TRANSCRIPT: In Conversation with Dmitry Medvedev: Interview with five television channels

(Government.ru – December 9, 2015)

Prime Minister answered questions from TV anchors Irada Zeinalova (Channel One), Sergei Brilyov (Rossiya), Kirill Pozdnyakov (NTV), Yelizaveta Osetinskaya (RBC TV) and Mikhail Fishman (TV Rain).

Sergei Brilyov: Good afternoon. On behalf of the media holding that hosts this broadcast it is my pleasure to welcome you on Rossiya 1, Rossiya 24 TV stations, as well as Vesti FM and Mayk radio stations. We are live with the annual Conversation with Dmitry Medvedev.

Good afternoon, Mr Medvedev.

Dmitry Medvedev: Good afternoon.

Sergei Brilyov: Mr Medvedev, you know all my colleagues present here today. Since I represent the network that is broadcasting today’s interview, I would like to ask the first question, if I may.

The past year was quite challenging, to say the least. The Government prepared an anti-crisis plan. Although it is clear that it has played its role, the question of whether it has been effective is less obvious. Every three months we are hearing that we have reached the bottom, and that the economy has started to grow. This growth then comes to a halt and some new trends emerge. Is the anti-crisis plan working or not? What are your impressions about it?

Dmitry Medvedev: It is true that the situation is challenging. Let me remind you, however, that the last several years were not easy for us either. This is just the way things are internationally and domestically. Speaking about my perspective, I can say that the anti-crisis plan delivered on its objectives. This has helped us weather the most difficult period this year, and this plan has succeeded in nearly all spheres that we identified as being of the utmost importance.

What does this mean? The goal was to stop the decline in production and in the economy as a whole. Based on the data that are available to the Government, I can tell you that the downturn in the economy and production has been stopped, and we believe that growth will resume next year. This is the first thing I wanted to say.

The second is that the key priority of any antirecession plan is to prevent a decline in living standards. Of course, it’s for the people to decide if we have succeeded or not, but I’d like to say that we have implemented very important measures, such as the indexation of the funded component of retirement pensions to equal inflation. As a result, the pensions that our people receive do not lose value due to inflation. This is very important, considering that very few countries approve such indexation measures in conditions that can be described as an economic crisis. But we have done this.

The third thing I’d like to mention, which I consider to be of exceptional importance for the national economy, is, of course, support for our financial system. We can talk as long as we please about taking care of people’s income and about indexing their wages, but nothing good will come of this if the financial system falters and the banking system totters. We have supported our financial system, and our banking system is in functioning properly. I don’t accept recent criticisms. You’ve helped the banks, these people say, but the banks have enough money and other assets as it is. But when banks go down the drain, when they collapse, the entire economy comes to a standstill. Those who remember the 1998 crisis and other difficult periods know this very well.

We have supported our production sectors and the agriculture industry. There are a number of programmes underway. Where did the crisis strike first? It has hit the most vulnerable spots such as the automotive industry. We have invested big money in our automotive industry, so this is why now, despite the downturn… Yes, the sector has declined, although not as much as we feared. The agriculture industry is in good shape. This year’s growth rate will be between 2.5 percent and 3 percent even despite a number of restraints, primarily financial ones. This is why I believe that the antirecession plan has succeeded. It’s a different question whether we should extend it.

Yelizaveta Osetinskaya: Mr Medvedev, next year’s budget looks very optimistic: the price of oil, that’s factored into it, is $10 above the current price, the inflation rate is half what we have now, and growth, instead of decline. Don’t you think that this budget is excessively optimistic? Do you have a plan B and how does the Government intend to deliver on the objectives set forth in this budget?

Dmitry Medvedev: According to the latest estimates, and judging by the forecasts we have to date, I can say…Let me first explain why I said “to date.” What I meant is that the current situation is extremely volatile, as the economists say, which means that there is a lot of uncertainty in terms of economic development. Of course, we have had to update our forecasts more than once. So, according to recent estimates, and judging by the latest forecasts, I think this scenario is quite realistic. We can cut the inflation rate in half, down to 6.4 percent, as we promise in this budget because inflation is already slowing. You know all too well that inflation has almost levelled off in recent months. This is my first point.

