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President of Russia Dmitry Medvedev: Good afternoon, I do not know whether you are tired after your prolonged stay in Russia, or if it was interesting and useful nonetheless. I am not going to make any opening remarks, because I hope you were able to access on the Internet the main content of my article on how difficult our life now is. I also think that my yesterday's speech [in Yaroslavl at the Modern State and Global Security International Conference] was quite informative.

So I will not make an opening address. I will only say that I am very glad to see you all one year on. I hope that, despite the crisis, this year was a good one for you. I think that this format, one we thought up some time ago and that is already fully established, is both good and interesting. And you can now tell me yourselves what you think is good and what should be improved.

I was glad when Mr Gromov [Deputy Chief of Staff of Russia’s Presidential Executive Office] told me that you were in Yakutia, or at least that many of those present were. This is actually very important, because when you go to such far-flung places you begin to understand what Russia is, no matter how pretentious that sounds. So I also wanted to say thank you for this, for visiting this part of Russia.

That’s all. I am ready for our discussion.

RIA Novosti Editor-in-Chief Svetlana Mironyuk: Mr President, on behalf of the organisers and participants of the club let me welcome you and thank you for giving us the opportunity to meet.

This year 45 experts and political scientists from 15 countries participated in the club. Colleagues from Hungary, Poland and Turkey joined us this year. We believe that this is a very good sign and we think that we will work further in this direction. The range, representativeness, and geographic coverage of the club will grow. Four different panels were held under the general theme Russia and the West: Back to the Future. During these panels colleagues discussed whether the Cold War has ended, how a nuclear “reset” is proceeding, and what are the prospects for relations between Russia and the West, Russia and the East.

As co-organiser, please allow me to give the opportunity to ask the first question to a colleague from Canada, Piotr Dutkiewicz.

Piotr Dutkiewicz: Mr President, we came back late yesterday from Yaroslavl. I would like to know what that conference [on the Modern State and Global Security] means to you? What significance do you attach to its consequences? About two years ago we tried to figure out what the so-called Putin Plan was. After we visited, saw and listened to the Yaroslavl conference — I may be wrong, but I think that you used it to outline a Medvedev Strategy. If so, what is the essence of this strategy? If not and if I am mistaken, then please forgive me. I think that not only foreigners would be interested to hear your answer to this question.

Dmitry Medvedev: Thank you.

Each state leader should have a plan – how else can work proceed? Of course, this concept is not merely a set of bullet points; it includes a set of views, ideological elements, even emotions, and, if you want, information on how to organise work, on how to arrange a country’s governance.

If we are talking about my plan, then of course it did not begin to emerge now – it would not be very correct to characterize it as such. I think I said quite a few important things during the election campaign when I talked about certain development stages for our country and priorities that must necessarily be implemented. And what I said yesterday is, of course, another piece of strategy. I will not deny this – they were not random words, and I said them not in order to please a distinguished audience, I really think them, just as I think a lot of weaknesses that we still have – those I wrote about in my recent article – are also part of a bigger endeavour.

As for the conference, you know this is our first experience with it. We have our own little Russian Davos meetings, such as St Petersburg [International Economic Forum], and those that are in fact no longer small in size, but rather significant, such as the Sochi [International Investment] Forum which will soon take place. But we did not have our own political platform, and in Russia people like policy research and write a lot on politics. Our colleagues write most different things, sometimes very interesting things. This is not very foreign for me, as some time ago I practiced law and, therefore, was involved in political science. So I was glad to support this idea when colleagues came and told me that there had been a proposal to hold such a forum. And I thought – though you must be the judges – that it turned out quite well because, first of all, there was a normal full-fledged debate and, secondly, it was the first time we examined the development of international relations at a Russian forum. Therefore, if this becomes Russia's political forum, a traditional one that is held once a year in Yaroslavl which I personally consider to be a pretty town even though Yaroslavl has its own problems, as it is an ancient city and requires a major renovation, this is also very good. So I have a positive impression of the conference.

To conclude my answer to your question I would say: ”Yes, this is part of the plan.“

Piotr Dutkiewicz: Thank you.

