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kremlin.ru
September 12, 2008
Transcript of the [Medvedev] Meeting with the Participants in the International Club Valdai
GUM Exhibition Centre, Moscow
[DJ: Audio and video of event in Russian at www.kremlin.ru]

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Good afternoon, gentlemen,

Colleagues,

This meeting is taking place in a rather unusual venue, not because I have decided to do a bit shopping before the weekend, although this is not a bad choice for such pursuits, but for a different reason. The Kremlin is just opposite. It also has plenty of interesting places and many of you have been there, but it probably cannot offer as comfortable a place as this where we can meet and discuss all the issues on our minds today. If you wish, of course you can take a walk around the Kremlin too, though the weather is not the best today.

You have been working intensively for four days now. I think your work has at the least lived up to the expectations we always have from big meetings. You have very lively debate going on, and the debate is so lively because this years meeting of the Valdai discussion club is taking place at a difficult moment. What happened not long ago in the Caucasus changed the situation in the world and changed a number of our priorities too. We will definitely discuss all of this.

But I would like to start by thanking you all for paying such attention to Russia and its problems, and not just to our capital but to other places too, including places as complicated as Grozny. It is very good to see that the club is expanding its choice of venues from year to year, because you cannot understand Russia without visiting all the different parts of the country. Even we who live here permanently do not always realise just how diverse our country is. I can tell you that I began flying a lot when I started working in the Government two-and-a-half years ago. I have made around 60 trips around the country, and this has done a lot to shape my picture of how the country lives and works today. It is a very big, beautiful and also very complicated country.

I will be happy to discuss any issue you think important. My task is made easier by the fact that you have already had very serious, intensive, and at times sharp discussions, and you had a big discussion yesterday. So, I am all yours now and await your questions.

SVETLANA MIRONYUK: Dear colleagues, I would like to give the floor to Orietta Moscatelli.

HEAD OF THE NEW EUROPE PROJECT AT APCOM NEWS AGENCY ORIETTA MOSCATELLI: Dmitry Anatolyevich, first of all, thank you for meeting with us, all the more so as, as you said, this is not the easiest time. This is your first meeting with the Valdai club, so on behalf of all of us I would like to wish you success in your work. And now for the first question.

Before the current crisis in the Caucasus began, you proposed establishing a new system, in particular a new security treaty, in Europe. The crisis and the war showed that the international rules do not work anymore. We have had much discussion and debate over these last few days. What has changed from Russias point of view following this crisis and the recognition of South Ossetia? And how do you see Russias role in general in todays changing world?

Thank you.

DMITRY MEDVEDEV: Thank you.

The changes are maybe not so visible, but for me personally a great deal has changed as a result of the events that have taken place. I think that for many people in our country, and not just in our country, the recent events in the Caucasus signify the end of any illusions that still remained after Russia became an independent state. These illusions were many in the early 1990s. As the country developed they decreased and some of them simply faded away. But I think that the recent events mark the complete loss of any illusions that still remained. These were illusions that the world is a fair place, the security system based on the current division of political influence is optimum and keeps the world in balance, and the main players on the global political stage are in a state of equilibrium. But none of this is so. Regrettably, making our world a secure place is a task that requires serious intervention from all constructive forces.

I spoke about this not so long ago when I set out my vision as embodied in what I called the five principles underlying our foreign policy. I think that we need to do everything within our power today to build a different security architecture. The Russian Federation, in any case, is not happy with the current system. We are not happy with it not because we see no place in it for Russia, there is a place for Russia, and it is not this, not Russias ambitions that is the issue. The issue is that the current security system is in a state of serious breakdown, which translates into at best political clashes and the emergence of various political problems and changing borders, and at worst leads to bloodshed.

I do not think the bipolar world that existed during the years of confrontation between NATO and the Warsaw Pact has any future prospects. But it is just as clear today that the single-polar world is completely unable to manage crisis situations. Look at what has happened. A small but proud country not only worked on strengthening its economy and developing democracy no doubt the right steps to take but over a number of years also built up its military muscle in order to, one quiet day that humanity traditionally spends in peace, launch a totally cynical and bloody attack under the slogan of restoring constitutional order against a people who stated quite some time before that they cannot live in the same country. This country did not do this all on its own. It did this after serious preparation and with the moral, material and military support of another country, a big country claiming the right to set the main rules of the world order.

What happened next? The adventure failed and many people lost their lives, our citizens and Georgian citizens. So, did the system work? No, on the contrary, everyone froze in a loss as to what to do next. I think therefore that military analysts, politicians, and you too, as specialists in this area, will be analysing the lessons of the Caucasus crisis for some time to come. As I said, for me personally and for a large part of the Russian public, this crisis has meant an end to the last illusions about the current security systems ability to function reliably. We simply have to create a new security system, otherwise there will be no guarantees that some other Saakashvili could blow his top and do something like what happened in August, and we would again have to pay a high price.

What kind of security system do we need? At the minimum it should be a system that complies fully with international law, not with the right of the strongest, but with international law. The efforts made throughout the twentieth century have not been in vain. Really, humanity spent the entire twentieth century creating the modern system of international law. We need to keep these laws alive in the twenty-first century. Humanity went through several bloody wars that cost tens of millions of lives during the twentieth century, but at the same time, for the first time in history, we created a full-fledged system of international law and established the United Nations and a system for maintaining collective security.

Unfortunately, it seems to me that the twenty-first century has begun by negating what has been achieved. We need to return to the foundation we built up during the twentieth century, taking into account the reality today too, of course.

Second, as I have also said, any construction built around the existence of a country that considers its decisions the only right decisions for the rest of the world cannot work. The Caucasus crisis has shown this to be ineffective. We all realise that even with the closest relations there are situations when it is impossible to defend an ally if this ally has committed war crimes. Our American friends also realise this. Despite the intense and hardline rhetoric, they realise full well what the Georgian regime has done, the cost of this crime and the geopolitical consequences it has. From what I saw on the television, my colleague, Vladimir Putin, spoke extensively on this subject yesterday.

We cannot have a single-polar world. The world has to have various poles. A polycentric world is the only way of ensuring security for the years ahead.

Finally, Russia has its place in this world, its mission, if you will, as a big country and permanent member of the Security Council, a participant in the G8 and a fast-growing economy. We will formulate our objectives in accordance with this understanding. I have said before and I say again now, there are regions in which Russia has interests. It would be foolish and in some cases even damaging to deny this. Our partners in the international community speak in these terms with regard to their own interests, and we also need to state this out loud. If we keep quiet as if ashamed of it we will end up with situations like the crisis in August. Of course we will defend our interests, but most important of all, we will protect our citizens. I have said this before and I want to emphasise it now. The world changed practically straight away following these events. It occurred to me that for Russia, August 8, 2008 is almost like September 11, 2001, for the United States. A lot of people are making this comparison now. Someone here also made this comparison, I think. I think it is quite accurate, in application to the situation in Russia, at least.

The United States and all of humanity learned many useful lessons from the events of September 11. I hope the world will also learn from the events that began on August 8 this year.

SVETLANA MIRONYUK: Professor Feng, please go ahead.

PROFESSOR, DEAN OF SCHOOL OF ADVANCED INTERNATIONAL AND AREA STUDIES (SAIAS), EAST CHINA NORMAL UNIVERSITY (ECNU) SHAOLEI FENG: Dear Mr. President, first I would like to thank you for your wonderful, talented and effective work during the Year of China in Russia and the Year of Russia in China, when you were chairman of the organising committee. Ordinary Chinese are well aware of this.

