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Meeting with participants in the CEO Global Summit

May 23, 2014, St Petersburg

Vladimir Putin met with heads of major Russian and foreign companies and business associations at the CEO Global Summit, which is part of the St Petersburg International Economic Forum.

The summit of global business leaders was organised by the Russian Union of Industrialists and Entrepreneurs.

* * *

President of Russia Vladimir Putin: Good afternoon,

To start, I believe Mr Shokhin will say a few words.

President of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin: First, thank you Mr President for finding the time in your busy schedule to meet with the heads of global companies.

We have called this event the Global CEO Summit at the St Petersburg International Economic Forum (SPIEF). This is already a continuation of a certain tradition. Last year we held the B20 Business Summit on the forum’s sidelines, and you met with leading Russian and world entrepreneurs to discuss recommendations for you as the G20 President, and for your G20 colleagues.

Last September we had an opportunity to bring these recommendations to the G20 leaders. We’ve decided to continue this tradition and this year we convened this Global CEO Summit to continue discussing the world’s economic agenda.

The global economy remains fragile and many measures, including those adopted in St Petersburg, are still being elaborated and their implementation is fairly complicated. This is why business should continuously renew this discussion to make adjustments and provide new recommendations.

The second area we’ve discussed is conducting business in Russia, primarily systemic issues of improving the investment and business climate.

Obviously, we couldn’t discuss all questions at our panel sessions, but the St Petersburg Forum has many other options for panel discussions, so more specific issues will be reviewed (and some have already been reviewed) today and tomorrow.

In addition, on the forum’s sidelines we held many bilateral business meetings with our partners, bilateral business councils and Russia-based foreign business associations.

We didn’t just discuss problems, but tried to determine some priorities, conducted interactive voting and determined what key issues could help improve the economy (in the opinion of Russian and foreign business).

Traditional areas are represented by investment, infrastructure, financial regulation, trade, employment, social investment in human capital, transparency of government management, anti-corruption efforts and some other issues. I’d like to ask my colleagues to report on the discussion of these issues.

But before they do this, I’d like to make the point that the development of public-private partnership has been described as the main issue in infrastructure investment. As for energy security…

Incidentally, we brought this item back to the agenda in 2006. Energy security was the main issue during the G8 summit in St Petersburg. For some reason it left the agenda of these forums but we believe it’s time to bring it back.

So, for energy security it is essential to regulate the power industry based on the real-life risk assessment and return on investment. In other words, economic policy should be built not on some hypothetical assumptions but on real risk assessment.

The main priority in financial regulations – as it was a year ago when we discussed it – is to prevent the adverse impact of financial reforms on long-term investment. We don’t need more regulation but we must make it more efficient and conducive to economic growth. As for employment, first and foremost it is necessary to pursue macro-economic policy that stimulates the creation of productive jobs. In international trade, struggle against protectionism continues to be at the top of the list.

During the last six years of the G20’s existence, this has been the number one priority, but the fact that it remains on the agenda means that far from all has been done in this area, even compared to our expectations. In particular, I’m referring to the implementation of the WTO agreement signed in Bali in the end of the past year.

Equal access to government and municipal purchases is the main goal of the efforts to achieve transparency and counter corruption. Indicatively, this is a topical issue not only for Russia but also our foreign colleagues.

As for Russia’s priorities in creating a favourable climate at home, the most important priority is the development of small and medium-sized business. The main task here is to remove the barriers for small companies by simplifying registration and improving regulation. Incidentally, today we presented the national rating of investment climate in various regions, and this issue was also discussed in detail there.

The second priority in improving the investment and business climate in Russia is to reduce regulation. Above all, it is necessary to get rid of redundant procedures and check-ups by monitoring and supervisory bodies and ensure their transparency.

With this, I’ll finish my account of our activities. As hospitable hosts we’d like to give the floor to our foreign guests. I’d like them to continue our discussion. First of all, I’d like to give the floor to our guest from India – the elected President of the Confederation of Indian Industry (CII).

President Designate of the Confederation of Indian Industry Sumit Mazumder: Thank you, honourable presidents.

