VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Vladimir Putin’s opening remarks:
Good afternoon, colleagues, ladies and gentlemen,
I am very glad for this opportunity to speak here and to tell you about our plans, to share my understanding about the development of the global economy, as well as the situation in Russia. Allow me to begin by saying a few words about global economic and financial developments as seen from a Russian perspective.
I need to recognise that the global economy is still feeling the shock waves of the economic crisis that hit in 2008.
The recent downgrade of the US credit rating was an extraordinary and highly indicative event. Stock market indexes of Europe’s largest economies plummeted by about 10% in two weeks in August. On the other hand, European countries, including G-8 members, have significantly increased loan interest rates, which means that investor confidence is still weak.
The sovereign debt crisis in developed countries is requiring politicians, economists and investors to rethink their traditional approaches. Last summer’s global economic shocks were yet further proof that development models relying on growing debt are no longer working. It's clear that the old leaders are ceding their positions and are no longer able to model the wise macroeconomic policies that they have been teaching us until very recently.
Moreover, the debt crisis in Europe and the United States is compounded by the fact that their economies are teetering on the brink of recession. Unfortunately, it is still unclear when they will recover, if at all, and this goes for Russia as well.
The centres of global growth have shifted as well. In the next decade, emerging economies in particular will be demonstrating confident growth at a rate two or three times higher than developed countries.
We in Russia respond promptly to the smallest negative changes. As you know, last August the Finance Ministry increased the supply of funds offered in auctions to place with bank deposits to avoid another liquidity crunch. The Bank of Russia also intervened to balance the national currency exchange rate, working in constant cooperation with other market operators and regulators.
It is worth noting that Russia feels quite confident with regard to its key economic indicators. We expect to overcome the lingering effects of the recent slump by next year - that is, the economy will regain its pre-crisis levels and will be growing by 4% annually over the next three years. This is just the baseline, however; we will make efforts to grow even faster. We are using a 4% growth estimate in order to plan, including for the federal budget and economic development forecasts. However, let me repeat that we will try to grow faster, because this is clearly not enough.
Russia has practically no dangerous short-term corporate debt; its sovereign debt to GDP ratio still does not exceed 10%. As for foreign debt, it is around 3%, no greater. In comparison, the average for developed countries is around 90%, and for some of them, it is as high as 100% or 200%.
Russia’s international reserves exceed $500 billion, which ranks third after Japan and China. And we planned that we would spend almost the entire government Reserve Fund this year in order to finance the budget deficit and to address social problems. We have two government funds: the National Wealth Fund, which is mainly used to finance the deficit of the pension system and the needs of the pension system, and the government’s Reserve Fund. We expected to spend all of the Reserve Fund this year, but we will not; moreover, we are replenishing it, so the government’s reserves are growing.
Inflation is unlikely to exceed 7% this year, which will be a new low in Russia’s modern history.
We will not simply support stability, which is so important for business, we will try to ensure critical macroeconomic conditions for further reforms. The draft federal budget for the next three years, for 2012, 2013 and 2014, was created with development in mind. The draft will be submitted to the Russian parliament before the end of September.
The draft budget has a minimal projected deficit and is based on very cautious and conservative estimates. Earlier, we set ourselves the goal of fully balancing revenue and spending by 2015; now we hope that we will be able to reach this goal earlier. This year, as you know – we have already announced it – even though we proceeded from an assumption of a deficit of 3.6%-3.7% of GDP, we will reduce it almost to zero; that is, the Russian budget will not have deficit this year. Nevertheless, let me repeat that we are proceeding from conservative estimates, we look at our economic reality, at what is happening in the global economy; we expect to have a deficit of about 1.5% in 2012, 1.5%-1.6% in 2013 and 0.7% in 2014. But if the foreign economic situation is favourable for us, as has been the case this year, we may not have a deficit next year either.
