Putin interview ahead of the G20 Summit

© Mikhail Metzel/TASS

Ahead of the G20 summit Russian President Vladimir Putin in an exclusive interview with TASS spoke about challenges that Russia and other participants of the summit will face

The G20 summit is to start Saturday in Australia's Brisbane. Leaders of the world's 19 biggest states and the EU will discuss issues of global economy. Ahead of the summit Russian President Vladimir Putin in an exclusive interview with TASS spoke about challenges that Russia and other participants of the summit will face.

TASS: You are going to another G20 summit. To what extent is this format still in demand and relevant, and is it logical that some G20 countries, while striving to cooperate and develop the global economy, have been taking sanctions against one of the G20 members?

Putin: Is this format still in demand or not? I believe it is. Why? The G20 is a good place for meeting each other, for discussing both bilateral relations and global problems, and for developing at least some sort of common understanding what this or that problem is all about, and how to resolve it. To make a road map for joint work. This is the most important. Hoping that everything that may be said there will be implemented is absolutely unrealistic, especially if one remembers that the decisions themselves are not mandatory. To an extent they are neglected. They are defaulted on then and there, when and where they are in conflict with somebody's interests. First and foremost this applies to the interests of global players.

For instance, at one of the G20 meetings a decision was made to enhance the role of developing economies in the activities of the IMF and to redistribute quotas. The US Congress blocked that decision. Full stop. Both the negotiators and our partners are saying: well, we would be glad, we signed everything, we made that decision, but the Congress will not let it through. There you have it.

And yet, the very fact that a certain decision has been formulated, that all international actors involved in the G20 found it right and fair and consonant with the current realities, this fact alone shapes the international public opinion and the experts' minds in a certain way, and this has to be taken into account. The very fact that the US Congress has refused to pass this law indicates that it is the United States that drops out of the general context of resolving the problems facing the international community. One little thing: nobody cares to recall this. Some capitalize on their world mass media monopoly to hush up this information, to produce an impression it ostensibly does not exist.

You know what I mean. Everybody is talking about some current problems, including the sanctions and Russia, but in reality, in global terms it is the United States that defies decisions being made. This is a fundamental thing, by the way. But it is being neglected. That does not mean, though, that it is a useless format. I have already explained why. It does yield benefits.

TASS: Possibly, it would make sense to make the decisions binding, wouldn't it?

Putin: That's impossible. You know that there have been no such precedents in international practice. Except for the UN Security Council decisions regarding international security proper. But that procedure was generated in the very dramatic conditions of bloody World War II. It is just unrealistic to expect that these days some new mechanisms may be established to enforce compliance with decisions, let alone decisions in the sphere of economics. Let me say once again, all this is of moral, political and economic nature. Which is not bad at all in itself.

© ITAR-TASS

The USA, EU, Canada and Australia have introduced sanctions against Russia over its involvement in the Ukrainian crisis.

Now a few words about the sanctions some G20 countries have taken against Russia. Of course, they run counter to the very principle of G20 activities, and not only the activities of the G20 and its principles, they run counter to international law, because sanctions may be introduced only through the United Nations and its Security Council. Moreover, they are against the principles of the WTO and the General Agreement on Tariffs and Trade, the GATT. The United States itself created that organization at a certain point. Now it is crudely violating its principles. This is harmful and, of course, it does certain damage to us, but it is also harmful to the United States, because as a matter of fact the entire system of international economic relations is being undermined. I do hope, and I proceed from the understanding that in the final count the awareness of this will prevail and bygones will be bygones.

TASS: Are you planning to raise this question at the summit, or will it remain in the background and you will speak your mind only if the theme is raised...

Putin: If this theme is mentioned, I shall speak on the subject, of course, but I am not going to propose these questions for discussion myself. The way I see it, it will be useless. All understand what they are doing. Those who impose the sanctions. What's the use of drawing attention to this matter or asking for something? It'll make no sense. Such decisions are made at the level of blocs and at the national level, they are made on the basis of our partners' understanding of their geopolitical interests. I believe that's just a mistake, even from the standpoint of their geopolitical interests.

