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September 14, 2007
[Putin] Meeting with Members of the Valdai Discussion Club
Sochi
PRESIDENT VLADIMIR PUTIN: Good morning, ladies and gentlemen!
This is our fourth meeting, and I think it has turned out to be very good practical experience for you in getting to know Russia, although you know it well already. All the same, organizing events of this kind cannot help but be useful.
In recent years, I have once again become convinced that the media in Europe and North America are very disciplined. I don't see the published results of our encounters but I'm sure that your knowledge of Russia helps you personally understand our country better. And since you are Russian specialists in any case, I think these encounters must be useful. We shall be glad if you can transmit your knowledge and understanding of Russia to your spectators and readers, in order to rid them of stereotypical notions that are still very strong among your fellow citizens, among people in the west. We, here in Russia, feel it. Of course escaping these false impressions from the past takes a lot of time. But this exchange, which is now in its fourth year, can only benefit us all.
This year you dealt with the problem of religious relations in Russia. This is one of Russia's most important problems. It has always been a problem, and hasn't disappeared in the course of decades and even centuries. Russia is an interdenominational country. And its economic, social and political well-being depend to a large extent on how we organise relations between different religious groups.
Moreover, Russia has been an interdenominational country from the dawn of its existence. And, if you think about it, here the Orthodox church, Russian Islam, and even Judaism have many things in common. For centuries, they have co-existed in harmony and developed by cooperating with each other. Not only can interdenominational cooperation, the best solution for these problems, benefit us, but it can serve to make the country stronger and more stable. And if things go wrong, all this can take on inimical and perverse forms and have unpleasant consequences. For centuries, Russia has managed to cope with these challenges. Today, we have created a reasonably comfortable working relationship among faiths. I have reason to believe that this will continue in the future.
Naturally you have been interested in issues related to the upcoming political events in our country: the elections to the State Duma and the election of the President of Russia in March 2008. I know that you met to discuss all of these issues in Russia's regions and in Moscow. Today we are fortunate to be able to discuss these things together. It will give me great pleasure to listen to not only your questions but also your views, opinions and assessments of the current state of Russia. I shall, in turn, permit myself to express my own view of events.
BRIDGET KENDAL (BBC TV correspondent): Vladimir Vladimirovich, I am very pleased to see you here in Sochi!
On behalf of all my colleagues I want to thank you for taking the time to meet with us today, because we are all interested in Russia, and it is very important for us to know your views on various issues.
Let me begin with a question that has been much discussed, by journalists and by all those who follow Russian affairs here and abroad, your appointment of a new prime minister. I would like to ask, why precisely now? Wouldn't it have been more democratic to wait until the Russian citizens of a democratic society had expressed their opinions? To wait until then, rather than appointing someone so early? And why Viktor Zubkov? What were your reasons for choosing him? And could he become a candidate for the presidency, as you did eight years ago? Perhaps the post of Prime Minister makes him well placed to take part in the race, or perhaps, you know that the Prime Minister of Russia is a sign of continuity in the run-up to the election?
VLADIMIR PUTIN: Regarding the appointment of a new prime minister at this time, it has nothing to do with democracy or with anti-democracy. It has nothing to do with the will of the citizens, if that is what is meant by democracy. Democracy is inseparable from the law and respect for the law on the part of all citizens and officials. What I have done to change the government is in complete accord with current legislation. So there has been no contravention of the law.
This decision is in large measure technical. If you remember, prior to the presidential election in 2004 it was exactly the same. I will tell you why: one possible scenario involved no change in the government before the presidential election and his inauguration in May 2008. And I would have liked events to transpire according to precisely this scenario. But, unfortunately, members of the government, like the rest of us, are people. I noticed that they were easing off at work and beginning to think about the shape of their own destiny after the elections. I would have liked the government in Moscow, the regional authorities and federal authorities in the regions of the Russian Federation, to work like a Swiss watch right up to the election and immediately after the election, between March and May 2008. We needed a workable, smooth, well-functioning mechanism, without any disruptions or delays, without any pause or relaxation.
