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Taking part in the meeting were delegates to the Civil 20 summit, taking place in Moscow on June 13–14, from Russia, Mexico, and Australia, the three countries that currently make up the G20’s official governing group, which comprises the current, previous, and upcoming presiding countries. Representatives of Turkey, which will follow Australia as the G20 presiding country, also took part in the meeting.

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President of Russia Vladimir Putin: Good afternoon ladies and gentlemen.

It is a great pleasure to welcome you to Russia, to Moscow, and to have this opportunity to talk with you about the priorities as Russia sees them for the upcoming G20 summit.

As you know, it was Russia’s initiative to meet with civil society representatives. This is the first time such an event is taking place within the G20. I note in this respect that all matters of this sort are decided by consensus. We consulted with our colleagues, with the sherpas, and with the G20 heads of state and government. There was overall support for the idea. I will be so bold as to take it upon myself to then present your views to the rest of our colleagues at the G20 summit in St Petersburg in September.

As you know, one of the G20’s basic aims, and one of Russia’s aims during our G20 presidency this year, is to find ways of ensuring high economic growth rates and using growth to resolve social issues.

Of course, no matter how we formulate the main aims and objectives of groups and forums such as this, it comes down above all to preserving jobs, resolving economic issues, and tackling the various social issues that are always on the agenda at such meetings. 

At the same time, no matter how well prepared the experts who plan and work on these sorts of events (some of them are here today), officials and organisations dealing with official business always face some professional limits, which at times make it hard for them to see beyond the horizons of their own professional interests. This is why I think that this kind of work with civil society organisations and their representatives is needed too, and I hope it will become a regular feature at future events of this kind.

I will leave my opening remarks at this and propose that we now start the discussion and exchange of views. Please, go ahead.

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President of Russia Vladimir Putin: One of the most important topics raised here is support for mothers and children.

First, I am pleased to say that in Russia we have implemented a very consistent policy supporting mothers and children over the past few years. It is particularly gratifying to see it producing positive results. I am not going to list all of this policy’s elements, but in Russia demographic indicators (birth rates) are the best they have been for the past 19 to 20 years. Unfortunately, we have not been able to resolve all the problems in this area, a great deal still remain. But what I mentioned definitely represents a positive trend, as do significant reductions in infant and maternal mortality.

Our colleagues in the G20 know about this; we have repeatedly discussed it and I have very good personal relations with some of them. We discuss this during workshops and in person, our experience is being studied, and we try to learn from our colleagues’ positive experiences. We know that demographic problems are very acute in some countries, particularly those with developed economies, both in Europe, and in other parts of the world. This is an extremely important topic that we work on together.

As for transferring money abroad, for law enforcement and other fields, those associated with supporting people who are in difficult situations because they can’t remain in their own countries. Of course, we have to think about this and to ensure that money can flow freely. Naturally, all this takes place within certain limits (something we must not forget) associated with the fight against organised crime and illegal cross-border financial transactions. So this is an issue that requires expert review and responsible decision-making.

Naturally, we feel our responsibility with respect to food security. Why? First of all, because Russia has become one of the world’s biggest grain exporters, along with the United States, Canada and Australia. We currently hold the 2^nd or 3^rd place measured by the volume of grain exports to international markets. And naturally, the question of whether or not we behave responsibly on this issue affects conditions on the international market, in Europe, and in several countries in particular.

Unfortunately, a couple of years ago we had to limit or even stop exports for a while, due to the difficult situation resulting from a two-year drought in Russia and the well-known crisis in the global economy. But I hope that this is something absolutely unusual, and we shall strive to fulfil all our contractual obligations.

And the second aspect, which makes us take an extremely responsible attitude to these problems, is the fact that Russia is one of the richest countries in the world measured in terms of arable land. We are currently witnessing a dramatic increase in our partners’ interest in this kind of activity, in work in agriculture. And we see our foreign partners’ desire to work in the agricultural sector of the Russian economy.

In this context, and in connection with a very sharp debate taking place in the framework of the World Trade Organisation, I consider it extremely important that the Civil 20, and civil society associations and organisations generally, participate in both the work of the G20 and the G8. As you know, the disagreement between developed and developing economies is long-standing and heated.

