“The US & Russia can find a solution on AMD and new START issues” – Medvedev

Russia-US relations are being restored after significant degradation, President Medvedev told the Italian media, adding that he hopes his upcoming meeting with Barack Obama in Moscow will bring some real results.

Alessandro Cassieri: Mr. President, you are going to meet with President Obama before the G8 summit. My first question is: what is the current state of US-Russian relations? Are they really being reset? And what do you expect from the G8 talks on how to tackle the global crisis?

Dmitry Medvedev: There is a lot we can say about Russian-American relations. They are a key element of international politics.

I think today they are being restored. Under the previous US administration they degraded significantly. Oddly enough, while personal relations between the two leaders were quite good—warm and cordial, relations between the states were very complicated. We had differences on a wide range of issues on the international agenda.

Currently, I think we are all cautiously optimistic—both the Russian and, I think, the American side. I hear what my counterpart, President Obama, is saying. Thus, we are looking forward to his visit to Russia. I talked to him on the phone several days ago. We discussed the agenda for our meeting and its key issue—the preparation of a new treaty on strategic arms reduction. But, in addition to disarmament issues, we have a broad range of other questions. These include regional and local conflicts, tackling the global financial crisis, and, finally, bilateral relations. Of course, our relations are developing, but we think the level of investment and bilateral trade between Russia and the US does not yet match our countries’ real potential.

So, on the whole, I’m cautiously optimistic. Naturally, we have to wait a little to see what will happen. On Monday, I will have meetings with the US President. We will talk both formally, at the talks, and informally. I think we’ll get to know each other better. On the whole, I think this will be an important and interesting event for the world, for those who keep an eye on the international agenda.

As for the G8 summit and the global financial and economic crisis, unfortunately we all are facing this problem today. Of course, we will discuss this during the Russian-American talks. But after our meeting, we will fly to Italy almost simultaneously. There, at the G8 summit, we will continue this discussion in a wider format. There are several documents that the leaders of the G8 plus five more countries will probably sign. Yesterday, I talked to my aide who handles these issues. Almost all the details have been agreed. These documents are dealing with the global financial crisis, the problems of our civilization’s development, the so-called millennium development goals, aid to poverty-stricken countries, climate change and regional conflicts. In short, almost everything is ready. On the whole, I think the G8 meeting will be successful. At least, we are sure that our Italian partners are well prepared for the event.

Alessandro Cassieri: With regard to the global crisis, you have said it is necessary to reform the architecture of international institutions. Are you going to discuss this at the G8 summit?

Dmitry Medvedev: You know, we meet quite often. Recently, we had a meeting in London. We discussed a number of measures we can take to counter the economic crisis. It’s a large-scale program—and a very specific one. These are not merely hypothetic speculations. Among other things, they include proposals on changing the international financial architecture.

Now we are to have a G8 summit in Italy. Then there will be a G20 summit in Pittsburgh, in the US. So, we do meet regularly, and perhaps we should meet often and discuss various issues, given the current situation. Yet I’d like to make a little remark here:

We have made some important statements in Washington on reforming the international financial structure. We confirmed them in London. It’s about time we moved on and started the actual reforms – because I have the impression that in some places people have somewhat relaxed. I mean primarily international financial centers like London and New York. But it is too early to relax. Even if it is true that the situation has begun to improve, these improvements are very slight. This applies even to some of the most recent positive developments, like the improving situation with car sales in the US and some other improvements in business and banking in Europe and in the US. This does not mean we have completely overcome the crisis. Thus, first, it is too early to relax and, second, we should reform the international architecture.

Our position on this issue is that we support some of the initiatives put forward at the London summit. For instance, we support the ideas of an international financial charter and of a global standard, because these measures will help establish a modern financial architecture. Today, we entrust international financial institutions with $1.1 trillion—a crazy, enormous amount of money. Naturally, we must be certain that these institutions are able to handle this money properly. It should be spent on the most urgent problems, like supporting the worst hit economies, or regulating some macro-economic processes. These institutions must be able to make such decisions. They should work in a new way.

We have agreed to reconsider many principles, like how these institutions are run, how quotas for various countries are determined. It’s high time we do it, not just talk about the need to reform the global financial architecture. Let’s really get on with reforming the International Monetary Fund and the World Bank, as well as other structures.

We have established an Economic Stability Forum, which includes all the G20 countries. This is another important forum where we should discuss the entire international financial agenda.
Thus, I think it’s time for us to act. It’s time to develop those standards. We should agree to start the project, put our experts to work and prepare some international agreements. This, I think, is extremely important.

