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The Russian President invited all APEC CEO Summit participations to Vladivostok.

The meeting of heads of state and government of the Asia-Pacific Economic Cooperation forum will take place in Vladivostok in September 2012.

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Transcript of discussion with APEC CEO Summit participants

Question: Mr President, you’ve just come directly now from a meeting with Barack Obama. Can you tell us a little bit about what you discussed?

President of Russia Dmitry Medvedev: I will, but I won't tell you everything.

We have good relations with President Obama, relations that are embodied in a number of breakthrough decisions of recent years.

This meeting was also a good one. We discussed a great deal of things. We discussed the current economic situation, we talked about the APEC summit, and we talked about Russia's accession to the WTO. I thanked President Obama for being the first American President to have made valiant efforts in this regard. If this had been done a little earlier, perhaps Russia would already be in the WTO, and then we would not have this strange situation, when a very important economy and a member of a range of organisations is not a member.

We discussed some regional problems, we talked about Afghanistan, Iran, and something else that I can't tell you about.

Question: As you mentioned the WTO. I mean in recent days you’ve overcome a number of hurdles towards accession to the WTO. Is it now a done deal? And what does it mean for Russia? I mean, after all we saw that when China joined the WTO, it entered a new phase of its economic development. Can we expect something similar with Russia?

Dmitry Medvedev: I also hope that this step will represent a very beneficial change for Russia's economy, despite the fact that we have been preparing for it for quite a long time, and that a number of Russian companies have certain difficulties and concerns. However, our policy has remained unchanged. We believe that Russia's accession to the WTO is long overdue. We are ready for it and pleased that, following joint efforts, we will hopefully be able to complete this process in the very near future.

“We have good relations with President Obama, relations that are embodied in a number of breakthrough decisions of recent years.”

With regard to the consequences for Russia’s economy: they are obvious. In this sense the Russian economy will be much closer to the standards of the World Trade Organisation and to those of international trade, which really does have implications for all countries and the entire WTO system. On the other hand, in my view, it will help improve the competitiveness of Russian companies, something which is also very important for those concerned.

So I'm glad that this is almost happening. I hope that the next few weeks will not hold any unpleasant surprises, and that Russia will finally join the club of countries members of the World Trade Organisation, and that Russian leaders and experts will be able to conduct those boring talks about how we can finally conclude the Doha Round of trade negotiations.

Question: The Russian economy is sometimes criticised – if that’s the right word, or characterised as being too resource dependent. Will accession to the WTO through a kind of competition that it’s bound to bring – will that cause more innovation in Russia? What hopes do you have for Russia to become a different kind of modern economy? Assuming that you accept that characterisation in the first place.

Dmitry Medvedev: To be perfectly honest and direct, accession to the WTO is only one of the conditions required to diversify the Russian economy. Russia is rich in natural resources and rich in energy products. This is very good because it allows Russia to develop. We must not underestimate our potential.

On the other hand, Russia cannot be a country where only one part of the economy functions, and we should not rely only on raw materials and the energy sector. We must develop other parts of our economy as well. In this sense, naturally the WTO will promote the development of our economy and diversification of our companies. But of course here we must focus and rely on ourselves in the first place, not on membership in international organisations. This is because only companies that have their origins in Russia can change our current economic situation.

At the same time, of course we expect that the new economy will arise as a result of joint investments by Russian entrepreneurs, Russian business, and the arrival of important and high-tech international investments.

I view these processes optimistically and am confident that the new, creative economy will assume its rightful place in the Russian economy, despite the fact that we will remain one of the main suppliers of raw materials and energy resources to global markets for a long time.

Question: As you mentioned you’re entering a rules-based system, and I think it’s fair to say that some foreign businesses don’t always associate Russia with sticking by the rules. I mean, first of all, is that a fair critisim by those companies. And if it is, is that going to change?

“We believe that Russia's accession to the WTO is long overdue. We are ready for it and pleased that, following joint efforts, we will hopefully be able to complete this process in the very near future.”

Dmitry Medvedev: This is accurate criticism. I would even add: other countries do not always comply with the rules either. And in cases where they are not observed, it is usually incumbent on the courts to deal with this. And this is perhaps the most important field where we need to devote our attention.

The problem is not that someone is violating the rules. The rules are often violated even in the most highly developed states with good legal traditions. The main thing is that if violation occurs, it must still be possible to protect one’s interests. And naturally, in this regard we still have to see a certain amount of progress.

