Question: Mr Medvedev, this is the first time you have taken part in the ASEM summit in Laos. Have the debates been constructive and substantive? In general, what are Russia’s prospects at this forum?

Dmitry Medvedev: Thank you. I was pleasantly surprised. I expected it to be worse, since I had never before taken part in this forum. It seemed to me too cumbersome – it had too many participants and their number increased by another three states. That said, the level of debates was no worse than at G20 meetings.

The forum is useful also because it unites not only the states from the G8 or G20, but many more, and it also has a regional aspect – Europe and Asia as the key partners. This forum is a very large entity. Finally, it also includes Russia, which is part of both Europe and Asia. In fact, our geographical position gives us a special place in it. The forum has a host of the most diverse projects and many prospects. Therefore, I believe that this forum is fairly substantive. It is a bit long, because practically every participant should express their opinion on all the issues, and practically everything is being discussed – the economy (everyone spoke about the current financial problems), geopolitics and security. Practically all issues are discussed at this forum.

To sum up, I think this is an interesting forum, one in which we will participate. We applied for participation in it with good reason. It offers a good opportunity to exchange ideas about the prospects of Europe and Asia and individual states, such as the Russian Federation. The debates were absolutely clear-cut and specific. Eventually, some participants even started sorting out their relationships. Such things happen. Sometimes even states do this.

Question: Mr Medvedev, today you and your Vietnamese colleagues have supported the formation of a free trade zone. Could you please explain why Russia needs this? What dividends will we get? The second question is more specific – could you describe in more detail Russian-Vietnamese nuclear cooperation?

Dmitry Medvedev: First I’ll say a few words about a free trade zone. Its purpose is fairly obvious. It will facilitate trade, attract new commodities and allow the free movement of goods. Importantly, we are now talking about trade relations between the Customs Union and Vietnam, rather than between Russia and Vietnam.

It is abundantly clear that the proposed zone opens up new opportunities for Vietnam, since all three countries have the same customs procedures. This is good for us too, because Vietnam has a vast number of free trade zones with other countries and is actively developing its trade.

Those who have been to Vietnam see how quickly everything is changing there. Some time ago I felt the same in China, when I saw how quickly it is changing. Now I can say that Vietnam is changing at the same pace. I think we’ll all stand to gain by intensifying trade. Our trade with Vietnam amounts to three billion dollars. We have a very good history of our bilateral relations, indeed truly strategic relationship. At one time we were very active in helping Vietnam gain independence by various means, and so our political and human relations are at the top level, whereas our trade is fairly modest. Let me recall that our trade with China amounts to about $20 billion; the figure for our trade with the United States is similar. With Vietnam, however, we are trading much less. We could have commensurate trade with Vietnam, or at least we could increase our trade substantially. Our goal is to bring it to at least seven billion dollars by 2015, and develop all possible communications. But with regard to trade regulations, this is a complicated issue, and we’ll start discussing them on January 1 of the new year. We must not simply remove the barriers to our trade but ensure free exchange of commodities, services and jobs between Russia, Belarus and Kazakhstan, on the one hand, and Vietnam, on the other. Concerning these package positions, we will discuss this subject with our Vietnamese partners.

Speaking about nuclear cooperation – I assume you are referring to the building of a nuclear power station – this is a truly big, flagship project and its cost is high – about $10 billion. Of course, we understand that this is a very important area of cooperation for Vietnam. At the same time, there are nuances that had to be discussed at this meeting as well – we spoke about the timing for starting this project and how to work… To sum up, we have synchronised our watches with Vietnam once again.

On the whole, we have practically reached an agreement on everything and will conduct our work in accordance with a schedule proposed by Vietnam, because this is going to be its nuclear station. We have provided them with a Government loan for it. This is good for us too, because Rosatom’s backlog of orders is increasing and this means more money and an opportunity to test the most modern nuclear technology.

Question: Has the loan already been issued?

Dmitry Medvedev: Yes, I’m positive about the loan.

Question: Could I ask you one small question? Could the formation of a free trade zone lead to a snowballing growth of Vietnamese imports, say of light industry products, into Russia?

Dmitry Medvedev: Naturally, we are thinking about this, because Vietnam obviously has its own advantages and beneficial spheres of activity. Therefore, we’ll have to consider everything so that some losses do not exceed the advantages of our presence in the Vietnamese market. This is what we are going to discuss at our negotiations, which will start on 1 January of the new year. It goes without saying that we are thinking about this.

Question: Mr Medvedev, I’m much intrigued by your remark that some leaders sorted out their relations, even at the summit. Who was sorting out their relations, with whom and on what issues? This is my first question.

And the second one is about Vietnam. Have you discussed, at today’s talks, the formation of a base for logistical support of our ships? And the third question – have you discussed an opportunity for Russian companies to participate in the exploration of Vietnam’s oil and gas deposits? What are our prospects there? What do you think about them?

