View settings

Font size:
Site colours:


Official website of the President of Russia

News   /

Russia Calling! Investment Forum

October 29, 2020, Novo-Ogaryovo, Moscow Region

Vladimir Putin addressed the plenary session of the 12th VTB Capital Russia Calling! Investment Forum.

The 12th VTB Capital Russia Calling! Investment Forum is taking place, via videoconference, on October 29–30, 2020. The main theme of the event is Global Challenges, Local Remedies.

* * *

President of Russia Vladimir Putin: Friends, ladies and gentlemen,

Allow me to welcome all of you at the Russia Calling! Forum. As usual, the forum has brought together our friends from all over the world, business leaders, investment managers and consultants, as well as international experts in the field of the economy and finance.

This year the forum is taking place in an unusual format, via videoconference. But I hope that this will not stop us from openly and frankly discussing burning issues on the economic agenda, which are a matter of concern for the professional community both in Russia and the world.

Of course, the main factor that determined the global economic dynamics this year is the novel coronavirus pandemic. We can see the serious decline it has provoked in industrialised countries and emerging economies and the huge funds that have been allocated to support national economies.

The indisputable priority for Russia in this situation is the protection of the life and health of Russian citizens, of our families. I mentioned this on numerous occasions. This is the logic by which our actions have been and will be guided during the pandemic, when we coordinated a package of anti-crisis measures designed to save jobs and protect people’s incomes and to stimulate new contracts in the production chain. I would like to point out that total federal allocations approved for these support measures amounted to some 4.5 percent of the GDP. We know that some countries have allocated even more.

I have no doubt that our decisions have been adopted on time and that they were sufficiently effective. In my opinion, this is the main thing. We have seriously mitigated the consequences of the epidemic in the national economy. Economic decline is even smaller than in many other countries, as you are well aware.

However, the risks persist, of course. At the same time, I would like to note that, despite the complicated epidemiological situation, we are now much better prepared to work in conditions of a pandemic than before. Yes, I realise that we need to pay special attention to some matters and problems, and there are regions that require our special attention – we have recently discussed this matter at a meeting with the Government. But on the whole, the situation is better. This is due to the experience of mobilising the healthcare system and implementing essential preventive measures.

We clearly understand how we should act, and we therefore do not plan to introduce all-out restrictive measures or to launch a nationwide lockdown, when the economy and all business operations virtually grind to a halt.

If an objective need arises, the authorities will make justified pinpoint decisions, with due consideration for doctors’ recommendations, as regards the situation in specific regions, cities and municipalities. These decisions will make it possible to maintain people’s safety to the greatest possible extent and to facilitate the uninterrupted work of enterprises and organisations.

In this connection, I would like to ask business owners and managers to be socially responsible and to comply with all recommendations of doctors and specialists regarding the working conditions of their employees and workers.

Of course, we must fine-tune measures for supporting companies and businesspeople in the current conditions. This includes both short-term and long-term measures.

We are focusing on support for small and medium-sized businesses. We have halved the insurance premiums for these companies, from 30 to 15 percent. This is a permanent decision that does not apply to the current crisis period alone.

Small and medium-sized businesses working in the affected sectors can delay tax and insurance premium payments for the first quarter of 2020 by up to six months.

However, I would like to draw your attention to the fact that not all companies in the affected sectors were objectively able to restore their earlier positions. They continue to face problems. First of all, this concerns restaurants and other services. I suggest extending the delay in tax and insurance premium payments for these companies by another three months.

It has also been decided to extend the moratorium for planned inspections of small businesses until the end of 2021.

We are therefore reducing the administrative and tax burdens for tens of thousands of companies employing millions of Russian citizens, thus preserving jobs and people’s incomes.


Despite a very difficult year, Russia has maintained macroeconomic stability, prevented an inflation hike and ensured financial market stability.

This is a solid basis for taking further steps to consolidate the efforts of the state and the business community, overcome the decline, restore employment and bring the national economy back to the growth trajectory.

We intend to act and are already taking measures in such key spheres as stimulating investment, promoting exports and ensuring a broad-based introduction of digital technologies. These factors can definitely set the trend for long-term quality growth.

I would like to emphasise that joint coordinated action is especially important, when government measures to develop the infrastructure, improve legislation and provide direct support to economic sectors are complemented with business investment in the creation of new, modern and highly paid jobs. Only in this case will we see a combined effect and a real result for the entire economy and for the welfare of the people.

I would like to reiterate that the macroeconomic stability we have attained is important for and directly benefits both the people and the real economy. This stability has allowed the Central Bank to lower the key interest rate and enhance the accessibility of loans, as you are aware, while the Government used it to launch new instruments in the interests of small and medium-sized businesses and Russian families.

Let us consider, as an example, the easy term mortgage programme with a 6.5 percent interest rate. This form of targeted support has proved effective. According to forecasts, the amount of mortgage loans issued this year will be record-high at more than 3.5 trillion rubles. In addition, this measure has not only helped the construction industry but has also encouraged additional demand for the output of related sectors, which employ millions of our citizens.

I have said already that a decision was taken to extend the easy term mortgage programme until July 1, 2021. We will also allocate considerable funds from the federal budget to promote rural mortgages. Next year we will nearly triple them.

At the same time, I would like to remind you about our goal: while making mortgage loans more affordable, we must also expand supply on the housing market to prevent imbalances and a rapid growth of prices – we are aware of this danger. Otherwise, the lowering of the mortgage interest rate will have no effect at all.

In this regard, special focus should be on the infrastructure support for housing construction and, in general, the development of regional infrastructure, including motorways, utilities, public transport and social facilities.

We will expand long-term debt financing, remove regulatory restrictions and create lucrative opportunities for safe investment of free capital and savings, so that companies and regions can bring in additional resources to achieve these goals.

All the more so as the activity of domestic, including retail, investors is on the rise in Russia. This goes to show the level of trust in the domestic economy. Of course, this is also due to the rate cut. Nevertheless, it is also a measure of trust in the economy in general. It is a major investment source that should be used to promote sustainable development and implement infrastructure and other projects of Russian companies.

Notably, despite the current difficult period, Russian assets enjoy demand on the market. Since earlier this year, the domestic issuers have raised $37 billion on public debt markets, and the securities market placements have brought in over $6 billion, a record-breaking amount over the past few years.

On a separate note, I would like to note a new model for attracting private investment that we tested just three weeks ago when Sovcomflot held a public offering on the Moscow Exchange.

Over 42 billion rubles have been raised. Moreover, these funds will be invested in new projects, including the construction of gas carriers at domestic shipyards, rather than go to the budget. To reiterate, I am talking specifically about additional resources, which will be used to expand the company and implement industrial projects. Thus, we will hopefully get a cumulative effect for many industries and high-tech sectors.

Close cooperation between the state and businesses is critically important if we want to reinforce and improve the securities market. The issue of perpetual bonds by our major infrastructure company, Russian Railways, is quite notable. With the assistance of the Government and the Central Bank, these securities provided resources to back the Russian Railways’ investment programme and, importantly, helped create a portfolio of orders for domestic manufacturers of equipment, cars and locomotives.

In addition, the state is supporting the green bond instrument designed to finance the transition of Russian enterprises to the best available technology. The state will cover up to 90 percent of the bond coupon payments.

I would like to say this once again: stimulating investment is our priority at the current moment, bearing in mind the goal of long-term future-oriented economic development. Of course, I would also like to point out that reliable and safe mechanisms for investing in new financial instruments are available to both Russian and international investors. We value every partner who wants to work together with us.

In addition to this, another instrument for the implementation of large projects important for entire regions and territories should be investment protection and encouragement agreements, which have a so-called stabilisation clause that guarantees the stability of tax terms, use of land and construction conditions for investors, whose spending on infrastructure will be made up for through the amount of taxes paid.

About two dozen projects with an aggregate budget of some 900 billion rubles have applied for this instrument. I have recently discussed this with the Government, and I would like our colleagues in the Government to remember that these plans must be implemented and become a reality a soon as possible.

And the last thing. You are aware that digital transformation is one of Russia’s national goals in the coming decade. It is an extremely important condition for enhancing economic growth and improving the quality of life for the people.

Russia’s leading companies, first of all Yandex, Sber and VTB (Mr Kostin can vouch for this), have been long and very successfully investing in these spheres, spreading to new niches and products and actually growing into what is now described as “econsystems.”

I am quite sure that the speed we have accumulated and the development of competition in this sphere (this is very important, and we will probably talk about this later today) will give a powerful impetus to our economy and will also help many small and medium-sized companies expand their marketing channels. This is extremely important, and I am certain that this subject is interesting for our colleagues, including those wo are attending this event.

Thank you. With this, I would like to conclude my opening remarks.

I have the pleasure of giving the floor to our host today, Mr Kostin. Please. 

President and Chairman of the Management Board of VTB Bank Andrei Kostin: Mr President,

First of all, thank you for your participation and substantive remarks. This is your 12th consecutive address at our forum and this is what primarily attracts investors from all over the world.

You have already mentioned that this forum is being held in unusual circumstances, although we are gradually getting used to it. We really doubted for a long time whether we should hold the forum this year, because, as we know, most of the forums both in Russia and abroad were cancelled this year for reasons that are well known.

However, investors are an impatient group and view the crisis not only as a time to count their losses, but also as an opportunity to make lucrative investments, because crisis is usually a good time to buy and the likelihood of making a profit is probably higher. Therefore, we took the chance and decided to hold this forum the way it is being held now. There is probably an upside to it, because with the help of our partners, the Russian media and international news agencies, our session is being broadcast to 70 countries online. Almost anyone who wants to hear and see it, and there will certainly be hundreds of thousands of people, if not millions, will have this opportunity.

So, if you do not mind, then, as is customary, we will start the Q&A session. I hope modern technology will allow investors from different countries to ask their questions.

Colleagues, please introduce yourselves and tell us what financial organisations you represent, where you are located and what country you represent.

Let us start our discussion. Please.

Yakov Arnopolin: Good afternoon, Mr President.

My name is Yakov Arnopolin, and I am from the PIMCO Investment Fund in London.