What I would like to emphasise in this regard is that we are increasing social spending, investing significant financial resources in the modernisation of healthcare and education: this is investment in quality of life and in human capital. We are perfectly aware that this policy requires funds, and huge funds at that. At the same, it is necessary to keep the budget stable, and, of course, we cannot indefinitely increase the fiscal burden on people and on businesses, eliminating incentives and resources for entrepreneurs to grow and expand. We needed to find a delicate solution, pinpoint measures, so we resorted to reducing the basic rate of insurance payments, simultaneously introducing an additional burden for salaries of over 512,000 roubles a year, which is a high salary in Russia. In fact, it is a burden on those who earn large incomes. I have to say, according to preliminary estimates – which are made based on the progress of budget revenues – even after social taxes and insurance payments were raised to 34% – which, we understand, was a hard blow – the progress of payments showed that businesses had coped with it, and budget revenues kept growing instead of falling. Generally speaking, some experts even said that it was not necessary to reduce this fiscal burden, but we did it nevertheless, in order to improve conditions for businesses.
As for small businesses, the rates of insurance payments for them will be lowered to 20%; tax breaks will remain in place for agricultural producers, companies that employ the disabled, high-tech companies and for businesses set up at universities and research centres.
For small manufacturing businesses, we are introducing a zero rate even on high salaries (those above 512,000 roubles). It is important because a big share of such companies’ spending goes to wages, so we want to provide targeted support to this sector.
Let me emphasise that the government’s stance is consistent and clear: the total tax burden in relation to the country’s GDP should not grow; reserves should be created from a more rational use of budget funds and from bringing order to tax administration.
Colleagues, the recent events in the world have served as yet another cruel reminder of the need to create a stable economic model. Obviously, those who implement the most viable strategy of post-crisis development will be among the leaders.
I believe that we should not just try to increase the size of the Russian economy. As I have already said, it will return to it previous size this year. But this is not our only goal. We must also make the economy more efficient by developing real manufacturing and encouraging innovation. We need to change the structure and the quality of our economy.
We intend to rely on active and creative people to help implement our development strategy, on people who want to convert their knowledge and skills into development projects, into new, state-of-the-art enterprises and high-tech companies, into millions of new jobs and the modernisation of the social sphere.
At the same time, we must acknowledge – and I want to talk about this today – that the risks and uncertainty of Russia’s business climate are, unfortunately, still high.
Say what you will about ratings agencies, and indeed they make a lot of mistakes, but they also point out our problems, and we are grateful to them for this. We would, of course, like their assessments to be somewhat more weighted: for example, according to their assessments Russia is practically a world leader in such a negative category as “the effect of malaria on doing business”, which affects the investment climate. But what does malaria have to do with Russia? Odd assessments and odd criteria. But if we distance ourselves from these obvious absurdities, we nevertheless take these unfavourable grades seriously; we agree with them to an extent and understand that a lot needs to be changed.
I want to point out that our common goal is not to become a safe haven for speculative capital, a place where it can hide out. Russia needs to create all the necessary conditions for smart investments both in manufacturing and in high-tech development, so we need to expand freedom for bona fide entrepreneurial activities and to support those with clear and useful initiatives, which seek not to make a one-time profit, but to improve the quality of life of individual towns, cities and entire regions, while at the same time making profit from their economic activities, of course.
These are the goals we set for the Strategic Initiatives Agency. We held a national competition to select talented young people who started their business from scratch; people who have implemented and are ready to continue implementing important social projects. Now they will propose solutions to eliminate systemic problems as well as administrative and other barriers that feed corruption and prevent the growth of business.
The agency has already begun selecting promising projects that will be implemented with support from the Russian Venture Company and Vnesheconombank. I have been informed that the agency will sign corresponding agreements with these institutions here at the Sochi forum. I hope this has been done or will be done soon.
Let me draw your attention to the fact that the Strategic Initiatives Agency plans to hold a news briefing for Russian and foreign investors and the media after our meeting today in order to talk about its activities in detail.
Moving on, we have set up several powerful development institutions in recent months. The Russian Direct Investment Fund was founded to support big programmes of both foreign and Russian businesses. Leading representatives of the global investment community have agreed to join its international expert council. The fund has already received over $2 billion; its capital is projected to reach $10 billion in five years. The money will actually go to co-finance Russia’s modernisation. As you know, we are developing a number of special economic zones, and 24 zones are already operating successfully. We are creating Skolkovo, which many of you must have heard about, and we will move in this direction consistently and aggressively. We will work to resolve systemic problems and to tackle local problems as well.
The Export Insurance Agency will soon be launched in order to support the ambitions of small and medium-sized businesses that want to enter foreign markets. We expect to have more than $14 billion worth of export loans insured from 2012-2014. We will primarily provide support to domestic high-tech products that, I'm sure, are capable of competing in the world market.