Fabrizio Dragosei: Mr. President, you have mentioned the talks with the US on strategic arms reduction. Russia often links these talks with the issue of the American missile shield. Do you think these two subjects are related? In other words, is it impossible to resolve the problem of the new strategic arms reduction treaty without solving the issue of missile defense in Poland and in the Czech Republic?

Dmitry Medvedev: Yes, we do think these two subjects are related—for obvious reasons. Offensive nuclear arms are not a thing in itself; their effectiveness depends on the means used to counter them, on missile defense. So, as we discuss their reduction, we must keep in mind the situation with the means used to defend against nuclear strikes, with missile defense.

We have repeatedly stated that we are against the deployment of missile defense elements in Poland and the Czech Republic. While the previous US administration took a very uncompromising stance on this issue, the current administration is ready to discuss it. I think we are well able to find a reasonable solution, because in order to resolve this question, we absolutely don’t have to cancel all the decisions we made previously. All we need to do is show some restraint and ability to compromise, and then we will be able to reach an agreement on the main documents related to the new START Treaty – and at the same time reach an understanding on the missile defense issue.

You see, we in the Russian Federation are not opposed to missile defense as such. We just think it should not be unilateral, and it should not be aimed, essentially, against one of the parties in this dialogue, against such a major nuclear power as Russia, because we do believe that the decisions our partners have been making so far have put us in a difficult situation. Therefore, if we want to establish a missile defense system, it should be a global defensive system against those countries which really pose a threat. And we are ready to discuss this with the United States.

Fabrizio Dragosei: The Americans claim this system is to protect them against possible aggression from Iran. Naturally, there will be a lot of talk about Iran at the G8 summit. Europe is under the impression that Russia is too soft towards President Ahmadinejad. Do you think you can reach an understanding on this issue with your Western partners, in particular with Europe?

Dmitry Medvedev: As far as missile defense is concerned, Poland and the Czech Republic are on one continent whereas Iran is on another one. I really cannot understand how you can say that this missile shield is related to the problems in the Middle East. Accordingly, I believe all these explanations were invented to justify the decisions the previous US administration made—by the way, without consulting with other NATO members first. Essentially, it made these decisions in the bilateral format.

Now, as regards Iran, it is an important partner for us. We talk to each other regularly, and there is a whole range of issues we efficiently cooperate on. I don’t even mean economic ties, because it’s obvious. I mean, there are some challenges that we deal with jointly, like drug trafficking and terrorist threats. So, we will continue our cooperation with Iran as our neighbor, our partner on the international arena. Therefore, I think it is not appropriate to even discuss this subject.

As for Iran’s nuclear program, our position is the same as that of other nuclear powers and, in fact, of all countries involved in discussing this issue: Iran’s nuclear program can be a peaceful one only if it’s monitored by the IAEA. But if Iran acquires nuclear arms, this would pose a threat to its neighbors. Therefore, we will monitor any developments of this nature with utmost caution. Naturally, at the same time we will maintain normal relations with Iran. We think this would be appropriate.

Now, as far as Iran’s current internal problems are concerned, our position is simple: let the Iranians sort out the situation themselves. These are their internal affairs. To us, it is important that Iran will be a stable state which you can work with on international issues. That is the most crucial thing.

Alessandro Cassieri: Mr. President, seeing that the development of nuclear programs in North Korea and Iran poses a threat to the world, do you think you could take a tougher stance? As regards scientific research in this field, all this, of course, is interesting. But could you define your strategic views on this issue?

Dmitry Medvedev: I have just said about nuclear programs that they must be peaceful and must comply with the requirements of international agencies, primarily such a highly-respected and important agency as the IAEA.

Now, I believe that the situation with Iran is not the same as with North Korea. These are different countries with different political regimes. Nevertheless, we do follow closely the nuclear programs in these countries. As far as I know, the US leadership is now willing to have more direct and open relations with Iran in order to discuss their concerns directly. We support this. Moreover, we are ready to help them in this matter. This is perfectly normal.

As regards additional sanctions, I think usually they are not too effective. If we impose them now, we may only make the situation worse.

Now, as far as North Korea is concerned, the current situation there is more alarming to me—because while Iran is communicating with the international community, North Korea has practically suspended all contacts with the world, and those six parties that conducted talks on the North Korean problem are practically doing nothing now. In the meantime, North Korea continues its nuclear tests and launches of short-range, medium-range and longer-than-medium-range missiles. North Korean missiles now have a very, very serious range. Naturally, we are concerned, because we are close to this country. Traditionally, our relations with North Korea have been quite good. We’ve been partners. But naturally we are concerned about what is happening there now.

