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OFFICIAL WEBSITE OF THE GOVERNMENT OF THE RUSSIAN FEDERATION

In Conversation with Dmitry Medvedev: Interview with five television channels

Prime Minister answered questions from TV anchors Irada Zeinalova (Channel One), Sergei Brilyov (VGTRK), Marianna Maksimovskaya (Ren TV), Vadim Takmenyov (NTV) and Mikhail Zygar (TV Rain).

Transcript:

Sergei Brilyov: Good afternoon. TV channels Rossiya 1, Rossiya 24 and Rossiya HD and Vesti FM radio are broadcasting the traditional annual live interview with Dmitry Medvedev. Good afternoon, Mr Medvedev.

Dmitry Medvedev: Good afternoon.

Sergei Brilyov: Good afternoon colleagues. I won’t introduce you because the country knows you very well and there will be also subtitles for those who don’t.

Mr Medvedev, since I represent the host channel, I will ask the first question if I may. This is an annual programme, but there has never been such a packed year or such a dramatic yearend, at least not in Russia’s history. There have been many important events this year, including Crimea’s reunification with Russia and a Victory parade in Sevastopol. But there were also sanctions and response sanctions, which have added to the economic slowdown that began before the events in Ukraine. The price of oil is falling, and there is rouble and food price turmoil. So I will break with tradition and not ask you about the yearend results but will take the bull by the horns: Will we have to review the national budget, which is based on realities that have changed even though it was prepared about a month ago? Will we have to do this?

Dmitry Medvedev: Sergei, I will nevertheless start with the yearend results. I fully agree that this year was out of the ordinary for the country. It was packed with events including remarkable achievements and serious problems. Speaking about the past events, we should nevertheless start with the economy.

It’s true that negative trends have been adding up in our economy for the past few years. In truth, we have not fully emerged from the 2008 crisis. Yes, recovery growth alternated with decline, but the fact is there were signs of crisis in the economy all along. But we still recorded a positive result this year despite everything. 

This year our GDP will grow, which is very important, especially compared to other countries. Yes, a series of negative trends have emerged in our country, such as rising inflation and prices. From all indications, inflation this year will be over 9 percent even though our targets were different. This also has brought about a situation where food prices began to be affected by a number of negative factors. In this sense, the year’s results are somewhat controversial.

Dmitry Medvedev: "We still recorded a positive result this year despite everything. This year our GDP will grow, which is very important, especially compared to other countries."

Nevertheless, I believe that, despite everything that is happening, we have managed to ensure the result we sought to achieve. This result is to have a balanced budget. Of course, this has come at a price: We had to abandon a number of programs and sacrifice something, if you will, but nevertheless, it will be possible to preserve this next year.

Regarding next year’s scenarios (as you put it, “taking the bull by the horns”), indeed, at present, we have one scenario and, there’s no hiding it, conditions can change. We are watching the situation unfold on the oil market. If you recall, at the end of last year the price of oil was $110 and even $115 per barrel, now it is $65-70. In other words, the price is effectively half of what it was. Naturally, this has led to a number of important consequences, primarily those related to the rate of the rouble. So if economic conditions change significantly, we will have to review the scenario and ultimately make budgetary decisions. But we are not doing this yet.

Dmitry Medvedev: "We have managed to ensure the result we sought to achieve. This result is to have a balanced budget."

Irada Zeinalova: Mr Medvedev, would you say that the current decline of the rouble has been provoked intentionally? Is it happening for purely market reasons, or are financial authorities controlling the process? A weaker rouble is more convenient for the federal budget, filling the gaps emerging because of the fall in the oil prices, isn’t it?

Dmitry Medvedev: Irada, I would not say it was actually provoked by some force alone. I do not believe we can apply the “it is happening because it benefits someone” formula to this situation. Obviously, the rouble fluctuations depend on a whole range of factors. These factors are well known, but I will mention them nonetheless. What are they? First of all, the price of oil. I just explained how the oil price has been changing. There is a correlation here, although it is not a direct dependency. When oil fell to a half of what it cost, this certainly weakened the rouble.

