptional, but unique, original and benefits from equal rights, including the right to independently choose their own development path.

This is our conceptual outlook, and it follows from our own historical destiny and Russia's role in global politics. Our present position has deep historical roots. Russia itself has evolved on the basis of diversity, harmony and balance, and brings such a balance to the international stage.

I want to remind you that the Congress of Vienna of 1815 and the agreements made at Yalta in 1945, taken with Russia’s very active participation, secured a lasting peace. Russia’s strength, the strength of a winning nation at those critical junctures, manifested itself as generosity and justice. And let us remember [the Treaty of] Versailles, concluded without Russia’s participation. Many experts, and I absolutely agree with them, believe that Versailles laid the foundation for the Second World War because the Treaty of Versailles was unfair to the German people: it imposed restrictions with which they could not cope, and the course of the next century became clear.

There is one more fundamental aspect to which I want to draw your attention. In Europe and some other countries so-called multiculturalism is in many respects a transplanted, artificial model that is now being questioned, for understandable reasons. This is because it is based on paying for the colonial past. It is no accident that today European politicians and public figures are increasingly talking about the failures of multiculturalism, and that they are not able to integrate foreign languages or foreign cultural elements into their societies.

Over the past centuries in Russia, which some have tried to label as the ”prison of nations“, not even the smallest ethnic group has disappeared. And they have retained not only their internal autonomy and cultural identity, but also their historical space. You know, I was interested to learn (I did not even know this) that in Soviet times [authorities] paid such careful attention to this that virtually every small ethnic group had its own print publication, support for its language, and for its national literature. We should bring back and take on board much of what has been done in this respect.

Along with this the different cultures in Russia have the unique experience of mutual influence, mutual enrichment and mutual respect. This multiculturalism and multi-ethnicity lives in our historical consciousness, in our spirit and in our historical makeup. Our state was built in the course of a millennium on this organic model.

Russia – as philosopher Konstantin Leontyev vividly put it – has always evolved in ”blossoming complexity“ as a state-civilisation, reinforced by the Russian people, Russian language, Russian culture, Russian Orthodox Church and the country’s other traditional religions. It is precisely the state-civilisation model that has shaped our state polity. It has always sought to flexibly accommodate the ethnic and religious specificity of particular territories, ensuring diversity in unity.

Christianity, Islam, Buddhism, Judaism and other religions are an integral part of Russia’s identity, its historical heritage and the present-day lives of its citizens. The main task of the state, as enshrined in the Constitution, is to ensure equal rights for members of traditional religions and atheists, and the right to freedom of conscience for all citizens.

However, it is clearly impossible to identify oneself only through one’s ethnicity or religion in such a large nation with a multi-ethnic population. In order to maintain the nation’s unity, people must develop a civic identity on the basis of shared values, a patriotic consciousness, civic responsibility and solidarity, respect for the law, and a sense of responsibility for their homeland’s fate, without losing touch with their ethnic or religious roots.

There are broad discussions on how the ideology of national development will be structured politically and conceptually – including with your participation, colleagues. But I deeply believe that individuals’ personal, moral, intellectual and physical development must remain at the heart of our philosophy. Back at the start of the 1990s, Solzhenitsyn stated that the nation’s main goal should be to preserve the population after a very difficult 20^th century. Today, we must admit that we have not yet fully overcome the negative demographic trends, although we have veered away from a dangerous decline in the national potential.

Unfortunately, throughout our nation’s history, little value was given at times to individual human lives. Too often, people were seen simply as a means, rather than a goal and a mission for development. We no longer have that right and we cannot throw millions of human lives into the fire for the sake of development. We must treasure every individual. Russia’s main strength in this and future centuries will lie in its educated, creative, physically and spiritually healthy people, rather than natural resources.

The role of education is all the more important because in order to educate an individual, a patriot, we must restore the role of great Russian culture and literature. They must serve as the foundation for people’s personal identity, the source of their uniqueness and their basis for understanding the national idea. Here, a great deal depends on the teaching community, which has been and remains a highly important guardian of nationwide values, ideas and philosophies. This community speaks the same language – the language of science, knowledge and education, despite the fact that it is spread out over an enormous territory, from Kaliningrad to Vladivostok. In this way, the community of teachers, the educational community overall, in the broad sense of the word, binds the nation together. Supporting this community is one of the most important steps on the path toward a strong, flourishing Russia.

I want to stress again that without focussing our efforts on people’s education and health, creating mutual responsibility between the authorities and each individual, and establishing trust within society, we will be losers in the competition of history. Russia’s citizens must feel that they are the responsible owners of their country, region, hometown, property, belongings and their lives. A citizen is someone who is capable of independently managing his or her own affairs, freely cooperating with equals.

Local governments and self-regulated citizens’ organisations serve as the best school for civic consciousness. Of course, I’m referring to non-profits. Incidentally, one of the best Russian political traditions, the country council tradition, was also built on the principles of local government. A true civil society and a true, nationally-focused political elite, including the opposition with its own ideology, values and standards for good and evil – their own, rather than those dictated by the media or from abroad – can only grow through effective self-governing mechanisms. The government is prepared to trust self-regulating and self-governing associations, but we must know whom we are trusting. This is absolutely normal global practice, which is precisely why we have passed new legislation to increase the transparency of nongovernmental organisations.

Speaking of any kind of reforms, it is important to bear in mind that there is more to our nation than just Moscow and St Petersburg. In developing Russian federalism, we must rely on our own historical experience, using flexible and diverse models. The Russian model of federalism has a great deal of potential built into it. It is imperative that we learn to use it competently, not forgetting its most important aspect: the development of the regions and their independence should create equal opportunities for all of our nation’s citizens, regardless of where they live, to eliminate inequalities in the economic and social development of Russia’s territory, thereby strengthening the nation’s unity. Ultimately, this is a huge challenge because these territories’ development has been very unbalanced over the course of decades and even centuries.

I would like to touch on another topic. The 21^st century promises to become the century of major changes, the era of the formation of major geopolitical zones, as well as financial and economic, cultural, civilisational, and military and political areas. That is why integrating with our neighbours is our absolute priority. The future Eurasian Economic Union, which we have declared and which we have discussed extensively as of late, is not just a collection of mutually beneficial agreements. The Eurasian Union is a project for maintaining the identity of nations in the historical Eurasian space in a new century and in a new world. Eurasian integration is a chance for the entire post-Soviet space to become an independent centre for global development, rather than remaining on the outskirts of Europe and Asia.

I want to stress that Eurasian integration will also be built on the principle of diversity. This is a union where everyone maintains their identity, their distinctive character and their political independence. Together with our partners, we will gradually implement this project, step by step. We expect that it will become our common input into maintaining diversity and stable global development.

Colleagues, the years after 1991 are often referred to as the post-Soviet era. We have lived through and overcome that turbulent, dramatic period. Russia has passed through these trials and tribulations and is returning to itself, to its own history, just as it did at other points in its history. After consolidating our national identity, strengthening our roots, and remaining open and receptive to the best ideas and practices of the East and the West, we must and will move forward.

Thank you very much for your attention.

<…>

Member of the Valdai Discussion Club Advisory Board Piotr Dutkiewicz: Mr President, this is the tenth year that we are meeting with you here.

This is a unique platform and a unique format – there is nothing like it in the world. Thank you for these ten years of warm support for our club.

I have a two-part question concerning your article in The New York Times. It was an excellent idea and a brilliant article. Indeed, you are personally responsible for stopping the expansion and deepening of the Syrian conflict, which is an enormous achievement.

Question: who came up with this idea? Was it Lavrov, Shoigu, Peskov or someone else? And when did you discuss it for the first time with President Obama?

The second part of the question: it seems to me that you put yourself in a rather awkward position with this brilliant idea, this brilliant article, because you became a kind of hostage. You and Russia have taken on the burden of responsibility for the success of this agreement. You already have many detractors because they do not want to see major global policy to develop as a Putin and Obama duet. What happens if it doesn’t work?

Thank you.

Vladimir Putin: Thank you for your kind words.

My colleagues and I have always been pleased that there are people in the world interested in Russia, its history and its culture. Ten years ago, when I was told that these people would like to come to Russia, talk with us, engage in debate, and want to learn about our point of view on key issues in the development of the nation itself and its place in the world, well, naturally, we supported it immediately; I supported it and my colleagues supported it. I am very happy that over the last ten years, this platform has become even more prestigious compared to the first steps taken a decade ago. The interest in our nation is not waning; on the contrary, it is increasing and growing.

I want to respond to your words of gratitude in kind. I would like to thank all the experts on Russia who remain faithful to their love of our nation and their interest in our nation.

Now, regarding the article. I had this idea completely by chance. I saw that President Obama took the discussion on the possibility of attacking Syria to the Congress and Senate. I followed the course of that discussion and I just wanted to convey our position, my own position, to the people who will be forming their opinions on this issue, and to clarify it. Because unfortunately, the media often present various problems very one-sidedly, or simply stay completely silent.

So this was my idea; I called one of my aides and said that I would like to publish an article in an American newspaper – it didn’t matter which one, but one of the leading ones – so that this information would reach the readers, and dictated what I wanted to see written. You may have noticed that it does not contain anything I have not stated earlier, in various places in public. I have already talked about all of it in one way or another. So I just dictated it, and then when my colleagues put it together, I took a look. I didn’t like everything, so I rewrote and added a few things, gave it back to them, they worked on it some more and brought it to me again. I made some more changes and felt it was ready for publishing. We arranged through our partners that it would be in The New York Times; we came to an agreement with this respected publication that the article would be published without any cuts. If they didn’t like it, we could give it to another newspaper.

But I must give credit to the New York Times editors: they completely abided by our agreements and published everything as I wrote it. They even waived their usual requirements on the number of characters and words in the article; it was a little bit over the limit. They were going to submit it, but then one of my aides said, “President Obama is going to address the nation tomorrow. What if he announces that there won’t be any strikes, that they changed their minds? It’s better to wait.” I said, “Very well.” We waited, and the next morning, I was getting ready for work and I was given President Obama’s speech. I began to read it and realised that nothing had changed fundamentally, so I laid it aside without finishing it. But then I thought, “No, I need to read it to the end.” And when I read all of it, it became clear that my article was incomplete. As you understand, the matter at hand was America’s exceptionalism. So I picked up the article, and right then and there, I hand-wrote the last paragraph. I gave it to my colleagues, they passed it on to The New York Times, and there it was.

Now, concerning responsibility. You know, you are all very experienced, smart and clever people. Here is what I will say about Russia’s special responsibility. We have equal rights and equal responsibilities with all our colleagues involved in the discussion on Syria. This is not the first time I hear that I now carry a special responsibility. We all carry a special responsibility; we all carry it equally. If the attempt to resolve the problem by peaceful means is unsuccessful, that will be a tragedy. But we must investigate before we do take any other steps. My good friend Francois Fillon – we have known each other for a long time and have become friends during our years of working together – talked about how after the report was released by UN experts, it became clear that chemical weapons had been used. But this was clear to us from the very beginning, and our experts agreed. The only thing that is unclear is who used it.

We are constantly talking about responsibility on the part of Assad’s government, whether he used chemical weapons or not. But what if they were used by the opposition? Nobody is saying what we would then do with the opposition – but this, too, is an important question. We have every reason to believe that this was a provocation. You know, it was clever and smart, but at the same time, the execution was primitive. They used an ancient, Soviet-made projectile, taken from the Syrian army’s armaments from a long time ago – it even had “Made in the USSR” printed on it. But this was not the first time chemical weapons were used in Syria. Why didn’t they investigate the previous instances?

This matter should be investigated as thoroughly as possible. If we finally get an answer, despite all obstacles, to the question of who did this, who committed this crime – and there is no question that it was a crime – then we will take the next step; we will then work with other UN Security Council colleagues to determine the culpability of those who committed this crime, together and in solidarity.

Thank you.

Moderator Svetlana Mironyuk: They say that Senator McCain followed your example and published an article of his own in Pravda newspaper. He probably remembers from the Soviet years that Pravda was a well-known publication and the most popular newspaper in the country. True, a lot of time has passed and things have changed a bit since then, so it’s no longer true. I don’t know if you heard about this or not, Mr President.

Vladimir Putin: No, I didn’t know about it. I have met the senator before. He was in Munich when I made the speech there that went on to become so famous. Actually, there was nothing anti-American in that speech. I simply stated our position frankly and honestly, and there was nothing aggressive in what I said, if you only take a closer look. What I said then was that we were promised at one point that NATO would not expand beyond the former Federal Republic of Germany’s eastern border. That was a promise directly made to Gorbachev. True, it was not actually set out and written down. But where is NATO today, where is the border? We got cheated, to put it quite simply. That’s the whole story. But there’s nothing aggressive here. It’s more just a reluctance to admit to what I just said. But I didn’t say those words to offend anyone. I said them so that we would be able to lay everything before each other plain and clear and discuss the problems in an honest, open fashion. It’s easier to reach agreements this way. You shouldn’t keep things hidden.

The senator has his own views. I do think though that he is lacking information about our country. The fact that he chose to publish his article in Pravda – and he wanted after all to publish it in the most influential and widely read newspaper – suggests that he is lacking information. Pravda is a respected publication of the Communist Party, which is now in opposition, but it does not have very wide circulation around the country now. He wants to get his views across to as many people as possible, and so his choice simply suggests that he is not well-informed about our country.

Actually, I would have been happy to see him here at the Valdai Club say, taking part in the discussions. As far as I know, our big television channels, the national channels, proposed that he come and take part in an open and honest discussion. There you have it, freedom of speech, freedom of the press. He is welcome to share his point of view with the whole country and discuss things with his equals, with political analysts and politicians, members of the State Duma or the Federation Council.

In this respect, I can only express my regret that our American colleagues did not react to our parliamentarians’ proposal and refused to receive them in Washington for a discussion on Syria. Why did they do this? To be honest, I don’t see anything so bad about this proposal, which, on the contrary, seems to me of interest and the right thing to do. The more we actually discuss things directly with each other, the easier it will be to find solutions.

Svetlana MIRONYUK: Thank you.

Are there more questions from the floor?

Let’s stick to the subjects if we can, so as not to jump from one topic to another.

Bridget Kendall, go ahead.

Diplomatic Correspondent For the Bbc Bridget Kendall: Thank you.

Again about Syria, Russia has been lauded for its achievement for bringing about a deal which looks as though it could lead to the elimination of chemical weapons in Syria, all the more an achievement given that the Syrian government didn't admit it had them until very recently. Would you have been able to persuade President Assad to do this if there hadn't been a threat of American military strikes? In other words, did the threat of US military strikes actually play a rather useful role?

Vladimir Putin: Am I right in understanding that you are asking about whether it is the threat of military strikes that plays a part in Syria’s agreeing to have its weapons placed under control?

First, I’d like to ask you all to address your questions to everyone taking part in today’s discussion, so as not to turn this into a boring dialogue. If you permit, I will redirect your question to my colleagues and ask them to share their points of view on this issue.

The threat of the use of force and actual use of force are far from being a cure-all for international problems. Look at what we are actually talking about after all. We are forgetting the heart of the matter. We are talking about using force outside the framework of current international law. We’ve just been saying how the US Congress and Senate are discussing whether to use force or not. But it is not there that this matter should be discussed. It should be discussed in the UN Security Council. That is the heart of the issue. That is my first point.

Second, on whether we will manage to convince Assad or not, I don’t know. So far it looks as though Syria has fully agreed to our proposal and is ready to act according to the plan that the international community is putting together, working through the UN. Russia and the USA, in the persons of Secretary of State Kerry and Foreign Minister Lavrov have already practically drafted the outlines of this plan. There is a special organisation that will work together with the UN on this matter of eliminating chemical weapons. Syria has declared that it will join and that it indeed already considers itself to have joined the International Chemical Weapons Convention. These are practical steps that the Syrian government has already taken. Will we succeed in taking the process through to completion? I cannot give a 100% guarantee. But what we have seen just lately, over these last few days, gives us hope that this is possible and will be done.

Let me just remind you about how these chemical weapons came about. Syria got itself chemical weapons as an alternative to Israel’s nuclear arsenal, as we know. What can be done about the various issues associated with proliferation and non-proliferation of weapons of mass destruction remains a very relevant question today, perhaps the most important issue of our time. If this situation gets out of control, like it once happened with gunpowder, the consequences will be unimaginable. We therefore need to strive towards nuclear-free status in particular parts of the world, especially in such volatile regions as the Middle East.

We need to be very careful in our action so as to give unconditional security guarantees for all participants in this process. After all, there are people in Israel itself who categorically oppose nuclear weapons. You remember the well-known case when a nuclear physicist was sent to prison, served his sentence and still continues to think that his position was right. Why? There is nothing anti-Israeli in his position. He is a Jew himself and a citizen of his country, but he simply believes that Israel’s technological superiority is such that the country does not need nuclear weapons. Israel is already technologically and militarily a long way ahead of the region’s other countries. But nuclear weapons only turn the country into a target and create foreign policy problems. In this respect, there is sense in the position of this nuclear physicist, who disclosed the existence of Israel’s nuclear weapons.

But to come back to your question about whether the plan will succeed or not, we hope that it will.

Svetlana Mironyuk: Mr President, I suggest that since we have veered away from defence and security issues, we should give Mr Rühe a chance to reply, ask a question, and express his opinion.

Mr Rühe, you have the floor.

Former Defence Minister of the Federal Republic of Germany Volker Rühe: Well, I wanted to speak about the young generation in this country.

First, I would like to begin – because I’ve been here from the beginning – to also compliment our Russian friends on the format of Valdai, the architects – because it would not be enough to call them organisers. What we have seen here, I call the culture of inclusiveness and a love of pluralism. And I can tell you, Mr President, we are quite fascinated by the pluralistic voices from Russia, including very powerful statements by people that are in opposition to your politics, and I think this shows the strength of the country, that it was organised in this way.

I’ve never looked at Russia with the somewhat narrow eyes of a defence minister, you know this. I was first here in 1971, and Sergei Karaganov is a friend of mine since the late 1970s. We don’t look it, but it’s a fact of life. We have lived through SS-20 and Pershing.

And what I would like to say is, I came here as Defence Minister in 1995 and I went to St Petersburg. And I said, I don’t want to see any tanks or artillery, or any generals. I want to see the Mayor, Sobchak. And I got to know you also, you were part of his team. Why? He was a lighthouse for me, as a young member of parliament in West Germany, still in the divided Germany, and I think what he was doing was much more important than tanks and artillery, and it has proved to be this way. So it’s a lifelong interest in a neighbour. And we all, I believe, on this continent, are interested in a successful, modern Russia.

