President Putin: St Petersburg International Economic Forum Plenary sessionJune 17, 2022 http://en.kremlin.ru/events/president/news/68669The theme this year is New Opportunities in a New World.* * *
Plenary session moderator Margarita Simonyan: Good afternoon, or almost evening.
As you may know, we had a minor technical issue. Thankfully, it has been dealt with quickly. We are grateful to those who resolved this.
We are also grateful to the audience.
We are grateful to our leader, President Vladimir Putin, for traditionally fitting this forum into his schedule so that he can tell us about economic prospects and other plans.
We are grateful to President Kassym-Jomart Tokayev for attending our forum. We know that it is not an easy thing to do. Thank you for supporting our forum and our country. We really appreciate this.
We will have a lot of questions today. You may not like some of them, and I may not be happy to ask some of them. We would be much happier to speak only about good things, but this is impossible today.
Mr President, I would like to ask you to take the stand and to tell us what lies in store for us all. Thank you.
President of Russia Vladimir Putin: Thank you very much. President Tokayev, friends and colleagues,
I welcome all participants and guests of the 25th St Petersburg International Economic Forum.
It is taking place at a difficult time for the international community when the economy, markets and the very principles of the global economic system have taken a blow. Many trade, industrial and logistics chains, which were dislocated by the pandemic, have been subjected to new tests. Moreover, such fundamental business notions as business reputation, the inviolability of property and trust in global currencies have been seriously damaged. Regrettably, they have been undermined by our Western partners, who have done this deliberately, for the sake of their ambitions and in order to preserve obsolete geopolitical illusions.
Today, our – when I say “our,” I mean the Russian leadership – our own view of the global economic situation. I would like to speak in greater depth about the actions Russia is taking in these conditions and how it plans to develop in these dynamically changing circumstances.
When I spoke at the Davos Forum a year and a half ago, I also stressed that … the era of a unipolar world order has come to an end. I want to start with this, as there is no way around it. This era has ended despite all the attempts to maintain and preserve it at all costs. Change is a natural process of history, as it is difficult to reconcile the diversity of civilisations and the richness of cultures on the planet with political, economic or other stereotypes – these do not work here, they are imposed by one centre in a rough and no-compromise manner.
The flaw is in the concept itself, as the concept says there is one, albeit strong, power with a limited circle of close allies, or, as they say, countries with granted access, and all business practices and international relations, when it is convenient, are interpreted solely in the interests of this power. They essentially work in one direction in a zero-sum game. A world built on a doctrine of this kind is definitely unstable.
After declaring victory in the Cold War, the United States proclaimed itself to be God’s messenger on Earth, … without any obligations and only interests which were declared sacred. They seem to ignore the fact that in the past decades, new powerful and increasingly assertive centres have been formed. Each of them develops its own political system and public institutions according to its own model of economic growth and, naturally, has the right to protect them and to secure national sovereignty.
These are objective processes and genuinely revolutionary tectonic shifts in geopolitics, the global economy and technology, in the entire system of international relations, where the role of dynamic and potentially strong countries and regions is substantially growing. It is no longer possible to ignore their interests.
To reiterate, these changes are fundamental, groundbreaking and rigorous. It would be a mistake to assume that at a time of turbulent change, one can simply sit it out or wait it out until everything gets back on track and becomes what it was before. It will not.
However, the ruling elite of some Western states seem to be harbouring this kind of illusions. They refuse to notice obvious things, stubbornly clinging to the shadows of the past. For example, they seem to believe that the dominance of the West in global politics and the economy is an unchanging, eternal value. Nothing lasts forever.
Our colleagues are not just denying reality. More than that; they are trying to reverse the course of history. They seem to think in terms of the past century. They are still influenced by their own misconceptions about countries outside the so-called “golden billion”: they consider everything a backwater, or their backyard. They still treat them like colonies, and the people living there, like second-class people, because they consider themselves exceptional. If they are exceptional, that means everyone else is second rate.
Thereby, the irrepressible urge to punish, to economically crush anyone who does not fit with the mainstream, does not want to blindly obey. Moreover, they crudely and shamelessly impose their ethics, their views on culture and ideas about history, sometimes questioning the sovereignty and integrity of states, and threatening their very existence. Suffice it to recall what happened in Yugoslavia, Syria, Libya and Iraq.
If some “rebel” state cannot be suppressed or pacified, they try to isolate that state, or “cancel” it, to use their modern term. Everything goes, even sports, the Olympics, bans on culture and art masterpieces just because their creators come from the “wrong” country.
This is the nature of the current round of Russophobia in the West, and the insane sanctions against Russia. They are crazy and, I would say, thoughtless. They are unprecedented in the number of them or the pace the West churns them out at.
The idea was clear as day – they expected to suddenly and violently crush the Russian economy, to hit Russia’s industry, finance, and people’s living standards by destroying business chains, forcibly recalling Western companies from the Russian market, and freezing Russian assets.
This did not work. Obviously, it did not work out; it did not happen. Russian entrepreneurs and authorities have acted in a collected and professional manner, and Russians have shown solidarity and responsibility.
Step by step, we will normalise the economic situation. We have stabilised the financial markets, the banking system and the trade network. Now we are busy saturating the economy with liquidity and working capital to maintain the stable operation of enterprises and companies, employment and jobs.
The dire forecasts for the prospects of the Russian economy, which were made in early spring, have not materialised. It is clear why this propaganda campaign was fuelled and all the predictions of the dollar at 200 rubles and the collapse of our economy were made. This was and remains an instrument in an information struggle and a factor of psychological influence on Russian society and domestic business circles.
Incidentally, some of our analysts gave in to this external pressure and based their forecasts on the inevitable collapse of the Russian economy and a critical weakening of the national currency – the ruble.
Real life has belied these predictions. However, I would like to emphasise that to continue being successful, we must be explicitly honest and realistic in assessing the situation, be independent in reaching conclusions, and of course, have a can-do spirit, which is very important. We are strong people and can deal with any challenge. Like our predecessors, we can resolve any task. The entire thousand-year history of our country bears this out.
Within just three months of the massive package of sanctions, we have suppressed inflation rate spikes. As you know, after peaking at 17.8 percent, inflation now stands at 16.7 percent and continues dropping. This economic dynamic is being stabilised, and state finances are now sustainable. I will compare this to other regions further on. Yes, even this figure is too much for us – 16.7 percent is high inflation. We must and will work on this and, I am sure, we will achieve a positive result.
After the first five months of this year, the federal budget has a surplus of 1.5 trillion rubles and the consolidated budget – a surplus of 3.3 trillion rubles. In May alone, the federal budget surplus reached almost half a trillion rubles, surpassing the figure for May 2021 more than four times over.
Today, our job us to create conditions for building up production and increasing supply in the domestic market, as well as restoring demand and bank financing in the economy commensurately with the growth in supply.
I mentioned that we have taken measures to reestablish the floating assets of companies. In most sectors, businesses have received the right to suspend insurance premiums for the second quarter of the year. Industrial companies have even more opportunities – they will be able to delay them through the third quarter as well. In effect, this is like getting an interest-free loan from the state.
In the future, companies will not have to pay delayed insurance premiums in a single payment. They will be able to pay them in equal installments over 12 months, starting in June next year.
Next. As of May the subsidised mortgage rate has been reduced. It is now 9 percent, while the programme has been extended till the end of the year. As I have mentioned, the programme is aimed at helping Russians improve their housing situation, while supporting the home building industry and related industries that employ millions of people.
Following a spike this spring, interest rates have been gradually coming down, as the Central Bank lowers the key rate. I believe that that this allows the subsidised mortgage rate to be further cut to 7 percent.
What is important here? The programme will last until the end of the year without change. It means that our fellow Russians seeking to improve their living conditions should take advantage of the subsidy before the end of the year.
The lending cap will not change either, at 12 million roubles for Moscow and St Petersburg and 6 million for the rest of Russia.
I should add that we must make long-term loans for businesses more accessible. The focus must shift from budget subsidies for businesses to bank lending as a means to spur business activity.
We need to support this. We will allocate 120 billion rubles from the National Wealth Fund to build up the capacity of the VEB Project Financing Factory. This will provide for additional lending to much-needed initiatives and projects worth around half a trillion roubles.
Colleagues,
Once again, the economic blitzkrieg against Russia was doomed to fail from the beginning. Sanctions as a weapon have proved in recent years to be a double-edged sword damaging their advocates and architects just a much, if not more.
