Eurasia Press & News
The President attended the plenary session of the 25th St Petersburg International Economic Forum.
President of the Republic of Kazakhstan Kassym-Jomart Tokayev also took part in the session. President of the People’s Republic of China Xi Jinping and President of the Arab Republic of Egypt Abdel Fattah el-Sisi addressed the session via videoconference.
The theme this year is New Opportunities in a New World.
Plenary session moderator Margarita Simonyan: Good afternoon, or almost evening.
As you may know, we had a minor technical issue. Thankfully, it has been dealt with quickly. We are grateful to those who resolved this.
We are also grateful to the audience.
We are grateful to our leader, President Vladimir Putin, for traditionally fitting this forum into his schedule so that he can tell us about economic prospects and other plans.
We are grateful to President Kassym-Jomart Tokayev for attending our forum. We know that it is not an easy thing to do. Thank you for supporting our forum and our country. We really appreciate this.
We will have a lot of questions today. You may not like some of them, and I may not be happy to ask some of them. We would be much happier to speak only about good things, but this is impossible today.
Mr President, I would like to ask you to take the stand and to tell us what lies in store for us all. Thank you.
President of Russia Vladimir Putin: Thank you very much. President Tokayev, friends and colleagues,
I welcome all participants and guests of the 25th St Petersburg International Economic Forum.
It is taking place at a difficult time for the international community when the economy, markets and the very principles of the global economic system have taken a blow. Many trade, industrial and logistics chains, which were dislocated by the pandemic, have been subjected to new tests. Moreover, such fundamental business notions as business reputation, the inviolability of property and trust in global currencies have been seriously damaged. Regrettably, they have been undermined by our Western partners, who have done this deliberately, for the sake of their ambitions and in order to preserve obsolete geopolitical illusions.
Today, our – when I say “our,” I mean the Russian leadership – our own view of the global economic situation. I would like to speak in greater depth about the actions Russia is taking in these conditions and how it plans to develop in these dynamically changing circumstances.
When I spoke at the Davos Forum a year and a half ago, I also stressed that the era of a unipolar world order has come to an end. I want to start with this, as there is no way around it. This era has ended despite all the attempts to maintain and preserve it at all costs. Change is a natural process of history, as it is difficult to reconcile the diversity of civilisations and the richness of cultures on the planet with political, economic or other stereotypes – these do not work here, they are imposed by one centre in a rough and no-compromise manner.
The flaw is in the concept itself, as the concept says there is one, albeit strong, power with a limited circle of close allies, or, as they say, countries with granted access, and all business practices and international relations, when it is convenient, are interpreted solely in the interests of this power. They essentially work in one direction in a zero-sum game. A world built on a doctrine of this kind is definitely unstable.
After declaring victory in the Cold War, the United States proclaimed itself to be God’s messenger on Earth, without any obligations and only interests which were declared sacred. They seem to ignore the fact that in the past decades, new powerful and increasingly assertive centres have been formed. Each of them develops its own political system and public institutions according to its own model of economic growth and, naturally, has the right to protect them and to secure national sovereignty.
These are objective processes and genuinely revolutionary tectonic shifts in geopolitics, the global economy and technology, in the entire system of international relations, where the role of dynamic and potentially strong countries and regions is substantially growing. It is no longer possible to ignore their interests.
To reiterate, these changes are fundamental, groundbreaking and rigorous. It would be a mistake to assume that at a time of turbulent change, one can simply sit it out or wait it out until everything gets back on track and becomes what it was before. It will not.
However, the ruling elite of some Western states seem to be harbouring this kind of illusions. They refuse to notice obvious things, stubbornly clinging to the shadows of the past. For example, they seem to believe that the dominance of the West in global politics and the economy is an unchanging, eternal value. Nothing lasts forever.
Our colleagues are not just denying reality. More than that; they are trying to reverse the course of history. They seem to think in terms of the past century. They are still influenced by their own misconceptions about countries outside the so-called “golden billion”: they consider everything a backwater, or their backyard. They still treat them like colonies, and the people living there, like second-class people, because they consider themselves exceptional. If they are exceptional, that means everyone else is second rate.
Thereby, the irrepressible urge to punish, to economically crush anyone who does not fit with the mainstream, does not want to blindly obey. Moreover, they crudely and shamelessly impose their ethics, their views on culture and ideas about history, sometimes questioning the sovereignty and integrity of states, and threatening their very existence. Suffice it to recall what happened in Yugoslavia, Syria, Libya and Iraq.
If some “rebel” state cannot be suppressed or pacified, they try to isolate that state, or “cancel” it, to use their modern term. Everything goes, even sports, the Olympics, bans on culture and art masterpieces just because their creators come from the “wrong” country.
This is the nature of the current round of Russophobia in the West, and the insane sanctions against Russia. They are crazy and, I would say, thoughtless. They are unprecedented in the number of them or the pace the West churns them out at.
The idea was clear as day – they expected to suddenly and violently crush the Russian economy, to hit Russia’s industry, finance, and people’s living standards by destroying business chains, forcibly recalling Western companies from the Russian market, and freezing Russian assets.
This did not work. Obviously, it did not work out; it did not happen. Russian entrepreneurs and authorities have acted in a collected and professional manner, and Russians have shown solidarity and responsibility.
Step by step, we will normalise the economic situation. We have stabilised the financial markets, the banking system and the trade network. Now we are busy saturating the economy with liquidity and working capital to maintain the stable operation of enterprises and companies, employment and jobs.
The dire forecasts for the prospects of the Russian economy, which were made in early spring, have not materialised. It is clear why this propaganda campaign was fuelled and all the predictions of the dollar at 200 rubles and the collapse of our economy were made. This was and remains an instrument in an information struggle and a factor of psychological influence on Russian society and domestic business circles.
Incidentally, some of our analysts gave in to this external pressure and based their forecasts on the inevitable collapse of the Russian economy and a critical weakening of the national currency – the ruble.
Real life has belied these predictions. However, I would like to emphasise that to continue being successful, we must be explicitly honest and realistic in assessing the situation, be independent in reaching conclusions, and of course, have a can-do spirit, which is very important. We are strong people and can deal with any challenge. Like our predecessors, we can resolve any task. The entire thousand-year history of our country bears this out.
Within just three months of the massive package of sanctions, we have suppressed inflation rate spikes. As you know, after peaking at 17.8 percent, inflation now stands at 16.7 percent and continues dropping. This economic dynamic is being stabilised, and state finances are now sustainable. I will compare this to other regions further on. Yes, even this figure is too much for us – 16.7 percent is high inflation. We must and will work on this and, I am sure, we will achieve a positive result.
After the first five months of this year, the federal budget has a surplus of 1.5 trillion rubles and the consolidated budget – a surplus of 3.3 trillion rubles. In May alone, the federal budget surplus reached almost half a trillion rubles, surpassing the figure for May 2021 more than four times over.
Today, our job us to create conditions for building up production and increasing supply in the domestic market, as well as restoring demand and bank financing in the economy commensurately with the growth in supply.
I mentioned that we have taken measures to reestablish the floating assets of companies. In most sectors, businesses have received the right to suspend insurance premiums for the second quarter of the year. Industrial companies have even more opportunities – they will be able to delay them through the third quarter as well. In effect, this is like getting an interest-free loan from the state.
In the future, companies will not have to pay delayed insurance premiums in a single payment. They will be able to pay them in equal installments over 12 months, starting in June next year.
Next. As of May the subsidised mortgage rate has been reduced. It is now 9 percent, while the programme has been extended till the end of the year. As I have mentioned, the programme is aimed at helping Russians improve their housing situation, while supporting the home building industry and related industries that employ millions of people.
Following a spike this spring, interest rates have been gradually coming down, as the Central Bank lowers the key rate. I believe that that this allows the subsidised mortgage rate to be further cut to 7 percent.
What is important here? The programme will last until the end of the year without change. It means that our fellow Russians seeking to improve their living conditions should take advantage of the subsidy before the end of the year.
The lending cap will not change either, at 12 million roubles for Moscow and St Petersburg and 6 million for the rest of Russia.
I should add that we must make long-term loans for businesses more accessible. The focus must shift from budget subsidies for businesses to bank lending as a means to spur business activity.
We need to support this. We will allocate 120 billion rubles from the National Wealth Fund to build up the capacity of the VEB Project Financing Factory. This will provide for additional lending to much-needed initiatives and projects worth around half a trillion roubles.
Colleagues,
Once again, the economic blitzkrieg against Russia was doomed to fail from the beginning. Sanctions as a weapon have proved in recent years to be a double-edged sword damaging their advocates and architects just a much, if not more.
I am not talking about the repercussions we see clearly today. We know that European leaders informally, so to say, furtively, discuss the very concerning possibility of sanctions being levelled not at Russia, but at any undesirable nation, and ultimately anyone including the EU and European companies.
So far this is not the case, but European politicians have already dealt their economies a serious blow all by themselves. We see social and economic problems worsening in Europe, and in the US as well, food, electricity and fuel prices rising, with quality of life in Europe falling and companies losing their market edge.
According to experts, the EU’s direct, calculable losses from the sanctions fever could exceed $400 billion this year. This is the price of the decisions that are far removed from reality and contradict common sense.
These outlays fall directly on the shoulders of people and companies in the EU. The inflation rate in some Eurozone countries has exceeded 20 percent. I mentioned inflation in Russia, but the Eurozone countries are not conducting special military operations, yet the inflation rate in some of them has reached 20 percent. Inflation in the United States is also unacceptable, the highest in the past 40 years.
Of course, inflation in Russia is also in the double digits so far. However, we have adjusted social benefits and pensions to inflation, and increased the minimum and subsistence wages, thereby protecting the most vulnerable groups of the population. At the same time, high interest rates have helped people keep their savings in the Russian banking system.
Businesspeople know, of course, that a high key rate clearly slows economic development. But it is a boon for the people in most cases. They have reinvested a substantial amount of money in banks due to higher interest rates.
This is our main difference from the EU countries, where rising inflation is directly reducing the real incomes of the people and eating up their savings, and the current manifestations of the crisis are affecting, above all, low-income groups.
The growing outlays of European companies and the loss of the Russian market will have lasting negative effects. The obvious result of this will be the loss of global competitiveness and a system-wide decline in the European economies’ pace of growth for years to come.
Taken together, this will aggravate the deep-seated problems of European societies. Yes, we have many problems as well, yet I have to speak about Europe now because they are pointing the finger at us although they have enough of their own problems. I mentioned this at Davos. A direct result of the European politicians’ actions and events this year will be the further growth of inequality in these countries, which will, in turn, split their societies still more, and the point at issue is not only the well-being but also the value orientation of various groups in these societies.
Indeed, these differences are being suppressed and swept under the rug. Frankly, the democratic procedures and elections in Europe and the forces that come to power look like a front, because almost identical political parties come and go, while deep down things remain the same. The real interests of people and national businesses are being pushed further and further to the periphery.
Such a disconnect from reality and the demands of society will inevitably lead to a surge in populism and extremist and radical movements, major socioeconomic changes, degradation and a change of elites in the short term. As you can see, traditional parties lose all the time. New entities are coming to the surface, but they have little chance for survival if they are not much different from the existing ones.
The attempts to keep up appearances and the talk about allegedly acceptable costs in the name of pseudo-unity cannot hide the main thing: the European Union has lost its political sovereignty, and its bureaucratic elites are dancing to someone else’s tune, doing everything they are told from on high and hurting their own people, economies, and businesses.
There are other critically important matters here. The worsening of the global economic situation is not a recent development. I will now go over things that I believe are extremely important. What is happening now does not stem from what happened during recent months, of course not. Moreover, it is not the result of the special military operation carried out by Russia in Donbass. Saying so is an unconcealed, deliberate distortion of the facts.
Surging inflation in product and commodity markets had become a fact of life long before the events of this year. The world has been driven into this situation, little by little, by many years of irresponsible macroeconomic policies pursued by the G7 countries, including uncontrolled emission and accumulation of unsecured debt. These processes intensified with the onset of the coronavirus pandemic in 2020, when supply and demand for goods and services drastically fell on a global scale.
This begs the question: what does our military operation in Donbass have to do with this? Nothing whatsoever.
Because they could not or would not devise any other recipes, the governments of the leading Western economies simply accelerated their money-printing machines. Such a simple way to make up for unprecedented budget deficits.
I have already cited this figure: over the past two years, the money supply in the United States has grown by more than 38 percent. Previously, a similar rise took decades, but now it grew by 38 percent or 5.9 trillion dollars in two years. By comparison, only a few countries have a bigger gross domestic product.
The EU’s money supply has also increased dramatically over this period. It grew by about 20 percent, or 2.5 trillion euros.
Lately, I have been hearing more and more about the so-called – please excuse me, I really would not like to do this here, even mention my own name in this regard, but I cannot help it – we all hear about the so-called ‘Putin inflation’ in the West. When I see this, I wonder who they expect would buy this nonsense – people who cannot read or write, maybe. Anyone literate enough to read would understand what is actually happening.
Russia, our actions to liberate Donbass have absolutely nothing to do with this. The rising prices, accelerating inflation, shortages of food and fuel, petrol, and problems in the energy sector are the result of system-wide errors the current US administration and European bureaucracy have made in their economic policies. That is where the reasons are, and only there.
I will mention our operation, too: yes, it could have contributed to the trend, but the root cause is precisely this – their erroneous economic policies. In fact, the operation we launched in Donbass is a lifeline they are grabbing at to be able to blame their own miscalculations on others, in this case, on Russia. But everyone who has at least completed primary school would understand the true reasons for today’s situation.
