Transcript of the meeting:

Arkady Dvorkovich: Good day, colleagues! I will outline the key objectives for the Russian delegation at this year’s Davos Forum. The delegation, headed by Prime Minister Dmitry Medvedev, will attend the forum meetings on January 23 and 24, that's two full days. The delegation comprises representatives of federal and regional governments, including yours truly, as well as some members of the Government Staff, including Sergei Prikhodko (First Deputy Chief of the Government Staff), Minister for Relations with the Open Government Mikhail Abyzov, some regional heads, in particular Rustam Minnikhanov (Head of Tatarstan), Lev Kuznetsov (Governor of the Krasnoyarsk Territory) and Yevgeny Kuivashev (Governor of the Sverdlovsk Region). The forum will also be attended by a number of deputy federal ministers, including Sergei Belyakov (Deputy Minister of Economic Development) and Sergei Storchak (Deputy Minister of Finance). Representatives of business associations and large state development institutes Vladimir Dmitriev (Chairman of Vnesheconombank), Alexander Shokhin (President of the Russian Union of Industrialists and Entrepreneurs), Vasily Titov (Deputy CEO of VTB Bank), and leaders of the Agency for Strategic Initiatives, as well as leaders of large state and private companies, will also attend the meetings.

This year, the Russian delegation is bigger than ever. There are several reasons for that. First, Russia is president of the G20 this year and traditionally the Davos Forum welcomes the chairs of the G20 and G8 as its main guests. This time, the Prime Minister will speak at the first large plenary session in the Congress Hall. This meeting will focus on national development scenarios which have been prepared by a panel of Russian and foreign experts over the past few months. Our colleagues, Sergei Guriyev, Alexei Kudrin and Yale University professor Oleg Tsivinsky, will speak about them at the beginning of the plenary meeting. Following the presentation of the scenarios (they will be discussed for about two hours prior to the session), the Prime Minister will deliver a speech outlining his own view of the development scenarios and Russia’s role in the global economy. He will talk about the priorities of Russia's presidency of the G20 and outline the Russian Government's main objectives, including those that lie at the heart of Government activities and which he will shortly be announcing at a Government meeting. In this sense, both the Davos Forum and the Gaidar Forum, which  recently took place, provide platforms for comparing approaches with the experts and verifying understanding of Government activities, which under Russian law are defined by the Prime Minister.

On the second day of the forum, the Prime Minister will attend two main events. The first one is a special working breakfast, organised by the major Russian bank VTB Bank, where an informal discussion on Russia’s development will take place. The second event is a session on the G20. During this session, the Prime Minister will give a more detailed view of the priorities of Russia's G20 presidency, taking into account his own experience working in this format. Together with other heads of state, Mr Medvedev  was one of the de facto instigators of the G20 in its current format and was himself one of the G20 leaders. Therefore, he has all the information needed to give an overview of the prospects and priorities for the G20. Ksenia Yudaeva, the current Russian G20 Sherpa, will attend this session too and will give a detailed presentation of our position and priorities. This meeting will also be attended by the Sherpas of the other G20 countries.

The Prime Minister will also hold bilateral meetings, as the leaders of many countries traditionally attend the meeting in Davos. In particular, meetings have been scheduled with UK Prime Minister David Cameron and President of the Swiss Confederation Ueli Maurer. Other meetings, the duration of which may vary, could be held in other formats; their schedule is being coordinated. Mr Medvedev will certainly meet with the media and will also attend two meetings held behind closed doors, notably meetings with members of the Davos forum’s International Business Council and International Media Council where he will be able to put forth our approaches and our vision on issues of interest to our colleagues in an informal manner.

Many informal evening meetings are held during the Davos forum. The Prime Minister will attend a party given by Mr Schwab (Klaus Schwab, the founder of the World Economic Forum) which is traditionally held on the opening day of the forum, where he will be able to talk with his colleagues, including the leaders of other countries, in an informal setting. In our opinion, this is very useful for discussing global issues in different formats, including Russia’s priorities which are of interest for business people, journalists and our colleagues in the governments of other countries.