Regrettably, the modern world exists within a very narrow horizon of planning, in particular, that in the sphere of politics and security. Everybody lives from election to election. This is a very narrow planning horizon. It leaves no opportunities for taking a broader perspective, for looking into a more distant future. That's bad. But I hope that we shall discuss this. At the just-ended APEC summit there were discussions with practically all those who were in attendance over international problems and over bilateral problems, including the problems of sanctions that you've just mentioned.

TASS: In the G20 there is a certain balance of force. On the one hand, there is the G7, and on the other hand, the BRICS countries and some associated states. Proceeding from what you've just said about each country pressing for its own interests, how do you see this balance of force - as a dispute that will eventually produce the truth or as a fundamentally new confrontation of two blocs?

Putin: Firstly, I believe it will be very bad if some blocs begin to crop up again. That's very counterproductive and even harmful to the world economy. We are on the subject of economics, aren't we?

TASS: Economics prone to a growing intrusion of politics.

Putin: Right. But after all the G20 is an economic forum first and foremost. My suggestion is we move the center of gravity of our conversation in that direction. And here I would like to make a point. I have already mentioned the WTO, which has established certain rules of the game.

© Mikhail Klimentyev/TASS

Putin and IMF managing director discussed prospects of global and Russian economies.

There is the mechanism called the IMF. Discussions are underway over perfecting the international financial mechanisms and international trading relations. You know that the Doha round of WTO talks is stalled. Why? The divergence of approaches and interests between the developing economies and the developed economies is the reason. In the meantime, in one case there emerges an imbalance of capital and in the other, imbalances of commodity flows. In the advanced economies there is a great amount of free capital, and the question is about the effective, reliable and safe placement of this capital in those regions and those economies of the world which will ensure stability, protect property and generate some profit, some revenues for the advanced economies. For this reason they export capital, and the developing countries form the commodity flows. Some would like to be certain their capital is well-placed, and others, the recipients of the capital, need the certainty that the rules of the game will not be changed at the sole discretion of those who export capital, including for political reasons.

One and all should be aware that the world economy and finance these days are exceptionally dependent on each other. Take our case: imagine our partners have restricted the access of our financial institutions to international money markets. In the meantime, by drawing capital from international financial markets, our financial institutions finance our companies that import finished products from the very same industrialized economies, thereby supporting jobs, the social sphere and economic growth. If we stop doing that, disruptions will follow there. These are in-depth matters. They are not lying on the surface, they are not obvious at first sight.

Our joint work with the Federal Republic of Germany maintains some 300,000 jobs there. If there are no contracts, these jobs may be lost. True, some new bearings can be found, but it still remains to be seen what these bearings are. It is not so easy.

It is essential to present a common front to address all these issues that emerge on the way. If we take a different path... The United States is contemplating the creation of two associations: one trans-Atlantic, and the other, trans-Pacific. If these are going to be two self-isolated groups, the end result will be not the elimination of imbalances in the world economy but their exacerbation. Of course, we are for doing away with these imbalances, for working together, but this task is achievable only through joint efforts.

Just 20-30-50 years ago the situation was different. Why am I so certain that only joint efforts can be effective? The GDPs of the BRICS countries calculated at the purchasing power parity are greater than those of the G7. As far as I know, the GDP of BRICS is $37.4 trillion, while that of the G7, $34.5 trillion. What if they (G7) are told: 'No, thank you, we shall be doing this and that here on our own and we don't care how you will carry on?' There will follow nothing but worse imbalance. If we really wish to decide something, we should decide it together.

TASS: There has been much talk about the emergence of another G7 - the BRICS countries plus Indonesia, Turkey and Mexico. Do you believe this format may have a future?

Putin: As I have already said decisions must be made together. Everything is interrelated in the modern world, and if some regional associations, like the one we are building these days - the Eurasian Economic Union also involving Belarus and Kazakhstan - are to be created, they should emerge only as addenda to the existing global instruments that must be operating in compliance with these global rules.

TASS: You spoke about imbalances in world economy, and the IMF is speaking about them, too. It is forecasting a possibility of new bubbles. Is Russian economy prepared to rebuff a new wave of the crisis?