Mr President, here is my question for you. It has come to our attention that the growth rates of the Russian economy have decreased over the past five years amid demographic problems, weaker inflow of migrants and still relatively low amounts of direct foreign investment. Additional costs to combat the virus may cause the postponement of the national projects to a later date. Accordingly, what measures is Russia considering to achieve higher growth rates in the long term?

Vladimir Putin: This is actually the main issue from which we proceeded. I am not going to give an extended answer now, because this would take time. But I would like to note that the economy has slumped not only in Russia but throughout the world as well. As you know, the Russian economy has slowed but not as steeply as the other economies, including those of the so-called industrialised countries.

The economy declined by 8 percent in the second quarter in Russia, 9 percent in the United States, as far as I am aware, and by as much as 17 percent in the Eurozone, from 14.7 percent to more than 17 percent in some countries. So there is nothing out of the ordinary; we are in line with global trends. As I have said, we are even better off in this respect than some other countries.

However, foreign analysts who analyse the situation say this has to do primarily with the structure of Russia’s economy, where the flagship sectors have been affected less than other industries. I do not think so, because, for example, the demand for energy (we are aware of the role and importance of our energy companies in our economy) has fallen considerably, yet the overall indicator is not bad at all. This is primarily the result of the stability of our macroeconomic policy in the past few years.

I would like to emphasise that the Central Bank transitioned to a floating exchange rate of the ruble several years ago. This has allowed us to mitigate the effects of changes on global markets, in particular, the energy market. By doing this, we have largely, though not entirely yet, “unfastened” our economy and its main indicators from global price fluctuations, because we have also introduced the Budget Rule and are strictly complying with it. We have preserved and even increased our reserves precisely thanks to our decision on the Budget Rule.

As of today, or more precisely as of the middle of October, our gold and currency reserves totalled about $585 billion. Our National Wealth Fund equals approximately $176 billion. At the same time, we are sticking to the target inflation rate of around 4 percent. We have one of the smallest sovereign debts in the world, approximately 3 percent, and our aggregate debt is about 17 percent. Taken together, this allows us to feel secure, including to continue developing our economy and to coordinate new economic development plans.

Of course, one of the main factors, as you have pointed out, is attracting investment, not only direct foreign investment but also other types of investment. We proceed from the assumption that the macroeconomic conditions I have mentioned will serve as a guideline for our potential partners. 

Here is what I would like to point out. Surveys conducted by international institutions, not us, who questioned our partners and foreign investors in general showed that no one refuses to work in the Russian market, but on the contrary (I cannot provide specific numbers, but they are readily available in the public domain), the number of companies planning to work in the Russian market is on the rise.

We will make every effort to create proper conditions for our investors, both domestic and foreign. We are also well aware of where our main investors come from – Cyprus, the Netherlands, and so on. This is about reinvesting Russian capital, and that is good, too. We do not mind that we have free movement of capital. We do not restrict this and do not intend to. This is our principled position. This was the case during the 2008–2009 crisis, and this is the case now amid the crisis caused by the pandemic. I hope this, too, inspires trust in the Russian economy and Russia’s economic policy, as we can see from the capital returning in the form of foreign investment.

So, all of that is causing optimism despite the known risks. Look, we will, of course, have a decline in the economy, but it will be much less pronounced than in other countries at about 4 percent this year and 4.2 percent next year. In a year, growth will resume, including an increase in our surplus. I have just given you the numbers showing the deficit and ensuing budget surplus. This year, the budget deficit will amount to 4.4 percent, and next year we expect about 2.4 percent. The year after that there will be a surplus of about 1 percent. The economy will grow in step. Overall, I am more optimistic than pessimistic, and I hope our potential partners will appreciate this.

The factor that you mentioned – achieving targets under the national projects – is critically important. Indeed, we are shifting certain elements to the right of the chart, but these goals do not go away. Moreover, the goals have been set even higher in the projects that you mentioned, namely, infrastructure projects involving the creation of new opportunities under railway and motorway projects. In general, this year we are over 80 billion rubles in excess of the plan. We have planned and will implement a number of large investment projects, and I hope, in some cases even at an earlier date than planned.

I will be happy to hear that this answered your question.

Andrei Kostin: Mr President, may I ask one more question?

Our expert community is heatedly discussing whether the government can increase investment. Even Alexei Kudrin, once an ardent supporter of scrimping and saving, recently said in an interview that investment can and must by increased through augmenting sovereign debt and tapping the NWF more vigorously.

Indeed, you quoted Russia’s sovereign debt at 17 percent, one of the lowest in the world. According to IMF methodology, up to 40 percent debt is actually acceptable, low risk. Aren’t we pursuing an overly conservative policy in this area? Could we possibly increase spending on investment projects by augmenting debt and, perhaps, use a little more of the National Wealth Fund, which we seem to be keeping for a rainy day? It seems like the right time to use it, doesn’t it?

Vladimir Putin: You asked if we could increase spending. The answer is yes, we could. But there is another side to your question that you have not asked – whether this should be done now or not. I can tell you that we are doing it now. I am referring to the support measures I have mentioned many times and we will probably discuss them later today. These measures primarily involve support for specific industries, support for Russian citizens, families, primarily families with children. Where does this money come from? It comes from the reserve funds. We have a very low federal budget deficit, somewhere around 3.9 percent this year, I believe. Why is it so moderate? Because we are using our reserve funds, including the NWF.

Do we need to do more? This question is pending in a thorough study by the Government and the Central Bank. I am watching this closely. My colleagues and I are adjusting our actions. Boosting government spending unreasonably would mean running risks that we may not be able to predict.

I have just mentioned the construction industry. Yes, we have lowered the mortgage rate to 6.5 percent. An all-time record inflow of funds to the construction industry and a record number of mortgage loans people have taken out. But I also mentioned the risks, one of them being rising prices, and we must closely monitor this situation. The same holds true for other industries. We could pump in more money, but then the increased prices and inflation would eat up our good intentions. We have to be very careful here. And this is how we have acted so far.

Andrei Kostin: Thank you very much.

Colleagues, please, who is next? Please, go ahead.

Kaan Nazli: Good afternoon, Mr President. Thank you for your comments. My name is Kaan Nazli. I am with Neuberger Berman in London, a new investment fund.

My question is partly answered, and it is again about the national projects – in particular, infrastructure spending. You have emphasised these projects since 2018, and they were an important part of the economic growth for the past two years. So now with, of course, the COVID-19 pandemic changing both global and local dynamics, I wanted to ask if there is perhaps a change in focus of these projects, perhaps tackling more public health issues or some social inequality issues that might stem from the pandemic or, in addition to the pandemic, climate change is another risk. So I would really appreciate your comments on this. 

Vladimir Putin: You mentioned national programmes and infrastructure projects, in particular, and a potential shift in emphasis towards alleviating the problems associated with social inequality and the efforts to preserve the environment. Of course, social inequality and fighting poverty are the key tasks of the Government and the Russian state. This is obvious. Maybe, we will talk about this later today.

The same goes for our environmental goals. This is important for Russia since 70 percent of its territory is located in the northern latitudes and a significant part, 60 percent, is beyond the Arctic Circle. We have people living there. There are residential buildings, industries and infrastructure, which could be damaged (I spoke about this publicly not long ago) if the permafrost starts thawing, which it is doing, and will continue to thaw. This is a very serious challenge for us, and of course, we are monitoring it. We will continue to cooperate with our partners, including within the Paris Agreement, we will strive to fulfill our obligations. I can discuss this in more detail later.

However, this does not mean at all that we are abandoning major projects that are part of our national development goals. This, not lastly, perhaps even primarily, concerns infrastructure. We are not canceling our infrastructure plans. On the contrary, I hope that we will even be able to implement them earlier than planned. I have already said that we have allocated an additional 80-plus billion rubles this year to this end. We will continue to implement these projects.

What are they? They are widely known, but I will list them again. This includes the development of the Eastern area, the capacities of the BAM (Baikal-Amur Mainline) and the Transsib, so that businesses that plan to invest their money in developing certain deposits are able to export these products to the Asia-Pacific region and its promising and growing markets. This, of course, includes the development of railway infrastructure and access roads to the Black Sea and the Azov Sea – Black Sea basin. This also includes the development of the railway infrastructure in the Central Federal District, and the central transport hub in general. This includes the construction of a new Moscow-Nizhny Novgorod-Kazan motorway, which we agreed on with our Kazakh and Chinese partners.

These are the biggest projects that crossed my mind, but it is not limited to these. For example, transport infrastructure development around our big cities with over a million people, around Yekaterinburg, Krasnodar and other large cities, are also part of our infrastructure development plans with a view to “stitching together” the territory of the Russian Federation. It also involves seaports, airports and so on. None of that has been put on the backburner; it will all be done.

Andrei Kostin: A question, if I may. Our bank has already pooled around 850 billion rubles this year as investments for participating in concessions, private concessions, including toll roads, airports and the like. I think this has been a fairly successful experience and it was developed in Russia, too. But now we see that the Government wants to shift the emphasis to substitute more private concessions with concessions of state-owned enterprises which issue infrastructure bonds. For example, Avtodor gets a concession and raises bonds. On one hand, it will probably attract portfolio investors who are interested in these kinds of equities, but I believe we will miss other investors who prefer to invest in concessions directly. Meanwhile, we have such investors, Arab and Chinese investors in Pulkovo airport and Europeans in toll roads. Do you think private concessions have a right to exist in Russia and will they get state support?

Vladimir Putin: Of course. However, our major goal is to attract private investment, including foreign private investment. The first speaker mentioned that, and I reaffirm it. Let me repeat, we are trying to ensure that their participation in our economy is attractive to them, not just break-even.

When we talk about the infrastructure bonds of our biggest companies, with the positive experience of, say, Russian Railways that issued perpetual bonds, people are happy to invest their money in these fiscal instruments. And rightly so, because it is guaranteed by the state, it is the biggest company and it is impossible to imagine effective sustainable performance of the entire economy without the efficient operation of that company, this is true. However, it does exclude the need to attract private investment, including for infrastructure. And this is what we are doing.