The second factor that has naturally influenced the rouble rate is the outside pressure that Russia is currently experiencing. Whatever they say, sanctions always create certain expectations, in one way or another, as financiers put it. These expectations, in turn, influence public sentiment – both individuals and companies – and therefore affect the rouble in one way or another.

Finally, there is a range of other factors that also influence the situation to some extent, including the unavoidable play around the national currency.

Currency transactions and speculation in national currency is a fairly common phenomenon. In regular life, they serve to balance the financial system. If they happen in an imbalanced environment amid all kinds of complex expectations, it certainly affects the overall sentiment, which should be monitored by the Central Bank and the Government and, where necessary, acted upon.

What are these actions about? How does this situation manifest itself? A number of companies must pay up their debt. This is a standard situation. These large companies need to accumulate fairly long-term currency positions and then make payments under their contracts. In this case, they keep their foreign exchange earnings to themselves, which results in shortages of foreign currency on the currency market. To avoid this, the Government and the Central Bank ask major businesses to conduct such sales on a more regular, rhythmic basis. This is absolutely normal, and we practise such an approach.

Marianna Maksimovskaya: Mr Medvedev, speaking about the sentiment. The rouble is rapidly depreciating, and there’s no end in sight. The authorities make no bones about the cheaper rouble being good for them, because there will be enough money in the budget to pay pensions and salaries to public sector employees. What are the people supposed to do? They are receiving old pensions, but have to pay new prices, and everyone has felt the pinch of the sharp decline in the purchasing power, not to mention the actual forfeiture of the middle class’ savings. What can the Government offer its citizens now instead of former stability?

Dmitry Medvedev: I believe that economic categories cannot be flat out beneficial or damaging. You are talking about devaluation. As an economic process, the devaluation of our currency cannot be just beneficial or disadvantageous. It's a reality that we are faced with exactly for the reasons which I have just mentioned in my answer to the previous question. Such processes, or such phenomena, have both positive and negative economic aspects. The negatives include fewer imported goods, reduced purchasing power and weakened ability to purchase equipment or other facilities that are necessary for companies’ normal operation.

In Conversation with Dmitry Medvedev: Interview with five television channels

There’s an upside to it, as well. Exporters who settle in foreign currencies have access to greater amounts of roubles. They can use these roubles to buy more domestic goods and sign more contracts to manufacture more domestic products. This helps expand our economy. To say that devaluation is good or bad for us is not quite right, because there are upsides and downsides to it. In the long run, clearly, significant weakening of the rouble is not good for our economy. Furthermore, most economists and analysts agree that the rouble has become too weak and undervalued.

This is the result of the factors I have already mentioned in addition to oil prices and negative expectations, which really exist. In this sense, there will obviously be a revision. I don’t know if it will be this month or next month, but we need to find a balance.

Dmitry Medvedev: "Exporters who settle in foreign currencies have access to greater amounts of roubles. They can use these roubles to buy more domestic goods and sign more contracts to manufacture more domestic products. This helps expand our economy."

It’s true that an increased money supply is important for the budget, including for balancing the budget and for other targets. However, this would be strategically unprofitable for the state and the economy, as I said.

As for what people will do in this situation …

Irada Zeinalova: People are sliding into poverty.

Marianna Maksimovskaya: They are nervous.

Dmitry Medvedev: Yes, this is hitting people in the wallet, those who earn their living in roubles, and there is an absolute majority of them. All of us receive our salaries in roubles, and so our purchasing power is declining. But there is no need to panic; what we need to do is take time and analyse in detail what happened in a similar situation.

I’d like to remind you about what happened in 2008 and 2009, when the rouble weakened considerably. Some rushed to exchange bureaus to exchange their roubles for a foreign currency – US dollars or euros. But then the rouble bounced back by 25-30 percent compared to the bottom rate in 2009, and those who exchanged roubles for dollars or other foreign currencies lost as a result.