This does not mean that we do not have a judicial system. It functions, it is improving, but it is still not as developed or as smoothly running as that of many other countries. In recent years I have tried to pay particular attention to this problem by improving our legislation on our judicial system, and at the same time creating new institutions that could be used to achieve these goals.

Question: What do you think of the TPP [Trans-Pacific Partnership] arrangement? I mean it could look like as soon as you join one club, America immediately sets up another club, to which you are not invited. Do you resent this new body that’s being set up alongside the body that you’re just joining?

Dmitry Medvedev: I don’t really understand what will result from the Trans-Pacific Partnership. When it is really operational and bears fruit, then I would say that this so-called club could become interesting for us, and at that point we could think about whether it is a good or bad thing that we are not members of it. But it’s still just a project, although doubtless an interesting one. Let’s wait and see.

Question: Thank you. You’re in APEC, obviously, here you are at the conference and you’re hosting it next year. The perception is that you look very much to Europe, and certainly if you look at your trading patterns that would support that view. You trade much, much more with Europe than you do with Asia. I guess my question is: aren’t you betting on the wrong horse? Isn’t this where the action is, and there you are looking at Europe. Shouldn’t you be looking more to Asia?

Dmitry Medvedev: We try to look in all directions.

Russia is part of both Europe and Asia, so we're looking in both directions. Without a doubt Europe, the European market, and the eurozone are not living through their best times, and much remains to be done in order to stabilise the situation. Actually, this was the subject of the latest G20 summit, during which the situation in European markets was discussed. But I would draw your attention to the fact that the entire world is discussing this situation.

Today it is impossible to imagine that European problems can be resolved, for example, in isolation from global financial ones. That is why they are being discussed everywhere: in America, in Australia, in the countries of the entire Asia-Pacific region, and in Russia too. For that reason it is very important to us that Russia’s development is harmonious, and that we grow in all different directions.

“The Russian economy will be much closer to the standards of the World Trade Organisation and to those of international trade, which really does have implications for all countries and the entire WTO system.”

Our current trade balance with EU countries is $250 billion which, taken as a whole, is quite a lot. But in fact the potential of the Asia-Pacific regions and the markets in this part of the world amount to no less; we have a very high trade turnover with China, India, and many other countries.

What is perhaps unfortunate is that we do not have such a big trade turnover with the United States (incidentally, we also talked about this with President Obama today), even though it has reached $30 billion. There is potential for further growth. Therefore we are developing in all directions, and we consider that only Russia’s balanced, harmonious development can produce the desired effects. It is for that reason that we very much hope that the APEC summit, which will be held in Vladivostok in 2012, will contribute to strengthening the Russian Federation’s position in Asian markets.

In addition, our regions in the Far East are not as well developed as Russia’s central or European ones. This is also a means of developing them, a so-called driver factor which will allow us to bring new contracts and new investments there.

Question: I think you raised an interesting point: if you look at Siberia, some of the towns on the border with China, you’d expect them to be booming but they’re not. What more can be done to both increase trade generally with Asia, but also to exploit or to ride what is obviously the world’s vastest biggest economy, the fastest growing big economy in the world at the moment?

Dmitry Medvedev: We simply need to create normal conditions in which everyone can work. I believe that the inflow of investments is always a mutual process. On the one hand, it depends on your openness to these investments, and your ability to create mechanisms for their protection. On the other, it reflects the desire of the investor who makes them.

Often investments do not flow to countries that have a wonderful investment climate, but rather to those that have some problems with theirs. So while there’s no linear relationship, in general investment occurs in those places that really want it. Our task is to create such an investment climate in Russia and in this region.

Question: What about specifically the gas pipeline, gas and oil pipeline, that we’ve heard a lot about for many, many years? I was looking at some numbers and if I’m not mistaken I think that only two percent of your fossil fuel sales go to China. One would expect, given that this is a kind of a hungry beast that needs more energy, and you have that in abundance, you know it’s hard to understand what’s holding it up.

Dmitry Medvedev: I don’t know about two percent, I don’t have such statistics. But it is obvious that the Chinese market can accept a lot more energy. This is precisely what we are currently agreeing on with our Chinese partners.

For example, there are two projects regarding gas deliveries via a so-called gas pipeline to China by two possible routes: western and eastern. At the moment we continue negotiating with our Chinese partners about terms and conditions for gas supplies.

Once those talks are concluded (and the main issue is always the same, that is the price), all barriers will be removed and gas will be supplied in large volumes. I think that the potential supply of piped gas to China is absolutely comparable with the volumes that we currently supply to countries in western Europe.

