Dmitry Medvedev’s interview with G8 media – part 1

President Dmitry Medvedev has mapped out his vision of Russia’s role in the world in a question-and-answer session with foreign journalists ahead of next week’s G8 summit. This is Part 1 of the full version of the interview.

D. MEDVEDEV: Hello to everyone! I’m waiting for your questions. I can say a couple of words. I’m glad to see all of you. It’s great that it’s summer in Moscow.

D. STILE: Dmitry Anatolievich, Mister President!

It’s a great honour for us to have an opportunity to sit near you on the eve of your first participation in the G-8 summit. Not only your partners in the G-8 but also the Russian press and the Russian people have a great interest in your views as President of Russia. That is why first of all I’d like to thank you for inviting us here for this interview.

My first question is as follows: During the last few weeks you said that the global economic system is not effective. You were even criticising the US and you said that new economic mechanisms need to be put in place. I wanted to ask what mechanisms do you offer and how would they work?

D. MEDVEDEV: Thank you!

I’m also glad to talk to you on the eve of the G-8 summit. I will tell you about my views and preferences on the main agenda of the upcoming summit with pleasure.

First of all, the present global economic system can’t satisfy anyone. Despite the fact that there are several islands of economic stability, the parameters of the international economy are very complicated. Last year’s financial crisis led to the problem of money liquidity. Several key players were affected by the crisis. The crisis has shattered confidence towards the American mortgage system and was accompanied by different negative processes in the macroeconomic sphere.

In particular, as a result of policy changes among several leading states the problem of inflation which affects nearly every World economy was heightened. In some countries, inflation growth is higher, in others it is lower, but still the figures are quite significant. In the EU the rate of inflation is higher than the critical figure which is 3 % a year. We have recently talked about it with my European colleagues.

Russia has also suffered certain difficulties because of its economic and financial system.

Firstly, interest rates got higher.

Secondly, we also were influenced by inflation rates and did not manage to stay within the figures that were considered optimal for this year. It happened last year but this year the inflation rate also needs improvement. That’s why whole government policy is aimed at coping with inflation and setting the figures we consider optimal which can be compared to the inflation rate of developed countries. So, the condition of the global economic market is rather complicated. And it is obvious that institutions that were created in the 70s or even the 60s now can’t cope with the tasks they are trying to cope with. That’s where the idea to adjust this financial system came from. First of all, it should be more fair. It should consider a number of risks that are topical nowadays. It should also consider the negative experience related to mortgage systems. It should consider the negative experience which happens when an economy overheats: in the World economy on the whole and in economies of individual countries. The mortgage system crisis affected not only the US. In the US it appeared in the strongest way but other countries also had this problem. The mortgage system should consider the situation with funds and should be modernised.

What should be done about it? We need to formulate these proposals and start negotiations about how the new system would look like. Several states are preparing these proposals, including Great Britain. We are also preparing proposals.

I’m speaking about attempting to solve the problems that we have already got now and to make this system more flexible, more suited to today’s needs, learning to manage the processes that led to a significant change on the global financial market. This is not an easy task and, what is more, it does not necessarily mean that today’s financial structures created over several decades should be broken. But it should be modified and should become more modern, more protected from risks and should not be nationally egotistic, it should instead be more fair in relations between states. The new system can not be oriented towards only one country of one currency. In future it should be based on the harmony of leading economies, on their substantial growth and on the principle of several reserve currencies. We consider this multicurrency approach quite important when the dollar is stable, not weak, as it is today. We have other reserve currencies which help the World economy and individual states to cope with the problems they have. We are speaking about European currencies and the ideas that are formulated in the East today. We are also speaking about making the rouble a regional reserve currency in future. But it can’t be done only with a Presidential decree. It is done as a consequence of a smoothly running economy and accepting this or that financial instrument which can be used by other partners.

The fact that we started developing an open trade of oil derivatives for roubles is a step towards making the rouble a regional reserve currency, even more so that the aim to make the rouble convertible within and outside the country was reached. Now we want the rouble to be perceived as stable and sustainable. And this aim can be reached.

Thus, I think that the agenda of improving the macroeconomic situation in the World is overcoming global economic problems.

K. LEVI: Dear President, my question is about John McCain. As you know, he called for the expulsion of Russia from the G-8. If he wins the election would it be difficult for Russia to establish good relations with the United States?