Clearly, this situation doesn’t make anyone happy. It was precipitated by a number of objective factors, which I have mentioned, yet I believe that we need patience to weather this difficult time and look forward.

Irada Zeinalova: What about the Government? Will it be able to help those who cannot wait, who cannot go on?

Dmitry Medvedev: Regarding government measures, of course, we will ensure the indexation of pensions and public sector wages as far as we can. This is absolutely obvious. As for the commercial sector, of course, this is up to employers to decide.

Vadim Takmenyov: In other words, your practical advice is this: there is no need to buy up dollars and euros. Every day we see crazy economists on television give absolutely opposite advice. Moreover, some are saying: buy up jewelry and expensive cars, and poor folks rush to buy all that and fall deeper in debt. So your advice as a source of valuable information is to stick to the rouble and sit still, right?

Dmitry Medvedev: You know, I believe that the most important thing in the face of such economic problems is not to make rash decisions. It is important to take a calm view of things and plan your priorities, taking into account what you have. If a person has some savings, he is free to use them as he sees fit. To reiterate, even the experience of the previous crisis – because people rarely listen to anything, such is human nature – but the experience of the previous crisis shows that attempts to invest personal savings in a foreign currency very often lead to a loss of money.

Vadim Takmenyov: A very brief question now. Have you felt this difference between the rouble, the euro and the dollar in your personal life, your family finances? Your son is a student, which costs a lot. In which currency do you keep your savings?

Dmitry Medvedev: I definitely keep my savings in roubles and receive my salary in roubles. Like all Russians, the weakening rouble has affected my income of course, so we are all in the same boat in this sense.

Mikhail Zygar: Mr Medvedev, we all remember that many government officials said last summer that sanctions would not hurt us but would only make us stronger. But now we can see that many sanctions, in particular in the banking sector, could have an adverse effect on our economy. The capitalisation of Russian companies has plummeted, so that now all of them together are valued at less than Apple. Did we underestimate the possible effect of the sanctions? Do you know the full scale of the damage?

Dmitry Medvedev: Mikhail, we did not make lightweight statements like that; we didn’t say that the sanctions are only a cause for boosting development, or that these sanctions would not affect our economy at all. No one said this, with the possible exception of some less serious commentators. We all know that the sanctions, which foreign countries have approved against Russia – in violation of international law, by the way, – are definitely harming our economy, just as they are damaging the economies and companies of the countries that approved them. These decisions always cut both ways, but I can tell you that no one ever said that these sanctions are child’s play to us.

Dmitry Medvedev: "The sanctions have offered us an opportunity to think that it’s time we launched real import substitution. Putting it bluntly, this is not about import substitution; this is about the creation of industries that will produce quality competitive products. And this is what we are doing now."

But we can draw very serious conclusions from these decisions that are unpleasant to us, including those that we should have made long ago. What conclusions? It’s very easy to let the national economy and individual companies become addicted to imports, and to import absolutely everything. The sanctions have offered us an opportunity to think that it’s time we launched real import substitution. Putting it bluntly, this is not about import substitution; this is about the creation of industries that will produce quality competitive products. And this is what we are doing now. This is not the positive side to the sanctions, but a challenge to which we must rise. No one ever underestimated the decisions we made. In principle, the price of such decisions is estimated in the tens of billions of dollars. In other words, the sanctions have cost our economy tens of billions of dollars. According to our economists, the European economy has lost 40 billion euros by terminating contracts with Russia and approving restrictive measures, and next year it will lose 50 billion euros. This is the price they have to pay. In other words, the sanctions don’t benefit anyone, as I’ve said more than once. No one needs sanctions, and they almost never lead to a desired goal.

