TRANSCRIPT: Dmitry Medvedev’s interview with Rossiya 24 TV channel

Dmitry Medvedev file photo

(Government.ru – Sochi, Krasnodar Territory, September 28, 2013)

Anna Schneider: Good afternoon, Mr Medvedev. Thank you for finding the time to come here.

Dmitry Medvedev: Good afternoon.

Anna Schneider: The forum is about to complete its work. What results have been achieved? What are your personal impressions? How is this year’s forum different from the previous ones in terms of participants, the issues raised or the volume of concluded agreements?

Dmitry Medvedev: I have just met with the governors of several regions and I said to them that they travel a great deal and every trip should bring tangible benefits. A large number of forums are held in Russia every year. What is the goal of the Sochi forum and how is it different from the others, for example from the St Petersburg International Economic Forum or the forums held in the Far East and Siberia? It is a universal venue for discussing regional issues; that is its main value and its main purpose. I believe that’s exactly what we have today and what we must preserve for the future ­ a venue where almost all Government members and all the governors who came to Sochi this time can focus on regional matters. Naturally, due to the economic situation and the social issues that are prevalent in this country, the main agenda revolves around socioeconomic matters. So this is a unique event in this respect.

What was more successful and more interesting this time around? The choice of the city where the forum is being held, which will host the Olympics soon. It has excellent halls for consultations, panel discussions, plenary sessions ­ I believe that has also made an impact and created a businesslike atmosphere which last year’s forum did not manage to achieve to the same extent.

As for what happens on the sidelines of such events, of course, various issues are always debated and contracts are signed, and this forum was no exception. Yesterday we concluded seven large-scale agreements, and that’s just those that were signed in my presence, so of course there have been far more of them. I cannot name any concrete figures yet because we still need to look at them more closely and make calculations. But the majority of these agreements are regional: they are contracts between different regions and development institutions, or between regions and major companies, both Russian and foreign. To sum up my answer to your question I can say that, to my mind, that is why it is the most effective, the most widely acknowledged and the most businesslike platform for discussing regional issues in our country.

Anna Schneider: In your speech at the forum and in the article that was published in Vedomosti earlier, you said that the global economic crisis is forcing you to change the economic strategy, and as we know, the Government has already declared that it is necessary to redistribute funding allocations from the federal budget. It is clear that social spending will be reduced, but at the same time you have acknowledged that there is already a lack of financing for such sectors as education and healthcare. What can we expect next? Will be you be able to implement the reforms that have already been launched?

Dmitry Medvedev: I just want to make a small correction to what you said. First of all, we have the so-called protected expenditures, which will not be affected by any reductions, at least under the current circumstances. These expenditures cover salaries, social benefits and the Government’s main social obligations. Despite the recent 5% reduction, they are fully protected and there can be no doubt about that. Even if we make further reductions, we will still make these payments.

As for the general situation with education and healthcare allocations, to be perfectly honest, I wish they were higher. I believe, these are the shortcomings of our budget; they did not emerge overnight and there are reasons why the budget is structured the way it is. For example, it has been a long time since we spent any money on the army’s rearmament and new military technology, and at a certain point we made the decision to focus on that area. Now we are committed to continuing the modernisation of the armed forces and the navy until they reach a certain level. When this period of large-scale investment in national security comes to an end, we will probably be able to change our priorities. But that does not mean that we pay no attention to healthcare and education: our spending on these sectors is much more extensive than it was 10 or 15 years ago; the wages are completely different and we have a totally new system for financing education and healthcare. Although we must admit that it would be better for our country if these sectors had a bigger share in the overall expenditure structure. That has been pointed out many times. But the absolute figures for government spending on healthcare and education have not decreased; on the contrary, they continue to grow year after year.

Anna Schneider: You say that the Government has a privatisation policy but we have heard from experts and also from you that the programme is not being executed. What are you going to do about it now, especially during the transition form the quantitative economy to a quality economy, which you have been promoting and saying that the economy should be made more efficient?

Dmitry Medvedev: You know, privatisation is not a policy; strictly speaking, it is a tool for reaching a number of goals. Which goals? First of all, privatisation is a source of revenue for the budget. That is normal. Second, when we decide to privatise state property, we do it so that enterprises get new owners who will manage them more effectively. At the same time, privatisation is not some abstract goal for us to pursue. Privatisation is closely linked with the economic climate. You just don’t sell property during a recession because you will lose money, so we hold special meetings before making a decision regarding each property (a large asset that is subject to privatisation). This work is done by my colleagues, and they report to me on the results. Eventually, we decide if it makes sense to sell the state’s share in some business or a whole company, or if this step should be postponed. That is why we have not reached all of our privatisation targets. But I would like to reiterate that it is essential to take the economic situation into account and sell only when it is profitable.

