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Excerpts from transcript of closing meeting of St Petersburg International Economic Forum

Editor-In-Chief of Dow Jones and Managing Editor of Wall Street Journal Robert Thomson (re-translated): Russia’s growth rate is high in comparison with Western Europe and the United States, but if we compare it to China and India, it is much more modest, to put it mildly. Therefore, President Medvedev, what does the existing growth rate in Russia mean, and will the current economic crisis in Europe affect the situation in Russia?

President of Russia Dmitry Medvedev: Let's start with Europe, the EU and the euro. We wish our European partners to quickly overcome this difficult period and our reasons for that are very simple: the Russian Federation is a major partner of the EU and the EU is our largest trading partner, we have $300 billion a year in trade, which is a huge amount. Plus nearly half of our foreign currency reserves are in euros. Therefore, a great deal in our country depends on the situation in the European Union.

The euro problem, if we don’t dig too deep – and as far as I know nobody has analysed in it in depth so far, the problem is right on the surface: never in the history of mankind has there been a situation when a single strong currency was used by a number of different countries. Some of these countries have strong economies while others, unfortunately have weaker ones, and this contradiction will always cause problems. However, I believe these problems can be resolved, especially since the trend is that the world is moving towards a global currency, which President Nazarbayev has just talked about in his captivating speech.

We want to overcome these problems as quickly as possible. You talked about responsible and voluntary decisions. It will be good if it happens. For some reason this brings to mind the voluntary surrender of animals to collective farms, which took place in our country in the late 1920s and early 1930s. It was not very successful. I hope that all these voluntary decisions to be taken in Greece will meet with greater success and the EU will contribute to it.

Now for the growth rate. You asked why it is different from the growth rates in China and some other countries. The answer is also fairly simple: because Russia is not China, and that is obvious. China has been developing along certain lines for the past 25 to 30 years, and we are just starting out on that course. This is the first point.

Second, there are some purely Chinese factors and purely Russian factors. I will not analyse the factors unique to the China in the absence of President Hu Jintao, who visited our forum yesterday, as that would not be polite.

But there are some purely Russian factors, which I spoke about quite openly yesterday from this podium, perhaps too openly for such a forum because the standard practice at forums is to talk about how well the economy is doing and why we are inviting investors. However, I believe that the purpose of such discussions is not to describe only positive developments, which we certainly have as well, but also to talk about some of our problems. If we tackle these challenges successfully, then perhaps the Russian economy’s growth rate will be comparable to the growth in China or Brazil, or other countries with rapidly evolving markets.

We have our own problems and we must address them. That is what we are trying to do, in any case. I think 4 or 4.5% growth we anticipate this year is not a bad result. But there is still a lot of work to do and we are determined to solve these problems. 

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Robert Thomson: President Medvedev, before your closing address, I would like to ask you one more question. This is St Petersburg, a beautiful city, and we are a small group of friends gathered in this hall…

Are you going to stand for president next year? I think this is an excellent moment to share your thoughts on the matter.

Dmitry Medvedev: I can’t say your question has impressed me with its originality.

You know, I had this feeling for the past 15 minutes that this is not just a group of friends who came to talk about economic development, but also a geography lesson at a school for children with behaviour problems, judging from our latest discussion and the comparisons made by some of my colleagues just now.

I have stated my position on this subject more than once. When I believe the moment is right to say directly whether I will or will not run, I will do so. But this forum is not the best venue for that, and neither is a news conference, although when I spoke about it at the recent new conference journalists were disappointed, they demanded, it seemed, that I do it straight away because it would have been a very dramatic and striking gesture. However, decisions of this kind, and I have spoken about this as well, are usually thought out and made in a very special format. I will certainly let you know my decision. You can rest assured that I will not be able to escape this happy fate and I will not be able to avoid announcing my decision to the Russian people and to all the interested people present here.

You will not have long to wait but every story should have an element of suspense, otherwise life would be boring, so let’s enjoy the suspense a little longer. 

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Dmitry Medvedev: Friends, President of Kazakhstan, President of Finland, Prime Minister of Spain,

I am very pleased that we have gathered here to discuss economic development, our nations’ lives, our recent achievements and our plans for the future. Yesterday, I talked for half an hour or so about steps that I believe should be taken in this country. I hope those of you who heard my address found it interesting because I think forums such as this are an excellent opportunity to discuss the most pressing and acute problems of our countries’ development.

I have just heard with great interest the speeches of some of my colleagues and I want to say that they were all fascinating and evoked certain emotions that I would like to share with you.

Prime Minister of Spain, Mr Zapatero, talked about the onset of the economic crisis, the events that led up to it and the role that emerging economies played at the time, which is absolutely fair, as well as the lessons of the crisis. Every crisis has its own lessons to teach us. Yesterday evening, when we were discussing the state of our economies and the EU economy, I told the Prime Minister [of Spain], that when we met in late 2008 in the United States, when the previous administration was in office, I had a feeling that we cannot agree on anything. My feeling was that for whatever reasons, possibly because of the attitude of some of my colleagues who had gathered at the time, we would get together, sit around a big table and go our own way, and as a result the crisis would last a very long time if not forever, and the rules regulating international financial relations would not change at all.