My second point is that we can move into a trajectory of tangible, if not solid, economic growth. It is true that there are different perspectives in this respect. The Central Bank has its perspective, which is somewhat less optimistic than that of the Ministry of Economic Development. That said, under the most pessimistic forecasts we’ll have zero growth, while there are also relatively optimistic economic growth projections predicting an increase of up to 1 percent. This is quite good, since, as we know, economic growth rates are sluggish around the world. The European economy is growing at 1.5 percent. This is an average for the EU, and in some member states the economy is actually shrinking. As for our partners, for example a close partner like Brazil has been in a recession for the last 18 months. The Chinese economy has slowed considerably as well, which goes to show that this is a global trend.

For that reason, we believe that in the current environment our scenario is quite realistic. However, not having a plan B, as you said, or even a plan C, if need be, means poor governance. Of course, oil prices are far from gladdening. We discussed this issue recently with you. It’s true that the price of oil is at its lowest point in the last 17 years. I’ll remind you what happened over the last few years. Just a few years ago we were at the peak with oil at $150 per barrel, and now the price is $37-$38 per barrel. I’m talking about Urals, not Brent, which often pops up in various tables and on websites. If you compare these prices with 1998 when oil was at its all-time low of $9 a barrel, I mean an all-time low for Russia, not the Soviet Union, it turns out the purchasing power of the dollar has changed by almost three times. Thus, we could argue that the price of oil is at a 20-year low.

Of course, there is nothing positive about the fact that the Russian economy depends on oil to such a large extent, but we were not the ones who created this structure. This dependency has been shaped over the last 60 years, so it will surely take more than five or ten years to turn things around. So if the need arises, if the times are hard, if we face a worst-case scenario on the oil and gas market, we’ll have to make adjustments. In this respect, the position of the Government will be absolutely realistic.

Mikhail Fishman: Mr Medvedev, since the issue of oil prices has come up, naturally, amid falling budget revenues, the budget as a whole has to be trimmed. However, my question concerns the budget structure, because over the past few years we have been seeing a significant (relative) rise in defenсe spending against the backdrop of social spending cuts, in particular education and healthcare. I’d like you to comment on this. Is this a change of priorities?

Dmitry Medvedev: Mikhail, I take a somewhat different view of this. Indeed, over a certain period we increased defenсe spending. This is so. What’s more, it was done practically five years ago, and I believe that we did the right thing, because by that time, unfortunately, the status of our military hardware, as well as the status of our armed forces as such, was below par. Now we’ve brought this spending up to international levels and our objective is to provide our armed forces with some 70 percent of new weapons and equipment by 2020. Why? Because no one country, not even the smallest country, can sacrifice its defenсe capabilities. Even a very small country in terms of population and territory has to earmark significant resources for defenсe and security. What about our country then? We are the biggest, the largest country in the world, with the longest border. If we do not have effective armed forces we will simply have no country. I believe this to be obvious.

However, I’m saying this now, not to say that we’ve built up security and military spending and that this is our main priority, our overriding priority while everything else is subordinated to it. That would be a one-sided approach. Indeed, this had to be done at some point.

Regarding social spending. Let’s admit it openly and frankly: Over the past 15 years, social spending has been growing rapidly. Yes, there were prerequisites for this: Oil prices rose and we were able to spend more. As a result, we significantly expanded the scope of our social commitments, very much so. Suffice it to recall wages and pensions in the late 1990s, even relative to foreign exchange rates, and today these are totally different figures. And we have not reduced anything. Absolutely nothing! We have not abandoned a single social obligation. So, in this sense, the social budget has been developing practically according to the same scenario as the Defence Ministry’s budget.