I am going to talk about infrastructure, as he told you. Among the G20 countries, the emerging markets are still struggling, and they haven’t quite recovered. For the G20 countries as a group to prosper, it is important that even the emerging countries prosper so that as a group we prosper. And it needs inclusive prosperity.

So I have one suggestion, which is that if some sort of a robust multilateral investment framework can be built, and the governments extend special cooperation, and a proper mitigation process for losses be drawn up, then the required funding for these emerging markets would come, and it would really help the G20 countries to be prosperous in the long run. Yes, he talked about private-public partnership – that is working quite well in India. But there are other issues that require looking into. This is one suggestion.

The second point I’d like to make is that by 2020, there will be more people retiring from the job market than entering the job market, whereas India will have an excess of working-age people. I believe 65 percent of the population in India at that time would be the working population. And it is estimated that by 2026 the shortage in the world market would be about 45 million people, whereas India will have an excess of 56 million people, so it is very important that these people are properly trained and made ready for this opening. And this will happen once the infrastructure is at the same level as the mature markets. And this is important for the entire group of the countries, for their own good, because India could also be the manufacturing base for a lot of the countries.

These are the two suggestions that I have, Mr President. Thank you. 

President of Russia Vladimir Putin: I want to start by once again welcoming the global business leaders. I think, as Mr Shokhin [President of the Russian Union of Industrialists and Entrepreneurs] mentioned, this is the first time such a summit is taking place as part of the Forum.

We have many common problems. When I say ‘we’, I mean the global economy and its impact on the world, including on the Russian economy.

Our colleague from India spoke just now about some problems that are purely global in nature. Let me take advantage of the fact that the floor was given first to a representative of Indian business, and to note the longstanding friendship between Russia and India. 

I just had the pleasure of speaking with the leader of the party that won the election, with the man who will be Prime Minister very soon. We agreed to press on with our undertakings and plans already underway, already in progress, and create new opportunities for work together too. We will discuss all of this at a meeting very soon. 

In this context, we should note that India has very large labour force and many people looking for work. This does create a big problem of course. Young people make up more than half of India’s population. How many voters do you have? I think it is close to half-a-billion people. Such figures are impressive. Our country is not exactly small, but when you hear figures like this you cannot help but be impressed.

What you talked about is linked to open borders of course, visa-free travel and the right to employment. We have long since been discussing these issues with our Indian friends. I think that the existence of some restrictions is understandable. They are linked to the need to protect our own labour market. 

But we are moving in this direction all the same. We are making it easier to enter our country and will continue to do so on a parity basis. We have an increasing number of joint projects, including in hi-tech sectors such as nuclear energy, as we all know, and in this situation exchanges of highly skilled people obviously make particular sense and become more important. 

I think you would agree though, that this is a rather narrow sector. People working in nuclear energy know that in order to develop the sector and ensure reliable safety of the projects we carry out, we need to use top-class specialists, at the initial stage at least.

What the Russian Federation does when it undertakes these kinds of projects is to not just provide the power units or build production facilities, but establish the whole sector, and this includes training local personnel.

This is just the clearest example, but we work in similar fashion in other sectors too, in the military technical cooperation sector, for example. We are working with you to develop advanced military technology such as the well-known BrahMos missile that India’s armed forces use.

In this case, we do not limit ourselves to simply delivering a good. The missile is a joint product and is our joint intellectual property. The project also involves personnel training. We have organised this kind of work with our Indian friends in this sector and will continue to do so.

As for hiring labour on a mass scale, this is possible too in certain areas and in the case of big projects, including joint projects such as the infrastructure projects that you mentioned. 

We have a large number of infrastructure projects in the pipeline. For the projects in which we plan to invest money from the reserve funds – these are above all infrastructure projects – we do not rule out the possibility of using foreign labour.

Alexander Shokhin: I’d like to give the floor to our Canadian colleague, CEO of Kinross Gold Corporation Paul Rollinson.

Kinross Gold Corporation Ceo Paul Rollinson: Hello. Thank you, Mr President. I’ve been asked to speak on the theme of investments. And we’re a mining company, so I’ll make my comments relative to the mining industry.

I would say we’re proud. We have been active in Russia for almost 20 years now, and we are the largest foreign investor in mining thus far. We’ve recently invested over $3 billion in the mining sector. 