I have a question, which is not directly linked to conflict situations. Can you talk about Russias economic strategy for cooperation with East Asian countries? I think there are a lot of positive indicators, such as the huge potential of the Russian economy to develop very quickly. But on the negative side it has to be pointed out, for example, that the slowdown in world economic growth continues. Under such difficult circumstances, what do you think Russia's economic strategy in the East should be?

Thank you.

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: We frequently call Russia a Eurasian country, not thinking about the practical implications of such a term. In any case, perhaps we dont take this fully into account when we talk about making a given decision. But in fact Russia is indeed a state one part of which is drawn towards Europe, yet an important part of Russia is located in Asia. Of course Russia has a large number of ties with its Asian partners, including the People's Republic of China. We now understand that, without diversifying the country's development to the East, our economy has no future, and this for several reasons.

First, because if we do not move in the direction of the East, our eastern regions will not grow as we would like them to. Although our country is immense, it has a small population density. And in order to create new jobs and implement major economic and social programmes, we are simply obliged to fully develop cooperation with our East Asian partners. And we will do so. We participate in all the forums. We created the Shanghai Cooperation Organisation, we are participating in the APEC forum, and consider it to be one of our priorities. We can safely say that in this sense there is no contradiction between the Asian vector and the European one. Of course Russias history shows that its cultural identity evolved from a European base, but at the same time, if we think about more ancient history or ordinary concerns, then a great deal links us to Asian states. And we must make use of these in our everyday work, in our everyday activities.

So I think it is very promising direction for our country, and we will of course continue to pursue it. Not at the expense of relations with Europe, not at the expense of relations with the western world. This must be the polycentric aspect of a multipolar world. This is not only a purely political concept: the world is more stable when there are a range of major, important political players. We understand perfectly that the economy too can only be stable if there are a number of different economic areas, when exchanges are actively working not only in Berlin, Paris, London and New York but also in Asia. And we understand that otherwise a lack of equilibrium develops. Of course in this regard we will do our utmost to resolve for our own sakes some major challenges, in particular to diversify energy in the direction of Asia, once again not to the detriment of our interests and the interests of our partners in Europe, but in order to ensure more stability. Im thinking about shipments of oil and gas and the development of atomic energy.

I sometimes find it quite amusing when I read that there is not enough Russian gas to supply even the Europeans. As we all know perfectly well, this is not the case. Russia is the biggest exporter of gas in the world. And if we have a big market in the East for that gas, we will develop new deposits. You can be sure of that. Naturally all this must proceed in a sustainable way and should not produce some sort of economic catastrophe.

We are all looking on transfixed as the situation in the oil market evolves. Excessively high oil prices create problems, and sudden drops in the price of oil create other problems. And nobody can say with certainty just what the right price is. But what is most surprising is that we cannot even see consistent patterns as the price of oil goes up and down. And if its true that this factor to a considerable extent is haphazard, we have to harmonise the development of our economic relations in both the European and Asian areas.

I am not talking now about the cultural component of our relations, which is huge. And of course we have always had a great interest in the cultures of ancient China, India, Japan and other countries. This is an interest that can be measured by the work of generations of historians, philologists and other specialists. This too needs to be addressed.

SVETLANA MIRONYUK: Mr Kuchins, please go ahead.

DIRECTOR AND SENIOR FELLOW OF THE RUSSIAN AND EURASIAN PROGRAM AT THE CENTRE FOR STRATEGIC AND INTERNATIONAL STUDIES IN WASHINGTON D.C, ANDREW KUCHINS: When you became President, the Russian stock market and stock indicators generally were very high. Since then the market has lost 25 percent. Now we have heard the good news that it has recovered somewhat. This is probably good news in part because you noted the recovery. But such a large-scale collapse isnt simply a market correction. If the U.S. market had declined by such a figure, we would have called it an economic disaster. I think we are talking about the main indicators of the economy, that is, what investors think about the future, and what investors are saying about Russia now is that they have lost confidence. They see Russia as a large economic risk.

How do you plan to solve this problem, especially in light of the fact that foreign investment is to play such an important role in the achievement of the goals that you set out in your plan for development between now and 2020?

DMITRY MEDVEDEV: Thank you.

You know, I would like to start with the fact that of course every conflict without exception poses problems for the economy. Everyone knows that. But when it comes to choosing between protecting people's lives and protecting the economy, you can understand why we made the choice we did. I am not saying this to be pretentious, but it describes the case exactly. Almost every state would have reacted in this way if a situation of the kind that presented itself in August had occurred. That is how we reacted. I have specifically said and I reiterate it for my audience here: protecting the lives and the dignity of Russian citizens, wherever they are, is the raison d tre of the Russian state. From this one should draw only the correct conclusions, without creating any illusions or causes for concern. This is our raison d tre.

Now with regard to the consequences of the crisis on world financial markets, the problems that have emerged for the stock market and foreign investment. I would certainly make one fairly basic observation: there is nothing to be melodramatic about here. Because of its status, because of its role in the global division of labour, because of its geographical features and intellectual capacity, Russia will always be a magnet for investment. In order to destroy all this, you would need to erect an iron curtain. But even during the Soviet period there was investment in Russia. Of course we have no intentions of creating problems for investment cooperation with the western world or with our Asian partners. On the contrary, we have done and will do everything to ensure that the investment climate in Russia is everything that it should be. We cannot violate some fundamental principles concerning constitutional freedoms in order to attract investment. But in every other case we will work round the clock to ensure that our country has a normal business environment.

I do not think that what is happening in the world is all that unusual. The world economy is cyclical, the things it values remain the same. I would draw attention to the fact that the Russian Constitution includes the same rights and freedoms that are subscribed to in other parts of the civilized world. The protection of property rights remains one of the top priorities of the state. And we are only now beginning to realise how important it is for us to ensure full protection of property for Russian citizens, foreign companies and foreign investors in Russia.

I have already been obliged to hold forth on the value of property rights. I believe that due to a number of factors in Russia for almost the entire twentieth century there was no real idea of property in the ordinary sense. And our task is to create it, to give it our full-fledged guidance and protection. This is perhaps the cornerstone of a normal investment and business climate. Nothing else means much in this regard, not even military developments, as paradoxical as that might sound, because problems of a military kind can be resolved, whereas economic development and social development never stop.

There is another point worth making. The world today has fallen back from its peak economic development. Unfortunately we have probably not yet hit the bottom. Recent developments on the American financial market are naturally reflected in all the other markets. If we are going to speak about the respective contributions of recent crises to the fall in Russias stockmarket indices, I would rate their contributions as follows: 75 per cent of the drop or correction in the stock indices is related to the effects of the international financial crisis and 25 per cent to our internal problems, including the aftermath of the war in the Caucasus.

Despite all these difficulties, therefore, I remain in this respect quite moderately optimistic. I believe that the resources available to our companies to restore the values of Russian stock indicators is huge. There are two reasons for this: the first is that until now Russian blue chip stocks, the most attractive Russian companies, have still not reached their peak: their worth has not yet been fully appreciated. They are still undervalued. And the second reason is that, given that our market is still growing, still evolving, in this sense it is more risky than traditional markets, and this makes for all the variability in the markets, or as economists say, all the market volatility. There is nothing to be frightened of. We simply need to take a deep breath and calmly continue to pursue developing the economy, as a matter of fact to go on doing what we have been doing.

