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President of Russia Dmitry Medvedev: I will give you all a detailed account of all that has taken place seeing as everyone was unhappy yesterday that only a sherpa [Arkady Dvorkovich] appeared to answer questions and not the President. So I will tell you now about everything that took place at the G8 and G20 summits, as I have already answered questions on the USA visit.

So, taking things in order, we have the G8 summit at Muskoka first, where several issues were top of the agenda. This included global management issues, of course, the correlation between various institutions, their efficiency, and the extent to which they meet today’s demands.

If we take the UN, there are many calls for reform of the Security Council, for example. Likewise, there are calls for reform of other international organisations that have been around for a long time now. Naturally, all of this has an impact on our ability to address the economic problems before us. This was one of the issues that we addressed.

Nuclear security, as one of the key issues in today’s world, was also on the agenda, including the nuclear programmes of countries that have been the biggest source of concern, namely, Iran and North Korea. We had a very detailed discussion on these matters.

We reviewed regional issues at the summit. This included the most complex issues such as AfPak, the situation in Afghanistan, in Pakistan, and in North Korea, including the explosion that sank the South Korean warship Cheonan.

We also reviewed the latest problems to come up, in particular the situation in Kyrgyzstan. I briefed my G8 colleagues on a number of matters, whereas in some respects we have greater possibilities and closer contact.

Drug trafficking is a global threat and an issue that I specifically addressed. There is clear focus on some drug trafficking routes, while others receive much less attention. Here, on the American continent, for example, we see that everyone recognises the great danger posed by drug trafficking from Latin America, from countries that rank among the world’s biggest drugs producers. But there is little mention of the problems caused by drug trafficking from Asia, including Afghanistan. 

I proposed that in the future we must tackle this problem through global action alone, because drugs do not circulate within particular regions only, but know no borders at all and flow wherever there is profit to be made.

This explains why we in Russia are now encountering drugs coming in from Latin America too, and not just strong heroin-containing drugs, but also cocaine produced in Latin America. This means it has become profitable for the traffickers. They use special recipients, containers, whatever suits their needs for delivering the drugs to our country.

Clearly, we therefore need to join forces and establish a global programme. This is something we talked about at the G8 summit. I remind you that we held a special conference on this subject recently in Moscow [Drug Production in Afghanistan: A Challenge to the International Community], looking specifically at the drugs threat coming from Afghanistan.

But my point is that we cannot address simply the threat coming from Afghanistan or Columbia or any other individual country, but need to work on the whole problem together. Only this way will we achieve results. 

We discussed the Millennium Development Goals and the aid programme for developing countries, including for fighting infant mortality and childbirth-related deaths. We are all allocating funds for these needs. Russia is carrying out programmes to train doctors, midwives and other specialists.

I should also mention an idea that Canada proposed to provide support for university education in Africa, in particular, helping with training for mathematicians and other specialists. This is an area where Russia has quite interesting experience to offer, given that our country is well known for its mathematics studies. Overall, this summit examined all of the issues traditionally on the agenda at G8 summits.

In this sense I think that the G8 still has relevance as a group. It provides a useful forum for discussing political issues, global security, and coordinating foreign policy, and I think that in this respect it has a clear future ahead. My colleagues share this view. 

Moving on now to the G20 in Toronto, the priority here of course was to analyse where we are in terms of implementing the Pittsburgh summit’s decisions. We made progress evaluations in the following areas: implementing the G20 framework agreement on sustainable growth, improving the global financial management system, reforming international financial institutions, establishing a global network to guarantee financial security, reducing ineffective subsidies for minerals and fossil fuels in order to promote green growth, expanding support for the poorest groups in the population, including through providing access to financial services, and a number of other areas.

What have we accomplished so far? I will not make a lengthy analysis, but will mention eight main points. First, we have outlined the principles and set quite concrete timeframes for carrying out fiscal consolidation in the developed countries, and for drawing up recommendations on structural reform of economic and financial policy in groups of countries in the aim of guaranteeing sustainable growth.

The communique that we adopted sets a deadline of next year at the latest for starting to carry out fiscal consolidation. These consolidation plans involve taking the needed measures to cut budget deficits two-fold by 2013 and stabilise state debt levels by 2016. As you can see, this is practically the same as the targets that we already set ourselves at the domestic level.