Our two mines are located the Far East, Chukotka. And our experience has been a very positive one, and there’s been a lot of cooperation with the government and improvement in the regulation. But we think there is more that can be done to attract more foreign investment in mining.

And the benefits of that, of course, are that it would provide addition jobs, train human talent, and of course provide additional revenue for governments.

We have three specific recommendations in that regard. Number one, please consider the strategic limit for minerals, the size or the elimination.

We also think there may be a possibility to simplify the claim-staking process. There’s a pilot project currently underway, but it hasn’t been rolled out in all regions. And lastly, there are ways to facilitate the process to move from exploration to mining.

I would further suggest that, we would think that a way to come at this would be on a pilot basis – to pick one region or a couple of regions where there is good mining prospectivity, such as the Far East Federal District, and roll out these suggestions on a pilot project.

And if we were to do that, we see four potential benefits. First of all, it would reinforce the government’s strategic focus on economic and social development in the Far East. It would attract, we think, more mining investment into the Far East. The government would still retain control over its subsurface resource. And lastly, we think this can be done with very little to no cost to the government. Thank you.

Vladimir Putin: We’d be very grateful to you if you could formulate these proposals concretely. In cooperation with our business community and various business entities, we’ve been working on this particular agenda and on ways to simplify various administrative procedures. Many decisions have been made in the area of customs regulation, incorporation of companies and regional administrative practices.

Of course, this is probably not enough, and we’ll continue working on it. Your recommendations will be most useful to us. I say this without any exaggeration or irony. We’re working on these proposals in conjunction with our business community. Some of them are being drafted, others have been adopted and still others are being formulated.

We can discuss simplifying access or application filing procedures as well. We believe we have a fairly liberal approach to these issues. We don’t have any bans whatsoever, as I′m sure you know. We allow everything, if I may put it this way – we don′t have any subjects that are off-limits in cooperation with our foreign partners.

There are certain rules on so-called national resources or national mineral deposits. This doesn’t mean that access to them is banned to foreign investors. It merely means that decisions on this issue should be approved by the government commission.

Working in Russia, you must be aware of these issues. So, if you believe there are any problems, we have government members here, top Russian leadership, so please tell us what exactly is making things difficult for you. There are deadlines for reviewing such applications and they are being observed, just like yours, but we′re ready to give more thought to this question.

Regarding simplified procedures on prospecting and production after a permit is issued, these decisions are usually interlinked. If we issue a permit for prospecting, we proceed based on the premise that the company that invests resources and money into this phase of work should receive a production license as well, although current Russian legislation does not explicitly provide for this.

This concerns the need to ensure the public interests with regard to future investment. We want to prevent a situation whereby a company that has invested relatively small funds into prospecting will in effect start dealing in its licensing options.

Still, the licensing power should belong to the Russian Government. As you have said, the Government should monitor this process. But maybe we have overlooked something. Please formulate your ideas in more detail, and we will be happy to consider them.

Alexander Shokhin: Thank you.

I’d like to give the floor to Mr Jean-Pascal Tricoire, Chairman and CEO of Schneider Electric, France.

chairman and CEO of Schneider Electric Jean-Pascal Tricoire: Mr President, good afternoon. Thank you very much for meeting us this afternoon. My company Schneider Electric is specialised in systems, in equipment and software for energy management and energy efficiency.

Under the guidance and with the support of your teams, we have invested a lot in Russia. We employ now 12,000 people in your country, developing manufacturing technology here in the country.

So after so much investment, my question goes naturally to your energy plans. I would like to ask you if you could explain to us where you see your priorities in the field of energy – which sector, which installation, in which geography.

I would like to know if you could give us some colour about this agreement that you signed this week between Russia and China. And as it is one of specialities of my company, if you could tell what is the specific place of energy efficiency in your energy vision for Russia. Thank you.

Vladimir Putin: Energy efficiency should be our primary concern, not only in Russia but also for any company in any other country. It is one of the key elements of success in any sphere, in any business or project.

Of course, we will try to ensure maximum efficiency in accordance with modern standards in all areas of work concerning energy. What should we focus on?

We are certainly considering such promising energy sources as renewable energy, hydrogen energy and solar energy. We are working on these projects. Our companies allocate funds for this and also receive government support for such projects.