I am not talking about the repercussions we see clearly today. We know that European leaders informally, so to say, furtively, discuss the very concerning possibility of sanctions being levelled not at Russia, but at any undesirable nation, and ultimately anyone including the EU and European companies.
So far this is not the case, but European politicians have already dealt their economies a serious blow all by themselves. We see social and economic problems worsening in Europe, and in the US as well, food, electricity and fuel prices rising, with quality of life in Europe falling and companies losing their market edge.
According to experts, the EU’s direct, calculable losses from the sanctions fever could exceed $400 billion this year. This is the price of the decisions that are far removed from reality and contradict common sense.
These outlays fall directly on the shoulders of people and companies in the EU. The inflation rate in some Eurozone countries has exceeded 20 percent. I mentioned inflation in Russia, but the Eurozone countries are not conducting special military operations, yet the inflation rate in some of them has reached 20 percent. Inflation in the United States is also unacceptable, the highest in the past 40 years.
Of course, inflation in Russia is also in the double digits so far. However, we have adjusted social benefits and pensions to inflation, and increased the minimum and subsistence wages, thereby protecting the most vulnerable groups of the population. At the same time, high interest rates have helped people keep their savings in the Russian banking system.
Businesspeople know, of course, that a high key rate clearly slows economic development. But it is a boon for the people in most cases. They have reinvested a substantial amount of money in banks due to higher interest rates.
This is our main difference from the EU countries, where rising inflation is directly reducing the real incomes of the people and eating up their savings, and the current manifestations of the crisis are affecting, above all, low-income groups.
The growing outlays of European companies and the loss of the Russian market will have lasting negative effects. The obvious result of this will be the loss of global competitiveness and a system-wide decline in the European economies’ pace of growth for years to come.
Taken together, this will aggravate the deep-seated problems of European societies. Yes, we have many problems as well, yet I have to speak about Europe now because they are pointing the finger at us although they have enough of their own problems. I mentioned this at Davos. A direct result of the European politicians’ actions and events this year will be the further growth of inequality in these countries, which will, in turn, split their societies still more, and the point at issue is not only the well-being but also the value orientation of various groups in these societies.
Indeed, these differences are being suppressed and swept under the rug. Frankly, the democratic procedures and elections in Europe and the forces that come to power look like a front, because almost identical political parties come and go, while deep down things remain the same. The real interests of people and national businesses are being pushed further and further to the periphery.
Such a disconnect from reality and the demands of society will inevitably lead to a surge in populism and extremist and radical movements, major socioeconomic changes, degradation and a change of elites in the short term. As you can see, traditional parties lose all the time. New entities are coming to the surface, but they have little chance for survival if they are not much different from the existing ones.
The attempts to keep up appearances and the talk about allegedly acceptable costs in the name of pseudo-unity cannot hide the main thing: the European Union has lost its political sovereignty, and its bureaucratic elites are dancing to someone else’s tune, doing everything they are told from on high and hurting their own people, economies, and businesses.
There are other critically important matters here. The worsening of the global economic situation is not a recent development. I will now go over things that I believe are extremely important. What is happening now does not stem from what happened during recent months, of course not. Moreover, it is not the result of the special military operation carried out by Russia in Donbass. Saying so is an unconcealed, deliberate distortion of the facts.
Surging inflation in product and commodity markets had become a fact of life long before the events of this year. The world has been driven into this situation, little by little, by many years of irresponsible macroeconomic policies pursued by the G7 countries, including uncontrolled emission and accumulation of unsecured debt. These processes intensified with the onset of the coronavirus pandemic in 2020, when supply and demand for goods and services drastically fell on a global scale.
This begs the question: what does our military operation in Donbass have to do with this? Nothing whatsoever.
Because they could not or would not devise any other recipes, the governments of the leading Western economies simply accelerated their money-printing machines. Such a simple way to make up for unprecedented budget deficits.
I have already cited this figure: over the past two years, the money supply in the United States has grown by more than 38 percent. Previously, a similar rise took decades, but now it grew by 38 percent or 5.9 trillion dollars in two years. By comparison, only a few countries have a bigger gross domestic product.
The EU’s money supply has also increased dramatically over this period. It grew by about 20 percent, or 2.5 trillion euros.
Lately, I have been hearing more and more about the so-called – please excuse me, I really would not like to do this here, even mention my own name in this regard, but I cannot help it – we all hear about the so-called ‘Putin inflation’ in the West. When I see this, I wonder who they expect would buy this nonsense – people who cannot read or write, maybe. Anyone literate enough to read would understand what is actually happening.
Russia, our actions to liberate Donbass have absolutely nothing to do with this. The rising prices, accelerating inflation, shortages of food and fuel, petrol, and problems in the energy sector are the result of system-wide errors the current US administration and European bureaucracy have made in their economic policies. That is where the reasons are, and only there.
I will mention our operation, too: yes, it could have contributed to the trend, but the root cause is precisely this – their erroneous economic policies. In fact, the operation we launched in Donbass is a lifeline they are grabbing at to be able to blame their own miscalculations on others, in this case, on Russia. But everyone who has at least completed primary school would understand the true reasons for today’s situation.
So, they printed more money, and then what? Where did all that money go? It was obviously used to pay for goods and services outside Western countries – this is where the newly-printed money flowed. They literally began to clean out, to wipe out global markets. Naturally, no one thought about the interests of other states, including the poorest ones. They were left with scraps, as they say, and even that at exorbitant prices.
While at the end of 2019, imports of goods to the United States amounted to about 250 billion dollars a month, by now, it has grown to 350 billion. It is noteworthy that the growth was 40 percent – exactly in proportion to the unsecured money supply printed in recent years. They printed and distributed money, and used it to wipe out goods from third countries’ markets.
This is what I would like to add. For a long time, the United States was a big food supplier in the world market. It was proud, and with good reason, of its achievements, its agriculture and farming traditions. By the way, this is an example for many of us, too. But today, America’s role has changed drastically. It has turned from a net exporter of food into a net importer. Loosely speaking, it is printing money and pulling commodity flows its way, buying food products all over the world.
The European Union is building up imports even faster. Obviously, such a sharp increase in demand that is not covered by the supply of goods has triggered a wave of shortages and global inflation. This is where this global inflation originates. In the past couple of years, practically everything – raw materials, consumer goods and particularly food products – has become more expensive all over the world.
Yes, of course, these countries, including the United States continue importing goods, but the balance between exports and imports has been reversed. I believe imports exceed exports by some 17 billion. This is the whole problem.
According to the UN, in February 2022, the food price index was 50 percent higher than in May 2020, while the composite raw materials index has doubled over this period.
Under the cloud of inflation, many developing nations are asking a good question: why exchange goods for dollars and euros that are losing value right before our eyes? The conclusion suggests itself: the economy of mythical entities is inevitably being replaced by the economy of real values and assets.
According to the IMF, global currency reserves are at $7.1 trillion and 2.5 trillion euros now. These reserves are devalued at an annual rate of about 8 percent. Moreover, they can be confiscated or stolen any time if the United States dislikes something in the policy of the states involved. I think this has become a very real threat for many countries that keep their gold and foreign exchange reserves in these currencies.
According to analyst estimates, and this is an objective analysis, a conversion of global reserves will begin just because there is no room for them with such shortages. They will be converted from weakening currencies into real resources like food, energy commodities and other raw materials. Other countries will be doing this, of course. Obviously, this process will further fuel global dollar inflation.
As for Europe, their failed energy policy, blindly staking everything on renewables and spot supplies of natural gas, which have caused energy price increases since the third quarter of last year – again, long before the operation in Donbass – have also exacerbated price hikes. We have absolutely nothing to do with this. It was due to their own actions that prices have gone through the roof, and now they are once again looking for somebody to blame.
Not only did the West’s miscalculations affect the net cost of goods and services but they also resulted in decreased fertiliser production, mainly nitrogen fertilisers made from natural gas. Overall, global fertiliser prices have jumped by over 70 percent from mid-2021 through February 2022.
Unfortunately, there are currently no conditions that can overcome these pricing trends. On the contrary, aggravated by obstacles to the operation of Russian and Belarusian fertiliser producers and disrupted supply logistics, this situation is approaching a deadlock.
It is not difficult to foresee coming developments. A shortage of fertiliser means a lower harvest and a higher risk of an undersupplied global food market. Prices will go even higher, which could lead to hunger in the poorest countries. And it will be fully on the conscience of the US administration and the European bureaucracy.
