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Andrei Vandenko: State capitalism.

Vladimir Putin: Yes.

Andrei Vandenko: What is it that makes today's business titans better than the oligarchs of the 1990s? The mere fact that you know them and trust them?

Vladimir Putin: I have known both. The difference is…

Andrei Vandenko: You were not President then.

Vladimir Putin: I was Prime Minister then, and I became President in 2000.

Andrei Vandenko: Yes.

Vladimir Putin: I knew them all.

Andrei Vandenko: And…

Vladimir Putin: And I worked with all of them.

Andrei Vandenko: And…

Vladimir Putin: The point is not to crack down on some…

Andrei Vandenko: But that is what happened…

Vladimir Putin: …or twist their arms or any other body parts. Absolutely not.

Do you know what really matters? It is keeping them away from running the country, from influencing political decisions. It is clear that both then and now everybody was, and is, looking to make moves and lobby their own interests.

The difference between the 1990s or 2000s and today, is that they used to directly influence the decisions made by the state on internal, economic, and even foreign policy matters as well as security issues. A modern CEO does not enjoy this privilege.

Andrei Vandenko: But do they try to?

Vladimir Putin: Not any more, actually. They have realized that it is impossible and do not even bother trying.

Andrei Vandenko: Did you make that clear?

Vladimir Putin: They are struggling to protect their interests. For instance, we are currently discussing oil and gas prices with our Eurasian Economic Union partners. Of course, they stand their ground. That is understandable. But they are not trying to exert pressure from the inside. They simply clarify their position, providing arguments to prove they are right. But this refers to a very limited segment of their practical interests. This is natural.

Andrei Vandenko: And what about all this active state intervention in the economic sphere over the recent years? Look at all these state corporations established in those years of affluence. In the second half of the 2000s, when there was windfall cash that could be put to use.

Vladimir Putin: This is not true. There are different assessments regarding the state's involvement in the economy. They vary. Some believe that the state's intervention in the economy is excessive; others believe it is normal. Different methodologies lead to discrepant results.

Andrei Vandenko: So how do you see it?

Vladimir Putin: I believe that overall, we have managed to find the balance. If I am not mistaken, only 7 or 8 out of our 20 biggest companies are partially state-owned. Is it 7 or 8 out of 20 biggest companies, I may be off by a notch, which is no big deal, I think.

The question is not whether they are private or public. The question is how they operate. If they are effective, profitable, and generate public revenue, then the question is whether privatization is the overall goal at all.

Take Canada, for instance. I remember talking to my Canadian counterpart; they had privatized their railway system. In the end, the Americans bought it. The Canadians have come to regret it.

Here we need to be very careful and take calculated decisions. Besides, public-private companies are some of the major contributors to public budgets at all levels. Rosneft is number one, followed by Gazprom and Lukoil. Then come Tatneft and Sberbank.

Andrei Vandenko: Lukoil is a private company.

Vladimir Putin: Yes. That is what I am telling you: the largest companies are the biggest taxpayers.

Andrei Vandenko: It is common belief, an axiom of sorts, that the government is not an effective owner.

Vladimir Putin: This axiom is nothing: you have to look into the way a particular business operates. Applying a generalized approach here is as useless as calculating the average body temperature of patients in a hospital. As you know, this argument is often used when people start asking, quite reasonably, why is it that my neighbor and I are not doing well at all, while life in our country on the whole is fine. It is the same here, two sides of a coin. Therefore, while a generalized approach might be correct, as a methodology, we should consider each particular case separately.

Andrei Vandenko: In other words, you believe that reprivatization is not a bad thing.

Vladimir Putin: Right. I do not think it is a bad thing. Well, you know, there are many different…

Andrei Vandenko: Your adviser Yumashev thinks differently.

Vladimir Putin: Well, that is what advisers are for: their job is to offer opinions. There are different approaches and different visions. A decision-maker must consider every opinion. That is what I am trying to do.

Here is another problem: the Central Bank is being heavily criticized for having taken too many financial institutions under its control, for having spent too much money, for having paid large dividends to its shareholders, and so on and so forth. It was actually not to the shareholders that most of the payments went. The shareholders were hardly paid anything. The bank was paying citizens to minimize their losses from this or that institution’s failure.

In the long run… I know some people will look, get angry, and say, ”I sustained damage.“ But the Central Bank's task was to prevent millions of people from sustaining this damage, to prevent weak financial institutions from borrowing too much money from people, from the population, the way real estate developers dealt with defrauded homebuyers. And then just vanish, to reappear somewhere in London, as usual.

That is why we had to resort to resolution procedures at some point. Whether it was done well or badly is another question. The Central Bank took over the assets of these financial institutions, but not for good, and it is not going to keep them forever. They will be reorganized and reintroduced into the market. The Central Bank has a relevant plan, Ms Nabiullina briefs me.

Andrei Vandenko: Speaking of profits. How do you match a public corporation’s status and its top management’s free market salaries?

Vladimir Putin: They do not match well.

Andrei Vandenko: When they are paid…

Vladimir Putin: They do not. I agree with you.

Andrei Vandenko: …one million a day!

Vladimir Putin: Listen, I find this outrageous myself, honestly.

Andrei Vandenko: Now, Mr Putin…

Vladimir Putin: I will reply.Many things are not as simple as they might seem at first.

I have already had a word with them on that score. What is their answer? They hire many foreign specialists, who work effectively and are worth something on the market, on the international labor market that is. They have to hire them and pay them a wage equivalent to the cost of their services on the international labor market. But if they are to be paid this amount, their bosses are entitled to be paid more.

Do you know where else this has happened? Civil aviation pilots. Precisely the same thing. We were forced to hire foreign pilots, in particular, those with experience flying Boeings and European planes. We had to raise their pay to meet European and US standards. Now the military pilots eagerly take co-pilots’ jobs, because in the Air Force they are paid less than in civil aviation. This distorted the labor market, affecting the Defense Ministry. And we are seeing the same here.

Andrei Vandenko: Now, Mr Putin, how much are airplane pilots paid? Half a million a month?

Vladimir Putin: The second pilot gets something around 300,000–350,000 rubles, I believe.

Andrei Vandenko: While a top manager gets a million a day. Mind you, a day! Now, this seems a little bit too much.

Vladimir Putin: I do not know about the daily rate, but it does look a bit too much. I agree.

Andrei Vandenko: As far as foreign specialists are concerned, that is something… Well, it does not sound like…the truth, I hate to say.

Vladimir Putin: No-no-no, why?

Andrei Vandenko: I mean, it is important, but…

Vladimir Putin: No, no. Otherwise, they would be paid less than their subordinates are.

Andrei Vandenko: Maybe they should be paid less, then.

Vladimir Putin: Does that happen anywhere? Should we be an exception? It does not work like that anywhere in the world.

Andrei Vandenko: Really? Fine then.

Vladimir Putin: But, honestly speaking, I find this annoying and preposterous. I agree.

Andrei Vandenko: They have to be more modest.

Vladimir Putin: Yes, that is true.

Andrei Vandenko: Fine then.

Vladimir Putin: I fully agree with you.

Andrei Vandenko: Perfect.