At the same time – as an energy expert, you should know this – everyone understands that energy consumption will be growing in the next 30 years, while the structure of primary sources of energy will not change. Therefore, we will focus on the production of hydrocarbons and the development of nuclear generation.

Nuclear energy currently accounts for 16% of the Russian energy balance. If my memory serves me correctly, the figure is over 80% in France. So there is still room for improvement, and we have a comprehensive development plan.

We intend to increase the share of nuclear energy to at least 25% of the total energy balance. This will require us to work hard to build new capacities. We plan to build around 20–25 large power units, or as many as were built in the entire history of Soviet nuclear generation.

Of course, we – I am referring to Russia and France – are both partners and rivals, but in a positive sense. The issue concerns the production of generating equipment and the supply of nuclear fuel to the global market.

I believe that we have certain advantages, because we offer full-cycle services, including the removal and recycling of fuel waste. Our capabilities in this area are considerable, and we can offer its services both to our companies and to our foreign partners. Our nuclear companies have a big portfolio of contracts for decades ahead.

As I have said, we not only supply and sell nuclear generating equipment, but we are also building a whole new industry, which includes research and personnel training. We intend to continue improving our nuclear sector as a science. We take part in international projects. We intend to build the best and safest modern nuclear power stations.

As for hydrocarbons, their prices will not decrease. I think this is obvious, because what’s left is difficult to access or is located in areas that lack the proper infrastructure. This is the situation in Russia and also elsewhere, as you are aware.

So there are downsides, but there are advantages as well which lie in the fact that this area of business is a fairly safe investment.

Where are the most promising and significant opportunities? Of course, they are on the shelf of the Arctic seas. The amount of reserves there is colossal, just planetary. I′m referring to Yamal Peninsula and the Arctic. As you may be aware, some of the projects are already underway. The first ever gas was produced on the Arctic shelf. This successful project is operated by Gazprom.

We will by all means develop all our eastern provinces and work on the shelf. I′d like to point out that our companies use the latest environmentally friendly technology. I always cite this example (we are now trying to replicate it). The head of LUKOIL is present in this auditorium, I visited their platforms on several occasions and I saw them work.

Not a single speck of waste is dumped into the sea. All waste is processed: packed up, taken to the shore and processed there, you see. It's so impressive. Almost all our companies work on the shelf like that. I am proud to note that in this regard Russian companies are ahead of their foreign counterparts. Perhaps, only a half step ahead, but still ahead.

Regarding the deal which you just mentioned between Gazprom and its Chinese partners, it′s a major deal, and you're probably already familiar with the numbers. It is designed for 30 years, although there are enough reserves for, I believe, 50 years. They′ve been underestimated. The recoverable reserves in two fields that we are about to commission — Kovykta and Chayanda — are 1.5 trillion cubic metres of gas per field, so 3 trillion combined. I will speak about this during the session.

And in fact, as I’ve mentioned, there's even more there. The contract was signed for 30 years, but I believe that the production may last at least 50 years. Gas will be supplied to the People′s Republic of China and to domestic consumers as well. This is important to us.

This is a multi-faceted project, because it gives us an opportunity, with a market as large as China and with supplies in the amount of 38 billion cubic metres of gas annually … This makes the project commercially viable and thus gives us an opportunity to develop our eastern provinces, build an extensive gas supply network for neighbouring regions, and later move on to the second phase.

This is what we refer to as the Eastern Route from Eastern Siberia, but we agreed with our Chinese friends that the Western Route with the resource base in Western Siberia will be the focus of our next phase. The infrastructure development in both parts of Siberia will give us an opportunity to link the Russian Far East with Eastern Siberia, and Western Siberia with European Russia.

We will then have a single gas supply system in Russia which will vitally improve gas supplies across Russia and give us an opportunity to diversify gas supplies westward when there’s need for that, or eastward as the global market dictates.

Remark: Colleagues, since Mr Putin provides very detailed comments, please ask fewer questions in your remarks, otherwise many participants won′t get the chance to speak.

Vladimir Putin: That′s quite a subtle message directed at me. I hear you.