D. MEDVEDEV: You know, I suppose that the steadiness of the American economy in a crisis – and the American Finance Minister Mr Poulsen told me about it yesterday – is possible because the US tries to conduct a balanced policy. And this policy should not depend on who is at the helm. That’s why I don’t want to comment on separate announcements made during the election campaign. As far as I know, no one was speaking about it lately. It is quite obvious that announcements concerning expelling Russia from the G-8 or trying to put pressure on the country can’t be considered seriously. The G-8 exists not because someone likes it or not, but because it consists of the world’s largest economies and the most serious political actors. The attempts to limit one of the actors would harm the whole global order.

I think this question is not worth further discussion. I’m convinced that any American Administration, if it wants to succeed in overcoming the depression that exists in the American economy, should conduct a pragmatic policy inside and outside the country.

D. ARMSTRONG: Mr. President, are you going to continue Mr. Putin’s policy?

Do you think that Putin’s policy promoted stability in Russia?

There is evidence that in many aspects life became worse: the level of corruption and crime remained the same, government bureaucracy became even higher. Are you planning to act differently in some field? And if you are, then in which fields?

Thank you.

D. MEDVEDEV: Every responsible government – as the US government – should conduct stable and balanced policy. That’s why we have settled our priority development for the next 15-20 years 8 years ago and are not changing the course we have taken. We want to make Russia a developed country with a strong economy and social sphere, to overcome poverty, corruption, to have friendly relations with our neighbours. These priorities can’t be changed, no matter who is the head of the Russian state. I think this is something that can’t be changed and I’m convinced that that’s what people want from us.

As far as the details and emphases go, they are surely changing. Some problems are easily solved but some can’t even be moved from deadlock. One of the main problems is corruption. Unfortunately, we’ve done little to solve it. And Putin was speaking about it in his final press-conference. And now, when we have already achieved a certain success in the economic sphere, we should start dealing with this problem because it is impossible to eradicate corruption in a poor country. Corruption is much easier to be restricted in a developing country that is becoming richer.

Thus, the emphases in internal and external policy are to be changed. Besides, the style of each politician and President is different. If not and people were all the same, then citizens would get bored and that wouldn’t make anyone happy. But I’m convinced the main aim should remain unchanged: we should work on our priorities because our country and our people are interested in that.

F. NODE-LUNGLAU: An additional question on corruption. In March, you had said that you would like to change people’s approach, that in Russia people unwillingly comply with forms of law. And, as was mentioned by Chubays in St. Petersburg, the reforms, I quote: “will be effective, if there are no competitive political mechanisms, if there is no strong opposition.” Do you support this point of view?

D. MEDVEDEV: You know, corruption is, obviously, an opportunity to use one’s monopoly position to fulfil, usually selfish needs. A person has exclusive resources and uses them in non-governmental ways, but for one’s personal gain. That’s why any type of competition is beneficial. Why do we want to introduce competitive procedures into economics? Precisely because if there is a choice among several options, a corrupt decision would not happen.

A competition of political forces is also needed for the political system to be stable.

The system based on one party’s right to the truth had shown its weakness about 20 years ago. It could not cope with the new challenges and became obsolete. That’s why, to ensure the competitiveness of our country in a global framework, we have to use political competition as well. But it needs to be reasonable. It’s competition, built in the right way. It’s competition in the framework of laws of those political forces that are aiming for normal competition and aiming for a better future for Russia. Without such competition, of course, an effective fight against corruption would be impossible.

V. GUREVICH: Dmitry Anatol’evich, you’ve listed a few of the global crises, which, perhaps to a certain extent, we are facing. And they came, in a rather short period of time, everything started happening in the second half of last year. Meanwhile the G-8 is a traditional format. It gets ready for a long time and without a precise bureaucracy, beforehand. To what extent do we and all the world leaders and world powers manage to react to crises that occur day to day? Is there, perhaps, an additional need for new formats as well as G8 like a quickly assembled “eight”, where world powers could gather together straight away to make a decision.

