20 may 2013

Arkady Dvorkovich interview with Rossiiskaya Gazeta


Question: Criticism of the Government has increased recently. Do you feel that the Government is really under pressure or is it business as usual and all this criticism is wishful thinking on the part of analysts and political scientists?

Arkady Dvorkovich: As I see it, like any government in the world, especially in a large country, the Russian Government is under constant pressure. This is normal, this is the fate of every government.

But I do not see that our government is getting jumpy. We are withstanding the pressure, we are preparing, adopting and implementing difficult decisions. Some things come easier and some are more difficult to accomplish, some things can be carried out within the Government’s scope of authority and some require the President’s approval.

I believe that during the past year a huge amount of work has been done and much of it, though not all of it, has yielded results. Some things we have failed to do. We have set ourselves ambitious tasks for this year. They are already enshrined in state programmes and will be reflected in the plans of the ministers that the President ordered to be worked out during the May 7 meeting. So, they will all be ready and published by June 7. 

Question: After that meeting, Deputy Prime Minister Vladislav Surkov, who was also the Chief of the Government Staff, resigned. How do you account for his resignation?

Arkady Dvorkovich: I can only confirm that he made that decision of his own accord.

In my opinion, the Government Staff is doing a very good job. It is a well-oiled bureaucratic machine, in the best sense of the word. There are no more delays in fulfilling the instructions of the President and the Prime Minister, we are no longer behind schedule in implementing the decisions of the Constitutional Court, a backlog had accumulated over the course of several years, there are no delays with the issue of enabling legislation, and the areas in which Vladislav Surkov introduced some innovations in his capacity as Deputy Prime Minister are well-structured.

All the necessary mechanisms are running fairly smoothly, although the work is only starting and there is still a lot to be done.

I would give very high marks to what has been accomplished this year, although it is not for me but for the President and the Prime Minister to give the final appraisal.

Question: The Government of which you are a member has become the most heavily criticised in the last 13 years. It is being criticised from all sides and not always in an acceptable form. How do you account for the fact that your Government has become the most heavily criticised?

Arkady Dvorkovich: My answer is very banal: it is only those who do nothing that do not get criticised.

Question: Are you suggesting that previous governments did nothing?

Arkady Dvorkovich: Of course they did things, and they were all criticised. The question is about the amount of criticism. The current Government, like the governments of other countries, faced with challenges connected with the slowdown of economic growth and budget constraints, has to make difficult decisions, sometimes meeting with a mixed reaction from various groups of people. In this context, if the Government has the courage to take difficult decisions, it is criticised by those who do not like it.

Half-hearted decisions that appear to be good, and are unlikely to be criticised, are not always the most effective decisions. Sometimes you have to take tougher measures which will eventually benefit a larger number of people. We are doing this in several areas and we are pursuing the ambitious goals the President set when he made his electoral promises. We have no right not to fulfil them. That calls for a great concentration of effort and financial resources, which creates tensions in other areas where resources are scarce. It is in these areas that we pick up the sharpest criticism.

That is normal. It means that we need to look for other ways to increase efficiency. The priorities have been determined, but that does not mean that we can afford to neglect certain other things.

Besides, no one can deny the fact that society has changed. It has become more open and the Government has become more open: it exposes itself to criticism far more than before. When there is more information there is more criticism. When there is less information there is a certain aura of mystery: sometimes people do not know what to criticise.

Of course some criticism comes in an unacceptable form, but then each of us in accepting a Government job realised that that came with the territory: you would be exposed to criticism, some of which will be unacceptable from an ethical point of view. We have learned to take it in our stride.

Question: There is much talk today about the existence of two centres of power. They are the current Government and the team of Presidential aides who were members of the former government. You have worked as the President’s economic adviser and now you are the Deputy Prime Minister in charge of the economy. How big an influence do presidential aides have on the Government and in what capacity is it easier to influence economic processes, working in the Kremlin or here in the White House?

Arkady Dvorkovich: I worked as Presidential aide for four years, I was in charge of economic issues and I was in contact with the Government. At all times, now and before, the President’s Staff and its Chief, his deputies and presidential aides and on the other hand the Government and all its members within their scopes of authority have certain powers and wield certain influence. The powers of the Government are laid down in the Russian Constitution. The presidential aides work for the President and they influence the President not the Government.

