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Dmitry Medvedev: Good afternoon.

Jonathan Steele: Dmitry Anatolyevich, Mr President.

It is a great honour for us to meet with you on the eve of your first G8 summit. There is a huge amount of interest in you and in your views as the new President of Russia not just from your partners in the G8 but also from the press and public in other countries. I would like to start therefore by thanking you on behalf of us all for the invitation to come here and for this interview, this conversation.

My first question is: over the last weeks you have said on several occasions that the current global economic system is not functioning effectively. You even criticised the United States of America in this respect. And you said there is a need to create new economic mechanisms. What specific mechanisms do you propose and how will they work?

Dmitry Medvedev: Thank you.

It is also a pleasure for me to talk with you before the G8 summit begins. This will be my first time at this event and I will be happy to tell you about my ideas and preferences concerning the main issues on the summit’s agenda.

Let’s start with the fact that no one can be happy with the current economic situation in the world. There are some good islands of economic stability here and there, but overall the global economy is in a very difficult situation. Last year saw a financial crisis and a credit crunch. This crisis has affected a number of major players, has undermined confidence in the American mortgage market and has gone hand-in-hand with various negative macroeconomic processes.

In particular, policy changes in a number of leading countries have exacerbated the inflation problem, which is now affecting practically all of the planet’s developed economies. Some countries have higher inflation, especially on markets that are not so well regulated, and others have lower inflation rates, but the figures are nonetheless quite high. The European Union has already gone beyond the three-percent annual inflation rate that they consider a critical limit. I spoke about this just recently with my colleagues from the EU.

Russia is also being affected by problems arising from the current financial situation.

For a start, interest rates have gone up, and the interest rate that is applied in most of the developed economies today naturally enough also affects our interest rate policies.

Second, we have also come in for inflationary pressure and have gone beyond the inflation target that we set as our optimum objective this year. This was the case last year too, and this year is also not entirely favourable. The Government is therefore concentrating now on reining in inflation and bringing it down to the parameters that we wanted for this year and subsequently reaching the figures that we set as our target objectives, that is to say, we want to bring inflation down to a level similar to that of the developed economies. Overall, therefore, the situation in the global economy is complicated indeed.

It is very clear today that a number of the institutions established in the 1960s and 1970s, a number of the organisations that are major players, are no longer able to deal with the situation. This is why a number of countries have started saying that we need to come up with new ways to regulate the financial system. First, we have to make it fairer. It should learn from the negative experience of economic overheating – overheating in national economies and in the global economy. It should also take into account the negative experience related to mortgage systems. The United States has been hit most sharply and obviously by the mortgage crisis, but it is not the only country to be affected. The new system needs to take into account the general situation on the markets, and should be modernised in keeping with today’s demands.

What does this require? At the very least we need to set out our proposals and begin talks on how this system should look. A number of countries are currently drafting proposals of this kind, as I just said, including Britain. We are also working on proposals.

What we are looking at is making use of the international financial relations system – the structural aspect and the system’s actual substance – to resolve the problems that have built up today. We want to make this system more flexible and better adapt it to today’s demands and learn to manage the processes that have led to this serious situation on the global financial market. This is a complex undertaking and it certainly does not mean simply demolishing the entire architecture that was created over the course of decades. But there is absolutely no denying that it should be improved, modernised, be better protected from risks, freed from national financial and economic selfishness and become fairer in respect to other countries. This system cannot be focused on just one country and one currency. It should be built on a balance of the major economies, on their sustainable growth and the principle of several reserve currencies. We think that this policy of having several currencies is important. We think there should be a dollar that is strong, not weak like today, and several other reserve currencies as well that help individual countries and the world economy as a whole deal with the problems before it. We are looking at the European currency, of course, and at the ideas currently being discussed in the East. We are also looking at the future possibility of turning the rouble into a regional reserve currency. This is not something that can be done by presidential decree, by the simple stroke of a pen. This is, as a rule, something that grows out of a well-organised economy and the acceptability of this or that means of payment for use by other partners.

We have begun developing an exchange for oil and other energy resources, where trade is conducted in rubles, and this is a step towards turning the ruble into one of the possible regional reserve currencies, all the more so as the ruble is now fully convertible at home and abroad (this was a goal that we set several years ago). The main thing now is for the ruble to be seen as a reliable currency in which savings can be placed and which can be used to carry out transactions. This could require a longer time-frame, but I think it is an entirely realistic goal.

I think therefore that as far as the agenda for improving the macroeconomic situation in the world is concerned, the main thing is to overcome the global economic problems.

CLIFFORD J. LEVY: Mr President, I want to ask a question about John McCain. You know that McCain proposed excluding Russia from the G8. Do you think that if McCain wins the election it will be difficult to establish good relations between Russia and the USA?

Dmitry Medvedev: I think that the American economy’s ability to resist crises, and this is something the treasury secretary, Mr Paulson, spoke eloquently about yesterday, is linked to the fact that overall, the United States tries to follow a balanced policy. This policy should not depend on who stands at the helm. I do not want to comment therefore on individual statements related to the election campaign. As far as I know, no one has said anything specifically about this lately. It is very clear that the idea of excluding Russia or putting pressure on Russia simply cannot be taken seriously. The G8 does not exist because of someone’s likes or dislikes, but because these are objectively the biggest economies and biggest players in terms of foreign policy influence. Attempts to restrict anyone in this capacity would at the very least be damaging to the entire world order.

