Aleksandr Zhukov, Deputy Prime Minister and the Head of the Committee for Sochi 2014
Deputy Prime Minister of the Russian Federation
Head of the Government Committee for Sochi 2014
1956 - Born in Moscow
1978 - Graduates, Moscow State University
1978 - Researcher, National Research Institute of Systems Analysis, USSR Academy of Sciences
1980 - Holds various positions including Deputy Chief of Currency Department, USSR Ministry of Finance
1991 - Graduates, Harvard Business School
1991 - Vice President, vehicle export company Avtotraktorexport, Moscow
1994 - State Duma Deputy
1994 - Member, Board of Directors, East-West Bank
1995 - Deputy Chairman, State Duma Committee for the Budget, Taxes, Banks and Finance
1998 - Chairman, State Duma Committee for the Budget, Taxes, Banks and Finance
2003 - Joins United Russia Party
2004 - Deputy Prime Minister of the Russian Federation
A top level economist and reformer, Aleksandr Zhukov, headed a key Duma body - the Budget Committee - for many years before becoming the Deputy Prime Minister. Having held different positions at the Finance Ministry, at the very beginning of his career, Mr. Zhukov never sold himself short and always aimed high. His current post is a great example of his achievements. One of Mr. Zhukov's main character traits as a person and politician, is his ability to find a common language with all parties concerned. During his time in the State Duma, he has maintained the image of a professional economist, who distances himself from politics. The Deputy Prime Minister is also well known for his athletic abilities, having participated in numerous footballing events. His first degree, in mathematics, correlates with his keen interest in chess. He holds the Master of Sports chess title and is the president of the Russian Chess Federation. Mr. Zhukov sincerely believes in Sochi's chances of becoming the Olympic city 2014. His leadership of the government committee for Sochi 2014 is his personal investment in this mission.
Aleksandr Zhukov, Deputy Prime Minister of the Russian Federation and the Head of the Government Committee for Sochi 2014, joined RT to discuss Sochi's Olympic bid and the performance of Mikhail Fradkov's cabinet.
He spoke to RT's Al Gurnov on "Spotlight."
A.G.: Hello, Mr Zhukov, and thanks for coming to our programme.
A.G.: We just heard in your biography of your sporting achievements, of your passion for sports. I would also add that you are a football fan and you play football yourself. Therefore, my first question is news-related: just a couple of days ago, the exclusive broadcasting rights for the national championship games were sold to a TV satellite channel. Russia is the only country that has a national public sports TV channel. Why do they have to move football to pay-TV now? Was it a political decision? Or maybe the government has run out of money that it stops promoting sports?
A.Z.: Obviously, the decision was made by the Football Federation and the Premier League that owns the broadcasting rights. In principle, there is nothing wrong with this. This happens worldwide: TV channels purchase broadcasting rights for football games. However, I think we should re-consider this decision, because I believe it would be wrong to leave the national public sports TV channel that so many people watch without national football games altogether.
A.G.: In other words, as a politician, you are afraid of people's strong reaction?
A.Z.: Actually, there was a period in our history when hardly any football games were broadcast at all. Today, the situation has changed; people are now more interested in football and not many people can afford a satellite channel. So, I believe that the most interesting games should be broadcast openly on a public channel.
A.G.: Let's stay with the subject of sports. You are overseeing Russia's Olympic bid for 2014. Recently, an IOC evaluation committee visited Sochi, and we all saw you accompanying the committee. Could you please tell us about the results of this visit? What kind of impression did Sochi produce on the committee members?
A.Z.: Well, I can only say something based on the committee members' individual comments.
A.G.: This is exactly what we want to hear - secret data, inside information.
A.Z.: Well, I do not possess any "secret data." We did our best to provide thorough and frank answers to whatever questions they had - which were numerous; they had to do with both the sports side and the economic side of things, with the matters of ecology and transportation, plus how the facilities we build will be used in the future. Anyhow, they had lots of questions, and we provided detailed answers. According to the statements the head of the committee and his deputy made at the final press conference, they were satisfied with our answers, and they said that our bid was a very solid one and that it had virtually no weak points.
A.G.: Mr Zhukov, I have your quote here: "One of the reasons we have to host the Olympics is that it is going to boost both Sochi and the entire Krasnodar region economically." I should mention that so far, nearly all the Olympic facilities in Sochi exist on paper only. Did you manage to present this as an advantage? And will you be able to complete all these projects that you think the region needs so much, even if we don't get to host the Olympics?