So, they printed more money, and then what? Where did all that money go? It was obviously used to pay for goods and services outside Western countries – this is where the newly-printed money flowed. They literally began to clean out, to wipe out global markets. Naturally, no one thought about the interests of other states, including the poorest ones. They were left with scraps, as they say, and even that at exorbitant prices.
While at the end of 2019, imports of goods to the United States amounted to about 250 billion dollars a month, by now, it has grown to 350 billion. It is noteworthy that the growth was 40 percent – exactly in proportion to the unsecured money supply printed in recent years. They printed and distributed money, and used it to wipe out goods from third countries’ markets.
This is what I would like to add. For a long time, the United States was a big food supplier in the world market. It was proud, and with good reason, of its achievements, its agriculture and farming traditions. By the way, this is an example for many of us, too. But today, America’s role has changed drastically. It has turned from a net exporter of food into a net importer. Loosely speaking, it is printing money and pulling commodity flows its way, buying food products all over the world.
The European Union is building up imports even faster. Obviously, such a sharp increase in demand that is not covered by the supply of goods has triggered a wave of shortages and global inflation. This is where this global inflation originates. In the past couple of years, practically everything – raw materials, consumer goods and particularly food products – has become more expensive all over the world.
Yes, of course, these countries, including the United States continue importing goods, but the balance between exports and imports has been reversed. I believe imports exceed exports by some 17 billion. This is the whole problem.
According to the UN, in February 2022, the food price index was 50 percent higher than in May 2020, while the composite raw materials index has doubled over this period.
Under the cloud of inflation, many developing nations are asking a good question: why exchange goods for dollars and euros that are losing value right before our eyes? The conclusion suggests itself: the economy of mythical entities is inevitably being replaced by the economy of real values and assets.
According to the IMF, global currency reserves are at $7.1 trillion and 2.5 trillion euros now. These reserves are devalued at an annual rate of about 8 percent. Moreover, they can be confiscated or stolen any time if the United States dislikes something in the policy of the states involved. I think this has become a very real threat for many countries that keep their gold and foreign exchange reserves in these currencies.
According to analyst estimates, and this is an objective analysis, a conversion of global reserves will begin just because there is no room for them with such shortages. They will be converted from weakening currencies into real resources like food, energy commodities and other raw materials. Other countries will be doing this, of course. Obviously, this process will further fuel global dollar inflation.
As for Europe, their failed energy policy, blindly staking everything on renewables and spot supplies of natural gas, which have caused energy price increases since the third quarter of last year – again, long before the operation in Donbass – have also exacerbated price hikes. We have absolutely nothing to do with this. It was due to their own actions that prices have gone through the roof, and now they are once again looking for somebody to blame.
Not only did the West’s miscalculations affect the net cost of goods and services but they also resulted in decreased fertiliser production, mainly nitrogen fertilisers made from natural gas. Overall, global fertiliser prices have jumped by over 70 percent from mid-2021 through February 2022.
Unfortunately, there are currently no conditions that can overcome these pricing trends. On the contrary, aggravated by obstacles to the operation of Russian and Belarusian fertiliser producers and disrupted supply logistics, this situation is approaching a deadlock.
It is not difficult to foresee coming developments. A shortage of fertiliser means a lower harvest and a higher risk of an undersupplied global food market. Prices will go even higher, which could lead to hunger in the poorest countries. And it will be fully on the conscience of the US administration and the European bureaucracy.
I want to emphasise once again: this problem did not arise today or in the past three or four months. And certainly, it is not Russia’s fault as some demagogues try to declare, shifting the responsibility for the current state of affairs in the world economy to our country.
Maybe it would even be nice to hear that we are so powerful and omnipotent that we can blow up inflation in the West, in the United States and Europe, or that we can do things to throw everything into disorder. Maybe it would be nice to feel this power, if only there were truth in it. This situation has been brewing for years, spurred by the short-sighted actions of those who are used to solving their problems at somebody else’s expense and who have relied and still rely on the mechanism of financial emission to outbid and draw trade flows, thus escalating deficits and provoking humanitarian disasters in certain regions of the world. I will add that this is essentially the same predatory colonial policy as in the past, but of course in a new iteration, a more subtle and sophisticated edition. You might not even recognise it at first.
The current priority of the international community is to increase food deliveries to the global market, notably, to satisfy the requirements of the countries that need food most of all.
While ensuring its domestic food security and supplying the domestic market, Russia is also able to scale up its food and fertiliser exports. For example, our grain exports in the next season can be increased to 50 million tonnes.
As a priority, we will supply the countries that need food most of all, where the number of starving people could increase, first of all, African countries and the Middle East.
At the same time, there will be problems there, and not through our fault either. Yes, on paper Russian grain, food and fertilisers… Incidentally, the Americans have adopted sanctions on our fertilisers, and the Europeans followed suit. Later, the Americans lifted them because they saw what this could lead to. But the Europeans have not backed off. Their bureaucracy is as slow as a flour mill in the 18th century. In other words, everyone knows that they have done a stupid thing, but they find it difficult to retrace their steps for bureaucratic reasons.
As I have said, Russia is ready to contribute to balancing global markets of agricultural products, and we see that our UN colleagues, who are aware of the scale of the global food problem, are ready for dialogue. We could talk about creating normal logistical, financial and transport conditions for increasing Russian food and fertiliser exports.
As for Ukrainian food supplies to global markets – I have to mention this because of numerous speculations – we are not hindering them. They can do it. We did not mine the Black Sea ports of Ukraine. They can clear the mines and resume food exports. We will ensure the safe navigation of civilian vessels. No problem.
But what are we talking about? According to the US Department of Agriculture, the matter concerns 6 million tonnes of wheat (we estimate it at 5 million tonnes) and 7 million tonnes of maize. This is it, altogether. Since global production of wheat stands at 800 million tonnes, 5 million tonnes make little difference for the global market, as you can see.
Anyway, Ukrainian grain can be exported, and not only via Black Sea ports. Another route is via Belarus, which is, incidentally, the cheapest way. Or via Poland or Romania, whichever you prefer. In fact, there are five or six export routes.
The problem is not with us, the problem is with the adequacy of the people in control in Kiev. They can decide what to do, and, at least in this particular case, they should not take their lead from their foreign bosses, their masters across the ocean.
But there is also the risk that grain will be used as payment for arms deliveries. This would be regrettable.
Friends,
Once again, the world is going through an era of drastic change. International institutions are breaking down and faltering. Security guarantees are being devalued. The West has made a point of refusing to honour its earlier commitments. It has simply been impossible to reach any new agreements with them.
Given these circumstances and against the backdrop of mounting risks and threats, Russia was forced to go ahead with the special military operation. It was a difficult but necessary decision, and we were forced to make it.
This was the decision of a sovereign country, which has еру unconditional right to uphold its security, which is based on the UN Charter. This decision was aimed at protecting our people and the residents of the people’s republics of Donbass who for eight long years were subjected to genocide by the Kiev regime and the neo-Nazis who enjoyed the full protection of the West.
The West not only sought to implement an “anti-Russia” scenario, but also engaged in the active military development of Ukrainian territory, flooding Ukraine with weapons and military advisers. And it continues to do so now. Frankly, no one is paying any attention to the economy or well-being of the people living there, they just do not care about it at all, but they have never spared money to create a NATO foothold in the east that is directed against Russia and to cultivate aggression, hatred and Russophobia.
Today, our soldiers and officers, as well as the Donbass militia, are fighting to protect their people. They are fighting for Russia’s future as a large, free and secure multiethnic country that makes its own decisions, determines its own future, relies on its history, culture and traditions, and rejects any and all outside attempts to impose pseudo-values steeped in dehumanisation and moral degradation.
No doubt, our special military operation goals will be fulfilled. The key to this is the courage and heroism of our soldiers, consolidated Russian society, whose support gives strength and confidence to the Russian Army and Navy and a deep understanding of the truth and historical justice of our cause which is to build and strengthen Russia as a strong sovereign power.
My point is that sovereignty cannot be segmented or fragmented in the 21st century. The components of sovereignty are equally important, and they reinvigorate and complement each other.
So, what matters to us is not only the defence of our political sovereignty and national identity, but also strengthening everything that determines our country’s economic, financial, professional and technological independence.
The very structure of Western sanctions rested on the false premise that economically Russia is not sovereign and is critically vulnerable. They got so carried away spreading the myth of Russia’s backwardness and its weak positions in the global economy and trade that apparently, they started believing it themselves.
While planning their economic blitzkrieg, they did not notice, simply ignored the real facts of how much our country had changed in the past few years.
These changes are the result of our planned efforts to create a sustainable macroeconomic structure, ensure food security, implement import substitution programmes and create our own payment system, to name a few.
Of course, sanction restrictions created many challenges for the country. Some companies continue having problems with spare parts. Our companies have lost access to many technological solutions. Logistics are in disarray.
But, on the other hand, all this opens up new opportunities for us – we often talk about this but it really is so. All this is an impetus to build an economy with full rather than partial technological, production, human and scientific potential and sovereignty.
Naturally, it is impossible to resolve such a comprehensive challenge instantly. It is necessary to continue working systematically with an eye to the future. This is exactly what Russia is doing by implementing its long-term plans for the development of branches of the economy and strengthening the social sphere. The current trials are merely resulting in adjustments and modifications of the plans without changing their strategic orientation.
Today, I would like to talk about the key principles on which our country, our economy will develop.
The first principle is openness. Genuinely sovereign states are always interested in equal partnership and in contributing to global development. On the contrary, weak and dependent countries are usually looking for enemies, fuelling xenophobia or losing the last remnants of their identity and independence, blindly following in the wake of their suzerain.
Russia will never follow the road of self-isolation and autarky although our so-called Western friends are literally dreaming about this. Moreover, we are expanding cooperation with all those who are interested in it, who want to work with us, and will continue to do so. There are many of them. I will not list them at this point. They make up the overwhelming majority of people on Earth. I will not list all these countries now. It is common knowledge.
I will say nothing new when I remind you that everyone who wants to continue working or is working with Russia is subjected to blatant pressure from the United States and Europe; it goes as far as direct threats. However, this kind of blackmail means little when it comes to countries headed by true leaders who know the difference between their own national interests, the interests of their people – and someone else’s.
Russia will build up economic cooperation with these states and promote joint projects. At the same time, we will certainly continue to cooperate with Western companies that have remained in the Russian market despite the unprecedented arm-twisting – such companies exist, too.
We believe the development of a convenient and independent payment infrastructure in national currencies is a solid and predictable basis for deepening international cooperation. To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, transshipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.
But foreign trade is not our only priority. Russia intends to increase scientific, technological, cultural, humanitarian and sports cooperation based on equality and mutual respect between partners. At the same time, our country will strive for responsible leadership in all these areas.
The second principle of our long-term development is a reliance on entrepreneurial freedom. Every private initiative aimed at benefiting Russia should receive maximum support and space for implementation.
The pandemic and the more recent events have confirmed how important flexibility and freedom are in the economy. Russian private businesses – in tough conditions, amid attempts to restrain our development by any means – have proved they can compete in global markets. Private businesses should also be credited for Russia’s adaptation to rapidly changing external conditions. Russia needs to ensure the dynamic development of the economy – naturally, relying on private business.
We will continue to reduce administrative hurdles. For example, in 2016–2018, we imposed a moratorium on routine audits of small businesses. Subsequently, it was extended through 2022. In 2020, this moratorium was extended to cover mid-sized companies. Also, the number of unscheduled audits decreased approximately fourfold.
We did not stop at that, and last March, we cancelled routine audits for all entrepreneurs, regardless of the size of their businesses, provided their activities do not put people or the environment at high risk. As a result, the number of routine audits has declined sixfold compared to last year.
Why am I giving so many details? The point is that after the moratorium on audits was imposed, the number of violations by entrepreneurs – this was the result – has not increased, but rather it has gone down. This testifies to the maturity and responsibility of Russian businesses. Of course, they should be offered motivation rather than being forced to observe regulations and requirements.
So, there is every reason to take another radical step forward, that is, to abandon, for good and on a permanent basis, the majority of audits for all Russian businesses, except on risky or potentially dangerous activities. Everyone has long since understood that there was no need to check on everyone without exception. A risk-oriented approach should be at work. I ask the Government to develop the specific parameters of such a reform in the next few months.
There is another very sensitive topic for business, which has also become important today for our national security and economic resilience. To reduce and bring to a minimum all sorts of abuse and loopholes to exert pressure on entrepreneurs, we are consistently removing loose regulations from criminal law that are applied to economic crimes.
Last March, a law was signed, under which tax-related criminal cases against entrepreneurs shall only be brought before a court by the tax service – there is no other way. Soon a draft law will be passed on reducing the statute of limitations for tax-related crimes and on rejecting lawsuits to initiate criminal proceedings after tax arrears have been paid off.
Working comprehensively, although prudently, we need to decriminalise a wide range of economic offenses, for instance, those that punish businesses without a licence or accreditation. This is a controversial practice today because our Western partners illegitimately refuse to provide such licenses.
Our own agencies must not single-handedly make our businesses criminally liable for actually doing nothing wrong. The problem is this, and small businesses understand it very well – if a licence has expired, and Western partners refuse to extend it, what are businesses to do, wrap up operations? By no means, let them work. State oversight should continue, but there should be no undue interference in business.
It also makes sense to think about raising the threshold of criminal liability for unpaid customs duties and other such taxes. Additionally, we have not for a long time reconsidered the parameters of the terms ‘large’ and ‘very large’ economic loss for the purposes of economic offences despite inflation accruing 50 percent since 2016. The law now fails to reflect the current realities and needs to be corrected.
We need to reconsider the conditions for detaining entrepreneurs and for extending preliminary investigations. It is no secret that these practices have long been used inappropriately.