I think there is nothing more I can really say on this subject. I am sure that any administration in the United States, if it wants to achieve success, including in overcoming what is essentially a depression on its economic market today, will have to follow a pragmatic line both at home and abroad.

Jane Armstrong: Mr President, will you continue President Putin’s policies?

And do you think that Putin’s policies contributed to Russia’s stabilisation?

There is evidence that the situation has worsened in many areas of life over the last eight years: corruption and crime levels remain high and the state has become more bureaucratic. Will you act differently to President Putin in some areas, and if so, in which?

Thank you.

Dmitry Medvedev: I just spoke about the leadership in the United States and I would like to say the same thing about the policies the leadership of the Russian Federation follows and should follow. Our policy must be stable and balanced, without sudden twists and turns. We outlined our priorities for the next 15–20 years eight years ago, and our development goals have not changed since then. We want to build a developed country with a strong economy and a social sphere that meets our people’s demands, overcome poverty, eliminate corruption and build friendly relations with our international partners. These objectives will remain the same no matter who heads the Russian state. I do not think there is any reason to change these goals and I think that they are precisely what the people of Russia want.

As for the nuances, the emphasis, this can shift of course. We are quite successful in tackling some problems and have not succeeded in making progress on others. One of the most pressing problems, and I not only began specially talking about it some time back, but also started taking measures to resolve it, is corruption. Unfortunately, we have done little so far to deal with this problem. Vladimir Vladimirovich Putin also spoke about this when he gave his final press conference, I think. Now that we have achieved some economic successes it is time to tackle this problem, because it is impossible to root out corruption in a poor country. Corruption can be considerably reduced only in a country that is developing and becoming more prosperous.

Thus the emphasis in domestic and foreign policy can change, of course. Every politician, every president, has their own style. Were this not the case people would not be able to tell them apart and our citizens would be bored and you would also not find it very interesting. But these are stylistic nuances. I think that they should not detract from the main thing, which is work on implementing the priorities that are in the interests of our country and people.

Fabrice Nodet Langlois: I have another question on corruption. In March, you said that you want to change people’s behaviour and that people in Russia are not always keen to follow the law. Speaking recently in St Petersburg, [Anatoly] Chubais said that reform, and I quote: “will be ineffective without competitive political mechanisms and a strong opposition”. Do you agree with this view?

Dmitry Medvedev: Corruption, clearly, is the possibility of using one’s monopoly situation to pursue what are generally selfish aims. Officials have exclusive powers and use them not in the state’s interests but in their personal interest, in order to line their own pockets. All kinds of competition are therefore useful. We are taking a firm line, for example, on introducing tender procedures in the economy, perhaps not always exactly as we would like, but our policy is a firm one. Why are we doing this? We are doing it precisely because when there is a choice between several different options there can be no corruption. We know that results can be manipulated, and such cases occur here and in other countries, but the system is at least an open one. In this sense, competition between different political groups is also necessary in order to make the political system as a whole more stable.

The system built on the truth of one party alone proved its weakness 20 years ago. It was unable to cope with the new challenges arising and ceased to exist. In order to make our country competitive at the global level, we need to develop political competition too, but this should be reasonable competition, competition based on the law. This should be competition based on the law between political parties that want to take part in normal competition for building the best future for Russia. Without this kind of competition there can be no full-scale fight against corruption.

Vladimir Gurevich: Dmitry Anatolyevich, you have listed several global crises that we are probably all facing to varying degrees. These crises have come in quick succession, starting from the second half of last year. But the G8 is a traditional sort of event where preparations begin a long time in advance. To what extent are we and all of the world leaders able to respond swiftly to sudden crises? Is there not perhaps a need for some other kinds of new formats along with the G8, or something derived from it, a kind of rapid G8 say, where the world leaders can get together and quickly take decisions.

Dmitry Medvedev: Some crises arise quickly, while other crises can be predicted easily enough if the situation is analysed attentively. I just held a meeting with my aides in relation to preparations for the G8. In fact, I have just come from there. We recalled that there were a number of tendencies that worried us, in particular, the Russian Federation noted the situation on the mortgage market a year ago in Heiligendamm. But not everything we said then was taken on board. On the contrary, our concerns were met with surprise and we were told not to worry, that they would take care of everything and all would be well. But experience has shown that it takes time to take care of everything.

Why do I give this example? It is very clear that the leaders of the biggest economies and biggest countries need to meet and exchange information on the most complex issues and biggest problems before them. The G8 is a good place for this. But you are right; the agenda is prepared in advance. This does not mean that an agenda drafted 10 years ago or one year ago has precedence.

The G8 has gone through several stages in its development. When it began as the G7 the countries discussed only economic matters. This was a response to the crises of the time – the energy crisis and other problems. Later, the G7 and then the G8 began to take on a more political dimension, that is, it began to examine political challenges facing its members. There was a point when economic issues all but disappeared from the agenda. Now we see the result – we have two main issues that no one gave any thought to last year – finances and the economy, and the food crisis. Life has imposed its own changes. The agenda that was prepared ahead of time has been all but rewritten. The leaders’ task is to take the right decisions in each situation. We will examine the main issues, the most relevant issues today – the world economy, the food crisis, and the environmental and climate change situation.

