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Interview with Arkady Dvorkovich

In the wake of President Dmitry Medvedev’s address to the Federal Council, Presidential Aide, Arkady Dvorkovich, spoke with RT at length about the thinking of Russia’s Executive on ways to address the current global financial crisis. 

RT:  The presidential address was mainly oriented at the Russian economy rather than the global crisis.  Why was that?

AD:  First of all, in his address, President Medvedev made an analysis of the global situation and the global crisis as well.  He made some proposals on how to deal with the crisis – proposals that we will discuss with our partners at the G20 meeting in Washington on the 15th of November.  But this is an address to the Russian parliament, an address to Russian citizens, not to the world as a whole. This is why most of the speech was devoted to the situation in Russia, and the strategic vision on the future of policies and future developments within Russia.

RT:  The address came on the day after the U.S. election results were announced, and actually a lot in the address was devoted to the U.S. How do you think the relationship will form with the new U.S. administration?

AD:  Yes its true, in his address President Medvedev talked a lot about U.S. – Russia relations, and the role of the United States in the global financial system, the global economy, and global security system.  And also yesterday he congratulated Mr Obama on his win in the Presidential campaign in the United States, with the hope that our dialogue will deepen, that we will resolve the global challenges, the global issues, together, and with the hope for our future cooperation between the United States and Russia. We truly believe that the United States and Russia can be partners in the economic area, in the security issues, and in meeting the global challenges of the 21st century.

RT:  Now all countries are dealing with the crisis.  What measures are specific to Russia and its economy?

AD:  Russia became a very open economy during the last few years, and we enjoyed the benefits of the open economy.  Economic growth was partially financed by the inflow of capital from abroad, and currently this creates specific difficulties for some of the Russian companies that borrowed money abroad.  And the measures that we have undertaken and are planning to undertake in the future are related to the creation of a new refinancing system for the debts of the Russian companies and banks – to substitute the foreign borrowing that is not available right now.

RT:  What is your outlook and how long do you think the crisis can continue?

AD:  We base our outlook on the opinion of all kinds of experts and other international leaders, and its more or less the consensus that the crisis is still developing, that we will have to meet some further challenges next year, and we will face, during the next few months, difficult times in the global economy which would imply certain difficulties for Russian companies as well.  And we will have to undertake some further measures to stabilize the situation. It is likely that towards the end of 2009 the global economy will start recovering, and Russia should be prepared to enter into a new cycle of growth within the next few years.  This is why it is important to build up on what we achieved before, to create a truly independent financial system, which will be open, but have domestic financing sources.

RT:  The President also talked about the Ruble becoming a regional reserve currency. With which countries do you think this trade is possible, and is it essential that the Ruble be free floated? 

AD:  Well naturally a reserve currency is based on the developed financial system and also on trade.  And the natural partners of Russia, with respect to currency, are trading in the creation of reserves in Rubles, those countries that have substantial trade with Russia, in commodities and some other goods and services.  So we are talking about Europe, in particular, we are talking about central Asia, and some other countries.  And we believe that the Ruble can serve in the nearest future as one of the regional reserve currencies, for this particular region. Its too early to talk about the global importance of the Ruble, but based on our competitive advantages, in particular in the commodity market, we believe that the Ruble has a potential as a reserve currency.  Its too early to say but its clear that those countries that have more trade with Russia, like Belarus, Kazakhstan, some other neighbors of Russia, will have probably more incentives and more demand for Rubles than some other countries.

RT:  What role can Russia lay in resolving the global crisis?

AD: Russia is ready for dialogue, Russia is ready for collective decisions, Russia is a party in the G8 and G20, in international financial institutions, and we are ready to play an active role in finding common ground and solutions, that will serve as a sound basis for new, stable, economic development in the future.  We believe that we should reform existing institutions, probably we will need to create some new institutions, some new formats of dialogue, and Russia is ready to be part of  these new institutions as well, and contribute both intellectually and financially into the development.

RT:  Ahead of the G20 meeting in Brazil what proposals are Russian officials taking with them?

AD:  President Medvedev has sent his proposals to all our partners in the G20 and to some other countries with which we have some broader dialogue, and we hope that these proposals will be taken into consideration by our partners.  We will have informal discussions regarding these proposals in the next few days before the G20 meeting in Washington, in particular over the course of the Russia EU summit in Nice, just before the G20 meeting, and also informally with some other partners.  We have already received some of the proposals from other countries, and, based on our understanding of these proposals, most of the positions are quite close.  We have good potential to reach agreement on the main principles of reforming international financial architecture, this and next year.  We are moving step by step to common ground in the evaluation of the current situation and we have many similar proposals on the regulation of the financial sector, financial markets. There are some differences in the approaches towards macroeconomic management, and towards the composition of international financial institutions, but strategically we have the same vision about the main factors underlying stable economic development in the future.

RT:  The G20 meeting is broader than the usual G8. Do you think that the countries that are taking part in the meting now could form a joint block?

AD:  First of all, at G8 summits we have the outreach format where some other countries are participating.  We have the Heiligendamm process, where five countries join the G8 for discussion of some particular issues, including China, India, Brazil, South Africa, and Mexico.  We have the 8 plus 8 major economists meeting on climate issues where Australia, South Korea, and Indonesia are joining sitting countries, and the G20 is an even broader system.  And its important to have more and more representation in international decision making. Russia supports the new formats, and we will actively participate in all these dialogues. 

RT: Do you think this meeting in Brazil can really prepare a document that can be approved in Washington?

AD: It is likely that the Ministers of Finance, and Governors of central banks will come to joint conclusions and will develop a draft document, and we will have another week to work on the details of this document.  And we are optimistic about the potential results of the Washington meeting.