Question: Another kind of sticking point seems to be the Southern Kuril Islands, what the Japanese call the Northern Territories, the four disputed islands. Is there any prospect of solving that problem which would – after all many people say it would – unlock a kind of wave of Japanese investment into Siberia and into that region?

“The APEC summit, which will be held in Vladivostok in 2012, will contribute to strengthening the Russian Federation’s position in Asian markets.”

Dmitry Medvedev: We are still waiting for Japanese investments. Today I met with the new Prime Minister of Japan, Mr Noda. We talked about investments, and I think that’s perfectly normal.

Of course, there is one problem that bears on our relationship. It is the lack of a so-called peace treaty and the territorial question. Our position is simple: it consists in not dramatising this issue, not indulging in hysterics, but continuing discussions in a calm manner. Because our positions on this topic really do diverge.

We believe that the current situation reflects the status quo and the results of the Second World War. Naturally, the Russian Federation considers this territory to be part of it, so Russian authorities are there, and the Russian president and other leaders travel there.

But we are not opposed to Japanese investments there; on the contrary, we would welcome this. We are not opposed to having Japanese experts travel there, or to exploiting the islands together. This would be absolutely normal.

In my opinion, the economy should lead and politics should follow. This is generally true because the economy determines our lives, and politics sometimes corrupts.

Question: Mr President, do you have the potential to equalize the balance of Russia's economic development, both in the east and the west? Is there the opportunity to make Russia’s eastern parts as advanced as Moscow, and to create a new, advanced eastern centre, whether it be Vladivostok or simply the Primorye Territory?

Dmitry Medvedev: If I thought otherwise, I probably would not have taken on the position of president. You know, the Far East and Siberia hold tremendous potential. Since ancient times, when it was said that Russia will grow thanks to Siberia, the situation has not changed. In fact, we are developing to a considerable extent at the expense of resources from Siberia and the Far East.

This is not always reflected in the standards of living of those who live there, but in general there is a very good foundation to ensure that life in the Far East, in eastern Siberia, is no different from life in Moscow. For that we simply need to create proper infrastructure and a normal social environment, and achieve normal social standards. It is absolutely feasible.

I was there just recently, visiting Khabarovsk. This really is a very developed city. And all those who travel there understand that, on the one hand, it is a city in the Far East and, on the other, one with strong European traditions. We even held a Russia-EU summit there and our EU partners were surprised that Europe extends so far into the Far East. So all this can be resolved. We just need to invest the funds necessary to improve the living standards, and then life in these regions will be no different from that in the capital. This is normal.

Question: Could I just follow up on that, I mean does Russia see its identity as very strongly European? I mean, after all when it was the Soviet Union, you know there were many states that were in Asia, and you still have a big chunk of land that tucks out in this direction. I mean, do you still predominantly see yourself as a European nation? 

Dmitry Medvedev: This is a question to which it is dangerous to give any kind of definite answer, because any definite answer will be construed in a certain way. On the one hand, from the perspective of its dominant culture, it is obvious that Russia is a European country. A country that evolved as part of Europe. And despite the fact that it stretches from Kaliningrad to the Far East, it still remains a country with European traditions.

On the other hand, we are also part of the Asia-Pacific region. Moreover, we are establishing an integration association with our partners, namely with Kazakhstan and Belarus. This integration association, which is now called the Customs Union, in the future will be called the Eurasian Community. And this is a direct reference to Asia. Therefore of course we see ourselves as part of both cultures. And this is absolutely normal.

Question: Respected President, I come from Beijing, China, and I think that, regarding the territory issues with Japan, you said the economy first and politics second; I think this is a very good idea, economics is easy to formulate, and sometimes politics will make things even worse. China may have some conflicts with another country while Russia could become the mediator, to reconcile the conflicts between China and the other country.

Dmitry Medvedev: Is that a question or an observation?

Response: Will you be prepared to mediate in some future unknown crisis?

Dmitry Medvedev: All we do is mediate; everywhere I am I mediate. It takes up so much of my time that sometimes I do not have enough time to engage with domestic issues. I am a professional mediator.

Question: Respected President of Russia, you have a very good character and we support you very much. I am from the Far East, my name is Chang Chi-Pei. I have two questions for you this afternoon: everybody is concerned about next year’s election in Russia. Are you going to participate in the election? And the second question is regarding Chinese and Russian companies, who have discussed shipping natural gas and oil to China for over ten years. Without your consent this agreement will not be effective and we are interested to know, when are you going to sign this agreement? Thank you.