Businesses have been forced to cease operations or go bankrupt even before the investigation is over. The reputation of the owners and of the brand name suffers as a result, not to mention the direct financial loss, loss of market share and jobs.
I want to ask law enforcement to put an end to these practices. I also ask the Government and the Supreme Court to draft appropriate legislation before October 1 of this year.
In addition, at the Security Council, a special instruction was given to look into criminal cases being opened without later proceeding to court. The number of such cases has grown in recent years. We know the reasons. A case is often opened without sufficient grounds or to put pressure on individuals. We will discuss this in autumn to take legislative action and change the way our law enforcement agencies work.
It goes without saying that regional governments play a major role in creating a modern business environment. As is customary during the St Petersburg Forum, I highlight the regions that have made significant progress in the National Investment Climate Rankings compiled by the Agency for Strategic Initiatives.
There have been changes in the top three. Moscow and Tatarstan have remained at the top and were joined by the Moscow Region which, in a span of one year, went from eighth place to the top three. The leaders of the rankings also include the Tula, Nizhny Novgorod, Tyumen, Novgorod, and Sakhalin regions, St Petersburg and Bashkortostan.
Separately, I would like to highlight the regions that have made the greatest strides such as the Kurgan Region, which moved up 36 spots; the Perm Territory and the Altai Territory, up 26 spots; Ingushetia, up 24 spots; and the Ivanovo Region which moved up 17 spots.
I want to thank and congratulate our colleagues in the regions for their good work.
The federal government and regional and municipal governments should focus on supporting individual business initiatives in small towns and remote rural communities. We are aware of such stories of success. That includes developing popular software and marketing locally produced organic food and environmentally friendly products nationwide using domestic websites.
It is important to create new opportunities, to introduce modern retail formats, including e-commerce platforms, as I mentioned above, and to cut the logistics, transportation and other costs, including by using upgraded Russian Post offices.
It is also important to help small business employees, self-employed individuals and start-up entrepreneurs acquire additional skills and competencies. Please include corresponding measures tailored specifically to small towns and rural and remote areas as a separate line in the national project for promoting small and medium-sized businesses.
Today I would like to address our officials, owners of large companies, our business leaders and executives.
Colleagues, friends,
Real, stable success and a sense of dignity and self-respect only come when you link your future and the future of your children with your Fatherland. We have maintained ties with many people for a long time, and I am aware of the sentiments of many of the heads and owners of our companies. You have told me many times that business is much more than just making a profit, and I fully agree. It is about changing life around you, contributing to the development of your home cities, regions and the country as a whole, which is extremely important for self-fulfilment. There is nothing like serving the people and society. This is the meaning of your life and work.
Recent events have reaffirmed what I have always said: it is much better at home. Those who refused to hear that clear message have lost hundreds of millions, if not billions of dollars in the West, in what looked like a safe haven for their assets.
I would like to once again say the following to our colleagues, those who are both in this audience and those who are not here: please, do not fall into the same trap again. Our country has huge potential, and there are more than enough tasks that need your contribution. Invest here, in the creation of new enterprises and jobs, in the development of the tourism infrastructure, support schools, universities, healthcare and the social sphere, culture and sport. I know that many of you are doing this. I know this, but I wanted to say it again.
This is how the Bakhrushin, Morozov, Shchukin, Ryabushinsky, Akchurin, Galeyev, Apanayev, Matsiyev, Mamontov, Tretyakov, Arsanov, Dadashev and Gadzhiyev families understood their noble mission. Many Russian, Tatar, Buryat, Chechen, Daghestani, Yakutian, Ossetian, Jewish, Armenian and other merchant and entrepreneurial families did not deprive their heirs of their due share, and at the same time they etched their names in the history of our country.
Incidentally, I would like to note once again that it remains to be seen what is more important for potential heirs: money and property or their forefathers’ good name and service to the country. The latter is something that cannot be squandered or, pardon my language, wasted on drink.
A good name is something that will always belong to your descendants, to future generations. It will always be part of their lives, going from one generation to another, helping them and making them stronger than the money or property they might inherit can make them.
Colleagues,
A responsible and well-balanced macroeconomic policy is the third guiding principle of our long-term development. In fact, this policy has largely enabled us to withstand the unprecedented pressure brought on by sanctions. Let me reiterate that this is an essential policy in the long term, not just for responding to the current challenges. We will not follow in the footsteps of our Western colleagues by replicating their bitter experience setting off an inflation spiral and disrupting their finances.
Our goal is to ensure robust economic growth for years to come, reducing the inflation burden on our people and businesses and achieving the mid- and long-term target inflation rate of four percent. Inflation was one of the first things I mentioned during my remarks, so let me tell you this: we remain committed to this target of a four-percent inflation rate.
I have already instructed the Government to draft proposals regarding the new budget guidelines. They must ensure that our budget policy is predictable and enables us to make the best use of the external economic conditions. Why do we need all this? To put economic growth on a more stable footing, while also delivering on our infrastructure and technological objectives, which provide a foundation for improving the wellbeing of our people.
True, some international reserve currencies have set themselves on a suicidal path lately, which is an obvious fact. In any case, they clearly have suicidal intentions. Of course, using them to ‘sterilise’ our money supply does not make any sense. Still, the principle of planning one’s spending based on how much you earn remains relevant. This is how it works, and we understand this.
Social justice is the fourth principle underpinning our development. There must be a powerful social dimension when it comes to promoting economic growth and business initiatives. This development model must reduce inequality instead of deepening it, unlike what is happening in other countries. To be honest, we have not been at the forefront when it comes to delivering on these objectives. We have yet to resolve many issues and problems in this regard.
Reducing poverty and inequality is all about creating demand for Russian-made products across the country, bridging the gap between regions in terms of their capabilities, and creating new jobs where they are needed the most. These are the core economic development drivers.
Let me emphasise that generating positive momentum in terms of household income growth and poverty reduction are the main performance indicators for government agencies and the state in general. We need to achieve tangible results in this sphere already this year, despite all the objective challenges we face. I have already assigned this task to the Government.
Again, we provide targeted support to the most vulnerable groups – pensioners, families with children, and people in difficult life situations.
Pensions are indexed annually at a rate higher than inflation. This year, they have been raised twice, including by another 10 percent on June 1.
The minimum wage was also increased by 10 percent at the same time, and so was the subsistence minimum – a reference figure used to calculate many social benefits and payments – accordingly, these benefits should also grow, increasing the incomes of about 15 million people.
In recent years, we have built a holistic system to support low-income families with children. Women are entitled to state support from the early stages of pregnancy and until the child reaches the age of 17.
People’s living standards and prosperity are the most important demographic factors; the current situation is quite challenging due to several negative demographic waves that have recently overlapped. In April, less than a hundred thousand children were born in Russia, almost 13 percent less than in April 2020.
I ask the Government to continue to keep the development of additional support measures for families with children under review. They must be far-reaching and commensurate with the magnitude of the extraordinary demographic challenge we are facing.
Russia’s future is ensured by families with two, three and more children. Therefore, we need to do more than provide direct financial support – we need to target and direct the healthcare system, education, and all areas that determine the quality of people’s lives towards the needs of families with children.
This problem is addressed, among other approaches, by the national social initiatives, which regional teams and the Agency for Strategic Initiatives are implementing together. This autumn, we will assess the results of their work, review and rank the Russian regions by quality of life in order to apply the best experiences and practices as widely as possible throughout the country.
Prioritising the development of infrastructure is the fifth principle underlying Russia’s economic policy.
We have scaled up direct budget spending on expanding transport corridors. An ambitious plan for building and repairing the federal and regional motorway core network will be launched next year. At least 85 percent of the roads are to be brought up to code within the next five years.
Infrastructure budget lending is a new tool that is being widely used. The loans are issued for 15 years at a 3 percent APR. As I mentioned before, they are much more popular than we originally thought. The regions have multiple well-thought-out and promising projects that should be launched at the earliest convenience. We will look into how we can use this support measure. We debated this issue last night. What I am saying is that it is a reliable tool.
Upgrading housing and utilities services is a separate matter with a backlog of issues. The industry is chronically underinvested to the tune of 4.5 trillion rubles. Over 40 percent of networks need to be replaced, which accounts for their low efficiency and big losses. About 3 percent of the networks become unusable every year, but no more than 2 percent get replaced, which makes the problem even worse every single year.
I propose consolidating resources and launching a comprehensive programme for upgrading housing and utilities, and synchronizing it with other infrastructure development and housing overhaul plans. The goal is to turn the situation around and to gradually reduce the number of dated networks, just like we are doing by relocating people from structurally unsafe buildings or fixing roads. We will discuss in detail housing and utilities and the construction complex with the governors at a State Council Presidium meeting next week.
On a separate note, I propose increasing resources to fund projects to create a comfortable urban environment in small towns and historical settlements. This programme is working well for us. I propose allocating another 10 billion rubles annually for these purposes in 2023–2024.
We will allocate additional funds for renovating urban areas in the Far Eastern Federal District. I want the Government to allocate dedicated funds to this end as part of the programmes for infrastructure budget lending and housing and utilities upgrading, as well as other development programmes.
Promoting comprehensive improvements and development for rural areas is a top priority for us. People who live there are feeding the country. We now see that they are also feeding a major part of the world, so they must live in comfort and dignity. In this connection, I am asking the Government to allocate additional funding for the corresponding programme. Export duties on agricultural produce can serve as a source of funding here. This is a permanent source of revenue. Of course, there can be fluctuations, but at least this ensures a constant flow of revenue.
On a separate note, I suggest that we expand the programmes for upgrading and modernising rural cultural centres, as well as regional theatres and museums by allocating six billion rubles for each of these projects in 2023 and 2024.
What I have just said about cultural institutions is something that people are really looking forward to, something they really care about. Let me give you a recent example: during the presentation of the Hero of Labour medals, one of the winners, Vladimir Mikhailov from Yakutia, asked me directly for help with building a cultural centre in his native village. This was during the part of the ceremony where we meet behind closed doors. We will definitely do this. The fact that people are raising this issue at all levels shows that they are really eager to see these projects implemented.
At this point, I would like to make a sidenote on a topic that is especially relevant now, since we are in early summer, when Russians usually take their summer vacations.
Every year, more and more tourists want to visit the most beautiful corners of our country: national parks, wildlife sanctuaries and nature reserves. According to available estimates, this year this tourist flow is expected to exceed 12 million people. It is essential that all government bodies, businesses and tourists are well aware of what they can and cannot do in these territories, where they can build tourism infrastructure, and where such activity is strictly prohibited because it endangers unique and fragile ecosystems.
The draft law governing tourism in special protected territories and regulating this activity in a civilised manner is already in the State Duma.
In this context, I would like to draw your attention to the fact that we must figure out in advance all the relevant estimates and ensure that the decisions are well-balanced. We need to be serious about this.
I would like to place special emphasis on the need to preserve Lake Baikal. In particular, there is a comprehensive development project for the city of Baikalsk, which must become a model of sustainable, eco-sensitive municipal governance.
This is not just about getting rid of the accumulated negative environmental impacts from the Baikalsk Pulp and Paper Mill, but about setting a higher standard of living for the city and transforming it into a signature destination for environmental tourism in Russia. We need to rely on the most cutting-edge technologies and clean energy when carrying out this project.
Overall, we will be developing clean technology to achieve the goals we set in the environmental modernisation of production facilities, and to reduce hazardous emissions, especially in large industrial centres. We will also continue working on closed-loop economy projects, green projects and climate preservation. I spoke about these issues in detail at this forum last year.
Consequently, the sixth cross-cutting development principle that consolidates our work is, in my opinion, achieving genuine technological sovereignty, creating an integral system of economic development that does not depend on foreign institutions when it comes to critically important components. We need to develop all areas of life on a qualitatively new technological level without being simply users of other countries’ solutions. We must have technological keys to developing next-generation goods and services.
In the past years, we have focused a lot of attention on import substitution, succeeding in a range of industries, including agriculture, pharmaceuticals, medical equipment, defence production and several others.
But I should stress that there is a lot of discussion in our society about import substitution. And it is not a cure-all nor a comprehensive solution. If we only imitate others when trying to replace foreign goods with copies, even if very high-quality ones, we may end up constantly playing catch-up while we should be one step ahead and create our own competitive technologies, goods and services that can become new global standards.
If you remember, Sergei Korolyov did not just copy or locally upgrade captured rocket technology. He focused on the future and proposed a unique plan to develop the R-7 rocket. He paved the path to space for humankind and in fact set a standard for the entire world, for decades ahead.
Proactively – this is how founders of many Soviet research programmes worked at the time. And today, building on that groundwork, our designers continue to make progress and show their worth. It is thanks to them that Russia has supersonic weapons that do not exist in any other country. Rosatom remains the leader in nuclear technology, developing our fleet of nuclear-powered icebreakers. Many Russian AI and Big Data solutions are the best in the world.
To reiterate, technological development is a cross-cutting area that will define the current decade and the entire 21st century. We will review in depth our approaches to building a groundbreaking technology-based economy – a techno economy – at the upcoming Strategic Development Council meeting. There is so much we can discuss. Most importantly, many managerial decisions must be made in the sphere of engineering education and transferring research to the real economy, and the provision of financial resources for fast-growing high-tech companies. We will also discuss the development of cross-cutting technologies and progress of digital transformation projects in individual industries.
To be clear, of course it is impossible to make every product out there, and there is no need for that. However, we need to possess critical technologies in order to be able to move swiftly should we need to start our own production of any product. This is what we did when we quickly started making coronavirus vaccines, and most recently launched the production of many other products and services.
For example, after dishonest KamAZ partners left the Russian market, their place was taken by domestic companies, which are supplying parts for traditional models and even advanced mainline, transport and heavy-duty vehicles.