I think it is extremely important for all participants of this debate, politicians and professionals, to hear society’s views, and not only in developing countries, but also in developed ones. Because for developed countries to adopt quite critical and difficult decisions to open their markets is a complex and double-edged process. Some say it is better for us to open our markets to developing countries; the more they are open, really open, then the more everyone will benefit in the long-run. Some people think differently or say something like what I just said, but in actual fact do something completely different. But in any case, it would be extremely important to hear the views of civil society organisations and experts in this field.

Employment is a very important issue that will certainly be the focus of discussion at the St Petersburg summit this autumn. I am sure you know that Russia (you have certainly discussed it and the Russian colleagues have talked about it) has set an ambitious goal which may appear utterly unrealistic at first glance: to create 25 million new jobs. Strictly speaking, this is not even a government initiative; it originated with the business community, and received the support of the Russian leadership. I believe that this task is realistic even though it is a big challenge. In addition to creating completely new jobs from scratch, we are talking here about transforming the existing positions into highly productive modern jobs.

If we act aggressively and do not just go through the motions, I believe that we can succeed in this area. Russia’s top priority is to modernise the economy and put it on the modern high-tech track. If we manage that, jobs will also be modernised. This has vital importance for the economies of all G20 countries.

In this regard, our Turkish colleague’s remark on the need to develop infrastructure is highly relevant. First, we are trying to do just that in our country. It is a very important and challenging task for us, bearing in mind our vast territory (let me remind you that Russia is the biggest country in the world in terms of territory), as well as the long-standing infrastructure shortage in some regions.

In relations between states, we must strive to guarantee the movement of goods and labour. Incidentally, I want to draw your attention to the fact that on Turkey’s initiative within another organisation, the Organisation of the Black Sea Economic Cooperation, we are considering various projects aimed at expanding infrastructure capacity. I hope that the debate on this subject in the G20 will also have a positive effect and motivate us to work within the framework of regional organisations.

Environmental standards is one of the most pressing issues of our time that is always raised, regardless of the venue and format of our meetings. I fully agree that we must continue our efforts in this area. This not only pertains to the Kyoto process, although it has been at the centre of attention in recent years, and is considered to be the key to tackling various problems. However, it is probably not the only key as there are many other options and there is much controversy on the issue. I will not go into detail but I want to stress that the participation of non-governmental organisations is exceptionally important here for several reasons.

First of all, I would like to go back to regional cooperation. Many of the G20 countries are located far from each other, but some of them are neighbours. In this context, environmental cross-border issues are extremely important. If we are able to adopt even some very general standards, it will help us address many interstate issues related to compliance with environmental regulations. I must say that the G20 states usually succeed in reaching agreement and we are aware of our partners’ very responsible attitude to this matter.

For example, in recent years we have established a very positive, constructive dialogue with our Chinese partners. I must say that the Chinese leadership has responded very promptly and in a spirit of partnership to any problems that have arisen, and problems arise all the time, that is only natural between two countries that share thousands of kilometres of common borders. It is important to establish a dialogue and have the tools and principles in place.

At the same time I want to go back to the point I picked up from our colleague earlier regarding food security. She talked about the need to fight hunger, and said that people are starving in many countries around the globe and millions of people, especially children, go to bed hungry. And when the world leaders in general, and the G20 leaders in particular, think about ways to tackle these problems, some environmental issues automatically recede into the background. The question asked of environmental movements, tacitly or implicitly, is what would you prefer, shall we feed the people or work on forest conservation in this particular case or in a particular region? Shall we build new businesses and create new jobs or go hungry?

Finding solutions to hunger, creating new jobs and preserving the environment are the key challenges of our time. That is one of the key areas of effort. I very much hope that the awareness of these seemingly contradictory issues will lead to greater accountability of civil society, which should understand the full range of problems faced by the state, and will encourage the political decision-makers to adopt a more responsible approach to tackling them.

Naturally, issues related to energy efficiency, especially for offshore operations, are no less important. I must say that the Russian Federation adheres to the most stringent standards for such operations. If you look at what our companies are doing in the Caspian Sea, for example, you will certainly be pleased. There virtually not a single kilogramme of rock extracted during drilling is thrown back into the sea. Instead it’s all packaged, transported and stored in pre-arranged locations.