A.Z.: To me, this is our crucial advantage: we are going to build 12 modern Olympic arenas from scratch. This means that the world will now have a new place that has the potential to host winter Olympic Games. And this is not going to be a one-time thing; the place will host tournaments in biathlon, bobsleigh, figure-skating and other winter Olympic sports annually. These will be 21st-century facilities designed by the top architects and the sports experts from various countries. Plus this will enable Sochi to function as a sports retreat all year round.
A.G.: Somehow, I don't think this matters much to the Olympic Committee.
A.Z.: In fact, this matters very much to the Olympic Committee. The IOC pays much attention to how these facilities are going to be used once the Olympics are over. In Sochi, these facilities will be used to the utmost. We are looking at some very substantial investments, including not just building the arenas but also substantially developing the city's infrastructure. This concerns its road network, its power supply network, its ecology, etc. You asked me if these projects will be completed in case our bid fails. For sure, we will still do this, but on a smaller scale. The main projects will still be fulfilled; this will not be in vain.
A.G.: Mr Zhukov, you oversee this project as a politician, and I am sure you know how decisions are made by the IOC. Formerly, the decision was made by the IOC Executive Board; that's why recommendations made by the Evaluation Committee were very important. However, now all the IOC members have a right to vote, including countries like Nicaragua or Venezuela. These countries don't really care who will host the games, and some people say that their votes are secured with money - simply speaking, bribes. Is it so? Is it true?
A.Z.: All the IOC members have a right to vote, except for those bidding, which includes Korea, Russia, Austria and Germany, since some of the events, in case Austria is chosen, will take place in Germany. There are around 100 member-states, and I believe they will vote based on the existing bids and the recommendations of the Evaluation Committee.
A.G.: But they don't really care. Their national teams are not going to attend the games anyway.
A.Z.: They will also take into account how many medals the bidding countries have won in the past. Say, Russia has been participating in the Olympic Games for 50 years now, and it has 280 medals. So, it would be only fair to have Olympic Games in Russia at least once.
A.G.: In other words, you are saying that the IOC is one of the few international bodies that still want to be fair?
A.Z.: Definitely - one of the reasons being that the IOC representatives themselves are former athletes, and they really care about sport. If you compare Korea and Russia in terms of winter sports, the difference is immense. Austria, on the other hand, has all the necessary infrastructure, but it has already hosted the Winter Olympics twice. All these factors will be taken into account.
A.G.: Mr Zhukov, let's evaluate the results of what you did for our bid based on some figures. For example, has your activity affected the price of land in Sochi?
A.Z.: The prices, of course, are affected pretty much. In some areas, the price went up several hundred percent. However, I believe this process is going to take place regardless of the Olympics.
A.G.: If there are chances that the Olympics will be held there, investors from all over the world will be lining up for it.
A.Z.: That is indeed the case. Let me give you an example. The Sochi international airport has been under construction ever since the 1980s. Formerly, they had a lot of debts and could not complete the construction process. However, recently, we sold the airport with all its debts for 5 BLN roubles, and in six months the construction was finished.
A.G.: You said recently that in ten years, Russia was going to experience an investment boom. What would you say to those Western investors that want to wait with their investments until 2008? How much will the next administration continue with Russia's present-day course? Should the foreign investors worry about 2008?
A.Z.: I spoke about the investment boom coming last year. Based on the final figures for 2006, I can say that this boom has already started. Over the last year, the investments went up by 13.5%. The foreign investments went up significantly, over $US 50 BLN. For the first time in fifteen years, we have a substantial net inflow of foreign capital: over $US 40 BLN. We paid off almost all of our debts. We have fully liberalised our currency regulations. Today, there are no problems taking money out of Russia. Recently, I saw the results of the polls among the foreign investors in Russia. 96% of these investors say they are going to continue working in Russia because they are satisfied with the profit they gain with their investments here. There are figures that mean a lot to each investor: last year, Russian shares went up by 70% on the average; Russia's market capitalisation has almost doubled.
A.G.: There was some serious re-shuffle in Russia's cabinet recently. There were various comments related to this. I would like to hear from you: how much has this re-shuffle strengthened Russia's political stability? How much do they ensure that Russia will continue its economic and political course after 2008?
A.Z.: To answer this question and the one you asked earlier, I would say I am fully confident that Russia's political, economic and social course is not going to change after the presidential election in 2008.
A.G.: Do you expect any more significant changes in the government, or will it remain the same until 2008?
