“We hope for the better, but are prepared for the worse”
RT: Reforming global financial institutions and the world economy are said to be spotlight issues at the G20. What kind of tangible results can we expect from G20 summit?
Igor Shuvalov: We started talking in London about the new structure of international organizations like IMF, World Bank and regional bodies. And we are expecting a report, which is prepared by the British government about the new role of IMF and other institutions, and we hope that at this summit they will be closer to understanding that we need a really new structure, which will be paying more attention to developing countries, to the countries which have found themselves in a difficult situation, and how to respond immediately, how we can allocate special funds for responding to these issues. So I think that this time it will be a more detailed real talk in London. And the more leaders will meet at the summit at G20, the closer to the real result we will be.
RT: How is Russia assessing the aftermath of the economic crisis? Is the worst over?
IS: We believe that at this stage we are observing real growth. For three moths in a row we are getting positive signals, positive statistics. In June we had 1.0% of growth, and then it was half of a per cent. In August it was even higher. We believe that the second part of the current year will mean real growth and that the worst is behind [us].
But it does not mean that we need to be quiet, just expecting that the better times will arrive, because the global economy changes and the demand for Russian products will grow. We have prepared ourselves as well, we allocated special funds. If something again happens with the banking sector, if the bad loans portfolio is growing, than we will respond immediately, providing governmental bonds to the capital of the banks. That problem was announced recently. And I think that we are ready.
RT: In the United States the government has made several injections into its economy. Through your eyes, how productive have these steps shown to be?
IS: People provide a lot of critics, that a lot of liquidity was provided, and that afterwards we will observe high inflation in countries including the US. But the reality is that economy has started growing, and that’s the major fact we need to take into consideration. We need to understand that the global economy will be of course connected with the American growth and Chinese growth, which we are observing as well. And this year in China the growth rate is higher than predicted in the early months of this year.
So the picture is pretty positive. And I think that all the stimuli which were adopted by the American administration were very positive as well. We need to work altogether closely and carefully to avoid other difficulties like high inflation, as I said, and maybe others.
RT: Let’s talk about the dollar. Some analysts are calling for caution. Would you say that dollar has lost its trust and status that it used to once have?
IS: No, we believe that dollar is still a very strong currency, a reliable currency, which is playing the role of the international reserve currency in the world. We believe that it will still have the same role.
The position which we explain to our partners within the G20 is that for a safer future, we need to have more stable international currencies. It’s impossible to be dependent only on one. And if you look at huge Russian reserves – at the moment it’s more than $411 billion – and the major part of it is in dollars. If the national strategy is to save some money, then we’ll need to save it for public needs, and to be responsible in front of our citizens that we can keep that money in a safer place, and safer place means more safe currencies.
Igor Shuvalov (AFP Photo / Ilmars Znotins)
So we want to speak to our American colleagues and other partners about the fact that the current situation needs more international currencies. Dollar will still play the major role as reserve currency. Our task is to think about the ruble converting into a regional reserve currency. And along with that we would like to see another global currency.
RT: Let’s return to the G20. Some critics say that gatherings like this are basically done for the sake of meet-ups. What do you say to those critics?
IS: That’s not true. If you speak with experts who get together along with leaders, heads of finance, ministers, heads of the central banks, they always say that this year they observe the level of cooperation they never saw before. And then if you look at the national legislation and national anti-crisis plans, in many aspects they are very close. It means that people coordinate, they work together, they cooperate, and it means that it’s for better results tacking with crisis, and thinking about anti-crisis, post-crisis world. And I hope that this work together with central banks, with finance ministers, and our leaders will make us understand better politics.
RT: What country right now would you say is the world leader in terms of economy? Some say China has really pushed through because of the economic crisis. Would you agree with that?
IS: I don’t think that this crisis showed us any change in who is playing the major role in the global economy. The same countries are leaders. With all the difficulties we observe here, in the United States, I believe the United States is the strongest and most powerful economy in the world. China is a very powerful economy, and the success of the Chinese economy gives us a lot of optimism for future. There’s India, and so on. I believe that BRIC countries like Russia, Brazil, India, and China together – for future global development will play a special role. Not exactly right now, but now China plays within BRIC and for global purposes as well a very important role. And I think for the next decades role of BRIC will be completely different.
RT: Let’s talk a little bit about the future of Russia’s car making industry. How can we compare what happened in Russia to the collapse of the auto industry in the United States?
IS: It’s different. It’s completely different. You cannot compare. By the time the crisis happened, the Russian automobile industry already had many, many problems. We had to work with them, and labor productivity in all those factories was not brilliant. The equipment was pretty old, know-how and new technologies were not used at the level we expect from that industry. And some companies had already foreign partners, like AvtoVAZ – its Renault-Nissan, and others.
But at the same time we accept as Russian cars, foreign companies who invested in building up new factories in Russia. We have Toyota, Nissan, we have Volkswagen and others who built big factories producing thousands, hundred of thousand cars in Russia. And the location of components for those cars is rising each year, and we accept now those industries as Russian, maybe without Russian names, but those car-producers are Russian companies already.
And if you ask about the traditionally-called Russian cars, we have some difficulties – they need restructuring of their businesses. We’re working with them. It’s not easy, but they have ability to produce new models, to have more efficient structure of the businesses. Because now they have to be very, very tough on any expenditures the company can afford. It will take some governmental endeavors and governmental thinking about how to work along with private investors and workers in order to quit the very difficult situation.
RT: Here in the United States some are claiming that America is already going into recovery. Others meanwhile are saying that the works hasn’t even hit yet. What is your take? Can we expect another “economic Tsunami” in the US?
IS: There are so many experts who are predicting different scenarios for the United States and global scenario. We think that all the measures which were taken by American administration are very, you know, they are very healthy for the time being. And our common agenda for G20 shows us the same. That all the countries are coping, they are managing –including Russia. We are observing positive growth as well. And I hope that the worst is behind. But if something bad happens with the banking sector because of bad debts, we are ready for this, we have prepared ourselves, and we’ll be able to cope with this.