Remark: I'm afraid my colleagues might rough me up for doing so. No, Russians won′t do that, they are well-mannered, but I′m not sure about our Western colleagues. I′d like to turn it over to Chairman of Boston Consulting Group Hans-Paul Buerkner, on the subject of financial regulations.

chairman of the Boston Consulting Group Dr Hans-Paul Buerkner: Mr President, Russia has made enormous progress, and the Russian economy has made enormous progress during the first decade of the new millennium, and has become a strong member of the global economy. Now is the time to move Russia and the Russian economy to the next level, and there are enormous opportunities, but also there are strong challenges.

The key levers for really moving the economy to the next level are: continuing openness; secondly, increase competition; and thirdly, the strengthening of institutions to ensure the rule of law. And by really providing a level playing field for many players – start-up companies, small and mid-sized companies, large corporates – they will have opportunities to bring a lot more innovation, more productivity, higher efficiency, not only to the economy overall, but to the different industries.

And it will mean that there will be both domestic, and of course, foreign players, to really help ensure that there is strong growth over the next decade and more. This is of course also true for financial services. Obviously, financial services play a very important role, not just in mobilising savings, creating strong capital markets, but also, I think, providing funding for start-ups, for small and mid-size companies, and for the large corporates.

And in order to ensure that the financial sector plays a strong role, it's important to have quite a number of large players; not just two, or a couple of national champions, but to have a broad sector, and a broad range of institutions that really can play that role, the mobilisation of funds in capital market creation, and also in the funding of different companies of different sizes.

Now, the central bank is doing a very good job in trying to clean up the banking sector, really closing down those institutions that are destroying trust and destroying values. So that's one part. But I think it's important to have a broad range of institutions. Secondly, I think it's also important to ensure that pension reform is being accelerated, so that there are funds for long-term projects.

The second element in the financial service sector is to ensure the application of global standards. So it's very good to see that Russia is applying Basel III going forward, so that we all have the same playing field. And we should also make sure that we do apply the same standards.

And thirdly, financial services, like every other industry, like every other sector, will have to change fundamentally, because of digitisation. And there's a huge opportunity, for Russian institutions, but also institutions in general, to really move financial services to a different level of quality, efficiency, productivity, by having digital payments, digital banking, digital financial services overall. And here, Russia can really jump to the forefront – Russian institutions – and play a very strong role.

So overall, we, at BCG, and I'm personally very confident, that with increased and continuing openness, increased competition, and the strengthening of the institutions to ensure the rule of law, Russia will indeed, over the next 10 years, move to a completely new level of performance, and really build on what it has achieved over the first 10 years of the century. Thank you very much.

Vladimir Putin: As I understand, this is not a question but an opinion, a recommendation. I’d like to point out that we’re working in all these areas – support for start-ups, and expansion and consolidation of the financial system as a whole.

You’ve mentioned yourself the uneasy efforts of our Central Bank – let’s put it straight – on the reorganisation of our banking system. We all understand how painful it is to reduce the number of financial institutions that are ineffective or even dangerous for their clients because they are unable to honour their commitments to these clients.

This is a difficult job – both socially and politically, and it puts certain pressure on the budget, because when the Central Bank makes such decisions we compensate clients' losses from the budget. We had to draft relevant legislation for this, and we’ve done this. We had to develop the practice of applying such laws and finally start this heavy job of bank resolution.

We had to do this to make our financial system viable and efficient. You know that we have about a thousand banks. Now probably the figure is a bit lower – 950, I think. On the one hand, this is a good thing. As a financier you are well aware that this is not a prerequisite for efficient performance. So we’ll continue this work and, of course, we are open to cooperation with companies like yours.

As for attracting finances, including foreign funds, I’d like to point out… One of our colleagues has already spoken here about attracting investment. Last year our country was ranked third in terms of attracting foreign direct investment. I’m going to speak about this issue at the plenary session and I will cite some specific figures. But it goes without saying that we cannot and should not stop at that, and we will continue to move forward.

In this context, support of our efforts, including the work of the Direct Investment Fund that we established a few years ago and that is doing fairly well… We’re cooperating with practically all major global funds and will continue this practice. In this context, the work of such agencies as yours is much in demand. Naturally, it is necessary to come to terms and find partners at the corporate level, and we’ll always welcome this. Thank you very much.