The President decides whether or not to issue certain signals and instructions to the Government, often taking into account the opinion of his aides, so the Government acts based on the President’s orders. Today the head of state has more assistants than before. In that sense their influence has probably increased, but not because of the scope of authority or legal status have changed, but simply owing to the greater number of people. They consider the documents and tell the President whether or not they agree with specific laws. That role is very important and this is how work proceeds in certain areas, but not in all areas. Some presidential aides are more active than others.

In some ways we get real help because there are only 24 hours in a day and sometimes extra heads and hands are welcome because signals about the need to take certain decisions may be sent more quickly or the preparing of these decisions may proceed faster than the Government is doing. That is normal.

Sometimes positions differ, but that is also normal, it has always been that way. The main thing is to have constant constructive interaction. I think that for the most part this is the case. An ideal can never be achieved, but I think there is room for more effective interaction.

Question: How do you assess the results of the Government’s first year in those areas within your sphere of competence? What were the key aspects this year?

Arkady Dvorkovich: Regarding the work of the Government as a whole, first, the Prime Minister and other ministers have settled down fully in their new positions, their new status and in the new system. The Government is working well: the mechanism is well tuned and the plans that we had and the tasks set by the President are being fulfilled effectively. In some areas more successfully than in others. But generally effectively. The results are for people to assess, above all based on their quality of life and objective indicators such as the increased birth rate, reduced death rate, reduced poverty, expansion of the middle class, greater business activity, etc.

All this can only be ensured if there is an acceptable and fairly high rate of economic growth. This is precisely my task in the areas which I oversee: to ensure that they develop fast enough. With this end in view I set myself as the main task for the first year the formation of a stable regulatory framework so that everybody understands the legislative and tax framework in which these sectors will operate. We have managed to do it in some areas, while in other areas the process has been a bit slow and will be completed by the end of 2013.

The second most important theme, though perhaps first in terms of significance, is agriculture. The new state programme adopted last summer should allow the sector to get out of its difficult situation and restore the pre-crisis rate of growth. It is adapting itself to the conditions as a result of WTO accession, which is not easy for agriculture. I think we have weathered these months well enough and have been  able to resist the temptation to make simple decisions, for example, to ban the export of grain or spread money thin over a whole range of problems. We have managed to identify those support mechanisms for agricultural enterprises which are efficient, but these mechanisms are only now kicking in, so it will be several months before the results can be assessed.

Going back to the results of the Government’s performance it is important that, with the President’s support, we took the difficult decision to live according to the tough budgetary rules that limit the appetites of certain ministries and force them to look for ways to increase efficiency in each sector. We had a difficult conversation with all our colleagues, companies and industry associations. They hope that, as in past years, some extra money will come from somewhere, but we have to repeat each time: “There will be no more money. Look for other mechanisms.”

Question: With the situation in the Russian economy being what it is, there is no question of growth, we would be lucky to hold on to what we have. What is your forecast for economic growth: how much more is it likely to fall and how will it impact living standards in general?

Arkady Dvorkovich: So far I have trust in the forecasts of the Ministry of Economic Development, that is, a little over 2%. This is not the bottom line, but a conservative forecast. If one assumes that the situation will deteriorate faster in Europe and in China perhaps the figure will be even less. If we manage to prove that our latest decisions to make doing business easier and other measures are really effective, perhaps we will get more investments and that figure will be higher.

Question: How will oil prices be changing?

Arkady Dvorkovich: Assessments vary. Tensions in the Middle East so far have kept oil prices high and until the tensions ease the prices are unlikely to drop sharply. If the price were $70-80 per barrel, and not $105-110, the balance could shift in favour of the non-commodity sectors of our economy. But in any case it is good that oil prices are not falling.

Question: So in the current situation it is too soon yet to say that there will still be a need in the near future for the kind of state support for the real sector of the economy that was provided during the 2008-2009 crisis, with all the injections of cash? Or is the Government contemplating such options?