Now, the young generation. What I’ve seen – and of course it was very interesting for me to listen to his daughter, who is a powerful voice for the young generation, two days ago.

So what I’ve seen here, what I’ve seen in Russia is you have really an asset to the country, your young generation. They are very intelligent. They want to have a good education. They want to be more internationally connected. And they want to have a bigger say in the politics of your country. They are knocking at the doors of the Kremlin.

The young generation in my country, they also want to build their private lives, they are very much internationally connected. The doors to our Kremlins, which is the parliament and the government, are very open, but they don’t knock at it. They leave it to politicians because they think things have been arranged very well. And we are very sad that some of the very best just want to have a successful private life, but don’t engage in public life.

So my message really is, Russia can be proud of a young generation, even if there are political opponents that want to engage in public life, which is not the case in many of the west European countries. And I’ve said earlier in Russia also, we should give up this visa regime in the West, because that would enable hundreds of thousands of young Russians to come and see our life and our political system. But I must say, it would also change Russia, because once they have studied in Rome or in London or in Washington, because they’ll be forces of change, the necessary change in this country. But I think it would make the country also more competitive.

Now what has that to do with security? I think this is the best way to ensure security and to develop common points of view. And I’m very glad that this culture of Valdai, I don’t think there’s anything – I have been to many conferences, and also to Munich, but Munich is very narrow security-wise, there’s no conference like this in the world.

And also when we listen for four hours to your people about ideas and politics – we very often just talk from Monday to Thursday about our politics. It was very fascinating to see that the Russian speakers are much more interested in fundamental questions of society than we are, which is very much on the surface, what we are debating. So I think this is something to start from, but the real message is, I think it would be a great project of your third term to integrate this young generation when they’re knocking at the door of the Kremlin, because don’t forget, we want more people to knock at the doors of political power in the West, and you can be proud of these people. That’s my message.

Svetlana Mironyuk: Thank you, Mr Rühe.

G20 summit

2013-09-06T14:51:57+04:00

Vladimir Putin took part in the second working session of heads of delegations of G20 countries, invited countries, and international organisations.

The summit participants discussed investment and job creation, among other issues.

The discussion then continued in working breakfast format with the participation of invited heads of state and international organisations.

* * *

Speech at the second working session of G20 leaders

President of Russia Vladimir Putin: Ladies and gentlemen, colleagues, let’s get ready for today’s work.

In fact, this work has already begun. We met this morning with representatives of the Business 20 and Labour 20. Some of you took part in this meeting, in any case.

The subject of our meeting today is investing in stimulating economic growth and job creation.

We worked very productively yesterday, focusing primarily on the global economy and sustainable development issues. Today, we will talk about investing in economic growth and creating jobs.

This is a priority on the G20 agenda this year and the main issue receiving our closest attention. We need not only to protect ourselves against any recurrences of the crisis, but also ensure the global economy’s stable long-term growth and sustainable development, and we can achieve this only through development. This is why the G20 countries and the entire world need new growth sources.

At the same time, despite all the measures taken, unemployment levels in the G20 countries are still higher than they were before the crisis. The situation differs from one country to another, but there are a number of very serious problems that affect most of the G20 countries.

Youth unemployment is still very high, and structural unemployment is becoming an increasingly serious issue. The number of qualified specialists who cannot find jobs in their field is also growing all the time.

The spread of informal employment is having a negative impact on workers and their families. Their living standards are falling and social protection is declining, and in countries where tax revenues and pension contributions are shrinking this creates new budgetary constraints.

But employment policy cannot and should not be the task of only the state agencies responsible for social policy. It is clear that real change in labour and employment requires a system-wide approach.

We cannot create high-quality jobs separately from our overall national economic development efforts. We need to work comprehensively, taking into account macroeconomic, financial and social conditions.

Our experts are unanimous that one of the key factors in the economic slowdown and stagnation in employment was a significant drop in long-term investment. Overall, we see a whole series of problems: fragmentation in the European Union’s banking system, a shrinking fiscal base, development banks’ lower lending potential, and more stringent financial regulation. It is for these reasons that Russia proposed that we search for new sources of funding for investment.

We are grateful to our G20 colleagues and the international organisations for their broad support for this agenda, including by carrying out comprehensive analysis of the key factors that have an impact on mobilising internal resources and ensuring long-term financing.

The points I want to stress in particular are, first, that the international organisations, headed by the World Bank, have drafted a combined report that analyses the main causes for the decrease in investment financing and investigates the factors that are an obstacle to improving the investment climate.

Second, a special study group has been set up to examine investment financing issues. It has already collected information on different countries’ experience and practice in stimulating long-term investment.

Finally, a programme has been drafted for carrying out studies and drawing up concrete recommendations on improving the investment climate and stimulating investment flows.

The G20 experts, together with the OECD, have drafted the High-Level Principles of Long-Term Investment Financing by Institutional Investors. It is of key importance for us to stimulate these kinds of investors – insurance companies and pension funds.

They are putting a lot of effort into investing in our countries and we must give them the conditions they need for their work. After all, their activity is focused on the long term, and the amount of resources at their disposal comes to around $90 trillion, according to figures from 2012.

A G20 Action Plan to support development of local currency bond markets and recommendations on conducting market diagnostics for local currency bond markets were drafted. Bonds issued in local currency are an important source of financing for long-term internal investment, above all in infrastructure.

In this respect we support carrying out institutional and regulatory reforms designed to establish the conditions needed for developing these markets.

It is important that the Financial Stability Board carries out regular monitoring of how financial regulation reform is affecting access to long-term investment financing.

We need to make consistent progress in all of these areas. We are expecting concrete proposals from the World Bank on the global investment mechanism concept. I am sure that the work in this area will continue with success under the Australian G20 presidency next year.

I want to raise another important issue. Traditionally, the G20 agenda has devoted much attention to the energy sector, the situation on raw materials markets, green growth and climate change. This is understandable given that people’s quality of life depends directly on reliable and affordable energy supplies and on environmental security.

Colleagues, I propose that we discuss all of the issues I have just outlined.

<…>

Meeting with G20 business and trade union representatives

2016-02-09T17:58:20+04:00

On the second day of the G20 summit, the G20 leaders met with business and trade union representatives from the G20 countries.

Participants in the Business 20 and Labour 20 groups presented their recommendations to the G20 leaders at the meeting.

* * *

President of Russia Vladimir Putin: Ladies and gentlemen, friends,

It is a great pleasure to welcome you all here to St Petersburg, to this meeting between the G20 leaders and G20 business and trade union representatives.

Our meetings are becoming a fine tradition. We have met regularly over the course of the year. The Russian presidency made this the norm. We met on a number of occasions with business and trade union representatives.

I must say that this initiative came from the business and trade union representatives themselves. We have held regular consultations and studied carefully the recommendations the Business 20 and Labour 20 have presented. Friends and colleagues, I stress the point that the proposals we have drafted take into account a lot of what you said during our discussions.

I want to say a few words separately on two issues that we are set to discuss in just an hour’s time with the G20 leaders. By the way, two of our colleagues are still on their way – the German Chancellor and the British Prime Minister. We finished very late yesterday, around 2.30am, and so this is all understandable. Please excuse us for not all being here yet.

Turning to the actual substance of our meeting, we agree with your view that a lot still needs to be done to increase direct investment and trans-border investment in infrastructure. There is still not enough investment in this area.

We need to take a comprehensive approach to resolving issues related to free movement of capital and also the problem of insufficient projects with attractive returns. Unfortunately, we still come up against the problem of getting sufficient bank loans. Demand for long-term investment is growing all around the world, and one of the biggest priorities now is to stimulate private investment, especially in infrastructure. This was something that many of my colleagues discussed yesterday evening.

During our earlier meetings, we discussed guarantees, effective management, spreading the latest experience, and developing public-private partnerships. We also share your views regarding the employment situation and job creation.

Measures to develop the job market and invest in human capital must include free access to compulsory, high-quality education tailored to the job market’s needs, establishing a favourable environment for business development, including among young people, and a more effective migration policy that is better adjusted to the market’s real labour demands.

Effective labour market policy is always the product of compromises reached through discussion between employers and trade unions with the state authorities’ direct mediation. Success depends on ensuring balance between labour supply and demand, labour market flexibility and social protection of workers, wages based on labour productivity and labour productivity’s relation to working conditions, and coordination of employers’ and employees’ respective interests. If we manage to reach a balance, we can be sure of achieving a high degree of effective management.

Colleagues, I will not tire you with long speeches. I want to give all my colleagues the chance to speak. But to start with, I propose that we hear first from the business and trade union representatives themselves.

<…>

The G20 summit is underway in St Petersburg

2015-03-20T18:00:46+04:00

Among other things, the latest global economic trends and financial regulation issues were discussed during the first working meeting themed Growth and Financial Stability.

The G20 summit's work officially began with Vladimir Putin's welcome speech as he addressed the invited heads of state and government.

* * *

Speech at working session of G20 leaders

President of Russia Vladimir Putin: Ladies and gentlemen, dear friends, welcome to the St Petersburg G20 leaders’ summit.

This year marks the G20’s fifth anniversary and therefore we should take stock of our work, both what has been done and what remains.

First and foremost we managed to consolidate the efforts of the world’s leading economies; thanks to joint efforts we were able to mitigate the worst effects of the crisis, and begin to create the conditions to prevent future ones.

I recall that a year ago at the [G20] summit in Los Cabos we talked about creating a sort of anti-crisis firewall. We agreed to take a number of concerted steps to lay its foundation. First was resolving the fundamental problem of reducing budget deficits and public debt levels in developed countries, including in Europe. Second was eliminating large gaps in financial regulation. And finally, third was the problem of the lack of the International Monetary Fund resources.

In general, the G20 has proved its ability to find solutions to very sensitive issues. The situation has improved following the measures that we took. Today, the most pressing of these problems have been resolved or are under control.

However, it is too early to become complacent, and our main task is to bring back sustainable and balanced growth to the global economy. Unfortunately, this problem has not yet been resolved; systemic risks and conditions conducive to the recurrence of an acute crisis persist.

Just recently the IMF lowered its 2013 global growth forecast to 3.1 percent. Even though a year ago its estimates hovered around the 4 percent mark. The US economy is growing, something that certainly makes us all very happy. Unfortunately, growth is still not as fast as we would like.

For the first time in many years we can talk about economic growth in Japan. Unfortunately, there are no guarantees that this tendency is a sustainable one. And in the eurozone the first signs of the end of the recession are now visible: in the second quarter [of 2013] a slight increase in growth of 0.3 percent was recorded, but we are not expecting such good results for the whole year.

In addition, new risks have appeared in just the past few months. At the time, monetary stimulus measures and the quantitative easing applied by some countries helped to support growth and reduce the volatility of financial markets.

But we all understand that policies that amount to giving away free money cannot continue indefinitely. So now our partners are beginning to remove non-standard financial and economic policy measures, and this may affect both the status of key global risks and the economies of other countries. As a matter of fact, we know that they are already affected.

We need to monitor constantly, predict possible consequences, and adopt additional preventive measures in a timely fashion at both national and global levels. But again, let me repeat that the main goal is to provide the basic conditions for global economic recovery via high-quality development. Therefore, stimulating economic growth and creating jobs are crucial for the Russian G20 presidency.

Today we are going to approve the St Petersburg Action Plan for growth and job creation. I think we have every reason to consider that the document reflects a reasonable balance of interests. It will strengthen financial markets’ confidence in our plans and intentions, and at the same time encourage investors to look more closely at the real economy.

The Plan’s main components are budgetary strategies and individual countries’ commitments to implementing structural reforms. During heated debates there was a general awareness of the need to find an optimal balance between fiscal consolidation and supporting growth. It was not an easy task, but we can thank our experts for the results.

Clearly, most developed economics need to reduce their levels of national debt and fiscal deficit in the medium- and long-term. Nevertheless, restoring public financial sustainability alone is not enough to recreate to higher growth rates.

The logic and progression of the global financial and economic crisis have made it clear that we need universal structural reforms. It is important to focus on the fundamental guarantees for stable, long-term growth and development. That is precisely the logic embedded in the St Petersburg Action Plan.

We are talking about steps that are long overdue to regulate the labour and tax markets, develop human capital, modernise infrastructure and regulate commodities markets. Granted, we are still far from achieving breakthrough results: the process of implementing structural reforms is difficult, and often lengthy.

Stabilising the situation overall and mitigating risks pertaining to financial markets and sovereign debts will certainly help to increase the IMF resource base by more than $460 billion. G20 nations have played a key role in implementing this step. And today, we can acknowledge a nearly complete fulfilment of the obligations we took on a year ago in Los Cabos.

Reforms to increasing the role – i.e., the quotas and votes – of developing nations and emerging markets in the IMF should be our next step. I regret to note the lack of progress in fulfilling our mission to complete the 15^th quota review by January 2014, although this work has riveted the attention of the entire global community. We are held back by our lack of decision on ratifying the agreements of 2010.

I am calling on all of you to demonstrate greater readiness to seek a balanced, compromise-based decision on redistributing quotas; it will largely determine the efficacy and legitimacy of the work by the IMF and G20.

Meanwhile, we have achieved noticeable success in reforming financial regulation. This issue has been at the centre of our forum’s attention since the start of the global crisis. I would like to particularly note that in 2013, the Financial Stability Board became a full-fledged international organisation, which clearly strengthens its potential in the work to improve financial regulation.

We have also made significant progress in developing approaches to restructuring and partially implementing the reforms agreed upon at the international level in the following key areas. These are very important areas, so I am going to list them.

The first is the Basel III bank regulation. The second is reforming OTC derivatives markets. The third is measures pertaining to systemically significant financial institutions. In order to conduct such complex reforms, it is imperative that the world’s leading economies strive to reach compromise-based decisions. Clearly, national measures to reinforce financial stability should not lead to unjustifiably high regulatory costs for foreign participants in the financial market.

Moreover, the quality of the financial regulations depends directly on the efficacy of measures to counteract tax evasion. This has become a key topic this year.

Under the conditions of increasing globalisation in the world economy, national-level efforts are insufficient to effectively counter unscrupulous taxpayer behaviour. Clearly, each economy strives to create the most appealing tax regime possible for businesses, but that does not mean these regimes should be used for tax evasion.

Based on our meeting, we plan to adopt a joint Action Plan to fight tax base erosion and the exclusion of profits from taxation. We have prepared it jointly with the OECD.

I want to thank all of our colleagues for this work. Without them, it would be nearly impossible to achieve this result. The plan stipulates a whole range of steps aimed at increasing transparency and improving international tax agreements. The result of its implementation should be a significant reduction in the practice of channelling profits into offshore accounts and an increase in tax payment in the jurisdiction where a given product or service is produced.

Colleagues, I propose that we move on to exchange opinions on our agenda. Let’s discuss global economic trends and how to react to them. Let’s talk about problems in financial regulation, including the taxation action plan and the global financial architecture reform. Let’s also finalise the St Petersburg Action Plan, which was prepared by experts.

I want to thank you for your attention. As we begin this part of our joint work, I would like to propose that we pass the floor to Ms Lagarde, who will give an assessment of the global economic and financial situation.

Thank you very much for your attention.

<…>

Opening remarks at the meeting with the BRICS leaders

2015-11-19T14:59:16+04:00

President of Russia Vladimir Putin: Colleagues, ladies and gentlemen, friends, let me welcome you all to St Petersburg.

By tradition we have an informal exchange of opinions with our BRICS colleagues ahead of the G20 meeting. This is a very good practice, and I’m sure it will achieve substantial positive results.

Our agenda is comprised of three main issues. We will discuss coordinating approaches on key aspects of the G20 summit. BRICS countries have contributed constructively to the substantive content of Russia’s priorities as the presiding country.

A considerable package of agreements has been prepared for the G20 summit. The main one is the St Petersburg Action Plan. We also have to think together about one of the most problematic global governance issues, namely the International Monetary Fund reform.

We consider establishing the BRICS Development Bank to be one of our group’s most important achievements. Its initial charter capital will be $50 billion.

The implementation of initiatives to establish a foreign exchange fund are in their final stages; BRICS countries agreed on a contingent arrangement of $100 billion. Russia will also contribute to this work.

Thank you for your attention. Once again, as the host of today’s event allow me to welcome you to Russia and to St Petersburg. We are pleased to give the floor to the President of South Africa Jacob Zuma, current chairman of BRICS, who will chair our meeting.

Thank you very much.

Meeting with representatives of different Orthodox Patriarchates and Churches

2016-03-31T19:15:29+04:00

Vladimir Putin met with Patriarch of Moscow and All Russia Kirill and representatives of the different Orthodox Patriarchates and Churches, who are in Moscow to celebrate the 1025^th anniversary of the Baptism of Rus.

The meeting has brought together the heads and senior clergy of the 15 Orthodox Churches: the Patriarchates and Orthodox Churches of Constantinople, Alexandria, Antioch, Jerusalem, Russia, Georgia, Serbia, Albania, Romania, Bulgaria, Cyprus, Poland, the Czech lands, Slovakia and Greece, as well as the Russian Orthodox Church in America. Between them, they unite more than 227 million believers.

* * *

President of Russia Vladimir Putin: Your Holiness,

Highly respected apostles and senior representatives of autocephalousOrthodox churches, welcome to Moscow.

I am very happy to welcome all of you – the heads of fifteen autocephalous, autonomous, Orthodox churches – to the Kremlin. This is the first time we are holding such a meeting, and we are very happy about it.

The Russian Orthodox Church and the entire Orthodox world are currently celebrating the 1025^th anniversary of the Baptism of Rus. Please allow me to begin our meeting by sincerely congratulating you on this shared celebration.

The acceptance of Christianity determinedRussia’s fate and choice of civilisation; it became a decisive turning point in the Russian state’s ecclesiastical and secular history. The moral foundations of the Orthodox faith played a major role in the formation of our national character and the mentality of Russia’s peoples, revealing the best creative qualities of our nation, helping Russia holda dignified place among the European and global civilisations.

”The acceptance of Christianity determined Russia’s fate and choice of civilisation; it became a decisive turning point in the Russian state’s ecclesiastical and secular history.“

Orthodoxy has become a spiritual buttress for the Russian state and for our national consciousness, uniting Russia, Ukraine and Belarus through strong bonds of brotherhood. It is symbolic that a joint steering committee headed by Patriarch Kirill of Moscow and All Russia was formed to organise the combined celebrations of the 1025^th anniversary of the Baptism of Rus in our three nations.