I’d like to stress that one more format will be added to the Gaidar and Davos forums soon for setting out the guidelines for the Russian Government’s activity. This is a forum that will be held in Krasnoyarsk in the middle of February, with the main day set for February 15. The Prime Minister will attend the Krasnoyarsk forum where following the announcement of our priorities he will be able to discuss them with a large group of experts, business people and representatives of Russian regions. We believe that this direct-access intense work, which will last a month, will be very useful for presenting the current efforts of the Russian Government.

Other members of the Russian delegation will attend different meetings. For example, I plan to attend the aforementioned VTB Lunch, where I will serve as the moderator, to direct discussions towards issues which I consider interesting (and which I hope my colleagues will like), including to coordinate the Russian and the global agendas, which is very important for us in the current situation. In addition, I plan to attend a meeting on the G20 priorities on the forum’s opening day, and also to talk with journalists from various media outlets. As chairman of the Russian Organising Committee for hosting Expo 2020 in Yekaterinburg, I will attend presentations on this issue. However, the planned special presentation will be held after the official delegation leaves Davos, but some colleagues capable of making the presentation at a high level will stay behind.

I’d like to say again that various Davos formats are a very useful method for resolving important issues very rapidly and in a compressed mode. Regarding Russia’s agenda, our most important task is to show investors, and primarily big international investors, that Russia is an open country, that one can and should work with it, and that we are waiting for investment and are ready to work with everyone who shares our view of priorities.

Question: Alexander Tretyakov, the newspaper Business Online, Kazan. I have a double question about the role of regional leaders, in particular the leader of Tatarstan Rustam Minnikhanov. What tasks are they facing?

Arkady Dvorkovich: Under one of the scenarios drafted by our experts, the role of regional leaders is very large, considering differences in the regions’ standards of development, and we can see the growth of the trend of the past few years, when Russia’s development will not be bolstered by all regions, and not even by the federal Government, but by regional leaders. I repeat that this is the opinion of experts rather than my personal opinion. The regional leaders who will go to Davos – as I have said today, there will be several deputy governors among them, in particular Mr Sharonov (Deputy Moscow Mayor Andrei Sharonov), who will represent the Moscow Government – these leaders have recently been the most effective, and Rustam Minnikhanov is definitely one of them: all of us know about Tatarstan’s achievements. Their goal is also to attract investors, to show what they are doing and possibly to boast about their achievements, and also to draw on the experience of others and to develop new ties.

The federal Government needs to demonstrate this aspect of Russia to the world, to show that Russia does not only consist of federal officials and Moscow as the federal centre, but that there are also a large number of regional leaders, and that Russia’s growth begins in the regions, which have proved their ability to achieve good results.

Question: Dina Khrennikova, Platts. You have said that one of the delegation’s tasks will be to show that Russia is open to investors. Hence my question: What is the Government’s view on the possibility of privatising Rosneft? What portion of the company does the Government plan to keep?

Arkady Dvorkovich: Of course, the Prime Minister and all of us [other members of the delegation] will present the promotion of competition as one of the Government’s priorities. Privatisation is, certainly, an instrument of creating truly competitive conditions on the Russian market, including in the energy sector.

We believe that no companies should have privileges. State property, as set out by law, excluding the shelf, does not entail any privileges – I am referring to the oil sector. But these de facto privileges still emerge because the attitude towards state companies is traditionally more lenient than towards private companies. That’s the way things are, and such are the traditions. We need privatisation in order to ensure an equal attitude and in order to improve the quality of corporate governance in those companies that are currently controlled by the state. We started privatising Rosneft some time ago. Last year, we made another important step in this direction, and the BP Company will receive a large stake in Rosneft. In my opinion, this will yield positive results. We believe that we will be able to show our colleagues that we are moving in the right direction. And, certainly, the Prime Minister will confirm plans for the unconditional fulfilment of the privatisation programme, which he initiated, which was approved by the Government and the President, and which we are implementing as planned.

Question: Alexander Yunashev from the newspaper Izvestia. Several years ago, Mr Medvedev attended the forum as President. And now he will attend it as Prime Minister. Why was it decided that the Prime Minister, rather than the President, should go there? And I would like to ask one more question, if I may. In 2000, forum participants asked: “Who is Mr Putin?” So, who is Mr Medvedev today? Thank you.