Moreover, as other countries continue to grow new formats are emerging. The G8 works not only as the G8 today. The ‘outreach’ format has developed, which includes another five countries. This time, the G8 will invite another three countries to participate in discussions on a number of key issues – South Korea, Indonesia and Australia. In this sense, the G8 as an institution, a mechanism for examining the most complicated problems, is expanding, and this is good. It is becoming more representative. This means that the decisions the participating countries discuss and the recommendations they come up with are not based on the opinions of just eight countries, but are based on the views of a greater number of countries, who are making themselves heard much more clearly in economic life and in the planet’s life in general today.

I think therefore that this format makes sense as a place to discuss these issues. But there are clearly also situations that require an urgent response. In this sense it is perhaps not necessary to have the heads of state come together at the call of a whistle, but there should be mechanisms that oblige the finance ministers, energy ministers and agriculture ministers to meet for a few days, report to their leaders and make decisions. We are drafting just such a proposal now for discussion at the summit.

Vladimir Gurevich: Thank you.

Hayami Ichikawa: Thank you, Mr President.

Japan is looking forward to your arrival on Hokkaido for the G8. What sort of impression do you want to make on the Japanese people and Japan’s government?

Bilateral trade and economic relations between Russia and Japan have improved considerably over recent years. But despite this improvement, political relations are not developing so dynamically as a result of the ongoing territorial disputes. A peace treaty still has not been reached. President Putin tried to settle this issue on the basis of the 1956 proposal which would have seen two of the islands remain in the hands of the Soviet Union and two going to Japan. But this question has still not been settled.

How do you plan to resolve this problem?

Thank you.

Dmitry Medvedev: Japan is one of our big partners in international affairs and in the economic sphere. We are happy with the way our economic relations with Japan are developing. The scheme is probably not ideal, but overall we have seen good growth in trade and economic cooperation of late. Our bilateral trade already comes to more than $20 billion. There are a large number of big projects in which Russian and Japanese companies are involved. There are big investment projects with good prospects for the future. There a number of projects that are really of world level. The decision was made recently to invest a little more than five billion dollars in the Sakhalin-2 project. This is a figure that reaches the global scale. In other words, I think that the trade and economic situation is very good indeed.

Speaking seriously, our trade and economic relations have probably never been as good as they are now. That is the first point I wanted to make.

Second, our countries are very close to each other and despite the differences in historical development and the respective uniqueness of our cultures, we do share a common set of values. These values bring us together in our work in the United Nations, in summits such as the G8 summit, and in other international forums. Our countries share the same views on a large number of issues, in particular regarding our responses to the main threats and challenges facing humanity – terrorism, narcotics, the world economic situation and climate change. These are all areas where we have the same view on practically all issues, and this creates opportunities for progress.

There is indeed one subject we have not yet been able to agree on, and that is the border issue and the related issue of a peace treaty. I think that, first of all, we should not dramatise the situation. We need to move forward and discuss this matter in accordance with earlier statements, and we should not try to achieve maximum result in the shortest time, because this is probably not possible, but we should openly discuss existing and new proposals.

Our talks have never stopped. I said this to the Japanese Prime Minister, Mr Fukuda, when we met in Moscow. We are ready to continue talking about all the issues and looking at the legal foundation that exists today.

I think that what is most important here is not to expect any miracles, not to lessen our contacts, and to maintain a friendly atmosphere. In this respect we do have the possibility of reaching agreement on this matter, all the more so as it is very clear that settling this issue will help to improve the economic and cultural ties between our countries, and these ties, as I have said before, are very wide-ranging.

I spoke about the economy, but interpersonal ties between our peoples are also developing well. Our citizens are happy to have contact with each other and are following cultural events. Russian collections go to Japan and Japanese collections come to Russia. Exhibitions are taking place.

I can share some impressions of my own. I visited an exhibition just yesterday, on the culture of the samurais. The exhibition is taking place in the Kremlin. It is a very interesting exhibition that gives insight into this unique chapter in Japan’s history and cultural development. You can learn through the military objects and the objects from daily life that are on display. I found it very interesting. These kinds of events bring us closer together and there should be more of them.

Leonardo Maisano: Mr President, oil is now $143 a barrel. What does Russia propose doing? Are you going to make any proposals to the G8 on this issue? Do you think that OPEC is still a functioning mechanism for settling these problems?

Dmitry Medvedev: The situation with energy prices is indeed very complicated and is having a clear impact on the overall state of the world economy. Of course, energy security will be at the centre of attention at the summit. This is one of the issues we are going to discuss. I want to note that the proposals, recommendations and most of the conclusions made during Russia’s presidency of the G8 and the St Petersburg summit turned out to be very successful in the sense that we correctly evaluated the situation. It is never an easy thing to make forecasts, but it was already very clear last year that there would be changes in this area.

I gave an example today and will repeat it for you now. A year ago, I met with your colleagues and I was asked about oil prices. I said that oil would cost $150 a barrel. This provoked an emotional reaction of course, and I was told that this would be impossible any time in the near future. But unfortunately for the world economy, prices continue to rise and this is creating problems for growth. I think that we need to look at this issue not just from the point of view of the consumer countries but also from the point of view of the countries producing the oil, pumping it, and the transit countries. Only in this way can we arrive at balanced decisions. The increasing energy prices, prices for petroleum products are an objective reality that we all have to take into consideration. This situation has a number of benefits for the producer countries, and it has a lot of drawbacks for countries that only consume these products. The overall situation is far more complex, and this is why I have said before that even our country cannot base itself solely on the energy sector. Of course it is a good thing if we invest in developing our energy sector, but attempts to concentrate only on this one sector while ignoring our other economic sectors would lead to the degradation of our entire economy. We need to plan our investment policies based on the need to diversify our economic development. Countries need to pay great attention to these matters, especially countries that hold a key position in the international economic arena.