Today I am pleased to say that I had been mistaken. Whatever one might think about the G20 and its efforts, I would say that in the end we managed to agree on a large number of vital issues. But this does not mean that we have finished the job. Of course, we must continue our efforts. President of Finland Tarja Halonen said that it would be wise to include such issues on the agenda of the United Nations, and not limit their discussion to G20 and G8 summits. I absolutely agree with that because even the G20 states, which together constitute 85% of the world’s GDP, cannot claim exclusivity. They should consider the opinions of all nations, make general recommendations and subsequently submit them to the United Nations for discussion.

We must continue our efforts. There are still many unresolved problems. What are they? We all know that we were able to reallocate some of the International Monetary Fund and World Bank quotas toward the rapidly growing economies, but the process has not been completed and we must take it to its conclusion.

The financial regulation rules still remain very archaic, as President Nazarbayev explained very clearly.

Auditing and financial reporting remain a clean slate, and little has been done so far. This means that these problems can arise again, given the procyclical nature of crises, no matter what we think about the theory of cycles and other economic theories – Prime Minister Zapatero and I talked about this yesterday and he believes that political efforts must always come first and his position is very firm on this point. Hence, we must work hard at all venues, the G20 and other international forums, of which there are many, including the SCO and BRICS, and the European Union, naturally; we must meet and work at such forums.

President Halonen spoke about a very acute problem that has great importance for all of us: unemployment. At one point the crisis engendered such a hike in unemployment that, frankly, everyone felt very scared. I remember the atmosphere at the G20 summit at that time. Nevertheless, the countries that made efforts to address this issue had some success. I am confident that the countries where this problem persists, including Spain, where the situation is very acute, will nevertheless achieve their goals because what could be more important for a state than to create new jobs? This is an area in which we must join efforts, concentrate our financial resources and work to resolve this problem for millions of people not only in our own countries, but also in countries that are organically linked with us through a huge number of economic ties.

President of Kazakhstan Nursultan Nazarbayev said that we are patching up the cracks of the crisis, flooding liquidity back. That is absolutely true, and there are both certain advantages and dangers in that. In some ways we have glued our economies back together but will the joints hold up? That is the question. And clearly economic growth cannot be achieved through financial injections alone.

Recovery growth has started in the global economy as a whole. We can see it in all our countries but it is still very timid. I recall our heated debate in this hall two years ago about what this recovery be like and which letter of the alphabet it will look like. Remember? Will it be a V-shaped kind of recovery or an L-shaped one? Most pessimists insisted it will eventually turn into a W, and so we should anticipate another round of the crisis.

Today, we understand the way it works. Perhaps the situation is slightly more optimistic than we had thought but there are new threats, which our colleagues discussed for a long time. I mean threats to southern Europe, or to certain countries, to be precise. I am confident that we will cope with that because there are integration mechanisms and interdependence of the economies.

Yesterday Prime Minister Zapatero and I discussed what would have been the fate of the global economy if a crisis like the crisis of 2008 had happened 50 or 100 years ago. It's terrifying to even imagine that, because the global economy had never experienced such a crisis. Preconditions for it did not exist, that much is true, but at the same time our European colleagues have already achieved success because we have always been striving for integration, given that the economy is global and globalism has certain advantage as well as dangers. Kazakhstan, Belarus and Russia have been trying to tackle our challenges and create our own integration association, and I am sure that we too will achieve success and create a common economic space. Therefore, we achieve relatively quick results due to integration, and that helps us to overcome the crisis. That did not happen 50 or 100 years ago, and this is an advantage of our modern life, however much we criticise it.

Colleagues, I would like to thank all of you for coming to St Petersburg, including the business leaders who have come to love St Petersburg, who come here regularly, sign agreements on the forum’s sidelines, just talk and listen to global leaders. That is very important because if there is no communication between business leaders it means that we have failed in a big way and have huge problems. It is very gratifying that even in 2009, when everyone’s spirits were pretty low, a large number of CEOs of the biggest companies in the world gathered here despite everything.

I would like to sincerely thank my colleagues, heads of state and government, for their effective and active participation. Yesterday, President of China Hu Jintao told us some fascinating facts about Chinese economy’s development. I met with the President of Sri Lanka and the Prime Minister of Belgium. Today, my colleagues from Finland, Spain and Kazakhstan are here. This means, first, that we want to talk with each other, we want to debate various issues. Second, we are aware of our interdependency and this is probably the most important thing. We are not closed; on the contrary, we talk about our problems openly. That is why I am confident that we will succeed. Many thanks again for attending the forum.

One last remark. Yesterday, when I arrived here, I was pleasantly surprised by the weather in St Petersburg. Our weather is not always the best but it was sunny and warm. So last night we remarked how good the weather was, and my friend, the Prime Minister of Spain, said: ”I am going for a run tomorrow morning.“ When we met in the morning, I asked, ”Did you have your run?“ He said, ”No, it started to rain and I don’t run in weather like this.“ Why am I telling you about this? Our economy is as changeable as the weather in St Petersburg: sometimes it’s sunny, and sometimes it rains. But whatever the weather we must work, and as we get to work we know that the sun will come out sooner or later and our countries will experience steady growth and progress, and that is what we work for.

Thank you for your attention.