Today, this makes up just 17.6% of overall exports, but by 2015 this figure will be about 30%.
Another important area in our efforts is to promote inventions and innovations in energy efficiency, infrastructure, equipment, communications and so on. In general, we will assist our scientists, engineers and innovation business by providing them with orders from major government corporations. In other words, we will create a market for them. This year 46 state companies will launch innovation programmes worth a total of 700 billion roubles, and will double their funding after two years.
We should have an entire line of efficient instruments of development for all types of business – big, medium and small.
Of course, one condition that would encourage investment has to do with the formation of a proper atmosphere and predictable tariffs. I have already spoken about this atmosphere – we intend to be very persistent in this regard. Tariffs compose a major component. The government has had long debates on this subject; we proceeded from the belief that it was unacceptable to raise tariffs in order to conceal the inefficiency of infrastructure monopolies and their reluctance to reduce costs.
The government has made the following decision. Heat and electricity tariffs will only increase this year to match the inflation rate, and we are planning this increase not for January 1 as before, but on July 1, so as not to encourage inflation expectations.
The only exception is Russian Railways. Their tariffs will also grow by 6%, which roughly matches the inflation rate, but this will begin on January 1 because of repairs that are necessary in order to guarantee the safety of railway transport. We are planning to raise annual gas tariffs by 15%, but also starting on July 1 instead of January 1 of next year.
There is another important topic. We will continue ensuring macroeconomic stability at the federal level, and are launching major social and infrastructure projects. However, the efficiency of federal projects will largely depend on the operation of regional management teams – on their desire to change the course of development of entire territories and their readiness to take on the initiative and responsibility to do so.
I have just walked through the exhibition that is being held during this forum. I'm sure many of you have been there as well. Our regions are presenting a large number of interesting projects, but we would like to see not just projects, but also the efficient work of their management teams. This has to do entirely with the formation of a favourable business climate.
I believe that we have every reason to discuss the formation of a single business support standard in the regions. Any company entering a new regional market should be able to understand the rules of the game. These rules must be uniform, understandable and transparent. Any company should know what support to expect from the regional authorities as well as the federal authorities. I'd like to ask the SIA, whom I've already mentioned today, to submit its proposals in this area along with the business community as well as federal and regional bodies.
For our part, we will encourage the regions to carry out the necessary changes with the help of a wide variety of mechanisms, including financial instruments. There is a special fund whose purpose is to provide incentives to the regions attracting the biggest investment. This fund currently contains 10 billion roubles. I suggest that we think about establishing a direct link between the business climate and the allocation of subsidies to the regions.
In general, the effectiveness of the regional and local authorities in attracting investment and creating modern production lines and jobs should be the main criterion in assessing the activities of the regional governors.
Dear colleagues, I think many of you are wondering how sincere and persistent we are in our attempt to provide simple answers to complicated and difficult issues. We are not going to cover up these issues – I'll speak about them right away. I'd like you to understand that aforementioned measures are designed for the years ahead and do not depend on political, or even foreign economic circumstances. Moreover, we fully realise it is not enough simply to develop institutions that would facilitate Russia's advancement. We must also resolve systemic problems, such as corruption, which is one of our most unpleasant and complicated issues. It is clear that this is a systemic problem not only for Russia, but also for practically all countries with advanced economies, particularly transitional economies.
Throughout the past few years we have been consistently eliminating opportunities for corruption, improving the operation of law-enforcement bodies, introducing clear and precise administrative procedures and creating conditions for honest competition. We will definitely continue this work.
Today, one of our key tasks is to renew the personnel of the Russian officialdom and change the philosophy of government officials. We are going to bring new people into the government, the economy, politics and the social sphere – people who have demonstrated their ability to carry out constructive changes and work for the benefit of the people and the entire country. We will do all we can to help these people reach the State Duma, our highest legislative body, following the December elections. This is why we are holding preliminary voting all over the country and this is why we are involving the general public in it. This is why we are offering all those who want to work together with us to come to the State Duma. They can accomplish this, for instance, through the channels of our leading political force – United Russia.