There was a meeting held yesterday on precisely this topic, dedicated to the development of Moscow and Russia as a new financial centre. I believe that in this sense we have very good prospects, both in terms of turning Russia into one of the financial centres and making the ruble a reserve currency. Banks now have a range of foreign exchange holdings and foreign exchange earnings in different currencies. Our task today is to make major financial participants keep a portion of their reserves in rubles. This is perfectly plausible task, given that the ruble at the moment is a freely convertible currency, Russia is one of the very important economic players, Russia trades in various goods, including commodities, and its cash holdings are very significant.

Our neighbours use the ruble in their dealings with the Russian state. And if we can demonstrate its attractiveness, I am sure in the coming years we will be able to turn it into one of the reserve currencies. Moreover, as must now be obvious to everyone, the world monetary system, built on the priority of the dollar, also has sprung a number of leaks. Most states are now moving to a multi-currency system. The ruble today is also pegged to the dollar, to its changes, but also to the euro, in what might be called a dual currency basket. The more currencies in the basket, the more sustainable the economic situation.

Therefore, I believe that all the difficulties that exist today in the international financial market and domestic difficulties more generally are surmountable. There is nothing surprising in any of this, we just need to have patience and work hard. We need to work, work and work to solve these problems.

Thank you.

SVETLANA MIRONYUK: Mr Catacciolo, please go ahead.

INTERNATIONAL AFFAIRS EXPERT, EDITOR-IN-CHIEF OF LIMES, ITALY'S GEOPOLITICS MAGAZINE, LUCIO CARACCIOLO: Thank you, Mr President.

You talked about Russian zones of influence and of Russias special interests. Can you give us more detail on this, where they begin and where they end, and which countries fall within the definition of such areas?

DMITRY MEDVEDEV: Russia is a state with a thousand years of history. It is perfectly obvious that we are interested in a stable situation with our neighbours, absolutely all of them, without exception, even those with whom we now have rather difficult relations. And these states have every reason to want things in Russia to be as calm and predictable as possible. What does this mean? It means one simple but very important thing: our neighbours are without any doubt states that are traditionally close to us and they represent the traditional sphere of interests of the Russian Federation. And the Russian Federation is for them exactly the same sort of traditional sphere of interest. We are so close to each other that it is impossible to come between us: it is impossible to say that Russia would like things a certain way, and our neighbours another. It is not even a matter of belonging to this or that organisation, this or that bloc, but rather the common history and genetic connectedness of our economies and the very close kinship of our souls. Therefore, of course, our neighbours and good relations with them are our number one priority.

But as I have already said, this does not mean that that Russia should isolate itself by aligning itself with only the CIS countries or with nations that formerly made up the Soviet Union. There are many other interesting places in the world where governments are in power with whom we have friendly relations. And if they think it possible to develop economic, cultural and military links with us, we will not say no. In the 1990s we could not afford this: we were weak and sickly. Now we can do it. Any state which wants to be friends with Russia will meet with a friendly response. This only stands to reason. Of course we are not interested in drawing boundaries on some map to designate our own areas of influence and so forth. That would be pointless. In a multipolar world, everyone influences everyone else. But with those nations with which we have traditionally been close, with whom we have had warm relations, we will work to extend our contacts. If that doesnt please everyone, what can I do about it? We also have to put up with things that dont particularly please us.

SVETLANA MIRONYUK: Mr Primor, please go ahead.

ADAR PRIMOR: Mr President, about the proposed conference on the Middle East to be held in Moscow. This initiative symbolises Russias return to active participation in Middle Eastern affairs. If so, will Russias policy be based on the Soviet Unions policy in the Middle East?

DMITRY MEDVEDEV: No, of course not. We do not wish to pursue the policy of the Soviet Union in the Middle East, the Far East or anywhere else. We dont need it. Russia is not the Soviet Union. And maybe this is just basic misconception that we cannot overcome. Unfortunately -- and this has been said many times in many different places -- unfortunately, so far Russia continues to be perceived not only as the legal successor of the Soviet Union, but as its ideological heir as well. And this is not the case. Russia has completely different values.

Yes, the Soviet Union was a great and strong state. Many of our people were born in the Soviet Union, including myself. But when it comes to ideological values, ours are completely different. Maybe we dont even fully realise how different todays Russia is from the Soviet Union. And when Russia offers to act as a mediator, or offers its peacekeeping services, I think you should accept this without preconceptions.

For example, our desire to hold a conference on a Middle Eastern settlement is dictated by one thing only: we really would like to finally see peace in this long-suffering region, to see all those who live in the region -- Jews, Arabs, and others -- feel good about living there. Incidentally, the idea for us to host a conference was suggested from the outset as a continuation of Annapolis and was supported by most countries. I have spoken with almost all my colleagues about this and they are all in favour. My Israeli colleagues did voice some uncertainties. But, as I understand it, they now share our sense that such a conference would be useful. Of course, in the Middle East we will behave like one of the sponsors of a settlement, act in accordance with the mandate that we have, and in accordance with the agreements which bind us with the key players. No more than this. We have no messianic ideas, we have set no special challenges for ourselves. We will simply feel more secure, like everyone else, if at some point a Middle Eastern settlement is reached. And this, I think, is the main thing. I do not know whether something will be done before the end of the year, although some time ago I discussed this issue during a series of summit meetings. But we very much hope that certain things could nevertheless be done. And this is how we conceive of our task.

SVETLANA MIRONYUK: Mr Lieven.

ANATOL LIEVEN: Mr President, during the conference we heard a warning from our Russian colleagues about the implications of NATO membership and proposed membership in NATO -- this was described as a threat to Russia. Is this a view that you share? Can you talk about the consequences for Russian policy in this regard?

DMITRY MEDVEDEV: In brief, I share this view. The point is that if we go back to the period of the disintegration of the Soviet Union, we remember what promises were made at that time. I think it is a shame that the leaders of the Soviet Union did not sign the relevant agreements with their partners at that time. It would have been much harder to break them now. But we all know what assurances were given at the time.

I do not want to go far back into history, but I think that for all of us it is clear that Russia cannot feel comfortable in a situation where military bases are increasingly being built around it, and there are more and more missiles and anti-missile defence systems. Really, Russia just cannot feel comfortable in such a situation. Do you understand? My colleagues say to me: "What are you worried about? This is not against you" -- we have heard this from our American friends and from Europe a hundred times over. Well, how is this build-up not against us, if there are targets for strategic nuclear forces, objectives, and you know yourself where they are. It is absolutely against us -- there is no other way to understand the situation.

Look, NATO had several opportunities regarding how to behave in the 1990s. The first option, which NATO did not choose, was simply to invite Russia to join NATO. They were afraid. Incidentally, to no purpose. And if it had done so there would be fewer problems right now. They were afraid that Russia, a very big country involved in very complex political and economic processes; it would be necessary to take difficult decisions, or maybe Russia would start to disintegrate, confrontational situations would arise, occasioning the need to use force. Well, and there were lots of other reasons as well. I think this was a serious mistake.

The second error, it seems to me, was that NATO operated according to the following principle: any country that has shown loyalty to the bloc, is ready to be rude to Russia, and can demonstrate a basic set of fairly obvious things, has the right to claim NATO membership. We understand what threats NATO membership creates for the current world order in relation to ex-Soviet states. We understand how the prospects of membership have split the population in several of these countries; I am especially referring to Ukraine. We understand how uncomfortable people living in adjacent regions feel.

The only thing we do not understand is what is beneficial for NATO in all this? It drags states into a military-political alliance, several of which are still uncertain about this topic, where elites and the population are divided, where not even basic referenda concerning NATO membership are held, where there is great danger of separatism and the emergence of new states. What is the purpose of this? To get closer to Russia once again? I cant see any purpose in this, because NATO is not becoming stronger from such actions, this is not helping international relations, and tensions are not diminishing.