You have mentioned certain segments: education and healthcare. Naturally, I realised that you were going to ask me about this. You know, yesterday, I took a closer look at the figures and spoke to my colleagues, other ministers. The budget of the education system – both the federal and consolidated budget – is practically unchanged. It may be changing by one-tenth of the GDP, downward. It’s practically the same. The healthcare budget for next year – both federal and consolidated – is growing. Just a little, also by tenths of the GDP but it is growing, not falling.

Therefore, contrary to existing perceptions, or even some kind of a myth that social spending is declining and military spending is rising, this is not the case. Our social spending is steady, not falling. If we could, we would have increased it, but we can’t do it now. However, I want to reiterate that our priorities remain unchanged with regard to education and healthcare, and spending will remain the same as in 2015.

Kirill Pozdnyakov: Mr Medvedev, I would like to focus on healthcare. On the one hand, we are now doing more high-tech surgeries, which is definitely good news. On the other hand, media are publishing a fairly large amount of information about research institutes, such as the ones operated by the Finance Ministry, working on plans to introduce restrictions on the number of free physical examinations or ambulance calls. All services in excess of an established standard will be provided for a fee. What is this about? Is someone trying to attack the holy of holies, our free medical care?

Dmitry Medvedev: No, no one. Anyone who would try that will get a slap on the wrist or other body parts.

Kirill Pozdnyakov: They’ll have to go…

Dmitry Medvedev: Correct, they’ll have to go see a doctor. Of course, we need to understand how the money is spent, so there must be regulations in place. Free medical services aren’t actually free. They are financed from what is called national wealth, through taxes and deductions, which all individuals and corporations pay. This wealth, this portion of the budget, should be spent properly.

Therefore, we have introduced guaranteed free medical care. It means that everyone is guaranteed to have access to a certain number of medical services. These guarantees must be honoured religiously. Any attempts to cut guaranteed services are unacceptable, and must be addressed by the executive authorities and law enforcement agencies. This is how it must be.

But we must see to it that these guarantees meet today’s requirements. You mentioned high-tech medical treatment. I, of course, can’t help but comment on this. As you may recall, I used to address national high-priority projects including the healthcare project.

What did we accomplish at that time? We initiated normal, free and high-tech surgery using modern equipment for the first time in recent Russian history. Since then, the volume of this type of surgery has increased almost tenfold. By the way, we achieved this over the past seven to eight years. Currently, various kinds of high-tech medical treatments are conducted free of charge, and there are no queues in some areas, although this still isn’t true for all types of treatments. I believe this is a substantial and even dramatic change in the healthcare system because it is one thing to simply pay for medications (people are doing this, one way or another), but it is another thing to pay for extremely expensive high-tech medical treatment. As a rule, the whole world is doing this with the help of compulsory or voluntary medical insurance systems. Naturally, we are still mostly using the compulsory medical insurance system which is performing quite well. Instead of going abroad, many Russian citizens have started undergoing this surgery in Russia because foreign hospitals are more expensive and various other problems. We need to maintain this system no matter what. Please note that, in his address, the President specially talked about this issue and said that, until the compulsory medical insurance programme’s section on high-tech medical treatment is fully effective (certain directives need to be issued in this area, and certain economic processes initiated), we will be forced to finance this type of surgery straight from the budget. We will simply borrow budget funding and allocate it. I believe this is the best way to guarantee that people will be able to afford medical treatment.

The healthcare system is facing many challenges. Patients are being forced to pay for services which should be free. We know about bribery and extortion but it is our common job to deal with these processes. This is the job of the executive branch, law enforcement agencies and the patients themselves. They should understand that the more they give in to these kinds of transactions, the more corrupt the system becomes.

They need to report any implication of paying extra for a simple surgery or any other simple medical service.

Sergei Brilyov: Where should they complain?

Dmitry Medvedev: Where? At a higher-level agency, of course; in this case, a district healthcare department. They must tell them that a certain doctor or outpatient clinic is attempting to commercialise these healthcare services. I assure you, this will help.

Irada Zeinalova: Mr Medvedev, Finance Minister Siluanov said at a Federation Council meeting that next year would be the last time the Government will be able to use the Reserve Fund to cover the budget deficit. Is this alarming news?