At the same time, it is important not to go to the other extreme and stop the process altogether as we discuss the state of the market. As I said earlier, the goal of privatisation is not only to generate budget revenues but also to hand the assets over to more efficient owners.

Anna Schneider: What did the members of the Russian Union of Industrialists and Entrepreneurs tell you when you met with them at the forum? What kind of problems do they consider to be most important? As we know, the number of small businesses in the country is decreasing. At the same time you say the Government will allocate 700 billion roubles, I believe, to support small business next year. What are the priority areas on which this money will be spent?

Dmitry Medvedev: You know, the number of small enterprises is quite a controversial issue because it can grow or fall but what is more important today is the share of people working in small and medium-sized businesses. That percentage is quite high: about 25% of the working-age population is involved in small and medium-sized enterprises in some role. That is a substantial share.

Nevertheless, the situation remains complicated. Yesterday, during the meeting with businesspeople (there were representatives of large, medium-sized and small business) we discussed the main current problems. We have decided to side with small and medium-sized businesses on a number of issues related to insurance payments and some other things, such as tax breaks for small innovative enterprises.

But the most important thing that is mentioned by representatives of different kinds of businesses is the overall economic situation. Unfortunately because a number of markets, European and Asian markets, became closed for us, we are forced to look for sources of growth within the country. That is not bad in itself, but businesses must have the necessary resources to grow. Perhaps now business associates above all are talking about the need for access of small and medium-sized enterprises, and large ones too, to so-called long money ­ money that allows you to plan your business for the future. Here you have the so-called long-term liabilities, money that our businesses can get through the banking system ­ this is now the main issue. The Central Bank is currently working on this, as is the Government. Let’s hope that together we can achieve all the same changes that will enable enterprises to obtain long-term and sufficiently affordable financing.

When we talk about affordable financing, we certainly cannot ignore inflation factors. In 2013, inflation for us will probably be within the limits of what we currently planned ­ somewhere in the region of 6%. But in 2014, taking into account a number of decisions that we have adopted, including the decision to abolish tariffs for infrastructure monopolies ­ for Gazprom, for grid companies, for our railways ­ the inflation rate, we hope, will be slightly lower ­ in the vicinity of 4%-5%. This means that the corresponding inflation figures will accordingly have an impact on interest rates and the primary interest rate of the Central Bank through which other banks borrow money, and, of course, real interest rates at which loans are made to businesses and individuals. The main conversation yesterday was about these issues.

We, of course, touched on other issues ­ licensing, permitting, issues of the general business environment, relationships with oversight organisations and law enforcement agencies ­ indeed, things that entrepreneurs are always talking about.

Anna Schneider: When you spoke on the investment attractiveness of regions, you also said that one of the problems that now discourages investors, both domestic and foreign, concerns the flaws in our judicial system. You have already been saying for some years now that the courts should be reformed, and you personally spoke on this many times. Why is there no movement along these lines?

Dmitry Medvedev: You know, I’d like to say, maybe our courts are not really in need of reform. Actually, we had judicial reform in the 1990s and have continued to improve due process legislation, and we adopted new procedural legislation in the previous decade. In this sense, I believe that the legislation specifically addressing the courts and due process is quite modern.

More likely, the issue is that the activity of certain courts raises questions among those who use them. And these are not problems of legislation, but issues of psychological compatibility, the court’s authority, justifiability of rulings, legal practice and public confidence in the judicial system. I think that it is impossible to create an atmosphere of trust with reform legislation. The judicial system, in its development process, needs to earn the respect of everyone who uses it  ­ in this case, the authority of the court will be as lofty as possible.

The state should provide the right conditions for the development of the judicial system. What do I mean by this? It involves modern technological possibilities for administering justice, the ability to use different types of electronic locking of evidence in judicial communication, in the end, new court facilities, where the authority of the court is supported not only by the letter, but the whole essence of the law.

If we can achieve this, we will have a modern justice system in this country. I reiterate ­ this is not an issue of immediate reform of the judicial system, and we have done a lot in terms of creating the legal framework for the operation of our courts.

Anna Schneider: But I understand that the Government is about to implement specific measures, correct?