I think that many of these questions have yet to be answered at the present moment, but we do need to make use of some kind of consultation mechanisms.

As for the potential of OPEC and other international organisations, world experience shows that this potential should not be exaggerated. Not all the decisions taken by the OPEC member states have a long-term impact on oil prices, and abstaining from taking decisions also does not always calm the market. I think therefore that we need more complex and modern mechanisms for consultations between the main producer, consumer and transit countries. This is what we proposed at the St Petersburg summit. This is what was reflected in the declaration the summit adopted. We will build our future energy policy based on this position.

Michael Ludwig: Mr President, when you were in Berlin you proposed taking time out on issues on which the West and Russia differ, NATO expansion and so on. But life goes on. In this respect I have a question: is there hope that Russia will end the blockade in the UN Security Council against sending a European Union civilian mission to Kosovo, because the situation there is very complex and threatens to become a dual-power situation.

Dmitry Medvedev: First of all, Russia is not causing any blockade in the Security Council. We have stated our position on settling the Kosovo issue firmly and clearly. We have not changed this position. It was formulated some time ago and remains unaltered. We think that Kosovo sets a dangerous and regrettable precedent. We think that the decisions taken on this issue are not a one-off thing, not casus sui generis, as the diplomats would say, but set a precedent. Europe will have to face the consequences for decades to come. Moreover, this position will be taken up by a number of other separatist regimes, who will use it to justify their own status as subjects in law. There can be no escaping this fact and blaming someone.

As for the situation in the Security Council, our position has not changed. We think that the appropriate forces from the United Nations should have the principle mandate. We have stated this position very clearly. We were surprised by the position taken by the UN Secretary General, who bypassed the Security Council and made a statement on the need to replace these forces. But at the very least these decisions should not be taken by the UN Secretary General alone. This is the Security Council’s prerogative. Secondly, it is somewhat strange for the Secretary General to make a statement on this matter when the Security Council has not yet stated its view.

We therefore reaffirm our position and we consider that the UN forces should remain in this situation when there are parties to the conflict, countries categorically opposed to their withdrawal, I mean Serbia of course, which is under no circumstances willing to recognise Kosovo as an independent state, and there are many such states. And the process of recognition is going a lot more slowly than the founding fathers of the idea had hoped.

All of this confirms the need to maintain a calm and balanced course in this situation. We think that the United Nations and the Security Council are the only forums for discussing these matters. Correspondingly, peacekeeping contingents should be authorised in accordance with the UN Charter and Resolution 1244.

CLIFFORD J. LEVY: I would like to ask a question about Russia’s relations with its closest neighbours. Do you think that Russia should make an effort to support and develop democracy in the former Soviet Republics? And do you consider today’s Belarus or Uzbekistan, for example, democratic countries?

Dmitry Medvedev: Which of them are democratic in your opinion? Are the others democratic?

CLIFFORD J. LEVY: That is up…

Dmitry Medvedev: Up to me? Understood.

I think that we have friendly and fully fledged contacts with all the CIS countries. It is very good that this mechanism exists, because after the Soviet Union ended its existence we have created no other group that unites practically all the former Soviet republics except for the Baltic states. We need to value the CIS. Of course we will continue to move towards greater integration and make use of other forums for integration, such as the Eurasian Economic Community and the Common Economic Space. We will develop our contacts with the Collective Security Treaty Organisation. And so, the relations with our partners are built on a serious international base.

As for support for this or that individual country, I think that the best support for democracy in any country is the course set by the people in power in that country. Democracy cannot be imposed from outside. We have had this brought home to us yet again in the last decades. The experience in trying to build effective democracy in Afghanistan and Iraq shows very clearly that money alone is not able to establish democratic practice, which has to be rooted in serious and hard work by civil society and cannot simply be delivered in the form of humanitarian aid.

I can say the same thing with regard to countries with which we share much in terms of culture and history. Each of these countries is undergoing its own political processes. Change is taking place faster in some places and less fast in others. This is always related to the country in question’s own identity, people and traditions. It is clear that no choice of this kind can be imposed, whether by close neighbours or partners further afield. But I think nevertheless that after the Soviet Union ceased to exist as a single state all of the CIS countries, all of the states that emerged in the post-Soviet area, have come a long way. Their political system has changed vastly from what it was 15–20 years ago. In some cases countries have already gone through many changes of leadership, political system and constitutional foundation. In some cases the situation has remained a lot more stable. I cannot say that in the countries where the political system and the constitution has changed far quicker the situation with guaranteeing democratic values is better than in the countries that have more stable laws in this respect. For a start, it is not for me to give an assessment of these countries, and secondly, this is ultimately the internal affair of the people living in these countries. They are the ones who vote for the corresponding order and for the laws passed by their parliaments.

I think that practically all the states that emerged out of the Soviet Union still have a long and difficult road to travel in creating their own democratic values. I do not want to idealise the situation in our country either, because ours is a young democracy still in the process of construction, but we are trying to develop it consistently on the constitutional basis that exists in Russia. I think that this constitutional basis is optimal for developing our state for a long time yet to come. I am referring to the basic provisions of the Constitution, of course. There are some nuances, but I do not think the basic provisions should change. I said this on many occasions. I think, for example, that for all my respect for the system of a parliamentary republic I think that to establish this form of democracy here would spell the end of Russia as a country. For the coming decades and even centuries perhaps, Russia should remain a presidential republic in order to preserve itself as a unified state.