Svetlana Mironyuk: Allow me to give the floor to Angela Stent, one of the initial founders and participants in the first meeting of the Valdai Club [in September 2004].

Angela Stent (as translated into Russian): Mr President, I read the article you mentioned which was published last week, with great interest, your article about the problems Russia faces in the process of its modernisation. It was a unique, new format. I would like to know why you chose this particular format? What reaction do you expect from your citizens, and what do you think your citizens will write in response to this?

And one more thing that struck me is that you have a very ambitious programme. Do you think it is possible to achieve your goals given all the economic difficulties facing the planet?

Dmitry Medvedev: Thank you for paying attention to this article. I would not say that it's an ultra-unique format of communication, and what’s more I had no intention to create something ultra-unusual or absolutely untraditional. An article is a perfectly normal way of communicating ideas.

A different issue is the fact that this is the first time I have actually circulated a summary of my next Address, my [Annual] Address to the Federal Assembly. This is in fact the first time in Russian history that this has been done. So what I will say in my Address already is public knowledge now. I did indeed ask anyone interested in cooperating with us, both those who agree with the policies of the authorities and those who oppose them, to share their ideas about where to go from here. For this reason I hope that this idea will be elaborated by multiple comments that the Government Cabinet, the President’s website and the Presidential Executive Office are already receiving. I hope that I can even use some of these proposals in preparing my Annual Address. But of course there is a difference between, say, this article and the Address because this is a general framework. It was an attempt to set out a general framework, propose topics for discussion, and to some extent these are emotionally charged things that should in my view be engaged with.
The actual Address is of course a much more conservative document. It must consist not only of questions about why we have so many problems but also of suggestions for resolving them. But the Address is of course not a detailed plan. It involves rather adopting an ideological position.
As for our goals, they really are ambitious ones. They are very ambitious, but setting unambitious goals is a waste of time. So I always try to formulate ambitious goals. But I think that everyone knows that modernising Russia is absolutely necessary. In the 1990s we reconciled ourselves to the fact that we had become a different country and our goal was simply to survive. In the current decade, almost all our efforts have been directed towards creating a stable country, a country that is trying to be efficient. Of course we still have a long way to go but we have had substantial success at preserving what we have.
But our goal cannot simply be achieving certain results. Our goal is development. In today’s world development can only be achieved through modernisation, the modernisation of an economy with which we are not satisfied, the modernisation of a political system which has been greatly improved but is still far from ideal, and the modernisation of social life. Social life is perhaps most important as we have what I describe in the article as a semi-Soviet social system, one that unfortunately combines all the shortcomings of the Soviet system and all the difficulties of contemporary life. And so we must deal with changes in the pension system, even during this crisis, although this is going to be difficult. We must go about changing the health care system in a genuine way, and not just pretend to make some changes. We can’t pretend any more. 

Now that the situation is to some degree stable, I think that it is perhaps time for more decisive steps. Of course, they should be made carefully. We cannot ruin people’s prosperity; we cannot undermine our own economic foundations; we cannot cause difficulties for people; but we must move faster within the limits allowing such movement. Those are the main points of my message.

Feng Shaolei: Mr President, during my time here in Moscow, my countrymen in Shanghai have called me several times to insist that I pass their greetings on to you and thank you for your wonderful initiative in organising the Year of Russian Language in China. Our young students have received your letter and they were truly touched. I know that the entire Chinese nation is very happy to see that our two countries do not have any major disagreements in our relations and our stances on regional and global politics. As President, you have emphasised this fact many times. As you already said yesterday, “We have much to say to each other and much to learned from each other”.

My question is as follows. The great nation of Russia is not only a member of the G8, but also the G20, the SCO, and BRIC. What are your views on the relations between such different international organisations and forums, which all have their own particular functions? And what important role do you see Russia playing in the future? Do you believe that perhaps, through your initiative, a conference such as the G20 will take place in Moscow, St Petersburg, or Yaroslavl?