Festivities marking the Baptism of Rus are held alongsidemany secular and spiritual events. One such event, symbolising the spiritual unity of the Orthodox peoples, is the bringing ofa Christian relic – the cross of St Andrew the Apostle – to Russia, Ukraine and Belarus.

Sincere, resolute faith helped our ancestors overcome the most difficult trials together, to surmount hardships and be victorious. This experience of moral improvement and cultural, socio-political development has become an integral part of the heritage of eastern Christianity, uniting entire peoples belonging to the Orthodox religious tradition. Russia holds a worthy place among them, championing justice, caring for the spiritual integrity of our Orthodox world, advocating for the development of cooperation and reinforcing active dialogue between Orthodox churches. I am confident that our meeting and your visit to the capital of our nation will serve these goals in every possible way.

”Sincere, resolute faith helped our ancestors overcome the most difficult trials together, to surmount hardships and be victorious. This experience of moral improvement and cultural, socio-political development has become an integral part of the heritage of eastern Christianity, uniting entire peoples belonging to the Orthodox religious tradition.“

Today, as people once again search for moral support, millions of our fellow citizens are finding it in religion, trusting the wise, ministerial words of the Russian Orthodox Church. Its selfless, educational, social service is in great demand and its public prestige and peace-building efforts are aimed at strengthening harmony and stability, and re-establishing the historical ties between peoples, including our compatriots abroad. It is also important that relations between the church and the state are developing at a new level. We are acting as true partners and co-workers to resolve the most pressing domestic and international challenges, developing joint ventures for the good of our Fatherland and our people.

Over many centuries, Russia was built and matured as a multi-ethnic and multi-confessional state. It draws strength and confidence from this diversity, always being open to and respectful of other ethnic group and cultural traditions, championing the principles of solidarity, freedom and responsibility, respecting the rule of law and morality, and protecting traditional values. These are necessary conditions, the foundation for sustainable, progressive development, the guarantee for an equitable world order in the 21^st century; the position of the Orthodox Church in advancing these principles is invariably steadfast.

Today, we are especially in need of efforts to prevent conflicts between civilisations – conflicts fraught with the most serious of consequences. Russia is prepared to share its extensive experience in establishing and supporting interfaith peace and harmony.

”Our nation will continue to take an active, constructive position aimed at advancing a rapid political resolution to conflict situations. In these situations, we place great importance on fostering productive interreligious and intercultural cooperation.“

I am very alarmed that in many regions of the world, particularly the Middle East and North Africa, interfaith tensions are escalating and the rights of religious minorities are being violated, among them Christians, including Orthodox Christians. I feel this pressing problem requires close attention from the entire international community.

Our nation will continue to take an active, constructive position aimed at advancing a rapid political resolution to conflict situations. In these situations, we place great importance on fostering productive interreligious and intercultural cooperation. And naturally, active participation and support by regional autocephalous Orthodox churches and its primates are very important for us.

Please allow me to once again congratulate everyone here on the Baptism of Rus holiday. I wish you peace, prosperity, longevity, new successes in your selfless service in the name of affirming the high Christian ideals of kindness, charity and justice, and in the name of strengthening mutual understanding and trust between peoples.

Thank you for your attention.

<…>

Speech at the Second Summit of Gas Exporting Countries Forum

2015-03-20T18:00:50+04:00

President of Russia Vladimir Putin: Heads of state and government, delegation members, ladies and gentlemen,

It is with genuine pleasure that I welcome you to this Second Summit of the Gas Exporting Countries Forum.

It was five years ago now in Moscow that the representatives of 11 countries signed the Charter and Agreement establishing the Forum. At its first summit, the Forum adopted the Doha Declaration, which formulated and fixed the basic priorities for developing international gas markets. I think that this laid solid foundations for our long-term partnership.

Over these last years, the Forum has undergone quite rapid transformation from an informal discussion platform to a full-fledged international organisation bringing together the world’s main gas producers and exporters.

At the same time, I believe that we need to go even further, cooperate even more closely and consolidate our efforts to effectively protect gas exporting countries’ interests in order to strengthen the competitiveness of gas as a promising and clean fuel.

I think that one of the Forum’s key tasks should be to reach a commonly agreed position on price formation, put in place the conditions for reducing excessive price fluctuation, and improve transparency throughout the sector. Overall, this will help to develop gas transport infrastructure and make supply more reliable. There is no question that we also need to develop cooperation on collecting and analysing data on the sector and supporting research into the global gas market.

Global demand for natural gas today is growing faster than demand for oil and outstrips overall energy consumption. The International Energy Agency forecasts that demand will increase by more than 16 percent a year through to 2018 and will reach a figure of 4 trillion cubic metres.

This offers big opportunities for gas producers and also places big responsibilities on us all, especially now with the global economy going through a difficult juncture. Our countries account for two thirds (65 percent) of proven global gas reserves. We account for almost half of the world’s gas exports. Our priority goal is thus to ensure stable supply for the global market over the long term.

Recent years have seen rapid technological development in the gas sector. Gas production and transporting methods have improved and have made gas cheaper and more accessible for consumers. Industrial development of new resource types such as shale gas, difficult-to-access reserves and deep offshore reserves, coalbed methane and gas hydrates is expanding. This is strengthening gas’ position on the global market. At the same time though, pressure is growing on the exporting countries. This is a serious challenge for all of us.

We are seeing this challenge above all in attempts to impose on producers economically unacceptable conditions for supply via pipeline systems, abolish the principle of supplies based on long-term contracts, peg contract prices to oil and petroleum product prices as a market price indicator, and lower the level of compulsory gas purchase volumes.

Unfortunately, the advocates of these policies often do not realise that abandoning the basic principles of long-term contracts would not only deal a blow to the gas producers but would ultimately create big losses for the customer countries and undermine their energy security.

We should not forget that gas use responds to another of the global challenges we face. By increasing the share of gas in overall energy consumption we can substantially improve the environmental situation. Of course, we all need to pay for energy and environmental security. This is only fair and is fully in keeping with the spirit of market relations free of politicised considerations.

New hydrocarbon production and transport technology are certainly making supply on the gas market more elastic. New price references are emerging, including spot market prices. But this is not a reason to abandon effective instruments that have been tried and tested in practice, including long-term contracts and the ‘take or pay’ principle.

Together, these two parts of the energy security equation guarantee that the capital-intensive gas sector with its long investment cycle remains profitable, ensuring sustainable and proactive development of the global economy’s energy base in the future. I believe that we need to preserve a fair distribution of risks between the exporters and the importers.

I must mention here too the discriminatory restrictions a number of consumer countries have introduced in recent years against natural gas suppliers. I am referring above all to the changes to the European Union’s energy regulation laws, the so-called ‘third energy package’. The adoption of the relevant gas directive seriously restricts traditional gas suppliers, who have invested in the European gas sector’s development over several decades, in their activity on the EU market.

This situation makes solidarity between the gas exporting countries all the more important. We need to work together to resist unfair pressure and defend producers’ and suppliers’ interests on external markets. We want fair consideration of our interests.

Reaching common positions among the Forum’s participating countries on relations with the buyer countries is also important in the context of increasing competition between energy resources on the global market. Gas is objectively an effective, reliable and clean energy source, but if we grow complacent and rest on our laurels we will lose out in the competition with other resource types.

I think that cooperation on developing new uses for natural gas and supporting research on its potential uses and applications are another important area for our work together. Making more active use of gas as an engine fuel, for example, would enable us to substantially cut harmful emissions into the atmosphere.

Colleagues, despite the current economic difficulties, I think the Gas Exporting Countries Forum has a good future ahead. I am sure that we have what it takes to develop effectively functioning mechanisms for protecting gas producing countries’ lawful interests.

Russia is ready for this partnership and hopes that we will work effectively and reliably together, supporting each other and supporting the global economy and its development.

Thank you for your attention. I want to thank you for coming to this summit here in Moscow. I hope that you will have the chance not just to speak together and discuss bilateral ties and the gas sector’s development, but also to see something of our capital city.

Thank you for your attention.

St Petersburg International Economic Forum plenary session

2015-05-12T16:19:36+04:00

Vladimir Putin and Federal Chancellor of Germany Angela Merkel took part in the St Petersburg International Economic Forum’s plenary session.

In his address to the plenary session, Mr Putin outlined the global economy’s main problems today, looked at the issues on the G20 agenda under the Russian presidency, and noted Russia’s efforts to stimulate economic growth and improve the country’s investment climate.

German Federal Chancellor Angela Merkel is attending the forum as a guest of honour.

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Speech at St Petersburg International Economic Forum’s plenary session

President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen, friends,

The moderator began with the problems the global economy faces today, and I will also say a few words about these global problems, but I am sure you would agree that it would only be right for me, as Russia’s head of state, to talk about our country’s problems and the solutions we propose.

The St Petersburg International Economic Forum has particular significance this year because it is also one of the big events taking place as part of Russia’s presidency of the G20. Incidentally, I propose that we hold next year’s St Petersburg International Economic Forum on the same lines, in the run-up to the G8 summit, which Russia will be hosting in 2014.

The cornerstone of the agenda we proposed for the G20 is to take practical and systemic decisions that will clean up the global economy and finance and get them into shape again through growth and development. We can do this by making broader use of advanced technology that improve the quality of life, financial investment, above all, investment in people and social development, and developing high value-added industry that will create effective and modern new jobs. These are the Russian presidency’s priorities for the G20’s work, and they are also Russia’s socioeconomic policy priorities.

The times call for decisive action. It was not by chance that this became the motto for this year’s forum. Russia’s top priority is to create the conditions for sustained economic growth. For many years we had a situation when prices for our main export goods rose fast and almost without interruption, and this made it possible for Russian companies and for the government too, to cover high expenses.

”Russia’s top priority is to create the conditions for sustained economic growth. What is needed from us now are discipline, the best choice of priorities, and the right balance between working towards long-term goals and addressing current and sometimes urgent tasks.“

But this situation has changed now. There are no simple solutions and no magic wand we can wave to change things overnight. What is needed from us now are discipline, the best choice of priorities, and the right balance between working towards long-term goals and addressing current and sometimes urgent tasks.

Economic growth must be based on the three pillars – increasing labour productivity, investment, and innovation. Progress in all of these areas can be achieved only by bringing down financial, management and infrastructure costs, developing human capital, and creating a genuinely competitive environment for doing business.

A comfortable economic environment is also essential for growth. This means macroeconomic stability, further decrease in the inflation rates, responsible budget policy and compliance with the budget rule that we introduced and that is already in effect. For our foreign guests’ benefit, let me explain that what this budget rule entails is that extra revenues generated by high prices for our energy exports get put into a reserve fund.

We will stick to the strategic policy we set, and I particularly want to stress that we will continue this policy regardless of the personnel changes at the Central Bank and among officials responsible for economic matters in the Presidential Executive Office and the Government.

Incidentally, today is Ms Nabiullina’s last day working in the Presidential Executive Office. As of Monday she’ll be the Central Bank Chairperson. I would like to thank her for our joint work in the Government in previous years, and in the Russian Federation’s Presidential Executive Office.

”Economic growth must be based on the three pillars – increasing labour productivity, investment, and innovation.“

Ladies and gentlemen, by expending considerable efforts, and thanks to a responsible financial policy, we have been able to significantly reduce inflation. There were years – and you are well aware of that – when we were swamped by inflation of over 30 percent. The year before last, it was at a historic low: 6.1 percent. Last year it increased a little bit and this year it rose a little more, to 7 and odd percent.

On the whole, these are reasonable figures for our economy. But nevertheless we still have a great deal to do in this regard. The fundamental conditions for long-term investments, so necessary for changing the structure of our economy itself, are being established, or in any case we have to establish them.

As I already said, inflation remains high. And we intend to reduce it further. Today an important element causing inflation, including inflation expectations, is so-called non-monetary factors, in other words increases in tariffs. The growth in tariffs has become an independent and significant factor outpacing inflation. It is a real cause of a slowdown in economic growth, as well as the rising costs and reduced competitiveness of our manufacturers. Obviously, tariffs can no longer increase at the same pace as before.

In this regard, I want to inform you of a decision we’ve taken: the growth of regulated tariffs of infrastructure monopolies will be limited, and should not be higher than the actual inflation rate of the past year. This policy will be fixed for five years, starting in 2014. However, we all understand perfectly well that the final price of electricity, for example, for the consumer or the shipper is not limited to regulated tariffs.

I would ask the Government to propose a mechanism enabling the final consumer price to be set at an acceptable level, and for it to be in line with specific parameters and principles.

”The growth of regulated tariffs of infrastructure monopolies will be limited, and should not be higher than the actual inflation rate of the past year. This policy will be fixed for five years, starting in 2014.“

And another thing: consumer opinion must be consulted when making decisions about tariffs. The procedure must be strictly regulated so that proposed limits do not simply consist of wishful thinking. I suggest that we create consumer councils within the Federal Tariff Service, infrastructure monopolies and regional energy commissions. I would ask the Government and the business community to submit proposals on this account.

I want to stress that our infrastructure monopolies have the capacity to cut costs. Every such company should establish a programme to reduce costs and improve efficiency. You need to invest money wisely, and attract financing for your investment programmes in an intelligent fashion. But reining in tariffs should not have a negative effect, namely less investment in infrastructure. Our key challenge in the coming years is to remove many infrastructure constraints that literally stifle our economy, and prevent us from unlocking the potential of entire regions of the Russian Federation.

What are the proposals on this account? We have been discussing the possibility of using our financial reserves. We have several; one is the National Welfare Fund. Its resources must be used for the benefit of the Russian economy and future generations. They must not be frittered away or spent on inexistent programmes, but rather channelled to projects that are reshaping the country and opening up new development prospects.

For this reason we took another important decision: to invest 450 billion rubles [about $14 billion] in profitable infrastructure projects; naturally, these investments will yield a return. In general, about half of the National Welfare Fund will be invested in projects in Russia.

A key preliminary condition is that private business must assess the viability and effectiveness of a project, that is become involved in co-financing. I know that investors are hugely interested in infrastructure projects, especially if the state is willing to provide guarantees, minimise the risks, and act as a co-investor.

My meeting yesterday with heads of some of the world’s largest investment funds confirmed this. I see that some of them are present here today. Yesterday we had a detailed and quite a long discussion on the subject. Today I am ready to offer you the role of partners in implementing the first three such projects that will receive National Welfare Fund funding, as I just said.

”The National Welfare Fund's resources must be used for the benefit of the Russian economy and future generations. They must not be frittered away or spent on inexistent programmes, but rather channelled to projects that are reshaping the country and opening up new development prospects.“

What are these projects? The first is a high-speed train link between Moscow and Kazan. In fact, this will be a pilot project for the route that will eventually connect the Central, Volga and Urals economic regions.

Second, it is a central ring road that will actually be built anew and run through the Moscow Region and the New Moscow area. Some sections of that road will be 30 to 70 kilometres away from the existing Moscow ring road. In fact, the Central Ring Road is a new project that will change the entire transport logistics in the European part of Russia, connect the country’s central regions, open up new development opportunities for them, relieve Moscow of transit transport, and improve the capital’s environment.

The Russian participants of our meeting today understand what this means for the people living in the centre of the Russian Federation. About 20 million people live in Moscow and Moscow Region. And if we add those in adjacent regions, regions that will eventually use this infrastructure, the number of people and economic actors increases many times over.

And finally, as a third project we are going to significantly upgrade the Trans-Siberian Railway and expand its capacity. Let me point out that it is one of the longest railways in the world: nearly 10,000 kilometres. A direct rail route across Eurasia will act as a key artery between Europe and the Asia-Pacific region. It will give a powerful impetus to the development of the Far East and Siberia. Our transport infrastructure is getting very close to fast-growing Asian markets.

All these projects represent our invitation to work together in Russia. Let me repeat that for our part we are ready to invest, and we are interested in reliable, strong and ambitious partners. I would ask the Russian Government to create specific mechanisms for implementing these projects in the near future. I want to emphasise that these are projects in the economic sense of the word, with concrete plans, and not simply wishful thinking.

I would also like to add that the new pipeline infrastructure in the Far East, with a branch to China, and access to ports in the Pacific, enables us to carry out large-scale projects in the Asia-Pacific market. This infrastructure has made it possible for Rosneft, one of our leading companies, to sign a major contract with China National Petroleum Corporation today.

This provides for oil deliveries of up to 46 million tonnes a year for the next 25 years. The estimated contract value in current market terms is absolutely unprecedented, $270 billion. There are other figures – such as $70 billion – being bandied about in the media, but that is only the up-front payment.

Another important project that gives Russia access to Asia-Pacific markets is the construction of a railway bridge across the Amur. The relevant agreement was signed with our Chinese friends on the sidelines of this forum. I would note that at the first stage the bridge’s design capacity will exceed 5 million tonnes of cargo a year, and will then increase to 20 million tonnes.

Ladies and gentlemen, our domestic investors’ resources should become the resources available for investments in development programmes too. Resolving this problem implies increasing confidence in the financial sector, but in turn this requires an adequate system of regulation.

The regulation of all financial institutions will be transferred to a mega-regulator, which will oversee the work of banks, as well as investment and pension funds. This mega-regulator will be established on the basis of Russia’s Central Bank.

Already in the near future a pension savings guarantee system that will be established on the basis of the Deposit Insurance Agency. By creating a robust safeguards system, we will be able to get rid of the restrictions that currently prevent us from investing pension funds in long-term projects.

We must also determine the amount of pension funds that will be used to invest in the securities of sustainable infrastructure projects.

I cited the National Welfare Fund figures: 450 billion rubles for three projects. But we understand that this is absolutely insufficient to fully implement them, it’s only seed money. At the next stage, fully secured pension savings should be used, as well as the investors’ funds I already mentioned. As these projects develop we will look for other sources too.

”Our domestic investors’ resources should become the resources available for investments in development programmes too. Resolving this problem implies increasing confidence in the financial sector, but in turn this requires an adequate system of regulation.“

We will continue to develop our stock market to bring it in line with all international requirements. Concrete steps are already being taken, and today the Moscow Stock Exchange is all ready for major placements and privatisations.

I will stress once again that privatisation of state assets will be done on Russian markets. By the way, VTB share placement [on the Moscow Stock Exchange] showed that it is both possible and appropriate to do so. This public offering was quite successful and the work was conducted correctly.

At the same time, we will privatise gradually, focusing on the quality of deals and by selling assets at really competitive, fair prices. In parallel, we will increase the transparency and openness of public companies regardless of their ownership structure, create mechanisms to protect the rights of minority shareholders, and improve the quality of corporate governance.