Alexander Shokhin: Now I’d like to ask our Turkish colleague Erol Kiresepi, Santa Farma President and CEO, to speak about employment and social issues.

But I’d like to remind you, colleagues, that the official start time of our plenary session is 2.30 pm. Several thousand people will criticise us if we delay. So, please mind the time.

Vladimir Putin: You won’t be criticised but I will, because nobody will know why I didn't arrive on time.

Chairman and Ceo of Santa Farma Erol Kiresepi: Mr President, looking to the priorities in the area of employment and labour mobility, the votes, which have been given to you, came not so distant between the first and the third priority on the list, with only a little less importance on the second. This doesn't mean that the second is much less important.

The first priority was to introduce macroeconomic policies that promote employment and creation of more productive jobs. The flexible labour markets that offer a diversity of work contracts are an essential part of an enabling environment. A diversity of work contracts allows our companies to react rapidly to market changes and quickly create jobs. Flexibility is a necessary element for competitiveness. It's clear that the government's main responsibility is to support business, to create new jobs, with the adoption of new dynamic and flexible policies. The right policies will encourage the private sector to increase their employment capacities. It is important for the government to be in touch with the market in order to analyse its needs.

The second priority, which took less of the votes, Mr President, was to ensure trans-border labour mobility in response to the business and labour market needs. Governments should adapt immigration policies in line with labour market needs. Labour mobility is becoming a main challenge for the business community.

The labour market welcomes immigration according to their needs. However, in this process, the adaptation of immigrants to the host country, language problems and social benefit issues should be taken into account by the governments. Well-organised labour mobility will be beneficial not only for the host country, but also for the global labour market.

Mr President, to reach our goals in both priorities, we should also make employability a top priority in national education and training systems. Skills and competencies are the key determinants of an individual's place and mobility in the labour market. That is the reason why we must make employability a top priority in national education and training systems. I should also add that strategies to increase employability have to focus also on lifelong learning, which is a shared responsibility.

We must consider increasing growth and employment by creating an economy based on knowledge and innovation. In the recent terminology, they call this ”smart growth.“ This requires improving the quality of education, strengthening research performance, promoting innovation and knowledge transfer throughout the world, making full use of information and communication technologies, and ensuring that innovative ideas can be turned into new products and services that create growth and quality of jobs.

Now, coming to the SMBs, I will not tackle the subject, I will leave my colleague, Mr Koch, to tackle it within his subject. Thank you, Mr President.

Alexander Shokhin: Mr Koch, Chairman of the Board and CEO of Metro Group, Germany, will speak about the development of small and medium-sized business and trade.

Management Board Olaf Koch: Good afternoon, Mr President. Small and medium-sized enterprises typically are the backbones of large industries, and they create a lot of value. In the Russian Federation, they are up to 90 percent, as I know. In our business in METRO, we are supporting independent business people. They are the small guys running produkty stores, restaurants, hotels. And we very much appreciate the effort that is now on the political agenda, because we believe this is not only value creation for those small, independent business people; actually, it is quality of life that can be increased.

So actually, therefore, my question to you would be, what's your personal view on what can be done on top of it? For example, less bureaucracy, less regulation. And more support, so that these people can really grow. We are serving millions of them today; we just invited 14,000 to the METRO expo last month, and shared with them the experiences. And I can tell you, I think there's huge momentum, and huge potential, in the Russian Federation for that.

And that brings me to the other subject – and I just want to share that with you – we have been on a capital market transaction, preparing it since September of last year, where we shared our equity story, and our conviction about the value that can be generated in Russia. Until February this year, we were actually on a road show, and telling people… And I can tell you that the demand, and the excitement, about what can be done in Russia, is completely shared by a lot of people. So we have been promoting that.

But one of the concerns that I need to tell you about – because I think it would not be right not to do so – since March and April, since Crimea and Ukraine, there has been a lot of concern, frustration and lack of trust. So one of the concerns is really, how can trust be re-established? Thank you very much.

Vladimir Putin: This is truly the most important question. The main motto of this economic forum is restoring trust. As for the burning issues you mentioned regarding Ukraine and Crimea, it was this very lack of trust that caused them.