Arkady Dvorkovich: We are partially doing it in agriculture, a decision has been made to allocate an additional 42 billion roubles. This is rather an anti-crisis measure connected with the situation in the markets and with Russia’s accession to the WTO. As for other sectors, the situation is still under consideration.

Question: These options have not yet been included in the proposals submitted to the President, have they?

Arkady Dvorkovich: We suggested waiting until the end of June to see what happens in the second quarter before deciding whether to allocate the money. The budget has the necessary reserves for that. If this is deemed necessary money will be allocated.

Question: You are an advocate of privatising state property. It has been argued that the state should not have too much property and that private business is often a more effective manager than the state. At the same time there are some signs that the process of privatisation has slowed down. What is happening?

Arkady Dvorkovich: First. Privatisation plans are in place, they are medium-term plans until 2018. We have never seen privatisation as an end in itself, as a liberal catch phrase, but as an instrument to make our business more competitive, more efficient and only then as an instrument for bringing more money into the budget to finance important investment programmes.

Some privatisation deals last year went well. In September last year we sold a 7.58% stake in Sberbank for $5.2 billion. We intend to continue this process: VTB, Russian Railways, ALROSA and Sovkomflot are being prepared for the stock market. But as we have said all along, this will be done with due account of market conditions, we will not sell at minimum prices, that makes no sense. We don't necessarily have to wait until top prices are reached, such an opportunity is difficult to catch. We need to choose a more or less optimal reference point, taking into account the opinions of consultants. This is what we are doing.

There is always a struggle because privatisation is not a simple process. The managers of state-owned companies almost invariably oppose privatisation. The struggle will continue, some deadlines may be shifted, but on the whole we will go ahead with the plan.

Question: But there are very strong players on the fuel and energy patch.

Arkady Dvorkovich: Nobody said it would be easy.

Question: One of your opponents is thought to be the head of Rosneft, Igor Sechin, whose views are in many ways diametrically opposite to yours, especially on the degree of state participation in the fuel and energy sector. How easy is it to run that sector?

Arkady Dvorkovich: You should not run a sector, you should make it run itself. There are major companies in the sector and they are doing a good enough job. They are competitive in the global market and are becoming more competitive.

Working with them is not easy because they are all strong players, as in any other country. I don’t think that the US energy secretary finds it easy to deal with American giants. They too have powerful lobbies and promote their interests. The same is happening here, especially considering the restructuring of the sector. I am now referring to the power industry.

Things in the oil and gas sector are in some ways simpler because the structure is in place and is not changing much, although Rosneft has emerged as a very strong player. There are some sharply disputed questions, for example on offshore production. It has been the subject of major discussions. As a result it was decided to issue a major part of development licenses to Rosneft and Gazprom. And the discussion is still ongoing with regard to what should be done if these companies show no interest in some of these fields and start giving them back: can these fields be offered to private companies or should they remain part of the undistributed fund as a strategic reserve for future generations?

I don’t mind telling you that we differ on many issues with the Rosneft CEO, but we see eye-to-eye on many other things. For instance, there is the relationship with China, where we act in unison and I think are protecting the interests of our country. On some matters we have sharp discussions and our positions differ. That is also normal.

Question: On the privatisation of Rosneft?

Arkady Dvorkovich: There is no disagreement there because it has been decided that it will be done over the next five years, as for the rate of the process, this is not such a controversial issue. The management has its position, which it puts to the Government and the President, and the final decision will be taken by the Government and the President.

Question: Have your opponents rolled out any arguments which you categorically reject?

Arkady Dvorkovich: I find it unacceptable to declare a position that is not argued. If a position is declared it must be backed up by arguments. I am always ready to hear reasonable arguments and I always stick to that rule.   

The other thing that I find unacceptable is procrastination in making decisions. Decisions must be taken eventually and I chair many conciliation meetings every day and every week and make such decisions, clearing them if necessary with the Prime Minister or the President when the decisions have a political element.

Question: Going back to the fuel and energy sector. Do you see Gazprom being divided into production and transportation companies in the future?

