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Business, big and small (interview to TASS)

March 12, 2020

The twelfth part of Vladimir Putin's interview to TASS News Agency has been published.

The 20 Questions with Vladimir Putin project is an interview with the President of Russia on the most topical subjects of social and political life in Russia and the world. Total recording time is 3.5 hours.

Andrei Vandenko: Business could extend a helping hand.

Vladimir Putin: What do you mean?

Andrei Vandenko: If it is more actively involved in the country’s affairs, if there is investment, the economy will begin to grow.

Vladimir Putin: I can crack down on business right away and tell them they act irresponsibly. This is not the case.

Russian business in general has changed a great deal over the past ten years at least. The government has to create conditions for investment – this is for sure. To create better conditions involving controlling inflation.

We have been doing certain things in this respect. In the World Bank’s Doing Business ranking, we are in the 28th place, I think, we have moved up by one order more, massively more. This indicates that the government has been stepping up its efforts in this area, which are yielding positive results.

And the amount of investment is growing. In dollar terms, our investment in the beginning of the 2000s totalled around one billion dollars. Then there were tens of billions. Now direct investment exceeds $540 billion.

Andrei Vandenko: You know, it looks like you see businessmen as swindlers by definition.

Vladimir Putin: Well, you know…

Andrei Vandenko: There are some…

Vladimir Putin: There are certain grounds for this, you see. I’m saying this with a particular emphasis. What grounds are there? Firstly, the so-called small business throughout the 2000s was associated with trade. Almost entirely.

Andrei Vandenko: Not only in Russia.

Vladimir Putin: No, I disagree. In many so-called developed market economies, small business plays a very big role, there 20..

Andrei Vandenko: In the services sector, right?

Vladimir Putin: Not only there. In manufacturing, too. We have been trying to achieve what is already a reality in developed market economies. Namely: large companies have dozens or even hundreds of small businesses working close to them and serving the interests of those large companies.

What are we doing now? In fact, we are forcing our large companies, in particular those that are partially state-owned, to conclude contracts with small businesses. We are talking about trillions here already. And it really worked. This rally worked.

The structure of small businesses has begun to change. Now it’s no longer just retail trade like kiosks or pavilions, it’s not only about buying low and selling high. Now there are research business ventures, too. And small businesses in manufacturing. High-tech small businesses. They are rather effective. The export of these services and goods is growing, too. This is what makes me think we are moving in the right direction in principle, although progress is still, unfortunately, too slow.

Andrei Vandenko: Did I understand correctly, that ‘retailer’ is equal to ‘swindler’?

Vladimir Putin: In people’s minds, that’s what we say.

Andrei Vandenko: But I am talking about you.

Vladimir Putin: I am part of the same people, you know.

Andrei Vandenko: I see.

Vladimir Putin: So, honestly speaking, I mean, to be really honest. We all think so. But I…

Andrei Vandenko: Have you ever been swindled, cheated?

Vladimir Putin: Me?

Andrei Vandenko: You.

Vladimir Putin: Well, of course. You yourself have surely been swindled and cheated, too.

Andrei Vandenko: And what happened to those who did it?

Vladimir Putin: Nothing. You know, there was not much you could do during Soviet times. You got swindled, cheated and just lived with it.

Andrei Vandenko: But what if you caught them on the spot?

Vladimir Putin: Well, you know, first of all, it's not like I got cheated every day. But if I happened to notice it, there never was anything too serious, and I preferred not to lock horns. Making a scene is not a good idea, just isn't worth it.

Andrei Vandenko: Leaving small business aside, although it is obviously going through hard times, too. Now, there is this ”regulatory guillotine“…

Vladimir Putin: Yes. Starting from January 1, 2021.

Andrei Vandenko: How much time is left? Still a whole year. How many will survive till then and how many won’t?

Vladimir Putin: You see, Andrei, hitting the target is what it’s all about. It is a very tricky thing. What is a ”regulatory guillotine“? Take the very same retail trade, for instance. Especially the food retail sector or some other sectors that concern people’s lives. You could cancel everything to the point where hospitals would be working round the clock to accommodate patients with food poisonings. We should be very cautious about it.

The same applies to medicines and so on and so forth. Take fire safety. I know that the fire services are criticized a lot, but there are safety matters involved. Whenever a major tragedy occurs, we instantly begin to tighten the screws everywhere. In the meantime, it’s not about tightening or loosening rules – what we need is optimal fire safety requirements. The same goes for everything else. Therefore, cancelling everything at once is very dangerous. But leaving everything unchanged is no longer possible, either. That is why, during these 18 months and during this year, the Government will be working hard on this issue.

Andrei Vandenko: What about big business, investment? Foreign investment? Who will agree to take risks at a time when memories are still fresh – it all began with Khodorkovsky, then there was Magnitsky, and now we have Calvey.

Vladimir Putin: Khodorkovsky is a fraudster, and their company was involved not just in fraudulent transactions, but in murders. This is the real problem. They were convicted in accordance with Russian law. Khodorkovsky’s personal involvement in contract murders was not proven, but the killings did take place. They were proven. Including killings by their security service. Do you think that staffers of the corporate security service were killing people at their own initiative, of their own volition? I don’t think so. I don’t think it works that way. However, if it’s not proven, then it’s not proven. But his other illegal activities were proven, hence his prison sentence.

As for Calvey, the law enforcement agencies and the court are looking into this matter. Law enforcement agencies in the first place.

Andrei Vandenko: Well, that is a classic response.

Vladimir Putin: There can be no other response, because I cannot say if he is guilty or not until there is a well-founded…

Andrei Vandenko: Well, the West is watching, why get involved…

Vladimir Putin: Good for them. We should focus on what we are doing ourselves, paying no attention to the West or the East. We are paddling our own canoe. And we need to proceed from our country’s legislation and the supremacy of Russian law.

Andrei Vandenko: How much money has flowed out of the country over this period of time?

Vladimir Putin: Not very much.

Andrei Vandenko: Not very much?

Vladimir Putin: If we bear in mind how much money has flowed into the country. It can be calculated. The outflow of capital does exist, it is quite evident, but the picture varies from year to year. Generally speaking, it is a natural process – capital inflow and outflow. The more stable our rules of the game are, the more reliable the protection of investment and property is, the more comfortable people who invest will feel.

March 12, 2020