Where did the Ukrainian crisis come from? What caused it? This crisis emerged after President Yanukovych postponed the signing of an association agreement with the EU. What followed? A government coup backed by our US and European partners. What next? Chaos, and now we’re witnessing a full-fledged civil war.

All initiatives taken in the post-Soviet space and generally around the world, and in the former Soviet Union in particular, should be very cautious. We must exercise extreme care when dealing with the foundations of the state. Otherwise, as I said, it leads to chaos and political instability followed by economic turmoil.

Regarding Crimea, we are absolutely open in this respect. We have nothing to hide. We really ensured that Crimea's residents can freely express their will. They came to the polls and voted for their future. You can’t force 80 percent, in fact almost 90 percent, of voters to cast ballots, right? They could have refused to come, but they didn’t, and 96 percent opted for a “yes” vote.

This is just the objective truth. If we hadn’t done it, a tragedy would have occurred far worse than what we are currently witnessing in certain cities of Ukraine, in Odessa, where unarmed people were forced inside a building and burned alive. Almost 50 people perished in flames and another 50 went missing. Where are they? They were actually also killed. We prevented this from happening in Crimea, and I think that it was the right thing to do. What we are asking from you is an unbiased, impartial perspective on these developments.

How can trust be restored? By working together and engaging in dialogue. For instance, up until now Russia has been unable to work out a comprehensive partnership agreement with the European Union, stumbling into one issue after another. At the end of the day, we were offered to join consultations on Ukraine’s association with the EU, but we haven’t seen any consultations so far.

Russia’s Economic Development Minister Alexei Ulyukayev went there. He is liberal and pro-market in every sense of the word, in a good sense that is, but he came back empty-handed, bringing only slogans.

We really hope that a substantive, as diplomats say, dialogue will start at a certain point. Engaging in direct talks and finding mutually acceptable compromises while respecting each other’s legitimate interests is the only way to create a trusting environment.

As for small and medium-sized businesses, this is also a priority for us. I must acknowledge that, although we have done a great deal in recent years, it is still not enough. The development of SMEs in Russia still falls short of our needs. I won’t cite any figures in this respect.

We have developed a system for supporting SMEs on the regional and federal levels. When allocating funding from the federal budget, we channel it into the regions since SMEs operate locally, so regional authorities have a better understanding of whom to support and how.

What else should be done? Of course, cutting red tape is essential, and we have done a lot in this respect, albeit not enough. What have we done? We streamlined business registration procedures, access to utilities and other networks, and, as I already said, reduced the burden on companies operating on foreign markets from customs bodies.

These initiatives concerned banning companies established by customs services from operating in this segment. We also took many other decisions. What else is there to do? Ensuring access to cheap funding, low-interest loans, is essential. This is perhaps the most challenging objective, but addressing it is the only way to ensure fast and efficient growth for our SMEs.

Alexander Shokhin: Mr Putin, we have quite a few people who wanted to say something or ask a question, including President of Indonesia’s Chamber of Commerce and Industry Suryo Bambang Sulisto, Chairman of the Confederation of Finnish Industries (EK) Ilpo Kokkila, Carlsberg Group President and CEO Jorgen Rasmussen, who co-chairs the EU-Russia Industrialists' Round Table, Chairman of Global Counsel Lord Peter Mandelson, who served as the European Commissioner for Trade for many years, and many other colleagues. That said, your protocol service is telling us that it’s time for you to leave for the next event.

I would like to thank you, Mr Putin, for your detailed answers and comments. We understood that you intend to elaborate on many issues during your speech at the plenary session.

Colleagues, everyone who wanted but was unable take the floor are invited to come to SPIEF’s media centre after the plenary session where you will have an opportunity to share your views with the world.

Thank you, Mr President. I would like to return to my initial statement. I hope that this forum will become a permanent part of the St Petersburg International Economic Forum.

Vladimir Putin: With great pleasure. Thank you very much to everyone for coming here and joining our discussion on Russian and global issues. I think that this discussion will benefit all of us. In any case, this is a very positive signal for enhancing cooperation with Russia.

As for the questions that were not raised or were not answered, such as the question on the labour market, I will address some of them in my remarks. I will share, among other things, Russia’s plans for the near future regarding measures to develop the national economy.

Thank you very much!

May 23, 2014, St Petersburg