Therefore, I thought it appropriate to do this now, in order to highlight key points for the administration and staff. I did it to show it to the people who are likely to remain in the Government, in the ministries and departments, and to be working after the parliamentary and presidential elections. Provided, of course, that they are aware of their responsibilities, and that they are willing to commit themselves totally to the tasks at hand. And vice versa: for those who are keen to do something else, keen to go to other departments or to take up another line of work outside ministries and departments, it is better to do this now, to make the necessary changes and to create a competent team.
I did not push the Prime Minister into this. He arrived at the decision himself, because he is a responsible person. He sized up the mood perfectly and, as a matter of fact, he came to me with this proposal. I agreed with him, because I had observed the same thing. You know what we've done. I accepted his resignation and today appointed Viktor Zubkov. In the State Duma 382 deputies voted for him. That is a lot. Only a splinter group from the CPRF [Communist Party of the Russian Federation] didn't vote for him.
As for the second part of the question: why Viktor Zubkov? This is a man with great professional and life experience. Essentially, he's a true professional, an effective administrator with a nice personality and, on the other hand, a lot of on-the-job experience. You already know his curriculum vitae. He spent more than a decade in agriculture, working his way up from the grass roots. Back in Soviet times, he managed to give a boost to one of the worst collective farms, a state farm that eventually packed it in. He made it the best in the Soviet Union, not for the whole period, but during certain years. He did almost no ideological work but was always interested in production. He was not just the head of the regional department of the Communist Party in Leningrad but of the sectoral committee for agriculture. This was a production job because the party was in large measure simply a part of the state apparatus. Then he was first deputy chairman of the regional council that was also administrative work. And then he worked in the Mayor's office in St. Petersburg. Then he was Deputy Minister of Taxes and Duties. And here we have a brand new incarnation: he begins to deal with financial affairs, albeit at the level of the entire federation. He became First Deputy Minister of Finance. There is no need to explain to this audience the qualifications of people who have worked in the Ministry of Finance in any country. And his working on Alexei Kudrin's team says a lot; judging by the economic activity, it has been a highly professional team for the past seven years. Viktor Zubkov is a member of this team. And then he was chosen for his personal qualities -- he is an exceptionally decent man to create a new structure, Rosfinmonitoring or, in other words, financial intelligence. And here too he has shown himself in the best possible light. In his department he has at his fingertips a massive amount of financial intelligence. This is, after all, an analytical service that collects information about financial institutions and government organisations, a massive amount of information. Not once, I would like to emphasise, did Viktor Zubkov abuse this trust. Business circles in Russia repeatedly talked about the risks when we decided to create this organisation. People were afraid that, in contemporary Russia, the concentration of confidential information in one agency would adversely affect business. This did not happen. During all his years of work with the office, the agency led by Viktor Zubkov was never implicated in a single case of corruption. At the same time, the service has worked effectively. The information it has collected has led to criminal proceedings against thousands of people, 521 of whom have been found guilty by the courts. That number over that period of time is comparable to the number of persons involved with the justice system and convicted by courts in the major European countries. In the United States during the same time period twice as many people were convicted, in European countries, an average of 500-plus people.
All of this taken together constituted the basis for the decision. I believe that in this quite critical pre-election period for Russia, we need precisely this sort of person: a superb professional, a decent person, cool-headed and, I would add, wise.
Now, as to whether Viktor Zubkov will be a candidate in the 2008 presidential election. Maybe he will, like any other Russian citizen. Of course he is not an ordinary Russian citizen. From now on he is not simply the head of Rosfinmonitoring, but the Prime Minister of the Russian Federation. He answered this question when speaking to journalists yesterday or the day before. He explicitly said the following and I think he was right: before taking up a higher position, I have always convinced myself and the people with whom I have been working that I have achieved positive results in the position where I am currently working. And if the results of my work as Prime Minister of Russia satisfy me and satisfy the citizens of this country, I will not rule out the possibility of running for the position of President of Russia in March 2008. He did not say: "I will run." He did not rule out the possibility. I think that was a balanced, dispassionate response.
