30 december 2010

Prime Minister Vladimir Putin meets with the faculty of the Higher School of Economics

Vladimir Putin

At a meeting with the faculty of the Higher School of Economics

“Notwithstanding difficulties caused by the crisis, we are reforming social services and upholding social unity, which is very important. We have the public trust to carry on with the reform.”

Prime Minister Vladimir Putin’s opening remarks:

Good afternoon, ladies and gentlemen,

In late November the Higher School of Economics celebrated its 18th anniversary. Even though it’s a little late to say this, I would like to congratulate you, Mr Kuzminov (Rector of the Higher School of Economics), and all your colleagues, on this anniversary. I wish you and your alumni every success.

The HSE is an advanced university in every sense. It was established at a very turbulent time, when everything had to be built up from scratch – the economy, the system of government and political traditions. Society was undergoing a dramatic transformation. Russia needed new solutions, groundbreaking ideas and an overhaul of its world view. The HSE was our response to the challenges of the new era, and that was a very emphatic response.

This university was founded by leading economists, prominent scientists and educators, who were eager to search for and try out new solutions and were open to change.

This was the first Russian university to adopt the international system of bachelor and master degrees. In 2001 it started admitting students based on their Unified State Exam results and their performance at national student contests in different subjects.

The level of education has always been up to the highest standards here. Teaching has been based on outstanding traditions of the Russian higher education, taking advantage of the best international practices and factoring in socioeconomic realities. The HSE cooperates with famous international universities on the double major and cross education programmes.

Your alumni become true leaders in civil service and are very well prepared for business – many start their own businesses or work for Russian and international companies. According to statistics, 60% of your undergraduates have a job in their last year, 80% secure a job within the first six months after graduation, while the remaining 20% continue their studies.

The state has always supported the HSE, helping it to attract talented teachers and modernise its infrastructure. Last year it was included in the list of national research universities. You have rightly deserved this high status and honour.

The HSE has its development programme up to 2020, which I will speak about later today. You should know that the government will provide all the necessary assistance for this programme. It is in our mutual interests that your university’s prestige and opportunities should continue to grow steadily.

I would also like to touch on the cardinal changes your university will undergo in the near future. I’m sure Mr Kuzminov is aware that I have signed a government resolution on transforming the HSE into an autonomous educational institution. I would like to congratulate you on this highly anticipated decision.

This will give the HSE new administrative powers, as well as more freedom to set academic policies and procedures and to manage funds and other resources. I’m sure we all understand that more freedom and autonomy entail greater responsibility for your job, your students and the knowledge they receive. The HSE will be the first Russian university to trial new academic formats, and I wish you every success in this endeavour.

The HSE also provides expert support to the federal government, ministries and local authorities. But the scope of this activity needs to be expanded, and it is especially relevant today. I have just raised this issue with my colleagues in the government. We believe that the HSE, the Public Administration Academy and the government should set up an independent expert group to draw up proposals for the next phase of the economic modernisation programme up to 2020. As you know, this phase begins in 2012.

In 2012 we plan to introduce several legislative and executive initiatives, continuing what has been started, in particular the reform of the financial sector, municipal government, the pension system, where much needs to be fine-tuned, the modernisation of healthcare and so on.

We need a profound analysis of what has been done thus far and what needs to be done through the second phase of the economic modernisation programme up to 2020. I believe this work is critical. I know you have prepared proposals on several issues, which I suggest we discuss through the expert group.

There are a few other things I would like to add. We have always taken account of your expert opinion and proposals, especially during the global financial and economic crisis. I track opinions on the government’s performance. We know our strengths and weaknesses. I believe that the government performed effectively during the crisis. Not all people have felt it yet, and many feel that we are going through a testing time. But I’m now talking about the overall effectiveness of our efforts. Effectiveness can be measured easily, which you know very well. Last year the decline in production reached almost 8%, 7.8%, to be precise, while this year it will increase by some 4%. Industrial production fell 16% in 2009, growing by 8% in 2010.