And in this sense, I am pleased to note that when working offshore, our companies and partners act in accordance with the very highest standards. Of course, first of all this must continue and, secondly, it must be improved as the methods themselves improve. And issues related to ensuring environmental security must be developed in parallel, or at least they must be raised; of course we need to ensure that they don’t get put on the back burner.

With regards to the fight against corruption, this is a very important issue. You know that Russia consistently makes international commitments and joins international treaties. I agree that we need to promote the well-known UN Convention Against Corruption you mentioned within the framework of the G20 and, crucially, to ensure its effective enforcement. In this sense, naturally the role and significance of non-governmental organisations are extremely important, because it is possible to put anything at all on paper – I know this very well – and report that everything has been accepted and implemented. How does all this work in practice? In this respect, naturally civil society and its representative organisations play a large and significant role.

As for financial education, this is also extremely important. You are right on all accounts. I must say that I have the impression that you are a member of the Government of the Russian Federation. We say pretty much the same things during our operational meetings.

At first glance, everything seems simple. But in fact it is difficult to achieve practical results because, as you rightly point out, we need teachers to be ready for this, we need it to be included in the school curriculum, and we need the professional teaching community to agree that this is a priority. But then you have to address the issue of students’ overall workload, decide what to remove from the curriculum, and whether to make this subject a compulsory one or to make it optional. But I definitely agree with you that this must be done.

The most important thing is that we are honest with people, and give them the opportunity to choose one of the vast numbers of instruments and products available on the financial market, making them more self-reliant. As such society as a whole will become much more modern and viable. So this is a very important thing.

My colleague to my right said that you have all been up since eight this morning, and have only been able to agree on a general declaration. I want to draw your attention to how difficult it will be for state leaders to work in order to find the essence of a consensus. I hope you will not get mad at us if something you recommend is not adopted.

I read what the Civil 20 is proposing with regards to ensuring confident, stable, balanced and inclusive growth. You know, we’re working on exactly the same thing ourselves. I will allow myself to make some specific points (you probably know them well, but nonetheless). Those are the need to conduct a macroeconomic policy designed to create jobs and stimulate aggregate demand (you know, it’s as if we were at an operational meeting here, and this makes me very happy), to implement fiscal and monetary policy (we discussed this just yesterday at our meeting), and to introduce a progressive tax scale.

By the way, I would like to ask those of you who worked on this to clarify what you mean by progressive taxation scale? Are you referring to tax on personal income?

Co-Chair of G8 and G20 NGOs Working Group Marina Larionova: That’s right. I know that there are risks associated with it in our country, in Russia. However, many countries still recommend and use progressive tax rates.

Vladimir Putin: Whenever I have talked with the leaders of countries that use a progressive tax, almost all of them said: “We are so jealous that you were able to put a flat tax rate for individuals into practice.” Why? Because experts believe that it encourages people to disclose information about their incomes and, ultimately, contributes to economic growth, which, in turn, helps address unemployment and food security issues, and everything else that follows.

We have been discussing this for a long time, primarily with the left-wing parties, who believe that a differentiated scale is more equitable. But when we talk with representatives of liberal parties, they say that in fact the measures which give the maximum economic benefit are socially just. I do not want to start a debate on this issue here, but I just want to say that this is certainly a valid point for discussion. We may introduce some elements of progressive tax rates at some time in the future. We never said that the flat rate is here to stay forever. This is also possible.

But if you look at the fiscal side of things (I want to tell you about this though you may know it already), when we had the progressive tax rate, some taxpayers did not pay taxes and the federal budget lost revenues as a result, whereas from the point when we introduced the 13% flat tax rate on personal income, budget revenues rose dramatically, and I want to emphasise this. There was a real result. And social spending depends of budget revenues. So that is what we saw. Thank you very much for your suggestions, we will bear them in mind. This is not a brush off, but I want you to understand our position. We are aware of all the pros and cons that I have just mentioned, and we are thinking about it.

