26 january 2013

Dmitry Medvedev’s interview in Davos with the Vesti v Subbotu (News on Saturday) programme by the Rossiya television network


Sergei Brilyov: Mr Medvedev, I would like to come back to the Grand Hall meeting, where you took a seat in the audience. Why didn’t you go up on the stage straight away?

Dmitry Medvedev: I wanted to see my colleagues present their scenarios. I enjoyed sitting in the audience. It’s better than being on the stage, where the lights are on you and everyone looks at you.

Sergei Brilyov: Were you surprised by their assessments?

Dmitry Medvedev: No, I wasn’t. I knew what they would be because the scenarios were prepared in advance by large expert teams. In fact, these are not scenarios but assessments of risks, which are especially acute in three areas. I think it’s good that these scenarios were drawn up. I said so yesterday. They show to the Government what should be avoided, what deserves special attention and what’s dangerous to our economy because of its weaknesses. It’s good that experts paid attention to it all. We have no reason to dramatise things because I haven’t the slightest doubt that none of these scenarios will ever be enacted. They exaggerate things. Perhaps that was why they were drawn up.

Sergei Brilyov: There was a ballot there. I looked everywhere but couldn’t see if you voted.

Dmitry Medvedev: I did, of course. I didn’t vote for the first option.

Sergei Brilyov: Did you vote for competition?

Dmitry Medvedev: Yes, because it is true that state management and corruption are our national problems, and also because I don’t think it any less important to promote competition in our economy between companies and entrepreneurs, including small and medium-size businesses. We streamline management and combat corruption by promoting competition. So I voted for the third option.

Sergei Brilyov: Promoting competition.

Dmitry Medvedev: Yes, improving the competitive environment, establishing a basis necessary for competition and developing small and medium-size businesses.

Sergei Brilyov: Let me ask you another question about political competition. We have a strange situation in Russia. You say: “Let us get civil society more closely involved.” Sure, let’s do that. But then, you hear and read the demands that are made at the rallies…  The leftists want political competition but when it comes to the economy they mostly support socialist ideas. How can you implement reforms with such civil society?

Dmitry Medvedev: You know, I’m not saying that we should accept with everything that is said in the streets. That would be completely irresponsible. The Government, the national leadership should listen to the public opinion but proceed from reason and economic expediency without following any trends, whether leftist, rightist or any other. It is our duty to listen to every opinion but not necessarily to follow it.

Sergei Brilyov: Could you briefly outline the fourth scenario, please?

Dmitry Medvedev: It concerns our responsibility to guarantee sustainable economic growth using all our advantages. Russia must achieve growth rates allowing real economic development. We should not make do with 3.5% annual growth of the gross domestic product but come at 5%. We should retain macroeconomic stability, which is our major achievement, and we should proceed from the budget rule that safeguards our economy against all kinds of ups and downs. At the same time, we should combat inflation further. It is much lower than it was three, five or seven years ago, let alone 15 years ago. However, it is higher than in most European countries and even in some developing economies. In short, we must continue our efforts to promote sustainable macroeconomic development.

Sergei Brilyov: We have another responsibility, as we have learned from your address to investors during the VTB lunch today: Russia must develop agriculture and once again become the world’s breadbasket.

Dmitry Medvedev: Certainly, because this is our competitive advantage. This is my favourite subject. I mentioned it yesterday, too. What’s to become of Russia if oil and gas prices plummet? I spoke about it yesterday.

Sergei Brilyov: Especially as they are starting something with shale gas...

Dmitry Medvedev: They are making progress…

Sergei Brilyov: It’s a controversial policy.

Dmitry Medvedev: Still, other economies are permanently changing. They have volatile, flexible markets. But even if they change radically, Russia has industries that can ensure its sustainable development for decades ahead – I mean high tech industries we are currently advancing. Progress may not be rapid but we are establishing new high tech production facilities and creating new jobs. Agriculture is another of our advantages. Russia has already regained self-sufficiency in terms of farm products. Why shouldn’t we export them? Food is expensive, and Russia has always been an agricultural country.

Sergei Brilyov: We can also start with biofuel…

Dmitry Medvedev: Possibly, though we shouldn’t forget about maintaining a sound balance between foodstuffs and biofuel.

Sergei Brilyov: And we shouldn’t undermine our own oil industry.

Dmitry Medvedev: Besides, food is more important for the planet and the food market is much larger.