A.Z.: I believe this cabinet has been quite efficient for the last three years. There are no objective reasons for any serious changes in the government before the election.
A.G.: In other words, even if there are some changes, they are not going to be drastic?
A.Z.: It's hard for me to tell but I don't see any reasons for changes. All the changes that take place are meant to improve the cabinet's efficiency; they don't mean that the course is to change radically. Moreover, in the next month or two we are going to approve our budget for the next three years: 2008, 2009, and 2010. This will be the first time in Russian history for the budget to be approved for three years ahead, not just one. We are going to project our course three years into the future. According to our expectations and the plans we make, Russia's economy will continue to develop at a good pace, at least 6% a year. Investments and our citizens' incomes will continue to grow at a fast pace.
A.G.: We can talk about the budget later. Right now - you said shares' prices went up. However, recently the stock market plunged. Were you worried? And on Tuesday, the situation finally began to improve - what is this supposed to mean?
A.Z.: Russia's stock market is closely involved with the stock markets worldwide. What happened in China and the U.S. had to affect the stock market in Russia. This plunge was caused by the events abroad.
A.G.: Was there any panic within the cabinet?
A.Z.: There was absolutely no panic. As far as Russia's economy is concerned, there was no reason for the Russian stock market to expect some kind of further crisis, or plunge, with Russian companies' shares.
A.G.: Is this why Moscow was first to get over the crisis?
A.Z.: Most of the companies that are represented in Russia's stock market have positive dynamics. Over the last year, they proved to be very profitable. So, there is actually no reason why their shares should plunge. The stock market will get over the crisis, and the situation is going to improve.
A.G.: Now, let's talk about the budget. This three-year budget - what does this mean? Are we switching back to a planned economy with its five-year plans?
A.Z.: We are not talking about planning. We are talking about our forecast and our budget for the next three years. We ensure stability for several years; we make it possible for people to sign their contracts not just for one year but for several years. This is a big advantage for both Russian businessmen and foreign investors because now they know how Russia is going to develop in the future. They understand the future development of Russia and they can build their long-term plans and be sure that they will be able to act efficiently.
A.G.: When you work on the three-year budget, do you use oil and gas prices as your reference point, or do you consider other factors as well, like diversification, the world situation, and so forth?
A.Z.: For sure, we have to consider the world situation because most of our export profits will be generated by oil, gas and metals, and the prices for these goods depend on the world situation. We consider forecasts for oil and gas prices very seriously. But actually, our economic growth depends more on our internal factors. It's based on growing consumption within Russia, on our citizens' increasing incomes, not just on something external. So, we pay even closer attention to the figures that describe our domestic situation, to the forecasts for developing Russia's economy. Diversifying our economy is our goal today. Raw materials, of course, are important, but we have to develop our manufacturing industry.
A.G.: So, does the new budget envisage all these things?
A.Z.: Yes. Developing new technologies, developing hi-tech industries, social spending - all these things are part of this three-year budget.
A.G.: Speaking of the re-shuffle, you praised Fradkov's cabinet, didn't you?
A.Z.: I cannot praise myself. All I'm saying is that there are objective figures showing.
A.G.: The objective figures are also showing that this cabinet owes much of its success to the high prices for oil and natural gas. How efficiently would you say has the cabinet used this favourable situation?
A.Z.: It's not up to me to evaluate the efficiency of this cabinet. The efficiency of this cabinet will be evaluated by the voters, as they elect a new State Duma and a new president. But I can say this: right, the situation was favourable, and we fully used this opportunity. We managed to pay off almost all of our debts that we inherited from the USSR.
A.G.: We paid our debt to the Paris Club.
A.Z.: These were huge international debts, but we paid them and now our children will not have to worry about them. We have accumulated over $US 300 BLN in gold and hard currency; we have over $US 100 BLN in our Stabilization Fund. This enables us to face the future with confidence.
A.G.: Based on these figures, you said recently that by 2009, all the pensioners will have a pension above the subsistence level. How many pensioners are there in Russia now whose pensions are below this level? I tried to look up this figure but I couldn't find it.
A.Z.: I can't give you the figure right now but we do have pensioners that receive a so-called "social pension," an age-based pension, and that is below subsistence level. We will solve this problem. By 2009, the social pensions in Russia will be above the subsistence level.
A.G.: And the government already has this money?
A.Z.: There is money earmarked for this purpose in our three-year budget that we've being talking about.