You mentioned several foreign investors. RDIF is working, let us say, with investors from the Arab world. I have said this and I would like to reiterate that RDIF enjoys a fairly high confidence level in this area of investment, among other. Some people decided to automatically invest their money in projects that RDIF invests in, up to 10 percent, at once, automatically. This is why nothing has been cancelled here, quite the opposite, we will be doing our best to maintain interest in such work.

If you see anything here that needs more streamlining, please tell me, and we will certainly discuss it with our colleagues. We have the former economy minister here and my former aide on economic issues; he is currently a deputy prime minister. Can you add anything, Mr Belousov?

First Deputy Prime Minister Andrei Belousov: Only that there are no plans to impose any restrictions on existing instruments or institutions. Also, we are currently developing a wide range of new instruments where banks will play a key role, of course, because they will be using these new instruments.

Speaking of investment vehicles, we are now launching “green bonds” alongside perpetual bonds. We expect the green bonds to finance environmental projects. If I am not mistaken, five tranches of such bonds are already in the stock exchange. We are now working out the issue of financing the coupon yield and the state support for these bonds. Concurrently, a number of instruments are being launched which will allow investors to lower their risks and the cost of investment.

The most important thing with these instruments (as you have mentioned, Mr President) is the agreement on the protection and promotion of investment. Lowering risks means decreasing the cost of loaned money, which is very important, and this is actually an important part of the agreement.

We are increasing the use of such an instrument as special investment contracts, which, by the way, arouse immense interest among investors, including foreign investors, for localising manufacturing here, and other things.

This is why we are increasing everything that concerns instruments and interaction between the state and private business, as well as our support for private investors.

As for investments in infrastructure, I can only say that the figures speak for themselves. We have a comprehensive plan, which we have mentioned, in addition to the earlier named projects; we have the Northern Sea Route and a number of other projects, actually nine, all in all. While we will spend 365 billion rubles on it from government funds, above all government-owned companies, this year, in a year, in 2022, this amount will grow to 562 billion rubles, and by 2023, it will reach almost 600 billion rubles. And in aggregate, it will amount to almost three trillion rubles since 2019. This is a huge amount; such a sum of money has never been invested in infrastructure in this country before. This is in addition to motorways, which we will refer, as it were, to a special records management area.

Thank you.

Vladimir Putin: I would like to remind you of what Mr Belousov has just said, I mean the investment agreements that I mentioned in my introductory remarks. A rather large number of them have been signed, to the amount of 900 billion, I believe, all in all. Most important here is what the state takes upon itself – the consistency of the terms of the contract for the entire period of its implementation and infrastructure development under these projects. And I expect our business partners, private investors, to fulfil the obligations they have assumed.

As for the special investment contracts, indeed, it is a very interesting instrument not only for Russian, but also for our foreign partners. I know it firsthand; I heard it many times and took part in discussions with our foreign partners on various aspects of such special investment contracts. Yet, generally speaking, we are adapting this instrument so that it could clearly meet the interests of development, namely long-term development of the Russian economy, its real sector and that of our partners.

Andrei Kostin: Thank you, colleagues. Let us move on. Who is next? Go ahead, please.

Felix Hofmann: Can you hear me? This is Felix Hofmann calling in from Union Investment in Frankfurt. Hello.

Mr President, fiscal and monitory stimuluses have been put in place in Russia like in many countries around the world. How can you ensure that support will benefit those companies, and specifically SMEs, that are directly affected by COVID-19, rather than helping large corporates through, for example, lower interest rates, as seems to be the case in Euroland?

Vladimir Putin: Felix, if possible, could you please repeat what support measures did you say are being taken on a broader scale throughout the world? What are these measures? What did you call them?

Felix Hofmann: Okay, let me repeat the question, please. Fiscal and monitory stimuluses have been put in place in Russia like in many countries around the world. How can you ensure that support will benefit those companies, specifically SMEs that are directly affected by COVID-19, rather than helping large corporates through, for example, lower interest rates, as seems to be the case in Euroland?

Vladimir Putin: As for small and medium-size companies, a considerable part of the support measures taken by the Government of the Russian Federation concern these companies. We started our support measures by helping them. True, they were fairly closely related to the requirements for all business representatives, and the main goal here is to preserve jobs and employee income levels.

I will not list the support measures. There are many of them and they have all been published. But they include subsidised loans and grants for maintaining the number of jobs and delayed tax payments. Now I am suggesting additional measures for extending the tax holidays. These measures also include limiting excessive pressure from administrative bodies, and I have also proposed extending the term for cancelling inspections for a fairly long period, for the next year. So this was a whole package, a large package of support measures that are primarily meant for small and medium-size companies.

Our support measures for large companies, primarily in the processing industry, were announced only afterwards, when we took the second step. We intend to continue doing this in the future. We will target these measures and will be very attentive to this support.

We see that generally, as I have said, we are acting effectively, but at the same time we know that these support measures do not reach every company for many reasons. The Government is thinking about this and working on further steps in this area under my instructions. We will have to see how the situation develops. We are perfectly aware of the fact that today businesses in the food services and other services continue to be in a fairly complicated situation. We will certainly respond to this, just as we did to the situation in large companies, for that matter.

Small businesses, however, are definitely in the spotlight providing employment to about 20 million people, which is a big number. Our plans indicate that at least 25 million people will be employed in this sector several years from now. Of course, to get there and to achieve these numbers, we must be goal-oriented. We will continue to do this. I am not talking about the package of support measures that was implemented before the pandemic. That will continue to be implemented, and we will only step up these efforts.

Andrei Kostin: Through the prism of banking, we can see that these government measures were directed at and focused on small and medium-sized businesses. Large companies negotiated terms with the banks, etc. The state primarily took care of medium and small-sized businesses, and I think this is why many companies have survived and are developing.

Vladimir Putin: Mr Kostin mentioned the role of banks and not accidentally. Indeed, it was quite significant. The bankers were unhappy with what we did during the first phase saying that we used most of the measures to support small and medium-sized businesses and shifted them onto the shoulders of the banking system, meaning deferred payments on loans and other tools that we used. As we can see now, these decisions were nevertheless justified, and the banking sector was not hurt. It retained its clients when it allowed delayed payments on the loans taken out earlier by small and medium-sized businesses, and retained, I will say it again, a significant number of its clients.

Andrei Kostin: We have never been disgruntled with the President, maybe with someone else, like the officials.

Vladimir Putin: Okay. In any case, I am well aware of that. But it seems to me that it was nevertheless a justified decision, and, to reiterate, it did not hurt the banking sector, but supported the SMEs.

Andrei Kostin: Colleagues, let’s move on. Who’s next? Go ahead, please.

Damien Buchet: Good afternoon, Mr President. My name is Damien Buchet. I am Chief Investment Officer at Finisterre Capital in London. Mr President, Russia has been extremely fast and efficient in developing and producing a vaccine against COVID-19. Now, there seems to be a second wave happening for the pandemic, and it is starting to have a similar impact in Russia as in quite a few other countries. So my question is two-fold: when do you expect to see a broad distribution of the vaccine against COVID-19, to provide a convincing protection for the Russian people? Also, you have had significant expressions of interest from the export market for this vaccine. Could you tell us which countries are likely to be the first recipients? Thank you very much.

Vladimir Putin: Indeed, our specialists, researchers have been on the road of creating these vaccines very actively, and I would say, with great efficiency. It shows that our scientific schools, established back in the USSR, have been maintained and continue to advance. We can only be happy that we managed to keep these teams, their developments and experience, and that they are moving forward.

We are very grateful to the Gamaleya Institute and the Novosibirsk-based Vektor Centre. These are really good products. The key issue is that they must be safe and effective, and both requirements have been met in these cases – in the case of Sputnik V and Vektor’s vaccine. A third vaccine is coming soon, too.

There is only one issue to resolve now – the necessary production volumes. There are certain problems here related to the availability or lack of the necessary equipment, the hardware as they say, to carry out mass production.

In this connection I would like to say two things. First and foremost, we will have to provide vaccination for our people, citizens of the Russian Federation first, protect their health against this dangerous virus. This is number one.

Second. We will not refuse to work in foreign markets; we will be happy to work with others and we are already doing this. You are obviously aware, and I also mentioned it, that analysts have estimated this market at around $100 billion a year.

We are ready to take the following approach here: we are prepared to provide the sale of intellectual property, and most importantly, we are ready to produce this vaccine, or these vaccines, at the production facilities of our foreign partners, they have the required equipment. I would like to stress this – without compromising vaccinations in Russia, because we have yet to acquire or produce this equipment – we are ready to work with our foreign partners.

I would like to recall that we are generally ready to work with our colleagues in science more closely than before.

We know that many European countries have concluded contracts on vaccines from the UK. Unfortunately, our colleagues are having some troubles. They are using a vaccine based on chimpanzee adenovirus whereas our specialists at the Gamaleya Institute have a vaccine based on the human adenovirus. It is a “booster,” as the researchers call it, to deliver the necessary components to human cells. It works effectively, thank God, without fail. We have not had a single serious failure in this area.

The Gamaleya Institute vaccine and the Vektor vaccine are working effectively. The question is the launch of full-scale production. All the regions have received the vaccine. I hope we will be able to start mass vaccination by the year’s end.

Our first partner to get this vaccine, as you must have heard, is Belarus who we are working with within the framework of the Union State. As far as I know, work on the vaccine there is making progress.

Andrei Kostin: Thank you.

Colleagues, let us proceed. Who would like to go ahead? Please.

Marcin Wiszniewski: Thank you very much for this opportunity. My name is Marcin Wiszniewski with the fund Bluecrest Capital, based in London. My question is about the monetary policy and institutional setup of monetary policy in Russia. The economic emergency that COVID-19 created in the world has pushed the economic policy-making to its limits. A lot of global central banks have adopted a much more aggressive or a more proactive role in part of the policy response. As you know, a number of central banks have reduced their interest rates to zero or even negative, have engaged in the direct purchases of government bonds, or in some cases even corporate bonds directly in the market. The Federal Reserve in the United States has even officially changed or amended its inflation targeting regime into an average inflation targeting regime signaling that they would in the future tolerate higher inflation to support economic recovery. In the meantime, the Central Bank of Russia has continued very conservative, traditional policy-making. It has reduced rates somewhat, however, given the persistent track record now of inflation below target since mid-2017, despite very-very large currency volatility and economic shocks, there is perhaps space for the Central Bank to engage a little bit more actively to support growth and recovery. So I was wondering, do you believe, in the current environment, is there room and space for the Central Bank of Russia to become a little bit more proactive today? Do you think there is room to engage in a more unconventional monetary policy, or even to use a little bit more space within the conventional policy that they currently have?