Why do I say this? I say this because every country has its own road to democracy. The main thing is not to incite these processes from outside but to give the people themselves the chance to realise their own democratic aspirations. Then democracy will have a solid foundation and will guarantee the country’s full fledged development for years to come.

Jonathan Steele: Russia’s relations with Britain are cooler and tenser than with any other European country. You even called the British Council a nest of spies. How can this crisis be settled? What steps do you hope to see from Prime Minister Gordon Brown, and what initiatives are you ready to take yourself to turn a new page?

Dmitry Medvedev: I spoke with Prime Minister Brown not long ago. We had a good calm discussion. We agreed to have a meeting at the G8 summit. My aide recently visited Britain to discuss various aspects of this meeting and preparations are underway. I think that this contact, this meeting should be substantial and useful, all the more so as we have excellent economic ties, better than ever before, and we have huge investment and an immense amount of trade contacts. Our task is not to politicise these ties but to develop them calmly.

As for the areas where we have differences or where there are problems, I think that we simply need to meet face to face and discuss them. There is nothing so difficult about this. Our ties go back centuries and to be frank, we have faced tougher periods in the past than we do today.

Jonathan Steele: Are you prepared to take any steps to begin new relations?

Dmitry Medvedev: International relations are always a case of the different parties taking steps towards each other. There needs to be the opportunity for reaching compromises and the desire to hear what one’s partner has to say, otherwise nothing can be achieved. Of course Russia is ready to take steps, but we also want to see our British partners take the relevant steps too.

Jonathan Steele: How many times have you been to England, to Britain?

Dmitry Medvedev: That’s a good question.

Jonathan Steele: What memories do you have?

Dmitry Medvedev: I have been to London at least five times. London is a fine city, beautiful, very restrained, truly British. It is one of the world’s main financial centres. And from an economic point of view, from the point of view of rules, it is easier to work there than in New York, if we are talking about the stock exchange, for example. I have been to London for various reasons. I have been there on business, I have met with my colleagues from Downing Street, and I have been there simply on holiday. I like London, it’s a good city.

Jane Armstrong: Mr President, you have a reputation for being a liberal. Do you consider yourself a liberal? What does this word mean in Russia today?

Dmitry Medvedev: You know, I have never tried to classify myself on any scale, because people are always so much more diverse than the labels usually stuck on them. At the same time, people’s behaviour in general makes it possible to characterise them as having conservative views, or liberal views, or being a socialist or some kind of radical.

Given that I am still young and new in this office of president, I would not like to give any assessment of myself. I think it is not up to me to do so. But I certainly do have a set of basic values that were inculcated in me back during my university days and that are fundamental in my mind. It is a matter of individual taste as to what label to apply to them, but I have always taken the position that we need to respect the priority and supremacy of the laws and statutes passed by parliament, fight negligence of the law and legal nihilism, that the economy should be based on market values and that property rights should be unconditionally guaranteed. These are principles that I imbibed during my student years, and the same goes for the value of human rights. These values are enshrined in our Constitution. Human rights and freedoms should also receive unconditional protection and should be a priority for all the state’s work. As for what label to give this set of values, I leave it up to you.

Jane Armstrong: I have another question: should the media be free and independent, and should the media be free from state control?

Dmitry Medvedev: The state is one of humanity’s very valuable inventions, and no rational person today would deny the value of the state’s mechanisms. But extremes must be avoided. A state that turns into a dictatorship is an extreme that hinders human development, strangles freedom and often destroys people’s lives. A state that has disintegrated and become no more than an amorphous mass, a state that is no longer able to carry out its functions, is just as dangerous as a dictatorship. But as we know, the extremes tend to meet. Our country has known both extremes in its history. Both have ended in disaster at various moments in our history. In the second decade of the twentieth century our state turned to dust and a dictatorship arose in its place. This dictatorship eventually went the same way. It died a more natural and gradual death, growing weaker, breaking down into other state forms, but in the end it also faded away.

I do not support the idea of the state being higher than the law. I support the rule of law – a state that develops within a civilised, modern and democratic model based on the law, and not the other way round.

Fabrice Nodet Langlois: Dmitry Anatolyevich, a French member of parliament, a member of the president’s party, recently came to Russia and met with and expressed his support for [Mikhail] Khodorkovsky’s mother. He said he did not know all the details of the criminal case, but in his opinion it is clear that, and I quote, “this criminal case had a political dimension”.

My question is: do you think that a visit of this kind by a foreign politician constitutes interference in your country’s internal affairs?

Dmitry Medvedev: Criminal law and criminal procedure are decided by national legislation. International courts cannot directly overturn the decisions of national courts. There is an appeals procedure, but this procedure is based on good will and on conventions and agreements. International courts are not the highest instance for the national courts. I have spoken about this on many occasions. I think that all the procedures that exist in our country should be legal and based on our procedural and criminal law. As for attempts to influence the court’s position – I won’t even say the state’s position, because the state should not have a position overall on this subject – when it comes to criminal prosecution of any individual, including Khodorkovsky, only the law enforcement authorities can have a position, if they think there are sufficient grounds for pressing charges, and if they do so, the defence should also have a position. The defence exists precisely to look for flaws in the charges laid. Finally, the court should take the final position.