I want to emphasise once again: this problem did not arise today or in the past three or four months. And certainly, it is not Russia’s fault as some demagogues try to declare, shifting the responsibility for the current state of affairs in the world economy to our country.
Maybe it would even be nice to hear that we are so powerful and omnipotent that we can blow up inflation in the West, in the United States and Europe, or that we can do things to throw everything into disorder. Maybe it would be nice to feel this power, if only there were truth in it. This situation has been brewing for years, spurred by the short-sighted actions of those who are used to solving their problems at somebody else’s expense and who have relied and still rely on the mechanism of financial emission to outbid and draw trade flows, thus escalating deficits and provoking humanitarian disasters in certain regions of the world. I will add that this is essentially the same predatory colonial policy as in the past, but of course in a new iteration, a more subtle and sophisticated edition. You might not even recognise it at first.
The current priority of the international community is to increase food deliveries to the global market, notably, to satisfy the requirements of the countries that need food most of all.
While ensuring its domestic food security and supplying the domestic market, Russia is also able to scale up its food and fertiliser exports. For example, our grain exports in the next season can be increased to 50 million tonnes.
As a priority, we will supply the countries that need food most of all, where the number of starving people could increase, first of all, African countries and the Middle East.
At the same time, there will be problems there, and not through our fault either. Yes, on paper Russian grain, food and fertilisers… Incidentally, the Americans have adopted sanctions on our fertilisers, and the Europeans followed suit. Later, the Americans lifted them because they saw what this could lead to. But the Europeans have not backed off. Their bureaucracy is as slow as a flour mill in the 18th century. In other words, everyone knows that they have done a stupid thing, but they find it difficult to retrace their steps for bureaucratic reasons.
As I have said, Russia is ready to contribute to balancing global markets of agricultural products, and we see that our UN colleagues, who are aware of the scale of the global food problem, are ready for dialogue. We could talk about creating normal logistical, financial and transport conditions for increasing Russian food and fertiliser exports.
As for Ukrainian food supplies to global markets – I have to mention this because of numerous speculations – we are not hindering them. They can do it. We did not mine the Black Sea ports of Ukraine. They can clear the mines and resume food exports. We will ensure the safe navigation of civilian vessels. No problem.
But what are we talking about? According to the US Department of Agriculture, the matter concerns 6 million tonnes of wheat (we estimate it at 5 million tonnes) and 7 million tonnes of maize. This is it, altogether. Since global production of wheat stands at 800 million tonnes, 5 million tonnes make little difference for the global market, as you can see.
Anyway, Ukrainian grain can be exported, and not only via Black Sea ports. Another route is via Belarus, which is, incidentally, the cheapest way. Or via Poland or Romania, whichever you prefer. In fact, there are five or six export routes.
The problem is not with us, the problem is with the adequacy of the people in control in Kiev. They can decide what to do, and, at least in this particular case, they should not take their lead from their foreign bosses, their masters across the ocean.
But there is also the risk that grain will be used as payment for arms deliveries. This would be regrettable.
Friends,
Once again, the world is going through an era of drastic change. International institutions are breaking down and faltering. Security guarantees are being devalued. The West has made a point of refusing to honour its earlier commitments. It has simply been impossible to reach any new agreements with them.
Given these circumstances and against the backdrop of mounting risks and threats, Russia was forced to go ahead with the special military operation. It was a difficult but necessary decision, and we were forced to make it.
This was the decision of a sovereign country, which has еру unconditional right to uphold its security, which is based on the UN Charter. This decision was aimed at protecting our people and the residents of the people’s republics of Donbass who for eight long years were subjected to genocide by the Kiev regime and the neo-Nazis who enjoyed the full protection of the West.
The West not only sought to implement an “anti-Russia” scenario, but also engaged in the active military development of Ukrainian territory, flooding Ukraine with weapons and military advisers. And it continues to do so now. Frankly, no one is paying any attention to the economy or well-being of the people living there, they just do not care about it at all, but they have never spared money to create a NATO foothold in the east that is directed against Russia and to cultivate aggression, hatred and Russophobia.
Today, our soldiers and officers, as well as the Donbass militia, are fighting to protect their people. They are fighting for Russia’s future as a large, free and secure multiethnic country that makes its own decisions, determines its own future, relies on its history, culture and traditions, and rejects any and all outside attempts to impose pseudo-values steeped in dehumanisation and moral degradation.
No doubt, our special military operation goals will be fulfilled. The key to this is the courage and heroism of our soldiers, consolidated Russian society, whose support gives strength and confidence to the Russian Army and Navy and a deep understanding of the truth and historical justice of our cause which is to build and strengthen Russia as a strong sovereign power.
My point is that sovereignty cannot be segmented or fragmented in the 21st century. The components of sovereignty are equally important, and they reinvigorate and complement each other.
So, what matters to us is not only the defence of our political sovereignty and national identity, but also strengthening everything that determines our country’s economic, financial, professional and technological independence.
The very structure of Western sanctions rested on the false premise that economically Russia is not sovereign and is critically vulnerable. They got so carried away spreading the myth of Russia’s backwardness and its weak positions in the global economy and trade that apparently, they started believing it themselves.
While planning their economic blitzkrieg, they did not notice, simply ignored the real facts of how much our country had changed in the past few years.
These changes are the result of our planned efforts to create a sustainable macroeconomic structure, ensure food security, implement import substitution programmes and create our own payment system, to name a few.
Of course, sanction restrictions created many challenges for the country. Some companies continue having problems with spare parts. Our companies have lost access to many technological solutions. Logistics are in disarray.
But, on the other hand, all this opens up new opportunities for us – we often talk about this but it really is so. All this is an impetus to build an economy with full rather than partial technological, production, human and scientific potential and sovereignty.
Naturally, it is impossible to resolve such a comprehensive challenge instantly. It is necessary to continue working systematically with an eye to the future. This is exactly what Russia is doing by implementing its long-term plans for the development of branches of the economy and strengthening the social sphere. The current trials are merely resulting in adjustments and modifications of the plans without changing their strategic orientation.
Today, I would like to talk about the key principles on which our country, our economy will develop.
The first principle is openness. Genuinely sovereign states are always interested in equal partnership and in contributing to global development. On the contrary, weak and dependent countries are usually looking for enemies, fuelling xenophobia or losing the last remnants of their identity and independence, blindly following in the wake of their suzerain.
Russia will never follow the road of self-isolation and autarky although our so-called Western friends are literally dreaming about this. Moreover, we are expanding cooperation with all those who are interested in it, who want to work with us, and will continue to do so. … They make up the overwhelming majority of people on Earth.I will not list all these countries now. It is common knowledge.
I will say nothing new when I remind you that everyone who wants to continue working or is working with Russia is subjected to blatant pressure from the United States and Europe; it goes as far as direct threats. However, this kind of blackmail means little when it comes to countries headed by true leaders who know the difference between their own national interests, the interests of their people – and someone else’s.
Russia will build up economic cooperation with these states and promote joint projects. At the same time, we will certainly continue to cooperate with Western companies that have remained in the Russian market despite the unprecedented arm-twisting – such companies exist, too.
We believe the development of a convenient and independent payment infrastructure in national currencies is a solid and predictable basis for deepening international cooperation. To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, transshipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.
But foreign trade is not our only priority. Russia intends to increase scientific, technological, cultural, humanitarian and sports cooperation based on equality and mutual respect between partners. At the same time, our country will strive for responsible leadership in all these areas.
The second principle of our long-term development is a reliance on entrepreneurial freedom. Every private initiative aimed at benefiting Russia should receive maximum support and space for implementation.
The pandemic and the more recent events have confirmed how important flexibility and freedom are in the economy. Russian private businesses – in tough conditions, amid attempts to restrain our development by any means – have proved they can compete in global markets. Private businesses should also be credited for Russia’s adaptation to rapidly changing external conditions. Russia needs to ensure the dynamic development of the economy – naturally, relying on private business.
We will continue to reduce administrative hurdles. For example, in 2016–2018, we imposed a moratorium on routine audits of small businesses. Subsequently, it was extended through 2022. In 2020, this moratorium was extended to cover mid-sized companies. Also, the number of unscheduled audits decreased approximately fourfold.
We did not stop at that, and last March, we cancelled routine audits for all entrepreneurs, regardless of the size of their businesses, provided their activities do not put people or the environment at high risk. As a result, the number of routine audits has declined sixfold compared to last year.
