TRANSCRIPT (continued): [Putin at] meeting of the Valdai International Discussion Club (transcript concluded)

File Photo of Vladimir Putin at Valdai Club 2013 Meeting, Adapted from Screenshot of Valdai Club Video at youtube.com

(Kremlin.ru – Novgorod Region, September 19, 2013)

[Complete transcript here http://eng.kremlin.ru/transcripts/6007]

VLADIMIR PUTIN: And one more question for our American friend and colleague. What will the United States do about the budget deficit, the debt that has reached an incredible size? It is the largest debt in the United States’ post-war history. How will the situation unfold moving forward? This directly affects the global economy and is a real concern for everyone.

DIMITRI SIMES: First of all, we count on further cooperation with our Chinese partners, that they will buy even more American financial obligations. I think you will see that over the course of the next two weeks…

VLADIMIR PUTIN: Just don’t forget that Russia ­ Mr Kudrin is sitting right there ­ has bought a bunch of your obligations. Mr Kudrin, how much did we buy?

FORMER RUSSIAN FINANCE MINISTER OF 2000-2011 ALEXEI KUDRIN: Mr President, Russia’s Stabilisation Fund has been transferred into the Central Bank’s foreign currency accounts. We do not buy securities; we simply hold currency in Central Bank accounts. On the global market, the Central Bank invests about 50% in American government bonds, which are included in the foreign currency reserves.

VLADIMIR PUTIN: We currently have over 500 billion in foreign currency reserves, 40% of which is denominated in US dollars; it was 50% when Mr Kudrin was minister, and now it’s 40%. This, of course, is not the Chinese trillion, but nevertheless, it is still a significant sum. It speaks to Russia’s trust in our American partners and our trust in the policy being implemented by the US government ­ I say that without any sense of irony.

People attacked Alexei Kudrin, particularly members of the leftist parties, for the fact that the Central Bank holds a significant proportion of its reserves in securities denominated in dollars. But nevertheless, we must give credit to our American partners; when we needed money, we got everything, regardless of any internal problems within the US economy, or any problems with the famous mortgage companies. In terms of partnership discipline, our American partners fulfilled everything with great discipline. But ultimately, what will happen next, in your opinion? With the Federal Reserve policy and the enormous debt?

DIMITRI SIMES: You will see several very difficult weeks, perhaps even months, when the House of Representatives votes against the budget proposed by Obama, unless Obama decides not to finance his medical insurance programme, and that will not happen. And you will see conflict between the House and the Senate, between the Senate and Presidential Administration and the House.

I assume, given responsibility to you and Alexei Kudrin, the American currency will hold out; I am almost certain of this, although there will be a few very nerve-wracking weeks, or perhaps even months.

VLADIMIR PUTIN: On the one hand, we have always assumed that the monetary mitigation policy must end at some point; but the first steps in this direction, even the first words in this direction, have led to a certain destabilisation within developing markets. It has affected Russia to a smaller degree, in terms of currency and outflows. This is not related to the Federal Reserve policy; partially not related. But we very much expect that our American partners will succeed in overcoming these difficulties, which are evident as well, and the fundamental backbone of the American economy will prove to be stable.

The last question, please. Mr Prokhanov.

PROSE WRITER, MEMBER OF THE VALDAI DISCUSSION CLUB ALEXANDER PROKHANOV: Mr President, a great deal of financing is allocated to the military industrial complex. I am familiar with the programme to develop high-speed transport; in particular, I travelled the Moscow-Kazan route. There are plans to intensify development of the Northern Sea Route, and to create innovation centres. Before you were elected, you published a whole set of fundamental articles.

Is there a synthetic, integral project, a large project, a “Russia” project underway, or are all these just symptoms of such a project, and the project is being assembled part by part?

VLADIMIR PUTIN: Russia is not a project ­ it is a destiny. You know, it’s life.

Of course, we have plans for development. We have a development plan through to 2020; there are plans for developing the Armed Forces and they are very intense; we have plans for developing infrastructure. We have agreed not to touch our reserves, and the reserves are quite significant. We talked about the Central Bank reserves, but we also have two reserves accumulated by the Government: the National Welfare Fund, and the Reserve Fund.

I believe the first already contains $89 billion, and the second also has around $90 billion. We agreed that after reaching a certain reserve fund level, we will carefully allow ourselves to begin investing in developing infrastructure. This gave birth to the project of high-speed railways, in this case, to Kazan. In the first stage, we are going to organise survey works, and then, of course, we will build it.

It is imperative to conduct a great deal of work to develop infrastructure. We know how underdeveloped the infrastructure is in the Far East, in Eastern Siberia ­ all this needs to be done. At the same time, Alexei Kudrin and I have often argued: of course, we need to have a fundamental backbone, of course, we are striving for these projects to pay for themselves. We know that there are not that many efficient projects in the world. Try to make some kind of road-building project in the Far East pay for itself entirely. You know this, as an expert, right?

They immediately count the amount of traffic that will use this road and look into the opportunity to utilise it as a toll highway, but according to the law, it can be a toll road only if there is a parallel route, which there isn’t. And it will not pay for itself in the next few years. So what then, should we stop building roads at all? Then Russia would not have a highway connecting the eastern and western parts of the nation. We only completed one recently.