Arkady Dvorkovich: Such plans are not under consideration. The key thing at this stage is to have transparent rules of access to the gas transportation infrastructure and financial transparency within Gazprom in various types of activities, a clear understanding of the costs connected with the gas transportation infrastructure.

Question: Is there not enough transparency today?

Arkady Dvorkovich: Perhaps the Gazprom management thinks there is enough transparency, but this is not what the Ministry of Energy thinks. So, there is not enough transparency.

Question: In your line of duty you communicate with business. In the West parading one’s wealth is thought to be bad manners for businessmen. Do you think that in the period of transition which has lasted many years now Russian business, while growing richer, could be more modest and show more social responsibility? Hardly anyone likes the size of the bonuses and salaries of company executives.

Arkady Dvorkovich: Those who for various reasons have proven to be more successful should not boast of their wealth, but that is a matter of ethics. It is not a question of laws or a question for the Prosecutor’s Office, the Audit Chamber, or administrative pressure, it is a question of internal culture, which takes shape gradually. Big businessmen, members of the RUIE administrative office now behave differently than they did 10 years ago. They have grown up, their life priorities have changed, they spend a lot on charity and patronage of the arts. They do so not on request, but often simply because they feel that they must do it, it is their inner conviction: they have turned out to be more successful, and they must give a chance to others to succeed, they must create conditions for normal life around them, and not only for themselves.

There are some things where the state should step in. I am talking about the heads of companies with state participation. The state makes decisions so that these people set an example to others. There is still much to be done in this area but we have to proceed with caution so as to make the situation in this sphere understandable and transparent for society, on the one hand, and not to deprive those who want to work for the state, on the other.

There is much talk about corruption. The issue is that when a regional civil servant who earns less than a schoolteacher receives a businessman who has come to ask for something, certain motives may arise. Social responsibility consists of big business and civil servants living according to the law, so that businessmen do not even consider offering a bribe and officials do not even consider accepting or soliciting a bribe. But then they need to have a different motivation, they need to understand that if they work well and with a sense of responsibility, they will earn more and will get a promotion. This is not the case at present, although we are trying to provide such a motivation.

Question: Our readers ask us why the number of bureaucrats is increasing while the performance of the bureaucratic apparatus is not improving? Does it make sense to have an army of low-paid bureaucrats in the regions when it is possible to sack some of them and pay more to those who remain?

Arkady Dvorkovich: The number of bureaucrats at the federal level has dropped. We have set the target of reducing it by 20% by 2015 and we have partly solved it. We haven’t reduced it by 20% yet, but I think we have reduced it by more than 10%. The exact figures are floating because downsizing in different agencies takes place at different times. The decisions made at the federal level are being fulfilled. Bureaucracies have been growing at the level of regions and municipalities for the most part.

Question: But the people who live there have to deal with these bureaucrats.

Arkady Dvorkovich: But that is their job. They make decisions that they should increase the number of staff in a regional government or a municipal government body. If you think there are too many of these people then don't elect them, vote for someone else. This is a universal mechanism for changing the government. Perhaps others would come along and cut their staff by half. You should vote differently.

Question: Would you like to go into politics and join a political party?

Arkady Dvorkovich: No.

Question: Is that a matter of principle for you?

Arkady Dvorkovich: Yes.

Question: One more question from our readers. Why have you abandoned Twitter?

Arkady Dvorkovich: Because I now have a lot more duties. I have less time for anything that is not connected with my job than before when I was a member of the President’s Staff. My job is more responsible now because I have to make decisions and not just advise. I have much less time than before. I have given up Twitter, that's true. Sometimes there are days, or rather evenings, when I have a couple of hours and I feel that I am back there, but it only happens once every two or three weeks. But I have become more careful about what I write and what messages I am sending because now the reaction to what I do on social networks can be projected not only onto me but onto other members of the team.

Question: And what about chess?

Arkady Dvorkovich: As for other hobbies, I have less time for them too unfortunately. I missed the tournament at the Louvre in Paris and the second part of that tournament at the Russian Museum in St Petersburg although I know how events developed and who won, and I congratulated the winner on his victory. But I have much less time to play myself. Usually I can do it on the plane with an iPad programme or over the phone.