Dmitry Medvedev: Let me start with the second question so that I may logically conclude the Russian-Vietnamese subject. Naturally, we have discussed the formation of a base for repairs of Russian ships in Cam Ranh. This item is on our agenda. We are continuing to coordinate our positions, and the Vietnamese side is thinking about how to legalise our relations on this score. We will continue discussing this subject and I think it is likely to have a positive outcome.

As for oil and gas projects, we have many of these. I’d like to visit the biggest project, but don’t have the time. I’m referring to Vietsovpetro, which started in 1981, if I’m correct. This is one of the biggest oil producing companies, and we are taking part in this project. This is a very good investment. We achieved much, both in the Soviet and post-Soviet periods, although we have somewhat reconfigured the content and normative base for our relations. Many people are working on this project – more than a thousand Russian citizens, not to mention our Vietnamese colleagues.

There are also other hydro-carbon projects on which we have made progress. We are now discussing cooperation on the shelf in the South China Sea, and opportunities for joint work in other places, including Russia. We’ve recently decided to let our Vietnamese friends – and they are truly friends and privileged partners – work on one major deposit in the Yamal-Nenetsk Autonomous Area. This is a federal deposit. I’ll be honest with you – this decision was exclusive, having in mind our special relations with Vietnam. They let us work in their country, and we reciprocate. This is a good exchange, and they are also pleased about it. I hope for good prospects there. Our companies, including private ones, would like to see what can be done on the shelf. I’m referring to LUKoil and TNK. Both have their own arrangements with Vietnamese companies, and will continue exploring this subject. Something may come out of this. We spoke about this today, too.

And, finally, there is one very promising direction – the supply of LNG, or liquefied natural gas, on the market of Vietnam and adjacent countries. This is also a good direction, considering our potentialities in the Far East. To sum up, our prospects for oil and gas cooperation with Vietnam are fairly good.

Now I’ll reply to the first question, which I must have provoked. China and Japan had a tough conversation on their territorial issues. But this shows why such meetings are useful – it is at the forum that it is necessary to seek solutions to the most delicate and difficult issues. This should also be done on a bilateral level, which is only natural, but, considering that many issues concern all states, on a multilateral level as well. We hope that all these negotiations will be conducted in a good-hearted and peaceful manner, and that eventually the parties in this dispute or dialogue will come to terms.

Question: Yesterday, the new Defence Minister suddenly appeared…

Dmitry Medvedev: Was his appearance really so sudden?

Question: …nonetheless, consultations on the Minister’s appointment lasted for several days. Were there many candidates? And to continue this subject, did you have any problems with Serdyukov concerning the reform and the federal system for defence contracts (Rosoboronzakaz)? Will Sergei Shoigu complete the reform? Thank you.

Dmitry Medvedev: Once again, let’s start by assessing what has been done. Yesterday I gave a brief account of this. I’ll repeat: I think that Mr Serdyukov has been effective in his capacity as Minister of Defence. He has begun the long-awaited overhaul of the Armed Forces. Our army has not seen such a transformation since the founding of the Russian state. Our army has been in dire need of such an overhaul. Mr Serdyukov has had some successes and some failures because reform is a complicated matter. However, I hope that the transformation of the Armed Forces has become irreversible because we do not need a Soviet-type army. We need a highly efficient, compact and strong army with state-of-the-art weapons and a powerful nuclear arsenal for the purposes of deterrence. I have said this repeatedly and I want to stress this again: I think that we should not spare money when it comes to this. This is a matter of the sovereignty and security of our state. Our country is big, the biggest in the world. Perhaps other countries can avoid spending such funds. Unfortunately, we have to, because the army has not received adequate funding for a long time.

The overhaul includes military housing: for the first time in the history of the modern Russian state, servicemen have been provided with quality housing. Housing has been offered to the majority of retiring servicemen. Naturally, all this should be completed, because we cannot stop these programmes. Other housing options, including mortgages, have come into effect. The army has been getting more and more professional; I mean the ratio between the number of conscripts and contract servicemen. And I think this is the way it should be. I endorsed it as President and as the Supreme Commander-in-Chief, and nothing has changed. Therefore, personally, I have never had any complaints against Mr Serdyukov.  

As for the subject of the investigation, it is indeed necessary to carry out this investigation and take all decisions in accordance with the law. One should not comment on such things prematurely in accordance with the law.

The Federal Service for Defence Contracts had its problems, that is true. But these problems involve not only the activities of the Ministry of Defence but also those of defence enterprises. This is always a complicated process – agreeing prices, quantities and deadlines. No one is perfect in this respect, I suppose. The Ministry of Defence has put tough pressure on defence enterprises that don’t always operate as efficient as the current situation and market demand. The defence sector needs modern equipment and not the retreads of 30-40 years ago that they try to sell us at high prices, which are just Soviet equipment – designed by our talented engineers of that time – in new packaging. That does not work. The enterprises should make new equipment, fundamentally new equipment. In this case, we will buy it, and our partners, such as Vietnam, will buy it – we have good cooperation in the defence sector. So the work to improve supplies under state defence contracts should be continued.     