Dmitry Medvedev: Yes, we should be alarmed by what Minister Siluanov said, but we are reasonable and sensible people. It is the Finance Ministry’s job to dramatise the situation to make us go cold. I’m saying this openly because only the Finance Ministry can do this. The Finance Ministry is the last ditch, and the Finance Minister, whoever it is, is obliged to dramatise the situation. And this is the right approach.

As for our reserves, let’s ask ourselves: Why have we accumulated them? We have accumulated them for a rainy day like this one, when we’ll be able to spend them rather than sit on them mumbling: “Yes, it’s a difficult situation, but we won’t touch these funds. We’d better tighten our belts more and deny ourselves everything, but we won’t spend our reserves.” What kind of a position is this? No, we will spend our reserves, but in a reasonable way. We know that these reserves will not last forever, but if events take the predicted turn, they will allow us to weather the most difficult economic period. That’s one thing.

Second, the reserves must be replenished at the first possible opportunity, and there have been opportunities like that this year. The rouble rate is highly volatile, and the Central Bank buys foreign currency whenever possible, which amounts to replenishing the reserves. We’ll continue doing this, and hence the task of the Government – a clever government, which is how I see our Government – is to spend the reserves, but on the other hand, to prevent a situation where we go broke. And this is what Mr Siluanov is managing…

Irada Zeinalova: …while at the same time trying to scare us.

Dmitry Medvedev: Yes.

Mikhail Fishman: Is he trying to scare us when he says that one day we’ll have to choose between introducing new taxes and cutting social spending?

Remark: Let’s take a closer look at taxes.

Dmitry Medvedev: First of all, Irada, you’re right. There should be both good and bad guys in the Government. We determined all these roles in advance. There’s no doubt about that. Now, I’m a good guy.

Sergei Brilyov: Oh, can I ask the good guy a question, Mr Medvedev? In particular, about taxes, since the subject has come up. We know how the posh housing and luxury tax stories can end, judging from Mr Depardieu’s case. He has relocated to Russia.

Dmitry Medvedev: He’s not the only one.

Sergei Brilyov: They come here, among other things, because of the 13 percent tax. Now, here is a question, not from the rich but from the middle class, which is, of course, watching the Duma debate with some anxiety, especially from the leftist perspective, regarding the possibility of introducing a progressive tax rate and moving away from 13 percent. What do you think about this?

Dmitry Medvedev: Sergei, do you consider yourself to be a member of the middle class?

Sergei Brilyov: I do.

Dmitry Medvedev: So, what do you think about the introduction of this “progress”?

Sergei Brilyov: You’re putting me in an awkward situation. I’ve never gone to the polls nor do I plan to, but you’re compelling me to give a political answer. I take a bad view of this. I believe that 13 percent should remain.

Dmitry Medvedev: Well, I see. As a matter of fact, yesterday, I also conducted a mini poll among my colleagues, other ministers, realising that we will address this issue at some stage, maybe even including the introduction of progressive taxation. I believe, first, that the 13 percent income tax, which we introduced in 2000, is something that has proven a 100 percent success of ours. Ours – I mean the ruling authority that has been around since 2000: President Putin, the government and other authorities who subsequently dealt with it. This tax has put us into a totally different league. Remember how salaries were paid in the 1990s (everyone here worked during the 1990s and remembers this very well). Money, a significant part of it, was paid in envelopes [=off the books]. When the 13 percent level was introduced the gray sphere practically disappeared and now people pay their taxes (I mean income taxes). It makes more sense to pay than not to pay. Well, then, why kill the goose that lays golden eggs?

Yes, there is a view – many leftist parties adhere to it – that progress is essential. What’s at issue? It’s our society’s readiness for progressive taxation and the readiness of our tax system. After all, progressive taxation has pluses, since it equalises – apparently more fairly – the chances of those who participate in the sharing of the public pie, those who generate tax revenues and those who then use public funds. Well then, the collection of progressive tax revenues involves significantly higher administration costs. We will simply have to force everyone to file declarations, albeit online. Even if your wages are relatively low you will have to file a declaration from each place of employment. This will make things more complicated.