The Mir card payment system has successfully replaced Visa and MasterCard on the domestic market. It is expanding its geography and gradually gaining international recognition.
The St Petersburg Tractor Plant is another case in point. Its former foreign partner stopped selling engines and providing warranty maintenance. Engine builders from Yaroslavl and Tutayev came to the rescue and started supplying their engines. As a result, the output of agricultural equipment at the St Petersburg Tractor Plant hit a record high in March-April. It did not decrease, but hit an all-time high.
I am sure there will be more positive practices and success stories.
To reiterate, Russia possesses the professional, scientific and technological potential to develop products that enjoy high demand, including household appliances and construction equipment, as well as industrial and service equipment.
Today’s task is to scale up the capacities and promptly get the necessary lines up and running. One of the key issues is comfortable work conditions for the businesses as well as the availability of prepared production sites.
I ask the Government to submit key parameters of the new operating guidelines for industrial clusters by the autumn. What is critical here?
First – financing. The projects launched in these clusters must have a long-term credit resource for up to ten years at an annual interest rate below seven percent in rubles. We have discussed all these issues with our economic agencies as well. Everyone agreed, so we will proceed.
Second – taxation. The clusters must have a low level of relatively permanent taxes including insurance contributions.
Third – supporting production at the early, kick-off stage, forming a package of orders including subsidising the purchases of ready products by such enterprises. This is not an easy issue but I think subsidies may be required. They are needed to ensure the market. We just have to work it out.
Fourth – simplified administration including minimal or no inspections as well as convenient customs monitoring that is not burdensome.
Fifth, and probably the most important – we need to set up mechanisms of guaranteed long-term demand for the new innovative products that are about to enter the market. I remind the Government that such preferential terms and respective industrial clusters must be launched as early as January 1, 2023.
On a related note, I want to say that both new and already operating points of industrial growth must attract small businesses and engage them in their orbit. It is crucial for entrepreneurs, for small entities to see the horizon and grasp their prospects.
Therefore, I ask the Government together with the SME Corporation [Federal Corporation for the Development of Small and Medium Enterprises] and our biggest companies to launch an instrument for long-term contracts between companies with state participation and SMEs. This will ensure demand for the products of such enterprises for years ahead whereas suppliers can confidently undertake commitments to launch a new manufacturing facility or expand an existing one to meet that order.
Let me add that we have substantially shortened the timeframe for building industrial sites and eliminated all the unnecessary burdensome procedures. Still, there is much more we can do here. We have things to work on, and places to go from here. For example, building an industrial facility from the ground up takes anywhere from eighteen months to three years, while the persistently high interest rates make it harder to buy suitable land plots.
Given this, I suggest launching industrial mortgages as a new tool for empowering Russian businesses to quickly start making all the products we need. What I mean are preferential long-term loans at a five-percent interest rate. Companies planning to buy new manufacturing space will be entitled to these loans. I am asking the Government to work out all the details with the Russian banking sector so that the industrial mortgage programme becomes fully operational soon.
Friends,
Changes in the global economy, finances and international relations are unfolding at an ever-growing pace and scale. There is an increasingly pronounced trend in favour of a multipolar growth model in lieu of globalisation. Of course, building and shaping a new world order is no easy task. We will have to confront many challenges, risks, and factors that we can hardly predict or anticipate today.
Still, it is obvious that it is up to the strong sovereign states, those that do not follow a trajectory imposed by others, to set the rules governing the new world order. Only powerful and sovereign states can have their say in this emerging world order. Otherwise, they are doomed to become or remain colonies devoid of any rights.
We need to move forward and change in keeping with the times, while demonstrating our national will and resolve. Russia enters this nascent era as a powerful sovereign nation. We will definitely use the new immense opportunities that are opening up for us in this day and age in order to become even stronger.
Thank you for your attention.
Margarita Simonyan: Thank you, Mr President.
I would very much like to say that after such exhaustive remarks and such an exhaustive analysis, we have nothing left to talk about, because you have answered all the questions. Still, some questions remain, and we will certainly ask them.
And now I would like to ask President Tokayev to come over here and share with us his perspective on the processes taking place in his country, in our country, and in relations between our countries and in the world.
Thank you.
President of Kazakhstan Kassym-Jomart Tokayev: President Putin,
forum participants,
I congratulate everyone on a significant event – the 25th St Petersburg International Economic Forum. I thank President Putin for the invitation and for the warm and cordial welcome in the cultural capital of Russia.
Over the past quarter of a century, the St Petersburg Forum has deservedly gained respect as a prestigious expert platform and occupies a worthy place among other world discussion platforms.
Today, we are meeting in rather extraordinary circumstances – I am referring to the elevated political and economic turbulence. The global upheavals caused by the pandemic and the rising geopolitical tensions have led to a new reality. Globalisation has given way to an era of regionalisation, with all its inherent advantages and disadvantages. Be that as it may, the process of reformatting traditional economic models and trade routes is accelerating.
The world is changing rapidly – unfortunately, in most cases it is not for the better. Inflation in many countries is breaking ten-year records, global economic growth is slowing down, and competition for investment and resources is intensifying.
There are constraining factors for economic growth such as climate change, growing migration flows, and faster technological change. We certainly pay attention to these processes.
Speaking about the new reality, it is important to bear in mind the rapidly changing structure of the international order – even the seemingly stable East-West, North-South vectors of interaction are shifting. It is important for the countries in our region not only to find the right answers to all these challenges, but also to try to make the most of them. Therefore, we have to consistently reach our full potential for cooperation within the Eurasian Economic Union. The project to link Eurasian integration with China’s One Belt, One Road initiative is relevant here.
As you know, Kazakhstan is now implementing large-scale political and economic reforms. Their goal is to reset public administration and build a fair, new Kazakhstan. We are working to ensure that there is a correlation between economic growth and rising living standards for our people. We want to achieve sustainable development of trade and economic ties, open new production lines, support the growth of human capital, and make investments.
As part of our large-scale effort to modernise the country, we are drafting new rules of the game in the economy without glaring monopolies and rampant corruption. Our priority is to support businesses and improve the business climate with a view to providing the utmost protection for the rights of investors, and promoting stability and predictability. We will continue meeting all of our commitments to our traditional partners. Kazakhstan will continue building an inclusive, fair society without social inequality.
I believe that to ensure sustainable development of all countries of the region, it is necessary to determine new horizons of cooperation and create new growth points in our economies. Along with this, we must always remember the very important task of ensuring international and regional security.
In this context, I would like to draw your attention to the following points.
The first task, as I have already mentioned, is to strengthen the capacity of the Eurasian Economic Union. This task remains relevant for us. The aggregate size of the economies of its members exceeds $2 trillion. This is an enormous market with free movement of goods, capital, services and workforce. At any rate, this is what it should be.
Despite the pandemic and geopolitical upheavals, cooperation in the EAEU continues to grow stronger. Last year, its trade reached a record $73 billion, which is a third higher than last year.
Russia has been and remains Kazakhstan’s key economic partner in the EAEU. Last year, our trade went up by almost a third to exceed $24 billion. These are record figures for us. The dynamics remains positive this year as well. Our trade increased by over 12 percent in the first quarter of 2022.
I believe that, considering the new reality, it would be appropriate and useful to develop an innovative trade strategy within the Eurasian Economic Union. Instead of imposing counter-sanctions, which, frankly, are unlikely to be productive, a more proactive and flexible trade policy should be pursued covering the Asian and the Middle Eastern markets. Kazakhstan could be instrumental in its role of a buffer market.
Overall, the ultimate success of Eurasian integration largely, if not massively, depends on our effective common trade strategy. Kazakhstan and Russia can break new ground in industrial cooperation.
We have a special plan, a programme for industrial cooperation in the new circumstances. Investors from Russia will be provided with industrial sites complete with infrastructure, and a favourable investment climate will be created for them. As a matter of fact, this is already being done.
The full unlocking of our countries’ agricultural potential is particularly important in these circumstances. According to the FAO [the Food and Agriculture Organisation of the United Nations], Russia and Kazakhstan are global leaders in terms of available agricultural land. This fact is of particular importance in light of declining global food security. According to the UN, the number of malnourished people will go from 270 million to 323 million this year.
Providing people with high-quality and safe food remains a priority and a factor in maintaining internal stability.
To create a reliable food system, it is important to implement innovative solutions and advanced technologies, as well as to cut food losses.
Approaches to ensuring food security should be developed at the national level and within regional associations, including the EAEU with account taken of the interests of all state participants. Achieving declared goals in this extremely important area is unlikely without coordinated work.
In other words, fighting skyrocketing inflation and food shortages is our common challenge, which will remain a priority in the foreseeable future, because it directly concerns the well-being of our people. Our countries’ potential makes it possible to consistently and fully supply our markets with the necessary foods, as the President of Russia convincingly demonstrated today.
Secondly, I believe that it is essential that we continue expanding trade and economic cooperation with third countries. Kazakhstan is proactively involved in integration processes, and has always stood for mutually beneficial cooperation with other international organisations.
As far as I know, there has been much interest on the sidelines of the St Petersburg International Economic Forum in Russia’s initiative to build a Greater Eurasian Partnership. This concept consists of offering regional organisations a platform for creating a common space of equal cooperation. It is for this reason that Kazakhstan continues to have a positive outlook on the effort to build the Greater Eurasian Partnership.
This year, Kazakhstan chairs the Commonwealth of Independent States. Over the years, this structure has built up a positive track record despite all the geopolitical challenges, which proves that multilateral dialogue tools are effective.
I believe that the CIS is perfectly suited for serving as a foundation for this megaproject. I am referring to Greater Eurasia, or the Greater Eurasian Partnership. It can encompass the SCO, ASEAN, and the Eurasian Economic Union as its integral elements.
Over the next decade, China, India, as well as countries in the Middle East, South and Southeast Asia, which have traditionally been friendly to us, can become major investors in the economies of our region.
China has already emerged as Kazakhstan’s main economic and foreign trade partner. This country invested in our economy more than $22 billion over the past 15 years. For this reason, strengthening our multilateral cooperation with China is a very important goal for our country.
Of course, the economy matters today just as much as political considerations. I believe that we have to promote business-to-business ties and build new transport and logistics corridors. Today, we treat these matters as our top priorities when meeting with people from Russia and other interested nations.
There is a lot of potential for combining our efforts to develop a pool of breakthrough innovation and technology projects, as well as uninterrupted transportation and logistics chains. At the end of the day, this will create new economic growth opportunities for our countries.
Thirdly, Kazakhstan maintains its unwavering commitment to international efforts to combat climate change. We will be consistent in our efforts to promote green investment and carry out corresponding projects. Environmental problems are global in nature, affecting almost all countries without exception, including Kazakhstan.
Last year, our farmers had serious problems due to a draught that was triggered by low rainfall and low water level in rivers. The cross-border Ural River is in critical condition. We call it Zhayyq on our territory.
I believe we should tackle such problems together when faced with such long-term challenges to the sustainable development of our states. I think we should give serious thought to the prospects of introducing the principles of closed-loop or circular economy. We are working to reduce the GDP’s energy-output ratio, expand the renewable energy sector and reduce transit losses in this area.
The similarity of our economies, industrial infrastructure ties between our two countries and geography as such are prompting us to pool efforts in this strategically important area as well. I hope that together we will manage to draft effective approaches and specific measures for tangible progress in this field.
Fourthly. High quality human resources and constructive inter-cultural dialogue are a reliable source of economic growth. As part of the UN-proclaimed International Decade for the Rapprochement of Cultures, we will continue our policy of preserving the cultural diversity of our country and promoting international dialogue between civilisations.
In September our capital will host yet another congress of world and traditional religions. We welcome the participation of religious figures from Russia in this forum. Practically all of them confirmed their participation.
Kazakhstan is actively reformatting the system of its higher education with the participation of leading foreign universities, including Russian ones. The deepening of international academic ties has special significance for promoting the traditions of bilateral cooperation.
I am convinced that the successful implementation of a number of joint educational and cultural initiatives will allow us to make a tangible contribution to the steady economic advance of our country.
Participants of the forum,
Kazakhstan proceeds from its firm conviction that Eurasia is our common home and that all countries on our continent should closely cooperate in the community. We are confident that the building of a peaceful, stable and economically strong Eurasia will become a major factor of sustainable development and inclusive growth on a global scale.
I am convinced that this prestigious discussion venue that unites top class experts has great potential in searching for constructive ideas aimed at normalising the international situation and recovering the positive dynamics of the world economy.
Thank you for your attention.
Margarita Simonyan: Thank you very much, President Tokayev.
Eurasia is indeed our common home. We all want this home to be safe and prosperous through God’s help and our mutual efforts.
And now we will turn to Africa. We have a video address from President of Egypt Abdel Fattah el-Sisi. Can we have it on the screens, please? Thank you.
President of Egypt Abdel Fattah el-Sisi: In the Name of Allah, the Most Beneficent, the Most Merciful,
President of the Russian Federation Vladimir Putin,
Ladies and gentlemen,
At the outset, allow me to extend to His Excellency, President Vladimir Putin, my sincere congratulations on the silver jubilee of the St Petersburg International Economic Forum. Since 1997, when it has been held for the first time, the forum has become a leading platform for the business community and a remarkable economic event that seeks to discuss the key economic issues facing emerging markets and the world.
Ladies and gentlemen,
The Arab Republic of Egypt, as a guest country, will be part of this year’s session of the forum, which marks the 25th anniversary of its launch, thus confirming the distinguished level that Egyptian-Russian economic relations have reached over the recent years.
This year’s forum is being held amid unprecedented political and economic challenges of a strategic nature. We hope that the outcomes of the forum will contribute to finding effective solutions to these challenges in a way that mitigates the impact of the global economic crisis and its negative repercussions on many countries in the world, especially the economies of emerging countries, takes the concerns and interests of all parties into account, and achieves the security and tranquility of peoples.