We agreed on the principles for bankruptcy procedures for financial institutions, protecting taxpayers when redistributing the losses arising through bankruptcies, continuing to provide financial services, and effective cooperation between jurisdictions.

The G20 Financial Stability Board has been tasked with preparing measures for big financial institutions in time for the Seoul summit this year. We have launched the plans that we announced last time to carry out reviews of each of the G20 countries. This will involve analyzing and assessing each country’s progress in carrying out the recommendations of the IMF programme on sustainable economy and financial sector indicators.

Next, the G20 leaders’ decision to increase the World Bank organisations’ capital has been carried out in full. This was what we agreed on concerning redistribution of quotas, and with regard to the World Bank this process is complete. The decisions from the G20 summits in London and Pittsburgh have thus been implemented in this area, and this includes the decision to increase the voting power of the developing countries and countries in transition by 3.13 percent. The developing countries now account for 47.19 percent of the total votes in the World Bank.

Of course we also discussed the need to make swifter progress in redistributing votes and setting new quotas in the International Monetary Fund and its management system. We have taken on obligations in this respect and we now need to see this through. This applies too to our domestic obligations.

What else have we accomplished? We have reached agreement on the principles for innovative provision of access to financial services. These principles aim to create a favourable regulatory environment for access to financial services. In other words, the goal is to make it easier to work. Of course we will make use of experience from around the world here. We have already launched a project to hold a tender for the best model for financing small- and medium-sized businesses.

Another subject related to financial management reform and that sparked active debate was that of global tax initiatives. Countries that have spent money bailing out banking institutions are understandably keen to compensate for their expenses by imposing a levy on their financial institutions. Most important though, is that on this issue we agreed that each country will decide individually whether or not to introduce such a levy.

Russia opposes the idea of introducing a universal levy on financial operations and transactions in all countries. We think that this should be a voluntary option for any country. In our view, introducing a levy of this kind would increase the cost of financial services and the cost of lending, while at the same time reducing liquidity on the financial markets. A substantial part of the cost would ultimately be shifted to the non-financial sector and to ordinary citizens. We therefore oppose the introduction of a universal financial levy. Some countries, on the other hand, will probably introduce this measure. Let’s wait and see how effective it will prove. 

Another subject concerns the idea that I formulated back in Moscow [in the interview to the Wall Street Journal] regarding the cleanup following the accident in the Gulf of Mexico. Today I presented this idea here at the summit too. The proposal is to establish an international mechanism for preventing and liquidating these kinds of offshore accidents and protecting the marine environment in general.

The main problem here is not so much lack of funds, although accidents of the type that happened in the Gulf of Mexico are very costly, and the environmental damage they cause is beyond any financial measure. But the real problem is political and legal in nature: we simply do not have the full-fledged foundation of legal agreements needed to deal with these kinds of issues. There are a number of separate conventions – I especially looked into this and examined these conventions. These are agreements dealing with specific issues, a convention concerning oil spills, for example, or the international convention on the law of the sea, and they all address specific issues, but none of them provide a comprehensive vision.

I think it would therefore make sense to draft a new international legal framework in order to prevent and minimize effectively these kinds of dangerous accidents. What kind of provisions would such a framework involve? One idea, which will need further discussion, of course, is for the big international companies involved in oil production to pay a percentage of their profits into a special consolidated fund, and (perhaps in addition thereto) to make payments that would be used to insure against these kinds of risks. In other words, this special fund could be established, and also a special insurance programme.

We agreed to get our experts to study this proposal and report on their conclusions at the summit in Seoul. I think this is an important matter. In passing, I note too that Russia wants to set an example here and not stand on the sidelines, and we are therefore ready to submit a draft law to our State Duma on protecting the marine environment from pollution caused by oil.

That is the basic roundup of what we worked on in Muskoka and Toronto. Overall, I think the work went quite well. As far as my personal impressions go, when we held our first summit in Washington in 2008, everyone was in something of a panic over events in the global economy. Everyone’s mood was grim and some of the speeches – not mine though – were excessively emotional. But the situation today has changed, despite the problems in the European Union, in the European economy.