I would like to talk separately about state-owned companies. Often investors use the quality of such companies’ work as a proxy to judge the quality of governance in the entire country, and it is no secret that the conclusions they come to are sometimes unflattering. We intend to strengthen the state’s role in overseeing the companies it owns, to introduce clear performance management indicators, including with respect to companies’ capitalisation and financial return ratios. Decisions about whether to reward or punish companies, as well as personnel decisions, will be taken based on these indicators.

Of course, no regulation or performance indicators will replace the main thing, namely competition. Regardless of who owns a company, no preferential treatment in our economy, a normal market economy, will be allowed. We must create a competitive environment in both internal and external markets for goods and services, for both private and public companies.

As the first step in the field where competition seemed impossible before, we offer to gradually lower the restrictions on liquefied natural gas (LNG) exports. Increasing opportunities in the Asia-Pacific market, where LNG consumption is expected to double, allow us to make a decision on gradual liberalisation of LNG exports. This will create conditions to fully exploit the potential of offshore gas production as well as that in coastal areas.

”Privatisation of state assets will be done on Russian markets. In parallel, we will increase the transparency and openness of public companies regardless of their ownership structure, create mechanisms to protect the rights of minority shareholders, and improve the quality of corporate governance.“

I note with satisfaction that agreements on LNG exports have been signed on the sidelines of our Forum; NOVATEK, one of our companies, concluded an agreement with the China National Petroleum Corporation on cooperation in the Yamal LNG project. The agreement contemplates that the Chinese party will buy a 20 percent stake in [NOVATEK’s] Yamal LNG project, and a long-term contract for LNG supplies to China will be concluded. Gazprom is also preparing to sign contracts for delivering gas to Japan and the People’s Republic of China.

Following these contracts, major investments in the development of offshore production will be carried out with global leaders in the oil and gas industries, such as ExxonMobil, Statoil and Eni. There will also be investments in localising production and up-to-date equipment with global technology leaders such as General Electric.

Ladies and gentlemen, an important factor in determining the amount of investment, whether in a specific country or a particular sector, is taxes. Tax policy should also be working to develop business incentives, encourage investment, modernise existing and open new production facilities in Russia, and create high-quality jobs. Therefore, as we develop our tax policy we believe that even the government’s strict budgetary constraints are not justifications for increasing tax burdens for business.

This past year we have significantly improved tax administration. Judging by its quality, Russia has taken a major step forward in international rankings: it rose by 30 points at once, from 94^th to 64^th position. According to this indicator, we are ahead of many long-standing OECD members. But we do not intend to stop there.

Thus, already in the near future we should narrow the gap between tax bookkeeping and accounting. We have discussed this with the business community many times already, and I agree that we need to move in this direction.

We will continue to develop tax incentives for investment. This applies to both investments in fixed assets and those in securities. Of course, we are first and foremost talking about Russian companies, as well as projects in our Far Eastern regions. I should add that the new movable property of legal entities is tax exempt.

Equally important is that citizens get more involved in capital markets, and benefit from tax incentives for long-term investments. This will give citizens the opportunity to earn revenue from economic growth. Such measures are currently being developed as well.

At the same time, we are going to fight tax evasion and funds fleeing to offshore finance centres. Work to this effect is proceeding at both national and international levels. Yesterday I met with G20 Youth Summit participants. These young people are suggesting very original and rather strict ways of dealing with offshore tax evasion. I think that a lot of their suggestions could be adopted.

”Tax policy should also be working to develop business incentives, encourage investment, modernise existing and open new production facilities in Russia, and create high-quality jobs. Even the government’s strict budgetary constraints are not justifications for increasing tax burdens for business.“

Together with our G8 colleagues (Madam Merkel was also there), we talked a great deal about this very issue, and the need to fight tax havens at the global level.

As one measure to prevent offshore tax evasion, Russia plans to sign special bilateral agreements with offshore and low-tax jurisdictions, in order to ensure a broader exchange of tax information. Such agreements are being concluded increasingly often.

Our domestic legislation is already in line with the requirements of the OECD and the Financial Action Task Force (FATF) (incidentally, Russia will soon take up the chairmanship of this organisation). The State Duma has adopted a relevant law and it will be signed in the near future.

Major changes to criminal, banking and tax legislation with the aim of combating money laundering are being introduced. In this way oversight of and responsibility for such actions has significantly increased. Now credit organisations will be required to identify clients, disclose information on owners and clients that benefit from their services, and stop providing services if violations are uncovered.

We are also introducing tools for the tax control of such operations. We foresee a disclosure of information to tax authorities about individuals’ bank accounts. In particular, you know that we have made relevant amendments to our Tax Code and agreed to provide such information to our partners abroad, on a reciprocal basis naturally.

And another thing about the banking system: the most important factor determining business and investment activity is the availability of bank loans. This is particularly true for small and medium businesses, and here we have to take a number of measures, namely improve mechanisms for refinancing the banking system, take steps to promote competition in the banking sector, and expand the system of state guarantees for small and medium businesses.

We must also give banks the opportunity to reduce their risks, costs, and administrative expenses, including by eliminating redundant administrative procedures related to accounting. Particular attention should be paid to protecting creditors’ rights. Often banks do not only fail to recover their money if the borrower goes bankrupt – they themselves become debtors. At the same time, we must protect the rights of those using financial and insurance services, primarily of citizens who often have limited financial expertise.

We are also introducing tax control over such operations. Banks must disclose information about private accounts to the tax authorities. In particular, we have adopted amendments to the Tax Code and agreed to provide such information to our partners abroad, on a reciprocal basis.

Another point about the banking system: bank loans are the most important factor in business and investment activity. This is a particularly acute issue for small and medium-sized businesses, and it is necessary to take a number of measures in this area: to improve the mechanisms of refinancing the banking system, promote competition in the banking sector and expand state guarantees for small and medium-sized businesses.

”We do not divide those who set up production and create jobs in Russia into domestic and foreign businesses. We value those who work hard, and we strive to create not just good, but the best possible conditions for those people. We make every effort to make their businesses in Russia profitable, comfortable and secure.“

We must also allow banks to reduce their risks, costs and administrative expenses, including through the elimination of redundant control procedures for reporting. Particular attention should be paid to the protection of creditors’ rights. Often banks cannot recover their money in case of the borrower’s bankruptcy, and even become debtors themselves. At the same time it is necessary to provide protection for the consumers of financial and insurance services, primarily individuals, many of whom do not always have sufficient knowledge about financial services.

Another point I wanted to mention is that we have recently established the Popular Front for Russia social movement. I suggest that this movement should think about becoming the platform for protecting borrowers’ rights. Also, I ask the Russian Popular Front to take charge of public control over government and state monopolies’ procurement. It is vital to ensure the transparency of resources allocated for priority projects.

Ladies and gentlemen, our key priority is to improve the business climate. Everyone must join in this effort, from the mayor of a small town to the federal minister, from the district police officer to the head of law enforcement agency.

The quality of governance at all levels of authority is becoming a decisive development factor, which is why the state authorities and officials at all levels must set objectives that are clear and understandable to the public. The results of their work are evaluated, as in business, in terms of personal efficiency. I stress that our joint actions and motivations fully determine our business environment and the investment image of the country as a whole.

We do not divide those who set up production and create jobs in Russia into domestic and foreign businesses, into theirs and ours. We value those who work hard, and we strive to create not just good, but the best possible conditions for those people. We make every effort to make their businesses in Russia profitable, comfortable and secure. We are confident that the measures to improve the business climate will be fully realised.

We have also done a great deal to eliminate prosecutorial bias in the work of law enforcement and judicial systems, to eliminate the reasons for commercial disputes to be turned into criminal prosecution. Together with the business community and the Parliament, we have made great efforts to liberalise the criminal law.

In order to ensure uniform approaches to the resolution of disputes involving both individuals and organisations, as well as disputes with state authorities and local governments, we propose to combine the Supreme Court of the Russian Federation and the Higher Arbitration Court, and to achieve that it would be necessary to amend the Russian Constitution. That is a serious issue, and we must consider and analyse all the aspects carefully.

I ask the Presidential Executive Office, representatives of the judiciary and the Parliament to join efforts in this work. I ask you to prepare this issue in time for consideration during the autumn session. The draft law will be submitted to the Parliament in the near future.

”The social dimension of the economy will play an increasingly important role. We must see real changes in the lives of every individual, every family. That is what we are working to achieve.“

In Russia, the office of the Commissioner for Entrepreneurs’ Rights has been introduced recently, both at the federal and regional levels. The Commissioner has the practical powers to defend business interests in relations with the state authorities.

These powers extend as far as suspending local government acts and are enshrined by law. By the end of this year, pubic organisations, including business associations, will have the right to file lawsuits on behalf of an unlimited number of its members. In fact, influential business associations will take on the role of public ombudsmen along with the Commissioner for Entrepreneurs’ Rights.

Another fundamental decision I would like to report to you: a month ago, I had a meeting with representatives of leading business associations. A proposal was made to declare an amnesty on economic offenses, especially since Russian legislation radically changed in recent years and many people simply would not have been convicted if the modern legal norms were in force at the time.

Of course, we should not be hasty in matters of amnesty. We cannot allow people who committed serious crimes against the state, individuals and property to walk free. For example, corporate raiders, counterfeiters or those who tricked people by taking away their homes. It would also be unacceptable to pardon those who committed crimes involving threats of violence. The draft resolution on the amnesty has been finalised by the business community and State Duma deputies. I can give my support to this version and ask the State Duma to consider and pass it. I hope that this will be done in a short time, before the summer break.

According to the draft resolution, the amnesty will apply to those who have committed economic offenses, for whom this is a first conviction, and who agree to reimburse or compensate for the damages or losses to the victims. The criminal records of these people will be expunged.

I stress that the decision on the economic amnesty will not only restore justice and will not only be an act of humanity in relation to specific businesspeople. This is an opportunity to relaunch a wide range of public relations, the work of our law enforcement and judicial systems, to realise our plans to radically expand the space for business initiative and in general strengthen public confidence in business.

I am convinced that the development of the state is possible only if there is public respect for private property, the values of economic freedom and entrepreneurial work and success.

Ladies and gentlemen,

In conclusion, I would like to return to the central issue of human resources. We are implementing a project aimed at the conservation of the nation, investing in human resources and personal development. We are paying special attention to demographic and healthcare programmes, making serious improvements in the social sector and all levels of education, including higher education. We are aware of the demographic challenges we will face in the coming years.

Most importantly, we realise that the social dimension of the economy will play an increasingly important role, and therefore the abstract figures of the gross domestic product and industrial growth, despite their importance, cannot be the ultimate goals of our policy. We must see real changes in the lives of every individual, every family. That is what we are working to achieve, and I invite you to join efforts with us.

Thank you very much for your attention.

Meeting with Business 20

2013-06-20T21:07:30+04:00

Vladimir Putin met with representatives of the Business 20 Summit, an international business forum with the participation of companies and business associations from G20 member states and partner countries, as well as leading international governmental and commercial organisations.

The meeting took place on the sidelines of the St Petersburg International Economic Forum.

* * *

Excerpts from transcript of meeting with the Business G20

President of Russia Vladimir Putin: Ladies and gentlemen,

It’s very good to see you all. I am happy to welcome the B20 participants to St Petersburg, on the first day of the St Petersburg International Economic Forum. We always value the opportunity to discuss ongoing issues directly with the business community, especially since there are quite a few of them at present.

I would like to note that our meeting today, and in general, the work of the B20 at the St Petersburg Forum are of particular importance, bearing in mind that Russia will host the G20 Summit this year, very soon, in just two months, and it will take place near here, in St Petersburg. Therefore, such direct dialogue with the business community is extremely important to us.

Just recently, in Moscow, I had the pleasure of meeting with G20 representatives from non-governmental organisations, who had also analysed the situation and presented their proposals for the leaders. I must say that almost all of these suggestions somehow resonate with the challenges that you focus on in your research and proposals to the leaders of the 20 strongest global economies.

The concern that the world leaders feel about the processes unfolding in the world is obvious because global growth is slowing, or it is unstable in any case. Unfortunately, there are very few positive signals and numerous different risks.

2012 was the most difficult year for the global economy since the crisis of 2008–2009. Amid growing national debt, global GDP growth in 2012 was 3.2%. The figure was a little higher in Russia, at 3.4%. As for the debts, to our great regret, they have continued to grow at a remarkable pace. The average national debt in all developed economies stands at 109.3% of GDP, while in 2011 it was only 104%. In the G7 countries, the national debt is 125% of GDP, while in 2011 it was 120%. According to the International Monetary Fund, growth will continue in the current year and will come to about 3.3%.

We are all aware of the alarming unemployment figures. About 200 million people among the economically active population in the world are unemployed. In Europe, the unemployment rate exceeds 25%. There is a very difficult situation in South Africa. And unemployment among young people is a special subject, which I am sure you are familiar with and have discussed at your meetings. Youth unemployment is over 40% in Italy and Portugal, 56% in Spain and over 60% in Greece. That is a tragedy, a highly dangerous situation, not only for the economy but also for the social and political spheres.

Political developments are a separate issue, beyond the scope of today's meeting. Many experts are talking about this now. During my visit to the UK for the G8 Summit, I had an informal business dinner with British experts. Many of them are wondering about the contribution of today's political institutions to the economic crisis. This is a separate topic that we all need to think about.

Of course, the business community is responsible for the lion's share of investments and new jobs in the modern world. That is natural and could not be otherwise. The confidence of businesspeople and their plans largely determine the standard and quality of life in their country, and ultimately the stability of entire nations.

In this regard, I note with great appreciation that the B20 agenda of this year includes such issues of global significance as infrastructure development and increased investment in human resources. This is reflected in the materials that have been provided.

In this context, you believe that education is paramount, and raise several other issues. I would like to say a few words about it.

Efforts are ongoing in most of these areas at the official G20 level. That is why the Russian Presidency in this association is aimed at promoting an active dialogue with the business community, that is to say with you, ladies and gentlemen, to ensure the utmost transparency in G20 activities. To do this, we conduct multilateral consultations with the business community. We expect to make the maximum use of your research and proposals.

Today the business summit is holding an open discussion of the first draft of your recommendations for the leaders. Mr Shokhin has passed on the Green Book to me. That’s a good picture. It shows raised drawbridges, a symbol of St Petersburg. But what we need to think about together is how to lower these bridges, that is, how to close the gaps in the global economy and the G20 countries, because the most important challenge is to remove barriers to investment and trade, and you highlight this point in your recommendations. The world trade is also slowing down, and we feel it.

I hope the White Book with the final proposals for inclusion in the G20 Summit documents will be ready soon. As I said, the event will be held here, and we will certainly try to take into account all of your proposals.

I want to go back to some of your ideas and suggestions that are based on the analysis you have conducted. Before we start our discussion, I would like to ask a few questions, the answers to which could become a basis for our conversation.

What financial instruments are most important for economic growth over the next several years? Most people’s answer is flexible financial regulation. First of all, I want to understand whether there are people here who feel regulation is unnecessary (indeed, this is a fundamental question). And if there is no one here who thinks we do not need any regulation, it means there has been an enormous shift in the consciousness of the business community, an enormous transformation.

But in that case, we need to define what is flexible regulation? Where does flexibility end and some sort of dictate from the regulating authorities begin?

What are the main priorities in trade? Is it to extend commitments in the fight against protectionism after 2014? My question to you is entirely concrete, and it concerns the G20’s work specifically. What do you mean – work within the WTO framework, further discussions within the WTO framework, or just extending previous temporary arrangements and agreements? Do you suggest simply prolonging them?

This is a serious matter because last time, in Los Cabos, there was an argument about it between developed and developing economies. Representatives from developed economies said, “Let’s stop prolonging everything and reach some final decisions within the framework of the WTO.” I would like to hear your option. This is one of the fundamental questions.

Another question: what measures do you feel are most effective in creating new jobs and developing human capital? Education? I suppose this is clear, but we need to agree on everything.

And another issue: what actions do you see as priorities in fighting corruption? A fair and transparent state purchase system? I just want to let you know this is a problem we are trying to resolve as efficiently as possible in Russia. If you have any specific recommendations on this type of transparency, I would be very grateful.

Furthermore, what are the key success factors for stimulating private investment in infrastructure? Removing limitations on free flow of capital with the aim of stimulating cross-border investment.

I would like to let you know, and you have probably already heard this for yourselves, that regulating tax legislation and deoffshoring the global economy were among the main, key topics during the G8 discussions in the United Kingdom.

So my question is: how will removing restrictions on the free flow of capital correlate to deoffshorisation and the fight against tax evasion? Do you feel there are any problems with this? Are there any complications or contradictions? If so, what are they? I just want to hear your opinion.

And finally, how confident are you that the recommendations will be transformed into concrete decisions and actions? Mr Shokhin [president of the Russian Union of Industrialists and Entrepreneurs and B20 chairman] said that 15 percent of people replied they were “fully confident,” and another 56 percent replied they were “confident to some extent.”

Mr Shokhin was somewhat sceptical when talking about this, specifically stressing the “some extent” part, but I suggest we focus on the other parts, the words “fully confident” and “confident.” And that accounts for nearly 70 percent. I think we need to look at these issues with more optimism.

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(On financial regulation) I agree with both my Russian and my American colleagues here. The point I want to make is that, first, we understand the fears, the Russian Central Bank’s fears in this particular case, about anything that might give rise to financial bubbles and fill markets with products for which there is no demand.

My Russian colleagues know that I had a business meeting, more of a friendly conversation really, with Russian business leaders yesterday, and we discussed this issue too. We discussed the lending issue and also talked about interest rates, which are quite high in Russia at the moment. But I want to touch on a slightly different aspect – the relations between different countries and regions.

I met yesterday with the Dutch Prime Minister. The Netherlands is a small but highly developed and rapidly advancing European country, and also one of Russia’s biggest trading partners. Bilateral trade between our two countries comes to more than $82 billion, which is a sizeable figure. So, what’s the problem? The problem is that Dutch banks must comply with particular rules, which means that if a Dutch bank (incidentally, I haven’t told my Dutch colleague about it) invests more than 5 percent in the Russian economy it faces much higher reserve rules. In effect, this limits the investment process, and this is something I want to draw to your attention.

We will discuss this at the G20 too of course, but I hope that in your everyday practical work you could also nudge your regulators into lifting these kinds of completely unjustified restrictions. We will do this at the government level of course, but I think the business community also has an interest in doing away with these kinds of absolutely unfounded restrictions. We need to get rid of them.

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(On protectionism and tariff policy) It does not cost much to abolish non-tariff barriers, but many countries think that abolishing these barriers will end up costing them dearly. It isn’t hard to get rid of them – abolishing them doesn’t cost a penny, but some countries think they will suffer big losses as a result.