Further, our business is becoming more mature and in some cases does not require additional protection. It is for this very reason that I consider it necessary to expand the powers of self-regulating organisations and to provide them with the opportunity to establish order in the business community themselves. Of course, they should do this without making things worse or creating problems for the market participants. This is a subject of our thorough professional work with the relevant communities.
We will also take additional steps to reduce the state's unnecessary presence in all areas of the economy. In particular, we will gradually withdraw from the capital of state corporations. I'd like to point out once again what I have emphasised at various levels – we are not going to develop state capitalism. If we concentrate some resources it will only be with the express purpose of helping some production or branch. For example, we are setting up state corporations or companies with the predominant participation of the state in the aviation industry, shipbuilding and some other branches as well. If you look at other countries you will see that the same sort of monopolisation is going on there. There are some areas where private business cannot afford to invest huge resources. At any rate, this is true of this country and also Europe – what is the EU there for, after all?
So, if we want to preserve our aviation industry or shipbuilding we need to invest state funds in them. However, this does not mean that we will have a presence there forever. As soon as these companies are able to get on their feet and conquer the markets (and they are certainly capable of doing well on both domestic and foreign markets), we will gradually reduce state participation there. And there is nothing unusual about this – many countries are doing the same thing. I have no doubt that working together, we can change Russia and make it a stronger and more prosperous state, a friendly neighbour, a country that protects human rights and dignity and has reliable private property guarantees. I'm confident that acting in this manner, we are bound to achieve success. Thank you very much for your attention.
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Vladimir Putin’s comments on speeches by forum participants
On the speech by Leon D. Black, Apollo Global Management CEO and Chairman of the Board:
Vladimir Putin: Thank you very much, Leon. Everything you said regarding the global economy and Russia was very interesting. If I may, I would like to give a short response to it. Thank you for the positive words about Sochi. You said you were delighted by what you had briefly seen. But if you take a closer look I am certain it will leave an even stronger positive impression. There is still a lot to be done, primarily with infrastructure. It is the priority. These are roads, tunnels, bridges, water and gas supply, sewage and power. But I believe these plans are ambitious in every sense. They would be ambitious for any country, not only for Russia. I believe we can make it a reality, and this part of Russia’s south will be very attractive and comfortable for Russian citizens and visitors from abroad.
Now to say a few words about your views on what is happening in the United States and Europe. I have nothing to add here really. With all sincerity, I must tell you and everyone here in this hall that Mr Black is indeed one of the world’s experts and practitioners and his is a highly valuable opinion. It is always interesting and helpful to know how people of this level of expertise see the current situation in the global economy. You talked about the States and Europe but, you know, there is something… There is a lot that I am concerned about but we remain optimistic because, for example, in Europe when European leaders face problems they find the strength and courage to make sometimes unpleasant but necessary decisions. We mentioned these countries, Portugal, Ireland, Spain, to say nothing about Greece. But look what is happening now in Italy. The country is in trouble. Without a doubt, it has been living off of debt. The country’s debt is 124% of GDP, if I’m not mistaken. No matter how much they criticise Mr Berlusconi for his special relationship with the fair sex (I believe, by the way, it is only jealousy), in this urgent situation he showed himself a responsible leader in every respect and took on the burden of these hard but necessary decisions. I was indeed glad for him. Yes, it was hard for him. Yes, it was an unpopular decision, but there was no other way out. In fact, everybody understands what needs to be done in this situation but not everybody has the courage to take the responsibility.
The necessary decisions are being taken not only in Italy but in other countries as well. It is important. It is a positive sign. I am in constant contact with my European colleagues, both businessmen and high-level government officials, as well as with financial institutions. They understand what is going on and are taking the right course of action. I think this is the most positive sign that these difficulties will be overcome. I sincerely hope for it. I hope both the United States and Europe recover soon because they are our close partners. The United States is the leader of the world economy (at least, for now) and we have over 50% sales turnover with European countries. Where do we export our goods? We export them to these markets, the United States and Europe. We import goods from there as well.
I noted what Leon said about the investors who prefer to stay away. As far as I know, President Obama has recently called on investors to increase their activity. And I think it was an absolutely correct and timely call because while investors are staying away and waiting it is not possible to change anything for better. Of course, we must be careful. Of course, our actions must be cautious, weighted and professional. But something must be done! We must start addressing each specific case today, otherwise we will be creating the conditions for a recession, which is unacceptable.