Dmitry Medvedev: About the election, I had a feeling that we had talked about our plans, that I had talked about mine. But if it must be repeated then: yes, I will run in the elections.

The electoral campaign for parliamentary elections, that is elections to the State Duma, is currently underway. So even my stay here is limited by time constraints. On December 4, the campaign will end and yours truly will head the list of one of the parties participating in the State Duma elections, United Russia.

If all goes well, if the United Russia party performs successfully, and if our candidate wins the election as President, I am planning to work in the government. Actually, I may have said something unexpected that no one knew about. So please consider this a new statement that I made here in Honolulu.

With regard to gas and oil supplies, we are already quite actively delivering oil to China. We have good ties and contracts designed for the long term.

Speaking of gas supplies, I just answered that question: we are concluding our negotiations. Gazprom chairman of the board, Mr Miller, is here. But, as one of our literary figures said: ”An agreement is the result of non-opposition on both sides.“ We have a position, as do our Chinese friends. We have to make these positions coincide as much as possible.

Only one open question remains: the price. All other things have been clarified and defined. And we are very close to a final agreement on the price. So I think that in the very near future, in the short term, we will agree and begin implementing this major project. Every time we meet with Chinese leaders we talk about this. And last time I met with President Hu Jintao, we talked about this as well.

Question: Can I just end with a couple of questions: first of all, I do need to ask you about the European crisis. I mean, how grave do you think this is, how will it play out, is this the end of the euro, is it the end of the eurozone, or are we being overly dramatic?

Dmitry Medvedev: I would remind you that my name is Medvedev, not Merkel or Sarkozy; they are probably better able to answer this question than I am. On the other hand, thank God that I am not Merkel or Sarkozy as they are in such a difficult position right now.

Of course, the situation is a difficult one. At the same time, I have the following feeling: if the euro had not existed as a global reserve currency, the years 2008 and 2009 would have been more difficult for us. Incidentally, it would have also been more difficult for the US dollar. Therefore, the euro’s presence as a global reserve currency still helps the functioning of the entire financial system. This is the first point.

Second. The euro is used by very different countries. And this, of course, is a design flaw because the currency was designed to serve countries whose economies are very different from one another. But now there is nothing that can be done about this. Now all EU member states must overcome this situation together.

I think that if the so-called eurozone 2.0 is launched, it could eventually cause irreparable damage to the idea of the euro itself. Because if the number of eurozone countries decreases, it is not a given that this will make the euro a more stable currency. I think that the policy EU leaders have agreed on, notwithstanding enormous difficulties, including very difficult decisions to support the Greek economy, is still the correct way to solve this problem. Let’s wait and see.

Naturally, we are great supporters of the euro and of the economies associated with the euro because we have very large foreign reserves, and nearly half of the foreign exchange reserves of the Russian Federation are in euros. Therefore, the People’s Republic of China is closely observing the euro’s fate, as are a number of other countries as well.

Question: You will be hosting APEC summit next year in Vladivostok and it becomes a Russian-led event. What is your agenda for next year: how will you carry this project forward?

Dmitry Medvedev: We will not hide the fact that we are proud to see Russia host the APEC forum in 2012. We are preparing intensely, and have a significant number of major projects that we are implementing in Vladivostok. For this reason the authorities from Primorye Territory are here today, in order to learn from our friends from the United States about how to host this forum well.

But this is the organisational aspect, though a very important one. As to the agenda, in my opinion it will be synthetic. It will refer back to what we are working on today, because I am sure that, unfortunately, some of the problems of the global economy will remain with us. Some of the problems facing the Asia-Pacific region will also remain. And we have to solve them together, whether they concern trade, energy cooperation, logistics opportunities, or food security.

Incidentally, all these topics will undoubtedly be discussed, as well as energy issues, which are very natural in Russia. But we

believe that the APEC forum which will take place in Vladivostok will be perfectly suited to address these topics in comprehensive fashion. I cordially invite all those present here in Honolulu to the APEC forum, which will be held in our country, in Vladivostok. I am sure that by that time we will have resolved a whole range of problems.

On the other hand, we still have a huge number of outstanding issues that need to be discussed during the business part of the APEC forum in Vladivostok. I think you will like it there. I cannot promise the same weather as in Hawaii, but today I promised President Obama that conditions will be comparable, because it is a good season for Primorye Territory. So come, and we'll be happy to see you all.