Here, let us think about what would have happened if Georgia had a plan for membership.

I can tell you that as President and Commander in Chief I would not hesitate for an instant about taking the same decision I just made, not an instant, because my motives would be unchanged. And what would the consequences be? They would be of a different order of difficulty. A different order of difficulty. Yes, a plan for membership is not the same thing as full membership, and an attack or military action against a given state does not result in the activation of the well-known article [of the NATO Charter], but the consequences would be of a different magnitude. Well, how would that be better for NATO? Would it be better for the states which formed this bloc? For that reason, like my other colleagues, I do not like this situation: it is not fair to Russia, and one could say that some time ago it was simply humiliating for Russia. We cannot tolerate it any longer. For us this is a very difficult decision but we wont be able to tolerate it, and there should be no doubt about this.

SVETLANA MIRONYUK: Mr Nowak.

WOLFGANG NOWAK: Mr President, you were disappointed by the reaction of the Europeans and the Americans. Perhaps Russia could strengthen its ties with other countries to develop a counterpoint? The BRIC countries, for example.

DMITRY MEDVEDEV: That would perhaps be the simplest. I am not in favour creating alliances for spiteful reasons. There is a Russian proverb: Ill frostbite my ears to spite my parents face. But I dont think it is suitable in international relations. At the same time, of course we will develop our relations with, for example, East Asia and the BRIC countries. But we would have done so regardless of our relations with the Europeans and with the Americans. Therefore, it seems to me that there is no point in creating new alliances. Rather, the heads of major states should understand the price that they will have to pay for having contributed to the deterioration of the international situation. There is no benefit in the long run.

And if you think that after well-known recent events Russia has decided to change the vector of its development, then I can tell you that this is not the case. In any event, as long as I am a head of state, I do not retract a word of what I said in the period before the war about the creation of a new security system in Europe, in relation to the full development of rights and freedoms, the fight against corruption, strengthening private property rights, and with regards to foreign policy. Russia has no other choice. As far as I understand, you have also come to the conclusion that what is happening now certainly does not fit into a Cold War framework.

A Cold War was always accompanied by an ideological confrontation and this is not the case today. It is a question of trusting partners and a realistic assessment of their place in the world. Incidentally, today this is a consequence of the crisis, but not only a consequence -- a cause as well.

But we are not going to create some kind of counter-alliance, there is no point in doing so. Of course, we have our traditional set of priorities and allies. I recently met with the Collective Security Treaty Organisation, with our allies among the ex-Soviet states, with which we have special relations and military relations. Of course, we will develop this kind of relationship and strengthen its military component -- I am a 100 per cent sure of that. But we would have done so anyway.

The only thing that is unpleasant, I can tell you frankly, is that I have had to spend the whole of last month on the war, and this month could have been spent much more productively. There are a huge number of tasks in the area of improving legislation, something that is near to my heart, the fight against corruption, the development of our financial and stock markets, or simply the development of the economy. I work on these things every day, just as any head of state does. And when a war begins you have to work on other things entirely. We very much did not want this, it was very unwanted. We have spent 17 years trying to install order there. We have already talked about this a hundred times, but I will say again that we have tried, in the past, to fix what broke down a long time ago. And what did we get? Not only did no one say thank you to us, but they started shooting at us. And all of us here understand where this aggression came from, who provoked it and what it ended with. You know, for any head of state this is always a very difficult choice. When all this started -- Vladimir Vladimirovich Putin told you yesterday what meetings he had then: he was then in Beijing. And I can tell you frankly where I was: I was on vacation. And all this talk, all these provocations, that our Georgian colleagues are engaged in today with respect to the fact that Russia was preparing for war, concentrating its forces - these are all lies. You know how many of our peacekeepers were there, how they were attacked, and what happened next. I can reproduce for you minute-by- minute what happened.

I received a call from the Minister of Defence at one in the morning. I was on the Volga River, relaxing, and he said: The Georgians have told the South Ossetians that they are going to war. Of course, this was not news for me. But I thought that maybe it was just another provocation, a little tester, as we say in Russian slang. And during this entire period as Georgian troops moved towards the territory of South Ossetia - we watched it all - I did not take any decision, hoping that those jerks would have the good sense to stop at some point. They did not. In this situation hope dies last, as we say. And we really waited until they started firing rockets at the city and using artillery, until they started shelling houses and firing at peacekeepers. And only then, after a real attack did I have to give an indication of our answer. I can tell you frankly that of course I will never forget that night. Deciding to use force even as a response to an aggression is not a simple matter. It is easy to talk about this issue but to actually take this decision knowing full well what the consequences are is very difficult, especially when you have held the job for only 95 days.

We did everything right. I am not ashamed of the actions of the Russian troops, rather I am simply proud of them: they operated effectively, harmoniously and in proportion with what was required. And proportionality must be considered in light of the fact that it is impossible to stop during this period, when an aggression has begun, because if you stop you are perfectly aware that the aggressor could simply regroup a few days later and deliver a new blow, if only to save face. Incidentally, it was exactly the case, because the peace enforcement operation took a few days. Therefore these were very difficult decisions for any state and any head of state to make. And it would have been better if none of this had ever happened. But now that it has we need to learn the lessons from this -- and we are not the only ones who need to do so and I am not referring to us particularly. We have already learned our lessons.

Yesterday I met with the Minister of Defence and the Minister of Finance. And, as you understand, we did not discuss issuing a new batch of cars or tractors, but rather rearming the Russian army. What does this imply? This suggests that the conflict has caused us to change certain priorities. But everything else, and I would like to end my answer to this question on this note, remains unchanged. All the values that currently form the basis for the development of Russian society need to stay the same. We do not want to be a militarized country behind an Iron Curtain, I dont want to live in such a country -- I have lived there already, it is too boring, not engaging enough. But Russia should be an estimable player in the international community.

SVETLANA MIRONYUK: Sir Roderic Lyne.

SIR RODERIC LYNE: Mr President, about your previous answer. First of all, we have had four very useful days of discussions. In such times people need to talk and listen more than they currently do. You referred to the lack of trust as one of the characteristics of the present situation. Over the past three years, and especially over the past month, we saw the destruction of trust between Russia and the West, the European Union, NATO and the United States. If I were a neutral observer, I would say that both sides had their reasons for this.

Do you think that this trust can be restored? Do you think we are now caught in a new era of confrontation? I do not use the term Cold War because, like you, I think it is ill-suited. From Russias standpoint, have relations with the United States reached a point of no-return? You set out your five guiding principles, but what are the long-term goals of your foreign policy? What is your long-term strategy?

Thank you.

DMITRY MEDVEDEV: Thank you.

The aim of any foreign policy is to ensure a good domestic life. Foreign policy is itself only a means for achieving internal political goals. If a state begins engaging in foreign policy as an end in itself, it risks falling into a very difficult situation. The foreign policy of any state should be designed to ensure the stable development of its economy, its social sphere, and ensure normal standards of living for its people. And this informs my answer to your question. I do not believe that what happened represents a fault line which will lead to a prolonged period of confrontation. We do not need this, that's for sure -- it is pointless. I think that you agree with me. It is another matter that our relations have become cooler and that the trust, that was previously fragile, is now diminished.