Speaking of Leon’s call for Russia to acquire some of the assets that financial institutions such as European institutions want to get rid of, I should say, Leon, that in most cases these assets are ‘toxic’ (or just complicated). Who wants to eat expired food? It is a sure way to indigestion. So, our investors would be ready to do it but they have to be aware of the consequences in this area or the other. Even in these conditions. We as a government would be ready to support our investors with the mechanisms available to us. I must tell you they have more and more uncommitted resources. If you talk to the heads of our leading banks such as VTB, Sberbank, Vnesheconombank, you will see that, as one of our favourite artists Shukshin (Vasily Shukshin) used to say, there is so much money the pockets will soon burst. They are looking for interesting and promising projects. But we need a proper attitude. Everybody, well, maybe not everybody but many people know how hard it was to reach a compromise in the deal with General Motors (GM) when we were buying one of its key German assets in the car industry. We were negotiating the Opel deal but we managed to find a compromise. It was so painful and slow but we finally signed it and it was a bargain for everyone. Everyone! We had no intention to steal anything from them, not a single piece of technology. Yes, we talked about development and the possibility of relocating a portion of production facilities to Russia. But it was supposed to be a gradual, careful relocation. No rush, no losses for anyone at all. I even met with the leaders of Opel’s trade unions and we agreed on everything. But no, the deal fell apart in the last minute! Why?
We also negotiated our share in several sectors of the electronic industry. We talked and talked and everybody understood it was necessary. No, it fell apart in the end. Do not be afraid of Russia. We are quite civilised partners. I will repeat, we have no intention of stealing any technology. All we want is a proper and equal partnership. We are ready to open our markets.
Speaking of our foreign partners in the West, from the United States, Europe and Asia, I think they should invest in production whose success is guaranteed by the country’s domestic market and is geared more toward the domestic market, rather than only in commodities (I will talk about this in a minute). It is no coincidence that in 2009, amidst the raging crisis, we decided to significantly increase pensions, for example. It was only a small measure but we did it to boost the purchasing power of this social category. In fact, we think about it regularly and the purchasing power of our citizens will definitely be growing. Our car market, for example, is currently the most promising one in Europe, and this opinion is based on international rankings, not just my own opinion. There are other areas such as telecommunications. Mobile networks are booming. There is no such boom in any European country. There are other areas. These are attractive areas where our companies as well as foreign partners could make a difference. This is what I wanted to say in response to your speech. My sincere thanks to you, Leon, for such a thorough review. It was very interesting.
On the speech by Drew Guff (Managing Director of the Siguler Guff venture fund):
Leon spoke about the interests of investors in the mining industry of the Russian economy, and Drew has just told us about what is being done to develop and invest in the so-called new economy. Both are of interest for us. In the first case, the amount of investment is significant… I'd like to draw our partners’ attention to the fact that Russia is one of the most open countries in this respect – there is not a single major international company that is not working in this sector here. Recently, as you know, the Russian oil company Rosneft and ExxonMobil signed some documents on a strategic partnership, including on the Arctic shelf. I was honestly very pleased to hear what was being said about investment in the so-called new economy and about the success of these investments. A strategic goal for us – for the Russian government and for Russia in general – is to change the structure of our economy. But we need to recognise, and you and I are well aware of this, that the share of the new Russian economy on the global market is currently tiny – just above 3%. The question, of course, has to do with what is considered a new economy. For example, China’s share is higher, but their products are different, not something our domestic teams are able to do, such as the programmers that Mr Guff was talking about. We have a huge potential that should be put to use. Thank you very much.
I have already mentioned the Strategic Initiatives Agency, and I would like to ask its head, Mr Nikitin, (Andrei Nikitin) to comment on the issues that we raised, but with a focus on Russia’s investment opportunities. And I would like for you to pick up where Drew left off. First of all, I would like to hear your opinion about how we can develop these innovative sectors of our industry and of our economy.
On the speech by Andrei Nikitin (Head of the Strategic Initiatives Agency):
I would like to say something concerning this topic. First of all, Mr Nikitin – as you must know by now – belongs to that category of Russian businessmen who are fairly young, but have already proved themselves through tough professional tests; they have had difficulties, but ultimately achieved success. They have achieved positive results, and it is very good that a) we have such people and b) this is possible in this country.
