www.Kremlin.ru
November 18, 2008
[Medvedev] Opening Address at the State Council meeting «On Measures to Promote National Competitiveness in a Global Financial Crisis»
Izhevsk
PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Good day dear colleagues!
The theme of today's meeting of the State Council of the Russian Federation is national competitiveness within current economic conditions. Competitiveness is not an abstract concept, one found only in books, but rather a tangible, practical thing. And when we talk about competitiveness today we will do so in relation to the current financial and economic situation.
National competitiveness has been and remains our strategic goal. Recently in my Address [to the Federal Assembly], I said that despite the very difficult conditions caused by the crisis we should not put off tasks that will help the development of our economy, our economic life.
Russia's integration into the global economy has increased significantly and is now high. This is linked with significant advantages and, of course, problems as well. We cannot but feel the effects of the financial crisis which is affecting the world today. But there are no alternatives to innovative development, the introduction of advanced technology, and increased productivity, and we all understand this. All of these measures represent the best way to counter this crisis.
The state has already taken certain preliminary steps in this direction. The government cabinet has adopted and is implementing an action plan. The action plan applies to the financial and banking sectors, key industries, and small and medium businesses. These are its basic components.
We must take active measures to support domestic demand, support and optimize regulation in today's labour market, provide social support for the poorest segments of the population. Around 5 trillion roubles will be spent on such stabilisation measures. But this is not the final figure; we all fully understand that the magnitude of the current problems that have engulfed the world economy and global financial system are such that we may be required to take further decisions. If so, we will take them.
What is the key task in this respect? It consists in effectively financing industry and agriculture, in other words the real sector. The global crisis will require that we take new measures to support it. We have been working on this in recent years, much has been done, though not all. But we now require additional measures. We will take them. Such measures of course include additional instruments concerning bank capitalization, something we are actually doing right now. The government cabinet and the Bank of Russia must work at making sure that each rouble allocated is well spent. Some time ago I talked about this and I would like to it repeat in this room in the presence of the heads of all Russian regions: this is a lot of money and the most important thing is that it be spent effectively. I am not even talking about abuse as there is nothing to say in this respect – such actions must be punished in the most stringent way – I am talking about the misuse of funds, even in the most plausible fields for development. Or the problems associated with the current situation in the banking sector, with respect to eliminating things that clog up the financial sector today. This is not only our problem. Unfortunately, the crisis of confidence in banking and financial spheres, financial problems, and liquidity problems exist in most developed countries in the world. But this does not make it easier; these problems need to be addressed at home. I wish that all the leaders of regions also pay the utmost attention to this issue, especially since a large part of banks, especially regional banks and small banks, are based in the Russian regions.
So that such actions are systemic in nature, rather than piecemeal, each region should develop their own action plan. There cannot be any uniform solution: it would be funny to create some such plan in Moscow then apply it to the regions. It must be of your own design, and this is as it should be. The plan should be developed and adopted in due course. It is extremely important that we constantly monitor the employment situation. We must constantly, on a daily basis, analyze the situation on the labour market and increase – as far as possible, of course – financial programmes supporting employment, because these problems could worsen. Work in this field should be coordinated with all those involved in labour relationships: with employers, social organisations and trade unions.
Another very important issue which certainly applies to all of us here (I am sure that you will talk about this in your speeches) is filling the regional budgets. Firstly, we are working on the question of increasing the funds designed to support the regions of the Russian Federation. We'll talk about this. The relevant cabinet members are here. And secondly, we will offer budgetary credits to cover cash gaps. In doing so, we should certainly not forget about improving relations between different budgetary levels. Their improvement represents an additional resource and essential tool for implementing long-term national plans.
You need to pay particular attention to small businesses. It is clear that small and medium businesses have serious potential for creating new jobs, preventing unemployment and excessive social costs. Of course I am referring to reducing administrative barriers, to financial and infrastructural support. We talk about these things as if they were magic acts, but it is clear that in the current circumstances support for small and medium-sized businesses is not just a national priority that we are working on together. Rather, it is a way to preserve our economic potential and, in some cases, to preserve qualified personnel. Therefore, programmes to support small and medium-sized businesses must be radical, in the best sense of the word. They should already be significant, but now they must simply be very serious.