So I feel that we ultimately need to invest money in it, even if during the first stage ­ the first stage! ­ it does not really bring quick returns. We should include funding from the reserves, but carefully, so that we maintain a safety cushion.

The same is true of the Armed Forces. We do not have a militaristic budget. Ours is a necessary budget; it is large, but we could never compare it with, say, the United States. You are familiar with the figures. If we take all the military budgets of all the nations in the world, they would add up to less than what the US spends on its military needs. So our budget is very modest. We just have some equipment reaching retirement age, figuratively speaking, our main combat systems: rocket technology, planes, aviation equipment. One way or another, we simply need to replace them; they are becoming outdated.

And, of course, if we replace them, we should replace them with modern, promising models. We have plans in this domain as well. Now we must adjust them based on budgetary feasibility and the capabilities of the industry itself. This is a natural process, it’s normal. There is nothing remarkable about this. We will not make any sudden cuts. As the experts say, we will move a few things slightly to the right. But, of course, we will certainly do all these things.

But this is not a project. This is destiny. It is our destiny. It is our Fatherland, our nation. We must develop it and we will do this for ourselves and future generations. I feel that Russia has a great, powerful future, and that this is a very promising nation.

I have already recounted my first meeting with Chancellor Kohl several times. For me, it was entirely unexpected ­ I already said this but I will say it again ­ because this conversation had a very deep impact on me. When we were in Bonn, suddenly, unexpectedly for me as a former Soviet intelligence officer, he began to say, “Europe does not have a future without Russia.” And he began to lay out his reasoning. He is a historian by training, and he began to develop this idea intelligently, calmly, without any posturing.

You know, something changed in my mind. I understood that there are people in the world, in Europe, who genuinely believe this. Unfortunately, in terms of practical policy, it doesn’t always work. But people like Kohl are always ahead of today’s practical politicians; compared to others, they are looking somewhat ahead. I think that we will also gain some understanding, the Europeans will ultimately reach this insight, and we will find common ground on issues more quickly. But Russia has a great future.

GERHARD MANGOTT: Mr President, my name is Gerhard Mangott, I’m from Austria. I’m a professor of international relations at the University of Innsbruck.

Two brief questions. One on Syria: let’s assume and hope that the permanent five members of the Security Council find a consensus on the text of a new resolution. What happens, however, if the Syrian government does not abide by its obligations? Your foreign ministry has said yesterday that in such a case, the Security Council will get seized of the matter again. Can you, as the Russian President, in such a case, think of Russia supporting Article 42 measures?

And the second point I want to raise: I really admire the diversity of your country. It’s a great country. But of course, with a lot of diversity, you get a lot of contradiction of values. And that requires respect among the people. Respect by the minorities for the majority, but also respect by the majority for the minorities. And I personally would like you to endorse the idea of the beauty of love, regardless of its expression and its form, spread over all your country, without any harassment, without anyone having to fear to get beaten or killed.

VLADIMIR PUTIN: Let’s begin with the second part of your question. We do not have any harassment on a sexual basis. Russia does not have any laws punishing sexual minorities for their… for their what?

REPLY: For their orientation.

VLADIMIR PUTIN: For their orientation, right. So there is nothing to worry about here.

We have passed a law that forbids propaganda to minors. But I will tell you again: there is a serious population problem in your nation, in all European nations and in Russia ­ a demographic problem. The birth rates are low, the Europeans are dying out; do you understand that or not? Same-sex marriages do not produce children. Do you want to survive on account of immigrants? You don’t like immigrants either, because society cannot take in such a large number of immigrants. Your choice is the same as in many other nations: recognising same-sex marriages, the right to adopt, and so on. But allow us to make our own choice, as we see fit for our own nation.

As for rights, I will repeat again: we are not limiting our sexual minorities’ rights in any way. There are no limitations, we do not have laws limiting them in anything at all: at work, or in other areas of activity. I have already said many times, I communicate with these people, I present state awards to them, medals and so on, if they have earned them by carrying out their work in the arts, at enterprises, and so on. This is normal in our political practice. Let’s not make baseless charges. These are unnecessary fears.

Some nations, by the way, still criminalise homosexuality; for example, it is still illegal in some US states. And the Supreme Court is against this, it feels it is unconstitutional, but has been unable to abolish it. But this exists, you understand? Why does everyone like to put so much stress on Russia? Let’s not make false accusations, there is nothing frightening here.

Concerning Syria. You see, I feel it is wrong to talk now about what we will do if the Syrian government does not fulfil its promises. They have already acceded to the Chemical Weapons Convention and we currently do not have any grounds to believe they will fail to fulfil the obligations they have taken upon themselves. If they don’t, we will look into it. But it is too early to discuss this.

I want to thank you all for our work together. I want to say ­ I began by saying this, but I want to say it again ­ we are very pleased that there are many people in the world who are interested in Russia and who have made studying Russia their profession. It is pleasant and we recognise that it is very important. Your considerate assessments and your critical view of Russia’s reality are important to us.

This will certainly help us develop our national policy; an outside perspective is always important. And it will help us build relations with the nations you represent, because it gives us a better understanding of the ideas guiding a particular nation in general and with regard to Russia. This is very important and useful work. Thank you very much for doing it and for finding the time to come to the Valdai Discussion Club.

Thank you.

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