So I would like to return to what Leon said; I made a note of it, but did not respond immediately. Leon, you said that, fortunately, Russia did not find itself in as difficult a situation as other countries during the crisis. This is not exactly the case. We found ourselves in perhaps an even more difficult situation than other countries, because the Russian economy was dealt a double blow: the markets for our traditional goods were down and prices dropped, but we took a number of rather energetic steps towards improving the situation. This applied foremost to the financial sector, then industry, the real sector; it was true for power generation, infrastructure and the resolution of social problems. We developed what turned out to be quite efficient tools for fighting unemployment, and we implemented them across all regions of Russia. At this point, we have almost reached the pre-crisis unemployment level. Honestly, this was not an easy thing for us to accomplish on a national scale, as with Andrei and his enterprises. But I am very pleased to be able to say that we have achieved positive results.
To conclude this part of our conversation, I would like to say that we set up the Strategic Initiatives Agency that I mentioned for people like Mr Nikitin, in order to create additional conditions for them to conduct business. And I strongly hope that in so doing, they will have a most favourable impact on the formation of the entire investment climate and the business environment in this country. But I would like another participant in our discussion, Kirill Dmitriyev – I have already mentioned the Russian Direct Investment Fund – to continue the discussion with regard to the activities of this institution, in order for us to get a sense of what opportunities for investment in the Russian economy he sees.
On the speech by Kirill Dmitriyev (Managing Director of the Russian Direct Investment Fund):
Mr Dmitriyev said just a couple of words about our Direct Investment Fund, but I hope, and I am certain, that it will be efficient and reliable. I feel confident because it is headed by such a professional as Mr Dmitriyev – an experienced person, who has shown his abilities and has proved that he can work effectively. The colleagues he has mentioned are also leading professionals in international finance and the international investment process.
I very much hope that we will be able to work together and that we will succeed. My colleagues – to the left and right of me – have already talked about different forms of applying investment efforts, and have named different sectors of the Russian economy – both high-tech and commodities, but Mr Dmitriyev also mentioned agriculture at the end of his speech. I would now like to ask Andrei Danilenko to share his opinion about investment in the sector where he and his friends work and on the prospects for agricultural development in Russia.
Vladimir Putin’s commentary on the speech by Andrei Danilenko (President of Russian Farms Group of Companies):
Thank you very much, Andrei! I just didn’t understand why there was applause when he mentioned a glass of vodka. We need to fight against alcoholism in the country. Do you remember the movie about Jack, an American who wanted to grow tobacco, but failed? Well, Andrei here has succeeded.
I remember when I first saw him on one of the farms (you used to live in California, didn’t you?), I asked him, “Whose production is this?” “Mine,” he said. I said, “Really? This is an excellent modern farm. Whose it is?” And he said, “Mine.” I said, “And where are you from?” And he answered, “From California.” I thought that the young man was having a laugh, especially when he said that he was a philologist by training. I thought he was playing the fool. But it turned out he was indeed from California, he was a qualified philologist and he was working in agriculture at the time. And I asked him (I don’t know if you remember this, Andrei), “Why aren't you doing this in California?” And he said, “They don’t have conditions for it. I would never have got such loans there, with almost no collateral.” Here, we have no collateral value, and the governor helps very actively, which I was pleased to learn.
Then, a year later, we happened to run into each other at another event, and he proudly told me, “I have received Russian citizenship!” “Well done!” I said. And I realised that when he decided to take up dairy farming he was attracted not by a glass of vodka, but, rather, by Russian milkmaids. This all comes together very well. Indeed, it is a very good example of developing a business from scratch. And I am really very pleased, because this means that our programmes to support agriculture do work and they work efficiently. In some areas, such as in the production of meat and poultry – which I have already spoken about, and many of you know this already from the statistics – the growth that we are witnessing is comparable to that of mobile phones, and is even greater. It is not a matter of a few percentage points – it is several times greater.
I am unaware of any growth like this among our potential rivals. I don’t believe it exists. But we will begin working with red meat, with cattle, in the near future; we will be working in all areas. Everything that has been done in agriculture in recent years has been yielding good results. Unfortunately, we had some bad weather last year and the year before, but we nevertheless proposed and carried out a set of measures to support agricultural producers. And I must say, this also succeeded. It was designed primarily for those farms that suffered from drought. This year, the situation has been better.