But the state as such should not have a position. So long as I am at the head of this country, so long as I am President of the Russian Federation, this is the principle upon which I will base myself. We need to protect the courts from any attempts to influence them, whether by business corporations or by state agencies. That is my answer.

Vladimir Gurevich: Russia has built up very big financial resources over the last several years. Having obtained these funds, the idea arose that with oil prices high and the possibility of borrowing easily on the markets, foreign investment is not really so essential. Not everyone thinks this, but this idea has become quite popular. At the same time, over these last few years, we have been trying to work out in our own laws who to let into which sectors and who to keep out. Could you say that we have now formulated a more or less clear position, clear to us and to our partners on the world market, as to who to let in and to what extent?

Dmitry Medvedev: The Russian Federation does need foreign investment, this is without any doubt. The question is what kind of investment and in which sectors. We are indeed in a decent economic situation today, despite the macroeconomic problems I mentioned before and the global economic crisis. But we have not come to a standstill. We are developing and investing in important sectors of our economy. We are investing in infrastructure. We are finally investing in the social sphere and in education. And we will continue to do this. But foreign investment is absolutely essential.

First, there are a number of objectives that we can reach only together with foreign investors who have either experience or the very substantial financial means that we need.

Second, an inflow of foreign investment is generally an indicator of an economy’s state of health – whether it is growing or stagnating, or closing off. In this sense, foreign investment is a market development indicator, an indicator of economic freedom. A state that shuts itself from foreign investment cannot be considered free. That is obvious. The question is one of who to let in and where. This is the issue that is the subject of debate today. We have settled this question in Russia and have stated so openly. Five years ago, foreign investors said to me: “pass a law that sets out the particular areas where our presence is not wanted or is possible only together with Russian organisations”. We passed just such a law. But this is a global problem. I can tell you that even the preparations of documents for the G8 have involved examining the issue of strategic sectors and access for foreign investment. Our partners agree with us that security considerations are the only grounds for closing a particular area to foreign investment. Of course, each state has its own interpretation of security considerations.

I can tell you that our interpretation is far from being the toughest. I will not name other countries, but their laws (I have specially read them) are a lot tougher and at the same time a lot more based on decisions by official agencies than ours. Our laws set everything out in a list, stating what investments can be made and who decides what, but in a number of countries the laws state that decisions are up to this or that provisional commission or ministry. We think therefore that we have taken a very moderate line. I think that the situation is quite straightforward in Russia today. There are areas in which foreign investment is welcome, and there are areas in which foreign investment must receive official approval, but where, overall, it is also welcome.

Hayami Ichikawa: Global security is one of the main issues the G8 discusses. North Korea’s nuclear programme remains a source of concern. What Russian or Japanese or other regional programmes can be carried out to help increase security? What measures does Russia intend taking to neutralise North Korea’s nuclear programme? Japan’s people place their hopes on Russia in this respect. We would like to know what kind of cooperation we can expect from you as the new President.

Dmitry Medvedev: Does your question concern Iran too or only North Korea?

Hayami Ichikawa: You can extend the question to cover Iran too.

Dmitry Medvedev: The situation regarding Iran’s nuclear programme, and the North Korean nuclear programme (I will speak about both countries together first and then go into some individual nuances) is of concern to the United Nations of course, and to us too. We have already stated our position in the past. All of the formats for work on the situation with these nuclear programmes are based precisely on this position. We cannot remain indifferent to the development of non-transparent nuclear programmes, and neither can other countries. But we try to work by emphasising the positive. I think therefore (and our position has not changed here) that with regard to the ‘problem programmes’ in the countries concerned we need to use a system of positive incentives. It cannot be simply a case of we pass a resolution, and come what may, you have to comply otherwise we will look at tough international sanctions, and ultimately even a military operation. This is a dangerous approach. A system based on incentives is a lot more comprehensible and, most important, it is easier to explain, easier to put before our difficult negotiating partners.

As far as the situation with Iran is concerned, there has been some progress in some areas and we remain at a standstill in others. Unfortunately, the efforts of the countries taking part in the relevant forums and in the IAEA have not yet achieved any real breakthroughs, but the process will continue. We need to motivate the Iranian leadership to demonstrate that its nuclear programme is transparent, and this includes making it possible to discuss the programme’s future if it becomes transparent. Steps and decisions that were approved with the IAEA need to be carried out, and this would reduce tension over the programme. But we must continue to offer positive incentives. Whatever the case, we need to understand how these processes work. We cannot make decisions that contradict the general course.

If we are negotiating with Iran in various formats we should not undertake action that would provoke the Iranian leadership and lead to the imposition of additional sanctions. I really do not understand why the European Union recently took this kind of decision, and I spoke about this during my recent meeting in Khanty-Mansiisk with Mr Barroso and Mr Solana. Either we are talking to them or we are trying to provoke them in various little ways.

As for North Korea, this is also a complicated situation, but I think that there has been progress in this case. The recent decisions and the steps the North Korean leadership has undertaken, including the dismantling of its nuclear installations, are all steps in the right direction in my view.

We fully support these initiatives and we are working together with other countries. China made a report on this issue just recently. Moreover, we are participating in aid programmes for North Korea in order to eventually normalise the situation on the Korean Peninsula. We are carrying out in full the energy supply commitments that common decision placed on the Russian Federation. We are already supplying heavy fuel oil to a value of more than $100 million, as I was informed today. These are sizeable supplies. I think therefore that there has been progress in the North Korean case. Of course, the international community should not change its position. We need to create positive incentives for our partners in North Korea and assist them. This will create the opportunity for settling this situation with this programme in full and then being able to settle the general situation.