Why am I giving so many details? The point is that after the moratorium on audits was imposed, the number of violations by entrepreneurs – this was the result – has not increased, but rather it has gone down. This testifies to the maturity and responsibility of Russian businesses. Of course, they should be offered motivation rather than being forced to observe regulations and requirements.
So, there is every reason to take another radical step forward, that is, to abandon, for good and on a permanent basis, the majority of audits for all Russian businesses, except on risky or potentially dangerous activities. Everyone has long since understood that there was no need to check on everyone without exception. A risk-oriented approach should be at work. I ask the Government to develop the specific parameters of such a reform in the next few months.
There is another very sensitive topic for business, which has also become important today for our national security and economic resilience. To reduce and bring to a minimum all sorts of abuse and loopholes to exert pressure on entrepreneurs, we are consistently removing loose regulations from criminal law that are applied to economic crimes.
Last March, a law was signed, under which tax-related criminal cases against entrepreneurs shall only be brought before a court by the tax service – there is no other way. Soon a draft law will be passed on reducing the statute of limitations for tax-related crimes and on rejecting lawsuits to initiate criminal proceedings after tax arrears have been paid off.
Working comprehensively, although prudently, we need to decriminalise a wide range of economic offenses, for instance, those that punish businesses without a licence or accreditation. This is a controversial practice today because our Western partners illegitimately refuse to provide such licenses.
Our own agencies must not single-handedly make our businesses criminally liable for actually doing nothing wrong. The problem is this, and small businesses understand it very well – if a licence has expired, and Western partners refuse to extend it, what are businesses to do, wrap up operations? By no means, let them work. State oversight should continue, but there should be no undue interference in business.
It also makes sense to think about raising the threshold of criminal liability for unpaid customs duties and other such taxes. Additionally, we have not for a long time reconsidered the parameters of the terms ‘large’ and ‘very large’ economic loss for the purposes of economic offences despite inflation accruing 50 percent since 2016. The law now fails to reflect the current realities and needs to be corrected.
We need to reconsider the conditions for detaining entrepreneurs and for extending preliminary investigations. It is no secret that these practices have long been used inappropriately.
Businesses have been forced to cease operations or go bankrupt even before the investigation is over. The reputation of the owners and of the brand name suffers as a result, not to mention the direct financial loss, loss of market share and jobs.
I want to ask law enforcement to put an end to these practices. I also ask the Government and the Supreme Court to draft appropriate legislation before October 1 of this year.
In addition, at the Security Council, a special instruction was given to look into criminal cases being opened without later proceeding to court. The number of such cases has grown in recent years. We know the reasons. A case is often opened without sufficient grounds or to put pressure on individuals. We will discuss this in autumn to take legislative action and change the way our law enforcement agencies work.
It goes without saying that regional governments play a major role in creating a modern business environment. As is customary during the St Petersburg Forum, I highlight the regions that have made significant progress in the National Investment Climate Rankings compiled by the Agency for Strategic Initiatives.
There have been changes in the top three. Moscow and Tatarstan have remained at the top and were joined by the Moscow Region which, in a span of one year, went from eighth place to the top three. The leaders of the rankings also include the Tula, Nizhny Novgorod, Tyumen, Novgorod, and Sakhalin regions, St Petersburg and Bashkortostan.
Separately, I would like to highlight the regions that have made the greatest strides such as the Kurgan Region, which moved up 36 spots; the Perm Territory and the Altai Territory, up 26 spots; Ingushetia, up 24 spots; and the Ivanovo Region which moved up 17 spots.
I want to thank and congratulate our colleagues in the regions for their good work.
The federal government and regional and municipal governments should focus on supporting individual business initiatives in small towns and remote rural communities. We are aware of such stories of success. That includes developing popular software and marketing locally produced organic food and environmentally friendly products nationwide using domestic websites.
It is important to create new opportunities, to introduce modern retail formats, including e-commerce platforms, as I mentioned above, and to cut the logistics, transportation and other costs, including by using upgraded Russian Post offices.
It is also important to help small business employees, self-employed individuals and start-up entrepreneurs acquire additional skills and competencies. Please include corresponding measures tailored specifically to small towns and rural and remote areas as a separate line in the national project for promoting small and medium-sized businesses.
Today I would like to address our officials, owners of large companies, our business leaders and executives.
Colleagues, friends,
Real, stable success and a sense of dignity and self-respect only come when you link your future and the future of your children with your Fatherland. We have maintained ties with many people for a long time, and I am aware of the sentiments of many of the heads and owners of our companies. You have told me many times that business is much more than just making a profit, and I fully agree. It is about changing life around you, contributing to the development of your home cities, regions and the country as a whole, which is extremely important for self-fulfilment. There is nothing like serving the people and society. This is the meaning of your life and work.
Recent events have reaffirmed what I have always said: it is much better at home. Those who refused to hear that clear message have lost hundreds of millions, if not billions of dollars in the West, in what looked like a safe haven for their assets.
I would like to once again say the following to our colleagues, those who are both in this audience and those who are not here: please, do not fall into the same trap again. Our country has huge potential, and there are more than enough tasks that need your contribution. Invest here, in the creation of new enterprises and jobs, in the development of the tourism infrastructure, support schools, universities, healthcare and the social sphere, culture and sport. I know that many of you are doing this. I know this, but I wanted to say it again.
This is how the Bakhrushin, Morozov, Shchukin, Ryabushinsky, Akchurin, Galeyev, Apanayev, Matsiyev, Mamontov, Tretyakov, Arsanov, Dadashev and Gadzhiyev families understood their noble mission. Many Russian, Tatar, Buryat, Chechen, Daghestani, Yakutian, Ossetian, Jewish, Armenian and other merchant and entrepreneurial families did not deprive their heirs of their due share, and at the same time they etched their names in the history of our country.
Incidentally, I would like to note once again that it remains to be seen what is more important for potential heirs: money and property or their forefathers’ good name and service to the country. The latter is something that cannot be squandered or, pardon my language, wasted on drink.
A good name is something that will always belong to your descendants, to future generations. It will always be part of their lives, going from one generation to another, helping them and making them stronger than the money or property they might inherit can make them.
Colleagues,
A responsible and well-balanced macroeconomic policy is the third guiding principle of our long-term development. In fact, this policy has largely enabled us to withstand the unprecedented pressure brought on by sanctions. Let me reiterate that this is an essential policy in the long term, not just for responding to the current challenges. We will not follow in the footsteps of our Western colleagues by replicating their bitter experience setting off an inflation spiral and disrupting their finances.
Our goal is to ensure robust economic growth for years to come, reducing the inflation burden on our people and businesses and achieving the mid- and long-term target inflation rate of four percent. Inflation was one of the first things I mentioned during my remarks, so let me tell you this: we remain committed to this target of a four-percent inflation rate.
I have already instructed the Government to draft proposals regarding the new budget guidelines. They must ensure that our budget policy is predictable and enables us to make the best use of the external economic conditions. Why do we need all this? To put economic growth on a more stable footing, while also delivering on our infrastructure and technological objectives, which provide a foundation for improving the wellbeing of our people.
True, some international reserve currencies have set themselves on a suicidal path lately, which is an obvious fact. In any case, they clearly have suicidal intentions. Of course, using them to ‘sterilise’ our money supply does not make any sense. Still, the principle of planning one’s spending based on how much you earn remains relevant. This is how it works, and we understand this.
Social justice is the fourth principle underpinning our development. There must be a powerful social dimension when it comes to promoting economic growth and business initiatives. This development model must reduce inequality instead of deepening it, unlike what is happening in other countries. To be honest, we have not been at the forefront when it comes to delivering on these objectives. We have yet to resolve many issues and problems in this regard.
Reducing poverty and inequality is all about creating demand for Russian-made products across the country, bridging the gap between regions in terms of their capabilities, and creating new jobs where they are needed the most. These are the core economic development drivers.
Let me emphasise that generating positive momentum in terms of household income growth and poverty reduction are the main performance indicators for government agencies and the state in general. We need to achieve tangible results in this sphere already this year, despite all the objective challenges we face. I have already assigned this task to the Government.
Again, we provide targeted support to the most vulnerable groups – pensioners, families with children, and people in difficult life situations.
Pensions are indexed annually at a rate higher than inflation. This year, they have been raised twice, including by another 10 percent on June 1.
The minimum wage was also increased by 10 percent at the same time, and so was the subsistence minimum – a reference figure used to calculate many social benefits and payments – accordingly, these benefits should also grow, increasing the incomes of about 15 million people.