Putin: Yes, it is. We're considering all the scenarios, including the so-called catastrophic fall of prices for energy resources, which is quite possible, and we admit of it. The Ministry of Economics and the Finance Ministry prefigure development of economy under each scenario. You see, the thing is I spoke about the imbalances of capital, on the one hand, and commodities, on the other hand. When they appear, in some cases owing to political considerations, and when they increase, then different countries - and especially the emerging economies - become hard-hit and find themselves amid big complications. A country like ours finds the situation easier to cope with. Why? Because we're producers of oil and gas and we handle our foreign exchange/gold reserves and government reserves sparingly. Our reserves are big enough and they enable us to feel assuredness over our ability to stay committed to social obligations and to keep all the budgetary processes and the entire economy within a certain framework. And what about those who don't have these reserves? They will be hard up in a situation like that. But I'd like to say once again we'll have a common discussion and will seek a common decision on changing things for the better and eliminating the imbalances.

TASS: You mentioned the reserves right now. The funds that had been accumulated enabled us to get smoothly enough over the years 2008 and 2009. Isn't time now to unseal those funds and to warm up and speed up our economy?

Putin: I don't think so. We were ready to unseal them anyway even before the discouraging events that are linked to fluctuations of the ruble's exchange rate or the slide of oil prices. We spoke about a possible utilization of monies from the National Welfare Fund. We didn't say it yesterday, did we? We said it two years ago. But it always happens this way in the circumstances the world economy and our economy have got into. And how does it happen? If funds are utilized, the spending has several target areas. One of them is infrastructure. That's where we presuppose to invest the monies from the welfare fund. A supplementary automobile ring road around Moscow will be built. Many railway level crossings will be overhauled and new routes for the eastward haulage of cargoes will be built or upgraded. I mean the Trans-Siberian Railroad and the Baikal-Amur Mainline. Or take the high-speed railroads, as well as development of ports and airports. We planned all those things previously, too, and now that the market situation is getting worse, we'll get down to them. Still this doesn't mean we can simply eat the reserves out and overlook economic returns just because we're solving current problems. That's not the way for us to go.

TASS: Quite naturally, the case in hand is structural reforms, for which time and money are always in short supply.

Putin: Structural reforms do not require that much money. They call for political will and certain administrative steps. Either in the economy or in the social sphere.

TASS: I'd like to say a few more words about infrastructure but let's round up the National Welfare Fund issue. What's your stance on the request from Rosneft (Russia's major oil corporation - TASS) to allocate monies for itself from that fund?

Putin: If I were the CEO of Rosneft, I would request money, too. Why not? Who doesn't ask for it now? Everyone's asking for money and hoping to get it. If you take the government, I know their position because I spoke to the government and to Rosneft about it likewise. The government will make decisions not only with account of requirements of the corporation, which we treasure and which we'll help without any doubt. It will also watch its practical activity and see how it's going to invest and what benefits the entire national economy will get from this investment. This will be tangible assessment and I don't rule out Rosneft may get some funds. Yet their size, amount, and terms will demand scrutiny and hurry is ruled out in this matter.

TASS: Since no decision has been made yet, it looks like Rosneft hasn't convinced anyone.

Putin: You know, in the context of my visit to China, Rosneft is arranging an agreement with a major Chinese corporation on getting a 10% stake in the Vankor oilfield project. Along with the stake, the Chinese will get seats on the board of directors. But we are also making arrangements on selling oil from that deposit for the yuans. The amounts to be sold are really big. In this situation, our Chinese partners will be prepared to issue loans and to finance many transactions. Secondly, we're moving away from the diktat of the market that denominates all the commercial oil flows in US dollars. We're boosting as much as possible the use of national currencies - both the ruble and the yuan. Thirdly, this will additionally stabilize corporate finances.

We inspected the financial status of Rosneft recently and didn't find any problems there whatsoever. Simply no financial problems. And if they need more money, I'd like to say once again they must prove the funds will be spent for well-specified purposes if they get them and there will be returns for the entire economy, on top of returns for the company.

TASS: One of the proposals of the Australian presidency in the G20 is to set up a center of infrastructure investment. Given the priority that Russia is already attaching to infrastructures, does the proposal offer advantages? Or will it stand at variance with our work, if you take the sanctions?

Putin: Well, you don't need to coordinate anything with anyone here. The fact simply proves - and one cannot but agree with the Australian proposal - that we're on the right track. Absolutely in the mainstream, as it were. And the international community - the economic one in this case - abides by the same view of government actions in the situation that's taking shape in world economy. The fact merely confirms we're right and this is always pleasant and useful to know.