Leonardo Maisano: Mr President, you have said lately that you do not want so many civil servants to be involved in the management of state corporations. A few days ago, Gazprom and Rosneft appointed new directors, and they are all political figures. Is there not a contradiction between what is declared and what is actually happening?

You said earlier that civil servants should not sit on the boards of directors of state enterprises, at least, the press said that you said you do not wish to see so many civil servants on the boards of directors of state companies, but why then have Gazprom and Rosneft appointed civil servants?

Fabrice Nodet Langlois: Mr Shuvalov also gave a very firm view on this issue in St Petersburg.

Dmitry Medvedev: I would note two moments. First, I stated the idea of reducing the number of state representatives on the boards of directors four months ago, during the election campaign period, not because this is some kind of populist idea, but because I think it is the right thing to do. That is why this idea came up.

My colleagues – you mentioned some of them – supported this idea. But in order to carry it out we need first of all to have a normal pool of independent members of the boards of directors.

Second, we need to respect corporate procedures, because in the case of Rosneft or Gazprom, for example, representatives were nominated in accordance with the law before January 31 of this year. The idea that I expressed came a bit later.

Finally, we need to look too at what company we are talking about. I know the situation at Gazprom well. I think that in principle the overall number of state representatives, people who are currently civil servants, can be reduced in Gazprom and other companies. We already have independent directors there. The state holds the controlling stake in Gazprom, and not only civil servants but also independent directors can be elected to the board of directors to represent this stake. But to do this we need to make a list of the potential nominees and we have to be sure that they have the necessary preparation to be able to take such decisions. At the same time, as you realise, they will have to represent the state’s interests and not their own interests. There are some matters that, according to corporate rules, the individual members of the board of directors must decide for themselves. But there are issues on which the state gives directives when it considers a matter sufficiently important to it as a shareholder, just as other shareholders issue directives to the members of their boards of directors. But I think that bringing professionals into the boards of directors would be a positive step. Nobody has taken this idea off the agenda, including with regard to the big companies, but we need to act in accordance with our legislation concerning shareholders, work to a realistic timeframe and understand the responsibility that comes with work in a big company.

Taking the case of companies such as Gazprom and Rosneft, I think that even if there were a large number of independent directors on the board, given these companies’ importance, the board should probably still be headed by a representative of the state. I made this point right from the start. The idea is not that the board of directors should at all costs be headed by an independent director, but that board decisions should be taken on the basis of greater professionalism, drawing on the experience of independent directors. This is as far as the biggest companies are concerned.

Looking at the second and third-tier companies, I think that the boards of directors could certainly be headed by independent directors or by someone not currently engaged in civil service at least. There is no contradiction here.

Michael Ludwig: Mr President, a few days ago we read in a survey that among the young middle class elite that you want to develop up to 60 percent, that is the majority of this elite is contemplating emigrating from Russia. They are the future, the professionals, people who have been fortunate in life, and yet most of them are nonetheless considering emigration. What can you do so as to not to lose this generation?

Dmitry Medvedev: To be honest, I do not know what survey you are talking about.

Michael Ludwig: A survey by the Levada Centre.

Dmitry Medvedev: The Levada Centre?

Michael Ludwig: Yes.

Dmitry Medvedev: And what percentage do they give?

Michael Ludwig: Around 57 percent. One of the reasons respondents give is that they cannot protect themselves against arbitrary action by state officials and that they do not believe that the situation is stable overall in Russia.

Dmitry Medvedev: I will take a look at this survey. The Levada Centre is a perfectly respectable establishment. My impression is that the number of people wanting to leave Russia and settle permanently in some other country has gone down a lot over recent years. To be frank, I am not judging by surveys but by the mood of my friends who are not working in the civil service or in other important areas. These are ordinary people, people running small businesses or simply citizens engaged in working on this or that social issue. I think that we will need to take a closer look at the statistics the survey gives and see what the situation is. But if people are not happy then of course they can be in very different moods. But as I said, it seems to me that our people have realised over this last decade that life in other countries is also not all milk and honey and that you need to work hard everywhere, whether in Russia or elsewhere, to achieve success.

Regarding the conditions for doing business, for normally running one’s business and one’s life, this is of course a real responsibility for the state. It is our duty to ensure comfortable conditions for our citizens. When these comfortable conditions are absent people start wanting to leave. This is what happened at the start of the 1990s.

Today, I think that the economic conditions for working in Russia, especially for young people who want to open their own business or get involved in some kind of technology project, are perfectly decent, though not yet ideal, of course. This is why we are working on small business development and fighting corruption. But overall, conditions have changed vastly from what they were even just 10–15 years ago. I think therefore that the number of people who see their future abroad rather than in Russia is steadily coming down.

The question is also one of how the question in the survey was formulated. This is a subtle matter with many nuances, including sociological ones. It is a rather specific thing when it comes down to it. But of course the state needs to be aware of these processes and take the necessary steps to prevent a mass exodus of young people abroad.