Therefore, together with other parties to the talks on the North Korean nuclear program, we have sanctioned a resolution by the UN Security Council. We think this was a timely step. It is to remind North Korea that it should be more cooperative on such sensitive issues. We need to meet and have discussions. This doesn’t mean that we need to heighten tension all the time. On the contrary, we need to look for new ways and approaches. We need to invite our North Korean colleagues to discuss things. I cannot imagine any other scenario. If something bad does happen, this will be the worst-case scenario, the most terrible thing you can imagine. Therefore I believe there can be no alternative to having a dialogue with North Korea. We need to use every approach that’s available to us.

Having said this, we naturally need to comply with the UN Security Council resolution.

Alessandro Cassieri: I’m sorry, Mr. President. You are saying that if something happens with North Korea, this will be the worst-case scenario. Could you please explain what you mean? What is this worst-case scenario?

Dmitry Medvedev: Well, you know, tensions keep rising. New launches are taking place. Naturally, nobody can be pleased with such a situation. Tension is building up on the Korean Peninsula. Everybody is concerned: South Korea—the Republic of Korea, Japan, the People’s Republic of China and the Russian Federation. Therefore, we don’t want any complications and any belligerent statements. And North Korea does make belligerent statements from time to time. This is what I meant.

Fabrizio Dragosei: Mr. President, in many countries people say that Silvio Berlusconi acts as Russia’s advocate in international affairs. Do you agree that our prime minister is Russia’s advocate? Do you think he could act as a mediator between Russia and the United States?

Dmitry Medvedev: What do you mean by “Russia’s advocate”? Russia is not on trial, and thus we have no need to hire an advocate.

But I do have a special, close relationship with the head of the government of the Italian Republic. We often discuss the international agenda. Just recently we had a telephone conversation. We discussed how the dialogue between Russia and NATO should proceed. The Italian prime minister told me, “I think we should revive the spirit of Pratica di Mare,” that is the spirit of the first meeting that took place in 2002 and that became the foundation of a new dialogue between Russia and NATO. I agree. In this respect, I fully support his views and the initiatives that he puts forward from time to time with the elegance which is so typical of him.

Thus, in this sense, we naturally do count on his help and his friendly support. But this doesn’t mean, of course, that we should talk to all countries only through Italy and its head of the government—even though we do want to be partners with the leadership of the Italian Republic, including my colleague.

Alessandro Cassieri: Mr. President, you have launched an anti-corruption campaign in Russia. Have you noticed any progress, say, in the judiciary? Let’s take, for instance, the Khodorkovsky case. Do you think you could pardon this controversial person?

Dmitry Medvedev: You know, I think we should keep these two things separate: fighting corruption and individual cases. These are different things.

As far as fighting corruption is concerned, I spoke openly about this at the very beginning of my presidency. I think Russia has a very high level of corruption, and we need to take systemic measures to reduce it. We’ve taken a number of steps: we have a new law on corruption, we have introduced special rules—for instance, government officials are required to declare their income, and so on. And we will definitely continue with this work, because we consider it extremely important. Furthermore, it should include everybody, from police officers to the head of state. This is what we may call the principal direction we are moving in to fight against this very complex Russian problem.

Now, as regards specific cases, for every specific case there is a specific answer. Our country has a standard procedure for a presidential pardon, be it Khodorkovsky or any other person. The person needs to appeal to the president, admit himself guilty of perpetrating a crime and ask for a pardon. Thus, at this point, there is nothing for us to talk about.

Furthermore, if we are going to discuss various problems involving businessmen, I don’t think we should single out just one case. In this time of crisis, there are all kinds of trials going on in other countries as well. And some businessmen get very serious prison terms. For instance, there is one businessman in the United States who was sentenced to 150 years. But for some reason nobody seems to care about him that much.

Anyway, I think that in various situations there may be various government procedures, and the government’s response may vary. That’s my point. Anyway, this is an individual case.

Fabrizio Dragosei: Do you think the case in the US and the Khodorkovsky case are similar? The West thinks they are different. The West thinks that Khodorkovsky is a victim of the Yukos takeover and that he was convicted not only for legal or technical reasons.

Dmitry Medvedev: You know, my view of this situation is perhaps different from that of many commentators. I view this case from the legal point of view. As the president, I cannot take any other approach.