In recent years, we have built a holistic system to support low-income families with children. Women are entitled to state support from the early stages of pregnancy and until the child reaches the age of 17.
People’s living standards and prosperity are the most important demographic factors; the current situation is quite challenging due to several negative demographic waves that have recently overlapped. In April, less than a hundred thousand children were born in Russia, almost 13 percent less than in April 2020.
I ask the Government to continue to keep the development of additional support measures for families with children under review. They must be far-reaching and commensurate with the magnitude of the extraordinary demographic challenge we are facing.
Russia’s future is ensured by families with two, three and more children. Therefore, we need to do more than provide direct financial support – we need to target and direct the healthcare system, education, and all areas that determine the quality of people’s lives towards the needs of families with children.
This problem is addressed, among other approaches, by the national social initiatives, which regional teams and the Agency for Strategic Initiatives are implementing together. This autumn, we will assess the results of their work, review and rank the Russian regions by quality of life in order to apply the best experiences and practices as widely as possible throughout the country.
Prioritising the development of infrastructure is the fifth principle underlying Russia’s economic policy.
We have scaled up direct budget spending on expanding transport corridors. An ambitious plan for building and repairing the federal and regional motorway core network will be launched next year. At least 85 percent of the roads are to be brought up to code within the next five years.
Infrastructure budget lending is a new tool that is being widely used. The loans are issued for 15 years at a 3 percent APR. As I mentioned before, they are much more popular than we originally thought. The regions have multiple well-thought-out and promising projects that should be launched at the earliest convenience. We will look into how we can use this support measure. We debated this issue last night. What I am saying is that it is a reliable tool.
Upgrading housing and utilities services is a separate matter with a backlog of issues. The industry is chronically underinvested to the tune of 4.5 trillion rubles. Over 40 percent of networks need to be replaced, which accounts for their low efficiency and big losses. About 3 percent of the networks become unusable every year, but no more than 2 percent get replaced, which makes the problem even worse every single year.
I propose consolidating resources and launching a comprehensive programme for upgrading housing and utilities, and synchronizing it with other infrastructure development and housing overhaul plans. The goal is to turn the situation around and to gradually reduce the number of dated networks, just like we are doing by relocating people from structurally unsafe buildings or fixing roads. We will discuss in detail housing and utilities and the construction complex with the governors at a State Council Presidium meeting next week.
On a separate note, I propose increasing resources to fund projects to create a comfortable urban environment in small towns and historical settlements. This programme is working well for us. I propose allocating another 10 billion rubles annually for these purposes in 2023–2024.
We will allocate additional funds for renovating urban areas in the Far Eastern Federal District. I want the Government to allocate dedicated funds to this end as part of the programmes for infrastructure budget lending and housing and utilities upgrading, as well as other development programmes.
Promoting comprehensive improvements and development for rural areas is a top priority for us. People who live there are feeding the country. We now see that they are also feeding a major part of the world, so they must live in comfort and dignity. In this connection, I am asking the Government to allocate additional funding for the corresponding programme. Export duties on agricultural produce can serve as a source of funding here. This is a permanent source of revenue. Of course, there can be fluctuations, but at least this ensures a constant flow of revenue.
On a separate note, I suggest that we expand the programmes for upgrading and modernising rural cultural centres, as well as regional theatres and museums by allocating six billion rubles for each of these projects in 2023 and 2024.
What I have just said about cultural institutions is something that people are really looking forward to, something they really care about. Let me give you a recent example: during the presentation of the Hero of Labour medals, one of the winners, Vladimir Mikhailov from Yakutia, asked me directly for help with building a cultural centre in his native village. This was during the part of the ceremony where we meet behind closed doors. We will definitely do this. The fact that people are raising this issue at all levels shows that they are really eager to see these projects implemented.
At this point, I would like to make a sidenote on a topic that is especially relevant now, since we are in early summer, when Russians usually take their summer vacations.
Every year, more and more tourists want to visit the most beautiful corners of our country: national parks, wildlife sanctuaries and nature reserves. According to available estimates, this year this tourist flow is expected to exceed 12 million people. It is essential that all government bodies, businesses and tourists are well aware of what they can and cannot do in these territories, where they can build tourism infrastructure, and where such activity is strictly prohibited because it endangers unique and fragile ecosystems.
The draft law governing tourism in special protected territories and regulating this activity in a civilised manner is already in the State Duma.
In this context, I would like to draw your attention to the fact that we must figure out in advance all the relevant estimates and ensure that the decisions are well-balanced. We need to be serious about this.
I would like to place special emphasis on the need to preserve Lake Baikal. In particular, there is a comprehensive development project for the city of Baikalsk, which must become a model of sustainable, eco-sensitive municipal governance.
This is not just about getting rid of the accumulated negative environmental impacts from the Baikalsk Pulp and Paper Mill, but about setting a higher standard of living for the city and transforming it into a signature destination for environmental tourism in Russia. We need to rely on the most cutting-edge technologies and clean energy when carrying out this project.
Overall, we will be developing clean technology to achieve the goals we set in the environmental modernisation of production facilities, and to reduce hazardous emissions, especially in large industrial centres. We will also continue working on closed-loop economy projects, green projects and climate preservation. I spoke about these issues in detail at this forum last year.
Consequently, the sixth cross-cutting development principle that consolidates our work is, in my opinion, achieving genuine technological sovereignty, creating an integral system of economic development that does not depend on foreign institutions when it comes to critically important components. We need to develop all areas of life on a qualitatively new technological level without being simply users of other countries’ solutions. We must have technological keys to developing next-generation goods and services.
In the past years, we have focused a lot of attention on import substitution, succeeding in a range of industries, including agriculture, pharmaceuticals, medical equipment, defence production and several others.
But I should stress that there is a lot of discussion in our society about import substitution. And it is not a cure-all nor a comprehensive solution. If we only imitate others when trying to replace foreign goods with copies, even if very high-quality ones, we may end up constantly playing catch-up while we should be one step ahead and create our own competitive technologies, goods and services that can become new global standards.
If you remember, Sergei Korolyov did not just copy or locally upgrade captured rocket technology. He focused on the future and proposed a unique plan to develop the R-7 rocket. He paved the path to space for humankind and in fact set a standard for the entire world, for decades ahead.
Proactively – this is how founders of many Soviet research programmes worked at the time. And today, building on that groundwork, our designers continue to make progress and show their worth. It is thanks to them that Russia has supersonic weapons that do not exist in any other country. Rosatom remains the leader in nuclear technology, developing our fleet of nuclear-powered icebreakers. Many Russian AI and Big Data solutions are the best in the world.
To reiterate, technological development is a cross-cutting area that will define the current decade and the entire 21st century. We will review in depth our approaches to building a groundbreaking technology-based economy – a techno economy – at the upcoming Strategic Development Council meeting. There is so much we can discuss. Most importantly, many managerial decisions must be made in the sphere of engineering education and transferring research to the real economy, and the provision of financial resources for fast-growing high-tech companies. We will also discuss the development of cross-cutting technologies and progress of digital transformation projects in individual industries.
To be clear, of course it is impossible to make every product out there, and there is no need for that. However, we need to possess critical technologies in order to be able to move swiftly should we need to start our own production of any product. This is what we did when we quickly started making coronavirus vaccines, and most recently launched the production of many other products and services.
For example, after dishonest KamAZ partners left the Russian market, their place was taken by domestic companies, which are supplying parts for traditional models and even advanced mainline, transport and heavy-duty vehicles.
The Mir card payment system has successfully replaced Visa and MasterCard on the domestic market. It is expanding its geography and gradually gaining international recognition.
The St Petersburg Tractor Plant is another case in point. Its former foreign partner stopped selling engines and providing warranty maintenance. Engine builders from Yaroslavl and Tutayev came to the rescue and started supplying their engines. As a result, the output of agricultural equipment at the St Petersburg Tractor Plant hit a record high in March-April. It did not decrease, but hit an all-time high.
I am sure there will be more positive practices and success stories.
To reiterate, Russia possesses the professional, scientific and technological potential to develop products that enjoy high demand, including household appliances and construction equipment, as well as industrial and service equipment.
Today’s task is to scale up the capacities and promptly get the necessary lines up and running. One of the key issues is comfortable work conditions for the businesses as well as the availability of prepared production sites.
I ask the Government to submit key parameters of the new operating guidelines for industrial clusters by the autumn. What is critical here?