D. MEDVEDEV: Some crises happen fast, some can be easily predicted, when you have a detailed analysis of a situation. I had a meeting with aides regarding getting ready for the “eight”. I have just come here from that meeting. We were remembering that there are a lot of worrying trends, for instance, on the mortgage market a year ago in Heiligendamm that was pointed out by the Russian Federation. Having said that, not everything we said then was actually heard. On the contrary, it caused surprise. “Well, no, everything is fine, we will take care of it, it will be fine,” they said. Experience shows that not everything can be managed that fast.

Why am I using this example? It’s obvious, that meeting and exchanging information on the most problematic issues, for heads of states, that represent the largest economies and generally the largest countries, is essential. The eight, for this purpose is not a bad place. But you are right, it is prepared beforehand. It does not mean that, for example the agenda that was made up 10 years ago or a year ago, is prevailing.

The G8 in its development has seen different stages. When it just came into being, states were discussing just economic issues, like in G8. In essence, this was an answer to a series of crises that happened at the time, like the energy crisis, and other problems. Than the G8 started to get politicised, the G7 and then the G8 had started to examine political challenges as well, that are faced by the states, faced by the participants in this framework. At some point economic questions had vanished all together from the agenda. And here is the result – we need as two main topics, that no one thought about last year, to consider finance, economics and the food crisis. Events have amended the agenda in their own right. The agenda that was prepared beforehand, was simply out of date. The objective of the leaders is to take the right decisions in such situations. We will consider the main, and the most relevant question – the world economy, food crisis, the environment and climate change.

Moreover, taking into consideration the growth of other states, new formats start to emerge. The G8 now works not just as an actual “eight.” An outreach format has emerged, that includes another five states.

During this G8 summit yet another three states will be invited to discuss a number of certain key issues, I mean South Korea, Indonesia and Australia. Thus “the eight” as an institution, as a mechanism, so to speak is expanding when it comes to considering the most difficult issues and it’s good. Its size increases. And these decisions, that the participating countries discuss, and those recommendations that they work out are all based not just on opinions of these eight states but a larger number of states whose voice in economic life, and in life on our planet generally are quite prominent.

That’s why, I think, it’s a rational format for considering issues. But it’s perfectly obvious, there are situations, when one needs to react urgently. And in this respect, perhaps, it’s not necessary for all the states to gather but there should be mechanisms that make finance ministers, energy ministers, ministers of agriculture to meet just for a few days and report to their superiors and then to make decisions. These kinds of decisions we are preparing right now, including those for discussion at the G8.

V. GUREVICH: Thank you.

K. ICHIKAVA.: Thank you, Mr. President.

Japan anxiously awaits your arrival to Hokkaido to the G8. What kind of impression would you like to give on Japan’s people and the government?

Over the last few years, bilateral trade and economic relations between the Russian Federation and Japan have significantly improved. Despite that, political relations are not developing dynamically enough because of continuing territorial disputes. Because of that, a peace deal has not been reached to this day. President Putin had tried to solve this issue basing it on a statement from 1956 by Russia and Japan, which said two islands remained within the Soviet Union and two belonged to Japan. However, the issue remains unsolved. And how do you plan to solve this problem? Thank you.

D. MEDVEDEV: Japan is our very significant partner in international relations and in the economic sector. We are satisfied with the development of our economic relations with Japan. Perhaps, it isn’t an ideal scheme. But generally the growth shown by both of our economies is very good. Trade turnover is more than 20 billion dollars. We have many large deals that involve Russian and Japanese companies. There are large investment projects, aimed for the future, with good prospects. Plus a number of projects on global scale. Not so long ago a decision was taken to allocate more than five billion dollars to the “Sakhalin-2” project. This numbers are significant on a global scale as well. In other words, on the whole, I consider the situation in the economic sector to be very productive.

On the whole, as far as our trade and economic relations are concerned, they have never been better. That’s the first thing I would like to say.

Secondly, our countries that are located close to one another, despite the differences in their historical ways, and cultures, have common values. These values unite us during our work in the United Nations, during summits on the level such as the G8 summit, and generally in other international frameworks. In a significant amount of issues, our countries have a shared position, in particular, when we react to the main threats and challenges faced by humanity such as terrorism, narcotics, and the world economic situation, and climate change. It’s these sectors where practically most of the issues are understood by us in a similar way. It gives the chance for a way forward.

We do have one topic, on which we could not reach an agreement, that is the border question and the signing of a treaty related to it. I think, that we firstly do not need to dramatise this situation. We need to move forward, need to discuss this topic in accordance with those declarations made earlier. We should not aim to reach a maximum result in a short period, because, most likely it’s impossible, but we should also discuss those ideas that are already out there, and those that are being formed too.