Vladimir Putin: I am convinced that many of your colleagues in Russia have not only listened to your question attentively but also applauded it inwardly, because in this country, as probably in other countries as well, there is a running discussion on these matters.

As for unconventional regulation methods, you know, we treat all unconventional forms, including unconventional marriages, with a certain caution, if with understanding. I am saying “with understanding” and want you to take note of this word, too. With understanding, but cautiously. Why? Because as the head of state I must deal with demographic problems, while unconventional marriages, as is common knowledge, do not produce children.

But unconventional regulation methods might be of use, in certain cases, in the sphere that you have just mentioned. But it is an open question whether they are suited for the Russian economy and at this juncture. We are following closely the developments in some countries – what measures they are taking and to what extent these measures are effective. In fact, many central banks are purchasing government bonds. I was told not so long ago that the Federal Reserve, for example, was even purchasing debt securities of certain major US companies. We should check whether this is so or not. But, as we see it, this is not the main function of a financial market regulator, nor the main function of the Central Bank of the Russian Federation.

What is this leading to? First, this is in demand where there is a clear dearth of development resources. But what is this leading to? Chile, for example, or Poland, our neighbour, are known to use these tools. So far, we see no negative consequences, this is true, and we monitor this closely. But the budget deficit in Poland, for example, if my memory serves me right, is nearly 10 percent, while ours is half of that. Next year, it will be halved again, to 2.4 percent. Yes, the deficit will amount to 2.4 [percent]. But what does this mean in practical terms? The Central Bank is purchasing government bonds, but this is an emission, we understand that this is just an emission. What is it leading to? To an increase in the money supply and this may lead to inflation growth. We must be quite wary of this.

We have, in fact, target indicators of inflation at the level of some 4 percent, but a danger of this kind, at least for our country, does exist. Inflation growth means price growth. But the government has to live up to its social obligations. What does this mean? This means that the budget deficit will continue to grow. All right, Europe has a seemingly stern but actually kind auntie to whom you can always turn for help. You understand whom I mean – the Federal Republic [of Germany]. But we have no one to go to with hat in hand. That is what makes all the difference.

This is why we must keep to the rules that have enabled us to maintain a sound macroeconomic situation in this country over the past years – precisely in order to ensure that our partners, including private investors, both current and prospective, keep faith in the Russian economy and the fundamental framework of sound development of the Russian economy. We will act and devise our policy in this sphere based on this premise.

I am not ruling anything out, but at this moment we do not have any need of this sort.

Andrei Kostin: Thank you.

Next question, colleagues.

Joaquim Nogueira: Mr President, I am Joaquim Nogueira from GAM Asset Management. We are a Swiss-based asset management firm. I am based in London with my team. Since the beginning of your presidency, you have shown a commitment towards a market economy, an open economy. An example would be the privatisation programme. We participated in the Sovcomflot privatisation. And my question goes about that precisely: which sectors would you open further to private investment? And which sectors do you feel more protective about? Which sectors do you feel should remain, and which industries should remain in the hands of the state?

Vladimir Putin: As I understand, you took part in the Sovcomflot IPO. I want to thank you for that. It is true, as I said, we attracted 42 billion, and I want to draw the attention of our audience to the fact that this money will not be used to pay dividends or other noble but not necessary goals in this case. Paying dividends is very important for improving a company’s capitalisation, but in this case, all this money will be used for the construction of ships of various kinds, for creating work for our enterprises and thus for expanding the capabilities of the Russian carrier.

Sovcomflot was a 100 percent state-owned company, and now the state’s share has decreased. The government retains control over the enterprise, but the trend has been set. In the near future, next year, we plan that 180–186 stock companies with state participation and approximately 86 unitary enterprises will take part in the privatization. And another 1,300, I think, various economic entities that belong to the state will also take part in the privatisation process.

At the same time, I want to emphasise that there are at least two factors that we take into account and that lie at the root of all privatisation processes. First, we assume that any privatisation deal must improve the enterprise’s efficiency, create new jobs, new investments and technologies. This is the most important thing. And, finally, we cannot forget about the market conditions in which privatisation deals are made. That is, they must be fiscally profitable, bring some profit to the treasury.

But again, I want to reiterate, I named an approximate number of enterprises of various types and from various sectors, and there are no restrictions in these terms. There are no restrictions made by Russian law for foreign investors. As you know, in some nationwide projects, permission is required from a relevant government commission, but there are no prohibitions. And I hope that our partners will appreciate that and we will be working together, including as part of the privatisation process.

Andrei Kostin: Thank you.

Mr President, we have another very good partner and investor. Yekaterina Ilyuchenko represents Union Investment, a branch of the Bank DZ, the second largest bank in Germany. Due to certain reasons she was not able to be here today to ask her question. She sent it online and asked for it to be read. I will read it, there are even two questions.

“Every crisis unites people. The number of people with an income lower than the minimum monthly wage has not decreased. What can break this trend in the medium term?” What can stop a rise in the number of people with incomes lower than the minimum monthly wage?

And the second question I related to the efficiency of public services amid the growing digitalisation. “You have repeatedly emphasised the need to introduce artificial intelligence. On the one hand, it will improve the efficiency and speed of problem analysis. On the other hand, it can prompt information abuse. In terms of personal data protection, will Russia follow the example of China or Europe in terms of regulation?

Vladimir Putin: As for the first question, combating poverty. This is a very pressing and extremely important issue for each country of the world, including Russia. Against the backdrop of the pandemic, I want to note – not to prove that we are no worse than others, but objectively – during the pandemic, the number of people below the poverty line increases in almost all countries.

Unfortunately, Russia is no exception. These numbers are well-known, but I will mention them once again: there were over 40 million people below the poverty line in Russia in 2000, and since then their number has been decreasing. In 2015, there was, unfortunately, an increase of the number of people with low incomes in Russia. Then it began going down again. As compared to the previous years starting with 2000, it has fallen by over two times. But it does not mean we are happy with this result. Of course not.

You have yourself mentioned the link between the subsistence minimum and the minimum monthly wage. We have amended the Constitution of the Russian Federation. The minimum monthly wage cannot be lower than the subsistence minimum. I am proceeding from the assumption that the Government will unconditionally ensure this constitutional requirement – a requirement enshrined in the Fundamental Law.

We are fine-tuning a number of other tools to support the people who need this support; we are lending our helping hand to those badly in need.

The second measure is certainly making various tools proposed by the Government to help people who have found themselves in a difficult situation, more targeted.

We are talking about the pandemic period. I have spoken about this and I would like to reiterate this. Who are the intended recipients of a large part of the tools that have been proposed, the support measures? Families with children. There is an entire range. I will not repeat anything now, the format of our discussion does not make it possible to go into detail, but all of this is common knowledge and available from open sources. This includes support for families with children from birth to three years of age, from three to seven years, and we have introduced support for families with children aged up to 16 years and paid these families a lump sum of 10,000 rubles on two occasions. I am not even mentioning the maternity capital that now covers all families upon the arrival of their first child; it is being regularly indexed to the rate of inflation. In general, these are all tools to support the people who need a helping hand from the Government.

As for the jobless, we have taken the necessary steps in this direction as well, including by increasing the unemployment allowance. We are using the so-called social contracts on a wider scale that help people to acquire new skills, another profession, and find a job in a relevant way. Social contracts enable people to take part in developing their cities, towns, and so on, and perform quite needed, if not perhaps highly skilled, work with secure funding. We will continue to encourage self-employment, and so on. There is an entire range of measures that we are using today, and we will continue to do this.

But, of course, the general method and way to solve the problem is by changing the structure of the Russian economy and creating new, well-paid jobs. And at this point, we are gradually transiting to another topic that you have broached, namely digitalisation.

Investment, private investment in the first place, structural changes based on new digital platforms, digitalisation of the economy and the life of the country and the state in general are, certainly, a very important area. We are not going to follow any established pattern here. You asked if we want to follow the Chinese pattern of data protection, or the European one. We will have a Russian pattern. But protection of personal data is extremely important. It is a human rights issue. People have the right to protect themselves and their families from the abuse of personal data.

We will proceed very carefully to make sure this field of activity is not frozen and provides for the development of the social aspects of the country’s development, healthcare, the economy and all areas of life. But at the same time, people need to feel protected.

I will not talk about any final decisions right now. We are thinking about it. Of course, we have no intention to take any prohibitive measures that would destroy the entire idea.

Andrei Kostin: Mr President, interestingly, Yekaterina asked a question about personal data protection specifically in the context of public services. But there is a tremendous amount of information processed by private companies as well. A recent public opinion poll in America has shown that only 14 percent of Facebook users believe that this company is capable of respecting their privacy.

I can give you a personal example. Recently I was at the gym. I stepped on a treadmill and it said: “Choose a programme.” I pressed a button. The treadmill asked for my full name, date of birth and email. I was surprised that a treadmill would like to know so much about me and switched to a cycling machine which was, apparently, an older model and did not require anything. So I pressed ‘start’ and got going. But in general, the amount of information that more and more private companies are demanding from us when they provide their services is enormous. Can the state interfere with this process and regulate the amount of information and its use by private entities providing their non-public services?

Vladimir Putin: This is exactly what I have just said. This is exactly our goal and I think we will be able to find an adequate and balanced solution. I mean our technological capabilities. You stepped on a treadmill and the machine requested a set of data from you which prompted questions and certain concerns.

Andrei Kostin: I did not really feel like running anymore.