Finally, there are countries where tax evasion is a serious crime. We don’t have this yet, unlike many other countries where not paying your income taxes or some other tax is simply not possible.

So the decision was made (it was endorsed by the President) not to touch the tax system in general and the 13 percent income tax in particular for the next several years.

Lastly, to ensure that those who make more money share their income in some way or the other… After all, why are incomes necessary? It’s rare when a person just sits on his capital and does not invest it in anything. Usually he considers buying a house, a car, etc. . Well, upscale housing and expensive cars are taxed at a higher rate now. So, those who procure expensive housing will contribute a greater part of their income all the same. I believe that today this is the optimal approach. And then we’ll see what happens in five to seven years.

Kirill Pozdnyakov: Maybe we should talk about ways to save money?. I believe many people would like to ask this question, because there are legends that officials, including former ones, enjoy some incredible benefits that cut into the budget, and that spending on the government apparatus, despite claims that it is being cut, is nevertheless rising at the expense of other programmes. Is there anything that can be cut? Is that popular sentiment correct?

Dmitry Medvedev: There are things that can be cut, and that feeling is correct. Indeed, spending on the state apparatus is inflated. The state apparatus is such a thing … The minute you turn away from it… it tends to expand. It lives by well-known governance laws. As far as I can remember (I’ve been in public service for a long time now), we have on many occasions decided to cut the state apparatus. It’s not that we failed to act on our decisions. We did act, but then six or 12 months later, someone starts needing more money. A new task, or a new function always requires more money. Purchasing new equipment or anything like this also involves more spending. As a result, spending is always growing. I believe that any government in any country must make regular decisions on cutting government spending and trimming excess spending.

In addition, we still have traditions that were formed in the Soviet and post-Soviet period. Let’s face it, our government officials are accustomed to riding in noticeably more expensive vehicles than do officials in other countries. I don’t think this the proper thing to do. If you make enough money, go ahead and buy yourself a nice private car and enjoy it. However, middle-class, not top-of-the-line, vehicles should be purchased for official use.

We decided to pare down our ministries that are part of the government bloc. The President takes all decisions on the security, defence and law enforcement departments as these departments are related to security, although there are cuts that can be made in these departments as well. So, we have decided to reduce the government bloc by approximately 10 percent starting next year. This is not the first time we will be doing this based on what I just said. We will, of course, see to it that this decision is implemented.

In addition, we will cut an entire line of spending on the state apparatus. More decisions are being made in other areas, including, by the way, in the sphere of civil servants’ pensions and vacations. I pointed this out once during a meeting.

I said that civil servants have longer vacations than other categories of employees, but is our work that much more hazardous? There may be different approaches to this. Our work is complicated, but I wouldn’t say that civil servants should have more time off than any other category of government employees. We decided to cut their vacation time. Perhaps, not all of my fellow public servants agreed with this decision, but this was the right thing to do.

With regard to the regions, there really is a decision to pay all sorts of bonuses and support former top officials from local and regional budgets. This has been left up to the regions to decide. So, I believe that the regional leaders should come clean and tell residents of their respective regions that if they feel that they have quite a prominent region head they should say that they want to provide him or her with life-long support, and let him keep the official vehicle and the country residence. Let the people decide. If they agree to it, let him or her keep their benefits. However, if the people are against it, then such benefits should be cut, because they come from the budget. We will of course provide the regions with the appropriate recommendations. I discussed this issue with our colleagues from the People’s Front who engage in providing expert opinions. They’ve been doing this for quite a long time now. I believe that this is absolutely the right thing to do, because we need to set things straight. But I emphasise: this should be done not from Moscow, not by the President or the Government. Let the regional authorities take the liberty and say whether they want to keep or withdraw the benefits. That’s the way to go.

Irada Zeinalova: Yes, hazardous production facilities. Of course, they should decide for themselves. I’m talking about money again. We met last year…

Dmitry Medvedev: Irada, they are always asking me about money.