This would be achieved through long-term political understandings that open the way for the growth of the global economy, especially in the wake of the severe coronavirus pandemic, which has cost our societies many victims and considerable money and resources, thus making us keen to avoid any slowdown in the global economy.
Ladies and gentlemen,
Let me use this opportunity to reiterate that the Arab Republic of Egypt values its firm, historic friendship relations with the Russian Federation, and values the tangible progress the two countries’ relations have been witnessing over the past years in a multitude of vital sectors, for the two countries’ economies and the prosperity of the two peoples.
The Arab Republic of Egypt and the Russian Federation have been engaged over the past years in the implementation of mega and ambitious projects that serve our countries and respond to the aspirations of our peoples to realise more economic progress.
The most prominent of these are: the project for the establishment of the Dabaa nuclear power plant, which comes within the context of the Egyptian State’s strategy to expand national projects for the use of new and renewable sources of energy.
Another project is the establishment of the Russian Industrial Zone in the Economic Zone of the Suez Canal, which is meant to become an important platform for industry in Africa.
This is in addition to cooperation between the two countries to upgrade the Egyptian railway network and other joint ventures that realise the benefit of the two peoples.
Ladies and gentlemen,
You must be aware that the exceptional events that have been taking place in the Arab Republic of Egypt over the past decade had their immense impact on the overall economic situation in the country. The Egyptian people stood up to surmount this crisis by supporting a clear vision, based on investing in the Egyptian citizen and developing his capabilities.
Therefore, Egypt Vision 2030 was launched to reflect the state’s long-term strategic plan to achieve the principles and goals of sustainable development, with its economic, social and environmental dimensions.
Based on this vision, the Government of Egypt has modernised its legislative structure to enable Egypt to attract more foreign investment. This qualified Egypt to become the top destination for attracting foreign investments in Africa and one of the few countries in the world capable of achieving a growth rate of up to 3.3 percent in 2021, despite the negative challenges posed by the spread of COVID-19 and their impact on the global economy. We expect the Egyptian economy to grow by 5.5% during the current fiscal year. The country’s non-petroleum exports also increased during 2021 to reach $32 billion.
Egypt has also succeeded, within the framework of its strategy to increase its capabilities, to implement mega agricultural projects that are aimed at increasing agricultural land by almost 2 million feddans.
This is in addition to the mega projects Egypt is implementing in the fields of transport, by expanding thousands of kilometers of roads and upgrading Egypt’s transport system by introducing new projects. Those include the high-speed rail that will constitute a means to link the Red Sea and the Mediterranean Sea, thus boosting and facilitating international trade.
Adding to this are the mega industrial projects and the numerous projects in the field of clean energy production, which have been established in Egypt at a rapid pace over the past period.
Despite the previously-mentioned national efforts, Egypt’s actions and efforts to achieve progress were hit recently by economic crises caused by the COVID-19 pandemic. The world was partially recovering from its effects and repercussions, when it was hit again by a great economic crisis that cast a shadow over growth rates and negatively affected states’ budgets, reflecting on the rise of fuel prices and the decline in the value of the national currencies in the face of hard currencies. This is in addition to the disruption in supply chains, the emergence of the food crisis, as well as the irregular movement of civil aviation. This sector is connected with vital fields of the Egyptian economy, primarily tourism and insurance.
Addressing this crisis, which has an international character, requires international efforts and collaboration among all parties in order to get matters back to their normal state, particularly the movement of maritime traffic and the regularity of supply chains, particularly foodstuff, such as grain and vegetable oil.
This also requires working toward restoring calm and stability at the international level, in order to mitigate the impact of this economic crisis on the peoples, who seek peace and development.
I also call on all companies participating in this forum and others to take advantage of this huge opportunity that is provided by investing in Egypt in all fields.
I would not miss, before concluding my speech, thanking the people of Saint Petersburg, this brave city throughout history, which at the same time represents an icon for culture and openness on the outside world.
Finally, I would like, once again, to thank His Excellency, President Vladimir Putin, for his kind invitation for Egypt to participate in this forum as a guest of this round, wishing the forum and the participants all success and blessings and wishing our friendly countries more constructive cooperation, prosperity and progress. We pray God Almighty to spread peace and stability across the world and to spare our peoples the scourge of war and its economic and social impact by giving priority to the language of dialogue, understanding and co-existence.
Thank you.
Margarita Simonyan: We are grateful to the President of Egypt. I think that the people of the host city should be especially pleased to hear his warm words about St Petersburg.
We have just a little time left before the discussion begins. They say anticipation increases desire.
We will now listen to an address by President of the People’s Republic of China Xi Jinping.
President of the People’s Republic of China Xi Jinping (retranslated): President Putin, ladies and gentlemen, friends,
I am delighted to have this opportunity to address the plenary session of the 25th St Petersburg International Economic Forum, which I attended in person three years ago.
In February this year, President Putin visited China and attended the opening ceremony of the Winter Olympic Games in Beijing. We had a detailed exchange of views, following which we reached a vital agreement on expanding our comprehensive practical cooperation and implementing the concept of global governance based on joint consultations, joint participation and joint use.
Cooperation between China and Russia is currently ascending in all spheres. Our bilateral trade reached $65.8 billion over the first five months of this year. We can expect to attain new records by year-end. This is evidence of the high resilience and ingenious potential of Chinese-Russian cooperation.
The world is entering a new period of turbulence and transformation amid the ongoing radical changes and the coronavirus pandemic. There is an obvious trend of anti-globalism, a growing divide between the South and the North, and a weakening of cooperation drivers in the area of development, which could plunge the erratically reviving global economy into a deep recession and create unprecedented challenges to the implementation of the UN 2030 Agenda for Sustainable Development.
According to ancient Chinese words of wisdom, a clever man sees a seed of crisis in every opportunity and an opportunity in every crisis. Danger and opportunity always go together. By overcoming danger, you get opportunity. Strength lies in confidence. The more there are difficulties, the more important it is to remain confident.
During last year’s session of the UN General Assembly, I proposed a Global Development Initiative, which was positively received and supported by a number of international organisations, including the UN, and about a hundred countries.
Today, at a time when the international community is ever more interested in achieving more equitable, sustainable and secure development, we should seize opportunities, meet challenges head-on, and work on the implementation of the Global Development Initiative to build a shared future of peace and prosperity.
First, we need to create conditions for development. It is important that we follow true multilateralism, respect and support all countries’ pursuit of development paths suited to their national conditions, build an open world economy, and increase the representation and voice of emerging markets and developing countries in global economic governance with a view to making global development more balanced, coordinated and inclusive.
Second, we need to strengthen development partnerships. It is important that we enhance North-South and South-South cooperation, pool cooperation resources, platforms and networks of development partnerships, and scale up development assistance in order to forge greater synergy for development and close the development gap.
Third, we need to advance economic globalization. It is important that we enhance the coordination of development policies and international rules and standards, reject attempts at separation, supply disruption, unilateral sanctions and maximum pressure, remove trade barriers, keep global industrial and supply chains stable, tackle the worsening food and energy crises, and revive the world economy.
Fourth, we need to pursue innovation-driven development. It is important that we unlock the potential of innovation-driven growth, improve the rules and institutional environment for innovation, break down barriers to the flow of innovation factors, deepen exchanges and cooperation on innovation, facilitate deeper integration of science and technology into the economy, and make sure the fruits of innovation are shared by all.
Ladies and gentlemen, friends,
The fundamentals of the Chinese economy are its strong resilience, enormous potential and long-term sustainability, which remain unchanged. We have full confidence in China’s economic development. China will continue to promote high-quality development, promote openness with firm resolve, and pursue high-quality Belt and Road cooperation.
China stands ready to work with Russia and all other countries to explore development prospects, share growth opportunities, and make new contributions to deepening global development cooperation and building a community with a shared future for mankind.
Thank you.
Margarita Simonyan: Thank you, Mr President.
Coming to learn Chinese wisdom and some of Chinese sagacity is always a good thing, especially now that Chinese wisdom might come in useful for the entire world.
Mr President, I would like to show you something that I have brought with me especially. It is juice, and it used to be so nicely coloured. It does not matter what sort of juice it is; you cannot even see the brand here, although it is a popular one. And now – do you see? A small picture and the rest is white. Why is that? And this is happening on a massive scale.
Because we ran out of paint. The producer of paint for such packaging has left Russia, and the producer of the packaging also announced that they are leaving. I bought this two weeks ago, and soon this will disappear. As a result, we will have to pour it into bottles or three-litre glass jars, like it was in my childhood, unless we discover that we do not produce bottles either.
There are conflicting opinions on this. You have touched upon this issue today. Some of the participants – a considerable part, maybe even the majority – came here by Sapsan trains. Some say “We will swap Sapsans for Chinese trains, they are even better,” since Siemens has gone. Others say “We will learn to make them ourselves.” Let me remind you that we launched our own high-speed trains in 1984, I think they were called ER200. I was four years old, did not go to school yet, but we already had high-speed trains – but we do not have them any longer. It is sad, isn’t it?
And there are also people who say that no, we cannot replace all that, we can use Sapsan trains for another couple of years and then we will just give up high-speed railways, which means we will step back from what we got used to. And it is like this with everything: telephones, computers, everything we got used to. This is a very sad, I would even say heartbreaking plan.
Maybe there is a different plan?
Vladimir Putin: Whenever any decisions are taken, the key issues must be to singled out. What is key for us? Being independent, sovereign and ensuring future-oriented development both now and for the future generations? Or having packaging today?
Unless we have sovereignty, we will soon have to buy everything and will only produce oil, gas, hemp fibre, saddles and sell rough logs abroad.
It is inevitable. I have already said so in my speech: only sovereign countries can expect to have a sovereign future. That does not mean, however, that we need to plunge back into a situation of 30, 40 or 50 years ago.
Regarding packaging. I do not think it is such a complicated thing that either our partners from other countries can replace, who will be pleased to occupy this market sooner or later, or we will be able to make ourselves.
Margarita Simonyan: You do not see it, but President Tokayev is nodding his head: they will probably be able to replace it.
Kassym-Jomart Tokayev: Absolutely, this is not a problem.
Vladimir Putin: Of course, we will able to replace it.
The question is about a totally different matter. We keep talking about import substitution. In my speech here I also said – and I will just add a couple of words so as not to take too much time while answering only one question.
The issue is not about import substitution, the issue is to establish our own capabilities based on progress in education, science and new promising schools of engineering. We will always be given packaging materials and other simple things, event telephones and smartphones. What we have never been given and never will be is critically important technologies. We have never been given them before even though we had problem-free relations with our Western partners in the previous decades. This is the problem.
And when we begin to stand up for our rights, we are immediately slapped with some sanctions and restrictions; this is what the problem is all about. Therefore, we must commit ourselves to that and have the capacity to reproduce critically important technologies on the basis of what I mentioned. And with that base we will always be able to manufacture the goods you mentioned: packaging materials, telephones and smartphones. If we realise that and keep focusing on solving fundamental issues, we will resolve everything else without a problem.
Let me reiterate: others are already coming to that place – those who produce the packaging materials, those who produce the paints. We are also starting to produce paints and other consumer goods as well as goods employed in industry in a broader sense. We can make anything – I have absolutely no doubt about that.
Obviously, some things will be lost, other things will be made on a new basis, much more advanced – the way it happened earlier. Therefore, when we talk about import substitution, we will substitute something while other things will have to be done on a totally new promising basis of our own making.
Margarita Simonyan: Thank you. President Tokayev, would you like to add anything?
Kassym-Jomart Tokayev: I think everything is clear here, and judging by President Putin’s extremely interesting speech, we can understand that he is thinking in the categories of historical perspective, so to say.
Margarita Simonyan: As always.
Kassym-Jomart Tokayev: And juice packaging has no place here.
Indeed, it is a small problem, nature abhors a vacuum: others will come who will be producing juice packaging that is just as good, and local producers will appear.
The issue is about something else. In particular, I said in my speech about the importance of Eurasian cooperation, about the importance of uniting efforts to resolve unexpected problems. I think we will arrive at the result we are seeking on this road.
Margarita Simonyan: Thank you.
Following up on your remarks, I wanted to ask you a question about the EAEU. You have talked at length about the need to strengthen ties within the EAEU. Of course, we are all for this, and this is what we believe in. However, will we all get a chance to improve these ties?
In the current environment, it is clear that Russia will not, how should I put it, give in to anyone’s pressure, and we have never taken such cues from anyone. Still, there are also other countries in the EAEU. Your country, and you personally have probably come under pressure. This is something that we can only guess. But maybe you could give us an insight into this issue. Other countries are threatened with secondary sanctions, etc. Will we succeed, considering the factor of pressure? I am not referring to our good will here, but to their ill will.
Kassym-Jomart Tokayev: Regarding Kazakhstan, I would not say that there is any pressure exerted directly on our country. True, this is something that comes up during talks. The sanctions are real, and we of course factor them into our trade and economic strategies. At the same time, Kazakhstan must honour its commitments under its agreements with the Russian Federation. Moreover, as I said in my remarks, geography, let alone history, have bound our two nations together. We must keep working together in these, should I say, peculiar circumstances. I mentioned the special programme for industrial cooperation between our countries in the new reality. This means that we will work together.
I believe that the Eurasian Economic Union has a future, despite all the challenges it faces. After all, the countries that agreed to join it are a significant economic force and have a lot of potential. Of course, we must not get ahead of things or be too arrogant, since the challenges we face are real. This is the objective reality.
For this reason, moving forward we will focus on talks and finding mutually acceptable solutions. Finding mutually acceptable solutions and taking into consideration each other’s interests takes hard work, as I have already said before.