Vladimir Putin: Yes, you do not want to run anymore. But I can imagine that in addition to your smart phone, you could have capabilities in your pocket that would satisfy the demands of those who want to know something about you while at the same time protecting your own personal data. We should think about this, of course. We need to cooperate with our most advanced companies which, by the way, are operating very efficiently not only in Russia but on international markets as well, including banking and protection of people’s bank data. You have extensive first-hand knowledge of this and these companies. I think we can find the necessary balance of interests on this path.

Andrei Kostin: Did your treadmill ever ask your name?

Vladimir Putin: I exercise regularly. I am used to asking questions myself rather than answering them.

Andrei Kostin: Sounds right.

Colleagues, let’s go on. Who is next?

Igor Tishin: Good afternoon. Igor Tishin, Harding Loevner investment company, New York.

Mr President, you have often said that the adoption of digital technologies, artificial intelligence and innovations in biology are of primary importance for the future of the Russian economy. In this context I would like to ask which role it is envisioned that small businesses and private companies will play in this development? And is the Government going to develop measures to protect smaller players and start-ups against the competitive pressure from state-owned giants, such as Sberbank and Rostec?

Thank you.

Vladimir Putin: It seems to me that I have partially answered this question when I was responding to previous ones. Nevertheless, I am ready to get back to it once again. We believe that the small and medium-sized business segment, above all in the high-tech area, is extremely important to us.

However I would like us to have little difference in this area from what is happening in other economies, specifically I would like our major companies to generate the need for and establishment of an entire cluster of such start-ups around them consisting of small and medium-sized businesses. All the more so that we have many and enough such opportunities, especially in the intellectual field. It seems to me that another thing is more important to us: it is more important to create conditions in which the Russian economy would generate the need for the products of such activity – this is what is important.

The second component of this process is, of course, effective antitrust legislation and practice in the application of existing regulations. It seems to me that today this sphere is regulated well enough, and both Sberbank and Rostec have, to my mind, the right attitude and are operating accordingly. Despite their size and ample opportunities, they are still trying to employ private entities. In fact, Sberbank wants to be not just a bank, but an entire new system, although the requirements imposed on it as a banking institution are still in place, I want to underscore this too, I want the bank’s customers to be aware of this. Banking requirements apply to it in full.

Of course, when fresh opportunities arise and new avenues of activity open up, this calls for government supervision, in this particular case, the supervision of the Central Bank over such activities to minimise possible risks during the implementation of projects. We are aware of this; we know about this, but we do not see any additional risks so far. But the Central Bank is considering ways to protect the customers’ interests and the safety of such establishments within the framework of the new digital platforms we are creating.

As for Rostec, you know that Rostec attracts private capital and private companies, including high-tech ones, even for its defence projects. There is nothing out of the ordinary about this. What is really unusual though is that in some cases Rostec agrees to cede controlling stakes in companies that are mostly involved in maintaining national defences. This was justified, so far; it was done very accurately, but it was really justified. These companies with private capital, these private investors provide the necessary funds to increase the technological standards of these enterprises and are working quite efficiently. We will continue to act as accurately as we did before.

Andrei Kostin: The question from Mr Tishin in New York was probably prompted by the high-profile report published in October by the concerned US House committee, which concluded that the four leading digital platforms – Facebook, Amazon, Apple and Google – abused their controlling powers in the digital infrastructure to fight their rivals, including through unilateral market regulation. The Republicans also believe that the so-called Big Tech are involved in political censorship and do not provide full information. I believe that this problem is being actively discussed in the United States, and this is probably why this question has been put to Russia.

Thank you for the answer. I believe that it is clear as well, just as the question was.

Colleagues, let us proceed. Next question, please.

Vladimir Putin: It should be noted that we understand what these debates are all about. We are also monitoring the situation, and some things look alarming to us as well. But we look at this as unavoidable, as something that was bound to appear in modern conditions. There is absolutely nothing out of the ordinary in this. Of course, we are closely monitoring these discussions and will take action when and if necessary.

Andrei Kostin: Very well. Colleagues, let us move on. There is still some time left. Please.

Christian Kopf: Good afternoon from Frankfurt in Germany. My name is Christian Kopf, I work for Union Investment. Mr President, it has been 20 years already since you took office and the modest prosperity that Russia has attained over this period remains to be concentrated in the capital. Yet, 60 kilometres, 100 kilometres outside of Moscow, people live right next to the pipelines that transport lucrative gas to the West and they themselves have no access to gas connections to heat their homes. So why has your administration been unable to reduce these regional disparities within Russia and which measures do you believe need to be taken in the medium term to address this issue?

Vladimir Putin: I believe that your question is politically charged, but there is nothing bad about this. The quality of living in Russia in 2000 and in 2020 are two widely different things. And the economic development level is completely different, and the level of economic stability differs considerably from what we had in 2000. As I have already mentioned, we had double-digit inflation back then, and it soared as high as 100 percent in some years. The current figure is about 4 percent, and been stable for some time. Our gold and currency reserves and state reserves as a whole stood at $12 billion, while our sovereign debt was somewhere around $136 billion, as far as I recall. We had soaring unemployment. Today we live in a totally different country with a different economy. As I mentioned, our gold and currency reserves stand at $585 billion, and our aggregate debts amount to a half or actually less than a half of this figure, and our sovereign debt is only 3 percent. This is a completely different country and a different economy, and the people’s incomes are different as well.

I have mentioned that many people still live below the poverty line in Russia. According to the latest data, there are some 20 million of them, but we had over 42 million in 2000: we have reduced the number by half. I am confident that we will reduce it by half again in the next few years. So the situation is changing, and it has already changed considerably.

As for connecting households to gas supply networks, I cannot say that I am satisfied with the current standards, although the system is developing. The current figure is around 70 percent, and it is 85 percent in the Central Federal District. Of course, there is still much to do in some regions. Our gas exports not only ensure the profitability of Gazprom but also create financial conditions… This is very important, and I would like our foreign partners to know about this, and I also would like to remind our citizens of the following. Our gas exports, considering that export prices are much higher than our prices for domestic consumers, also allow us to implement our projects for connecting consumers to gas supply networks. They ensure more than just our competitiveness, or rather additional elements of our economic competitiveness, which does not always please our European partners who try to put a spoke in our wheels, which I regard as absolutely unjustified. Yes, this is our natural competitive advantage. Why do some people think that it should be limited in an unnatural non-market way? I believe that this is wrong, unfair and absolutely contrary to market rules, by the way.

But we will continue to implement gas connection projects in the country, without any doubt. Additional instructions on this score have been issued to the Government. I am waiting for some practical proposals.

The main thing for us is to coordinate the connection of consumers to major gas pipelines and also to adjust this to the regions’ and municipalities’ ability to extend these pipelines to end consumers, to lay the final kilometre of the gas line. We will be definitely working towards this goal.

In addition, it is very important for us to interconnect our western and eastern gas provinces. This is a task for the future, which will allow us to effectively work not only on international markets but also to efficiently implement plans to connect consumers to gas supply networks. This is among our priorities. And we will be certainly working to effectively implement it.

Thank you for your question.

Andrei Kostin: All right. Thank you.

Colleagues, let us go on. Who is next? Please, be more active, let us not waste time. Please.

David Reid: Mr President, my name is David Reid, and I work for Wellington Management in London. My question is about oil taxation. The Government has been considering changes in the oil tax regime, with some tax breaks, which were intended to help stimulate investments in marginal fields potentially being changed to the newer, profit-based framework. What are the overall goals of this process? Should we expect the oil companies to bear a higher tax burden, or should any changes to the tax be roughly neutral overall? I also have a second question if there is time to address it. How do you see consolidation in the electricity sector developing? And what will be the role of state companies like Inter RAO in this process? Thank you very much.

Vladimir Putin: As for changes in taxation in the energy sphere, oil production in this case, we have implemented them and are not planning anything major in the near future. Yes, indeed, we have new tools, such as the excess-profits tax. What is this linked to in the oil sphere? This is about the need to remove some earlier support and preferential treatment measures that are no longer effective at this moment.

Our ultimate goal, in plain language, is to retune the tax system in such a way as to stop keeping alive endlessly worn-out and ineffective depleted old fields and to orientate our companies and their partners towards developing new projects and new regions and working to use advanced equipment and technologies. This is, properly speaking, what it is all about. I am referring to the fields that, let me repeat it, have been worked for quite a while and to viscous and super-viscous oil, etc. Generally, it was not easy to do; I know the Government had a hard time talking with the oil industry people, but, as I see it, a balance, on the whole, has been found.

Yes, of course, there are some minor shifts in the excess-profits tax system, the reason being the need to make up for the federal budget’s shortfall in revenue linked to what the Government believes is an unjustifiable income received in the previous couple of years. I do not think that this is something substantial for our companies, at any rate, this is done through dialogue with our leading producing companies. But, let me repeat, we are not planning any substantial, global changes

Concerning the possible consolidation of the electrical power assets… What company’s role was mentioned in the second part of the question?

Andrei Kostin: Inter RAO.

Vladimir Putin: What would I like to say in this connection? The power sector, I think, can be conditionally divided into two parts: power generation and marketing, this is one part. Why? Because this part of the power industry is entirely a market operation and must fully obey market regulation. Part two is power transmission and distribution. What is needed in this area, given the size of this country and its territory – let me remind you that the Russian Federation is still the largest country in the world in terms of territory – is, of course, a certain measure of support from the state, and a certain level of regulation should be reached.

Since the first part is about power generation and marketing – and Inter RAO is involved precisely in this business – I see no need for any serious changes. The company operates efficiently and posts good indicators; I know that they have plans to develop their business. The company is engaged not only in power generation, transmission and marketing at home but is rather active on foreign markets.

As for transmission and distribution, we have made some changes. I am sure you know about this: we have consolidated the packages of our two leading companies. Of course, generally we should seek to have a situation where unified transmission and distribution rules are effective throughout this country. This should also be achieved by market outreach and market methods, but our objective in this case is to have this so to say justified natural monopoly strengthen its positions.

Andrei Kostin: Thank you.

The next question.