I understand it when business, especially active and forward-looking business such as Russia’s metals sector, makes these calls to be allowed to move freely without borders. We support this desire of course, but the issue does not rest with us alone. If we take the G20, for example, there are various economies represented there, including economies that consider themselves developing economies. It was hard enough already at the Los Cabos summit to agree on extending the earlier commitments regarding non-protectionist measures. Some countries insist that we either abolish everything right now, or we come to long-term agreements within the World Trade Organisation framework. I can tell you that all of this was the subject of much discussion. We agreed then to extend the earlier commitments, but what will the next step be? Discussions in the WTO, unfortunately, have not been getting anywhere so far.

In this connection I have for you not so much a question as a proposal and request. I’d like you to think about how you can all get your countries’ experts involved so as to help us reach a balanced decision. It’s one thing to say, “You know, it would be great to get rid of protectionism.” We know that this would be a good thing. There’s no need to convince me of the benefits here, because I myself am looking for ways to support Russia’s metals, chemicals, and power industries, so that they don’t run into problems and have new investigations opened into their activities. Of course we would like to put an end to all of this. But we need to find solutions that would be acceptable for our partners from the developing economies too. It’s absolutely crucial to strike the right balance of interests.

I therefore turn to you, colleagues, as people from leading companies, banks, and consulting firms. I know that this work is not easy of course, but if you could get your experts involved, finance their work, which wouldn’t cost you much at all, and draft proposals, these really would be valuable recommendations and could be of great value indeed for the G20 leaders’ work.

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I stress again that creating new jobs is one of the Russian presidency’s priorities. I completely agree with you of course that we need not just any old jobs, but jobs that meet today’s economic development and labour quality demands. You have probably heard about how Russia is acting on the business community’s initiative to pursue a very ambitious programme of creating 25 million new jobs. We will not be creating all of these new jobs from scratch of course. In some cases we will re-profile existing jobs, and in other cases we will create completely new jobs.

This is not just an ambitious but also extremely difficult undertaking, but I think it is a realistic objective in Russia’s situation, given that economic modernisation is our absolute top priority. The economic modernisation process will create new jobs in any case. In other words, as we work on our top priority goal, we will be working on job creation at the same time. Of course this is an issue that we need to pay more attention to at the international level too, working through the international community.

There’s a point I want to make in this respect. I mentioned that some countries, South Africa, for example, are facing big unemployment problems. We have a whole programme underway in Russia for training and re-training personnel from countries with developing economies. We are steadily increasing the number of students we take from these countries. Their studies are paid for with Russian federal budget money, and we plan to continue this programme in the future.

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(On offshore zones) The point I want to stress here is that all government leaders I’ve had the chance to talk to all support ending the offshore system. Everyone agrees at least that transparency is the best remedy for ailments of this sort, and everyone supports disclosure of end beneficiaries. This is the biggest issue to sort out. I want you all to know that this is the direction in which the world is moving now. This is where we are heading.

Many countries, even developed economies, say that they and their tax systems suffer from offshores and tax havens. Even the US economy has this problem, and that is why President Obama talked about the proposals and ideas that they are trying out in the US tax system. I think those are interesting ideas, and you would also do well to take a look at what they are doing. They have introduced a demand to make up the difference between the tax rate in the country where they are paying taxes, and the tax rate in the United States itself. There are a lot of proposals in this area, not just from the US President, but from other leaders too. Whatever the case, the global economy is moving in this direction now.

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I can say right away just how we will go about our work [in the G20].

Once we have received your recommendations, we will give the relevant instructions to Russia’s sherpas. They are here and listening to all we are saying now. They will work through these questions with their colleagues from the other G20 member countries. We will transpose your recommendations to a practical dimension. I cannot say yet exactly in what form and volume it will all appear in the final documents. As you know, all issues are decided by consensus, and we cannot and have no plans to impose anything, but we will definitely put forward your ideas for discussion and will include them in the final document in one form or another. You can rest assured on this point.

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(On the energy market) I want to say on this issue that no one should add new problems or difficulties to this very important and responsible sector.

I note too that we need absolutely stable decisions and laws in this sector. We need to be able to guarantee the fundamental principles, one of which is that laws do not have retroactive force. Laws that we pass today apply only from the moment they come into force and only to the future, not to the past. To act otherwise would be to destabilise the whole situation, and I think that in a sector like energy this would be very dangerous.

We are engaged in ongoing dialogue in this sector, and I do not hide the fact that our debates continue with our European partners, who want to implement the Third Energy Package, which they adopted after our companies signed long-term energy supply contracts. Now they want to apply these new rules to contracts signed earlier. In our view, this is not the right approach and does not comply with civilised behaviour. But we hope to find solutions to this problem through dialogue between partners.

This is so very important because we are already putting billions into infrastructure projects only to then discover that we cannot use the infrastructure we worked so hard on developing because of legal decisions that have been taken. I think this is a very counterproductive situation. This is something we need to think about now and in the future.

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Before we part ways, let me add a few more words.

Our meetings have become something of an official event now. That is not a bad thing overall and creates a business-like atmosphere. The point I want to make is this. We went through the 2009–2010 crisis, and we see that the global economic situation is not at its best today either. There are a lot of risks and uncertainties, though we are all hoping for an improvement of course. But none of us really know for sure how things will develop. Let’s hope that all of the problems we have faced over these last years and are still facing today are the worst of it all, and that from here things will only get better. This is our hope, but we cannot be certain that this will really be the case.

It would be wrong, harmful and dangerous to add fuel to the fire and overdramatize things, but it would be equally dangerous to underestimate the problems. You can explain the situation in various ways. Some say that crisis was already in the making and would have come a lot earlier if it hadn’t been for the Soviet Union’s collapse, which opened up new markets in Russia, the post-Soviet area and Eastern Europe. Some say that the technological development and systems in place today no longer meet the demands of developed countries’ populations, or that existing political systems are unable to resolve the tasks that citizens want their governments to address today. There are many questions, but far fewer answers. We talked about the global economy’s complexities just now, and about how one of the biggest problems in the world today is the high unemployment level. As I noted before, youth unemployment in developed European countries is as high as 40, 50 or 60 percent.

You probably know that Russia’s unemployment rate is currently at a record low of 5.5 percent. We had GDP growth of 3.4 percent last year, which is equivalent to the global level. We have lowered the forecast for this year, though the IMF, which is fairly optimistic about the Russian economy, is forecasting that our GDP growth will remain at the global growth level. Our inflation rate is still high, but it is lower than at any other time over our recent history, and we will continue to keep it on a downward track. We have only minimal levels of debt. Our foreign debt comes to 2.5 percent of the Russian budget. This is compared to debt levels of 100 percent in the Eurozone and more than 100 percent in the United States. The difference is huge.

Overall, the Russian economy has good prospects and is totally healthy. But today’s situation still has us very worried even so, because we know that if the global economy goes into contraction, our economy will inevitably feel the impact too.

I am saying all of this because it is only through a common effort that we can find effective solutions to this situation. It would be extremely dangerous, given the complexities of the problems we face, for us all to shut ourselves away in our own backyards. It is very difficult to avoid all of these problems, but only if governments and business join forces and work together can we address and resolve the issues. You carry huge responsibility. I hope very much that this positive work together will continue over the years to come.

Thank you very much for taking part.

Meeting with US President Barack Obama

2013-06-17T23:50:15+04:00

Vladimir Putin met with President of the United States of America Barack Obama on the sidelines of the G8 summit.

One of the key topics the two leaders discussed was the Syrian conflict. Also, the presidents of Russia and the US discussed the situation on the Korean Peninsula and Iran’s nuclear programme, and touched on missile defence related issues, reduction of nuclear armaments and non-proliferation of weapons of mass destruction. Following the meeting, Vladimir Putin and Barack Obama issued several joint statements.

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President of Russia Vladimir Putin: We’ve had talks with the President of the United States on almost all the matters: we started with the economy and discussed it very substantively. We agreed to launch new mechanisms for cooperation in this area, including at the level of the Prime Minister of the Russian Federation and Vice President of the United States of America. We talked in detail about security issues – strategic security between our two nations and throughout the world overall. I think we have the opportunity to move forward in the most sensitive areas.

Naturally, we discussed problem spots on the planet, including Syria. There are still some aspects where our positions do not align, but we are united by a common aspiration to stop violence, stop the growth of victims in Syria and resolve the problem by peaceful means, including with the help of talks in Geneva. We agreed to push forward the peace talk process and push the parties to the negotiations table, organise talks in Geneva.

We express hope that after the elections in Iran, there will be new opportunities to resolve the Iranian nuclear problem. We will try to do that bilaterally and within the framework of the international negotiation process.

Naturally, we spoke about the problem of North Korea. We agreed to bolster our cooperation in all these areas.

I am very grateful to the US President for the detailed discussion and for the very sincere exchange of opinions we had today.

President of the United States of America Barack Obama: I had a very useful conversation with President Putin, and I began by thanking him again for the cooperation that was provided in dealing with the tragedy of the bombing at the Boston Marathon. We have a shared interest in countering terrorist violence, and we are continuing to strengthen our cooperation on this issue, including as we welcome Russia hosting the Winter Olympics in Sochi.

As President Putin indicated, we had extensive discussions about how we can further deepen our economic and commercial relationships. With Russian accession to the WTO and the removal of Jackson-Vanik, I think we’re poised to increase both trade and investment between our two countries, and that can create jobs and business opportunities both for Russians and Americans.

Our discussions on North Korea and Iran were very productive, and we both agreed to consult closely on the North Korean issue. And on Iran, we both expressed cautious optimism that with the new election there, we may be able to move forward on a dialogue that allows us to resolve the problems with Iran’s nuclear programme.

With respect to Syria, we do have differing perspectives on the problem, but we share an interest in reducing the violence, securing chemical weapons and ensuring that they’re neither used nor are they subject to proliferation and that we want to try to resolve the issue through political means if possible, so we will instruct our teams to continue to work on the potential of a Geneva follow-up to the first meeting.

And finally, we had a discussion about the fact that as the two nuclear superpowers, we have a special obligation to try to continue to reduce tensions, to build on the work that we did with the New START and to lead the world in both nuclear security issues and proliferation issues. And one of the concrete outcomes of this meeting is that we’ll be signing the continuation of the cooperation that was first established through the Nunn-Lugar programme to counter the potential threats of proliferation and to enhance nuclear security. And this, I think, is an example of the kind of constructive, cooperative relationship that moves us out of a Cold War mind-set into the realm where by working together, we not only increase security and prosperity for the Russian and American people, but also help lead the world to a better place.

And finally, we compared notes on President Putin’s expertise in Judo and my declining skills in basketball. [Laughter.] And we both agreed that as you get older, it takes more time to recover.

Vladimir Putin: Mr President wants to relax me with the statement of his declining skills. [Laughter.]

Meeting with G20 Finance Ministers and Central Bank Governors

2015-03-20T18:01:02+04:00

Vladimir Putin met at the Kremlin with the Group of Twenty Finance Ministers and Central Bank Governors. Russia is currently chairing the G20.

The situation in global finances and the G20 countries’ actions to stimulate global economic growth and restore confidence in financial markets were the main subjects of discussion.

The G20 summit will take place in St Petersburg on September 5–6.

For more information on Russia’s presidency of the G20 visit www.g20russia.ru.

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President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen, friends, colleagues,

It is with pleasure that I welcome to Moscow the Group of 20 Finance Ministers and Central Bank Governors.

We see today’s event as a major stage in the preparations for the upcoming G20 forum that Russia will chair. The global economic situation clearly calls for our responsible and consolidated efforts. The time when crises were local and isolated in nature is in the past now.

Financial problems in a number of the world’s big economies are affecting the global economic situation. It is not possible to shut oneself off and stay outside the global economic processes. No country can face today’s challenges alone.

This places tougher demands on our global governance institutions and calls for closer coordination of economic policy. Adjusting the institutions and creating effective new instruments for eliminating the imbalances that have built up and stimulating growth in all parts of the world – these are the main tasks for the G20 and for Russia’s presidency.

When the crisis was at its peak the G20 countries agreed on coordinated economic support measures, both at the individual country and international organisation level. It was the G20 that brought in tough restrictions on trade protectionism and gave a new impulse to trade talks, drafted new financial regulation rules, and began talks on reforming the international financial organisations, in particular the IMF.

The G20 has concentrated a lot of attention on facilitating sustainable development over these last years, promoting green growth, which focuses above all on high environmental standards and people’s quality of life.

The main challenge today is whether the G20 will be just as effective in resolving long-term development tasks, and whether we can continue a policy that will pull the global economy out of stagnation and uncertainty and set it on a steady growth track.

Russia proposes focusing the G20’s agenda on the forum’s main tasks: achieving balanced growth and creating jobs. Our priorities are to encourage investment, increase transparency, and make regulation more effective. These priorities make it possible to unite all areas of the G20’s work in order to reach the set objectives.

In the context of these priorities, we propose discussing development of capital markets and the financial investment instruments used in global trade, and also examining regulation of the financial sector and its infrastructure at the global and national levels.

Employment and job creation, including for vulnerable groups of population, are also important items on the agenda.

I hope that your meeting with the labour ministers in July this year will be of help in resolving this issue. This meeting is one of the Russian presidency’s innovations, and I want to tell you that it was in response to trade union leaders’ requests. They came to me with such a proposal. We discussed the matter together at Los Cabos with the other G20 leaders, and in principle no one had any objections to starting work along this track.

Overall, as we see it, all of the issues on the agenda we have proposed are closely interlinked and complement each other. For example, creating a good environment for investment growth automatically includes adjusting financial instruments, carrying out structural reform, and fighting corruption.

The investment issue is also closely linked to another of our financial priorities – managing state debt. The situation in this area is complicated today. The debt burden already exceeds GDP on average in the developed economies. It is not fully clear how countries will service their debt. This makes investors cautious of course, and countries end up in a vicious circle of debt and economic crises.

It is our firm belief that only by following a clear and transparent policy to manage fiscal deficits and state debt can countries win the necessary confidence from investors. Investment, transparency, and effective regulation are thus issues that concern all items on our agenda.

Colleagues, I note too, that the agenda Russia proposes aims to continue the work that was already begun. We will continue to implement the agreements on creating a fairer and more risk-resistant financial system. In this respect I think that the Seoul G20 summit’s decisions on reforming IMF voting quota distribution should be carried out.

We hope that the G20 will agree at the upcoming Russian summit on a new formula for calculating quotas that will fully reflect the balance of power in the global economy today.

Other important steps include introducing new banking standards and tightening supervision of financial institutions of global systemic significance and the shadow banking sector, and also developing the Financial Stability Board’s potential as a full-fledged international body.

I stress the point that the issues Russia has proposed reflect Russia’s own domestic social and economic priorities. This is something I discussed yesterday with our colleagues from the OECD.

We have intensified our efforts over these last years to make investment growth the main driving force in our economy. Our structural reforms are making good progress. Together with the business community we are pursuing a national business initiative to follow ‘roadmaps’ for improving the business climate, reduce administrative barriers, and simplify access to financial resources. At the same time, we are continuing to develop our stock market infrastructure and are putting in place good conditions for institutions that can put ‘long money’ into the economy.

One of our promising initiatives is the project to create a mega-regulator that will merge the Russian Central Bank and the Federal Service for Financial Markets. The new regulator will be tasked with raising financial regulation standards and strengthening market actors’ confidence. We also continue to pay full attention to budget stability issues, of course. Russia has one of the lowest state debt levels in the world.

We continue to target inflation. Inflation in Russia is relatively high compared to many countries, including your own, but last year and the year before we nonetheless managed to bring inflation down to its lowest ever level in the last 20 years.

We hope to continue this policy this year and in the medium- and long-term perspective. We will keep to a very balanced, responsible and conservative policy in state finance issues.

In this context I note that the so-called ‘budget rule’ went into effect in Russia this year. It is designed to make our budget less dependent on oil prices. We are aware of our problems, and we know that one of the big problems in this area is the high oil and gas deficit. We will work consistently on bringing it down and making the budget process more predictable.

Colleagues, over the next two days you will discuss the main areas in budget and financial policy in the world’s biggest economies. The G20 is above all your forum, your organisation. It was established so as to give specialists of your level and class the opportunity to get together, discuss the issues, and propose solutions to your countries’ leaders.

I wish you fruitful work. I hope that your discussions will produce the effective solutions and recommendations that we need and that will form the foundations for work at the G20 summit in St Petersburg in September.

Thank you for your attention.

<…>

Ladies and gentlemen, I want to ask you a question.

If anyone present here would like to add something or voice any ideas, present suggestions on how to organise our joint work for the upcoming period until the heads of state and government meet in St Petersburg, or make a comment on the topic at hand, please, go ahead. Nobody?

Ok. Then I will summarise some of the points of this brief discussion. Indeed, this was not so much a discussion as a series of short presentations, and I am very grateful to you for preparing them. I think the World Bank Chairman expressed some very good ideas that should help us find the right direction in our work, and in general, his words sent a very good signal. He said, “The worst part of the crisis is behind us.” Like we in Russia say, may your words come true, Mr Chairman! Let’s hope that the worst part of the crisis is truly behind us, as you just said.

In this respect, in concluding today’s brief meeting, I would like to say the following. Naturally, the main political decisions at international forums, and in each of our nations, are taken specifically at the political level by presidents and prime ministers. But when it comes to the economy, a leader – any president or head of government or prime minister – cannot make decisions without relying on your professional opinion regarding a whole range of very sensitive professional, special issues.

It is unlikely that any of my colleagues – heads of state or government – will allow themselves to argue with you on purely professional issues, and those are precisely the issues that usually underlie the political decisions. I want to stress that we are all placing high hopes on your joint work.

I will express my own position on a key matter. I agree with our German colleague, who stated that what is happening now is a problem of trust. But this problem stems from the systemic failures in the previous regulatory system. And investors will never be satisfied with any additional money injections or more printing presses, if they do not see that the conditions that would prevent any new crisis developments from happening have been created.

And naturally, first and foremost, we need to think about how to do this. At the same time, in making decisions, national leaders – prime ministers, presidents – always have to take into account two aspects: the necessity and the ability; the necessity to make particular decisions and their ability to implement these decisions based on political, social, and other factors.

Thus, I call on you to not just think about what absolutely needs to be done from a professional point of view, but also consider what can be implemented given the conditions of our life today: in each of our nations and in the global economy overall. This should be based on the principles of transparency and justice – justice in international relations in the economic sphere, and justice in the social sphere between certain groups of population in our nations. I would like to wish you success in doing so.

Thank you very much for coming to Moscow and thank you for your efforts to address urgent and very difficult issues.