Speaking at a forum in Sochi, I mentioned a series of decisions that have been taken with regard to Russia in the past. We seem to have forgotten about them, but it was really a highly instructive situation. In 1925, the Soviet Union was prohibited from making payments in gold. They simply said they wouldn’t accept our gold. In 1932, I believe, imports from the Soviet Union were completely banned: Whatever we produced could not be sold [on the world market]. In the 1940s, so-called COCOM lists were introduced. Remember the restrictions on the export of certain types of goods, primarily technical equipment and technology to Russia. In 1974, the notorious Jackson-Vanik amendment was adopted, which was in force for several decades, causing problems both for our country and of course, for the Americans themselves, as well as for US allies, who had to make decisions by factoring in the will of their American partners in some way or other. In the late 1980s and the early 1990s, we were prevented from purchasing a number of technologies to build the Urengoi-Pomary-Uzhgorod pipeline. That project simply became a target of sanctions. So, we lived the entire 20th century under periodic, constant sanctions. I would like to remind you that in 1989, the People’s Republic of China had to contend with a wave of sanctions. I would just like to ask one simple question: Who has ultimately benefited from that? Nobody. Some projects were frozen, businesses lost money, but when all was said and done, those countries continued to develop according to the plans they had worked out. I believe that this is a lesson that our partners, above all, should draw from the present situation, because we did not impose these sanctions and we are not the ones to lift them. This is up to them.

Marianna Maksimovskaya: Mr Medvedev, you, the Russian authorities have introduced so-called anti-sanctions, asymmetric sanctions in retaliation to Western sanctions, banning a lot of goods and pledging import substitution programmes. Now, again there is talk about import substitution, which is supposed to revitalize Russian producers, but there is none of that so far: only soaring prices. All of this looks like the government does not have a clear-cut, realistic anti-crisis programme. After all, import substitution today is impossible without government support. Say, production lines need to be purchased – purchased abroad, with expensive dollars and euros, while Russian manufacturers are unable to obtain credit for that at Russian banks. So, what is to be done? Why promise that import substitution in the first place?

Dmitry Medvedev: You know, we are serious people. We have never said that by introducing so called retaliatory restrictive measures we would get the entire range of Russian goods the following day – all the categories and types of agricultural products. We only said that it is high time to start doing this, yes, but the goal was primarily to ensure that domestically produced food staples finally appear on our shelves.

In Conversation with Dmitry Medvedev: Interview with five television channels

Remember how this looked just a few months ago. I am not talking about small towns, where there were probably not many imports anyway. Let’s take Moscow and St Petersburg, big cities with populations of over 1 million. A significant part of the retail chains, a significant part of large grocery stores were fully provided with imported foodstuffs. That wasn’t some gourmet food or something that wasn’t produced in our country.

What was meant were everyday goods – meat, fish, fruit and vegetables. This we certainly can produce and are doing so.

Moreover, we were repeatedly told that Russian producers, mostly mid-size and small producers, were denied access to shops because it was more convenient for our retail chains to work with those who imported large volumes from abroad and, let’s be frank, gave them a share of their profits. This is why Russian producers were cut off. I remember how a few months ago I held a special meeting on this theme. The retail chains said: We’ve turned to face the Russian producer; we understand that we must work with them and that this is the only way to fill the market properly and bring back the goods that are currently missing from the shelves. I think that we did that and the shelves are really filled with Russian-produced products – mostly. But this doesn’t mean that we have fully managed to replace imports. This is true.

Let me remind you of the events that have taken place on the Russian food market in recent years. We have a 100 percent supply of chicken and other fowl: we produce as much as we consume. This is why we don’t have “Bush’s drumsticks” and this is no longer of any concern. With regard to pork, however, the supply amounts to anywhere between 80 and 85 percent, and beef – 65-70 percent. And that’s the niche we must fill. This is a lengthy process because new production capacity, particularly in cattle breeding and beef farming, take from 9 to 11 years to create. That’s why there is a need for the bank credit you mentioned.

Marianna Maksimovskaya: There isn’t any.

Dmitry Medvedev: We’ll be working hard to achieve a reasonable interest rate that the agriculture industry can afford. As to the resources for that, we have already allocated 200 billion roubles to support agriculture this year, and have comparable spending planned for next year. We’ll simply subsidise the bank interest, which is indeed high with the current situation on the foreign exchange market. So what we need to do is subsidise the interest, that is, compensate them, in part or in full, for the interest they pay to purchase, for example, equipment for dairy production, meat production, and other products.