Saeed Al Marar: Good afternoon, Your Excellency. Firstly, I would like to thank you for this rare opportunity today. With you is Saeed Al Marar from the Abu Dhabi Investment Authority in the UAE. If I may, Your Excellency, I would like to ask the following questions. Do you think the US actions could change the global political landscape? Second: what is your future strategic vision for Russia post-COVID-19 in the context of foreign investment and trade? Thank you.

Andrei Kostin: Will the US presidential election affect the situation?

Vladimir Putin: In the world?

Andrei Kostin: Including for Russia. How will the global landscape change?

Vladimir Putin: You know, I do not want to discuss the presidential election in the United States, since no matter what I say, some of our partners will take every possible opportunity to prove what they believe is Russia’s interference in the election process in the United States.

Generally speaking, the United States plays an extremely important role in global affairs, and influences developments around the world. The United States is a superpower and an economic behemoth. Of course, this gives it a role in global affairs in one way or another.

We do not know what the two teams are planning and how they want to achieve this. We do not have the details. However, it is no secret, as I have already said, that the Democratic Party advocates a more socially-minded approach to a number of domestic and international matters. To an extent, this reminds me of the social democrats in Europe. If the Biden team gets to carry out some of its plans, even if we do not know who these people will be, but we know their mindset, this will require substantial budget spending on healthcare and other social sectors, education, etc.

I do not see anything bad about this. I am just thinking out loud about the consequences this may have. This could require additional spending, considering that the United States already has a record-high national debt. Of course, we have to weigh the possible consequences for the global economy. After all, Russia is part of the global economy, so this affects us as well. In any case, we will definitely adapt, since we are all interdependent. I think that I already said quite clearly in my answers to the previous questions that Russia has substantially improved its economic sovereignty over the past years. Still, this interdependence certainly persists. Let me reiterate that I do believe that we will manage this no matter how the situation evolves.

What the incumbent President Donald Trump’s team will do, how it will be changed after the elections, what trends will show – we can see them even now. For example, they have mentioned the FRS support of certain sectors of the economy, even large companies, such as buying out their debt. We can see the current FRS rate, which is also influenced by the administration, and this also needs to be kept in mind. We see their tendency to partly transfer production facilities from Asia back to the United States, and the opportunities for doing so. There are definite upsides to this decision, but there are other things that must be considered – I am referring to the cost of goods that will be produced there, and so on.

We are analysing the situation very calmly, in a routine way. We will accept any decision of the American people and will work with any administration. I hope that balanced decisions will be made in the future. Whatever they decide, we are fine with it.

And by the way, a significant part of our work today is… There have been problems in working with the United States: the current administration introduced new sanctions against Russia 46 times – against our legal entities and economic operators. Forty-six times – this has never ever happened before. But at the same time, bilateral trade grew by 30 percent over the previous year, oddly enough, even despite those restrictions.

We have collaborated quite effectively to stabilise energy markets. I know that President Trump – we took part in trilateral negotiations with the King of Saudi Arabia on this score – President Trump was personally and very effectively involved in them and by doing so, he unconditionally supported his oil producers, supported the industry. We have stabilised prices – we managed to do it together. This certainly suggests that wherever we do join forces, we can act quite effectively. And there are areas of activity, including in the economy, which are of common interest for all our countries.

As for the United Arab Emirates, we have very good, very positive relations with your country. We have been working effectively with the Crown Prince to stabilise the oil markets and reach investment agreements. I would like to thank you for the confidence you have in your Russian partners and the entire Russian economy. Investment is growing fairly quickly, expanding to ever new areas. On our part, we will make every effort, I would like to assure you, to safeguard the efficiency as well as the reliability of your investments.

Andrei Kostin: Thank you. Next question, please.

Giancarlo Perasso: Good afternoon, Mr President.

My name is Giancarlo Perasso. I am a Lead Economist for PGIM Fixed Income in London.

Mr President, the 2035 National Energy Strategy seems to indicate that Russia wants to increase its production and export of oil and gas further in the coming years, especially by exploiting the Arctic regions.

This development raises two types of concern in our view. On the economic front, it would increase Russia’s dependence on oil and gas revenues at a time when many importing countries like the European Union and China are setting ambitious targets and policies to reduce their dependence on such fuels.

On the environmental side, the production and consumption of these fuels would contribute to the continued increase of permafrost thaw, Arctic wildfires, and other extreme events that are already having a significant impact on Russia’s environment and infrastructure.

Do you think that the Energy Strategy should be reviewed so that Russia could become a less oil and gas dependent country and a world leader in tackling climate change?

Thank you.

Vladimir Putin: Mr Perasso, these are, frankly speaking, predictable and also very important questions, of course. The whole of humanity is discussing them and trying to find the best approaches to the solution of the problems connected with this sphere of activity.

The first thing I would like to point out is the following. We are not increasing the dependence of the Russian economy on the oil and gas sector. Quite to the contrary, we are reducing it. There are real figures to prove this, including our budget revenues. Our revenues from the oil and gas sector are decreasing, while revenues from the non-oil and gas sectors are increasing. It is true that our oil and gas revenues are still very large, but still. As I already mentioned, our goal is to use various instruments, including taxes, to restructure our economy and make it more diversified. It is one of our key priorities and one of our main objectives. Overall, I would like to note that we are moving towards it carefully and smoothly, even if a bit slowly. And we will continue doing this.

Your colleague has asked me about our innovations in particular in the field of oil and gas production, or more precisely oil. And I replied that our goal was to restructure our taxation system so as to be able to develop new fields and to attract new technologies and innovative solutions. Yes, they imply an opportunity to maintain and, if necessary, increase energy production. This is true. But we are acting based on the forecasts of energy consumption volumes and structure in the next decades made by international companies and analytical centres which all of us respect.

We are fully aware that it will be impossible to stop using hydrocarbons altogether in the next decades, unless we can accept a disagreeable loss of competitiveness. This will be impossible to do in the next decade. And you are certainly aware of this.

The structure of consumption will change, but it will be changing slowly. In this context, we can also see how the Asia-Pacific market and the Asian market as a whole will develop. We are aware of the structure of consumption in the People’s Republic of China, India and other Asia-Pacific countries.

We understand where Europe is headed. Still, we really hope that our companies will not face any non-market restrictions. Our European friends and partners keep talking about their market-driven economic development model, and are really proud of it. I hope that these rules will be universal and apply not only to those operating within the European market, but also their non-EU partners, including Russia, considering that we are the largest energy supplier on the European market, and Europe accounts for over 70 percent of our natural gas exports, as far as I can recall. However, we are increasing supplies to Asia. This is a promising market, including the People’s Republic of China, Japan, India, and other countries in this promising and emerging region.

By the way, we redirected some of our exports to Asia not because we did not like something in Europe from a political standpoint. The Asian market is growing, and so is consumption. This is what we see, and what forecasts tell us. We want to be ready when consumption goes up.

In this context, it is essential in my opinion that we understand that the structure will change. This is inevitable in the long run, and we must be prepared. First, the Russian energy sector should be among the greenest in the world. In fact, what sources take up a substantial share in our energy mix? Hydro and nuclear power, as well as natural gas, the most eco-friendly, cleanest hydrocarbon.

I have already mentioned this, and everyone understands this. Buying electric cars is superb, but where does electricity really come from? Not from the wall socket you plug into, that’s certainly not the case. It comes from power stations. But if these facilities work on coal or fuel oil, this will not make the environment on the planet any better no matter how many electric cars you use, as long as the primary source of energy pollutes the environment.

In Russia, we have a large-scale plan to change things for the better. For example, we have a plan for the 300 biggest polluters in Russia to introduce the best available technology before the end of next year in order to substantially curb emissions in 12 cities by as much as 50 percent by 2024. By 2030, this will cover the entire country. Of course, we will move in this direction.

We will also work on hydrogen, solar and wind power. Russian companies that have these cutting-edge solutions not only develop these sectors in Russia, but tap international markets and are quite successful at it. We will definitely support them in every possible way. There is no doubt about this.

Andrei Kostin: Mr President, being a bank, we can also see that large investments have gone into oil and gas processing in Russia. In the Russian Far East, and also in Europe, by the way. So the balance will also shift from exporting crude oil and gas to oil and gas products.

Vladimir Putin: Yes. But our colleague is certainly right. I understand his concern in regard to a significant part of our promising projects being moved to the Arctic region. We are aware of this, and we bear in mind that work in the Arctic must certainly involve compliance with safety standards. The region has a very fragile environment, very fragile nature. We must and will do everything to ensure that the required environmental standards are met. But our production volumes will always be matched to the needs of the world market.

Andrei Kostin: May I ask a question? I recently read that 10 years ago, the world’s 10 largest companies in terms of capitalisation included four oil producers and only two digital companies. Now there is only one oil company, Aramco, and six digital giants. In Russia, out of the 10 largest companies by capitalisation, we have eight resource companies, of which five are oil producers, and only one, Yandex, is digital. Do you think this situation will change 10 years from now? Are we going to have more big digital companies?

Vladimir Putin: I hope so. Yandex is growing fast. I hope that its partners will not use any non-commercial, non-market instruments in their competition. But I have no doubt that Yandex will continue to grow, and our other companies, such as Mail.Ru, Rostelecom and Sberbank, also have very good prospects. We will do our best to promote their development.

Andrei Kostin: Excellent. Thank you.

Next question, colleagues. Go ahead. We have been working for quite a long time, but we still have a little time, I want you to be more active. Who’s next?

James Rose: (speaks Russian) Mr President, thank you for your time.

My name is James Rose and I work for GSA Capital in London.

My question is similar to the last one.

(Speaks English) The European Parliament recently voted to reduce CO2 emissions by 60 percent by 2030. Does Russia aspire to a similar target? And you mentioned the Arctic. Of course, many companies are responsible for the emissions over the Arctic and other Russian regions, often purely for cost saving rather than production. Could Russia apply regulatory pressure on those companies, or would you plan to even set up new companies rather than transform the current ones? Thank you very much.

Vladimir Putin: Create companies to develop Arctic fields?

James Rose: No, just the emissions over the Arctic from many companies. Just emissions in general.

Vladimir Putin: You know, I have no records that our companies are gas emitters in the Arctic.