Irada Zeinalova: But I’m talking about big money. We met last year, and, as you might recall, the dollar broke all records. That situation was very difficult psychologically.

Dmitry Medvedev: That’s true.

Irada Zeinalova: This week, we are also posting some discouraging news. We understand it, this is the end of the year … But one dollar costs about 70 roubles again. Is this the limit? What exchange rate does the Government consider the most appropriate when drafting the budget and for economic development? What can we expect?

Dmitry Medvedev: Irada, you’ve asked the right question, and I’m glad you recalled our conversation of 12 months ago at this same table. Indeed, to be frank, everyone, even members of the Government and, naturally, representatives of the Central Bank, were much more alarmed at that time. Of course, we realised that this process couldn’t last forever, but we still had to see whether we had reached the bottom of the barrel and to evaluate exchange rate limits. Everything has stabilised. Indeed, the rouble has entered an entirely new stage, and we are now using a floating exchange rate. And that’s good because no one is dictating the rouble’s exchange rate. Any control implies that the exchange rate is unrealistic, and an unrealistic rate can crash at anytime. This is what happened during the Soviet and post-Soviet periods. So we’re using a floating rate of exchange. But there is no hiding the fact that the rouble depends on oil revenue and oil prices to a great extent. I said this a while ago.

It’s true, that I’d like to be able to say that our oil prices have hit bottom. I think this explains the rouble’s sliding exchange rate. And the current exchange rates won’t continue if oil prices rebound. Although forecasts are an unrewarding task, any oil price hikes influence the rouble’s exchange rate, and the people have adapted to this. Therefore, the 2016 budget forecast uses an average exchange rate of about 63 roubles to the dollar. It appears that the rouble will hover around these figures. But obviously, various factors will influence the rouble rate.

I’d like to remind you that, aside from oil prices, major economic powers and the most important financial markets have been closed to us for a long time. Basically we are using our own sources of development. This is both good and bad because we have been forced to assess the value of our own economic potential for the first time. What did we do in the past? I’m talking about the Russian Government of the 1990s and 2000s. When we were in trouble, we took out Western loans. These loans were mostly taken out by commercial institutions, including banks and major corporations. They used these loans to compensate for liquidity shortages, to obtain sources of currency for signing import contracts and so on. This is now history, but we continue to live, and we even continue to develop. True, we are worse off than we would like to be. But, on the other hand, we are learning to understand the internal resources of the Russian economy. Indeed, the Russian economy has proved its self-sufficiency, and this is an established fact. To put it straight, not every country has a self-sufficient economy; some countries are unable to live without foreign assistance. But our country can certainly live and develop even in these conditions, although there is little that’s positive about it.

Mikhail Fishman: This sounds promising, of course, but let me continue on the subject of money. Not without pride, you said that the Government is fulfilling its obligations with regards to the pay-as-you-go component of retirement plans. This is great, but for the second year in a row it has been decided to freeze the accumulative part of the pension. On the one hand, this undermines people’s trust in the very idea of personal retirement savings that the Government obviously committed to. At the same time, the Government has been constantly discussing possibly raising the retirement age. I believe these two issues are connected. There are economists that claim that it is necessary and inevitable. Therefore, I would like to understand what your intentions are with regard to both the accumulative element and the raising of the retirement age. What are you going to do?

Dmitry Medvedev: Here is what I would like to say in response to the first and second parts of your question. There is hardly any connection between the two issues. Speaking about the accumulative part, it is true, for a few years now we have decided to freeze the accumulative element of the pension. Does it affect the interests of the people who are covered by this system? There are different opinions. Let me express the one I believe is absolutely fair. They are not affected because this freeze concerns neither the entire amount of money that people will be paid when they retire nor our current pension obligations. Moreover, we are distributing almost the entire accumulated fund between the current retirees as the pay-as-you-go part and people get paid all they are entitled to. That means they now receive their pension in full and will receive it in the future. This is a compulsory measure, unfortunately, we can’t avoid it. There are two reasons why. First, we had to prepare the pension institutions that manage the respective component of pensions, or the private pension funds, for joining the insurance system so that they would be transparent, open and free of fraud. Unfortunately, there were many incidents of fraud.. The second reason is purely financial. We do need money for development. This is approximately 345 billion roubles that we can spend on current immediate tasks, including anti-crisis measures.