Once again I would like to stress that the necessary structural changes in our economy can occur only if there is increased competition in each of Russia's territories and in all sectors of its economy. Therefore, we must ask ourselves certain questions and give adequate answers. The questions are quite simple, but nevertheless urgent. For example, what is the degree of entrepreneurial freedom in the region, how effective are the policies for reducing administrative barriers, anti-corruption measures, antimonopoly measures, how effective is support for innovation and technological upgrading, for new technological approaches in companies – naturally, those that operate in the region. If we raise these issues we understand that there will be no easy answers. But nevertheless this is exactly what we need to work on together.
We should also reflect on the factors that will enable us to successfully compete with large foreign corporations in the near future. It is very important to create the conditions to support exports at both the federal and regional levels, and to encourage the expansion and development of new markets.
I just visited a factory – the Izhevsk radio manufacturing plant – an important and serious venture. It was very large during the Soviet period and still is, but what is good is that they really are actively engaged in the high-tech business and are creating new types of equipment which, in essence, are used in all aircraft and in different places. Why do I mention this? Because it is particularly important that we not only commercialize innovations and turn them into concrete products, but also that these products appear in the markets. We understand that some markets will be closed in the face of fierce competition and a global economic crisis. And we must do everything possible if we are operating on these markets to ensure that we are not squeezed out, but rather enter new markets to the extent that this is possible. This is a very complicated system of maneuvers, especially at a time when states, despite all kinds of appeals – and these were also heard during the summit in Washington – will still take protectionist measures, even though all have signed on the dotted line, so to speak, that they will not do so.
We have an opportunity to move forward in the CIS and we should take full advantage of it to do work in the Commonwealth and to create new projects there. To do this we need to use joint development institutions – such institutions exist and we must work on high-tech cooperative projects. If possible, we should certainly use the Russian rouble as one of the currencies in such transactions or the main one. This is one of the ways of making the Russian rouble gradually become a regional international currency. I propose that we discuss these issues – issues relating to cooperation within the CIS and certain other matters – at a joint meeting of the Security Council and the State Council in December.
Now two words about the summits in Europe and America. We discussed the situation concerning current problems in international finance and the economy at both. We discussed ways to restore the global financial order. I talked about the role Russia plays and the measures we are proposing, about our ideas on the establishment of global institutions that coordinate regulation in this field.
This process is very difficult, but the fact that such a meeting took place and that participants agreed on a summit declaration nevertheless represents a first step, the first international step to overcoming both the effects of the crisis and to establishing a better configuration in the future. In general this is a reasonable and correct thing to do, but unfortunately it is still insufficient. Naturally, we will develop these agreements in our own legislation and will take the steps that we have already announced, we will fulfill the commitments we have made within the relevant programmes provided by various agreements, including those discussed at the summit. In this sense I expect that the cabinet of the Russian Federation take all necessary action to implement these agreements.
Already a long time ago we have moved in favour of deep integration into the global economy. Of course, there was no alternative. We now benefit from the advantages of our presence in the global economy. I will not enumerate them, but as I said at the outset, there are also certain costs that we need to minimize.
Together with other states Russia is ready to create mechanisms that will shape a new financial system and simultaneously prevent other countries from taking erroneous decisions. Of course we must also monitor our own decisions, this is also important, but in some cases we are dependent on the decisions taken by other countries, particularly by the major economies.
The economy is global as is the financial system and therefore nothing like this has ever happened before. I already talked about this at the summit and I will repeat once again: all analogies with the financial problems of the thirties, of the late twenties during the great depression, and all kinds of global crises in the seventies and eighties fail. These comparisons are incorrect because this is the first international crisis in an era of global economics and finance. Hence the problem whereby no one knows the laws of this crisis, and the hope that some problems will be slightly easier to resolve in the global financial system. Therefore together we must accommodate our national interests with the use of our existing capabilities and the competitive advantages that Russia has.
This is more than a day's work; it is hard work, especially in times of crisis, but I am sure that we can handle it. We will work on this.
These were my brief introductory remarks. Now a report from Viktor Alexandrovich Tolokonsky, the head of our State Council working group.