It is true that we do have disagreements within the Eurasian Economic Union. After all, apart from meetings we hold in public, there are also the ones that take place behind closed doors.
Margarita Simonyan: President Putin is smiling. He knows what you are talking about.
Kassym-Jomart Tokayev: In most cases, we succeed in finding effective solutions, which is a positive thing.
Margarita Simonyan: Thank you.
I would like to wish you and all of us every success in searching for and finding these solutions as soon as possible.
Vladimir Putin: My colleague said we sometimes have disagreements. But of course, behind closed doors, we always have debates. Even so, we always treat each other with respect and always look for and find compromises, which is extremely important.
You spoke about pressure from the outside. President Tokayev mentioned the level of our mutual trade in his speech. Pressure or no pressure, this is impossible to cancel – our trade stood at US$24 billion last year and exceeded US$12 billion in the first four months of this year. If we continue like this, just calculate how much it will be. There will be more…
Margarita Simonyan: Thirty-six.
Vladimir Putin: Thirty-six, maybe close to 40. This cannot be reversed under any pressure. Hundreds and thousands of jobs and the welfare of millions of people depend on it. How do you cancel that?
No more than you could cancel… The Americans have cancelled, sanctioned our fertilisers, and then lifted the sanctions; food wasn’t sanctioned at all. Everyone wants to eat, the whole world. What sanctions can cancel that?
As for the blitzkrieg they have tried against our economy, it is clear that it did not work out. As Mark Twain wrote, “The reports of my death are greatly exaggerated.” The same is true of the blitzkrieg against Russia.
As for the EAEU, our trade is growing steadily with all countries – faster among the members than with third countries, but trade with third countries is growing, too. That is, the association is not preventing its members from maintaining relations with third countries. This is the way things are, and it is very good.
My colleague has mentioned Chinese investments; but Russian investment in Kazakhstan has reached US$7 billion.
Margarita Simonyan: But Chinese investment amounts to 20, as Mr President told us. That is still more.
Vladimir Putin: Well, China’s population is 1.5 billion, while we have 146 million; there is a difference. But even the US$7 billion invested in specific industries in Kazakhstan are certainly of great importance. Moreover, we have a very rich programme of industrial cooperation – that is what’s important. And not only cooperation inherited from the Soviet Union, but also new projects using new technologies. That is very important.
How do you cancel this? It would be simply impossible, no matter how much one would have liked to. So, yes, problems are being created for us, but they will certainly be overcome.
Margarita Simonyan: Taking the ‘we’re hungry’ narrative a bit further, a cynical joke, or even a slogan, has been circulating lately in Moscow. I have heard it several times from different people: hunger is our last hope. What does this mean? This means that once hunger sets in, this will bring them to their senses: this is when they will lift sanctions and will be friends with us because they will understand that there is no way around it.
In your opinion, how realistic is this forecast? Of course, achieving this through hunger is not something we want, but still…
Vladimir Putin: As I have already said in my remarks, the situation on the global food market is deteriorating. Make no mistake, this is not our fault. It all started with soaring inflation and increasing money supply in the major global economies in Europe and North America. This is how it all started – they did this themselves, and then made it even worse, of course, by imposing sanctions against Russia. I am referring primarily to logistics, financial services, insurances, etc.
Having people in these countries suffer from hunger is something we would very much like to avoid. Just recently, I had a meeting with African Union representatives. I told them that we will do everything we can to satisfy the interests of all our regular customers who buy our grain. I would like to reaffirm this statement. By the way, in recent years we have been exporting wheat to Kazakhstan, too, including this year. I have already mentioned that this season, which starts this summer and runs until next summer, we will export 50 million tonnes of grain. This is a very serious amount. Russia retains its lead in global wheat exports. We are the world’s number one wheat exporter.
However, let me tell you this: the fact that some countries may be negatively affected is not something that makes us happy. We never counted on that. On the contrary, we hope that common sense prevails and that the situation on the international arena calms down so that everyone starts treating each other’s interests with respect, putting the way we operate back on track.
By the way, I have no doubt that as time goes by, many of our partners, at least in Europe, will return to the Russian market and will once again enjoy working here. I have no doubt about that. They will be compelled to do so, while we will not stand in their way. We are open to the entire world, as I have already said. However, they must realise that we need to treat each other with respect.
Margarita Simonyan: God willing.
We received such warm greetings from the President of China. There are also several polar opinions on China, including from the people who have the expert knowledge and influence and who study the matter.
Some say that no, China is being careful and will not offer us a hand directly because that may damage its own interests. They give examples. For example, that Huawei stores are already closing in Moscow.
Others say that of course not, cooperation with Russia is in China’s core interests because a multipolar world is another core interest of China. A world where Russia is strangled or at least significantly weakened has fewer and fewer chances to achieve the multipolarity that many, China in the first place and Russia too, would very much prefer.
In your opinion, what is happening and will happen in our relationship with China?
Vladimir Putin: You know, multi-polarity is not just something we would prefer. It is inevitable. And when I said that somebody is trying to freeze international relations at the stage where they were 30 years ago, just after the collapse of the Soviet Union, I said that people do not understand that moving forward is inevitable. New centres of power emerge. They are strong, dynamic and have great potential. Some may not like it. They may also not like China’s power. Let me remind you, China has become a number one economy in the world in terms of economic volume and purchasing power parity. It is a fact supported by statistics. Of course, a country with 1.5 billion people has a lower GDP per capita than, for example, the United States or European countries. But it is the biggest economy.
Considering the specifics of China’s economy, it means that the Chinese leadership can allocate enormous resources for promising areas of development, including science, education and culture. It is very important and creates huge development prospects for the country.
The same is true of India. They also have about 1.5 billion people and a market economy. This country is developing very fast. Prime Minister Modi is a very progressive person who looks ahead to the future. Take other Asian countries such as Indonesia. Its population is over 300 million and, by the way, it has the largest number of Muslims in the world.
African countries are making strides in economic development. Latin America is growing at a very fast pace. Yes, they do have problems there. But who does not? Problems are the hallmark of the emerging economies, but the potential is simply staggering and impossible not to see.
So, multipolarity is unavoidable and those who cling to their imaginary global leadership are making a colossal mistake. This mistake will cost them dearly, I have no doubt about it. This is not a threat at all. This will simply happen as a matter of course.
With regard to the People’s Republic of China and our relations with China, with Asian countries in general and with China, in particular, we did not start building them because of the events of recent years or months. We have been doing this because Asia, China, in particular, have clearly become new global centres of growth.
Everyone understands, sees and is aware of it. Just take a look at China’s GDP growth rates. Yes, lately they have a little bit … They used to be 7 or more percent, now they are down to 5, but it does not really matter, since an adjustment was clearly inevitable. But they are absolute leaders, you see?
What about the GDP growth in the United States in recent years? How much was it? I think 1.7 percent and even less in the eurozone. In Asia, though, it was 5 and more. Those are the global trends and we have been aligning our relations accordingly for many years now.
Our trade with China is US$140 billion and will keep growing. This year, it will probably hit a record high. Not because we have to do so because of the current political situation, but because this is an objective global picture.
We find it interesting and beneficial to be partners with China, especially since we enjoy stable and trust-based political relations. I have excellent friendly personal relations with President Xi Jinping in the full sense of the word, which creates a good atmosphere for building ties between our countries. However, this does not mean that China should play along with us or support us every step of the way. We do not need this, after all.
There are interests of the state. Just like us, the Chinese leadership is acting primarily out of its national interests, but our interests are not at odds with their interests, and that is what matters. When issues arise – and they always arise at the agency level in the course of work – the nature and quality of relations between our countries makes it possible for us to always find solutions. I am confident it will stay that way going forward.
Margarita Simonyan: You spoke about freedom of entrepreneurship today and have mentioned it many times over the past years. You and people from the Government even made clear that entrepreneurship is what should keep us moving forward and help us withstand this burden and the blow of truly incredible sanctions that were designed to destroy us.
The President of Kazakhstan also spoke about this quite recently. Let me quote you, “In the new and fair Kazakhstan, there will be no place for arbitrary police action, incompetent prosecutors or biased judges.” I am not sure how things are in Kazakhstan in this regard. I hope you will update us about this, too.
I hate to break it to you, Mr President, but things are not too good in our country in this regard. You keep talking about it but following this discussion people will be talking about it and saying that the leader mentioned it again, but no one will hear him say that this time again. Reportedly, the number of businesspeople held in pre-trial detention centres on business-related charges has not decreased and is even growing, although you said many times not to do this. You know, it is as if we have some kind of a deep anti-state within our state. In America, they have a deep state, but we have some kind of an anti-state, which ignores your directions and then does what it pleases with the law. This is very sad.
Perhaps it can be eradicated with the use of tougher measures? Perhaps incarcerations on charges of this kind should be cancelled? I think many will agree that a few dozen of businesspeople evading criminal prosecution will cause less damage to our country than the system itself, which is protecting not society, but the interests of a group of dishonest people.
Vladimir Putin: This is a delicate sphere that I just spoke about. You are now speaking as an onlooker and in the interests of the business community, who are the majority in this audience. I understand these concerns. That is what I was talking about, that is why I was talking about it. But there is another side to it, namely, the interests of society and ordinary citizens who are also watching. When millions of people see illegal or unlawful actions perpetrated by the business community, they wonder why the state is not doing anything about it to protect ordinary citizens. Striking a balance is not that easy.
By the way, you have just mentioned some pressure from Russia. I would like us to return to today’s reality. And what about our neighbours? No pressure from them? They robbed our entrepreneurs, took their property for no reason at all, punishing them for their activities, their work in Russia. This is sheer nonsense. Where are these principles of the inviolability of private property? Often sanctions and property withdrawal affect people who have nothing to do with the state or decision-making by national political leaders. They are simply individuals who worked honestly without violating the law either at home or abroad. Yet, their property was taken away. What is this? This is simply beyond the pale, contrary to common sense. They are biting the hand that feeds them. Frankly speaking, many people linked with the Western economies were in favour of developing relations with them without being conduits of Western interests. But now that they were deprived of everything, what support will they give? They will say: “Darn you!”
Margarita Simonyan: When did you say this to them? You said in 2004: you will get sick of eating dust.
Vladimir Putin: Yes, they will, while running from one office to another, upholding their rights. Unfortunately, this is what happened.
What am I talking about? I am saying nothing like this happens here. Of course, we have problems or else I would not be talking about them. I keep saying and repeating that faced with the current difficulties we can respond effectively only by expanding freedom for people in general and businesses in particular. This also applies to the functioning of law-enforcement bodies. There is room for improvement here as well. This is why the most impressive example is the number of proceedings that were initiated but not brought to court. Why are cases started but fail to reach the court? Most likely, they were started to exert pressure on businesses. Does this problem exist? Of course, it does. Therefore, the main point is not to ignore this, and, most important, not to shut our eyes to this, and we are not going to. On the contrary, we are going to carefully cut red tape in the law-enforcement system, without infringing on the interests of society as a whole. We are going to make law-enforcement work for the interests of entire society, including the business community on which a lot depends today and which has shown its maturity, patriotism and efficient performance. I assure you this packaging and dyes will be made, in part, by Russian businesses. Aware of this, our state will certainly do all it can to support these people. And we will tailor accordingly the work of our law-enforcement bodies.
To reiterate, there are dishonest people there as well, no question about it. Look at the number of dishonest law-enforcement officers behind bars. Work is underway to clean up their ranks as well.
It is likewise important to finetune the regulatory framework in a way that will automatically preclude any excessive pressure from being exerted. This is what we will focus on. Rest assured, we understand this and will keep working on it.
With regard to Kazakhstan, I am aware that President Tokayev is paying great attention to this as well. We have discussed these matters many times. It is no coincidence that – although, frankly, I am not really supportive of this – many Russian IT specialists go to work in Kazakhstan because the terms are good. We will follow Kazakhstan’s example in this regard.
Margarita Simonyan: To bring them back.
Kassym-Jomart Tokayev: Thank you for the compliment.
Indeed, we are putting in place the best possible working terms and conditions for our Russian colleagues and friends who come to work. I suppose this is not permanent. Perhaps, in time they will go back to Russia, but in any case, this is where we should stand together. It goes without saying that it is impossible to say no to people who, for any reason whatsoever, decided to come to work in our country.
Answering your question on law-enforcement system reform, I fully agree with President Putin that it is a complicated effort and a challenging issue to deal with. It is impossible to resolve this problem overnight, but we must work to get there, because people see injustice which gives rise to social depression.
That is why I resolved to create a special commission charged with returning state property, assets that were illegally privatised using administrative and political resources.
In addition, I have set up a commission led by the Prosecutor-General, which will work to return financial resources that had been illegally taken out of the country. I know this is going to be a challenge, since we will need to comply with numerous procedures. However, there is no way around it.
With regard to reforming the law-enforcement system, in September, I will announce a new package of judicial reforms. This is a pressing issue, at least for Kazakhstan.
The police service reform, the so-called three-tier service model, is underway, but it is a bumpy process. However, I believe that eventually we will succeed. The political will and the support of the people are of paramount importance. With our society wanting and supporting this reform, I think we will be successful. Earlier models may have served their purpose in the past, but we need new approaches now.
We acted with uncertainty in our law-enforcement system reform efforts leaning either towards humanitarian, drawing on European experience, or towards toughening things up. That is, there was no clear understanding of what we want to accomplish in the end.
Margarita Simonyan: Where do you stand now?
Kassym-Jomart Tokayev: We are now following the golden middle that is clearly based on the needs of our people who want to see police as reliable protection and, most importantly, incorruptible officers.
Again, this is a challenging task. Please understand that I do not intend to declare great concepts and then forget about them the next day. This must be done.