The next item is combating tax evasion. From the point of view of personal income tax, the flat rate is the best way to fight tax evasion.

This item also includes combating tax evasion through offshore zones. It is necessary to take effective steps to relieve economies of offshore activity, and the Russian economy in particular. But at the same time I draw your attention to the fact that Russia is not the leader in creating offshore zones, though we may be one of the leaders in using them. The leaders include the Virgin Islands, other island states, as well as our colleagues and friends from the UK. The British Prime Minister is also aware of the need to fight this and to gradually abandon this practice, but it is part of their economy. Therefore, we realise that it is not easy for them to take such drastic steps, but it is clear that it is necessary to move in this direction.

Providing access to food, water, healthcare and so on – these are all things we have in mind. There are other very important essential issues which we will definitely not leave out.

Yes, you talked about the fight against infectious diseases. I want to thank you for your assessment of Russia’s contribution to this work. We have been working on this ever since 2005–2006, and we really are allocating the necessary resources. But the point is not that we are providing resources, rather that we are trying to act quite actively on this issue in Russia and in our neighbouring, partner countries. And I must say not without success, even though some problems remain. This is especially linked to preventive measures. I should note that in the Soviet Union such work was conducted better than it is today in Russia. We have to admit this and not just go back to previous standards, but to surpass them. We will also work actively in this direction both within Russia and with our partners.

Now with regards to the activities of NGOs. Our colleague from Australia said that quite a lot of resources are being allocated, and some funds are being sent abroad. And you said (I just noted it): “We can’t engage in political activities in other countries.” Well, in Russia you can. Only those organisations that receive money to engage in domestic political activity must register. That’s it; their activity is not prohibited. I want to emphasise this and for you all to know it.

However, I agree with our colleagues, including my adviser, about certain problems. We need to examine how things are enforced in practice, and reflect on how to improve the legislation, so that it doesn’t disturb anyone’s work, so that the government’s suspicions are not aroused by specific organisations, and so that these organisations are not disturbed.

As you know, this practice occurs not only in Russia, but also in other G20 countries, including the United States. Such laws have existed there since the middle of the twentieth century. But in fact our legislation is much more liberal, because in the United States, any public organisation receiving money from abroad and working in the environment, with mothers and children, in any field, must register as a foreign agent. In our country this concerns only those organisations engaged in domestic politics.

However, I agree with [Russian Presidential Adviser] Mr [Mikhail] Fedotov that the practice of the law must not go beyond the scope of decisions made, should be unencumbered, and should not interfere with anyone’s work. We’ll certainly reflect on this, including with civil society.

With regards to organisations active in healthcare, the environment, and local projects, there are absolutely no limitations. I want you to know this and to work in the Russian Federation as actively as you can, providing assistance to your partners here. 

And finally, to conclude I would like to say the following. First of all, I would draw your attention to the fact that our meeting today is not simply preparations by the Civil 20 for the meeting of state leaders in St Petersburg in September. On the contrary, it is a phase in your work. And I see that together you have done a very great deal, been involved in this work for a long time now, and directly influenced the course of work conducted by [G20] sherpas and experts. I consider this very, very important and extremely useful. Why? Because when state leaders meet, discuss things among themselves at the expert level, and then try to make decisions, naturally they try to carry them out one way or another, but they are not binding decisions. They remain recommendations, not binding international legal instruments. And when NGOs get involved in elaborating them, this significantly increases the legitimacy and moral force of such decisions. At that point decisions that are not international instruments whose application is mandatory are able to generate a completely different effect, and it is very difficult to not implement them at home.

And as I have already said and would like to repeat once again, a colleague here observed that the authorities view civil society representatives as crazy people who simply run around in the streets. It seems to me that our joint work will, on the one hand, increase the responsibility of civil society. Because when people are involved in problems and come to understand their multifaceted complexity, and when in the course of your own discussions you arrive at some kind of consensus decisions, then this increases civil society’s responsibility. On the other hand, this ensures that people who make decisions take your opinions into account. I repeat that all this combined makes working together more legitimate, more efficient, and more conducive to reaching a final agreement.

I want to thank you and assure you that we will listen to your recommendations very carefully. Thank you.