Overall, everyone has noted the emerging growth in global economy, the growth in various countries, and the positive trends that are taking shape. Everyone recognises that the situation is still fragile for now, but that the positive signs are visible nonetheless. In this sense, the mood at the summit was quite different, and this was reflected in the work on the documents, on the communique, because in the past we had more debate over the wording. It has to be admitted too that we already did a substantial part of the work. We cannot stop now and must continue the reforms.

Question: Mr President, you ended your remarks just now by saying that reforms must continue. This brings me to a question: there have been a lot of proposals of late on creating a new currency and financial system, and this will undoubtedly require further reforms of the International Monetary Fund, World Bank and other institutions that form the pillars of the global financial system. How should these reforms be carried out, in your view, and in what timeframe?

Dmitry Medvedev: It is never an easy thing to talk about a specific timeframe. As I see the situation, what happened is that when the crisis began, talk about creating a more diversified reserve currency system met with no understanding at all, and people would say, “what, isn’t it enough for you to have the dollar or the euro?” But look at what has happened since then. First of all it was the dollar that came in for a serious battering. And then just when things had more or less settled down again it was the euro that started having problems. Other currencies have also been having problems.

The current system, which offers a limited choice of reserve currencies, is clearly not entirely stable and does not meet global demands. The solution to this problem would be to create additional reserve currencies. As for the currencies that could potentially claim such status, we all have a fair idea of the world’s economic centres and the potential candidates for playing such a role.

We are also working on this, but I think we should avoid jumping too far ahead and keep our sights within more or less pragmatic limits. I do not think there is any sense in trying to give a specific timeframe right now to the creation of new reserve currencies or the formation of a new system. We have to wait and see how things turn out.

But comparing the situation now and two years ago, no one rejects this idea today. I remember what battles we had to fight to get these proposals mentioned in the communique back then, and our partners, it must be said, did their best to carefully steer clear of them, but now this subject is quite openly discussed and everyone seems to realise now that changes in this area will be inevitable.

As for when these changes will come, I think this will happen fairly soon. We will therefore work on this in parallel to building a financial centre in our country. Time will tell what results this will all bring. We will need, of course, to increase trade in rubles. This requires a strong financial system. In any case, this is no longer an exotic notion but an entirely realistic operational idea.

Response: What about reform of the IMF?

Dmitry Medvedev: It is going full steam ahead. Now we simply need to see it through to its conclusion. If further reforms are needed we will of course take the necessary steps. But reform of the IMF is underway. The World Bank has already reformed insofar as is needed at the moment, and the IMF is in the process of reform. We are finalising details of how the IMF will be managed. The final redistribution of the quotas is the subject of a separate discussion because in any redistribution someone gains and someone loses, of course. There is always the balance of interests to take into account, and this calls for careful and skilled work. Mr Kudrin [the Finance Minister] is sending me text messages on this matter.

Question: Mr President, could you comment on the news we have heard about Iran? The director of the CIA said that Iran now has enough uranium to make a nuclear weapon. Does Russia have any information on this account? What are your views on this news?

Dmitry Medvedev: Iran has been grabbing the headlines in general. We discussed the situation there in detail at the G8 summit, including the Iranian nuclear programme, the latest UN Security Council resolution, and the unilateral measures that some countries are taking with respect to Iran. I stated Russia’s views on these matters.

As for this piece of news, it would need to be verified. Whatever the case, this kind of news is always cause for concern, given that the international community does not consider Iran’s nuclear programme transparent, hence the UN resolution. If what the American experts and intelligence services say proves correct this will make for a tenser situation of course. I cannot rule out that this is a matter we will have to look into.

Question: What is your assessment of the results of the referendum that has just taken place in Kyrgyzstan?

Dmitry Medvedev: Let’s first wait for confirmation to come through that enough people have voted to make the referendum valid. I saw news just before that voter turnout has reached the required level, but we need to hear the official word from the electoral commission first.

What can I say? It is no doubt a good thing that the people have had their say, and now we need to see which way the voting went. But at the same time — and I won’t hide my views, which I have shared with Kyrgyzstan’s current leaders and in other conversations – just how best to govern Kyrgyzstan today is a very complicated matter in general.