Talks have never been interrupted. I have mentioned it to Japan’s Prime Minister, Mr. Fokuda, when we met in Moscow. We are ready to continue dialogue on all issues.

It seems to me, most importantly, on the one hand, not to expect any miracles here, on the other hand, not to weaken relations, to work in a friendly atmosphere. In this case we have all the chances to reach an agreement on this problem. Especially, it’s very obvious, that settling this issue will further help improvement of the economic and cultural ties between our countries. I’m going to stress again, that these ties are quite diverse. I have said about economics, but we have normal inter-personal relations that are developing nicely and our citizens communicate with pleasure and monitor cultural events, different groups from Russia visit Japan, and Japanese groups visit Russia, different other events take place.

 I can share my impressions with you with pleasure. Yesterday I went to an exhibition dedicated to the samurai culture, that is taking place at the Kremlin. An interesting show, it’s rather large but very informative, giving a good impression of this very unique page in development of the Japanese history and culture. I mean battle artifacts, and domestic things that are on display. It was very interesting for me. Events of ths kind, definitely, bring people closer; their number needs to be increased.

L. MAISANO: Mr. President, the oil price is 143 dollars now. What is Russia thinking of doing? Are you preparing some sort of proposal to the “eight” on the issue? Do you think OPEC is still an efficient mechanism for solving such problems?

D. MEDVEDEV: The situation with prices for energy producers is in fact very difficult because it impacts on the general condition of the world economy. Naturally, energy security will be at the centre of discussions at the summit. It’s one of those questions that we are planning to discuss. By the way, I would like to point out, that all suggestions and recommendations as well as most of the conclusions that were made during the time the Russian Federation was heading the “group of eight” and the St. Petersburg summit, we were absolutely successful in the sense that we adequately analysed the situation. Of course, forecasts are rather difficult to make, but even last year it was obvious that these changes would be made to this sector.

I gave this example today, and I will say it to you as well. A year ago, I met with your colleagues, and they asked me about oil prices. I told them that oil would cost $150. Their reaction was naturally quite emotional. I was told that it would be almost impossible in the near future. Unfortunately for the global economy, prices continue to rise. And I think that we need to look at this situation, not just from the standpoint of consumer countries, but from the standpoint of those countries that produce and transfer oil. Only in that case we can make any kind of balanced decision. On its own, the rising cost of energy and gas products is a given that we have to take into consideration. There are lot of positive aspects for those countries that produce oil, and a lot of downfalls for those who consume it. The general situation is of course much more complicated, and I have spoken about this several times, and am willing to repeat it – it is impossible for our country to just gear our economy towards energy. It is evident that if we put money into the energy sector, it will be good. But any attempt to replace other branches of the economy with it, will lead to a complete degradation of the Russian economy. Because of this we have to build our investments in way that ensures a diversification of our economic development. And this is why this process has to be closely monitored by countries, especially those who hold key positions in an international economic arena. I think that right now there are no answers to the significant part of these questions, but a certain consulting mechanism should be set in place.

As far as the potential of OPEC or of other international structures is concerned, our international experience tells us that their potential cannot be exaggerated. Not all decisions that are made by OPEC countries can have a long term influence over the cost of gas, just like withholding a decision will not lead to a calming of the markets. This is why I am under the impression that we need more complex and modern mechanisms, I mean, the consultation mechanisms between producer, consumer, and transfer countries. This is what we insisted on during the St. Petersburg summit. This especially was written into an appropriate declaration. And we plan to build our energy policy based on this.

M. LUDWIG: Mr President, a few days ago in Berlin you suggested taking a time-out on unresolved issues between Russia and the West, like making NATO larger, and so on. The world keeps on turning. With that in mind, is there a chance that Russia will end its blockade at the UN Security Council, of the EU’s civic mission in Kosovo, because the situation there is very complicated and could lead to anarchy.

D. MEDVEDEV: – First of all, Russia does not have a blockade at the Security Council. We made our position on Kosovo clear. We have not changed our minds. It was formulated some time ago, and it stays as is. We think that the Kosovo precedent is dangerous, and unfortunate. We think that the decision is not an individual one but one that sets a precedent.