Dmitry Medvedev: I think it is arduous work. Again, it is not limited to the signing of some law or even the unification of the judicial system, which is now being discussed quite a lot. In other words, if you like, it is a matter of the attitude toward the court. Disputes in our country were not settled in court for decades, strictly speaking. Plaintiffs wrote to the authorities, to party headquarters, to the executive branch, and of course, inundated them with all sorts of letters. Even now, people are often looking for protection in the executive branch, in the President, in supervisory instances, although the majority of these incidents should address the court structure, the judiciary. But again, decrees and laws will not solve this problem. The judiciary itself, with the aid of other state authorities, has to ensure its competitiveness in the best sense of the word, in other words, gain credibility.

Why do our entrepreneurs often write in the so-called arbitration clause into their contracts ­ that the dispute shall be resolved in the Arbitration Institute of the Stockholm Chamber of Commerce, or in London, or Paris? Because they are confident that this decision will be enforced. And if they do not write or do not submit a particular contract to our legal system and do not choose our courts or arbitration, it means that they are not quite sure that rulings will be enforced. And again I say ­ this is a general task. By the way, this is a task not only for the Government, not only for the courts, but also for the entrepreneurs who should also in this case choose our legal system after all, in order to strengthen it.

Anna Schneider: In your article, Mr Medvedev,  you talk about the need to mould a socially-oriented person. We have had direct elections recently, the first of the kind in recent years. What kind of conclusion have you arrived at as the leader of Russia’s largest political party? What do you think caused such a low voter turnout?

Dmitry Medvedev: We have had elections in the past that were also direct elections, but you are referring to gubernatorial elections. I think I can say a few things about them. Firstly, people are keen on voting in the elections. They want to exercise their electoral rights.

Anna Schneider: Thus the decision to bring back direct elections was the right one.

Dmitry Medvedev: Thus the decision was right. I am often reproached: Why did you say gubernatorial elections should not be re-introduced and then just brought them back? This means that I have just revised my stance. I think it is more fair for a person dealing with practical politics rather than stick to a certain stance and keep on saying: No, that’s what I believe and have believed, and I am going to die with those ideas! It’s just that at a certain point I looked into it and talked to people and governors. They said: Yes, you know, there is a demand for that. The legitimacy which comes through the old procedure, when the President nominates a candidate and the local legislature votes him into office does not suffice. There should be support from the people. And this choice has been made. Experience shows it is the right choice. The overwhelming majority of those who wanted to vote came to the poling stations.

Second. The voter turnover varied. In some places it was fairly standard. In others it was below the standard. We should certainly do as much as possible to make people want to take part in voting. This is a matter of the competitiveness of our election system and the attractiveness of the programmes proposed by candidates for Governor or legislature. I think this was not a success all around, and it resulted in the turnout numbers.

But there is one more reason. As you know, when people generally perceive their life as fairly quiet and regular, they are not very active in election campaigns. And conversely, the election processes go wild when the nation is overexcited by something. Just recall our situation just a short while ago.

I do not view this indicator as a critical one, because local elections, regional parliament and legislation elections in other countries are not marked by an extremely high turnout. Nevertheless, it is a matter of election programme competitiveness, and we have to work on this.

Third, I think the past elections were quite successful for the party I am honoured to head. Because under the conditions of direct competition with many parties taking part in the election ­ surely not all of them have matured, some of them are still quite small and weak, however, the competition was absolutely different. Yet the United Russia candidates have received a mandate to govern a region or a city in the majority of the territories, the absolute majority! And they showed better results than, say, in December 2011, although prior to the elections they used to say the United Russia party had run out of new ideas.

It turned out that if we do the right thing with people, if we explain our actions in the right way, people are ready to support even the party that has been in office for a rather long term.

Anna Schneider: And in conclusion will you please outline your opinion about the re-introduction of the “None of the Above” option in the ballots?

Dmitry Medvedev: You know, I’ve been thinking about this, to be honest, and have even discussed it with my colleagues. I feel ambivalent about it. I basically do not object to it, I believe it can be of some use, although it does not seem to make as much sense when there is a large number of parties as when there are much fewer parties. Because everyone can choose a certain political power.

But if we speak about a more subtle reflection of one’s will in the voting process, this option would be rather useful, because in the end I may be unwilling to support any of the parties, I might dislike everyone, and I may want to declare this directly, that is, to say that I am against everyone ­ not just to vote for some candidate who opposes the current authorities (to vote out of spite: let it be anyone, just not any of these repulsive authorities), but to indicate directly that I oppose everyone.

And I think this rule generally corresponds to overall democratic approaches. That’s why I think this matter requires further discussion. I think we can come back to it later.

Anna Schneider: Mr Medvedev, I’m sorry we have so little time. Please come back again. Thank you very much for the interview.

Dmitry Medvedev: Thank you very much! And you come to Sochi again, we will continue the forum.

[featured image is file photo]

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