Arkady Dvorkovich: First of all, Mr Medvedev will be attending the forum for the third time already. He had attended the Davos Forum as First Deputy Prime Minister and had set forth his perception of Russia’s priorities. He subsequently attended the Davos Forum as President of Russia for the first time. Mr Putin had also attended the Davos Forum as Prime Minister. Mr Medvedev is now going there as Prime Minister. You know, the timeframe of specific trips is determined in line with various events and official functions in any given time period. This January, it turned out that it is more convenient for the Prime Minister to go to Davos than the President. This is motivated by specific timeframes, including the fact that Mr Medvedev is able to unveil the Government’s priorities within the G20 format, because he has accumulated substantial experience working in the G20. I repeat, this is a reason why Russia is the main guest at the Davos Forum this year, and this is really so, considering Russia’s presidency in the G20. And our colleagues from Davos asked us long ago for a Russian leader to come and set forth his perception. I repeat, Mr Medvedev can spend two days in Davos in line with the timeframe. Naturally, they have discussed this issue, they have compared their stances, and so, there will be no problems here.

As for “Who is Mr Medvedev,” I believe that everyone already knows this. Everyone has been able to repeatedly assess the opinions and priorities of Mr Medvedev. But, as Prime Minister, he will unveil his agenda and his priorities in a fully-fledged format before this international audience for the first time.    

Question: Chamber of Commerce and Industry Information Agency (CCI-Inform). Mr Dvorkovich, you have said the main goal is to present Russia to investors. Could you perhaps describe and mention the most ambitious and outstanding investment projects and their approximate volume? Thank you.

Arkady Dvorkovich: In our opinion, at this stage, we can perceive the range of investment projects more fully than during the previous period and in previous years. How can this be explained? This has to do with the fact that we have reached a stage when, apart from purely production projects linked with the creation of specific companies and production facilities, we are ready to attract major investment in a large number of infrastructure projects. This time, we can also offer these infrastructure projects to our partners, our investors, including financial and strategic partners and investors specialising in the implementation of these projects. I am talking about the development of Russia’s Far East, an obvious priority, and the development of southern Russia, where we are implementing such projects as North Caucasus Resorts, the construction of electric power stations and major transport facilities. The Moscow transport hub is a major infrastructure project with the greatest expenses, and this is obvious because the Moscow Region is one of the largest in the world. It has a population of about 20 million. This is comparable to the population of an average-sized country. And the transport system of the Moscow Region is a clear and attractive investment project for anybody.

These are projects to develop the cities that will be the capitals of the 2018 FIFA World Cup. We should develop not only stadiums but also the infrastructure of these cities; in some cases it is necessary to create this infrastructure for the comfort of local residents and for the guests of the 2018 FIFA World Cup. These include energy sector projects that are necessary to fully implement our energy strategy, by which I mean the construction of generating facilities and grids. The investment demand amounts to hundreds of billions of roubles; and we cannot manage without foreign investors. Some of them are already operating in Russia, others are only watching what we are doing. Here we will unveil our new company, we will unveil the plans for its formation; I mean Russian Grids, which will integrate the administration of the Federal Grid Company and regional grid companies that are currently affiliated with Interregional Distribution Grid Company (IDGC)  Holding. I think this is an interesting project for many investors.   

In addition, we have big plans in all areas of machine building. I mean the automotive industry, aircraft construction and shipbuilding. There are many interested partners here. At the meeting, I will speak about other sectors – about agriculture which is interesting for many people too, and there are many agricultural projects, primarily in cattle farming (these are large investments, there are some large companies that are interested in this); and I will speak about the forestry sector in Siberia and other regions. This is an incomplete list of the areas that we will discuss, but I think that the range of issues will be more extensive than last year.

Question: My name is Pavel Bogomolov, from the Neftyaniye Vedomosti newspaper. Mr Dvorkovich, when you spoke on the Davos energy package, you mentioned the word “shelf.” Please tell me, should a discussion on access to the Russian shelf be held – perhaps not today but in the future? Can you comment on this? Can we expect in the future that not only state-run companies but also private companies will play a more active role in developing the Russian shelf or will the status quo continue? 