But if you want to be convinced that we did not want the situation to develop in this way, then you can be sure that this was certainly not our goal. The last time I talked with [President George W.] Bush on the phone it was during the active phase of military operations, and I told him that "in this situation you would have done the same thing, only perhaps more severely". He did not argue with me. This means that virtually any country that values the lives of its citizens and conducts an independent foreign policy would have reacted to the situation in roughly the same way. It is another matter that people did not expect this reaction from Russia and actively led the Georgian side to believe: "Do whatever you want, Russians will not bother you, it is not in their interests, they have neither the opportunities nor the desire to do so now". This was a clear foreign policy blunder. To me this appears to be just a diplomatic mistake, which will subsequently be portrayed in diplomacy textbooks as a mistake committed by the United States and a mistake by Georgia, although Georgia holds criminal responsibility too.

Therefore, I do not think that the phase of confrontation will be a long one. Russia certainly has no interest in this. On the contrary, we have repeatedly said that we are ready to go as far as our partners are willing to go. If you paid attention to the five principles that I mentioned, one of them speaks to the fact that we would like to fully develop our relations with the United States, with other states, with the Europeans and, of course, to do so in a full-value, friendly manner. Here nothing has changed. We have no desire - and I have just talked about this -- to make new alliances just to tease the Americans and Europeans. What is the point of this? There is none. Foreign policy must be pragmatic. And you, Mr Ambassador, are well aware of this. Everyone is tired of ideological, ideologically-informed foreign policy. During the Soviet period the entire foreign policy of the Soviet Union was completely ideological. We had hoped that in the new order foreign policy would get rid of those unpleasant traits. Unfortunately, now our partners have much more ideology in their foreign policy than we do. And all of these concepts, which are taken up by the State Department and in other places - they are pure ideology, and with perfectly obvious properties. This does not help the citizens of that state at all.

Let us ask ourselves frankly: because the United States is active in Iraq, in Afghanistan, and looking at Iran, is it that the life of the people of the United States of America has become better or more secure? Does the population receive any positive emotions from these activities? Hardly.

It seems to me that we should all try to remove the ideology from our foreign policy. The less schemes there are, the better. And we certainly need to get rid of Sovietology stereotypes. It seems to me that trouble with the current administration of the United States of America is that it contains too many Sovietologists.

SVETLANA MIRONYUK: Mr Ram, please go ahead.

NARASIMHAN RAM: Mr President, my name is Ram and I represent India.

When I think of Georgias motivation with regards to supporting this mad adventure, I think it consisted in the desire to test the position and the response of President Medvedev. Maybe the whole situation really did play out against them. But correct me if I am wrong. If we go one step further and look at the future, if we consider the possibility that Georgia will become a member of NATO, if there are serious steps taken in this direction, and if you have to take practically the same decision as the one you just made when you ordered Russian troops to intervene, what will happen? I think that the decision taken was the right one.

But would you not agree that this is a further evolution in the formulation of your policy in this regard?

DMITRY MEDVEDEV: Thank you.

You know, I would very much like to avoid seeing our policy further evolve in this direction. I would very much like for us to draw a line on this particular episode.

But when it comes to Georgian membership in NATO, I have already talked about this, and the fact that it will clearly be a very serious destabilizing factor for NATO and the Caucasus. And it wouldnt be so very serious if the head of the Georgian state had a balanced, reasonable policy, even one that was targeted across the Atlantic Ocean, but the situation is altogether different when the head of state is a person with whom we simply will not have any dealings, a totally unpredictable man, a man suffering from a number of pathologies and who is, unfortunately, in a mentally unbalanced state. You will excuse me I hope, but a man who uses drugs, as is well known to western journalists who interviewed him recently. A two-hour interview during which a head of state was under drugs is a little too much, way too much actually. If our colleagues in NATO want to welcome such a leader, then let them. Because of course for us new tensions that would emerge in the region would occasion very difficult choices.

I have just told you my own feelings about this, but you must understand that we have made our choice. Of course Russia will not joke around in this situation. Everyone should think about this.

SVETLANA MIRONYUK: Mr Carnogursky, please go ahead.

JAN CARNOGURSKY: Mr President, how do you perceive relations between Russia and central European countries such as Poland, the Czech Republic, Slovakia and Hungary?

DMITRY MEDVEDEV: I would like to have very good relations with our close neighbours with whom we share a long history and a cultural past, a fundamental link. I do not see any insurmountable problems in our relationship, none at all. Yes, the Soviet period created a fertile ground for exploiting this issue to achieve certain political goals. By the way, I understand why sometimes eastern European politicians resort to this. This is such an obvious political technique that, to some extent, is a way of consolidating national elite. It involves adopting the same attitude towards Russia as to the Soviet Union. I have already tried to talk about this not, of course, from eastern Europes point of view, but from our point of view in relation to the United States of America. What Iraq represents is obvious, and a large part of the problems there have been resolved. The same thing is true for Afghanistan. Iran is not very clear to the American consumer, despite the number of wild theories on this topic. But it is absolutely clear what Russia is. If Russia is the former Soviet Union, then there is the threat to international peace. This is easy to "spin". This is a platitude but it's true. And in general the popularity rates of this round of candidates proves this. Although I was somewhat surprised to learn that foreign policy has become a pressing issue for Americans, because it does not usually play a dominant role in the outcome of elections.

It is the same for eastern Europe. I think that if we try all to turn all the pages, not focus excessively on the events of the recent past, and try to prove to ourselves that Russia is not the Soviet Union, then relations will be much simpler. But if Russia is portrayed as dangerous, if Russia is seen to be a way of consolidating the population during given domestic or other events, then of course this will be difficult.

We have no doubt that Russia and eastern Europe could enjoy very close, really very close relations, because even during the most difficult period, the Soviet period, there were still some things that united us, namely joint development and a joint cultural and educational space. This is not lost. Therefore for Russia, as they say, this is no longer an issue. We are ready to develop full-fledged economic, cultural and educational ties with eastern Europe.

SVETLANA MIRONYUK: Bridget Kendall, please, a question.

DMITRY MEDVEDEV: Mr Cohen has been raising his hand for half an hour.

SVETLANA MIRONYUK: Will Mr Cohen cede to Bridget Kendall?

DMITRY MEDVEDEV: They are suggesting that you cede to a woman.

BRIDGET KENDALL: Mr Medvedev, thank you for this meeting. It is useful to speak frankly and look at the details of what is happening.

And I would like to go back to what you said at the outset about unipolar and multipolar worlds. If I understand correctly Russias objection to the idea of a unipolar world, it is linked to the fact that countries take unilateral decisions. But I think that during this crisis you had to take not only a very difficult decision regarding military action, the beginning of military hostilities, but a political decision as well, and one that was difficult to accept: to recognize the independence of the Republic of South Ossetia and Abkhazia. One reason that such a situation is difficult is that a unilateral decision had to be taken. And your western partners still subscribe to the old stereotypes in terms of relations with the Soviet Union. Nicaragua has also recognized these republics. I understand the reasons why Russia recognized the republics, ie. to protect their population. But maybe you could tell us about the process of how you came to this decision, whether you perhaps thought that it could send the wrong signals? And why did you make this decision, at what point did you make it -- at the beginning or at the very last moment of your process of reflection?

DMITRY MEDVEDEV: This is an important question for history. I will not repeat the reasons why this decision was taken, I have laid them out repeatedly. For some they are absolutely persuasive and for others they are less convincing. Although in my view today there is certainly no serious argument which would allow one to, for example, separate the process of the recognition of South Ossetia and Abkhazia from the decisions taken with regard to Kosovo. I have already spoken about this topic: it is up to each state to decide whether they recognize another states independence or not. This is even a domestic issue relating to the history of relations with a given state, the existence of any problems in the territory of a state which could then affect relations with the world at large and so on.