One of the leaders of Russia’s agricultural production is, of course, the Krasnodar Territory. So I would like Krasnodar Territory Governor Alexander Tkachyov to tell us, using his region as an example, about the development of the sector in general and about the efforts of the Krasnodar Territory’s authorities to improve the investment climate in agriculture and in other areas. Incidentally, the city of Krasnodar – which is the administrative centre of the territory – has consistently been ranked No.1 in investment attractiveness for quite some time recently.
On the speech by Alexander Tkachyov, Krasnodar Territory governor:
As for the development of infrastructure, this really is the case. I mentioned this in my speech as well – this is not a problem for the Krasnodar Territory or the Black Sea coast alone. There are not many places in Russia with comparable climate conditions and, of course, this is something we will be able to focus more on only after we are done with the Sochi Olympic project, which requires huge capital investment and federal budget spending. In order to balance revenue and expenses, and pursue a balanced macroeconomic policy that is conducive to well-being and creates the conditions for increased economic development, we need to proceed with caution. We have no intention to run into debt, to exceed the established parameters, and so on.
I would very much like for money to come pouring into Russia, and for construction projects to begin all over the country; this is impossible, however, due to reasons of a macroeconomic nature. We need to learn from our mistakes. We know what triggered the global crisis: it was the mortgage lending crisis in the United States. That means that certain mistakes had been made, and many of those in the audience can pinpoint them specifically. We will proceed with caution.
It's a pity that Mr Tkachyov did not talk about what the territorial authorities are doing to create favourable investment climate. He certainly does have something to say on this matter. There are many positive aspects to this. It is no accident that Krasnodar is ahead of Moscow and St Petersburg in terms of a favourable investment and business climate. This really is the case. I was very surprised when I first learned of this, but was not the slightest bit surprised when I saw it for a second time. They are making truly excellent progress. As for references to the expression, “we are holding the country by the tail,” I do not agree, Mr Tkachyov, and it would be best to stop saying this. Our country is beautiful, it has no tail – and there's no need to speak figuratively, either. As for macroeconomic parameters, we will absolutely stick to these basic requirements in our economic development. I would like to get back to where we began our discussion. I would like to ask Jean-Pierre Thomas, who is a special representative of the president of France for the development of French-Russian relations, to share his ideas about the global economy and about what we can do together to mitigate the risks facing this economy and move forward.
On the speech by Jean-Pierre Thomas, special representative of the president of France for the development of French-Russian relations:
I believe that our colleague, and a participant in the discussion, has made quite a few pleasant and important remarks, and has sent us a number of very good signals. I must agree with you about the position of the French president that you mentioned, regarding the establishment of a Euro-Russian economic space. As you know, I have said on several occasions that the real Europe … geographically, the European boundary lies in the Ural Mountains, and Europe is bigger, because it’s not just a geographical notion. European unity is based on common culture and shared moral and ethic values, and this includes the area extending from Portugal to Vladivostok.
We certainly need to promote the joint development of this region for the benefit of all people who live within this vast territory and this can definitely be accomplished. We should consider easing and ultimately doing away with visa requirements, so that business people and common citizens of our respective countries could interact freely. We should think about introducing common economic regulations, and so nothing remains for me but to welcome everything you just said: without Russia, the European Union is not truly Europe. That’s exactly right.
Of course, we can and should complement each other. What I mean is our capabilities and competencies in various areas, our availability or lack thereof of natural or intellectual resources, etc. Certainly, as one, a united Europe will be much more competitive globally than it is now. But getting back to the global economy, Mr Black (on my right) and Mr Guff (on my left) spoke about its problems; we know about them, and about problems facing the eurozone. We know that the governments of the leading European economies – France and Germany – came under severe criticism for everything that is being done to overcome problems in the eurozone…
Not everyone is aware that the European parliament has adopted more decisions that are mandatory for all European Union members – more than the USSR Supreme Soviet did in its time with regard to the union republics. Nevertheless, I find I must agree with Mr Thomas that our colleagues need to expand the competency of supra-national executive bodies in order to improve the efficiency of the executive branch.