The same is true for other products. Take, for instance, fruit orchards, or these much talked about Polish apples…

Marianna Maksimovskaya: By the way, the supermarkets are still selling them, only now they’re labelled ‘Serbian’ or something, and at double price.

Dmitry Medvedev: Yes, we know that.

Marianna Maksimovskaya: You do, do you?

Dmitry Medvedev: We do. And we also know that it’s wrong. We are aware that it would be nearly impossible to block all the black market import channels. But we also know that it’s wrong, and customs, and the federal agriculture regulator, Rosselkhoznadzor, and other official agencies are fighting them. Because this is wrong, and it violates the decisions we adopted. 

But fighting illegal imports is only part of it – the thing is to make our own reserves, create our own orchards and greenhouses. The latter will require significant investment.

Back to the apple issue – Poland actually developed this industry. Does it have a better climate or what?

Marianna Maksimovskaya: Can you even imagine the heating and electricity bills that greenhouse farms have to pay? They can’t grow anything, especially in the winter, they’ll be selling diamond apples, really.

Dmitry Medvedev: Yes, Marianna, energy prices vary…

Marianna Maksimovskaya: But they never go down.

Dmitry Medvedev: Well, they vary across regions, from high to very high, and we know that. In fact, I had several meetings with producers on greenhouse farms, and they did complain about high energy prices, so we are looking at gas and power costs for greenhouse companies. But overall, this is a normal situation. I’m still confident that in the medium term, we will be able to abandon unnecessary imports. Only – allow me to repeat – no one ever said we would reorganise the national agriculture industry to fully rely on local producers in six months. Still, store shelves around the country are mostly filled with Russian-made products now; wouldn’t you agree that this is a good result already?

Marianna Maksimovskaya: By the way, do you still have this so much talked about parmigiano and other imported food at the government house cafeteria? Do they bring it in especially for you, like in the Soviet times when state officials received hard-to-find goods from special distributors?

Sergei Brilyov: Parmigiano does not have to be imported from Europe. They say they make it in Altai as well.

Irada Zeinalova: The one from Kostroma is good too.

Dmitry Medvedev: They make parmigiano in Russia for sure, although this cheese requires a most complicated production process. As for the government house cafeteria, it is no different from any other office cafeteria. In the Soviet times, it did offer some special products, and was cheaper than other places, but this is no longer true. No oysters, no special goods, nothing you couldn’t buy in other places.

Sergei Brilyov: Oysters can come from the area of Khasan, so theoretically…

Marianna Maksimovskaya: Or from Belarus…

Dmitry Medvedev: Oysters can come from Khasan. I’ve never heard of Belarusian oysters though. I know they also come from the Black Sea now.

Sergei Brilyov: Mr Medvedev, let me add to what Marianna said. Based on my observations, buildings are being built where greenhouses were. But it’s a totally different matter. If we turn to industrial production, how many new facilities have been opened in Russia in 2014? These are not general but very concrete speculations. What sort of facilities are they? Are they addressing the goals that you mentioned?

In Conversation with Dmitry Medvedev: Interview with five television channels

Dmitry Medvedev: In fact, we’ve opened quite a few industrial facilities – about 300, if we’re talking about mid-sized and large industrial facilities that are related to our conversation. This also means that we have created tens of thousands of new, highly productive and efficient jobs. These facilities are quite diverse. As Prime Minister, I’ve visited perhaps a dozen new production sites  to see how it all looks. A short while ago, I was in Naberezhnye Chelny, where we saw several brand new facilities. I mean a powerful modern petrochemical works and the Ford-Sollers factory – an advanced, robotized facility with over 50 percent domestic content, which means that in effect it will turn out Russian cars – high-quality and affordable products.