Khodorkovsky and some other Russian businessmen were tried and convicted in court. These are not political affairs. This is a decision made by the court, and we need to respect it. Whatever happens to him or to any other convicted businessman must fully comply with the Russian Criminal Procedure Code. I strongly believe this.

The reason I mentioned the case with this American businessman is because I wanted to demonstrate that business people may have problems anywhere in the world—either with the government or with individuals, and they may be prosecuted.

So I don’t think it’s quite appropriate to single out just one case. That’s all.

Alessandro Cassieri: Mr. President, in the past few days the United Stated has launched a massive attack against the Islamist fundamentalists in Afghanistan. Do you think that after Soviet troops were defeated there and the experience you’ve had, the US can be successful in crushing the fundamentalists?

Dmitry Medvedev: Well, I think what’s happened to the Soviet troops many years ago in Afghanistan is a slightly different situation than what we have today. This is my first point. The second one, if we talk about our approaches to the issues, the military of our country today, not back then during the Soviet times, today it can only be deployed to counter an attack from an external aggressor and threats to the lives and well being of Russian citizens. And unfortunately these situations do come up. Also, it can be used to counter terrorist attacks. But if we talk about the situation in Afghanistan, of course we are ready to cooperate with the alliance there. But not on the military level, we will not do that. But in terms of anti-terrorist cooperation, we have allowed a number of European countries to use our territory for non-lethal and lethal shipments. We will talk about transit to Afghanistan with President Obama who is coming next week. This is our contribution to the problem of terrorism in Afghanistan. But this is not enough. We have to revive the political system in Afghanistan. We have to create a modern society there but with Afghan traditions in mind. We have to create new jobs and fight drug-trafficking. That is the only way to combat terrorism. And we want to put our efforts into it as much as we can. Not that long ago I met with the Afghan president in Yekaterinburg during the summit of the Shanghai Cooperation Organization. And I met with the president of Pakistan. I met with them individually and then together. I believe Russia has a role to play here because we are quite close neighbors and Russia is in the line of fire for terrorist threats and has to combat them. Some criminals from that territory are able to enter Russia through Central Asia. And there is the drug traffic which is trying to reach Europe through the same channels. The role of Russia here is very important and we recognize our responsibility.

Alessandro Cassieri: Mr. President, do you think the Western powers, the US and their NATO allies, will have success in their operation in Afghanistan, considering the Soviet and British experiences there in the last century?

Dmitry Medvedev: No, of course not. The military component alone will not have any success. And the experience which you allude to proves that very vividly. Success will be with those who will help the Afghan people create their own state, their own modern society, and a developed economy—and at the same time respect their traditions. But if we rely on military force alone, this is a road to nowhere, because the situation will only become worse and worse each year. It is impossible to create a modern society, a thriving economy, through gunboat diplomacy. Success will only be only possible if Afghans and those who are trying to help them join forces.

Fabrizio Dragosei: Mr. President, do you believe that rock bottom of the financial crisis in Russia and other countries has been reached and everyone is on the way to recovery? And in terms of concrete measures how to help Russia overcome the crisis, do you and Prime Minister Putin agree on these measures or do you have different views? How would you generally assess your cooperation with Mr. Putin?

Dmitry Medvedev: In terms of the financial rock bottom, I have already speculated on the issue and it is a thankless task. I am not a financial analyst. But of course I have to make some sort assessment as the leader of the state. What can I say? We are currently really experiencing a certain revival in the global economy and the Russian economy. There are a number of positive trends. Despite a very serious drop in industrial output and the slowing growth of GDP this year, in the last few months we’ve been seeing some good trends. First of all the unemployment rate is growing slower now, which is very important for the stability of our economy and the social well-being. Secondly, capital flight has slowed down. In the beginning of the year, the capital was fleeing from the country very fast. Now there is practically no capital flight, which means that the situation on the currency markets, the situation with the ruble as a means of payment is absolutely stable. The financial system and the banking system are functioning. Of course, unfortunately, we are not able to give out credits at lucrative rates because of the inflation which has increased lately. But at the same time, the Central Bank of Russia in the last few months has lowered its rate three times, which means interest rates are also falling. Inflation has slowed down, as well. All of this shows that the anti-crisis program which we introduced at the end of last year and beginning of this one has brought concrete results. Of course, there are still a lot of problems. These problems are above all in the so-called real sector of the economy. A number of factories have closed down; many are not working at their full capacity. But unfortunately the same has happened in the US and Europe. We are currently putting our efforts to revive the affected industries and give them additionally funding. If this cannot be done, we try to create new enterprises on the basis of the old. This restructuring will continue and it is fully in line with what our other partners do. On the whole I think that the anti-crisis measures which the government implemented on my initiative have had results. Of course we are not fully satisfied. And we will adjust these measures. I watch closely what the government is doing in this respect and what decisions are being made. For instance, when I feel that a decision is being made too slowly, I tell them. I openly tell them what I think. But this is nothing extraordinary. It’s absolutely normal. Especially in a situation like this.