First – financing. The projects launched in these clusters must have a long-term credit resource for up to ten years at an annual interest rate below seven percent in rubles. We have discussed all these issues with our economic agencies as well. Everyone agreed, so we will proceed.
Second – taxation. The clusters must have a low level of relatively permanent taxes including insurance contributions.
Third – supporting production at the early, kick-off stage, forming a package of orders including subsidising the purchases of ready products by such enterprises. This is not an easy issue but I think subsidies may be required. They are needed to ensure the market. We just have to work it out.
Fourth – simplified administration including minimal or no inspections as well as convenient customs monitoring that is not burdensome.
Fifth, and probably the most important – we need to set up mechanisms of guaranteed long-term demand for the new innovative products that are about to enter the market. I remind the Government that such preferential terms and respective industrial clusters must be launched as early as January 1, 2023.
On a related note, I want to say that both new and already operating points of industrial growth must attract small businesses and engage them in their orbit. It is crucial for entrepreneurs, for small entities to see the horizon and grasp their prospects.
Therefore, I ask the Government together with the SME Corporation [Federal Corporation for the Development of Small and Medium Enterprises] and our biggest companies to launch an instrument for long-term contracts between companies with state participation and SMEs. This will ensure demand for the products of such enterprises for years ahead whereas suppliers can confidently undertake commitments to launch a new manufacturing facility or expand an existing one to meet that order.
Let me add that we have substantially shortened the timeframe for building industrial sites and eliminated all the unnecessary burdensome procedures. Still, there is much more we can do here. We have things to work on, and places to go from here. For example, building an industrial facility from the ground up takes anywhere from eighteen months to three years, while the persistently high interest rates make it harder to buy suitable land plots.
Given this, I suggest launching industrial mortgages as a new tool for empowering Russian businesses to quickly start making all the products we need. What I mean are preferential long-term loans at a five-percent interest rate. Companies planning to buy new manufacturing space will be entitled to these loans. I am asking the Government to work out all the details with the Russian banking sector so that the industrial mortgage programme becomes fully operational soon.
Friends,
Changes in the global economy, finances and international relations are unfolding at an ever-growing pace and scale. There is an increasingly pronounced trend in favour of a multipolar growth model in lieu of globalisation. Of course, building and shaping a new world order is no easy task. We will have to confront many challenges, risks, and factors that we can hardly predict or anticipate today.
Still, it is obvious that it is up to the strong sovereign states, those that do not follow a trajectory imposed by others, to set the rules governing the new world order. Only powerful and sovereign states can have their say in this emerging world order. Otherwise, they are doomed to become or remain colonies devoid of any rights.
We need to move forward and change in keeping with the times, while demonstrating our national will and resolve. Russia enters this nascent era as a powerful sovereign nation. We will definitely use the new immense opportunities that are opening up for us in this day and age in order to become even stronger.
Thank you for your attention.
Margarita Simonyan: Thank you, Mr President.
I would very much like to say that after such exhaustive remarks and such an exhaustive analysis, we have nothing left to talk about, because you have answered all the questions. Still, some questions remain, and we will certainly ask them.
And now I would like to ask President Tokayev to come over here and share with us his perspective on the processes taking place in his country, in our country, and in relations between our countries and in the world.
Thank you.
President of Kazakhstan Kassym-Jomart Tokayev: President Putin,
forum participants,
I congratulate everyone on a significant event – the 25th St Petersburg International Economic Forum. I thank President Putin for the invitation and for the warm and cordial welcome in the cultural capital of Russia.
Over the past quarter of a century, the St Petersburg Forum has deservedly gained respect as a prestigious expert platform and occupies a worthy place among other world discussion platforms.
Today, we are meeting in rather extraordinary circumstances – I am referring to the elevated political and economic turbulence. The global upheavals caused by the pandemic and the rising geopolitical tensions have led to a new reality. Globalisation has given way to an era of regionalisation, with all its inherent advantages and disadvantages. Be that as it may, the process of reformatting traditional economic models and trade routes is accelerating.
The world is changing rapidly – unfortunately, in most cases it is not for the better. Inflation in many countries is breaking ten-year records, global economic growth is slowing down, and competition for investment and resources is intensifying.
There are constraining factors for economic growth such as climate change, growing migration flows, and faster technological change. We certainly pay attention to these processes.
Speaking about the new reality, it is important to bear in mind the rapidly changing structure of the international order – even the seemingly stable East-West, North-South vectors of interaction are shifting. It is important for the countries in our region not only to find the right answers to all these challenges, but also to try to make the most of them. Therefore, we have to consistently reach our full potential for cooperation within the Eurasian Economic Union. The project to link Eurasian integration with China’s One Belt, One Road initiative is relevant here.
As you know, Kazakhstan is now implementing large-scale political and economic reforms. Their goal is to reset public administration and build a fair, new Kazakhstan. We are working to ensure that there is a correlation between economic growth and rising living standards for our people. We want to achieve sustainable development of trade and economic ties, open new production lines, support the growth of human capital, and make investments.
As part of our large-scale effort to modernise the country, we are drafting new rules of the game in the economy without glaring monopolies and rampant corruption. Our priority is to support businesses and improve the business climate with a view to providing the utmost protection for the rights of investors, and promoting stability and predictability. We will continue meeting all of our commitments to our traditional partners. Kazakhstan will continue building an inclusive, fair society without social inequality.
I believe that to ensure sustainable development of all countries of the region, it is necessary to determine new horizons of cooperation and create new growth points in our economies. Along with this, we must always remember the very important task of ensuring international and regional security.
In this context, I would like to draw your attention to the following points.
The first task, as I have already mentioned, is to strengthen the capacity of the Eurasian Economic Union. This task remains relevant for us. The aggregate size of the economies of its members exceeds $2 trillion. This is an enormous market with free movement of goods, capital, services and workforce. At any rate, this is what it should be.
Despite the pandemic and geopolitical upheavals, cooperation in the EAEU continues to grow stronger. Last year, its trade reached a record $73 billion, which is a third higher than last year.
Russia has been and remains Kazakhstan’s key economic partner in the EAEU. Last year, our trade went up by almost a third to exceed $24 billion. These are record figures for us. The dynamics remains positive this year as well. Our trade increased by over 12 percent in the first quarter of 2022.
I believe that, considering the new reality, it would be appropriate and useful to develop an innovative trade strategy within the Eurasian Economic Union. Instead of imposing counter-sanctions, which, frankly, are unlikely to be productive, a more proactive and flexible trade policy should be pursued covering the Asian and the Middle Eastern markets. Kazakhstan could be instrumental in its role of a buffer market.
Overall, the ultimate success of Eurasian integration largely, if not massively, depends on our effective common trade strategy. Kazakhstan and Russia can break new ground in industrial cooperation.
We have a special plan, a programme for industrial cooperation in the new circumstances. Investors from Russia will be provided with industrial sites complete with infrastructure, and a favourable investment climate will be created for them. As a matter of fact, this is already being done.
The full unlocking of our countries’ agricultural potential is particularly important in these circumstances. According to the FAO [the Food and Agriculture Organisation of the United Nations], Russia and Kazakhstan are global leaders in terms of available agricultural land. This fact is of particular importance in light of declining global food security. According to the UN, the number of malnourished people will go from 270 million to 323 million this year.
Providing people with high-quality and safe food remains a priority and a factor in maintaining internal stability.
To create a reliable food system, it is important to implement innovative solutions and advanced technologies, as well as to cut food losses.
Approaches to ensuring food security should be developed at the national level and within regional associations, including the EAEU with account taken of the interests of all state participants. Achieving declared goals in this extremely important area is unlikely without coordinated work.
In other words, fighting skyrocketing inflation and food shortages is our common challenge, which will remain a priority in the foreseeable future, because it directly concerns the well-being of our people. Our countries’ potential makes it possible to consistently and fully supply our markets with the necessary foods, as the President of Russia convincingly demonstrated today.
Secondly, I believe that it is essential that we continue expanding trade and economic cooperation with third countries. Kazakhstan is proactively involved in integration processes, and has always stood for mutually beneficial cooperation with other international organisations.
As far as I know, there has been much interest on the sidelines of the St Petersburg International Economic Forum in Russia’s initiative to build a Greater Eurasian Partnership. This concept consists of offering regional organisations a platform for creating a common space of equal cooperation. It is for this reason that Kazakhstan continues to have a positive outlook on the effort to build the Greater Eurasian Partnership.