Personnel decisions are taken under the existing legal procedures. These procedures say that the Prime Minister submits to the President a decision on removing from office or appointing new Government members. This situation was similar. As for discussion, there are always options. I think the option of Mr Shoigu is currently the best option because the new Minister of Defence has good ministerial experience. He has built up a highly efficient Ministry of Civil Defence, Emergencies and Disaster Relief, which is perhaps the best ministry of its kind in the world. He is the man who can carry out orders and this is important for the head of the Ministry of Defence. Meanwhile, he must continue the overhaul initiated under the former Minister of Defence and he must see this overhaul through – this is critically important. In this regard, I think he is a skilled minister. He will be able to achieve this. I am sure that the minister will focus on social programmes, servicemen’s wages and housing programmes, which are sacred. 

Question: Mr Medvedev, Barack Obama won the US election. He has already given his victory speech. You have signed the Strategic Arms Reduction Treaty with him and you know him well. Will Obama’s election mean a continuation of the reset of US-Russia relations?

Dmitry Medvedev: We have our own memorable day, and now the Americans have theirs, November 7. It is up to Americans to elect their president. As for us, unlike Americans, we take a neutral position. However, I will say something on this, because I have a personal view. First, I’m glad that a man who considers Russia the number one enemy will not be the president of a large and very influential nation. This is ridiculous and borders on paranoia. 

I know Barack Obama well. I have worked with him. I think he is a successful president. He led the country during the crisis, so he does not need to retune mechanisms. To be honest, the US economic situation largely affects the world, including Russia. Whether you like the US and Americans or not, the US dollar and its fluctuation unfortunately affects practically every Russian family due to the global nature of the economy and the power of the US economy. This economy will continue to be the strongest economy in the world for a long time. So I think that President Obama is quite a successful president overall. 

We have a history of relations with him. Indeed, there was a reset. It has had some successes and failures, but in any case we have achieved good results: we have signed the New START treaty, we have eased tensions around the nuclear arms race, and we have tried to develop a great number of other projects. And in this respect, Obama is an understandable and predictable partner for us, and this is the most important thing in politics. We can have personal sympathies, or, on the contrary, misunderstandings, but predictability is the most important quality in politics. Barack Obama is quite a predictable partner for Russia, and I hope that Russia will have normal relations with him. This is important for the overall situation in the world because the relations between the two major nuclear powers still influence a lot of things worldwide.

Question: Can you elaborate on the operation of Vietnamese companies in the Russian oil and gas sector? Who will they cooperate with on the Yamal Peninsula? That’s my first question.  

Second, can you elaborate on your personal attitude to Rosneft’s purchase of TNK-BP? Does this deal contradict the Government’s policy of reducing the public sector? Thank you.

Dmitry Medvedev: On the Yamal Peninsula we have a special enterprise, Gazpromviet, and it has its partners. There are some other projects that will be successfully implemented, I hope. 

The deal to purchase a stake in TNK-BP has been developing according to the rules of corporate life. Currently, TNK-BP is a private company with a 50-50 stake ratio. This is not the best ratio in my view. If I had established this company I would never have done it like that. Or if I gave my advice as a lawyer, like in previous years, I would tell them not to conclude such a transaction because it would always be a source of internal problems. Any problems between shareholders create a deadlock. But they made this deal and numerous corporate conflicts flared up between them – between TNK and BP. These conflicts went on and on, and they still continue. In this sense, no one forced them to do anything. They were unable to reach an agreement and suggested acquiring their own stake. They tried doing it internally, but it came to nothing. As a result, they started contacting other parties. It should be admitted that this is a very large asset, and the potential for acquiring it is not as great as it may seem. To be blunt, Russia considers this to be a strategic asset. We are concerned about who will acquire a 50% stake or a 100% stake because this may become the largest stake to be sold on the oil assets market in recent years. Which means we cannot remain indifferent. Naturally, the state is monitoring the situation.

As for the arrival of the new owner, Rosneft, I would like to say two things. Quite possibly, if the situation were different I would think that the state should not need to increase its stake. In principle, I believe that the state should buy into specific companies only as a last resort. Moreover, we must pursue a consistent policy of minimising state involvement in companies. But in this particular situation, you should first of all find a prospective customer who could buy all this – this is a tremendous amount of money. If you find such a customer, I’ll tell you straight that such a transaction will not necessarily be in the interests of Russia. In this sense, the purchase of this asset by a state-controlled company which abides by free-market laws, which has conducted an IPO and which has its own free float and is listed on the stock exchange essentially amounts to a perfectly acceptable and transparent acquisition.

And now the last thing. The purchase of a stake in TNK-BP by Rosneft does not mean that we will not privatise Rosneft. And this is the correct option: We need to privatise a powerful company by selling off various stakes, depending on the market situation. Therefore we will carry on with our privatisation policy, and the state will continue to withdraw from various areas.

I wish everyone a good flight home. Goodbye.