TASS: Will this be a source of assistance for Russia or just a floor for sharing our experience?

Putin: I think this will be much rather a floor for exchanging experience. And for training specialists, which is a fairly good thing, too. Besides, it means an extension of our own proposals in a sense. We formulated them at the G20 summit in St. Petersburg.

TASS: Here in Russia, a number of infrastructure projects you mentioned are in the phase of implementation while others have been halted. Take a bridge across the river Lena in Yakutsk or a seaport in Taman (a town on the Black Sea coast - TASS). What's the future for these projects? Is it foreseeable or totally covered by smoke?

Putin: It's not smoke that's in focus. We need to focus on feasibility. Should we build a bridge in Yakutsk or no? Of course we should. And what's next? Yakutsk is home to more than 300,000 people. It'd be nice to give people a bridge so that they could move freely. Move this way and that way. Then the railway will get right into the city. Nice, isn't it? Surely it is. I do love Yakutsk. The local people are wonderful and the republic (Russia's constituent republic of Sakha-Yakutia - TASS) has immense mineral wealth. And everything there is to be developed. But when we discuss these things with my colleagues, they tell me the actual reason is bigger than the 300,000-strong population as such. The bridge is needed to stretch the railway out to a number of mineral deposits. On top of being socially significant, the project will also become economically grounded and rational. And if you take its extension farther on so that we could deliver more goods to the highly remote northern areas and get to certain deposits... Well, this is to be scrutinized. An in-depth professional study is essential. But on the whole that's the movement in the right direction.

The same things apply to Taman. We must review the whole set of aspects related to infrastructure. Private investment, too. A private company is building an up-to-date seaport in that area for several years already and a foreign investor has been invited and he is investing billions there. We should watch it attentively. Are we going to put up competition to them? And what's the cargo turnover? Or what about the railway infrastructure? Will it be sufficient for both ports? And where could we possible take the money right now to ramify that infrastructure so that it would service the two ports? Add to this the bridge to Crimea we also need to build. It's not a matter of liking or disliking. Everything should be done competently and calculated very professionally.

TASS: Coming back to the issue of the G20. It had apparently never mattered to you whether it was the G20, APEC or the previously- known G8, but it had always been your opportunity for tete-a-tete talk format. Your recent participation in the Beijing Summit was your first foreign trip following your sound address at the Valdai Club concerning the global security and the world order. Did you get any reaction from your foreign partners following that address?

© Mikhail Metzel/TASS

Putin: new serious conflicts involving world powers possible.

Putin: Actually, I did not. Talking with experts is the essence of the Valdai Club. It [the debate] somehow was free of any bounds. I agree that the debates there, just like many of them, are supposed to be in the same format, which somehow expresses the acute nature of shaping up the further direction of the debates - to provoke partners to come undone and express their opinions - so that we could jointly look for ways of possible solutions at an expert level. But pragmatic issues are more often discussed when we meet with counterparts at a bilateral level.

TASS: Placing the question differently, were there any changes in their attitude and had you any new issues to address them? Have you noticed anything of the kind?

Putin: No, nothing happens that quickly. Time is necessary if someone wants to hear what I had exactly said. It must be all well digested at the administrative, governmental and presidential levels, starting at the notch of aides, experts, with discussions to be followed without any clamor and senseless chirping, which are usually attributed to such forums as the Valdai Club. It is better to talk in the calm of our offices.

All these debate forums are good for sincere talks. However, as I have said before, it is good to return to issues without any fuss in the calm of offices and discuss everything over. It requires time.

TASS: Do you plan any personal meetings within the frames of the G20 summit?

Putin: Yes, I have scheduled meetings there. With the German chancellor. A lot of meetings.

TASS: Analysts say that your relations with [German Chancellor] Angela Merkel have recently become more strained and less friendly. Have you noticed it?

Putin: No, I have not. You know that we are guided by interests instead of sympathies and antipathies.

TASS: Were you also guided by the same interests in the past?

Putin: Not just in the past, but always. And she has also been guided by same interests just like any other leader of a nation, state and government. This is why I see neither considerable changes nor any substantial alterations in the nature of our relations.

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