But in terms of the architecture for making such decisions, it seems to me that this decision always boils down to the problem of a specific historical situation -- excuse me, the decision for the head of state -- because the idea to recognise South Ossetia and Abkhazia has been around for a very long time. I will not hide the fact that we really did not want this. On the contrary, for a long time both President Yeltsin and President Putin encouraged the leadership of the unrecognized autonomous regions and the population to remain in Georgia and not to create problems of another order. And we sincerely felt that if certain basic things were done we could at least return to a constructive situation. I can tell you frankly that the first time I saw Saakashvili as President was in St Petersburg, and the first thing I said to him was that we adhere to the same principles of territorial integrity as we did before. This was the first phrase that he heard from me and he was happy to swallow it. And what did we get in return?

I remember how our relationship developed. He was spinning around like a dradle and kept saying: "Let's meet, how about I come to Sochi?". I said: "Fine, come. I will be glad to see you, perhaps well sign an agreement abjuring the use of force". We had several such conversations over the phone. The last time I saw him was in Kazakhstan while celebrating the anniversary of Astana. And we parted on the fact that he was willing to come to Russia, to Sochi, and hold normal negotiations, including negotiations about a treaty renouncing the use of force. Even though he said: "Well, that has all been tried". I said: "But what is your alternative, is it to use force?" - It seemed not to be the case. We parted.

I am not a fan of conspiracy theories neither am I a fan of black-or-white descriptions, but I cannot help but say the following. After a while our close partner Condoleezza Rice arrived, and after that the guy acted differently. He stopped calling, he said: "We dont need the meeting in Sochi, maybe at the end of the year". Please: thats your business. He started to prepare for war. Because of this our view on the question of recognition certainly evolved and my personal point of view did as well. After all, it's my decision and ultimately I am responsible for it, both before the citizens of Russia and before the citizens of these two new republics. I am responsible as head of state. I will not surprise you when I say that the decision to recognise their independence arose, of course, after the outbreak of hostilities, when we realised that it was the only way to protect the Ossetians and Abkhazians, and that if blood has been shed once then it cannot be stopped, unless the aggressor is punished. That's when the decision was taken. This is a fairly banal thing, but it's true.

Mr Cohen, please go ahead.

ARIEL COHEN: Thank you very much, Dmitry Anatolyevich.

I would like to thank you on behalf of our entire community for your detail and candour. I just do not know any other presidents who spend so much time with political scientists. And your predecessor, Mr Putin has started a very good tradition.

Here is what I am concerned about. During this trip we heard that Russia is not only using force in a peacekeeping mission to enforce the peace, but has also adopted a number of geo-strategic and policy tools that have occasioned among experts -- not me personally but other experts that I know well, and not only in the United States -- precisely this fusion that you talked about, between the image of Russia and the image of the Soviet Union.

More specifically. The question of the dismemberment of Ukraine. The issue of instruments that give expression to anti-NATO sentiment in Ukraine. Once again, this can be perceived as interference in the internal affairs of a neighbouring state. Rhetoric about privileged spheres of interest, which again could be interpreted as contrary to the existing norms of international law. The discourse of your Foreign Minister Mr Lavrov about how Russia will activate the forces that have been accumulated in the third world - people who have received an education here and so on all this could be interpreted as a means of rearming, which also costs you dearly, and so on and so forth.

My question: Will Russias image became that of a country that positions itself against the status quo? Historically, countries that have been anti-status quo, even without ideology and without the Cold War, countries such as Germany before 1914 and France in the 18th century, have provoked global conflicts. Do the people who are making decisions in Moscow today realize that this rhetoric and geo-strategic orientation can result in such an outcome?

DMITRY MEDVEDEV: Rhetoric is one way of achieving certain goals. When I speak of this or that priority, I am not saying this because I feel like it but because I believe that it will help Russia achieve a given position in the world. The level of rhetoric is actually much higher today than it was in the past. The stylistic, substantive and semantic structures involved in this rhetoric are also different. And what would you expect in such a situation?

Think of it this way: there was an act of aggression, we responded to it, and as far as rhetoric is concerned we continue talking exactly the way as we did before. They simply would not accept this, either domestically or in foreign policy terms. When the United States of America started its operations on the basis of the events of September 2001, the rhetoric was extravagantly belligerent , but it was clear that the country has suffered a loss, that it was under threat. Naturally this affects what leaders say and what the President said.

For this reason I think there's an issue of reciprocity at stake here. If our partners want to see wholesale tectonic changes in Russian policy based on this rhetoric, or on certain stylistic changes, then that is what they will see. But if they understand that this is all a way of responding to a military conflict, then they will see things differently. In large measure this does not depend on us. This primarily depends on what politicians and the people they are supposed to lead want to see once the conflict is over. Of course, the easiest way is to fall back on a time-honoured practice and claim that Russia has finally dropped its democratic mask, shown that it wants neither democracy nor a market economy, but intends rather to militarise and strengthen its authoritarian regime. It has finally happened, and now talking to Russia is the same as talking with the Soviet Union. This response is accompanied by a counter-rhetoric that serves to achieve one's own domestic political purposes. But there is no need for any of this, as I have repeatedly said in all sorts of talks. In the last month I have spoken so much on the phone with foreign leaders that my ear doesn't want to function anymore. As you know, it is difficult if one has to talk for an hour. But in all of these conversations I noted that the real content was politics, not rhetoric. Here, much depends on you. Let me say again, it would have been better if Russia had been differently perceived that is what we wanted. Rhetoric is of secondary importance. If everything calms down, we know that the level of discussion of these problems will be different, including on our side. But if they continue to provoke us, the rhetoric will be harsh.

I can tell you frankly that when I started my term as President I never thought that I would be forced to resort to this rhetoric. But there are situations in which a president cannot use another set of arguments, any president that respects his country and does not think of it as a banana republic. In this sense it was easy for me, however difficult such a situation is in itself. We are not going to corner ourselves and to light a bunch of domestic fires on this subject. There is always a set of forces ready to warm their hands on such fires, including in our country. They have different names, but their essential nature is the same. I do not like these forces. I would like to get on with other things. I have already talked about this. But if the situation becomes complicated, the response will be obvious.

SVETLANA MIRONYUK: Mr Goldman, please go ahead.

MARSHALL GOLDMAN: I would like to speak with you as a representative of your old profession, a lawyer, a man who has studied law.

One of the issues that I face when talking to businessmen who invest in Russia, especially in the oil and gas sector, is their concern with what is happening in certain types of business. And when I ask them why they continue to invest in Russia, where, as you say, Mr Medvedev, a legal nihilism exists in the country -- and this is to some extent a criticism of your predecessor when I ask why they stay, why they continue to pursue their interests here, their answer is: "You can always go to Peru and deal with the Shining Path".

I want to ask whether you want Russia to be perceived like that in the world, at least as far as business is concerned?

DMITRY MEDVEDEV: Perceived? Perceived as a state?

MARSHALL GOLDMAN: As what kind of state? As a state of legal nihilism.

DMITRY MEDVEDEV: I see. This is indeed a topic very dear to me, and my deep conviction is that in Russia unfortunately there is no real understanding of the value of law. I have engaged with these issues for a long time, both in theory and in practice. Unfortunately this manifests itself everywhere, including in everyday matters, everyday issues: at the domestic level, the level of business, the level of civil servants and even the state as a whole. And so for us it's obvious, at least for me as head of state at any rate, that if we don't change in this regard we will never be accepted as equal partners. And this problem is our problem in a pure form: it can't be blamed on international community or insane dictators; it has its roots in our own history. Unfortunately, the history of 18th and 19th centuries and especially the history of the twentieth century in Russia is the history of a disregard for the law.