As for Arctic projects, those that have been implemented or are being implemented now, they rely on the most recent technologies. Take, for example Yamal LNG or Arctic LNG 2 that Russia’s NOVATEK is implementing with its French and Chinese partners. They have nothing of the kind there, no emissions. I was there and I would have seen it. An entire city was built in the Arctic, this much is true. But these are cutting-edge enterprises that comply with all environmental standards, absolutely all of them. Honestly, I do not see any risk there.

As for oil companies’ activities, the first steps have just been taken and those were also based on using the most modern technologies.

Now, about the European requirements. Europe lives its own life and develops its own rules and standards, which of course, cannot be questioned. Europe is the world's largest market and largest economy; united Europe is one of the largest economies in the world and our largest partner. We have undertaken obligations under the Paris Agreement, I have mentioned this, it is about the reduction of emissions into the atmosphere compared to 1990. Just as we complied with the Kyoto Protocol, we will certainly fulfil our obligations under the Paris Agreement. This is not just about respect for the current trends in the global economy and international affairs, it is because we are interested in this ourselves.

I mentioned that before, and our colleagues spoke about permafrost during our discussion. It is true, it is a real challenge for us, we understand that perfectly well, and we will continue to cut emissions. I talked about our plans for the near future, the next one or two years, in relation to the first 300 enterprises, many of which operate in the North, in relation to the improvement of the 12 largest cities where these companies are located. By then, by 2024, by 2030, we will continue to cut emissions all over the country. But, of course, we cannot rely only on the standards developed in the European Union. But again, as for the objectives of our partners, I think they should wait and see how efficiently they are.

I see certain difficulties: some countries are abandoning nuclear energy and coal. Gas is the cleanest hydrocarbon; there are no emissions at all. I do not understand why some countries that proclaim environmental friendliness even discuss limiting the use of gas. I cannot explain this by anything other than political reasons. If they truly care about the environment and its preservation, they need to do their best to have international multilateral gas projects implemented, because this is the cleanest fuel and the most efficient in terms of the economy.

So I believe that we are maintaining a dialogue despite the current difficulties related to the economy, pandemic, our political differences and controversies. I believe that the real economic interest that ensures the wellbeing of millions of people both in Russia and in Europe and the sensible understanding of mutual interests will find its way like our icebreakers make their way through the ice in today’s Arctic, and we will find a common balanced solution.

Andrei Kostin: Mr President, in the 20th century, mankind constantly invented new types of energy and in general progressed from something less efficient to something more efficient, ending up with nuclear power that, at the time, seemed boundless; the potential was huge. Today, in the 21st century, we seem to be going backwards. What do we have? Mostly wind generators and volcanoes in Iceland, and solar energy where there is sunshine. When flying over Europe in a helicopter, you feel like Don Quixote will pop up because there are windmills all over the place – sorry, not mills but wind stations. Is this the only way forward? There are perhaps other opportunities, more efficient ones, because it is only very rich people who can afford this type of power generation in our day and age. Mankind should probably continue to seek new types of energy aside from these renewable sources that we have known for centuries.

Vladimir Putin: Thank you for the angle shot you sent me. But, to tell the truth, I do not agree with you on all counts. I am more inclined, no matter how odd it may sound, to take the side…

Andrei Kostin: …Of the Greens?

Vladimir Putin: Yes, the side of some of our European partners. Mr Belousov, the First Deputy Prime Minister, mentioned our “green” bonds. This is one of the tools to support the companies operating in the power sector.

Andrei Kostin: We will purchase the bonds.

Vladimir Putin: But you said the sun was effective where it is available. It is available everywhere.

One speaker was just talking about our operations in the Arctic. I also mentioned this. For me, it was strange to hear that solar-cell array helped heat some of our facilities in the Arctic, for example, pipeline systems and so on. There is enough sun to solve this problem even in the Arctic. You do not have to blow smoke into the sky and additionally burden the environment with tons of emissions. This, incidentally, is also the answer to a question that was just asked. This is happening in our country, and we are doing it now. Gas or oil is produced, but pipeline systems are heated with solar arrays. We are keeping all this in mind and are working in all these areas.

Andrei Kostin: Excellent. Let's go on. Who’s next, colleagues? Go ahead please. Who still has enough “energy,” go on, please.

Rollo Roscow: Thank you very much for taking my question.

This is Rollo Roscow from Schroders Investment Management in London.

I think a large portion of my question has already been covered in the questions that Giancarlo and James have posed.

Still staying on the renewables theme, I would just like to ask a question as to which sector do you think should be investing in renewables? Should that be dependent on the oil and gas sector to start investing in some of the transitions in terms of solar or wind going forward? Or do you think it should be the utilities sector that bears the additional investment risk?

And at what point do you think they should start thinking about investing there more heavily despite the fact that there is still a strong demand tailwind for oil and gas going forward?

Thank you.

Vladimir Putin: Please excuse me, I don’t want to repeat myself, but I think I just talked about this, directly.

We will work in all these areas: hydrogen energy, wind energy, and solar arrays. Some of our companies operate abroad, and acquire assets, in Switzerland, for example, and develop production here. I just said that we are using solar energy in the Arctic, and we will continue working with this. We have plans to reduce emissions domestically, and we will use tools like green bonds and more, an entire range of approaches.

As for where to invest, I would say each investor makes decisions based on the current situation, on the prospects and potential profit margin of a project as part of an investment project.

I talked about the RDIF, the Russian Direct Investment Fund. I will say (a colleague from the United Arab Emirates represents one of the funds, a leading state fund here, so he can confirm) our Direct Investment Fund ensures a much higher profit margin from investing in Russia (I will not cite the exact figures now to avoid a mistake), but it is much higher than in other regions of the world. That is the explanation.

If anyone wishes to invest in certain types of energy, we will only welcome it. But as far as the hydrocarbon sector is concerned, well here I would say, we keep the door open to everyone; it is wide open. Many global companies are working with us, everyone. And American companies, unfortunately, the US administration is now restricting their work for political reasons, and to their detriment, I must say. But this is not our call. In any case, we have always been willing to work with the Americans, and with the Europeans, and with our friends from Asia. Japan works with us, China, as I said, France, too, and companies from Great Britain as well. And I hope they will continue to work here. As for specific projects to invest in, it is up to them to decide.

Our task is to ensure that their investments are protected and that their money is used efficiently. More large projects are being planned in the Arctic, in Siberia, in Eastern Siberia. I am sure they will be of interest to our partners.

Andrei Kostin: Okay, thank you. Next question, please. Colleagues, please, where are you from? Europe, America, Asia? Who’s next? Please.

Arif Joshi: Mr President, thank you for taking my call. My name is Arif Joshi, I am with Lazard Asset Management based in New York. And I wanted to follow-up with a comment that you had made earlier. The market seems to agree with you that in the event on Tuesday of a Joe Biden victory, you are likely to get significant fiscal spending in the United States, a significant fiscal data set next year, and that likely resolves in a depreciation of the US dollar versus many other currency pairs. Given that it has been a very difficult period of time over the past decade for non-dollar currencies, this may offer a new opportunity over the next couple of years for currency appreciation. So I am curious, how would currency appreciation change the way that you overall manage the Russian economy? Does it accelerate certain reforms that you have been targeting in the future? 

Vladimir Putin: As for new sectors in the Russian economy, as I said at the beginning of our discussion, I really hope (and we are working on this) that the digital economy, and digital development in a broader sense of the term, will be a new sector. We will be adjusting our fiscal regulation to make sure that our partners – both Russian investors and our foreign friends – can benefit from working in the sectors related to new technology and new types of production.

Regarding what happens to the dollar if Mr Biden wins, it is hard to predict right now because, as I said, very successful, from a social standpoint, projects and programmes may be carried out, but how it will affect the dollar in terms of maintaining the stability of the budget system and in terms of the economy in general, it is very hard to say right now. Considering the United States’ record level of debt, we do not know yet what policy the Federal Reserve System will pursue.

We could predict what happens if Trump’s team remains in power because we know what he has been doing for the past four years and in general, this course is familiar and easier to predict. Any dollar-related changes (and the dollar is not only the national currency of the world’s biggest economy, but the world’s reserve currency) will, without doubt, affect the entire global economy, all countries – and, obviously, us as well. This is what we are talking about.

Therefore, as I said, we are trying to strengthen Russia’s economic sovereignty. And overall, thanks to a sensible macroeconomic policy, we have been successful. We have managed to make our national economy more or less independent from price fluctuations on global exchanges, from commodity rates, oil and gas prices. We are maintaining stability when it comes to fluctuations of our national currency. The Central Bank is carefully taking measures to keep the national currency rate stable. In my opinion, it is the predictable stability of the currency rate that is important rather than the rate itself.

The Central Bank and the Government have been able to achieve that as well. This is crucial. We hope that, despite possible volatility in the United States, we will be able to maintain these positions domestically.

Andrei Kostin: Thank you.

Next question, please. Colleagues, go ahead.

Vladimir Putin: We should probably be wrapping it up. I will take a couple more questions.

Andrei Kostin: Okay, Mr President.

Tieu-Bich Nguyen: Good afternoon, Mr President. My name is Tieu-Bich Nguyen. I am from Taiping Asset Management and based in Hong Kong.

You have made some comments regarding the energy markets in Asia. This relates to my question.

In relation to gas production, Russia has pivoted to Asia.

Would you be able to discuss Russia’s longer-term strategy relating to this pivot to the Asia region?

Thank you very much.

Vladimir Putin: You know, it is not that we made a bet on the Asian market, no. We operate based on current realities. What are these realities?

The first reality is that the Asian markets are growing fast. Despite the pandemic and related difficulties in the global economy, growth in Asia continues. I noted that we have a decline in Russia, but it is less than in other developed economies. We will have a drop of about 3.9 percent in GDP at year-end, whereas other countries will have much more. Other incoming variables are pretty serious as well. According to various estimates, the economy will fall about 4, 3.9 to 4-plus percent. The Government has come up with its number, the Central Bank has provided a different estimate, but the decline is much deeper in other countries and the developed economies.