Sergei Brilyov: Mr Medvedev, you voiced two ideas yesterday without making a logical connection between them – you didn’t say “but” or “still” in between as you came down on the European Union for procrastinating with the adoption of visa-free travel and introducing the third energy package. Next, you mentioned Russia’s cooperation with India and China, our closest BRICS neighbours, as our country’s major advantage. Was this a hint for the Europeans?

Dmitry Medvedev: What I said was that we want to be friends with Europe and our partners in the CIS and BRICS. The message for the Europeans was that we are ready for the closest possible cooperation with the European Union and even integration but only on explicit principles and to mutual benefit. The European Union accounts for half of Russia’s foreign trade and is our largest partner. These are the hard facts.

Sergei Brilyov: But if anything goes wrong, we have our BRICS partners. Was that what you meant?

Dmitry Medvedev: We must certainly be on the lookout. Our closest neighbours, friends and partners are among the BRICS countries. Russia’s trade with China is nearing $100 billion and we intend to hit the $200 billion mark within a few years. That is why we are attentive to our partners in Asia. Russia hosts APEC summits and other events. Russia must upgrade its Far East. This is also of extreme importance but efforts on any one approach should not be to the detriment of our other partners.

Sergei Brilyov: You were asked about the Magnitsky and anti-Magnitsky laws in your interview with Bloomberg. I did not hear similar questions from politicians and investors during your meetings which I attended. Was that a journalist’s question or did it pertain to investment? Did it have any bearing on economic matters at all?

Dmitry Medvedev: I think it was an ideological and politically coloured question that had little bearing on the economy. It is also a tragic matter because it is connected with a death.

Sergei Brilyov: Yes, a man is dead.

Dmitry Medvedev: This tragedy has entirely shifted to the political plane and hovers permanently in the background of Russia’s improving trade and economic relations with the United States. Look what has happened: America has abolished the Jackson-Vanik amendment of the Soviet times and next adopted an anti-Russian law. As I see it, it’s an absolutely illegal act from the point of compliance with international conventions and the doctrine of international sovereignty. That is why we have to retaliate. Regrettably, such moves are normal for a state in this situation, but business has nothing to do with it.

Sergei Brilyov: You mean no one has talked to you about it?

Dmitry Medvedev: There was no business discussion. The matter is interesting only to some people who seek to gain political advantages from it. No one in the business world would ever raise the issue. Regrettably, it’s a factor in politics. We can’t help it. Russia will get over it but it is not the best situation for our American partners.

Sergei Brilyov: Another question concerning Europe: this interview immediately follows your meeting with UK Prime Minister David Cameron. Before coming here, he made a sensational speech about retuning Britain’s relations with the European Union, even questioning its membership in the EU. Is the European Union at death’s door? Or, as a French minister put it, has the European Union turned into a kind of restaurant where each can order something to his liking? If that is so, the Union doesn’t work any longer. What do you think?

Dmitry Medvedev: I put this question to David Cameron and received an exhaustive political answer. I will not repeat it because it concerned our talks but I am absolutely sure that nothing bad will happen to the European Union. Despite all the problems, it’s a very strong and lasting integration alliance. More than that, we should emulate all its best achievements in our Customs Union and Common Economic Space with Kazakhstan and Belarus. I have not the slightest doubt that the European Union will develop further. It matters a great deal to us as a permanent trade partner. Russia has transferred a substantial part of its currency reserves into euros. I’m sure they’ll settle all the issues among themselves. What else can they do?

Certainly, the European Union must address its problems, pay due attention to many countries’ tax burden and make them take up what is known as fiscal consolidation – that is, budgeting. I think the European Union will shift to sustainable development as soon as they do it.

Sergei Brilyov: I found the text of your speech in my pocket, and I would like to quote a sentence from it.

Dmitry Medvedev: How come it’s in your pocket? Did you write it?

Sergei Brilyov: No, it’s your speech, I just have a printout with me. You said you were sure that the Government team was fully formed and working efficiently. If that is your opinion, what do you think about my colleagues’ division of the Cabinet members into straight A students, C students and those that are failing? Have you thought about these assessments?

Dmitry Medvedev: You know, any government and any ministers and other officials are always going to be assessed by the public. That’s absolutely normal; that’s what democracy is all about. Some people are more efficient and others less. However, assessments should be based on the actual situation, expert judgements and criteria established by the state, while the opinions you referred to are extremely far-fetched. However, everyone has the right to his own opinions.

Sergei Brilyov: So you and the President don’t use such categories for assessments?

Dmitry Medvedev: Of course not. Why should we?

Sergei Brilyov: Thank you.

Dmitry Medvedev: Thank you.