In terms of my relationship with Prime Minister Putin – I had to answer this question a number of times and I am prepared to do it here. We have a close, businesslike relationship, which naturally is based on our positions. It means that I attend to the presidential responsibilities. I am the head of state. I must make all strategic decisions in foreign and domestic politics. The task of the government and the head of the government is to organize the work necessary at the times of crisis. It is a difficult task. Very difficult. And of course we are in close contact and discuss these problems regularly. But this does not affect our personal relationship which is still excellent and which started a long time ago, almost 20 years. We have known each other for a long time. So in that respect everything is just fine.

Alessandro Cassieri: Mr. President, in terms of the new economic architecture, do you support China’s proposal to change the reserve currency?

Dmitry Medvedev: Well, we need to think about the future. I’ve already mentioned that we made a number of crucial decisions, but now they are to be implemented, so that they are not lost in idle talk. We need to think about what the world’s payments system should look like in the future, plan for the next decade.

It is clear now that the system based on the dollar, or the dollar and the euro, has certain flaws. But I am a realist, and I understand that today there is no alternative to the dollar and the European currency.

Speaking of the European currency, I think Europe was able to withstand the crisis mainly because they have switched to the common currency. Otherwise the situation with systems of payments in the individual European countries would have been much more dramatic.

But we need to think about the future. The future depends on the reserve currencies’ stability. The countries issuing reserve currencies are interested in having their currencies used for reserves and payments. The states using reserve currencies are interested in having stable and strong reserve currencies. The interest is mutual.

But today analysts have come to the conclusion that two or even three world currencies are not enough. There needs to be more reserve currencies. That’s why we need to think about creating regional reserve currencies. It’s impossible to introduce them by a presidential decree or by the Central Bank’s decision. It’s all about trusting the economies.

But at present there are quite a few strong players in the world. The situation is different from what we had 50 years ago. I think that practically in every part of the world we can have a currency that would be attractive and will become a reserve currency.

As for the supranational currency, the so-called global currency, this project is even further away in the future. But potentially it is absolutely conceivable. We share this point of view with a number of our partners.

By the way we discussed this issue during the BRIC summit which recently took place in Yekaterinburg. What’s it all about? It’s about gradually creating a new unit for payments. I’ve mentioned this already. I think it’s normal that we’ve agreed upon use of special drawing rights, in other words it’s about the so called currency of the International Monetary Fund for settlements with this organization. But if we settle payments with this organization that way, it actually means that we use a supranational payment instrument already. So these special drawing rights may in the long run become an element of creation of a new international monetary system and even supranational settlements system. It’s all in future. But we are to think of it in advance. We must not be taken hostage by the economic situation of one country. At the moment we’re hostages of the economic landscape in the US which developed over the last few years. Everybody understands that. The US President understands that, as well. We need to have an opportunity to monitor the macroeconomic situation of big states so that the dramatic changes in their markets would not influence other countries. We have to understand what’s going on with their currencies, because the inflation of dollar and euro is a very dangerous problem for the whole world and the global economy. That’s why we need a system of macroeconomic regulators, and a system of indices which will let us evaluate the state and temperature of the global economy. That I believe to be very important and that’s what we are going to discuss at the G8 summit both at the restricted circle and the full summit – which means the G8 plus the Heiligendamm process, which is called the new format already: Heiligendamm plus Aquila. But most probably there is going to be a new abbreviation.

Fabrizio Dragosei: And the last question, a very short one. Would you tell us how soon the Pope could visit Russia?

Dmitry Medvedev: My responsibility in Russia is the state. Church affairs are not really my area. In our country the church is separate from the state and the state is separate from the church. That’s why the only thing I can say is that out diplomatic relations with Vatican are limited to mutual representation. At the moment we are discussing how these relations could be changed to full format. I mean we are trying to establish relations at the level of embassies. And I think that this is absolutely normal. As for the relations between the Russian Orthodox Church and the Holy See, it’s a separate issue, one of those I should not comment on. The holy fathers are capable of conducting talks on their own. And they do, but it’s a completely different issue. The relations between the states – Russian Federation and Vatican – exist, and they are likely to develop.