Arkady Dvorkovich: The discussion of state-run and private companies is a domestic discussion, and it’s essentially over. We have agreed that the fundamental players are state-run companies. But following the Prime Minister’s instructions, they are developing proposals on the cases in which private companies can operate on the shelf. I repeat we have not taken a final decision as to whether private companies will be able to operate and in what cases; however, we have instructions to develop such proposals. Primarily in such cases when state-run companies refuse to develop a portion of the blocks of the shelf, when state-run companies are not interested in developing some blocks. I repeat, the mechanism is not ready yet.

There will be no changes with respect to access for foreign companies. A foreign company can be enlisted as a technological partner, including on conditions of risk sharing, but not as license holders.

Question: My name is Anastasia Laukkanen, Voice of America Russian Service. I would like to ask two short questions. First: Is a bilateral meeting with representatives of the US delegation planned at the forum? And second: How can you explain the fact that the main discussion concerns the perspectives and scenarios for Russia, are you planning to discuss this with the international community? As far as I know, the Ministry of Economic Development has a long-term scenario for Russia’s development to 2030. Will you unveil these forecasts? Thank you.

Arkady Dvorkovich: So far we are not planning to meet with the US delegation or other delegations or their representatives; but we may run into each other. I repeat, there will be receptions with various people and informal contacts cannot be ruled out. I repeat, we are not planning them, but miracles always happen at Davos, anything can happen. I don’t even know who will attend from the US, somebody is sure to be there, but I don’t know who precisely will be there on the 23^rd and on the 24^th – they have just had the  inauguration ceremony, all colleagues surely attended, and I can only guess who’s coming.

As for the scenarios, you know, it’s up to the Davos Forum organisers to determine the Davos Forum programme. Naturally, they discussed this with us, and we believe that the theme of scenarios of Russia’s development is a convenient way to simultaneously discuss our priorities and how Russia fits into the global agenda. And since our colleagues and experts from Davos conducted this work for a year, in fact this discussion will be a finale to this large undertaking. Naturally, my colleagues from the Ministry of the Economic Development and colleagues from other departments have taken part in the discussion of these scenarios, and they will be able to compare the forecast to 2030 and the experts’ view.       

Question: My name is Irina Filatova, from the Moscow Times newspaper. Mr Dvorkovich, can you say, in general, what are these scenarios and how many are there? And may I ask you a second question – why have you decided to include Alexei Kudrin in the delegation? Is he going as an expert or is this a hint? 

Arkady Dvorkovich: As far as I know, Mr Kudrin is not included in the delegation, he is a guest of the Davos Forum; but he has been one of the leaders of this project. The Scenario for Russia has been chosen by our colleagues in Davos; we agree with this100%. He is a valuable expert, and naturally his participation in this work has been very useful. We discussed these scenarios with him, including at the Moscow meeting of the Davos Forum, when we had an expert discussion on this theme. Mr Medvedev also took part in this discussion, so there are no problems here; on the contrary, we are pleased that skilled experts have worked on these scenarios. Naturally, German Gref (Sberbank President and Board Chairman) took active part in this. He will also attend the Davos Forum and will take part in this meeting. 

As for these unusual scenarios, they are not attempting to make any forecasts. Experts have singled out three main uncertainties on the basis of their discussion. Russia’s subsequent development scenario will depend on how they are resolved, and in what combination. Naturally, experts have also voted or voiced their opinion concerning the probability of resolving these uncertainties one way or another. I repeat, these three uncertainties are as follows:

First, the situation on global raw materials markets;

Second, the pace of implementing institutional reforms in Russia;

Third, the extent of regional integration or, conversely, differentiation inside Russia.

(This question was asked by our colleague).

And the following three scenarios were compiled on this basis:

A scenario of falling oil prices could clearly cause difficulties in the implementation of various programmes and also contains some obvious risks. A scenario of high oil prices but without rapid institutional reforms will entail a different financial situation and other risks. And the third scenario of greater regional differentiation means in effect that the country will live at the expense of the leading regions but at the same time it means stagnation for all other Russian regions due to the insufficient activity of the Federal Government. Frankly speaking, all of these three scenarios are negative. This does not mean that they are terrible and catastrophic, but they cannot be called optimistic. And, of course, the Prime Minister will give his opinion of the scenario he perceives as most likely, the one we should go with and how we can minimise the risks associated with of any of the three scenarios that have been compiled by the experts.