This year, Kazakhstan chairs the Commonwealth of Independent States. Over the years, this structure has built up a positive track record despite all the geopolitical challenges, which proves that multilateral dialogue tools are effective.
I believe that the CIS is perfectly suited for serving as a foundation for this megaproject. I am referring to Greater Eurasia, or the Greater Eurasian Partnership. It can encompass the SCO, ASEAN, and the Eurasian Economic Union as its integral elements.
Over the next decade, China, India, as well as countries in the Middle East, South and Southeast Asia, which have traditionally been friendly to us, can become major investors in the economies of our region.
China has already emerged as Kazakhstan’s main economic and foreign trade partner. This country invested in our economy more than $22 billion over the past 15 years. For this reason, strengthening our multilateral cooperation with China is a very important goal for our country.
Of course, the economy matters today just as much as political considerations. I believe that we have to promote business-to-business ties and build new transport and logistics corridors. Today, we treat these matters as our top priorities when meeting with people from Russia and other interested nations.
There is a lot of potential for combining our efforts to develop a pool of breakthrough innovation and technology projects, as well as uninterrupted transportation and logistics chains. At the end of the day, this will create new economic growth opportunities for our countries.
Thirdly, Kazakhstan maintains its unwavering commitment to international efforts to combat climate change. We will be consistent in our efforts to promote green investment and carry out corresponding projects. Environmental problems are global in nature, affecting almost all countries without exception, including Kazakhstan.
Last year, our farmers had serious problems due to a draught that was triggered by low rainfall and low water level in rivers. The cross-border Ural River is in critical condition. We call it Zhayyq on our territory.
I believe we should tackle such problems together when faced with such long-term challenges to the sustainable development of our states. I think we should give serious thought to the prospects of introducing the principles of closed-loop or circular economy. We are working to reduce the GDP’s energy-output ratio, expand the renewable energy sector and reduce transit losses in this area.
The similarity of our economies, industrial infrastructure ties between our two countries and geography as such are prompting us to pool efforts in this strategically important area as well. I hope that together we will manage to draft effective approaches and specific measures for tangible progress in this field.
Fourthly. High quality human resources and constructive inter-cultural dialogue are a reliable source of economic growth. As part of the UN-proclaimed International Decade for the Rapprochement of Cultures, we will continue our policy of preserving the cultural diversity of our country and promoting international dialogue between civilisations.
In September our capital will host yet another congress of world and traditional religions. We welcome the participation of religious figures from Russia in this forum. Practically all of them confirmed their participation.
Kazakhstan is actively reformatting the system of its higher education with the participation of leading foreign universities, including Russian ones. The deepening of international academic ties has special significance for promoting the traditions of bilateral cooperation.
I am convinced that the successful implementation of a number of joint educational and cultural initiatives will allow us to make a tangible contribution to the steady economic advance of our country.
Participants of the forum,
Kazakhstan proceeds from its firm conviction that Eurasia is our common home and that all countries on our continent should closely cooperate in the community. We are confident that the building of a peaceful, stable and economically strong Eurasia will become a major factor of sustainable development and inclusive growth on a global scale.
I am convinced that this prestigious discussion venue that unites top class experts has great potential in searching for constructive ideas aimed at normalising the international situation and recovering the positive dynamics of the world economy.
Thank you for your attention.
Margarita Simonyan: Thank you very much, President Tokayev.
Eurasia is indeed our common home. We all want this home to be safe and prosperous through God’s help and our mutual efforts.
And now we will turn to Africa. We have a video address from President of Egypt Abdel Fattah el-Sisi. Can we have it on the screens, please? Thank you.
President of Egypt Abdel Fattah el-Sisi: In the Name of Allah, the Most Beneficent, the Most Merciful,
President of the Russian Federation Vladimir Putin,
Ladies and gentlemen,
At the outset, allow me to extend to His Excellency, President Vladimir Putin, my sincere congratulations on the silver jubilee of the St Petersburg International Economic Forum. Since 1997, when it has been held for the first time, the forum has become a leading platform for the business community and a remarkable economic event that seeks to discuss the key economic issues facing emerging markets and the world.
Ladies and gentlemen,
The Arab Republic of Egypt, as a guest country, will be part of this year’s session of the forum, which marks the 25th anniversary of its launch, thus confirming the distinguished level that Egyptian-Russian economic relations have reached over the recent years.
This year’s forum is being held amid unprecedented political and economic challenges of a strategic nature. We hope that the outcomes of the forum will contribute to finding effective solutions to these challenges in a way that mitigates the impact of the global economic crisis and its negative repercussions on many countries in the world, especially the economies of emerging countries, takes the concerns and interests of all parties into account, and achieves the security and tranquility of peoples.
This would be achieved through long-term political understandings that open the way for the growth of the global economy, especially in the wake of the severe coronavirus pandemic, which has cost our societies many victims and considerable money and resources, thus making us keen to avoid any slowdown in the global economy.
Ladies and gentlemen,
Let me use this opportunity to reiterate that the Arab Republic of Egypt values its firm, historic friendship relations with the Russian Federation, and values the tangible progress the two countries’ relations have been witnessing over the past years in a multitude of vital sectors, for the two countries’ economies and the prosperity of the two peoples.
The Arab Republic of Egypt and the Russian Federation have been engaged over the past years in the implementation of mega and ambitious projects that serve our countries and respond to the aspirations of our peoples to realise more economic progress.
The most prominent of these are: the project for the establishment of the Dabaa nuclear power plant, which comes within the context of the Egyptian State’s strategy to expand national projects for the use of new and renewable sources of energy.
Another project is the establishment of the Russian Industrial Zone in the Economic Zone of the Suez Canal, which is meant to become an important platform for industry in Africa.
This is in addition to cooperation between the two countries to upgrade the Egyptian railway network and other joint ventures that realise the benefit of the two peoples.
Ladies and gentlemen,
You must be aware that the exceptional events that have been taking place in the Arab Republic of Egypt over the past decade had their immense impact on the overall economic situation in the country. The Egyptian people stood up to surmount this crisis by supporting a clear vision, based on investing in the Egyptian citizen and developing his capabilities.
Therefore, Egypt Vision 2030 was launched to reflect the state’s long-term strategic plan to achieve the principles and goals of sustainable development, with its economic, social and environmental dimensions.
Based on this vision, the Government of Egypt has modernised its legislative structure to enable Egypt to attract more foreign investment. This qualified Egypt to become the top destination for attracting foreign investments in Africa and one of the few countries in the world capable of achieving a growth rate of up to 3.3 percent in 2021, despite the negative challenges posed by the spread of COVID-19 and their impact on the global economy. We expect the Egyptian economy to grow by 5.5% during the current fiscal year. The country’s non-petroleum exports also increased during 2021 to reach $32 billion.
Egypt has also succeeded, within the framework of its strategy to increase its capabilities, to implement mega agricultural projects that are aimed at increasing agricultural land by almost 2 million feddans.
This is in addition to the mega projects Egypt is implementing in the fields of transport, by expanding thousands of kilometers of roads and upgrading Egypt’s transport system by introducing new projects. Those include the high-speed rail that will constitute a means to link the Red Sea and the Mediterranean Sea, thus boosting and facilitating international trade.
Adding to this are the mega industrial projects and the numerous projects in the field of clean energy production, which have been established in Egypt at a rapid pace over the past period.
Despite the previously-mentioned national efforts, Egypt’s actions and efforts to achieve progress were hit recently by economic crises caused by the COVID-19 pandemic. The world was partially recovering from its effects and repercussions, when it was hit again by a great economic crisis that cast a shadow over growth rates and negatively affected states’ budgets, reflecting on the rise of fuel prices and the decline in the value of the national currencies in the face of hard currencies. This is in addition to the disruption in supply chains, the emergence of the food crisis, as well as the irregular movement of civil aviation. This sector is connected with vital fields of the Egyptian economy, primarily tourism and insurance.
Addressing this crisis, which has an international character, requires international efforts and collaboration among all parties in order to get matters back to their normal state, particularly the movement of maritime traffic and the regularity of supply chains, particularly foodstuff, such as grain and vegetable oil.
This also requires working toward restoring calm and stability at the international level, in order to mitigate the impact of this economic crisis on the peoples, who seek peace and development.
I also call on all companies participating in this forum and others to take advantage of this huge opportunity that is provided by investing in Egypt in all fields.