As for the measures adopted by the leading economies, I think that the leaders of France and Germany are not acting under the pressure of public opinion alone, but also operate based on strategic economic considerations. I think that they are entitled to ask problem countries to do more than simply wait for the leading economies to help them out by issuing securities and rescheduling their debt. They expect these countries to act with the goal of restructuring their respective economies and debts. However, I think that the leading European economies will ultimately assist problem countries to do their best to overcome their situation using their own resources. This kind of policy calls for patience and strong character, but I am certain that the eurozone will overcome these problems, just as the United States did based on the fundamentals of the US economy. I would like to thank my colleagues for participating in this discussion.
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Vladimir Putin answers audience questions:
Question: Today you witnessed the agreements that were reached on South Stream, a strategically important project. Also today, Yanukovych (Ukrainian President Viktor Yanukovych) issued the final, in his opinion, statement about Ukraine’s decision not to join the Customs Union. What do you think about the fact that these two events occurred on the same day?
Vladimir Putin: What did Viktor Yanukovych say?
Answer: Viktor Yanukovych said that Ukraine refuses to join the Customs Union and this is their final decision. He made this statement in Yalta today.
Vladimir Putin: I have not heard this statement. The final decision is usually made by the nation’s people in an open forum held in accordance with legally established procedures specially designed for life altering decisions such as this one. But certainly it is the sovereign choice of a nation, which direction to move in, what organisations to join.
We have just discussed the issues of the Eurozone. I can hardly imagine that under these conditions Ukraine will join the European Union. This is simply unrealistic. But as a strategy this choice is possible. However, it raises other issues and other concerns, concerns of an economic nature. But it is our Ukrainian friends and colleagues who must make the best choice. What option offers more advantages? To strive to join the Eurozone or to capitalise on an existing advantage brought about by the extensive cooperation of Russia’s and Ukraine’s industries? To capitalise on the advantage of having a common transport system and energy system, similar cultures and mentalities, and no language barrier? These are significant factors that could keep the economies of Russia, Ukraine and other Customs Union members competitive. There is no doubt about this.
I believe that calls to move in a different direction are politically motivated. If we look at reality, we will see that there are more advantages to joining the Customs Union. Secondly, who said that the Customs Union should not be integrated into the European economic zone? Our colleague here, Mr Thomas, just spoke about forming a common Russia-European economic zone. And the president of France, one of the leading European economies, has clearly stated that. There are no contradictions here, but we certainly will not force anything upon our partners. In the end, it must be their rational choice. But in any case, we will continue to cooperate, and Russia-Ukraine economic policies and their policies in general will not be impacted as a result of this statement. As far as I know, Ukrainian President Yanukovych has accepted the invitation of the Russian president. He will soon visit our country and we will have an opportunity to discuss these issues, not just as neighbours but as friends.
Question: The governor of the Krasnodar Territory has spoken about Law 94, which damaged the system of federal purchasing – investments in other words. You made a note to yourself but did not comment on it. Elvira Nabiullina, Minister of Economic Development, is here today. Perhaps, we will receive a clear …
Vladimir Putin: What organisation do you work for? You are keeping a very close eye on things.
Question: Can we get some clarification about the law?
Vladimir Putin: About Law 94? Presently the government is working on it. This work will result in either cardinal changes in the law or the drafting of a new law. The law is clearly flawed and that prevents us from working effectively. In some areas it is simply not possible to enforce Law 94. The Ministry of Economic Development, however, is aware of these flaws. For example, there should be a competition but with only one organisation serving as the executor. However, this law allows the government to appoint the one and only executor that performs services and offers goods, but in general the law needs to be reworked, to put it mildly. But the Ministry of Economic Development is aware of the problem and is working on it. What is important here is that as we correct mistakes we don’t make other ones. We need to proceed with caution.
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Vladimir Putin’s concluding remarks:
Esteemed friends! I would like to sincerely thank all of the participants in our discussion. For me personally it was interesting to hear such – and I say this without exaggeration – accomplished experts, specialists in their fields that have achieved real, brilliant results in what they do. I am pleased that we had an open discussion. And I would like that not only the individuals who are sharing the stage with me, who are attending the meeting but also those who may not be in attendance today but work in Russia would feel that the government, the regional authorities are doing and will do everything to not only improve the environment but also to work towards achieving results for the common good of our countries, of Russian citizens and citizens of our partner countries. I am certain that the number of these partners will grow. I would like to wish you success. Thank you very much!