This situation is temporary. I personally told my colleagues in the Government that we decided not to cancel the accumulative component and the current pension system because the pension system must be generally consistent. In the early 2000s we promised that it would consist of two elements and we must keep them. In this respect, there has been no step back.

Now, about the retirement age. This is a more complicated issue. First, there is no firm decision yet. The discussion continues and everyone is well informed about it. The question is when it is reasonable to retire for a specific person and which retirement age serves the interests of the state.

Let me remind you how the pension system was built, including the retirement age. The retirement age was introduced as a concept in 1932. When I was giving a speech at the State Duma, I looked at the statistics and was shocked. The average life expectancy in our country in 1932 was 35 years – due to hunger, civil war and so on, but nevertheless.

So, life expectancy was 35 years then, but the retirement age was set at 55 for women and at 60 for men. It was the lawmakers’ decision. Happily, the situation has improved radically since then, and life expectancy has recently increased a great deal. I see this as our major achievement. It may be less than in Japan or in Scandinavian countries, but still. And our women are doing better than men: their life expectancy is about 76 years, which is seven years longer than eight years ago. Our men live shorter lives, because of their bad habits, but their live expectancy has nevertheless increased from 10 years ago. This is good. And if they take control of their health, their life expectancy will increase to match that of our dear ladies.

This is a major achievement that has been brought about by our efforts in healthcare, by walking away from bad habits and taking up sports, and also by improved medical services. Hence, we can ask ourselves about the appropriate retirement age. But there is no answer to this question. We need to hold additional consultations and talk with experts and the public, because they have different priorities. Here’s an example to illustrate my point. I can tell you this with full knowledge, because I dealt with it personally. It concerns the retirement age for officials. When we only started discussing this idea, everyone thought, for some reason, that officials would be happy to extend their retirement age by five years. Nothing of the sort! Some of them said they would like to work as long as possible, and their decision did not depend on the post they occupy, while others said they would be happy to retire earlier to help bring up grandkids, grow vegetables and in general do more at their dachas, and so on. So, priorities differ. However, we’ve decided to increase the retirement age for officials to 65 years, but do this gradually, in stages. I believe that this gradual approach is a good formula for increasing the retirement age for all Russian citizens.

Mikhail Fishman: What I asked is whether the Government is taking too long to approve this long pending measure?

Dmitry Medvedev: It depends on your point of reference. The proponents of liberal economic views want us to move faster, while conservatives are trying to slow us down. You see, I believe that we shouldn’t move too fast, but on the other hand, we must not lose time either. Of course, had we made the decision by now, there would have been additional support for the budget. But are people ready for this? I’m not sure.

Hence, we should encourage people to survey their priorities in life and decide what they would do when they reach the age of 55 or 60 years: would they continue to work or retire? It was not a coincidence that we recently discussed how to pay pensions to working pensioners.

I’d like to remind you that working pensioners didn’t draw their pensions in the Soviet Union. They had to choose between drawing a pension and working past the retirement age. The choice was based on serious legal and economic arguments. What is a pension? In fact, it is a payment issued for the loss of one’s employment function, or the ability to work. If you haven’t lost your ability to work, then why should you receive a pension? This was the reasoning of our predecessors, who represented left-wing views, by the way. We changed the trend, and now working pensioners receive both their pensions and their wages. The only thing we haven’t done for them this time is to index their pensions, but I believe that we were in the right this time. So, it depends on your point of reference. But I think that we’ll have to take this decision in the next few years, but only after consulting the people.

Sergei Brilyov: Mr Medvedev, please give me a yes-or-no answer; we don’t want to run out of time here. Will current pensioners receive another pension increase next year? Will things take their usual course?

Dmitry Medvedev: Yes, of course.

Sergei Brilyov: This will remain in the plans.