At the same time, I think that one of Russia’s most undeniable achievements in the new democratic period is that any person is free at any moment to go and see how people live elsewhere, to work in another country if the conditions make this possible, to compare life here and there, earn money to study or to open a business, come back here and work here, or continue working abroad. This idea of a mobile population is an undeniable achievement that democracy has brought. This is certainly not something that should give the state a headache. The state should have a headache over other matters, namely how to ensure the organisational conditions for this mobility: visas, organising the arrival of people here or the departure of people there. The state’s task is to support young people in this respect, and I do not think there is anything tragic or so serious in this situation. On the contrary, I think that the tendencies are very positive.

CLIFFORD J. LEVY: I have a personal question. What are your impressions of your job so far? Is it better or worse, easier or more difficult than what you imagined three or five months ago?

Dmitry Medvedev: I will try to formulate my answer. Are you also interested in this or did you have another question?

Jonathan Steele: How much time do you spend each day talking with Mr Putin?

Dmitry Medvedev: I will start with your question because it is easier. It varies. Sometimes we call each other or meet several times, and sometimes we do not speak at all. Fortunately, our state administration and decision-making system is organised in such a way that we do not have to constantly call each other in order to settle various matters. It depends on the current situation and it changes all the time.

Now, concerning my feelings, I can tell you quite honestly that nothing has become easier and that I had no illusions that after my election, once I took office, I would be able to sit back in the president’s chair, relax and say to myself, “there we go, I’ve reached my goal, I’m President now. Now my colleagues can do all the work while I reign”. This is a nonsensical and impossible way of thinking. We have a country with a huge number of problems, with a population that is not well off, a country living in a fast-changing global world in which it faces a large number of threats. The President of a country like Russia, the President of a large nuclear power, has to work round the clock and certainly cannot afford to relax. I was very aware of this when I decided to take part in the election campaign and run for president.

Every person has their own story, no doubt. I sympathise with my American colleagues because it often happens that someone with solid experience of work in Congress or the House of Representatives say, is elected president, but is not so familiar with the executive system, and these are different things. Of course, one can always learn, but I make this point because I know that my work in the executive system and the presidential vertical of power over these recent years has given me colossal experience that would have been impossible to gain from books or from consulting with friends, colleagues or even former presidents. This is something you have to experience for yourself. In this sense, I think that I already had some preparation for dealing with the state’s tasks and responsibilities. I was involved in work on many of these problems before, at a different level it is true, helping the President resolve these problems or taking my own decisions when I was in the Government.

But life goes on. Essentially, I am continuing the same work, but the level of responsibility is higher. This responsibility lies in the fact that there is no instance you can turn to, no one who can make the decision for you. There are people I can consult with, Vladimir Putin, for example. He is someone with experience and he is a popular politician. But ultimately, the final decision is still up to me. If I make a mistaken decision, it is I who will have to answer for it, and this completely changes the way you look at how you should work.

Michael Ludwig: After your election, you said that some people have been trying to undermine your partnership with Vladimir Putin. Mr Surkov said recently that, I quote, “some destructive forces in the country are trying to drive a wedge between you and Vladimir Vladimirovich”.

Is this true? And who are these destructive forces?

Dmitry Medvedev: Everyone has the right and the possibility to comment on this or that process. My colleagues do this too, and this is absolutely normal. I am sure that there are some politicians out there who do not like the current power configuration, and part of the population no doubt does not like it either. But that is what democracy is all about. When elections take place the majority chooses a head of state, who in turn proposes the Government, and in this composition they work. I accept that not everyone may like the current set up, and I think that this is normal.

It would be ridiculous to list the names of destructive forces. I am not a supporter of conspiracy theories. Everything is a lot simpler in real life. But it is very clear that there is a system of political competition in any developed state. You asked me before about this too, about political competition. I think that this is a normal thing for any country. The main thing is not to let this political competition turn into anti-constitutional confrontation. Our country already had more than its share of this in the twentieth century. The President of Russia is the guarantor of the Constitution in order to be able to ensure general order in the country, ensure respect for the law and for rights and freedoms, give opposition forces the possibility to freely express their position, their views in the state structures, in the legislative bodies, in the parliament, and in the street, but all in accordance with the laws in force. Everything else is a question of evaluation.

Fabrice Nodet Langlois: This is a very specific question. As far as I know, you were involved in forming the new system of relations between the federal centre and the regions. One of the objectives was to end the system of agreements put in place during the Yeltsin period. But one example of a specific agreement between the centre and the regions remains, and that is Tatarstan. Why is this and how long will it continue?

Dmitry Medvedev: Every federation is unique in its own way. Our federation is unique too. Despite the fact that Russia has formally been a federation for almost 100 years now, it is only since the new era began that it has begun developing normally in terms of laws and substance. Before this it was not a real federation for reasons that were eminently clear.

Our federation has a complex nature. We have territorial entities based around different ethnic groups, and this gave rise to the need to conclude a number of agreements with these regions. Overall, most federations in the world do not have such a system of agreements between their territories but are based on the Constitution, even if negotiations took place and an agreement was reached as a preliminary step. Such is the case of the Federal Republic of Germany and the United States of America, for example.

But a federation is a living entity. At some point we therefore need to begin moving towards a more modern and efficient form of federal organisation. Of course this cannot be achieved overnight or even in a year. There are territories that place great importance on this aspect. We respect their position, because this is a matter concerning the unity of our state and our good relations. There are regions in the Russian Federation that think the agreement system has exhausted its potential. We therefore need to work calmly on developing our federation, taking into account all of these processes. The ultimate goal of federal development must be an effective federation that protects the rights and freedoms of it citizens, a federation that is a strong and unified state. There are enough such examples in our world.