Medvedev ready for dialogue with U.S.
Q: Good afternoon, Dmitry Anatolyevich.
A: Good afternoon, Yevgeniy. A very important thing in our life is to tell the truth and give an account of the difficulties that are being experienced by the world at large and in this country too. I believe the authorities have a duty to speak about it in a frank and straightforward manner as well; to speak about the decisions the authorities are adopting in order to overcome the crisis and about the difficulties we face. Because of this, I think we should devote our conversation to precisely this problem. And I believe that, generally, such discussions on this present situation should happen regularly. These talks should take place routinely.
Q: Thank you for inviting us, all the more so because the questions, given the crisis, are far from simple. Attention was paid to your statement at the Economic Conference on Monday. You said the forecasts did not suggest there would be a revival in the world economy before 2010 and, I quote, you urged saving the necessary resources for probability that the crisis would continue beyond the current year. That begs the question about how stable in general our financial system is, and for how long the accumulated safety net is going to last?
A: You know, the forecasts indeed provide no relief. They are rather complex. And the majority of experts, the majority of analysts, provide different forecasts, but all of these are complex. Of course, we must be focused towards an equally complex development scenario, but this does not mean that the situation we are in is desperate or extremely alarming. No, on the whole it is sufficiently clear and is under control. But we must perform certain actions that will help us deal with the crisis development not only this year, but possibly next year as well. While we are at it we have created, over the last five to seven years, some rather serious reserves. We have formed certain protective stocks precisely in order to make use of them in cases like these, where the financial and economic situation becomes complicated. Frankly, when all of this was being done in recent years, the government was being given harsh criticism. Some said, “Why on earth are you pumping so much money into this reserve fund? We’d better spend it right now. We live only once, and we must spend it as soon as possible in order to get results.” But the latest developments show that those decisions were correct after all. Because the countries that were thoughtlessly spending their money, while having a chance to create reserve funds and future generations’ funds, are currently in a pre-bankruptcy situation. Our own financial and economic condition, by contrast, is absolutely stable. We are passing amendments to the budget. Of course, it’s a difficult budget, a budget with a deficit. But nevertheless, while using funds from the reserve fund, we’ll be able to cover all our expenses, including the social ones, both this and next year, and go through the most difficult patch of the financial crisis. In that sense, I believe the financial policy that has been pursued recently has proved its efficiency.
Q: One more difficult theme is unemployment. The statistics are rather alarming. According to the Ministry of Labor, which is monitoring the situation, the number of unemployed people increased by 90,000 during the past week alone, and the general figure, if I am not mistaken, is 1,735,000. So, the question is whether the state is going to help those people who find themselves out of work or leave them to fend for themselves?
A: Well, of course, it’s possibly the biggest problem and the biggest pain of all which currently exists, because any crisis is accompanied by a decrease in the number of jobs, the closure of a number of enterprises, and a build-up of unemployment. Regrettably this is what is happening in this country. But the figures you give are registered unemployment figures. There is also latent unemployment, and we must pay attention to that too. But, of course, the most important thing is to prepare the normal measures. What measures are these? First, the possibility to pay unemployment allowances on a bigger scale. I mean the amount we offer today. But this is a short-term measure. In the longer term, it is, of course, the substitution of some jobs for others. If an enterprise is shut down or is made to down tools for some time, we must direct efforts, including public finances, at creating new jobs, something that already is happening. Jointly with the regions, we are drawing up specialised programs to support new jobs. Those programs will be funded both by the federal side, I mean this country, the Russian Federation, and the regions. We are allocating an additional 44 billion roubles for these purposes, and this money should create new jobs, including small business jobs and jobs in the new industries. New facilities are being built, facilities capable of creating additional jobs. These can be roads; these can be other infrastructure installations. We will certainly engage in that. And finally, a very important component is a retraining program because the crisis, regrettably, is so structured that, in a number of cases, a person just has to take a different job. This doesn’t mean that we don’t have jobs. This country has numerous vacancies to offer but, of course, a person who had an appealing job that was of interest to him isn’t quite as eager to retrain and take what is possibly a less prestigious job. But in a number of cases this will have to be done. There is a psychological barrier, the loss of money, etc. Some very considerable funds, both federal and regional, will be allocated for retraining as well. Incidentally, I’d like to say that the regions should approach this task in an exceptionally responsible manner. It is simply a crucial thing. No slowdown must be allowed where the acceptance of those programs is concerned. The majority of the regions are coping with these tasks but, in a number of cases regrettably, action is slow and inefficient. Based on the data I was supplied by the government, I can say that there are such problems in our Far East, the Maritime Territory, in the Ryazan Region, and in the Sverdlovsk Region. I would like those decisions to be accepted as soon as possible, because the fate of thousands of people hinges on those decisions. It’s not a joking matter.
Q: There is one more theme of concern to many. I mean, of course, the slide in real earnings. The rouble rate has declined almost 30% against the dollar-euro basket in the past month. What will happen to the rouble next, and what tasks are you setting the financial authorities?