Dmitry Medvedev: Speaking about pensioners, our position is the following: Those who don’t work, naturally, have the right to their pension including indexation. More likely than not, we’ll carry out this indexation in two stages, depending on the economic situation in the country. There is a standard indexation and another indexation is likely subject to our [economic] performance in the first three months [of next year]. This is the position, incidentally, that we’ve defined jointly with United Russia. I think that it’s a fair and appropriate position and it conforms to the economic state of affairs today.

Sergei Brilyov: And it’s immune.

Dmitry Medvedev: As far as working pensioners are concerned, they work and they receive a pension, but their pension is not subject to indexation because they have a job. I think this is also fair, because as long as they find enough strength to work, they don’t need these small sums from indexation so badly.

Yelizaveta Osetinskaya: Mr Medvedev, the people of Crimea are paying something of a high price for being citizens of Russia. The latest events have shown that Crimea is still isolated, and that its social support system, in effect, exists separately from the rest of Russia. When will this situation be dealt with and how? And most importantly, how much will it cost and who will foot the bill?

Dmitry Medvedev: Ms Osetinskaya, I think if we ask the residents of Crimea if they are paying too high a price to be part of Russia, the absolute majority of them will say that they are ready to pay an even higher price as long as they don’t have to return to the madhouse they were in not so long ago.

Yelizaveta Osetinskaya: I think this depends on how you poll them.

Dmitry Medvedev: You know, no matter how you ask, the first reaction will be the same. I’m not talking about manipulation. I mean the average person being asked a simple question. I’ve put these questions to ordinary people, people you meet in the street.

About Crimea’s integration – in fact, it is already integrated in the Russian legal and economic realm. This is exactly why we closed the Ministry of Crimea, because we moved on to a different form of government. Crimea is an integral part of the Russian Federation, both in the legal and economic sense. Local residents timely receive their pensions and benefits. The Crimea is now integrated in the Russian legal framework, which, in my opinion, is much more effective than what they had before.

Yet, Crimea remains really vulnerable for two reasons. One is the huge underinvestment of the past, maybe, 20 years, maybe even from the post-war period. Crimea, which was a gem even 100 years ago, failed to develop the way we all wanted it to during the Soviet period. This neglect grew even worse over the last 20 years. Therefore, there are problems, which only worsened due to the well-known position of the Ukrainian leadership. However, no matter what the Ukrainian rulers say, the recent blackout was nothing less than genocide. That was a cruel – even beyond any reason, as people say – thing to do. I mean cutting off public institutions and households from power supplies, – those same people whom the Ukrainian authorities even refer to as “their people” (“Our people live there, so Crimea should be returned to us,” they say). What else can we say? A disgusting and cruel thing to do. But, honestly, we were ready for it. We stocked diesel engines and backup power supply systems, so we prevented a collapse from happening and provided power to the critical institutions such as healthcare centres and social services even during the most difficult period. The first power supply line went back online recently. Soon we will connect the second leg of the first stage, and two more in May. The resulting capacity will be 800 MW. This should solve Crimea’s problems.

But of course, we will not stop here. The plans include building two new power plants by 2018, in Sevastopol and Simferopol. When this happens, the Crimea will stop being an energy deficient region, but will have an energy surplus. So I’d say the overall situation is normal there.

Finally, last but not least: not all of this is about the money. I return to where I began. It is a completely different story, and you are well aware of the enthusiasm with which the Russian people embraced this integration. .

Yelizaveta Osetinskaya: My question was more about the economic aspect. How much does all this cost?

Dmitry Medvedev: As for the financial aspect – it was not cheap. Of course it wasn’t.

I visited Crimea in the previous years, at invitations from Crimean and Ukrainian leaders, so I can say in all sincerity: I wanted out of there as soon as possible. The beautiful land was a mess, and their attitude toward it was no different. It seemed that the Ukrainian leadership never actually treated it as their land, never bothered to invest in it.

What did they do? They bought land there to build fancy houses for themselves but little else.

More to be posted soon…

[featured image is file photo]