Indeed, now it is hard to say, he still has to work during a rather difficult pre-election period and get through the period of the elections to the State Duma. We'll see then. If you recall, a year, a year and a half ago, we were told that the field was empty, that there was no one to choose, that no one knew who would be president. Now they have named at least five people who really have a chance to be elected President of Russia in March 2008. If another viable candidate comes along, that means that the people of Russia can choose from a larger group of candidates. Besides, the outcome of the elections to the State Duma in December of this year will indirectly influence the results of the presidential election one way or another. And these elections will be preceded by a sharp political debate and a partisan struggle. How will it end? Let's wait and see. Then we'll see what happens in March
ARIEL COHEN (Senior Fellow, Heritage Foundation): In recent weeks, the international financial markets have gone through a period of instability. Russian markets are becoming increasingly integrated into international economic processes and what happens in the world increasingly affects them. Foreign investors, portfolio investors came to the Russian market. How do you think what is happening now, how might it affect the Russian financial markets and could it have a bad effect?
V. PUTIN: As you have said -- and I fully agree with you of course the Russian economy is increasingly becoming part of the world economy. And all the positive and negative aspects of this process are now affecting the Russian economy. They are an intrinsic part of the process, and we already have a sense of not only the positive impact of developments in world markets, but also the negative. And when the mortgage market in the United States became unstable, it certainly affected us. We register such impact in the markets the very next day, and those events continue to affect us.
What can we expect from this, and how apprehensive are we? Not particularly, and I will tell you why. Because if we recall the sad events of 1998 and look at what was happening with the Russian economy, what sort of condition it was in, and if we look at the Russian economy today, we realize that it is a completely different economy. Then Russia's economy was weak and highly vulnerable. We had a huge national debt. We were literally addicted to borrowing from the World Bank. We were even more dependent on oil and gas than we are today. We had minimal gold and currency reserves. Even if we had wanted to at that time we could not have pursued the liberal economic policies that we can afford today. And we were very far from being able to say that our national currency was freely convertible, and even further away from actually making it so.
What do we see today? Today, the ratio of Russia's external debt to our gold reserves is the best in Europe. And the very existence of these reserves, of course, helps guarantee our stability. Since then we have consistently reduced inflation. As you know, it is still fairly high. But if you look at what it was in 1999 and 2000 I don't remember the exact figures it was over 40%. Now, I think it's eight and a bit. That is still high, of course, but it's not 40%. This has enabled us to significantly expand the Russian economy. The country's GDP is growing at an annual rate of 8%. Currently it is already 7.7%. This is also an element of stability. We have moved to full convertibility of the ruble. Successful countries in the economic sense such as, say, China and we congratulate our Chinese friends for that success have enjoyed really astounding success, but they have not yet moved to the free convertibility of their currency. And we have. We have removed all restrictions on the movement of capital. And, furthermore, the Central Bank still had some doubts, they kept some specific instruments for backup, and so on, but after consultation they concluded that these restrictions could be removed ahead of schedule. We did it last year.
As experience has shown, in general all this has had a positive impact on the Russian economy. We just had a huge inflow of capital. Last year it was 41 billion dollars; in the first half of this year, there was 70 billion dollars of net inflow. After the events in the North American market, we saw a small outflow of speculative capital, in the region of nine billion dollars. This is a normal adjustment, there's nothing unusual about it. Then this outflow stopped, and now capital is flowing in again. In my opinion, all this, in addition to a number of other legislative decisions, has created a very stable environment for the development of the Russian economy. Oil prices are rising. In addition, if we look at the 7.7% growth in GDP, we see that the proportion of processing industries has increased significantly when compared with previous years. And this also shows that we have been able to solve one of the main problems of the Russian economy by making it more diversified. This is also a sign of stability. All this together gives us every reason to believe that, despite the well-known interdependence of events in world markets, we will succeed in maintaining stability and development.