In principle, these facilities embrace the whole gamut of economic sectors – iron-and-steel, pipes (recently I attended the opening of a pipe factory in Seversk), pharmaceuticals, automotive and more. We have some hi-tech factories – not many, regrettably – but we are actively working on new ones. Practically speaking, they are very different kinds of facilities.

Dmitry Medvedev: "About 300 mid-sized and large industrial facilities opened in 2014.  These facilities embrace the whole gamut of economic sectors. We have created tens of thousands of new, highly productive and efficient jobs."

I’ll say it again: there are about 300 of them across Russia. I'm not talking about small businesses and small works or small production facilities that open in every village and town and are associated with small businesses. I’m referring to large- and mid-sized companies.

Irada Zeinalova: Mr Medvedev, let’s build a logic chain: a challenging spiral of crises is underway, oil prices have plummeted losing almost half their value in the process, and we’re faced with the challenge of import substitutions. In other words, we’re cornered. Let me ask: did we have time to use the fat years to break our economic dependence on oil, because currently we are completely dependent and vulnerable. Have we missed the moment? Isn’t it too late to say now that yes, we can overcome this dependence, because ...

Dmitry Medvedev: Ms Zeinalova, we have already discussed this topic. We did so just today. First (I would like to specifically emphasise this), the crisis that began in 2008 isn’t over yet and still affects the global and the Russian economy. There were a couple of years – 2011 and 2012 - of recovery growth when things went more or less well, but overall the situation remains difficult. What I’m trying to say is that, indeed, crisis events are adding up in our economy, it’s true, but if you look at the EU economy you’ll see that it is in about the same position. The German economy may be up 1.2 percent for the year, not more. France's economy will grow by about 0.5 percent this year, same as ours. That’s not enough to ensure steady growth. Italy's economy is in recession. Other European economies are also in recession. In other words, the crisis hasn’t been overcome. Brazil's economy... Usually, we talk about Brazil when our two countries are compared as rapidly growing markets, since Brazil is also part of BRICS and is approximately in the same position as Russia. This year, they will have an economic downturn of about 0.5 percent. That is, the world has not yet fully recovered from the crisis. The United States is doing better now and is showing some recovery growth. But it’s anyone’s guess as to how long it will last, especially given that the United States acted as a catalyst for the previous crisis via mortgage loans. Let's wait and see how crisis-resistant the US economy will be this time. Of course, we are all interested in the US making it, simply because it is a driver of economic growth.

The Asia-Pacific economies are also growing haphazardly, although the growth rates in some countries of that region are quite high. In other words, the situation is remarkably complicated.

With regard to the fat years and our dependence on oil. Let's face it: the dependence on oil in our country didn’t happen yesterday. It dates back to the 1960s and 1970s. It was back then that we got hooked on oil exports and took advantage of high oil prices. The price of oil fluctuated, and we ended up with an economy at least half of which is dependent on hydrocarbons, and all kinds of fluctuations on the oil and gas markets ultimately affect our economy. Is that bad? Yes, this is not good, overall. But there is a good side, because when the price of oil grows, this allows us to make reserves. We have accumulated substantial gold and currency reserves over the past few years, which help us to weather the crisis. Had we not done this, we would have most likely been in a fix now. But we have, and now these reserves allow us to take prompt decisions, to finance a number of large programmes even in the current situation and simply to live through it.

But eventually we will have to break the oil addiction. The President has advanced a number of initiatives in his latest address, just as did I in the past few years, for modernising our industry and creating high-tech companies. This is the alternative we need to provide to oil and gas export – non-commodities exports, the export of non-hydrocarbon products. This is what we need to focus on.

We still have some time to do this. But we must understand that creating such an economy, or diversifying Russia’s economy would not take a year or two, or even 10 years, but much longer, because our economy completely depended on oil for 40 years. We will need time to diversify our economy, to ease its dependence on energy exports.

Irada Zeinalova: But this will take money – cheap and long-term loans. We have no access to Western money now, and the East doesn’t seem eager to share their funds with us. What other medicine can we use to е to cure us of the oil addiction and to diversify our economy?

