Official website of the President of Russia

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Question: On measures to modernise the Russian economy.

Vladimir Putin: I have covered the matter in general terms in my opening remarks. I would like to add that the Russian Government has prepared a whole programme for modernising the Russian economy. In the most general terms, the programme is very liberal and considerate of the interests of the population. We intend to proceed in several areas at once. I have already indicated the first area: further reform of the Russian tax system, reducing the tax burden on the economy and the stability of taxation regulations. It may be premature, but I will tell you that we are thinking about reducing some taxes, such as the VAT. We should tread warily because we had many plans, but the risks are increasing, not diminishing. We will proceed carefully but steadfastly. In addition to reducing the tax burden and making it a sustained process, we intend to modernise the pension system and continue efforts to cut down the red tape in the economy. You can describe it as “further liberalisation of the economy” if you find it a convenient term. Already a good deal has been done in this area, the number of types of activities subject to licensing has been cut and some order has been brought to the work of auditing agencies, etc. We are committed to this course. We have a programme to modernise our major monopolies, which are traditionally called natural monopolies in Russia. I must say that, like in the tax sphere, we intend to think everything through very carefully before coming to a decision, but we are aware that a lot needs to be done in this sphere. We have plans, they have been made public and a broad discussion is underway and profound studies are underway with experts and the Government. Some of these decisions have been made, some are pending.

We are finalising the adoption of a reform of the judiciary and we hope that increased efficiency of the law courts, both of general jurisdiction and arbitration courts, will have a substantial positive impact on the Russian economy.

There can be no effective economy without well-developed services, above all in the sphere of finance, in the sphere of insurance. We should think about it and prepare administrative decisions on it today. It is the subject of our talks with our partners in the united Europe and the United States. And that is another area I would like to single out: further integration of the Russian Federation into the world economy. We are firmly committed to working towards accession to the World Trade Organisation, and that decision will be followed through. At the same time, some of those present here, I am sure, know what pragmatism is, and I have to say that all our actions will be coordinated with national interests, with the interests of the national economy. We will on no account agree to join the WTO on non-standard terms. We will work persistently, consistently, but with optimism to make sure that the same standard terms are applied to us and that no requirements are presented that have not been presented to other candidates in the history of the WTO. I won’t go into details not to waste your time, but you can take my word for it that unfortunately, we are facing such problems at the moment. But I repeat there is a measure of optimism, there is an understanding on the side of our main partners, and we hope that the outcome will be positive.

Question: On the outlook of the development of economic relations with foreign countries.

Vladimir Putin: It has to be admitted that the Russian economy is not yet so tightly integrated into the world economy as to feel all the fluctuations in it, but Russia is affected by what is happening in the world as a whole. And we follow very closely what is happening in the world economy and compare our actions with the forecasts of international experts. But, like they, we are optimistic, especially in the medium and long term. We believe that after the 1998 crisis the countries hit by the crisis and the international financial community have taken necessary measures to offset the possible negative phenomena that we observe today. And secondly, the foundations of the world economy are so strong that it is hardly possible to shake them. We believe that the pace built up by the Russian economy enables us to meet the challenges we face and not only to overcome the difficulties that we observe in the world economy, but to move the Russian economy forward significantly.

Question: On the goals and substance of the current reforms of the judiciary and law enforcement spheres.

Vladimir Putin: You know, at the dawn of the policy called “perestroika” I attended a similar event and one of the participants said: “Tell your political leadership to feed your people well, and then everything will be fine.” And that is true: we should enable people to create better lives for themselves and then many problems won’t appear to be as worrisome as they do today. The same applies to the level of wages in the country. The judiciary reform has been conceived and designed to make the judiciary system more effective, including in regard to the economy. It is a key component of judiciary activities, especially in an open market economy.

And of course, not the least of our concerns is the salaries of the judges; it is a very important component. But you would agree with me that these people, however important their sphere of activity may be, live in Russia and their level of incomes should be commensurate with those of people in other sectors of the economy and spheres of activity. So we would like our military to have higher salaries as well. As a former officer I know very well how families of our servicemen live.

We would like the level of incomes in the rural areas to rise dramatically. That is a key sector of the Russian economy, and unfortunately the living standards in rural areas are still very low.

We would like to see salaries of professionals, especially in education and healthcare, to be much higher, but we should act responsibly and our decisions in this sphere should be well considered and balanced.

We believe that our present plans are optimal. Of course, there is always room for improvement, and we will continue our efforts to raise the living standards of Russian people. But we will pay particular attention to the high-priority areas. These areas undoubtedly include the judiciary and law enforcement spheres.

Question: On the Russian Government’s plans to create an agency to combat money laundering and the preservation of the banking secret in Russia in that connection.

Vladimir Putin: Did we used to have banking secrets?

I think we should not be afraid of the instruments that make business transparent for the government. We should take another look at the world we live in. We should formulate firm and clear-cut rules so that criminal elements, terrorists and corrupt officials could no longer operate freely in Russia. I back the efforts of the Russian Government against money laundering. It does not mean that we should impose heavy legal constraints on businesses that function legally. On the contrary, we should see to it that banking secrets are observed. A document on setting up such an authority will be prepared and signed shortly.

Question: On the prospects of land reform and protection of investors’ interests.

Vladimir Putin: You have raised a very complicated question there, one that is complicated for any country, but especially for Russia. I have agreed with those who have expressed their fears and warned against making abrupt and ill-considered decisions to allow the free sale and purchase of agricultural land. You know that my personal opinion and that of the Government is that in this sphere, like in other spheres, the sooner we have normal market laws in agriculture the better. At the same time I cannot but agree with the critics of that position for a number of reasons. We should be mindful of the specific features of Russia, of the fact that the land issues in Russia are extremely confused, and so I have agreed with those who said that farmland should not be included in the recently adopted Land Code. And you have seen that even this somewhat limited law has evoked a politicised reaction and has caused heated debates in the Russian Parliament, to put it mildly. But I don’t think it should frighten us or stop us. We will continue to discuss ways of smoothly introducing market laws in the agricultural sector. Various ideas have been suggested and expressed, and in spite of the complexity of the process we intend to bring into these discussions all the interested parties, those who advocate an early transition to the market and their critics. We should seek a consensus in making that decision. We should take into account the interests of people who work in agriculture. If some of them think that such an abrupt change is dangerous, it is our task to present them with concrete figures to allay their fears, and to show what exactly we are planning and how it will impact their lives. It is a complicated process which calls for persistence and patience, but I think we should move along that path and not make abrupt moves. But we understand the direction in which we are going to move.

As regards ensuring the interests of minority shareholders, you know that decisions have been taken and I have signed additions to the Tax Code. We believe that the problem has not only been recognised, but has largely been settled. If you feel that more needs to be done, you can formulate these proposals during this forum. They will not be discarded offhand. We will consider them. Indeed, if all those gathered in this and in other rooms of the forum formulate clear-cut proposals on how to improve our actions in this sphere, we are ready to consider them. We will be grateful to you.

Question: on how the President sees Russia in 2010.

Vladimir Putin: I think in 2010 Russia will be a happy country.

Question: On assessing the investment climate in Russia.

Vladimir Putin: Let me start with Russian businessmen. We have regular meetings with them in various formats. I want them to feel that Russia is their home, and then of course to feel that their “home is their castle”. We will try to make sure that it is the case. And I would like our foreign colleagues to feel at home in Russia as well.

Thank you.