The growth numbers may not be as good as China would want, but it is still growth, and significant growth at that. In this sense, we must admit that China remains a driver behind the global economy. The volume of the Chinese economy in terms of purchasing power parity is now larger than the volume of the US economy. Of course, per capita (GDP) in the United States is much higher, but the volume of the Chinese economy is still significant and impressive. In our country, per capita (GDP) decline was much less as well.

However, in terms of trade volume, if we compare Asia and Europe, Asia came out on top as our trade partner. These are the realities, and we do not change our priorities deliberately, especially for political reasons. We just look at the realities, assess the potential and try to be ready for any ensuing changes.

Of course, these changes and these plans of ours undoubtedly benefit from our very good, partner-like and often friendly relations with our friends in Asia, such as the People's Republic of China, India and our other partners in Asia. This is a very considerate, positive, and often even friendly political atmosphere that reaches the level of alliance. Of course, it also helps promote trust, which underlies our relations, and economic ties. This is another advantage to the objective factors that we observe in the global economy, in this case, as it applies to Asia. I hope all of our plans will be implemented in cooperation with our partners.

Andrei Kostin: Colleagues, anyone? Two more questions. Please. Who is next? Who has not asked a question yet?

Jacob Grappengiesser: Good afternoon, Mr President.

Jacob Grappengiesser, East Capital. I am Swedish, but I have lived in Moscow for many years now.

I have two questions. The first one is about Belarus. Do you see a possibility of deeper political integration between Russia and Belarus and the creation of a Union State? Also, do you think a scenario of new presidential election in Belarus is possible?

My second question is about Nagorno-Karabakh. What, do you think, may be the lasting solution to the Nagorno-Karabakh conflict which would suit all three parties, that is, Armenia, Azerbaijan and the Republic of Artsakh?

Vladimir Putin: Would you please repeat the second part of your question about Nagorno-Karabakh?

Jacob Grappengiesser: What is the lasting solution to the conflict that would suit all three parties?

Vladimir Putin: I see.

Regarding your first question about building the Union State, the Treaty on the Creation of the Union State was signed in December 1999, if memory serves, and, to a large extent, has been implemented. Some provisions of the Union Treaty have not yet been implemented, such as creating a Union Parliament and holding an election to this representative authority by a direct and secret ballot by the people of Belarus and Russia, and the designation of common borders in a joint document.

In the sphere of economy, our agenda included creating a single issuance centre, a single currency, and so on. This has not been done. In the social sphere, though, we have come a fairly long way together, and, I think, this has a rather positive effect on our countries’ development and the social sphere of Russia and Belarus. This also applies to movement, the solution to social issues, social guarantees and the labour market. There are many specific issues, the implementation of which will benefit the citizens of both our states.

With regard to the political issues, which I also mentioned earlier, of course, and I agree with Alexander Lukashenko in this regard, we must operate based on current developments. To a large extent, this lies with the Belarusian leadership itself, but there is nothing new here, and nothing that would have come about as a result of the most recent internal political events in Belarus. To reiterate, this process began in late 1999. Everything is stipulated by the Treaty on the Creation of the Union State, and we do not think it needs any additions.

The question is whether we should implement certain elements of this plan, which have been in existence for two decades now, or refrain from certain things for a while. In any case, we are not forcing anything and will operate based on real needs, I emphasise needs, and the expedience of implementing particular steps. Most importantly, there is no doubt that this must be done. If something will ever be done, it will only be done on a voluntary basis on our part and on the part of our Belarusian friends and partners, based on how both sides assess their national interests in a particular sphere, be it politics or the economy.

The possibility of holding a presidential election in Belarus should be determined by the Belarusian people and its leaders. We stay away from these matters.

I would like to note that President Alexander Lukashenko mentioned it publicly several times. Moreover, he took concrete steps to implement what he said, namely about the possibility of amending the current Constitution or adopting a new Constitution and, as he himself said, holding parliamentary and presidential elections on this basis. I think this is based on the realities and the assessment of the internal political situation. This is a significant step on his part towards his political opponents. Everyone, I want to emphasise this, all political forces would do the right thing by getting involved in this process and not indiscriminately accusing President Lukashenko of wanting to pull a fast one, but rather joining in this effort and influencing the decisions that may be taken during this process. This covers the first part.

Regarding Nagorno-Karabakh, I talked about this, and I won’t be able to add anything new here, because the conflict began with ethnic clashes, first in the town of Sumgait, Azerbaijan and then in Nagorno-Karabakh itself. The Soviet leadership at the time did not take any effective measures to ensure the safety of the people. The Armenians took up arms and did it themselves. For better or worse these negative events, based on ethnic differences, triggered their actions. This led to Armenia taking control of Nagorno-Karabakh and seven other Azerbaijani regions. Is that a good thing or not? What is Azerbaijan saying? It is saying that these seven regions have nothing to do with the ethnic conflict or Armenia, as these are native Azerbaijani territories. And Azerbaijan says, “We have the right to return these territories and sort out things with Nagorno-Karabakh.” You know, everyone has their own truth. There are no easy solutions here; this is a complex knot.

Initially, we proceeded under the premise that this issue is about (our position is absolutely open) transferring five (plus two) regions to Azerbaijan and putting in place certain regulations for Karabakh, certain interaction with Armenia, and so on. What would a lasting settlement look like, you asked. Now I will come close to the meaning of your question. How do we strike a balance of interests that will suit the Azerbaijani people, whom we treat with unwavering respect, while taking into account the interests of the Armenian people and the state of Armenia so that the people feel safe, but at the same time put opportunities for effective regional development in place, including unblocking and expanding the infrastructural opportunities that would form the basis for effective development of both Azerbaijan and Armenia, and Nagorno-Karabakh as well, where people live quite modestly.

This would open up opportunities, including for many participants of our today’s discussion, to take part in developing these territories, to invest, and there are things to invest in there. People in both countries are very efficient and skilled. This 30 year-long conflict precludes the effective development of both conflicting parties.

The first phase must include stopping the hostilities and the loss of life. The parties must sit down at the negotiating table and find a consensus and a balance of interests. This can effectively be done based on the proposals formulated by the Minsk Group and its co-chairs – Russia, the United States and France, with the participation of other Minsk Group members, including Turkey and a number of European states. This can be done.

Andrei Kostin: Thank you.

Colleagues, let's wrap it up. Who wants to ask the last question? Who has a question? If any.

Vladimir Putin: Is there anything else?

Andrei Kostin: Are there any more questions?

Elena Loven: Yes, there are.

Vladimir Putin: Please go ahead.

Elena Loven: Good afternoon.

My name is Elena Loven. Funds manager at Swedbank in Stockholm. Mr President, I do not want to tire you by having you say the same things over and over again when answering questions about the climate or the Paris Agreement, but I would like to share my problem with you. I have been managing funds for about 15 years now. They were created 25 years ago. These funds work with Russia and Eastern Europe. Still, the weight of oil and gas and metals on the market is too big to ignore while investing only in the innovation economy, like Yandex, Mail, or Sberbank. That is, we are still dependent on energy not only in the real economy, but in investment markets as well.

Here is my question. I know you do not have a direct answer, but still, such major companies as Gazprom, NOVATEK, LUKOIL and Rosneft, how seriously will they invest in meeting the Paris Agreement provisions and the goals for a carbon neutral world 30 years from now? I know this is the long-term perspective. What is being done specifically to achieve this? Plus, are they developing any kind of new green renewable energy in their capital investments, like British Petroleum, Shell and other companies are doing now? What exactly are they doing, and how realistic is it?

Thank you very much.

Vladimir Putin: You asked to what extent our major companies, including energy companies, will invest in projects related to the preservation of the environment. They will have to do this because Russian laws will force the economic agents to follow certain regulations, which have become part of the legislative acts of the Russian Federation, which, in turn, fully meet the Paris Agreement. We have made these changes to our domestic laws in order to put our largest gas pollutants in a position where they will have to follow the requirements set forth in the Paris Agreement.

To reiterate, this is not something our distant foreign partners need. Russia needs this. Our citizens need it, because we still have plenty of environmental problems affecting the health of the Russian people.

To reiterate, we will push for emission reductions not only by our oil companies, but also by the companies working in the metallurgical industry and other areas and are major pollutants. We will seek positive changes not only from our 300 largest pollutants and improvement of the situation in 12 of our largest cities that need special attention, but also across Russia and throughout the Russian economy. The corresponding plans have been drawn up, programmes are in place, and they are part of the law. We will strive to ensure that all our goals for improving the environmental situation are achieved.

Thank you for your question, it is very important.

Andrei Kostin: Mr President, several years ago you had a meeting with RSPP (Russian Union of Industrialists and Entrepreneurs) leadership which coincided with my birthday. You publicly gave me this wonderful presidential watch. It shows the time very accurately, never stops, but it does show that we have abused your time and have significantly exceeded the planned time limit. However, I am sure it was beneficial for everyone, and your meeting with international investors today will certainly promote investor interest in these circumstances, where, I repeat, the global economy and the Russian economy need investment.

Thank you very much for your very detailed and interesting remarks. We look forward to seeing you next year in a somewhat different setting. Thank you.

Vladimir Putin: As a well-known fable goes, “The cuckoo praises the rooster for praising the cuckoo.”

For my part, I want to thank you for making this wonderful event possible many years ago and continuing to sponsor it, as you bring together engaged partners from all over the world.

I would like to thank the participants for their interest in Russia, our policy and the prospects for our economy’s development. I would like to wish every success to those of you who work here. For our part, the Russian state and the authorities will do whatever it takes to protect your interests which are to not only preserve your investment, but to grow it as well.

We will strive to make your work in the Russian market even more efficient than in other parts of the world, as the Russian Direct Investment Fund has been able to do so far in its work with its partners from the investment funds of other countries. I am aware that not only direct investments are working that way, but also the real sector of the economy, and I very much hope that the volume of this joint work will continue to expand.

Let me wish you success and express my gratitude for today's productive and interesting, at least for me, conversation.

Thank you.

Andrei Kostin: Thank you everyone.

October 29, 2020, Novo-Ogaryovo, Moscow Region