With regard to China, President Putin spoke very interestingly about that country. I am a trained Sinologist, and I am well aware of the wisdom that President Xi Jinping expressed today that every opportunity hides risk, and every risk hides an opportunity, and taken together this is called a crisis. The word “crisis” is made of two hieroglyphs; I still remember how to write them: the first hieroglyph stands for danger, and the second hieroglyph stands for opportunity. In every crisis there is danger, but there is also opportunity. I think we need to proceed on this premise.
Margarita Simonyan: Thank you, this is very interesting.
Kassym-Jomart Tokayev: By the way, you mentioned Huawei. I spent almost eight years in China, and I had the opportunity to visit that company when it was just starting out in the Haidian Qu District. I still remember the company taking up just three rooms. Back then, no one believed it would become a global company, but it did.
What do I think constitutes China’s success? First, they have managed to build a concept very pragmatically, thanks to Deng Xiaoping, that is, he imposed the capitalist way of production on a socialist foundation and called it socialism with Chinese specifics. This is first.
Second, of course, they realised the importance of high technology in time, and this is where they have achieved great success. They moved towards this gradually: at first, they produced essential goods, sold them abroad, earned money, brought it back to China, and invested this money in the development of technologies, including the acquisition of these technologies in various ways abroad, as former US President Trump said; he was offended by the Chinese. But in fact, they have achieved great success precisely in the technological sphere and set the task at the last party congress to turn the entire country into a cyberpower. I think this is where the secret of their success lies: the right choice of priority.
Vladimir Putin: Do you see this? You spoke about protecting the interests of entrepreneurs, the entrepreneur community.
Margarita Simonyan: That is what you said, Mr President, there at the stand.
Vladimir Putin: Good. My Kazakhstani colleague was just talking about returning illegally exported capital from abroad. It was taken illegally, and now the state is taking it back. Our entrepreneurs, in any case many of them, took their capital abroad legally, and they have been robbed there, do you understand? So, what is the conclusion? What I said in my speech: you need to invest at home, in your home country. And our task is to ensure the safety of these investments. We will do so.
Margarita Simonyan: Do you remember how, it seems, in response to the Poles you said long ago that they needed to think about home, about home.
Mr President, when you say, “Is it better there?”, you do not mean that someone here thinks that it is better there. It seems to me that now only a clinical idiot or a glaring hypocrite can believe that the very values and principles that we were fed as the only possible ones are practiced there: the freedom of speech, the freedom of ownership. I say this as the editor-in-chief of RT and Sputnik, which they closed in a single day. And today they have approved the extradition of Assange, who will be imprisoned in America for 175 years, and he will die in prison.
It is hard for me to say, because he is our former employee, he hosted a show on our channel, and he is a great journalist, in fact. He will be put in prison for his journalistic activities. So what freedom of ownership are we talking about? There, everything with simple freedom to life and freedom of speech turned out to be completely different from what we believed in the 1990s. But we are not there, we are here.
I would like to close this subject by asking you about the administrative “guillotine.” If you recall, the Medvedev government introduced it. As a result, we do have administrations, many of them, but there is no guillotine. The rules that many inspectorates are guided by often date back to the 1960s or 1970s. They are simply irrelevant sometimes and can no longer be enforced. They must have been important at some point, I am sure. They protected the rights of consumers, anyone, everyday people, the things that you are talking about, this is certainly important. Of course, we cannot let things go unsupervised. We’ll end up with one fire after another like at the Zimnyaya Vishnya trade centre in Kemerovo, God forbid. Things will burn down like this. There are many dishonest people.
However, I believe we need to bring these rules up to code. Mr President, you are known as a good surgeon. When are you going to take this scalpel in your hand?
I will give you an example. We had 33 inspections last year, despite all these bans, 33. The things they come to inspect are ludicrous. I do not want to complain, but you know, it’s the way they come to inspect.
Vladimir Putin: If it weren’t for this administrative guillotine, that Mr Medvedev spoke about when he was President, you would have had 133 inspections instead of 33.
Margarita Simonyan: That could well be the case, I agree.
Vladimir Putin: That is exactly what it would be like, meaning that the guillotine is working. Vast numbers, thousands of outdated rules have been repealed. Margarita, you are wrong, most have really been repealed and are not applicable anymore. I am sure if we gave the businesspeople in this audience a chance to speak, they would confirm this.
However, many would support you, because, indeed, not all has been done in this regard. That is why I said today that all inspections must be suspended. There is no need to run around doing inspections. Only businesses that pose a risk should be inspected. In other words, inspectors should go only to businesses that may pose a threat to peoples’ lives and health, and do everything else remotely, monitor operations, and create an environment where the business community will not be tempted to break the rules. It turns out that this is possible. So, we have accomplished a lot on this track, but we will not stop; we’ll continue to move forward.
Margarita Simonyan: Thank you.
The whole world was expecting to see our economy torn to shreds. Not all the world, but the portion which, in fact, represents a smaller part of the world. As a reminder, 83 percent of the global population lives in countries that support us, or at least have not joined the sanctions.
So, they have failed to see our economy in this condition. The fabric that our economy is made of turns out to be stronger than they expected and too tough for them. We all watched with delight the almost instant steps taken by the Government.
I was hard on the administrative guillotine and the like, but it is impossible not to praise the way it was done, especially early on, when indeed, it was impossible to imagine that we would not have a surge in inflation like they said, and that there would be no such thing as dollar to 200 rubles when they closed the airspace, and our Ministry of Transport closed the airspace to them the very next day at lightning speed.
That is, I have a sense that everything is working, God willing, more or less at the end of a tether, in the good sense of the word. That is, we did not hear anyone say anything like “we could have done it but did not have enough time” or “we hoped that things would miraculously take care of themselves.” There is no sense of this at all.
But the question is: is it not time to look at the system itself from a different angle? What I mean is that you suggested an interesting idea today that it was important not just to substitute imports, but to break new ground to force them to catch up with us. If I understood you correctly, this concerns technology and the manufacturing industry. Perhaps, it also applies to the economic model as such?
Look, here is the market. All these years they have been telling us things about the market and capitalism, but now they are looking at it from a different perspective. Today, at the VEB session, they were saying that capitalism, in the “grab and run” sense of the word is history, and that entrepreneurs need to change their approaches to the place they call home and think more about it.
There is another group of analysts who say that, oddly enough, the state should be more involved in the economic processes, because, say, Elon Musk would not have gotten to where he is now if he were just a free entrepreneur. He operates on orders from the Pentagon, and he is a free entrepreneur as much as the BBC is independent television channel.
People are saying that perhaps the state should regulate new industries more tightly. That way, we will see an entirely new economic model come to life.
What do you think of this?
Vladimir Putin: I spoke about this publicly at an online international event and made clear that the old capitalist system’s models centred on making profit have run their course.
The world has entered a phase where it is necessary to and everyone has to think not only about this, because if we continue like that into the future, the world will become highly unbalanced and threats will build up. This is the problem and the challenge of our time. So, in order to maintain this balance, we need to change our ways, balancing and paying attention to each and every component that may upset this balance.
This is true of the current situation, for example, with food and fertilisers and so on. If the world’s largest economies keep vacuuming up the goods, including food products, from the global market and take them home, then problems will accrue.
This may lead to more than famine. This will lead to new migration flows that will overwhelm, are already overwhelming the United States, among other countries. Whether they want to build a wall on the border with Mexico or not, the flows are still there and are not subsiding. The former and current presidents can do as much infighting as they want, but migrant flows are still there. If, God forbid, Africa gets hit by famine, economic migration to Europe will increase.
What are we supposed to do with this? The solution is very simple. All you need to do is put an end to the style of international relations where you think only about your beloved self. That is all there is to it. If this continues as it is, it will give rise to complex and severe problems. So, of course, we need to adopt a different governance and regulation model. This is a complex process, but I think that eventually the international community will come to realise this.
With regard to us, I have already made clear that being part of the general paradigm, the main movement and the global trend, we must prioritise what my colleague from Kazakhstan, the President of Kazakhstan, pointed out: we must focus primarily on economic growth based on technological development, as well as innovative economic management and socio-political models. Then, we will be able to provide leadership in the areas where we have competencies.
Margarita Simonyan: Thank you.
President Tokayev, do you also believe that a crucial change, as President Putin said, in economic management, that is, the international economic model as, again, President Putin said, is unavoidable?
Do you think it is unavoidable?
Kassym-Jomart Tokayev: I think that life itself is dictating that need. On the other hand, I agree with what the President of the Russian Federation had to say about the impossibility of self-isolation and actual absence of the need to self-isolate.
After all, I am a supporter of international cooperation, be it political or, even more so, investment, trade and economic cooperation. I covered this in my remarks today.
If things do not work out in one place, you should try another, because this is what the world is like. It is absolutely impossible to pursue a policy of self-reliance. Indeed, unadulterated import substitution does not exist. We need to look for opportunities on other markets and interact with each other.
To follow up on China, China is a critically important market for Kazakhstan. We have a common border of over 2,000 kilometres long that unites us. Everything that we produce, raw materials or finished products such as chocolate or vegetable oil, are very popular with Chinese consumers.
We value our relationship with the People’s Republic of China. It is a reliable partner, no matter what they say about China in today’s world.
Margarita Simonyan: Who is saying bad things about China?
Kassym-Jomart Tokayev: Well, you know that better than I.
So, from the perspective of regional cooperation, not to mention global aspects, we are not supportive of self-isolation but we are in favour of working with each other and being open to opportunities.
It is very difficult to survive alone. Of course, Russia has many more opportunities, because the economy is relatively large, and the country is large. Frankly, we have fewer opportunities, although the potential of Kazakhstan’s economy is quite significant. In any case, our economy is larger than the economies of other Central Asian countries combined.
We are not taking this for granted and are keeping ourselves in shape. We remain in a state of alert, because achieving success and then losing ground can happen very fast. So, with global competition all around us, we need to be in shape at all times. This is exactly what Kazakhstan is trying to accomplish.
Margarita Simonyan: Thank you.
We are on track to our next issue, Ukraine. Probably, not a single discussion can go without Ukraine now, but before I ask you my question, Mr President, I, as they say on television, would like to take this opportunity to remind everyone of a meeting that took place a year ago with you and editors-in-chief of the Russian media outlets. The transcript was published. My colleagues and I had just returned from Donetsk and what we saw weighed heavily on us. We asked you whether Russia was going to help those weary people who looked at us with much hope, since they had no one else to pin their hopes on.
We were heavily stressed by what we saw and then you said: “Don’t worry, Margarita. We will not let Donbass down.” There are many people, thankfully, not so many, but still some are saying that they are ashamed of being Russian. You know, we were ashamed back then, but we are no longer ashamed. Of course, occasionally we feel stressed, anxious and scared – not because of the sanctions – I am sure we will cope with them too – but because people are dying. But we are no longer ashamed.
I just wanted, on behalf of my colleagues and on behalf of millions of people who share these feelings, to thank you for that. (Applause.) You see, people really share my feeling. I did not ask them to clap their hands. Thank you very much.
Now, the question is: what should we be afraid of? You are probably aware of what the majority of people in our country are afraid of now in connection with these developments. It is the same thing that people in the liberated territories are afraid of. People are afraid that we will abandon them and leave.
We will not leave, will we?
Vladimir Putin: I will start with the first part of your remark.
You say that some people are saying they are ashamed of being from Russia. You know who should be ashamed – the people who do not tie their fate and their lives, the fate of their children, with our country. Not just ashamed. They simply do not want to have problems in the regions where they want to live and want their children to be brought up and live. This is a separate group of people.
Sensible people who tie their fate and the fate of their family with Russia may be worried about the ongoing events, but deep down want Russia to become stronger, more confident and more sovereign, and to be confident about its future. Anyone who wants their children to live here cannot think otherwise. That is what this is all about. So, ashamed or not ashamed are different categories altogether.
With regard to ongoing developments, hostilities are always a tragedy. These are just forced actions on our part, inevitably forced, that is what it is all about. We were just pulled to this line. I have to remind everyone how it all happened. No matter what previous pro-Western governments in Ukraine were, we worked just fine with all of them. Mr Yushchenko and Ms Tymoshenko were absolutely pro-Western leaders.
The civilisational choice. Pardon my language, but what kind of civilisational choice are they blabbering about? They stole money from the Ukrainian people, hid it in the banks and just want to protect it. And the best way to protect it is to say that this is a civilisational choice. They began to pursue an anti-Russian policy in hopes that whatever they do, their money would be protected there. No doubt, this is what happening. They get away with anything. This is the whole point of this civilisational choice.
Why stage a coup in Ukraine in 2014? That is what got everything going. Three foreign ministers from three European countries – Germany, France and Poland – came to Ukraine to attend, as guarantors, the ceremony for signing agreements between then President Yanukovych and the opposition. I got a call from President Obama, “Let’s get things to quiet down there.” – “Let’s.” A day later, a coup took place. Why stage a coup at a time where the opposition could have come to power in a democratic way? Go to the polls and win… No, for whatever reason they had to stage a bloody coup. This is how it all started.
Now, they are saying: let’s forget it. No, we will always remember it, because this is the reason. The reason is the people who made this coup possible. What were the guarantors who signed the agreement between President Yanukovych and the opposition supposed to do? There was a coup, whereas they guaranteed a peaceful process. What were they supposed to do? They should have come and said something like “guys, that will not do. Get back on the normal political track and go to the polls.” Instead, they started handing out cookies in the squares and supporting the coup. What for?
That triggered the events in Crimea. They chose not to respect the choice made by the Crimean people, and the first volley of sanctions on Russia followed. They carried out two, even three large-scale military operations in Donbass, shooting at civilians for eight long years with no one paying attention. Kiev refused to comply with the Minsk agreements, and it was fine with some people. That is what caused the situation at hand. That is why it all happened.