And Europe will have to deal with the consequences for many decades to come. Moreover, this position will most certainly be used by a group of other separatist movements, for justifying their actions.

Let’s not muddy the waters here.

As far the situation at the Security Council is concerned, our position did not change. We think that the UN should have the appropriate jurisdiction. And we have made that position clear. We were in turn surprised by the position of the UN Secretary General, who by-passed the Security Council, put together a declaration about the replacement of those jurisdictions. But these decisions cannot be made by the UN Secretary General alone; it falls under the jurisdiction of the Security Council. And secondly, it is quite strange that the Security Council did not respond to the statements made by the Secretary General. This is why we confirm our position on the UN, in the situation when there are conflicting parties, when there are countries that are categorically against this trend, and I am referring to Serbia here. And there are other countries that under no condition will agree to recognize Kosovo, and there are quite a few of them.

And the recognition process is going much slower than the founding fathers of this idea had hoped.

All of this reinforces the need for a calm and balanced course of action in this situation. And we think that only the UN and the Security Council can be the platform for this discussion. So, all peacekeeping forces have to be sanctioned in accordance with the UN Founding Charter, and resolution 1244.

K. LEVY: I wanted to ask a question about the relationship of Russia and its nearest neighbours. Do you think that Russia should put forth an effort to support and develop democracy in former CIS countries? And can, in your opinion, Belarus or Uzbekistan be considered democratic countries?

D. MEDVEDEV: And which can be considered democratic in your opinion? Aside from these? Are others democratic?

L. LEVY: That’s up to…

D. MEDVEDEV: In my opinion? I see.

I think that we have a good, friendly relationship with all former CIS countries. And that’s a good thing, because after the Soviet Union ended its existence, we did not create anything that would unify everyone, with the exception of the Baltic States. And the CIS could be treasured. Naturally, we are going to move in the direction of other integration opportunities, and will use other integration platforms, like the EurAsEC, like the united economic space, we will develop our contacts in the realm of the organization of security support, I mean the Collective Treaty Security Organization. So, our relationships with our partners are based on a fairly serious international base.

As far as individual support is concerned for some or all of those countries, I think that the best way is to support the already existing government. Democracy cannot be something that is advocated for from the outside. We see that time and time again. The experience of building effective democracies in Afghanistan or Iraq shows us that money is not enough to install democratic values.

This experience requires decades, and political practice based on serious, hard work from civil society. It can’t come in the form of humanitarian aid.

The same can be said of these countries, that are similar to us both culturally, and historically. Every country has its own political process, in some places this goes faster, in others it is slower. This always has to do with a state’s identity, its people, and its traditions. It is evident that this sort of choice can’t be imposed by close partners, or by distant ones either. Nevertheless, I think that since the fall of the Soviet Union, all members of the CIS, all countries that were created in that post-Soviet space, have come a long way. Their political system is quite different from what it was 15 or 20 years ago. Some countries went through several changes of power, changes in their political system, changes in the constitution. In other cases, everything remained more or less stable. And I wouldn’t say that the countries whose constitutions and political systems changed more rapidly are better off democratically speaking, than those that were more stable.

This is really a question of assessment, and it’s not up to me to do that. Secondly, this is an internal affair of the countries themselves, so it is the business of the people who live in these countries. They vote for a certain order, for the laws brought in by their parliaments.

This is why I think that almost all countries formed in the wake of the Soviet Union, have a long and difficult road ahead in creating their own democratic values. I wouldn’t want to idealise the situation in our country, because we have a young and imperfect democracy, but we are trying to develop it step by step, on the basis of the constitutional system that we have. In my opinion, our constitution provides a sufficient basis for the development of our country for a long time to come. I mean of course the basic constitutional values, because there are always finer nuances, but the basic framework of the constitution should not change. I have repeatedly talked about this. I think, for instance, that introducing a parliamentary democracy in the Russian Federation would lead to the country’s downfall, with all due respect to the parliamentary form of democracy. In order to remain a single state, Russia should continue to be a presidential republic for decades, if not for centuries.

Why am I talking about this? Because the path to democracy is different for everyone. And it is important not to rush that process, to give the people’s democratic goals an opportunity to develop. Only then will the democracy be stable, and only then will it ensure adequate development in the country for years to come.

Part 2