Notwithstanding difficulties caused by the crisis, we are reforming social services and upholding social unity, which is very important. We have the public trust to carry on with the reform. I know that we are sometimes criticised for spending too much. I don’t know whether it’s too much or not. And how much is too much? We have raised pensions by almost 46%, by 45.9%. The average pension is now 7,778 roubles. Is it too much for pensioners, to whom we have major commitments? Is this really too much? I don’t think so.

Meanwhile, despite these expenses, we continue to curb inflation. Yes, there is inflation, but it’s unlikely to exceed the year-on-year rate – most probably, it will be lower than last year.

I have just discussed it with the Bank of Russia, which also has several proposals. We will continue this policy. We will continue to curb inflation, and this is not just empty promises. We don’t waste any money– we are reducing expenditure on several very sensitive sectors. This is done specifically to sap inflation.

Here is what I would like to draw your attention to. I would like to thank many of your colleagues for taking part in our efforts during the downturn. We did not just prepare a programme of prompt response measures to the challenges posed by the downturn; our objectives were to minimise the negative processes brought about by the downturn and to maintain the economy’s modernisation rates.

Let’s take the labour market as an example. The result is evident: every government in the world reports on these indicators, but not every government can achieve the numbers we did: 1,200,000 new jobs have been created, and possibly even more. No one has achieved such results. But these are not only new jobs. We need to analyse this in detail but I have reasons to believe that the quality of jobs is also changing gradually, since these are jobs for highly qualified personnel. Of course the changes are not major, but the positive trend is obvious.

Or let’s take the financial sector, which I have already talked about. Not only did we prevent the banks from collapsing but, as you know, we purchased the banks and (financial) companies that were on the verge of collapse, for symbolic amounts. We have been changing their structure rather than just giving them money. And what has that lead to in the end? We have been injecting capital into financial organisations and consolidating them, rather than letting them go bankrupt. How many did we used to have? You must know this better than me. Now the amount stands at 1,000, which is a lot, though there used to be more. But the number has decreased due to structural transformations and implementation of new principles and new requirements rather than bankruptcy. This is the second set of measures that have been moving modernisation forward during the downturn.

If we look at the real economy, we have financed 175 billion worth of loans just through Vnesheconombank (VEB), and the money is working in this sector. We made a decision to support the stock market and allocated a certain amount via VEB. VEB did the work and earned about $400 million from this, which it then used to issue mortgage loans, incidentally. The real sector is undergoing structural changes also, though they are very slow and criticism would be appropriate here but it is becoming more competitive.

I travel a great deal around the country and see what is going on. During the downturn companies had to introduce energy saving technology, I saw it with my own eyes, both in reports and in reality. That is what modernisation is all about, and it is happening.

The same applies to agriculture. We have always purchased grain, but over the past few years we have become a major grain exporter, third after only the United States and Canada. We have even left Australia behind. Of course, the drought undermined this development: there was a decline of more than 9%. But there is one aspect nobody seems to have noticed: we’ve been saying that there has never been such a drought in the country before, and I have talked with the experts and they say that there has not been such drought in a thousand years. Never. There was a major drought in the 1930’s, though on a lesser scale, it wasn’t anything like last summer, when we had a three-month stretch of 42-degree heat with no rain in the entire European part of the country. I repeat, Russia had never seen such a drought. The drought in 1930’s was on a far lesser scale but we all know the havoc it wreaked: it was a tragedy, a famine in the entire country and huge loss of life. This year, however, we saw nothing of the kind.

Incidentally, we have made a decision to start distributing grain from the intervention fund in order to lower inflation, among others reasons. Another piece of news I would like to share with you is that in early January 2011 we will start trading in grain from the intervention fund via grain exchanges to the amount of 400,000-500,000 tonnes per month. This will be in addition to trading through government resolutions and the regions. We will keep this tool for the enterprises that have been affected the most. We will hold trading sessions every week. The only issue is to improve the mechanism and define the areas where the trading will take place.

That’s what I wanted to say in the beginning. I would be happy to hear your opinions on how the work is organised both at the educational institution and in the economy as a whole.