In addition, they started creating an anti-Russian foothold in Ukraine. How about we create an anti-American foothold on the borders with the United States, say, in Mexico? Do you know what will happen next? For some reason, it never even occurs to anyone to do something like that in the United States. At some point, we even removed our military bases from Cuba. You see, no one is even looking at it and does not want to look. Meanwhile, they are creating such threats for us. We told them a hundred times, a thousand times: let’s talk. But no.
Why such a position? Where does this dismissive stance towards everyone, including us, come from? Does it come from the imaginary greatness that gradually developed after the collapse of the Soviet Union? We are aware of that.
With regard to what we are going to do next, we are going to protect the interests of the people for whom our soldiers are fighting there, getting wounded and dying. This is the only way. What is the point of these sacrifices otherwise?
We will support the residents of these territories. In the end, the future of the people who live there is up to them to decide. We will respect any choice they make.
Margarita Simonyan: Thank you.
In fact, as you probably know, this special operation has rallied our society in an amazing way – for normal people in a way that was expected, and for those who are ashamed, and even more so for their sponsors and inspirers – in an unexpected way.
Maybe you are being told the figures of support and trust in you personally, about the movement that has risen now. People want to help: both humanitarian aid and let’s help the troops of the DPR, the LPR, and ask if our army needs anything, and just help people, shelter someone. Moscow, the Moscow Region, they need trucks to carry the stuff people collect. And it is the same in other regions too. Military correspondents send all sorts of things there, from copters to, I don’t know, mittens if they know that someone needs something somewhere in the battalion. Of course, this is astonishing to see, we have not seen anything like it, we have only read about such deeds in books, about the unity of our society in difficult times for our country.
And yet, sometimes you get the feeling, especially in Moscow, that we are living in the final scene of Bernard Shaw’s play Heartbreak House, where they are talking and discussing family matters and then at the very end, at the very last minute, bombs fall from the sky and World War I suddenly begins.
Both in Moscow and beyond, and even more so in the West, people are increasingly saying, just pronouncing the words ‘nuclear war’, ‘World War Three’. We understand that this is not the first, not the second, not the third special operation, that it is not ours, but in general is going on in the world over the past few years. Our so-called partners are carrying out special operations and waging wars wherever they want, for any reason and without one. No one has ever said that the situation in Libya or somewhere else, in Afghanistan, in Syria, could lead to World War III. But they are talking about it now.
Do you think this rhetoric is acceptable? Does it have any grounds or is it just talk – the louder, the better to be heard?
Vladimir Putin: Of course, we can hear such rhetoric. Where does it come from? It comes from their own statements. One irresponsible politician blurts out something, and another one follows suit at a very high level. For example, top foreign ministry officials talk profusely on this subject.
Are we going to keep silent? We reply accordingly. Following our reply, they start finding fault with us and saying that Russia is making threats.
We are not threatening anyone. However, everyone should know what resources we have, and what we will use, if need be, to defend our sovereignty. This is an obvious thing.
What special operations are you talking about? They unleashed full-scale wars there.
Margarita Simonyan: Of course.
Vladimir Putin: They virtually destroyed Iraq. They came …
Margarita Simonyan: And what about Libya?
Vladimir Putin: Libya has still not been able to restore its statehood. How many years did they fight in Afghanistan?
Margarita Simonyan: Their withdrawal was also shameful.
Vladimir Putin: It wasn’t just shameful. We must admit openly that it was an inglorious withdrawal.
This is not even the main thing. Most importantly, everything unfolded in line with their wishes, and not the way it should have. In many cases, including the dismembering of Yugoslavia, new countries and new interests emerged after the country ceased to exist. Of course, there were many internal disagreements; this is obvious. However, they helped aggravate these disagreements. Later, they started pushing Kosovo away from Serbia, and so on. It is hard to understand why that was necessary.
Speaking of our actions … By the way, what is the legal aspect of this case? It completely tallies with international law. When Kosovo was seceding, the International Court of Justice ruled, under the pressure of Western countries, that, according to the UN Charter, when any territory secedes from a state, its administration does not need to request permission to do so from central authorities. The International Court of Justice adopted this generalised decision with regard to Kosovo, but it also has broader connotations and sets a precedent. All right, in that case, the Donbass republics do not need to request permission from the authorities in Kiev. They declared independence. Did we have the right to recognise them? Of course, we did. We recognised them and signed a treaty on mutual assistance. We are providing them with military assistance under this treaty and Article 51 of the UN Charter. Did we have this right? We did, in full compliance with the UN Charter, whether anyone likes it or not. They did this themselves, they set a precedent. Consequently, our actions are absolutely legitimate.
However, the start of hostilities in Iraq did not have this status because no one there had invited anyone, and they did not sign any treaties with anyone. Nor did anyone recognise any newly-established state entities. They simply came and bombed out the country. They did the same in Libya. Why did they do it? They did it because, as I have already said, they appointed themselves the Almighty’s representatives on Earth.
Now we hear: behave or live by the rules. What rules? Who invented these rules and all this nonsense? There is only one rule that must be obeyed – international public law. What is it? It is agreements between countries that are a sort of compromise, which are signed by respective states. If someone invented these rules to enforce them on other countries, they will never work, it is obvious.
We proceed from the fact that sooner or later, and the sooner the better, the international community will again understand that one must live in accordance with international law, and not with some made-up rules. This is the way we are ready to work.
Margarita Simonyan: Mr Tokayev, I understand that my next question is difficult and there can be many answers, but I have to ask your opinion about our special operation, its inevitability, as we believe here, and its legitimacy. What do you think and what do people in Kazakhstan think about it?
Kassym-Jomart Tokayev: There are different opinions on it in Kazakhstan. Our civil society is open and mature, so people voice different opinions.
But I would like to note the following: the current international law is outlined in the UN Charter. The two main principles of the Charter have come into contradiction with each other: the territorial integrity of a state and the right of a nation to self-determination. The founding fathers of the United Nations probably did not consider this factor, or perhaps deliberately included these two contradictory principles in the Charter as a compromise.
Of course, since they contradict each other, there are different interpretations. Some say that the territorial integrity of a state is sacred, while others believe that any people that are part of a state have the right to form their own state and can break away from the main state in accordance with their wishes.
Actually, it was calculated that if all nations in the world use their right to self-determination, there will be over 500 or 600 states instead of 193 that are members of the UN today.
That would be chaos. And for that reason, we do not recognise Taiwan, Kosovo, South Ossetia and Abkhazia. And this principle will be used towards the quasi-state territories such as Lugansk and Donetsk, as we believe them to be. This is an honest answer to your honest question.
Margarita Simonyan: Yes, thank you for your honesty.
Mr President, before coming here, I asked my subscribers on social media about the questions they would like to ask you. Two theses won by a wide margin: one is a question, and the other one is a wish.
First, I would like to convey to you my subscribers’ wishes of good health and energy and all the best. This wish ranked first on the list of questions they would like to ask you.
Second is a question that is impossible not to ask. Look, Donetsk is being pounded every day. This week, they attacked the maternity hospital. Our film crew later captured these women on video as they were giving birth in a basement by a caesarean section. They also hit a farmers’ market killing a mother and her 11-year-old son. In this regard, people have the following question. Of course, we are slapping them on the hands for doing so, but is it not time to punch them in the jaw? What exactly do you have in mind when you talk about the red line, after which the decision-making centres will come under attack? This is what a punch to the jaw is all about, as far as I understand.
Vladimir Putin: Look, we are talking about a special military operation, and when conducting it we must not turn the cities and towns that we liberate into a semblance of Stalingrad.
Margarita Simonyan: Of course, not.
Vladimir Putin: This consideration comes naturally in our military planning. This is my first point.
Second, the absolutely senseless attacks on the residential areas of Donetsk stem from the fact that the line of demarcation created eight years ago is a strong fortified area. The local residents, the units manned by residents of Donetsk and Lugansk, are fighting there. They are fighting very well, excellently. However, military experts believe that assaulting these fortified areas is not a good idea even despite the ongoing attacks on the city, because this will result in heavy casualties among the attacking forces.
So, their tactics are different, as you can see. This can be seen on the map and in the media. In fact, methodical work is underway to get behind those fortified areas. This, of course, will take time. The counter-battery activities are underway and will undoubtedly increase, since our advantage in artillery is overwhelming, and this will happen inevitably.
With regard to the red lines, let me keep this to myself, because on our part it will include fairly tough actions targeted at the decision-making centres that you and I mentioned. Still, the country’s military-political leadership should be in the lead on making those decisions. The individuals who deserve actions of that level coming their way from us should realise what they may be facing if they cross these lines.
The attacks on residential areas are, of course, a crime against humanity. This is a humanitarian problem, which I am sure will be overcome.
Margarita Simonyan: Thank you.
We were told yesterday that the EU will allegedly fast-track Ukraine’s membership: three European leaders visited Kiev, got scared by an air raid siren and said that the EU will give Ukraine “immediate” candidate status. So how will it affect us – in a bad way, in a good way, or is it all the same?
President Tokayev, I also want to ask you whether you believe it will bring peace and stability to your country, the EAEU and the world in general, or the opposite?
Vladimir Putin: Unlike NATO, the European Union is not a military organisation or a military-political bloc. So we have always said, and I have always said that our position is consistent and clear: we have no objections. It is a sovereign decision of any country whether it wants to join an economic association and it is for the economic association to decide whether it accepts new members.
The EU member states should decide for themselves whether this decision is possible and expedient for the Union. Whether it will benefit Ukraine or not is also a concern only of the Ukrainian people and the country’s leadership.
The structure of the Ukrainian economy requires very large subsidies and support. If Ukraine fails to protect its domestic market it will completely turn into a semi-colony, in my opinion. But at the same time, it will receive significant support for current expenses. It is unlikely that it will revive the lost industries such as aircraft engineering, shipbuilding, electronic manufacturing and other crucial sectors, because the European giants will not want to create competition. Maybe there will be some assembly plants. But again, that is none of our business.
But we have never been against it. We have always been against any military membership because it would threaten our security. As for economic integration, it is their choice.
Margarita Simonyan: And what would you say?
Kassym-Jomart Tokayev: It is unlikely that Ukraine’s joining the European Union will harm the Eurasian Economic Union in any way.
However, I can hardly imagine how the process will take place. The EU has very strict requirements and Ukraine’s economy is currently in a deplorable state. Maybe there is some special programme for Ukraine.
But what is happening with that country evokes very sad associations. Moreover, we remember that in Soviet times, Ukraine was the granary of the Soviet Union, an industrially developed republic and, after all, the supplier of personnel for the Kremlin.
Margarita Simonyan: My native Krasnodar Territory will take offence for “granary.”
Kassym-Jomart Tokayev: After all, all former Soviet leaders were from Ukraine, we remember this well.
But unfortunately, times change. We are now seeing the new reality, which I have spoken about.
So, getting back to your question about the European Union: a decision has been made to help Ukraine become a member state.
As the President of Russia put it, it is an economic union, and if it sees fit to accept Ukraine, then, of course, we should accept it as a reality.
Margarita Simonyan: Thank you.
Vladimir Putin: I have written and stated publicly before that over the past decades Ukraine sent down the drain everything that was created in the preceding decades. The main industries and economic sectors ceased to exist. This is very sad.
The main point is not the current military situation and our special military operation in Donbass. The problem lies with the structure of the economy in Ukraine. Its agriculture still survives, but everything else is in a deplorable state, and so its rehabilitation capability is very small, very weak. It will take billions, tens of billions of dollars in investment to normalise life there.
Look, tough sanctions, to put it mildly, have been adopted against us. Our Central Bank had to raise the key rate to 20 percent, but it has recently been lowered to 9.5 percent and continues to go down. Inflation in Russia spiked to 17.8 percent, but it is down to 16.7 percent now and the downward trend continues.
Margarita Simonyan: Someone mentioned the possibility of a deflationary spiral at the forum today.
Vladimir Putin: Yes, experts are aware of this risk, and we should keep this in mind, because the inflation rate was 0.17 percent over the past months, as far as I know, which means that it tends towards zero and we must consider the possibility of deflation. On the other hand, the ruble has strengthened.
Margarita Simonyan: Which is not considered good either. They say the dollar should equal 70 rubles.
Vladimir Putin: 70–75 rubles.
This is clear to those who specialise in economics. This is bad for importers. If they sell products worth $1,000 and the dollar is worth between 80 and 70 rubles, they will cash in 75,000 rubles. But if the exchange rate is 56.60 rubles, as it is now, they will receive less in rubles, and they must use rubles at home. This is unprofitable for importers but probably good for exporters. With this dollar/ruble exchange rate, there is a risk of shoddy imports. In short, there are both pros and cons in this situation.
Anyway, Russia’s economic viability turned out to be much higher than our so-called “friends” thought. This is primarily the result of the stable macroeconomic policy we pursued over the past years. We are supporting the main economic sectors. We are aware of problems with supply chains and component parts. We expect other problems to surface and to grow. We are realistic about this.
But such sectors as agriculture have grown by 3.2 percent over the past four months. The rate was 2.3 percent in January, and the figure is 3.2 percent now. The construction sector showed an increment of nearly 8 percent in April, or more precisely 7.9 percent, and the overall increase since the beginning of the year is 5.8 percent, as far as I remember.
Margarita Simonyan: In construction?
Vladimir Putin: Yes.
Margarita Simonyan: But they say the market has plunged, that nobody is buying real estate.
Vladimir Putin: No, this is the figure for the first four months of the year in construction.
Other sectors reported a decrease, like the automobile industry and metallurgy. Some experts say that they were oversized, which should be taken into account. But they are still active industries, active enterprises.
