TRANSCRIPT: A panel discussion on the G20 in Davos – Dmitry Medvedev’s speech at the discussion

File Photo of "World Economic Forum" Display at Davos from Past Session

(Government.ru – January 24, 2013)

Ladies and gentlemen, I’d like to tell you about our view of the G20 and our plans. Last December Russia took up the baton of the G20 chairmanship, one of the most influential informal associations in the world. This is common knowledge, but I will repeat that the G20 countries account for about 90% of the global GDP and 80% of the world’s trade.

Indeed, I am well familiar with the topic of the G20. I remember how it was established and the gloomy mood that prevailed at that time. I remember my conversation with George W. Bush and Nicolas Sarkozy on this subject. As a result, the G20 has emerged in its current form. When it had just been formed we all had reserved feelings as to what we could do, because we believed that the situation in the global economy was too complicated and that we were too different. Yet at a certain point we realised that we could come to terms. This became clear during the second G20 meeting. This was a very important signal at that time, no matter how we may assess the decisions that were made and their implementation.

Now I’d like to saw a few words about the economic situation in Russia, because without this it is pointless to discuss our chairmanship. By and large we are doing well, despite the unfavourable situation in the world markets. Last year we managed to consolidate the positive trend of our economic development ­ the GDP grew by 3.5% and the federal budget was deficit-free. We have solid gold-and-currency reserves ­ a safety net of more than $500 billion. Our unemployment rate is not high ­ a little over 5% of the economically active population, which is one of the lowest figures in the G20.

That said, we are beginning our chairmanship in a difficult period. The trend towards the slowing rate of global economic growth is obvious. It was 5% in 2010, 3.3% in 2012 and the IMF’s forecast for this year is not much better ­ 3.6%. At one of the events experts voted on the predicted growth rate and they all agree that it will be a little over 3%.

As for the Eurozone, last year its economy went down by 0.4%, while the expected growth for this year is merely symbolic. Unemployment is a major problem ­ it has reached a record level for the entire postwar period. Obviously, large-scale measures of fiscal consolidation are extremely important but they have not yet produced economic growth or new jobs in the Eurozone countries, which is probably a new and big problem. To a certain extent, this situation is being made up for by the fairly dynamic development of countries with emerging markets, primarily BRICS. This year BRICS and developing countries in general account for 80% of global economic growth. But not everything is simple there, and there are many debates on this score. To sum up, no country is without problems.

Clearly, the slowing growth rates of the Western economies are affecting the majority of countries by narrowing their export opportunities, complicating access to loans and increasing uncertainty in the financial and stock markets. In this context the G20 could be very helpful as one of the main instruments of pooling the efforts of the leading economies.

Russia is not starting its chairmanship from scratch. We are relying on what has been done before, on the proposals and decisions made in the past. I’d like to mention in this context the decision of the G20 to toughen the requirements for bank reserves ­ the so-called Basel III. These requirements are designed to insure the financial system against excessive risk and guarantee the necessary stability of the capital market.

The G20 also deserves credit for another achievement ­ the redistribution of quotas and votes in the World Bank in favour of the so-called new economies and the start of negotiations on a profound reform of the IMF. Many swords were crossed on this issue. I remember the debates on the redistribution of quotas. There were times when emotions ran very high. But eventually this decision was made. Moreover, it was made in a way that alleviated the difficulties. I must admit it was the crisis that encouraged us to make these moves. We (I mean all states) would have hardly dared make them without the crisis.

The G20 has developed a system for responding to food crises in conditions of growing food prices in many regions. I’d also like to mention that at Russia’s initiative the G20 has created a mechanism for preventing catastrophic pollution of the marine shelf during the production and transportation of oil and gas.

We will advance further in 2013. Our G20 partners have unanimously endorsed the main priorities of Russia’s chairmanship. They are laid down in the concept of the Russian chairmanship, which was published last December. The concept has been approved by the President and is a logical continuation of the efforts that the G20 has been taking in the last three years.

What is the main priority? We must pool our efforts to encourage global growth and create more jobs. The task of accelerating economic growth and the need for fiscal consolidation are closely interconnected and this is why it is extremely important to initiate the improvement of the national systems of state borrowings and sovereign debt management. I think we should stop these endless and fruitless debates on what is more important ­ growth or fiscal consolidation. I have witnessed these debates in the last few years both at G20 meetings and other venues. This road leads nowhere.

Naturally, we will actively promote IMF reform. We will also continue implementing the framework agreement on ensuring steady, sustainable and balanced growth. It goes without saying that we will pay special attention to recovering investment activities and expanding employment. We will view investment activities as a factor in creating jobs.

Reserve currencies are a separate issue that is very important today. Central banks are using them not only to stockpile reserves but also to nominate financial assets. The experience of the past few years has shown that reserve currency liquidity crises exert considerable influence on financial activities and market volatility. This is why we must think about the formation of mechanisms that will play the role of the lender of last resort in these markets.

An analysis of new, unconventional protectionist measures will be conducted during Russia’s chairmanship. We will support the trade talks of the WTO, which Russia joined last year.

Russia intends to actively promote maximum transparency of the G20 activities and to consider the opinions of the biggest possible number of members of the international community. This will enhance the prestige of our forum and will make its decisions more universal. To achieve this, it is necessary to develop a system of contacts with international regional organisations and continue the practice of inviting the leaders of other countries and the heads of major international organisations to G20 summits.

This is very important indeed because very often my partners that are not part of the G20 have told me about their concerns. They complained that they are not represented in the G20, although their economies and states are exerting substantial influence on the world’s development and the global economy. We all realise that in this context the G20 is a fairly conventional entity and should not have absolutely precise borders. We should also encourage active dialogue with business and civil society. This is also obvious.

I’d also like to underscore that as chair of the G20, Russia will do all it can to find fresh, albeit uneasy solutions to the problems of the global economy with a view to speeding up its growth, forming a favourable business environment and creating more jobs. This is far from a complete list of the priorities of our chairmanship. I’d like to repeat that we will also deal with other issues. Our concept consists of eight items all in all. In particular we will work towards achieving sustainable development of global energy markets, which seems logical in the year of Russia’s chairmanship, promoting international development and multilateral trade and, last but not least, combating corruption.

I hope we will manage to ensure close cooperation in attaining these goals, both with the G20 governments and business quarters. I’d like to wish everyone success in 2013. We will look forward to your participation in G20 events in Moscow and St Petersburg and hope for effective cooperation. Thank you.

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