For this reason during the election campaign, one of the key talking points I put forward was the idea of fighting legal nihilism. We do have certain advantages in this regard. We are a country with a well-developed legal system and good law schools, a country that has developed for three centuries by relying on the resources of the European legal system, the continental legal system. In this sense, we have a very good base. The problem is changing people's habits that is the most difficult thing.

We know that you can create anti-corruption campaigns and that corrupt people can be thrown into jail. These aren't the very difficult things to do, though sometimes its also not so easy. It is much harder to make people respect the law in their everyday affairs.

You know, this may not be the best example but let me offer it to you anyway; we here are engaged in a frank conversation. Imagine the following situation: someone offers to pay cash for a given contract to a Russian businessman and a notional, abstract Western businessman (because as we know every country has its own special situation, its own deficiencies). For most civilised, highly-skilled businessmen the first question that arises will be the question of what the consequences of all this will be. What about the Revenue Services, the tax authorities? Is someone going to film this encounter? Is it all going to end in prison? Unfortunately the response of a large number of our businessmen would be quite different, and I can say this with absolute confidence because, in contrast to my predecessors as president, I spent a decade in business and I know something about it. These people are not really criminals by nature, they simply do not believe that, in breaking these laws, they are doing anything bad: "Well, come on, if I don't pay tax on that amount, so what? The state is not perfect. Why should I share with it? It does not protect me but just tries to winkle things out of me from time to time". And this is where the waters divide. This is perhaps the main thing that comes to mind in such situations.

I do not want to idealise anything. There are a lot of western businessmen who engage in cash transactions. But fewer than in Russia. And this will also depend more on traditions and habits in a given country. I am not going to name particular countries now, but we know which ones have bad habits. But the problem is that too many in Russia have these same habits. And because of this, I believe that legal nihilism is one of our most serious problems. I offer this as a perfectly obvious example. We have many others. And I would like in the years to come to do everything I can to reduce the level of this legal nihilism in the heads of the widest range of Russian citizens.

SVETLANA MIRONYUK: Mr Montbrial, please go ahead.

THIERRY DE MONTBRIAL: Mr President, you have repeatedly insisted that Russia is not the Soviet Union and is not the successor of the Soviet Union, at least in ideological terms. You yourself, although you were born in the Soviet Union, are of course a figure from post-Soviet history. But unfortunately, as you said yourself, your image, well, maybe not your personal image but Russia's' image is that of the Soviet Union. What can you do if your actions are immediately interpreted in terms of the Soviet past, both in a positive and a negative sense. When President Nixon was the U.S. president, he had a terrible reputation because of his Watergate problems, and his press secretary invited journalists to come to the Potomac River, and see how Nixon, like Christ, could walk on water while crossing the river. They looked on while Nixon actually did walk on the water crossing the Potomac River. And the headline in the Washington Post was: "Nixon cant swim".

Here's my question. Club Valdai is a wonderful forum, in which important interactions take place, and we are very grateful to Prime Minister and former President Putin and to you. But it is all the same a small group of people. I am not an expert on Russia, but many experts still believe that Russia is part of a post-Soviet world.

My serious question is: what do you think of this communication problem, and how do you intend to overcome this obstacle? And concerning more practical matters, I would like to ask you, on behalf of all our colleagues seated around the table, to have your picture taken with us after we finish our meal.

DMITRY MEDVEDEV: Of course, I'd be happy to.

The problem of communication is the main problem of the 21st century. New modes of communication have made their appearance and old ones are disappearing. This is the reality of the Internet in the 21st century: is it a tool that represents a possibility for communication or does it divide people? After all, everything depends on how one views this problem. Is it a step towards a better understanding of the real world or is it the foundation for creating a virtual world?

It's the same with regard to politics. Obviously all political issues represent a communication problem. If the Georgian authorities had had the intelligence to discuss a number of issues with Russia and the United States, there would have been no conflict. Because there was no communication, there was a war.

The problem of communication is linked to an image problem as well: the country's image, the image of power, my image if you want. When I talked with my colleague George W. Bush I don't think he would mind my saying this -- he said to me: "Why do you need all this, you're a young president with a liberal background. Why do it?" But I think the answer is clear. I didn't need it. But there are situations where image is nothing and real action counts for everything. This is a very difficult choice for a politician.

Therefore, the better communication is, the more confidence everyone has. The higher the level of confidence, the better the image all this is very clear.

Let's think in this regard about the image of Russia in 2008 and our image in 1993. When was there more democracy? Which Russia society was better prepared for communicating with the western world, that one or this one? Of course it's this one. Values shared by the vast majority of people, are adopted, in an intellectual sense, by 70 percent of people here, by those who voted for the present government at a minimum. In 1993 the situation was different. We wanted then to become a member of the large family of civilised peoples, but we had zero understanding, no real understanding whatsoever, of what that entailed. But if you think about it, when the tanks fired on the parliament in 1993, it was not regarded as a violation of democratic principles, whereas today simply changing the way governors are elected or empowering them is perceived as doing monstrous damage to democratic development, although this is being done in accordance with the Constitution and with the procedures outlined there. Russia is special but this is the fate of any state, particularly any large nation. Russia will never be able to dissolve itself into a small state.

I think you have raised a very important topic and the issue of basic communication is issue number one. I would be very unhappy if, as a result of the crisis in the Caucasus, some of the communication between Russia, Europe and the world was destroyed. I really would not like that.

SVETLANA MIRONYUK: Giulietto Chiesa, please go ahead.

GIULIETTO CHIESA: Mr President, my question is a little bit different from some of the others because I speak as a member of the European Parliament and, at the same time, as a member of the Emergency Commission on Climate Change. I have a very strange impression from our discussions that we are talking as if nothing has happened in the last 10-15 years. And I share many of the views you've expressed today, almost all of them.

What do I want to say? I would like to know your opinion. Over the next 10 years the dangers that will threaten us all will be quite different from those we are discussing today. Climate change is part of the worldwide energy crisis, the crisis of the financial world, the food crisis and the water crisis. I think that the problem of global security is already being seen in light of these challenges, since the old ways of thinking are no longer helpful. What will be Russia's contribution in helping the world face up to these important new challenges?

Thank you.

DMITRY MEDVEDEV: Thank you. This is exactly what we need to work on together, and what we did work on during the last [G8] summit in Toyako in Japan. These are certainly problems that are much more important than those associated with the military development of a given puppet state. We have faithfully undertaken a proportionate part of the obligations associated with climate change and development issues. And I think that this is very important for Russia as well as for the entire international community.

Some time ago, even ten years ago, we could not allow ourselves even to imagine that we could put money into funds of that sort, because we simply did not have enough money and we lacked the necessary capacities. Now the situation is different. And I have informed our colleagues and my colleagues in the G8 that in the nearest future we are devoting about half a billion dollars to these programmes. Our contributions will continue to grow. This means that we would like to tackle these issues with a responsible attitude and would like to work with our European partners, our American partners, and with the People's Republic of China, with India, in short, with all the major players on this issue.