A: Yes, indeed, the rouble rate has changed; there has been a weakening of the rouble rate. And this is connected with the fact that the economy has changed. Disappointing as it is, we are receiving smaller revenues, hard currency payments have increased, and this couldn’t influence the real rouble rate. These alterations have to be made, but in a calm and honest manner as, I believe, was indeed done by the Central Bank. We didn’t say that the rouble rate should freeze. At the present time, the rate ratio that has been achieved corresponds, as understood by the Central Bank, to the real condition of our currency, its real present-day solvency, and its capacity at the present moment. As is only natural, the Central Bank will be monitoring those rate parameters, without letting any leaps happen. And what is in my view even more important, is that the weakening of the rouble was not by leaps and bounds, let alone by the barbarous method that had been used in late 1998, when the wallets of our people, in effect, all of us, became thinner by 300% overnight, and everyone was drowned by that wave, a very unpleasant one. In this case, the weakening that has taken place – between 30 and 35 percent – was done neatly, and all participants in economic relations, both our citizens and our enterprises, could have chosen a reasonable strategy as to what to do with their rouble savings. I believe it was a reasonable thing to do, and this, incidentally, has had an effect on the general situation in the banking sphere, because its general condition and, on the whole, public confidence in the banking system have not been shaken. And this is very important for stability, for letting our state and our economy operate normally.
Q: Do you mean it was decided not to allow a hatchet job?
A: Of course! But certain economists held a view that a leap should have happened. Perhaps this made some sense from the point of view of certain economic models, but it could have involved shock-like consequences for millions of our people, and our companies too. As it is, what we have done is on the whole the same as has been done by a number of major countries with developing economies that were roughly in the same condition as ours, where exports prevailed, where currency revenues declined, and where the governments had to weaken their national currency rates.
Q: Many today are in need of help, and aid is forthcoming, but private businesses are being helped along with state-run operations. Why?
A: My answer is very simple. Our economy is made up of both state-run enterprises and those in other sectors, the private sector included. Those enterprises employ millions of our citizens. Some, incidentally, are very big enterprises, occasionally town-forming enterprises that have dozens or even hundreds of thousands of employees. At any rate, along with families, they are dependent on those enterprises. This is why, we, of course, are helping not only the public sector, not only the state-run enterprises, but also some private businesses that have to pass through this difficult situation with least losses. This doesn’t mean that aid is being given to owners. Shareholders should take care of themselves. The case in point is supporting the companies per se, supporting the enterprises themselves.
Q: Is there confidence that the money, this highly valuable public aid, will reach its destination?
A: You know, it is for this purpose, I mean for the purpose of controlling where money is heading and which money it is, that the government exists. There are always those wishing to use this money in a certain way. But in the present situation I am sure we have established a normal control system and I, for one, have personally insisted, among other things, that special Central Bank controllers should be sent to private banks so that the banking system operates, not for its own sake, but for the real sector and for ordinary citizens. Pay should be delivered on time, and money should not be immobilized in accounts but feed our economy in the normal way. And this sort of control measures should reach from the top down and back. This is why all instructions have been handed down to our ministers and the President’s plenipotentiary representatives and law enforcers – the prosecutors and others… Not so long ago I was saying as much to two ministerial college meetings, one at the Federal Security Service, the other at the Ministry of Foreign Affairs. My message was that currently, the task facing law enforcers was to monitor as close as possible how public money allocated for the support of the economy was being spent. This is very important.
Q: The financial intelligence’s role is likely to grow considerably, isn’t it? It often happens here that appropriations tend to disappear.
A: I believe both the financial intelligence and the financial monitoring service must watch what money circulates and where it heads. And if there is an inexplicable money outflow, it becomes an occasion for investigations and post-mortems.
Q: Practically every day we hear and see what the central authority is doing to overcome the crisis. But if we go down to a regional level, do the teams down there work hand-in-glove? Does everyone have an understanding of his responsibility?
A: I believe this crisis, this difficult situation that has taken shape in our economy and in our social sphere as a whole, is a chance to test everyone and to see what this or that person is up to. Work is easy when you have big revenues, primarily from oil and gas exports. You seem to be doing nothing, while the revenues keep coming. But in the situation that we now have on our hands, the first thing to do is to learn how to spend money rationally, the budget money, and, second, to show if one is a competent manager. I believe that generally our managerial system is prepared to confront these problems, but this does not mean that we will close our eyes to, let us say, shortcomings in someone’s work, or just to some or other bosses’ lack of talent, laxity or negligence. In this situation, it is, regrettably, impossible to pat them on the head and say, “Do buck up”. Some serious decisions will have to be accepted if the commands, if the earlier laws fail to be implemented. This is of exceptional importance. This is why the matter of executive discipline, which is always very important, particularly in this country, is coming to the fore.
Q: And the money ought to be spent in good faith, such as the recent tragedy in the Komi Republic.
A: Yes, of course. And it’s particularly painful and worrying, when sheer negligence, laxity, and a cynical attitude to people kills those that are unable to move – old men and women, who lived in a non-existent old peoples’ home. It’s a horrible story, and we, of course, have a duty to bring the whole thing to the very end. The investigation must identify the culprits and they must be punished. All criminal law measures… And the bosses who let it happen must lose their jobs too. A number of decisions have been accepted. And we’ll certainly get to the core of things.
Q: It’s clear that the situation is difficult, it’s clear that the necessary measures are being accepted. Can we make it?
A: Of course, we shall. It’s just a shame that a number of opportunities that were presenting themselves would have to be possibly put off till the day after tomorrow rather than the morrow. We’ll make it, we’ll sort things out. It’s just that we all should work, each person should perform his duties in his proper place, do that in good faith, honestly, without going into hiding… And then everything will come our way.
Q: Thank you
A: Thank you.