Goodbye and good luck!

VTB Capital RUSSIA CALLING! Investment Forum

2012-10-02T17:59:56+04:00

Vladimir Putin took part in the plenary session of the VTB Capital RUSSIA CALLING! Investment Forum.

The Forum is taking place in Moscow on October 2–4, 2012. Among the main topics for discussion are the strategic priorities of the country’s development in terms of changes in global economic markets, the creation of the Common Economic Space and Russia's accession to the WTO.

The RUSSIA CALLING! Forum has been held annually since 2009 and aims to develop an effective dialogue between the Russian business community and international investors, as well as to attract foreign investment in the Russian economy.

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Excerpts from transcript of the RUSSIA CALLING! Investment Forum plenary session

President of Russia Vladimir Putin: Good afternoon, ladies and gentlemen,

I am very happy to welcome once again to Moscow representatives of major companies, business leaders and investors.

Despite its youth, the forum organised on the initiative of VTB Bank has become a significant event in the economic life of our country and in the international calendar of such events. It serves as a useful platform for open discussions on complex economic issues and elaborating new approaches to the investment policy.

The name of the RUSSIA CALLING! forum reflects the nature of our policy of openness and partnership. Our goal is to maximise the profitability of investing in Russia, working in Russia, creating new jobs and setting up production here. We see this as a real indicator of our country’s competitiveness and the efficiency of all major state and economic institutions.

”The main question is what to do first to transform Russia into a centre of attraction for foreign and not only foreign but first and foremost our own domestic investments and capital, to make sure it obtains the necessary resources for modernisation and further economic growth.“

The main question is what to do first to transform Russia into a centre of attraction for foreign and not only foreign but first and foremost our own domestic investments and capital, to make sure it obtains the necessary resources for modernisation and further economic growth.

Today, Russia has an impressive potential for sustainable development. It is among the world leaders in terms of key macroeconomic stability indicators. National debt, as you know, is only about 10% of GDP, and the debt to foreign investors, our lenders is only 2.5%. Foreign currency reserves at the end of September reached $522 billion. Inflation fell below 7%; we repeatedly cited these figure: 6.1% last year, the lowest inflation rate in 20 years. We expect it to fall to below 5% by 2014. Keeping inflation down remains one of our top priorities.

We did not restrict the freedom of capital flow even during the global economic crisis, although the temptation was there and experts suggested this course of action. We could have introduced such restrictions to protect our interests, but we chose not to do so because we believed that tactical losses could become strategic, and it is better to wait it out, to gather strength and hold out in this difficult situation.

Investment inflows in the period from 2009 to 2011 amounted to 3% of GDP. This is above the average global level. In comparison, this figure in European countries, Brazil, China and India did not exceed 2% of GDP in the same period. Moreover, the main sources of investment in Russia were Germany, France, Sweden and the Netherlands, in addition to the traditional offshore zones. We realise that investment from the Netherlands and Cyprus is the repatriation of Russian capital, but that is good as well.

Today, despite the slowdown in almost all neighbouring regions, our economy continues to grow. According to the Economic Development Ministry, GDP grew by 4% in the first eight months of 2012, and experts believe that this trend will continue on average over the next three years. Although lower than before the crisis, this growth is much more balanced and higher quality. Actually, just the fact that there is any growth at all is a positive development because we don’t see it much in the current global economic climate. I want to emphasise that this growth is not based on a steady increase in oil prices or amassing foreign debt by banks and companies. That is, this growth is not based on oil revenues and debt bubbles. Naturally, I will admit that the commodity market has been doing well and that has had a positive impact on our economy, but it has not been booming either.

However, we also take into account the serious risks associated with the uncertain situation on foreign markets. We cannot but be concerned by the clear signs of recession in some European countries – and the European Union, as you know, is our largest trade and economic partner: more than 50% of Russia’s trade is with EU countries. Industrial production and GDP have slowed down in China and social tension is growing in a number of countries, which is a negative phenomenon in itself but it also has a harmful effect on the economy.

We certainly hope that the measures taken by our partners will improve the situation. For our part, however, will be do our utmost to protect our interests against any negative developments in the European and in the global economy.

Thus, in drafting the budget for 2013–2015, we implemented the budget rule for the first time. We began to work on it two years ago and discussed it at length. In fact, the main parameters of this rule were worked out by the end of 2011, and now the Government has finalised and adopted it.

The budget rule logic is based on the premise that the dependence of the Russian budget on oil prices must decrease. This will be a stable long-term trend. Over the next three years, the deficit of non-oil and gas revenues will fall from 10.5% of GDP in 2012 to 8.5% in 2015. I must say that the budget rule is a necessity for us because the revenues from the oil and gas sector will inevitably decline and our fiscal policy cannot ignore this.

In case of a severe change in the global economy in 2013, the budget provides for anti-crisis measures, including redistribution mechanisms for budgetary allocations, for example, the option to invest up to 150 billion rubles [$5 billion] in the recapitalisation of the banking sector should there be a crisis. We don’t expect it to happen but, if required, this can be done through the exchange of federal bonds for bank securities.

In addition, in some important and strategic industries companies can be granted further state guarantees. Together, these measures will help stabilise the economy in almost any scenario. However, we see the main guarantee of stability in the policy aimed at supporting growth and promoting business, trade and investment.

”We take into account the serious risks associated with the uncertain situation on foreign markets. We hope that the measures taken by our partners will improve the situation. For our part, however, will be do our utmost to protect our interests against any negative developments in the European and in the global economy.“

In this regard, I would like to mention the landmark event of the year: Russia's accession to the World Trade Organisation. For us, participation in this organisation is a key foreign economic priority. We hope that this step will have a positive effect on the investors’ attitude and will pave the way for promising long-term projects. We have always believed that accession to the WTO will make our economy and the rules by which it operates more transparent and understandable to investors from any country around the world that is a member of this organisation. In the coming years, we intend to join the Organisation for Economic Cooperation and Development.

Ladies and gentlemen,

Today the positive dynamic of the Russian economy, the accumulated safety factors and our reserves allow us to set new ambitious goals. At the same time, we realise that there are no simple solutions or easy growth opportunities.

Just three or four years ago, the world believed that global problems could be quickly resolved. Now everyone has realised that we need time and unconventional approaches to overcome the challenges we face.

We must substantially alter the basic economic development model in order to recover from the current crisis. Such changes will affect virtually all economies in the world, and attempts to cling to the old formulas will only preserve the problems. We must stimulate structural change, create the conditions for the emergence of new economic sectors and look for modern sources of growth.

We are aware that this requirement has a direct impact on our economic policy. Against the background of global change, including in the energy sector, we have to radically accelerate the diversification of the national economy and technological innovation, which is extremely important. We must move to a new technological structure.

The potential of growth through the exploitation of long-existing capacities has been practically exhausted. This is evidenced by a low unemployment rate compared to the level of the past 20 years. We certainly believe that this is an economic and social achievement but it also shows us that growth based on the old production capacities is no longer possible. We have a 5.1% unemployment rate – one of the lowest in Europe and in the world.

Further growth is possible only through investment in new manufacturing facilities and upgrading the existing ones, as well as investment in human resources development.

We aim to create or update at least 25 million jobs by 2020. By the way, this is an initiative introduced by one of the business associations, and I think it is absolutely correct. At first glance, it seems very difficult, perhaps even impossible, but our experts have made calculations along with this association and have concluded that it is possible. I do not mean the creation of entirely new jobs but rather upgrading and restructuring the jobs that already exist. All of this can lead to 25 million high-level and well-paid jobs.

By 2018, we aim to increase work productivity by 1.5 times compared with 2011 and the share of high-tech and knowledge-intensive industries in the GDP by 1.3 times. By 2015, investment is expected to grow to at least 25% of GDP, and to 27% by 2018.

We have already launched active efforts to achieve the stated objectives. Thus, we are developing roadmaps together with the business community for specific areas of improving the business climate and we will monitor their implementation together with the business community.

The Russian regions will play a central role in improving the business climate and attracting investors. Before the crisis, a healthy competition emerged among our regions in a bid to attract investment. The leading regions were able to dramatically change the structure of their economy. Last year, the Agency for Strategic Initiatives launched an important pilot project with the participation of the business community: the introduction of a regional government standard for improving the investment climate.

Best practices of cooperation with investors should become the norm for all regional administrations. We invite investors to cooperate actively with the regions and with the Agency for Strategic Initiatives, and to determine together the best approaches to the improvement of the business environment.

”In drafting the budget for 2013–2015, we implemented the budget rule for the first time. The budget rule logic is based on the premise that the dependence of the Russian budget on oil prices must decrease. This will be a stable long-term trend.“

I will reiterate: Russia is open to foreign direct investment and domestic investment in industry, services, agriculture and the innovation sector. We hope that capital will be followed by technology, management experience and modern models of production, distribution and service networks, which our foreign partners have.

Domestic financial market infrastructure development is a major priority for us. This means enhancing its stability, establishing an international financial centre in Moscow and developing modern investment instruments. All this will allow our companies to quickly and easily raise capital from domestic and foreign sources.

The Central Depository will begin to operate by November. Its goal is to help foreign investors enter the Russian financial market, to make the system of securities title recording more transparent and understandable.

With the adoption of the laws On Clearing and Clearing Activities and On Organised Trading we have created the necessary legal conditions for the development of financial market infrastructure entities: exchanges and the central counterparty. They will operate in accordance with international standards, significantly reducing the risk for market participants.

Our agenda includes the cancellation of full advance payment for securities. In international practice, the practice of delivering and paying for securities a few days after the deal, has long been accepted. This is more convenient for most investors and we are interested in implementing it as soon as possible. Naturally, I hope that all the advantages and disadvantages will be taken into account when we plan for introducing the system so that these innovations do not result in the creation of any financial bubbles.

Such innovations reduce the cost of capital for Russian companies and the economy in general, and increase the capacity of the domestic financial market.

One of the solutions that will determine the future of the Russian financial market is the consolidation of MICEX [Moscow International Currency Exchange] and RTS [Russian Trading System] exchanges. In the future, this will create a single, absolutely competitive world-class trading platform, which will determine the price for Russian assets and resources. I would like to note that the working group for the establishment of an international financial centre in Moscow is currently analysing various aspects of improving this area and drafting a roadmap. We expect that it will be approved by the end of the year.

The efforts of the Russian Direct Investment Fund are also aimed at the diversification of investment projects in our economy. We have agreed to allocate 62 billion rubles [$2 billion] to the fund every year: we allocated 62 billion last year and will give it another 62 billion this year. We will also consider doing this next year. The budget for 2013 does not have the money for that, but we will have to find it because, as I have already said, our budget should not only be socially oriented, but it should also be a development budget. How could this be achieved without using such instruments as the Direct Investment Fund? This is the best and the most effective tool that has proved itself around the world. It will work here in Russia too.

”Russia's accession to the WTO will make our economy and the rules by which it operates more transparent and understandable to investors. In the coming years, we intend to join the Organisation for Economic Cooperation and Development.“

Since its establishment in July 2011, the fund has allocated 7.7 billion rubles for financing investment projects, and the funding it attracted from co-investors exceeded 25 billion rubles [$ 830 million]. Another major step forward was the formation of a consortium which included the Russian Direct Investment Fund (RDIF) and a number of international investment funds – almost all of the world's largest investment funds. It has already begun to invest in Russian companies that are planning share placement in the MICEX-RTS common exchange platform.

We intend to encourage domestic and foreign investors and thus resolve the shortage of long-term money. This issue is of concern to everyone. Our financial system is not yet ready to offer such investment resources to the extent in which it is necessary for economic development, but we are well aware that this is not just an economic issue: people's trust in financial institutions and in businesses’ ability to implement various projects will largely depend on its solution.

One of the sources is well known: it is the funded part of pensions. I must say that this is a major advantage of the system of funded pensions, which we created some years ago. A great deal of money has been accumulated: this year it will reach about two trillion rubles [$65 billion]. We were promised both by the former and the present Finance Ministers that at least part of the funds will be allocated for infrastructure development by issuing infrastructure bonds secured by these accumulated funds. I hope that concrete proposals are submitted by the end of this year. Throughout the world, this money is provided by the top players in the stock market: insurance companies, pension funds and so on.

The issue of creating a so-called mega-regulator is currently widely discussed. This is another matter I would like to address. The Government proposes to merge the Federal Commission on Securities Market into a mega-regulator agency under the Central Bank. This idea has many supporters, although there are also some opponents (we have just discussed it again with some colleagues). I would like to invite the banking and investor community, as well as all interested parties to join the discussion. The matter should be resolved quickly. The question of radically improving the regulatory system is long overdue, and this decision should be made without delay.

We must admit that Russians do not yet have enough information about the role of the financial market and the opportunities it presents. As a result, people often invest in the few vehicles they understand and trust – in real estate or in foreign currency, or just stash their savings away. Therefore, we are going to work on improving financial literacy, strengthening public confidence in the Russian financial sector and creating new tools, including those that provide protection from inflation.

Improving corporate governance in state-owned companies remains an important task. This clearly provides an added bonus for the companies. Management at most businesses, or at least many of them, is not efficient enough. Therefore, the Government has been charged with the task of determining management efficiency criteria for state-owned companies in the near future, including by using the best international practices.

”Just three or four years ago, the world believed that global problems could be quickly resolved. Now everyone has realised that we need time and unconventional approaches to overcome the challenges we face. We must substantially alter the basic economic development model in order to recover from the current crisis. Such changes will affect virtually all economies in the world.“

Finally, another important point. The state will continue the privatisation of enterprises but it will do so judiciously. State assets will be sold in accordance with clear and transparent rules to the best and most efficient owners at fair market prices given the current economic environment.

The federal property privatisation plan has been approved. Ultimately, we will sell state-owned stakes in virtually all non-commodity companies. The only exceptions are some natural monopolies and defence companies, where the state will remain the controlling shareholder in the foreseeable future.

I emphasise that banks and other financial institution have the first place in the privatisation programmes of the largest blue chip companies. As you know, in February 2011, a 10% stake in VTB was successfully privatised for $3.3 billion, and in September 2012, 7.6% of Sberbank shares worth more than $5.2 billion were sold. This was one of the most successful deals in the past 10 years. As I recall, for every $100 Sberbank invested 10 years ago it got $700 – this really was one of the best deals of the decade. Both of these sales saw good demand and relatively high prices given the current state of the market. This clearly shows that Russian financial institutions retain their appeal despite the challenges faced by the global financial market.

Ladies and gentlemen,

It is axiomatic that capital tends to flow where investors consider the balance of risk and return to be optimal. Today both the global and the Russian economy need trust. To win the investors’ trust means to discover new horizons, and that is what we are striving for.

We hope that foreign and Russian investors will appreciate the achievements of our economy and commit to long-term and large-scale investment cooperation. We will pursue this aim and we are open to it, as I have already said.

Finally, I want to thank the VTB Bank for organising this forum and continuing the tradition of such important and beneficial meetings in our country, in the Russian capital.

Thank you for your attention.

<…>

Vladimir Putin: We heard from our colleagues just now, starting with our Chinese friend. He noted – and our European colleague later noted too – that our low government debt is one of our economy’s main strong points. It currently stands at 10 percent of GDP, of which 2.5 percent is external debt. We also have a minimal deficit. This is important too. Last year, we had a primary budget surplus of 0.8 percent. In other words, there are no reasons for an increase in our debt. This does not mean that the Finance Ministry cannot take advantage of the favourable circumstances and a relatively low borrowing cost for Russia to borrow now and then withdraw again in the event of future turbulence and higher lending costs and rely on domestic reserves instead. This kind of move is entirely possible. But the fact remains that a low debt ratio and low inflation, or absence of inflation, are fundamental advantages.

Our Chinese colleague spoke about the Chinese economy’s need to rely more on domestic demand. India offers a good example in this respect. It has been practically unaffected by the global crisis situation of these recent times and illustrates well the importance of being able to rely on domestic demand. Could we achieve this kind of self-reliance? I have some big doubts in this respect because to be able to have this kind of confidence we would need to make big strides in diversifying our economy. As our American friend noted, so long as we still depend so heavily on oil and gas exports we have little possibility of relying on domestic demand. But this is nonetheless an objective, not only for our friends in China, but for Russia too.

”Against the background of global change, including in the energy sector, we have to radically accelerate the diversification of the national economy and technological innovation, which is extremely important. We must move to a new technological structure.“

I note that our relations with China are developing very well indeed. Our bilateral trade reached a figure of $83.5 billion last year and will be even higher this year. This puts China in first place among our trading partners, ahead by a long way of Germany, and our trade continues to grow, which is good to see. The diversification process is not a simple one, but our trade and economic ties are nonetheless moving in this direction, with goods from the machine-building and other sectors and not just the hydrocarbons but also nuclear energy – advanced technology, in other words – accounting for a substantial share. We will continue in this direction. We have many big joint projects and good plans, which of course we must not just think about but actually carry out.

As for the situation in Europe, everyone is busy criticising Europe these days, and this event’s host also began by doing so. But Europe is not in any worse a situation than the USA, say, which also has a big debt and not the best macroeconomic situation at the moment. Where the Europeans run into bigger problems compared to others is that, as our European colleague said, they have “17 captains” at the helm. This makes things more difficult of course because it is hard to set rules and find solutions acceptable to all. The problem is not even so much that there are 17 captains, but that they are all sailing under different sails. You’ve got one in a flash yacht and someone else in a dinghy, and altogether this makes a whole flotilla. It’s even worse when someone’s dinghy springs a leak and they have to bail out the water the whole time. This all makes it hard to reach a consensus. Correct me if I’m a little off in the figures, but when France has average per capita income of 3,600–3,800 euros, and Romania has average per capita income of 260–280 euros, it is not easy to find consensus solutions.

Our European friend spoke of the need for budget consolidation in Europe. This is necessary, certainly, given that there are no borders and there’s a common space. People in Romania want to live as well as people in France do. They are all part of the same common community after all. But they hear instead, “No, you were poor before and you’ll be even poorer now.” Of course they don’t want to agree to this. It’s hard to convince the Greeks too, and the Spanish and Portuguese, who have had the chance to taste cheap money. This is a very complicated process that demands a clear understanding of where the common interest lies. In this sense I do not envy our European partners because they really do face some difficult tasks ahead.

<…>

Vladimir Putin: Following the discussions going on in the European Union and knowing the position of many European leaders, what makes me optimistic is that there is a common understanding on the fundamental concepts. This is very important. I am sure that this consolidation and common understanding of the problems and exit solutions from the crisis will help Europe to find a stable development road and change its situation for the better.