I make it clear that how to govern Kyrgyzstan is Kyrgyzstan’s own affair, of course, since it is a sovereign state. But the fact that the authorities cannot even bring order to the country suggests that their legitimacy is very low, and whether they will be able to muster the necessary support is a big question. In this situation, I am not really sure just how well a parliamentary republic model of government can work in Kyrgyzstan, and whether there would not be the risk of the country ending up entangled in endless problems, reshuffles in the parliament, uncontrolled transfer of power from one set of hands to another, from one political force to another, with ultimately the danger that this could pave the way for extremist forces to take over the country.

Whatever the case, the situation worries me, as it does all of Kyrgyzstan’s neighbours. We cannot remain indifferent because Kyrgyzstan is our close neighbour and partner, and a country facing very big problems right now. I would go even further and say that Kyrgyzstan stands now before a number of possible developments, including, at worst, even the state’s disintegration. Preventing scenarios of this kind requires a strong and well-organised government that can take into account the historical reality and, of course, the people’s will. Let’s see what the future will bring.

Question: Your initiative to tackle drug trafficking at the global level indicates just how disastrous the situation has become, in my opinion. You no doubt share this view. Most of the Russian-American statements on Afghanistan dealt with the drug trafficking issue. Can we take this as a sign that the first small step has been taken on Afghanistan? 

Dmitry MEDVEDEV: If we’re talking about Afghanistan – I already spoke about efforts to bring drug trafficking under control – then yes, speaking frankly, we were not always happy with the efforts being made to deal with this problem in Afghanistan. We are not entirely happy with the situation now either, or with the standards being applied on this issue. But we have agreed to address this together. We have agreed to have our drugs control agencies join forces, and we have agreed to work as actively as possible with Afghanistan’s government to minimise the threats coming out of the country.

But to be honest, this is really a huge problem that has eaten into the entire country. For many people in Afghanistan this is their only source of income, and this makes it very hard to combat. This does not mean though that we should give in on the pretext that this is the way of life these people have known for so long now. This is completely unacceptable because the hard drugs coming out of Afghanistan flow mostly across Central Asia and into our country. Hence you are right to say that Kyrgyzstan, which is not in the best situation right now, could become a weak link and turn into yet another hotbed of drug trafficking.

Question: Mr President, did you get a chance to watch the football at all during the summits, including the England-Germany match? What would you say to the English, and who are you supporting now?

Dmitry Medvedev: This is a good question with which to wind up this news conference.

I did not get a chance to watch the match. I saw the emotions on the faces of my colleagues – Federal Chancellor of Germany Angela Merkel, and UK Prime Minister David Cameron. Now and then they’d throw up their hands when one or the other side scored a goal. But we all know the result: Germany qualified for the next round, and England, sadly, did not make it.

All this endless travelling has prevented me from seeing practically any of the football. I was only able to take a quick glance now and then at the hotel, and that was only because they had wi-fi there, and all of the various gadgets that we all have these days pick up the channels quite well. Incidentally, I watched Vesti-24 Russian news channel and RBC [Russian Business Consulting] channel too, and could pick them up quite well, so long as the wi-fi was working at high enough speed. We definitely must keep developing this kind of technology because this is all very helpful in situations when we have no access to Russian TV, for example, or simply when there is no television nearby.

But getting back to the football, I hope that when I get back home I will be able to watch some of the remaining matches. I would have given my support to Slovenia, for obvious reasons, but they did not manage to go through. Now I will need to choose another team to support. Usually I support European football. Let’s see who emerges as the strongest in this situation. At the moment, the balance is not in European football’s favour, but in the end victory will go to the strongest team.

True, I am not sure that I will manage to watch many matches because almost immediately after returning to Moscow I will be flying to Siberia, and I invite all of you to come along on what will be an interesting journey in our own country. I hope that the few hours we will have will be enough time for you to recover. Thank you for your work here in Canada and in the United States. I think this was an important and interesting visit. For my part, anyway, I can say quite frankly that I am happy with the results.

Goodbye for now.