Dmitry Medvedev: It’s true that it can be quite difficult to sort out all the modern formats for meetings. I do not include the SCO in this, since it is a regional organisation which, I believe, has a promising future. This year, we had an honour of holding SCO summit in Russia, and I believe it was quite successful and everyone was happy, including my colleagues from China and the Chairman of the PRC.

As far as the other formats are concerned, just before coming here, I was speaking with my [G8] sherpa about our participation in the G8, the G20, the G8+5 outreach countries and other formats, and how these can be used in the future. Interestingly, this is not a very easy task, because on the one hand, the current Group of 8 is able to resolve many issues, but on the other hand, it is entirely clear that in the current circumstances of the global economic crisis, the G8 is not enough. With all due respect to these eight states, the G8 does not include many other nations, particularly a country as important as the People’s Republic of China and others; some of them are represented at this table. I therefore think that in the near future, this question will be subject to further discussion and will be brought up in Pittsburgh. I doubt that we will ever quit the G20 format by simply saying, well, you know, once we have sorted the pressing items out, now five of you can go home, and our further discussions will continue in the previous format. We will certainly have to hold our discussions with the entire Group of 20.

But other formats also have the right to exist. I think that when we meet with our colleagues we will discuss this matter. This is what I can say regarding formats in answer to your question.

As far as the agenda itself is concerned, the agenda for Pittsburgh is indeed a very serious one. I would like for us to move forward. How do I picture this movement? I hope that from now on, we can get away from general discourse on how this crisis is perilous for everyone and the need to prevent others like it in the future; we now need to make concrete decisions. Speaking frankly, that is why I’ve come here; I have no secrets from you, and I think that our movement toward this goal is not going well. It has slowed down. I am not going to blame anyone in particular, because we probably must be critical toward everyone, including ourselves; but it is high time to formulate proposals and make decisions.

A relevant example is a change in quotas for the IMF. The decision should have been made long ago. For Russia, this is more of a political matter, since we have nothing to gain from it. Still, I think that such a decision is very important in order for us to better understand one another and to ensure better performance of the new mechanisms.

We [Russia] have stated the necessity of shaping a new financial architecture. Has anything happened after that, have we made any progress in this area? I think we have hardly progressed at all. Everyone seems to understand that in case a new crisis strikes us in two or three years from now, we will all find ourselves in a very difficult position, and yet, this work is progressing slowly. I am not aiming this at anybody personally; I am simply inviting all of my colleagues and all G20 member-states to consider intensifying our efforts.

Ultimately, these efforts, as I have said many times, should result in new international conventions and new provisions in international law, rather than merely turn into stating our common wishes that we should all be friends and observe macroeconomic rations in each nation, to ensure that if some country has a problem at some stage, other states do not have to suffer as well.

Incidentally, yesterday, in my speech at the conference in Yaroslavl, I spoke about how, among other things, we need to carefully monitor the way things stand in other countries. This does not mean that we should interfere into other nations’ domestic matters. That would not be right for obvious reasons. But the state of economic affairs in other nations really does matter to us. Fifty years ago, we may have been indifferent. The Soviet Union was almost unconcerned with others’ economies, because the Soviet Union existed entirely autonomously, and saw this as the mail goal of its development. But today, we live in a different world. This world is globalised. And since this is the case, we cannot be indifferent to the economies of other nations and the decisions made by our colleagues. Similarly, they may not be indifferent to our domestic actions.

Russia’s economy is still developing. It has many shortcomings, which I already talked about, but nevertheless, Russia is a fairly big international player. And the way we address energy security, for example, will affect a great deal of other things. Thus, we are all paying close attention to one another. This is perhaps one of the most important conclusions made at yesterday’s conference.

Orietta Moscatelli: First of all, thank you for this meeting. Second, you mentioned that we have visited Yakutia. There, we heard about how the republic’s government is fighting the crisis. We then continued this discussion here, in Moscow, at various top-level meetings. I would like to hear your assessment of the Government’s actions in this regard. Thank you.