I think this is a very important topic; perhaps we do not yet appreciate just how important it is. Not that long ago everyone brushed this aside as if it were a bothersome fly. Everyone said that only the Europeans were doing anything in this area and other large states just thought it was a trifle. Now everyone understands how important the general situation on the planet is for us. We would like to participate in these programmes, and I have made a formal statement to this effect. We are now putting our money into these programmes. I can tell you that even during a critical phase of confrontation with our European counterparts, we were still talking about such programmes. This means that the process still continues, even at a time when there are differences on some other issues.

SVETLANA MIRONYUK: We have time for two more questions, Dmitry Anatolyevich, if you're still willing.

DMITRY MEDVEDEV: Mr Rahr has his hand up. I feel I have to take pity on him.

ALEXANDER RAHR: Thank you, Dmitry Anatolyevich.

Yesterday Vladimir Putin told us that the West missed a great chance last week, by not extending its hand to a liberal and modern politician like you. I think that our Valdai meeting today may be the resumption of that dialogue. You really are a liberal.

But I have a question about history, if you don't mind answering it. When did you feel that you would become or had a chance of becoming President of Russia? In 2005, or during your speech at Davos, or was it only on 10 December 2007, when the party asked you to be its candidate?

DMITRY MEDVEDEV: Today is a day for dredging up memories. In effect, I think you have correctly identified all the relevant milestones. Of course, when I became part of the government, I realised that destiny might or might not present such an opportunity. But the challenge was already there. When I spoke at Davos, it was a good experience for me and I went on to have a very interesting set of meetings there. By the way, Davos is a very good place and, unlike some of my colleagues, I believe that we should go to Davos, socialise with people, schmooze with them, as we say, because all of this provides us with opportunities to address a whole bunch of issues face to face.

As for the last phase, it probably happened a little sooner than the last date that you mentioned. This realisation probably happened at precisely the time when I knew that I would be participating in the election campaign. Naturally, there was a lot of consultation with the then President Vladimir Vladimirovich Putin and other colleagues. And that was when my aspirations were finally determined.

But I can tell you something else that has become quite clear: to become a real president it is not enough to win elections; that is just the formal legitimisation. It is important that you feel that you can actually make decisions that affect the development of the state over the next few years, and perhaps in the distant future. And you will hardly be surprised to hear that the well-known Caucasian events have obviously affected my idea of my job, how to do it, and gave me confidence in the correctness of the course that I had chosen for myself some time ago. It has been an important test of strength.

SVETLANA MIRONYUK: Who gets the last question?

DMITRY MEDVEDEV: I don't know. You decide. It's better when a woman decides.

SVETLAN MIRONYUK: Mr Sanai.

MEHDI SANAI: I want to ask the following question: after the Caucasian war, you said that the world has changed after the 8th of August. How will regional cooperation between Russia and Iran change, and what about cooperation with the Arab countries? How are things going to change, what will evolve in this regard?

The second part of the question is: what changes will there be or how will international relations between Russia and Iran, Russia and the region evolve, including cooperation concerning Iran's nuclear programme?

Thank you very much.

DMITRY MEDVEDEV: Thank you.

In a stable state even a situation in which some very dramatic events take place cannot cause a complete policy turnaround in which everything changes and results in a situation in which one acquires a bunch of new friends and old friends become enemies. This has not happened and will not happen. We always wanted to have a good, honest partnership with Iran and we will continue to pursue this course. This is not an example of volatility, it does not depend on the Caucasus or what happened there on the 8th of August.

I have had the opportunity to meet with the Iranian leader since then. But, again, this was a planned event, not because we wanted to send some sort of special signal. On the contrary, I had earlier agreed to meet with Mr President Ahmadinejad during the SCO summit. The meeting took place. It was a good, constructive, lengthy conversation that took place "in the margins" of the summit, so to speak. We discussed everything: trade and economic relations, cultural links, the situation in the world, and of course we discussed how Russia and Iran were positioning themselves.

With regards to the Iranian nuclear programme, there has been no change. We have always thought that talks need to be held on this issue. We do not favour any unilateral action. We absolutely do not believe in any militaristic scenario; there are no battlefield solutions to this problem, although we know that some of those involved in international relations have scripted such scenarios. We believe such a scenario is unacceptable, extremely dangerous for peace and for the region. In fact, it is so dangerous that I do not even need to explain why, since it's obvious to everyone. We will continue to work in the formats that presently exist and make constructive contributions there. In fact, we believe that a number of proposals which the Europeans have made on this subject recently, and negotiations that [Mr Javier] Solana conducted, as well as some other negotiations, have generally been quite positive. Here we have to build on what has already been done. We certainly do not need to roll out any new sanctions now, but we do need to try to find a solution to this problem, including the use of nuclear components for a peaceful nuclear energy programme. I think that this is the main object of our foreign policy.

Of course we would like to develop the most cordial and best relations possible with the Arab world, and we are doing precisely that. If you want, these countries are also one of Russias foreign policy priorities, there should be no doubt about that. We had good relations with Arab countries during the Soviet period. After that we had to work on our own problems, but now I believe that there is the opportunity to revive many different channels of cooperation.

MEHDI SANAI: I did not introduce myself: I'm from Iran, a professor at Tehran University.

DMITRY MEDVEDEV: Thank you.

If I have understood correctly, that is the end of our exchange. I am sure that you have got a very complete sense of the current situation in Russia, and it seems to me that the Valdai discussion club is performing its task, an especially important one at this time.

I do not know whether you have heard everything you wanted to hear, and I am absolutely certain that you do not agree with everything that has been said, and thank God for that. The main thing is that we listen to each other, that we use traditional means of communication in order to resolve our problems.

And I am confident that we can continue this kind of work in the future. I cannot see any other way of resolving difficult issues, only this one. Moreover, it is not only interesting, but also sometimes pleasant. At least for me it has been very pleasant to talk with you.

As someone who did not have time for lunch, I would like at least to propose a toast to the discussion club, for your involvement, for the days that you have spent in Russia, for your willingness to try to understand Russia and to listen to it all this means a lot to us.

I would like to wish you success in your everyday work. And I would like to apologise to those who have not been able to speak today. I am confident that we will all have the same opportunity next year. And I would like to say a special thanks to Sveta Mironyuk, to my colleagues in the Presidential Executive Office, and to Deputy Chief of Staff of the Presidential Executive Office Alexei Gromov, who did a great deal to facilitate this work.

In short, let me propose a toast to all of us here. (Applause.)

SVETLANA MIRONYUK: Dmitry Anatolyevich, let me ask you a question. A year ago we had planned to travel to the Caucasus. And it so happened that the Caucasus has been the scene of terrible and serious developments.

DMITRY MEDVEDEV: So, where are you going with this?

SVETLANA MIRONYUK: Every year we travel to one of the regions of Russia, to get a look at it and to try to understand it. We have been to Khanty-Mansiysk, to Kazan, and to the Tver region. Where would you advise us to go next year?

DMITRY MEDVEDEV: You're not trying to suggest anything with such a question? (Laughter.)

SVETLANA MIRONYUK: Absolutely not.

DMITRY MEDVEDEV: Because if you are trying to suggest something, I am going to pick some place outside Russia. (Laughter.)

Where would you like to go? Looking at the map, I think there are many good places to the east. This, however, will create jet lag problems for some [due to the difference in time zones], but you will always have that in one form or another. Maybe you should go somewhere in the Far East?

SVETLANA MIRONYUK: Well, we'll discuss it with members of the club.

DMITRY MEDVEDEV: Then, until we meet again!

One last thing. Today one of our comrades, Sergei Alexandrovich Karaganov, is celebrating a birthday. I would like to wish him all the best from all of you and from myself as well. We have a gift for him. Happy Birthday! (Applause.)