Yes, these scenarios have already been distributed among participants of the Davos Forum. I don’t know whether they have been posted online, but chances are that they can already be found online, now that they have been distributed among the participants.

Question: They are all relatively negative. Don’t we have a positive scenario?

Arkady Dvorkovich: I repeat once again that we have a positive opinion of development, but these scenarios have been compiled on the basis of the opinions of a panel of experts. And it is quite good that these scenarios are not overly favourable for Russia because they force people to think about where the main problems lie and how we can respond to these risks. A positive scenario would make us complacent because everything would seem okay. In this situation, all three scenarios involve major risks and major problems. This is a good challenge for the entire Federal Government and for regional governments. They make us think what we are doing wrong, and how this can be rectified.

Question: My name is Hernando Pineros, Press Secretary of the Embassy of the Republic of Colombia. I don’t want to discuss negative issues but nonetheless I would like to ask a question about capital outflow. How does this hamper attracting new investors?

Arkady Dvorkovich: Capital outflow is a complex phenomenon and involves different forms of money leaving the country for different reasons. At the same time, a sufficiently large, although as yet insufficient, volume of money is flowing into the country. I am talking about direct foreign investment, which is retained, which does not flow anywhere and, moreover, this investment continues to expand with every passing year. I want to say that the total accumulated volume of this investment is continuing to increase. As for capital outflow, some types of funding are, on the one hand, invested normally in various assets, and there is nothing bad in this. Any conservative and normal business simply has to invest its resources in various assets, including non-rouble assets. This amounts to a normal diversification of risks and is normal behaviour on the market. Consequently, this part of the capital outflow is quite explainable and reasonable. The other part of the capital outflow process is linked to a poor investment climate and with the fact that people are ready to invest in Russia, but they don’t see any profitable investment projects. This is bad for Russia. And we are trying to respond to this challenge. We have started implementing specific programmes and plans, primarily under the National Entrepreneurial Initiative and in line with roadmaps which have been compiled together with the business community. And, of course, the ability to stop capital outflow or failure to do so depends on our success. Our macroeconomic situation is not bad and is not the reason for capital outflow. We believe that the specific investment risks perceived by businesspeople in Russia is the main reason. Naturally, the Prime Minister will talk about this in Davos. And he will also discuss our methods for implementing these plans.

Question: I am Anna Gorshkova from Interfax agency. There is increasing talk that Europe is raising the issue of the security of energy supplies, particularly oil supplies, in talks with Russia. As you know, Transneft representatives have been summoned to report on the security of our oil deliveries. Will this issue be raised in Davos? Or perhaps Russia is preparing some special stance or presentation, or will it try and somehow talk about our ability to ensure the security of oil supplies? Won’t oil flow somewhere else, say, to the Asia Pacific markets? 

Arkady Dvorkovich: First of all, there is no such place in the European Union where we can be summoned. This is an illusion. Quite possibly, our partners also harbour this illusion. We have conducted and continue to conduct a reliable and completely secure energy policy. We are supplying all the concerned countries with our raw materials, including our energy resources. The various risks that arose in certain years were mostly linked with the behaviour of transit countries rather than with Russia. And we are also minimising these transit risks today by building new pipelines from Russia to Europe and from Russia to Asia and by using sea routes to transport oil and gas. Our colleagues realise this, and I don’t think that they need any separate presentations. Naturally, our companies provide all the required information to their partners in line with Russian legislation and in line with our international obligations. This concerns Transneft and Gazprom and other companies, and we are counting on real partnerships. Naturally, this will be discussed in Davos. Questions are likely to be asked, we will answer these questions, and we will put forward our stance. I repeat, this stance was clarified long ago.

We believe that energy security can only be ensured through real partnerships, real integration, real interests and real consideration for the mutual interests of all parties. Any unilateral actions or attempts to create rules of the game which don’t suit our partners will lead to negative results. Technically speaking, we now consider the East to be a very good potential market. Supplies to that market will increase, but not to the detriment of meeting the European demand. We will fully meet all future European demand for Russian fuel and energy. Thank you.