I would not miss, before concluding my speech, thanking the people of Saint Petersburg, this brave city throughout history, which at the same time represents an icon for culture and openness on the outside world.
Finally, I would like, once again, to thank His Excellency, President Vladimir Putin, for his kind invitation for Egypt to participate in this forum as a guest of this round, wishing the forum and the participants all success and blessings and wishing our friendly countries more constructive cooperation, prosperity and progress. We pray God Almighty to spread peace and stability across the world and to spare our peoples the scourge of war and its economic and social impact by giving priority to the language of dialogue, understanding and co-existence.
Thank you.
Margarita Simonyan: We are grateful to the President of Egypt. I think that the people of the host city should be especially pleased to hear his warm words about St Petersburg.
We have just a little time left before the discussion begins. They say anticipation increases desire.
We will now listen to an address by President of the People’s Republic of China Xi Jinping.
President of the People’s Republic of China Xi Jinping (retranslated): President Putin, ladies and gentlemen, friends,
I am delighted to have this opportunity to address the plenary session of the 25th St Petersburg International Economic Forum, which I attended in person three years ago.
In February this year, President Putin visited China and attended the opening ceremony of the Winter Olympic Games in Beijing. We had a detailed exchange of views, following which we reached a vital agreement on expanding our comprehensive practical cooperation and implementing the concept of global governance based on joint consultations, joint participation and joint use.
Cooperation between China and Russia is currently ascending in all spheres. Our bilateral trade reached $65.8 billion over the first five months of this year. We can expect to attain new records by year-end. This is evidence of the high resilience and ingenious potential of Chinese-Russian cooperation.
The world is entering a new period of turbulence and transformation amid the ongoing radical changes and the coronavirus pandemic. There is an obvious trend of anti-globalism, a growing divide between the South and the North, and a weakening of cooperation drivers in the area of development, which could plunge the erratically reviving global economy into a deep recession and create unprecedented challenges to the implementation of the UN 2030 Agenda for Sustainable Development.
According to ancient Chinese words of wisdom, a clever man sees a seed of crisis in every opportunity and an opportunity in every crisis. Danger and opportunity always go together. By overcoming danger, you get opportunity. Strength lies in confidence. The more there are difficulties, the more important it is to remain confident.
During last year’s session of the UN General Assembly, I proposed a Global Development Initiative, which was positively received and supported by a number of international organisations, including the UN, and about a hundred countries.
Today, at a time when the international community is ever more interested in achieving more equitable, sustainable and secure development, we should seize opportunities, meet challenges head-on, and work on the implementation of the Global Development Initiative to build a shared future of peace and prosperity.
First, we need to create conditions for development. It is important that we follow true multilateralism, respect and support all countries’ pursuit of development paths suited to their national conditions, build an open world economy, and increase the representation and voice of emerging markets and developing countries in global economic governance with a view to making global development more balanced, coordinated and inclusive.
Second, we need to strengthen development partnerships. It is important that we enhance North-South and South-South cooperation, pool cooperation resources, platforms and networks of development partnerships, and scale up development assistance in order to forge greater synergy for development and close the development gap.
Third, we need to advance economic globalization. It is important that we enhance the coordination of development policies and international rules and standards, reject attempts at separation, supply disruption, unilateral sanctions and maximum pressure, remove trade barriers, keep global industrial and supply chains stable, tackle the worsening food and energy crises, and revive the world economy.
Fourth, we need to pursue innovation-driven development. It is important that we unlock the potential of innovation-driven growth, improve the rules and institutional environment for innovation, break down barriers to the flow of innovation factors, deepen exchanges and cooperation on innovation, facilitate deeper integration of science and technology into the economy, and make sure the fruits of innovation are shared by all.
Ladies and gentlemen, friends,
The fundamentals of the Chinese economy are its strong resilience, enormous potential and long-term sustainability, which remain unchanged. We have full confidence in China’s economic development. China will continue to promote high-quality development, promote openness with firm resolve, and pursue high-quality Belt and Road cooperation.
China stands ready to work with Russia and all other countries to explore development prospects, share growth opportunities, and make new contributions to deepening global development cooperation and building a community with a shared future for mankind.
Thank you.
Margarita Simonyan: Thank you, Mr President.
Coming to learn Chinese wisdom and some of Chinese sagacity is always a good thing, especially now that Chinese wisdom might come in useful for the entire world.
Mr President, I would like to show you something that I have brought with me especially. It is juice, and it used to be so nicely coloured. It does not matter what sort of juice it is; you cannot even see the brand here, although it is a popular one. And now – do you see? A small picture and the rest is white. Why is that? And this is happening on a massive scale.
Because we ran out of paint. The producer of paint for such packaging has left Russia, and the producer of the packaging also announced that they are leaving. I bought this two weeks ago, and soon this will disappear. As a result, we will have to pour it into bottles or three-litre glass jars, like it was in my childhood, unless we discover that we do not produce bottles either.
There are conflicting opinions on this. You have touched upon this issue today. Some of the participants – a considerable part, maybe even the majority – came here by Sapsan trains. Some say “We will swap Sapsans for Chinese trains, they are even better,” since Siemens has gone. Others say “We will learn to make them ourselves.” Let me remind you that we launched our own high-speed trains in 1984, I think they were called ER200. I was four years old, did not go to school yet, but we already had high-speed trains – but we do not have them any longer. It is sad, isn’t it?
And there are also people who say that no, we cannot replace all that, we can use Sapsan trains for another couple of years and then we will just give up high-speed railways, which means we will step back from what we got used to. And it is like this with everything: telephones, computers, everything we got used to. This is a very sad, I would even say heartbreaking plan.
Maybe there is a different plan?
Vladimir Putin: Whenever any decisions are taken, the key issues must be to singled out. What is key for us? Being independent, sovereign and ensuring future-oriented development both now and for the future generations? Or having packaging today?
Unless we have sovereignty, we will soon have to buy everything and will only produce oil, gas, hemp fibre, saddles and sell rough logs abroad.
It is inevitable. I have already said so in my speech: only sovereign countries can expect to have a sovereign future. That does not mean, however, that we need to plunge back into a situation of 30, 40 or 50 years ago.
Regarding packaging. I do not think it is such a complicated thing that either our partners from other countries can replace, who will be pleased to occupy this market sooner or later, or we will be able to make ourselves.
Margarita Simonyan: You do not see it, but President Tokayev is nodding his head: they will probably be able to replace it.
Kassym-Jomart Tokayev: Absolutely, this is not a problem.
Vladimir Putin: Of course, we will able to replace it.
The question is about a totally different matter. We keep talking about import substitution. In my speech here I also said – and I will just add a couple of words so as not to take too much time while answering only one question.
The issue is not about import substitution, the issue is to establish our own capabilities based on progress in education, science and new promising schools of engineering. We will always be given packaging materials and other simple things, event telephones and smartphones. What we have never been given and never will be is critically important technologies. We have never been given them before even though we had problem-free relations with our Western partners in the previous decades. This is the problem.
And when we begin to stand up for our rights, we are immediately slapped with some sanctions and restrictions; this is what the problem is all about. Therefore, we must commit ourselves to that and have the capacity to reproduce critically important technologies on the basis of what I mentioned. And with that base we will always be able to manufacture the goods you mentioned: packaging materials, telephones and smartphones. If we realise that and keep focusing on solving fundamental issues, we will resolve everything else without a problem.
Let me reiterate: others are already coming to that place – those who produce the packaging materials, those who produce the paints. We are also starting to produce paints and other consumer goods as well as goods employed in industry in a broader sense. We can make anything – I have absolutely no doubt about that.
Obviously, some things will be lost, other things will be made on a new basis, much more advanced – the way it happened earlier. Therefore, when we talk about import substitution, we will substitute something while other things will have to be done on a totally new promising basis of our own making.
Margarita Simonyan: Thank you. President Tokayev, would you like to add anything?
Kassym-Jomart Tokayev: I think everything is clear here, and judging by President Putin’s extremely interesting speech, we can understand that he is thinking in the categories of historical perspective, so to say.
Margarita Simonyan: As always.
Kassym-Jomart Tokayev: And juice packaging has no place here.
Indeed, it is a small problem, nature abhors a vacuum: others will come who will be producing juice packaging that is just as good, and local producers will appear.
The issue is about something else. In particular, I said in my speech about the importance of Eurasian cooperation, about the importance of uniting efforts to resolve unexpected problems. I think we will arrive at the result we are seeking on this road.
To be continued.