I do not think that the world’s leading economies should have to shoulder the entire burden because they also have limitations, including domestic, political and social limitations.

Everyone knows that I have many friends in Germany. One friend is visiting just now. Her daughter works as a nurse and has three children, I think. Her husband is studying, and she makes a little more than 2,000 euros, and that’s it. There are many people like this in Germany, and they pay high taxes there, and have to pay for their housing. Putting too much pressure on the social sector would be counterproductive therefore even in the world’s leading economies, and could lead to serious consequences.

”By 2018, we aim to increase work productivity by 1.5 times compared with 2011 and the share of high-tech and knowledge-intensive industries in the GDP by 1.3 times. By 2015, investment is expected to grow to at least 25% of GDP, and to 27% by 2018.“

But the European leaders and the European Commission are clearly set on resolving the macroeconomic problems, consolidating finances, and carrying out structural reforms. Their determination is evident and we wish them success in this work. I am sure that they will succeed.

As for Russia, our colleague noted just before that we have a growth rate of 4 percent, which is a good performance compared to other economies. But this is not enough for us. As I have said on many occasions, and our experts and all of us know, for us to be able to reach our economic objectives we need to grow even faster. Our actual economic planning is based on a figure of 4 percent or slightly more for the period through to 2015–2016, but we need even higher growth.

Our American colleague noted our dependence on energy exports. Yes, this remains the situation and earnings from energy exports have increased. Budget revenue from energy exports have increased of late, it is true, but though oil and gas production is also up, the increase is not significant. Production fell a little during the crisis period, but overall, Russia was the world’s biggest producer last year. Our oil companies are now producing more oil than the world leaders, even ExxonMobil, if we take just oil. If we take oil products overall ExxonMobil produces more.

It is not the increase in production that is the main thing however, but the price rise. Prices have risen to their current level and have stabilised there. It would be foolish of us to sell our products below the market price. It is another matter however that we should consolidate part of these oil revenues in reserve funds, as I spoke about. First, we did this in the past, and second, we have now begun applying the budget rule that I outlined in my opening remarks. The main task is for the Government to keep within the parameters set by this budget rule. This sets strict requirements for planning the budget, but it is a necessary approach and reliable system to protect us against possible future crises.

Regarding infrastructure, I cannot but agree with you, as everyone knows what a longstanding problem this is in Russia. Unfortunately, these problems remain today, things like bad roads. Like you said, if the winter road has ‘melted’, what is there to do? There are only two options: either we abolish summer, or we build proper roads. We can’t abolish summer, and so the Finance Ministry will have to open its purse and put money built up in the pension funds, say, into issuing infrastructure bonds.

”Domestic financial market infrastructure development is a major priority for us. This means enhancing its stability, establishing an international financial centre in Moscow and developing modern investment instruments. All this will allow our companies to quickly and easily raise capital from domestic and foreign sources.“

There is another method, which we are starting to use now. You mentioned Mr Kudrin, who at one time proposed a 13-percent flat-rate income tax. This was the right decision, we went along with it and tax collection did indeed improve dramatically. Mr Kudrin’s name tag is here, but he himself is not. Having left the executive government he seems to think he can flout discipline and is out and about somewhere now. But it was Mr Kudrin who persuaded me back then to abolish the road funds, so you should direct your complaints to him next time you see him.

We have re-established these funds, although in a somewhat different form now and with different financing sources. The federal and regional funds have been re-established however. They will build up quite substantial funds, far more that the regions had at their disposal for these purposes. I hope that we will make further progress in all of these areas, issuing infrastructure bonds, increasing direct financing from the federal budget, and developing the regional road funds. Resolving this problem will be a gradual process, but we will certainly resolve it.

<…>

Question: Mr President, I have a question about inflation. Inflation was at a record low of 3.6 percent over the first half of the year but has now risen to 6 percent. Is the Government willing to sacrifice to short-term economic advantages for the sake of guaranteeing long-term economic stability and bringing down inflation?

Vladimir Putin: First, inflation was low in the first half because we decided to raise the prices for natural monopolies’ services only in the second half, and the prices thus started rising in July. We expected that the prices would rise, the monetary supply would increase, and this would affect inflation in the second half.

Second, we see that food prices are rising now. This is related to the drought that has affected big producer countries, including the United States. This also has a considerable impact on the domestic situation. Our grain prices are rising too after all. By the way, I draw to the Government’s attention that in 2011 and 2010 we took quite energetic measures in response, including with the help of the grain reserves. We need to look at how best to respond to this situation, which has arisen from natural causes.

Should we sacrifice something and try at whatever cost to maintain macroeconomic indicators, including a low inflation level, even if it means sacrificing economic growth? This is the choice facing all European countries today. I am sure my colleague will correct me if I’m wrong, but the whole debate today is about precisely this. Some countries get told to consolidate their budgets and cut spending, and they reply that if they do so they won’t have economic growth. So there won’t be growth – you’ll just have to bear it a while, the argument goes on. It’s a very difficult choice. We don’t even have to look as far as Europe. Our neighbours in Ukraine are in the opposite predicament. They have no inflation problem but have lending rates at around 20 percent and zero growth. Is this good or bad? Probably it is a problem.

I therefore think that we are going to have to make our way between a rock and hard place and keep a check on inflation of course, while monitoring at the same time what impact the Government’s response measures have on the real sector of the economy. We need to boost domestic demand, but how do we stimulate domestic demand if we do not get the economy growing? This is in many ways an art more than anything, something that requires a very fine touch indeed. Can we do this? Yes, we can. But ultimately, the main thing is to suppress inflation of course.

Question: Most of those present are financial investors. Corporate governance is an issue of concern to all. This concerns various interested party transactions, transfer prices, good faith work on the lending market, and so on. You know that the institutions of corporate governance are still far from perfect today. As part of the work on building the international financial centre you mentioned, amendments to the Civil Code were drafted last year and were passed in the first reading at the start of this year. This was followed by heated debate, with most objections coming from big companies, which, not so surprisingly, oppose bringing order to this area.

Do you have a position on this issue, and can we count on your support?

”One of the solutions that will determine the future of the Russian financial market is the consolidation of MICEX [Moscow International Currency Exchange] and RTS [Russian Trading System] exchanges. In the future, this will create a single, absolutely competitive world-class trading platform, which will determine the price for Russian assets and resources.“

Vladimir Putin: Yes, of course I have a position on this issue and am familiar with the discussion. We planned to pass the amendments to the Civil Code at the end of last year, and worked hard on this in the Government and the Presidential Executive Office. But you are right – many doubts and reservations were expressed. The Civil Code is essentially the economy’s constitution, and in this sense there is no place for hasty action. We must study all of the market actors’ concerns very carefully and listen to everyone, including the portfolio investors and our own big infrastructure companies. I know their concerns in detail. They tell me about their worries. A decision will of course be made in the end. We want portfolio investors to find a comfortable environment here and will try hard to clear the road for them as thoroughly as we can, but do so in such a way as to not cause any damage the other market actors. Decisions will be made.

Question: I have a question about the budget. Last year, you promised to increase social spending and public sector wages. This is understandable given the delicate economic situation at the moment, but if problems continue in the future, how will you finance social spending?

Vladimir Putin: We are indeed addressing the social problems we consider the urgent priorities. Let me note however that incomes in Russia are substantially lower than in the main developed economies. Yes, at the height of the crisis we did increase pensions, but our pensioners received so little to start with that despite our hesitations and concerns this increase did not really affect the inflation situation or the budget, which remained within the parameters we had planned. We raised service pay too for our military service members.

If you look at the overall money supply you will see that this has not affected our macroeconomic indicators. Naturally, we now have to bring other sectors in line with our guideline parameters, above all the banking sector. We decided to accord grants in education and raise wages for teachers and professors, and have just taken the decision to raise wages for people in the culture sector, but do you know how much these people actually earn in this sector? In real terms, they earn very little indeed – 8,000–9,000 rubles a month on average.

These are therefore steps we must take whatever the situation, because if people perceive society as socially unjust it will not be effective overall and people will not have confidence in our economic measures. We talk about our good macroeconomic indicators and growing reserves, but people do not see this reflected in their own lives at all, and this is an unacceptable situation. What are we living and working for if people don’t see the results? Everything must be balanced, but these wage rises and grants will not harm the macroeconomic situation. There are other issues here that we need to reflect on and resolve.

The average wage in Russia last year – not public sector wages, not wages paid for with budget money – was 24,000 rubles, 23,700 or 23,800 to be more precise. This year it will be 28,800 – close to 29,000. That is the result of natural growth. This is the national average. Knowing this figure, how can we not bring pay for people in the social services sector, for example, teachers, or health workers closer into line with it? It would be a big mistake if we returned to the times when people working in these sectors say, “You pretend to pay us and we will pretend to work, pretend to teach you or treat you.” This is unacceptable. Balanced solutions must be found, certainly, but people in these sectors should be paid in line with real incomes around the country as a whole.

Question: Establishing the Central Depositary has made the Russian stock market more convenient for foreign investors. But without changes to tax laws the procedures for paying taxes will become even more complicated for foreign investors. Do you plan to simplify these rules in any way?

Vladimir Putin: We are aware of the problem and are making amendments to the Tax Code.

Question: The annual cost of corruption in Russia comes to around a quarter of the country’s GDP and maybe even a lot more. We read in the papers, say, that Gazprom buys large-diameter pipes not directly, but through a specific company, which, according to Interfax, adds on a mark-up of around 30 percent. There are plenty more examples in this vein.

You have five-and-a-half years of your presidential term ahead. Do you want to go down in history as the man who restructured Gazprom so as to make investors happy and have the country working normally, transparently and so on?

Vladimir Putin: Our infrastructure companies have the same flaws and problems as our whole economy and society in general, of course.

At the same time we see, for example, how a whole campaign against Gazprom has been unleashed in European countries. They are looking for evidence of a monopoly hold on the market and a while ago carried out seizures of documents. Let me note however that Gazprom holds 27 percent of the market in Europe, I think, and Norwegian companies hold 29 percent. So, what kind of monopoly is there to talk about? In this respect we hear more and more reproaches about how Gazprom conducts business and allegations of corruption. There probably is corruption there, but in this case it is the police’s job to catch those responsible and put them in prison. That would be the right thing to do, I think.

”The state will continue the privatisation of enterprises but it will do so judiciously. State assets will be sold in accordance with clear and transparent rules to the best and most efficient owners at fair market prices given the current economic environment.“

This is not enough, however. Looking at the matter seriously, we need to change the economy of a company like this and guarantee its access to transport systems, especially the pipeline systems. This is the main thing we need to do. But we should not follow the approach our European colleagues embodied in the Third Energy Package with their division of production, transport, and distribution into separate businesses, thinking that this will lead to lower energy prices, including lower gas prices in Europe. You cannot separate transport into a viable business all of its own. It usually exists through cross subsidies that come through the production and sales side of the business. Transport as a separate business has no real interest, but the Third Energy Package makes it separate. This is a very dangerous thing, as we have told our partners many times, and so we need to be very careful and thorough in dealing with these matters.

As for bringing down prices for final consumers, including in Europe, I recommend looking at the price formation structure. Look at the share of taxes, for example. The final consumer pays a price that is 60-percent made up of taxes. Why do our partners want us to lower our companies’ revenues while they get to leave all of their taxes in place? I understand of course that these taxes can be collected and put into social spending, and in today’s situation they naturally do not want to lose this source of funds.

You mentioned Gazprom’s contract purchases just before. I am aware of this matter and have given repeated instructions to the law enforcement agencies. They are constantly working on the situation, digging something up, making arrests. In Europe, gas goes through several intermediary dealers on its way to the final consumer. Maybe they should be removed from the chain? Who benefits from their being there?

So, let’s look at the whole chain – from the producers to the final consumers. If we can work together to take a real objective look at the whole situation we will probably achieve results. Of course during my time in office as President I want to do as much as I possibly can for Russia. This is my basic aim and I will plan my work accordingly.

Question: Mr President, I have a question pertaining to what you said about diversifying the Russian economy so it is less dependent on raw materials. An important aspect is implementing modern industrial technologies. Over the last several years, the government is doing a great deal in this area, but one has the impression that neither private Russian businesses nor the companies with government participation are actively working on innovations in practice, rather than on paper, and in this area, Russia needs to “run to stay in place.”

So my question is as follows: does the government plan to create more incentives for innovation in the Russian economy, including through the use of the other part of the carrot-and-stick motivation scheme – the stick?

Vladimir Putin: It’s hard to use the stick in the economy – it’s a way to be certain not to get results. We need incentives, and naturally, we have spoken about this many times, and it is stated in our documents: “The diversification of the economy and its innovative development are key objectives in our economic activity.”

”Following the discussions going on in the European Union and knowing the position of many European leaders, what makes me optimistic is that there is a common understanding on the fundamental concepts. This is very important. I am sure that this consolidation and common understanding of the problems and exit solutions from the crisis will help Europe to find a stable development road and change its situation for the better.“

There are many areas of work that we think should lead us to the desired result. First and most important among them (and we are discussing this today, approaching it from many angles) is ensuring macroeconomic stability and defeating inflation. We are creating tax incentives for companies that are working in the field of innovation. Perhaps this is not enough, and I understand our Finance Ministry when the Economic Development Ministry and other colleagues constantly insist on lowering taxes in this sector, and increasing them in others. There is a constant battle for the fiscal interests of the budget, but ultimately, we will continue to proceed in this direction.

And finally, special support measures. For example, one of the approaches we must maintain is support measures for high-tech exports. We must maintain the support for specific areas that are pulling the overall innovative development of the economy like a locomotive. What do I mean? The aerospace sector, for example. Even in 2009, when Russia suffered a severe drop in industrial production, when everything fell by over seven percent, even more than in other nations – 7.8 or 7.7 percent – the aerospace sector grew by 17 per cent. The same happened in some other sectors of the economy into which the government was purposefully channelling resources. We are determined to continue this in the future. And, of course, we need to support innovative projects. This is a separate, major topic where we clearly need to do more.

Question: I am working at Tradewinds Global Investors in the United States and I am responsible for all capital investments in the housing and public utilities sector. Could you say a few words about this sector?

Today, unfortunately, it is very difficult to invest in this sector; plans for capital investments are bad, investors do not know what to expect in the future from this sector of the economy, and it has a high level of inefficiency in Russia.

Do you have plans to restore the investment status of this sector, and are you interested in attracting private investors for this purpose?

Vladimir Putin: I see you’re really giving me a hard time here. This is one of our most difficult, sorest issues.

You know what the problem is with this sector? It’s that it was created as absolutely ineffective and unprofitable. That is the problem. After all, heat and energy supplies were not calculated in any way; things were built any which way, and nobody in the Soviet Union ever counted kilocalories or tonnes of furnace oil. That is the reality. In order for all this to be refitted, to be put on a different, modern footing, we will certainly need huge investments. That is the first part of the problem.

The second part is that the government is not capable of doing it all at once. If we place this burden on our citizens, people will be unhappy; I simply think it would be unfair and impossible. It would be a real burden for people, and utterly unaffordable. This is very difficult. So if we do it, we need to do it step by step, and it is best to start with the newly built residential districts.

And the third part is that, quite frankly, we have been unable to develop effective, efficient mechanisms for reforming this sector. Everything attempted so far – housing cooperatives and such – has not worked as effectively as people thought it would. But the potential investment attractiveness of this sector is extremely high.

In order for everything we came up with and which is planned for the future to work effectively, we need to resolve another very important challenge, which our colleague from Finland drew attention to. We need to radically reduce opportunities for corruption in this sector, because these various offices and small firms are single players on the market and are usually financed directly via municipal budgets. Nobody else is allowed in there. This municipal mini-monopolism kills the entire system at the root, because it increases costs and does not improve the quality of service. This is an enormous area of work that will need to be dealt with. But it is entirely clear that this is one of the most serious challenges for the budget – because of the enormous funding being channelled there from the budget – as well as for the economy overall, and for citizens.

VTB Bank CEO Andrei Kostin: Mr President, I would like to ask a question, but please answer it a little later. It is no secret that your birthday is coming up. A jubilee is always a cause for celebration, but it is also a cause to truly consider the path one has walked and to think about what one wants in the future.

My question is as follows. What do you feel is the most important thing you have done in your life to date, and what is the most important thing you would still like to do in life? In order to give you time to think, I would like to invite you to speak at our next forum and answer that question there, if you have that opportunity.

Thank you very much. Thanks to all the other participants on our panel. I wish you all success, health and happiness.

Vladimir Putin: Thank you very much. I would like to thank you for this business-oriented and very positive approach to discussing even the most difficult issues and problems that we talked about today.

APEC Economic Leaders’ Meeting

2012-09-08T11:53:47+04:00

Vladimir Putin opened the first working session of the APEC Economic Leaders’ Meeting in Vladivostok.

At the meeting participants discussed issues of trade and investment liberalisation, regional integration, as well as improving transport and logistics systems and infrastructure.

* * *

President of Russia Vladimir Putin: Ladies and gentlemen, friends,

At the beginning of our meeting I would like to welcome all of you in Russia, in Vladivostok.

On the onset of a meeting I would like to say that one of our colleagues, Australian Prime Minister had very unfortunate tragedy in her family – her father passed away. So I would like on behalf of all of us to express our condolences to her and members of her family, and welcome Australian Minister of Trade who will be heading Australian delegation at the meeting.

Once again I want to welcome all of you in Vladivostok, the city that for over 150 years has been a stronghold of Russia here in the Far East. Vladivostok is a modern, fast-growing city, true megapolis, which has huge business and financial potential, a place where East meets West, gateway of Russia to the vast areas of Pacific and Southeast Asia, a gateway that is open for all of you, our partners in Asia-Pacific region, and that provides rapid and most efficient route to Europe from this region.

”The 20th anniversary APEC Economic Leaders' Meeting is taking place on the new premises of the Far East Federal University. We built the complex, the university campus that immediately after our Leaders’ Meeting adjourns will be handed over to the university, young people, students and academia. I hope that this university will become an educational and intellectual center not only attractive for the Far East of Russia, but for young people, scholars and researchers of the world.“

Colleagues, the 20^th anniversary APEC Economic Leaders' Meeting is taking place on the new premises of the Far East Federal University. And it gives me great pleasure that some of the colleagues mentioned specifically that they liked the venue. I have to mention that when we were thinking where to organize this big event, we decided to host it here, in Vladivostok to use it as an opportunity to develop Vladivostok.

We built the complex, the university campus that immediately after our Leaders’ Meeting adjourns will be handed over to the university, young people, students and academia. I hope that this university will become an educational and intellectual center not only attractive for the Far East of Russia, but for young people, scholars and researchers of the world.