Dmitry Medvedev: Like every other nation today, we are fighting the crisis. Russia is an enormous nation, and for obvious reasons, it is very diverse. Clearly, countering the crisis in Moscow is a somewhat different process than fighting the crisis in Yakutia. Since this is the case, we should employ diverse mechanisms. If Russia were a small state, we could simply have made the necessary economic decisions, injected cash into the banks, supported key businesses, and leave it at that. But we have a very large territorial spread, so each of our territories has its own problems. There are certain problems in Yakutia and other places, other territories in Siberia and the Far East. These problems include unemployment and the shutdown of many companies.

We face a specific Russian problem that we have inherited from the USSR, the problem of single-industry cities, i.e., cities where one company is a single or major employer. The structure of the Soviet economy was such that these companies often employed 10, 20, or 30 thousand, and sometimes even 50 thousand people. For example, about 200 thousand people work for our giant automotive company AvtoVAZ either directly or indirectly. This is a very high figure. The economic situation in such single-industry cities is the hardest. There, we need to make decisions to prevent personnel cuts, and if there are shutdowns and layoffs, then we must take measures to create new jobs – and new jobs must be created urgently. Alternatively, we may offer work relief programmes, as has been done in many nations, and as we are doing now. We have community jobs in all of our territories. This is by no means a simple problem, but in my view, we are still managing which is evidenced by the fact that despite some fairly major difficulties, the mood of the people is generally composed as far as this crisis is concerned.

As for the Government’s actions, I recently assessed them: I believe that the Government is handling its duties well. This does not mean that the Government never makes mistakes or that the Government always does everything in a timely manner and in the best possible way. The only people who make no mistakes are those who do nothing. We are working hand in hand when dealing with these issues, and although this generally falls under Cabinet duties, I nevertheless hold meetings on a roughly weekly basis where I invite key government officials for a discussion of what is happening.

We had wrong ideas on what had happened in the world and how it would affect our economy. Unfortunately, our projections were not quite correct and the downfall has been far more serious than we expected. This certainly causes aggravated problems. This year, our Gross Domestic Product will most likely drop by 8.5 percent, which is unfortunate because earlier, we were forecasting the GDP decline at one or two percent. Why did this happen? I wrote about it in my article: because structurally our economy is highly ineffectual and unwieldy and hence as soon as prices drop in the mining sector, our entire economy drops. I hope this crisis will stimulate our economic structure overhaul. This does not imply that we can or should accomplish it in a year or two, but in any event, we will strive to implement changes.

That is why today, in my view, everyone is working hard and we have achieved most of our goals. We allocated cash to our banks at the hardest moment, when we faced the risk that our banking system could reach a critical point, finding itself in a crisis. We made the decision to support strategic companies. Perhaps we have too many of them, but again, that represents the structure of our economy, so we were obligated to provide them with targeted assistance. We implemented certain measures of social support – I am referring to unemployment benefits and the creation of new jobs. Although this system is not ideal, it works nevertheless.

Thus, in the last few months, our registered unemployment has decreased. We saw certain other negative indicators go down too. The inflation rate has fallen. This year, we will most likely have lower inflation than we had predicted. Of course, lower inflation is not the results of our efforts alone, but also the effect of the overall production drop which in the last few weeks brought about a phenomenon that has never been observed in our nation: deflation. Well, one should always try to turn a problem to one’s benefit. I therefore think that it isn’t bad at all if we succeed in limiting inflation figures. In the last month, we saw a GDP growth in absolute figures, the growth was between 0.4 and 0.5 percent in July. Naturally, the overall year-end result will still be negative – we will still be in recession – but this is nevertheless an important trend. Indeed, this is happening in other economies as well, which makes us very happy.

I do not think we can already talk at national or international forums about having overcome the crisis. Clearly, the crisis has not yet been conquered, and there remains a variety of possible scenarios – you yourselves are well-acquainted with them. They include the possibility that the crisis will hit us with a strong second wave, bringing all of the unfortunate consequences. We must certainly be prepared for such a scenario.

In our Cabinet, we have some real conservatives who always predict major problems. I think people like that sometimes play an important role, even despite negative attitudes toward them on behalf of the expert community or even their own colleagues in the Cabinet. It is good to have a Cabinet with a diverse range of views. And so, we cannot just sit back and relax.

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