I would like to use the occasion to invite your students and researchers to come here to study, to teach and I would like to make a suggestion to all of you present here. We will send an official invitation to all of you to speak in front of the students, of this university and talk to them about your vision of the future of the region, of the world in general, to address students as professors, as keynote speakers. I am sure you will find that interesting, and young people that are to study here will definitely greatly appreciate the opportunity.

Today’s plenary meeting has two items on its agenda. First is trade and investment liberalization and regional economic integration. Second is improving transport and logistics systems and infrastructure of the region. Tomorrow we are going to talk about food security and promoting innovative growth.

Let me start by saying a few words on the first point of our agenda – trade and investment liberalisation and regional economic integration.

This topic is of great relevance for us especially in the difficult economic situation today when the recovery of global economy is faltering. We can only overcome negative trends by expanding trade, services, enhancing flow of capital. It is important to follow fundamental principles of open markets and free trade.

Russia, as you know, has become a full-fledged member of the World Trade Organisation, so I would like to thank all of you colleagues for your unwavering support to Russia’s efforts of joining this international economic organisation.

Jointly with you, we are determined to make our contribution to designing more liberal rules and mechanisms of trade at the global and regional levels including in the APEC space. The priority goal is to jointly fight all forms of protectionism – both traditional and new.

Russia suggested to introduce monitoring of environmental policy measures, come up with coordinated principles of regulation in this field. Implementing our arrangements to reduce tariff rates for environmentally-friendly goods was not easy. In line with the APEC summit’s decision made in Honolulu in 2011, they should be reduced to 5% or less by 2015. We have achieved substantial progress in drafting the list of such goods.

What is important is that APEC members are determined to continue moving towards the formulated goal in the spirit of the APEC fundamental consensus principle. I believe we should thank our experts that worked very hard preparing today’s meeting and as result of this work worked out balanced compromises. I guess, we can say that our meeting will bring results due to these arrangements.

Strengthening transparency of bilateral and multilateral free trade agreements will facilitate liberalisation. At our initiative, a model chapter on transparency was drafted to be included in this kind of agreements and it makes it mandatory to disclose substantial information on all preferential arrangements.

”By getting together and lifting barriers we encourage dynamic development of entire Asia-Pacific region and global economy in general.“

It is important to give special attention to investment liberalisation, improve business environment in the region. In our view, improvement of national dispute resolution mechanisms, especially at pre-trial stage, would serve that purpose. We should promote such mechanisms throughout entire APEC.

Let me say a few words about regional integration. I am sure it holds the future especially now when for many years we have seen WTO’s Doha Round of trade negotiations slippage. By getting together and lifting barriers we encourage dynamic development of entire Asia-Pacific region and global economy in general.

It is important to build bridges, not walls. We should continue striving toward greater integration, broaden dialogue between regional and sub-regional associations. It is in that direction that Russia will be moving and is already moving. This is precisely what we do in the former Soviet Union space.

You have certainly heard about our integration efforts. I am referring to the free trade zone within the CIS, the Customs Union and the Common Economic Space between Russia, Belarus and Kazakhstan. I suggest we exchange views on how we could encourage liberalisation of trade and investment in a more efficient way and take full advantage of regional integration.

<…>

Vladimir Putin took part in the APEC business summit plenary session

2015-03-20T18:01:15+04:00

The President addressed the APEC business summit plenary session.

The APEC business summit, attended by APEC economies’ leaders and more than 700 business community leaders from throughout the Asia-Pacific region, is taking place in Vladivostok.

* * *

President of Russia Vladimir Putin: Colleagues,

As I was preparing for this meeting and for the bilateral talks that have already begun on the summit’s sidelines, I followed your discussions on television and saw the finesse with which the moderator has been leading the discussion. I want to thank you for this work. The subjects you are discussing are important, interesting, and relevant. Really, it is in order to discuss these issues that we have all come here today.

It has become an almost universal tradition now for summits such as these to bring together not only state leaders, but also the business community, business and industry leaders. This is certainly true of the APEC summits. This creates an excellent symbiosis between people involved in politics and the economy at the practical level. It gives us the chance to listen to each other, meet and talk about the issues that face countries and business. I hope that the discussions today and afterwards will help us to find effective development solutions and proposals that will have a real impact on global economic development, especially in the region in which we live and work.

As I said, the business summit is an integral part of the APEC forum. To repeat a few well-known figures, the APEC economies account for about 55 percent of the world’s GDP, almost half of global trade, and around 45 percent of accumulated direct foreign investment. But even more important than any of this is that, despite the difficulties in the global economy, the Asia-Pacific macro-region has posted the fastest growth rates over these last two decades, building up its financial, investment, scientific and technology potential. This economic leadership places common responsibility upon us all, all the more so in today’s climate of global economic instability. We are aware of course that there are some worrying trends in the Asia-Pacific region too, with growth rates slowing in some of the region’s leading economies. A slowdown in growth is one thing, but we should concentrate not so much on the slowdown, as on maintaining the growth we have.

The growth rates in the Asia-Pacific region remain ahead of growth rates in other developed economies. Problems do exist however. Instability in the banking sector and financial markets has dampened global economic growth, as you know. The same is true, unfortunately, of rising unemployment in the developed economies. We have felt the effects here in Russia, as have most other countries. Sharp fluctuations on financial and currency markets and stagnating export demand are challenges for absolutely all economies in the world. The root causes of this situation, meanwhile, have still to be resolved, and this means that the current situation could become protracted in nature.

But there are also things that make us cautiously optimistic. The key economic actors are trying to keep within a set of rules and not take irresponsible and unilateral action that would have unpredictable consequences. Forums such as APEC are a big help in this respect. Of course, these issues are discussed at the G8 and G20 also, and we discuss them here too, and the progress made is the result of our joint efforts.

At the height of the crisis we managed to prevent a drift towards the dead-end road of protectionism and fierce trade wars, and instead sat down together to draw up a set of common anti-crisis measures and continue the long-term agenda of reforming the financial regulation system. The tasks before us now are perhaps even more complex than the issues we tackled at the crisis’ previous stages, for what we need now are new approaches and new economic development models.

The global economic landscape is changing before our very eyes. Over the next two decades, growth rates in the developing markets will far outstrip growth in the established developed economies. This is a clear fact now. This will in turn transform trade and financial flows, and this is only one aspect of the global transformation process. These changes will clearly have a deep-reaching effect.

”Over the next two decades, growth rates in the developing markets will far outstrip growth in the established developed economies. This is a clear fact now.“

The world is entering a new economic, technological, and geopolitical era. This change will be lengthy, complicated, and painful for some. Many familiar approaches will be reconsidered. Instead of declarations, what we need in life today are pragmatism and practical action. I think it is therefore no coincidence that regional economic integration projects gathered such impetus during the trials of the crisis. This is certainly a positive development that opens up promising opportunities, especially when set against the objective difficulties within the World Trade Organisation and the stalling in the Doha round. ”Over the next two decades, growth rates in the developing markets will far outstrip growth in the established developed economies. This is a clear fact now. ‘

We think that regional integration built on common understanding and mutual consideration of each other’s interests and the interests of our partners, including our geographically close partners, can and must play a key role in defending the basic principles of open markets and free trade, and give impetus to dynamic development throughout the global economy. Furthermore, the dialogue between big regional organisations such as APEC, NAFTA, the European Union, and also the Common Economic Space that was recently established here in the post-Soviet area is a good base for improving global trade and investment rules and regulations. It is important to stimulate the global negotiating process and initiate it from below, from the regions, build expanded integration areas and dialogue mechanisms between regional and sub-regional organisations. With Russia’s active participation, this is the approach that we are taking in developing Eurasian integration and building a free trade area in the CIS.

We recently signed an agreement on a free trade zone in the CIS, and almost all of the countries have ratified it now. We also established the Customs Union and the Common Economic Space, which I mentioned just before, and which bring together three post-Soviet countries: Russia, Kazakhstan, and Belarus. These steps are not just our common response to the challenges the crisis has brought, but they also open up new opportunities for common projects with the APEC economies.

”I want to stress just how important it is now to build bridges between the different parts of the world. In this respect I think that one of our priority tasks is to keep global and regional markets open.“

We are in talks on a free trade agreement between the Customs Union and New Zealand. A joint report has been drafted on beginning a similar process with Vietnam. Further talks of this kind are possible. Dozens of countries from the Asia-Pacific region have already expressed their interest in establishing special trade and economic relations with the Customs Union and the Common Economic Space formed by the three countries I just mentioned.““

By the way, our country’s position here at the Vladivostok summit is in fact the consolidated position of the three integration partners – Russia, Belarus, and Kazakhstan. We are not standing still. We are already at work with our partners on establishing the Eurasian Economic Union, which is a higher stage of integration involving more supranational functions and a coordinated macroeconomic, technology, and financial policy. Our aim is to build a powerful centre of regional development. The future Eurasian Economic Union could also become a link between Europe and the Asia-Pacific region.

I want to stress just how important it is now to build bridges between the different parts of the world. In this respect I think that one of our priority tasks is to keep global and regional markets open. We end up paying a high price for the illusion of simple solutions. The tempting medicine of protectionism eases the pain for a time, it is true, but it stops us from curing the economy as a whole and limits our trade and investment opportunities.

Let me remind you that global trade shrank by 12 percent at the peak of the crisis in 2009. This was the biggest contraction in global trade since the end of World War II in 1945. Of course, this was above all a direct consequence of the financial markets’ collapse, but it was also the price we paid for the upsurge in protectionist measures, and in the end, we all had to pay.

No one denies governments’ right to protect their own countries’ markets and national business. Of course they have a duty to support particular companies or economic sectors. I know about this from experience and can tell you about how these decisions are made, for Russia has also taken such steps. In 2009, for example, when I was Prime Minister, I visited a company in southern Russia that produces agricultural machinery. When I arrived at the site I saw that finished goods were everywhere, but there was nowhere to take them. The company was at a standstill, people were without work, and no one was buying the goods. But this was a company employing hundreds of thousands of people. The goods were stockpiled everywhere, even on the railway platforms, and made it almost impossible to move. In a situation like this, of course you start to ask yourself what can be done. Of course various solutions such as limits on imports and ensuring domestic industry’s interests start to come to mind. And indeed, we did take some measures in this sense. We had not yet joined the WTO at that point and had the right to take these measures.

The European Union also took such approach to protect a number of its own companies, especially in the automotive industry. In some circumstances this is even justified, because otherwise not just national economies would suffer, but the global economy would too.

The real issue lies elsewhere, and namely, in the fact that we need clear and comprehensible rules for these kinds of actions. It is not good when we put one thing formally on paper and then do something quite different in practice, although I do understand that in some situations there is not really any choice.

”We need to dot the ‘I’s and agree on an acceptable level of protective measures for protecting jobs during crisis periods. Most important of all is to establish mutual trust and clarity in this area.“

But, as I said, we need clear and transparent rules for decision-making here. In other words, we need to dot the ‘I’s and agree on an acceptable level of protective measures for protecting jobs during crisis periods.

Most important of all is to establish mutual trust and clarity in this area. This is what we should work towards. This is the approach that Russia will take in the World Trade Organisation. As a full-fledged member of this organisation we will play an active part in drawing up fair rules for international trade. We think it essential in this respect to set the special norms that will enable countries to support particular economic sectors that are most vulnerable and sensitive to global instability. These measures will help us to rectify the shortcomings in the WTO’s own rules and regulations and will strengthen the organisation as a global body able to effectively resolve international trade issues and respond to new challenges.

I stress that Russia supports intensifying the APEC forum’s integration agenda too, in the interests of further liberalising trade and investment in line with the Bogor Goals. This is not just a declaration. We are confidently expanding our economic presence in the region.

In joining the World Trade Organisation, Russia has taken on obligations to lower tariff and non-tariff barriers, and we will fulfil these commitments. We believe that preferential trade agreements should be as transparent as possible. This will allow us to see clearly the pluses and minuses of existing and pending free trade agreements and work towards an optimum integration model.

Of course, trade is the not the only issue at the centre of our attention. Issues such as energy security, the environment, and innovation are increasingly high on APEC’s agenda. There is an active dialogue underway on protecting intellectual property rights. Developing the Asia-Pacific region’s transport contours is also an indisputable priority. In accordance with the APEC Business Advisory Council’s recommendations on further diversification of trade routes, we and our partners in the Common Economic Space are ready to offer use of Russia, Belarus and Kazakhstan’s geographical infrastructure opportunities. A glance at these three countries’ territory is enough to see that there is much to offer here. We have established a common economic space free of internal customs and other formalities, and, for Asia-Pacific region business, this opens up a direct route not only to our countries’ economies but provides optimum infrastructure and transport links for cooperation with the European Union.

I mentioned the establishment of the Customs Union and Common Economic Space, and I want to stress the particularly important point that both organisations were established and function on the basis of WTO principles. I am sure that this will help our economic partners, including from the Asia-Pacific region, to work confidently in these three countries’ markets.

Building effective and reliable logistics chains requires us to make more active use of modern technology, including space technology. Russia has something to offer its partners in this area too, the possibility of equipping transport hubs and corridors with the GLONASS global navigation satellite system, for example. We built this system in quite rapid time and it is already global in scope now. We have placed in orbit a full-fledged satellite cluster of 28 satellites, two of which are backup satellites, and the system is now operating very effectively.

Strengthening food security is another of APEC’s priorities under the Russian presidency this year. Food security is not just an economic and social problem, but is an issue for the future of millions of people. Earlier in the discussions today, either the moderator or one of the participants said that 150 million people have encountered food supply problems last year alone, and some experts put the figure at 200 million. More than a billion people around the world are going hungry. Of course we cannot ignore a social and economic problem of this scale.

”We will play an active part in drawing up fair rules for international trade. We think it essential in this respect to set the special norms that will enable countries to support particular economic sectors that are most vulnerable and sensitive to global instability.“

As I have said, Russia will continue its substantial contribution to stable food supplies, including on the Asia-Pacific markets. Our grain export capability is currently around 15 to 20 million tons per annum. Some specialists forecast that Russia will be producing 120 to 125 million tons of grain each year by 2020, which will take our export capability up around 30 to 35 million or even 40 million tons.

Of course, we will not concentrate solely on food exports. It is in our common interest to encourage reciprocal investment in agriculture, expand the amount of stable cultivated land, and carry out other agriculture sector projects based on advanced technology. This includes close cooperation in biological resource use, and in this respect the use of the Pacific Ocean’s biological resources is very important. All of our countries border this ocean, and it is thus our common task to ensure continued replenishment of its bio-resources.

We have always paid a lot of attention to regional energy cooperation and ensuring a sustainable energy balance in the region. Russia is a leading and — I stress — reliable energy supplier, and as such has a key part to play. We have carried out several milestone projects in the region over these last years, such as the Sakhalin oil production projects. This is something we discussed yesterday with some of those present now, with our American partners. We thank you for your assessment of our work together.

Mr Tillerson, president of ExxonMobil, spoke yesterday about the positive way in which the Sakhalin projects are being carried out. I stress the clearly international nature of these projects. We will continue to work in this way, developing our cooperation with our partners and strengthening not only Russia’s energy security but also that of our partner countries and of the entire region.

Access to sufficient, affordable and safe energy resources is a fundamental condition for ensuring stable growth in the Asia-Pacific region and throughout the world.

Strengthening international cooperation in peaceful nuclear energy is another issue. We all know about the Fukushima tragedy, which has been a big lesson for us all. We will continue to meet the highest safety demands in building and operating nuclear power plants. We are currently carrying out a number of projects in this sector in Asia, including building a nuclear power station in China. I was very pleased to hear that our Chinese friends and partners are satisfied with the quality that we offer. I also note the strong international dimension of these nuclear energy sector projects.

We are not chasing big profits and any extra money we can get, but are building relations with global technology leaders, so as to have leaders in their sectors handle each component of these big international projects. These are costly projects, running into the billions – from $2–3 billion to $8–10 billion. In each case, contracts worth around 25–30 percent of the project’s total cost go to subcontractors in the partner country, where the facilities are being built. This is the approach laid out in the bilateral agreements we sign with our traditional partners, and the safety issue is of course the top priority. This is something we discuss, coordinate and agree on with our friends in Japan, the United States, Australia, and other countries too. We will continue to follow these principles.

”In joining the World Trade Organisation, Russia has taken on obligations to lower tariff and non-tariff barriers, and we will fulfil these commitments. We believe that preferential trade agreements should be as transparent as possible.“

Russia supports the creation of a regional system for monitoring natural and manmade disasters. We are ready for the closest cooperation with our APEC partners in this area. In the area of energy, we cannot ignore important issues such as energy saving, rational use of resources, and making our GDP less energy-intensive. The Green Growth model opens the road to new technology developments. I am sure that the APEC forum will help to bring the region’s economies together to solve the key energy issues, and regional business will invest in developing and spreading the technology that will increase the entire region’s energy security.

Innovation, as I have said, is an important integration area in which we count on active cooperation with the business community. Since we are here at the Far East Federal University, I particularly note the importance of cooperation in science and education. It is in our common interests to build up the ties between our universities and research organisations, encourage student exchanges and contacts between scientists, and facilitate development of human capital in general. The APEC agreement on gradually establishing a common education space was a big step in this direction this year.

The APEC economies complement each other very well in terms of their scientific and research base and human resources and education potential. Our prosperity depends in large part on our ability to use these competitive advantages to achieve together a new quality of economic growth in the region. With the Business Advisory Council’s support, APEC established this year the Partnership for Science and Technology Policy and held the first meeting of the Dialogue on Future Technology Issues. The aim in both cases was to get business involved in discussing the conditions for creating a good market-oriented environment for innovation development. I think these are useful and promising initiatives. We must take into account the business community’s views, take into account business demands and needs, and I hope that business will become more active in setting concrete and practical tasks for science.

Colleagues, Russia is an integral part of the Asia-Pacific region. We are investing seriously in developing Siberia and the Far East. The Far East Federal University, our venue today, is one of the areas in which we can work together. This is a big, large-scale project to establish a new scientific, educational, and intellectual centre for Russia’s Far East. We built it in just over three years. We think a large-scale project of this kind is an important beginning on the road to reviving science here and creating a strong new intellectual centre. We will continue developing this project.

This forum’s traditional motto is: APEC means business. The word for business in Russian is ‘delo’, which can also mean ‘cause’, and so I hope that this sense of having a cause and purpose, this boldness and vision will always define our work together. We must set ambitious goals and move forward, and take up the challenges of our time. It is on this that our common success depends. Thank you very much for your attention.