Д.Медведев: You are right about money. The situation is far from simple in this respect, because the Western money markets have been closed to us as part of the sanction policy. Our companies and banks cannot borrow on the Western markets, in Europe or America. As for Asia, the situation is not as dramatic, and we are negotiating this issue with our partners. In general, they are willing to cooperate with our banks. A series of decisions have been coordinated and contracts and agreements signed during a recent visit by the Premier of the State Council of the People’s Republic of China. We will also continue consultations with our other partners. In other words, the Eastern money markets are not closed to us. Of course, we are trying to borrow on these markets.

Dmitry Medvedev: "The President has advanced a number of initiatives in his latest address, just as did I in the past few years, for modernising our industry and creating high-tech companies. This is the alternative we need to provide to oil and gas export – non-commodities exports, the export of non-hydrocarbon products." 

But overall, we should mostly rely on our own resources, on the resources of our financial market, which we do have. We do have reserves, and our Central Bank has reserves. And we are relying on our own reserves, in particular the reserves of the National Wealth Fund, for implementing several large projects. We will use these resources to finance such projects as the BAM, the Trans-Siberian Railway and other large projects, especially in our eastern regions. In short, we have money, too. 

Vadim Takmenyov: I’ll expand a bit on the issue of oil dependence and how we can get past it. Today, the majority of Russians associate the word “silicon” with anything but the concept of a “Russian Silicon Valley.” I mean, nothing has been heard about Skolkovo lately, something you used to talk so much. What are the implications of this? What’s happening at Skolkovo? How is it getting along? Especially now, is it your impression that all the funding and efforts should not have been put into the development of oil the reserves but more into the development of this innovation sector, and more aggressively?

Dmitry Medvedev: I don’t know why you haven’t heard about it lately. Everything is all right there. All the decisions that were made on Skolkovo are being implemented. Skolkovo is alive and well. Perhaps at this stage we cannot say that we have created a full-fledged Silicon Valley, since you mentioned it, but it took the Americans decades to do that.

Regarding the project as such, there are about 1,000 innovation companies based at the Skolkovo Innovation Centre – so-called Skolkovo residents. These are modern high-tech start-ups, and this year these companies have already earned 20 billion roubles from their operations. In other words, normal manufacturing processes are underway there. And in addition to this, Skolkovo itself is developing. Regarding this innovation centre as such, at present, private entrepreneurs and businesses have invested more than the government has: Their investment, I believe is 85 billion roubles, while the government has invested about 60 billion roubles. And the process isn’t complete yet. Currently we are building a special Skolkovo university, called Skoltech. It will open next year. And the microenvironment is being formed, because everything there is all right.

Dmitry Medvedev: "There are about 1,000 innovation companies based at the Skolkovo Innovation Centre – so-called Skolkovo residents. These are modern high-tech start-ups, and this year these companies have already earned 20 billion roubles from their operations."

I would like to speak not only about Skolkovo, because maybe Skolkovo is just a model or, if you will, a basic blueprint for high-tech projects. Such high-tech clusters, or technoparks, exist throughout the country. When I visit our regions, at least big regions, I see how happy their governors are to work on these projects. This happens both in central Russia and in the Far East. The most important thing is that in recent years we have put in place a modern system of support, including our specialised institutions (Rosnano, the Russian Venture Company, VEB bank) and a number of other companies involved in providing support for such projects.

Why is this important? Because, as for agriculture, which we have just discussed, it is very important that money invested in such projects should, as we say, be cheap, so that it could be available to businesses. So these institutions provide this kind of support to these projects.

Therefore, I believe that on the whole the high-tech sector in our economy is developing. Maybe this is happening not as quickly as we or perhaps the absolute majority of people would like it to happen, but this is a primary goal on our agenda. I will once again draw your attention to the President’s state-of-the-nation address, where he speaks about the national innovation initiative, the technology initiative that is in fact designed to achieve this goal.

Mikhail Zygar: You mentioned the Presidential Address to the Federal Assembly. The President also spoke about small businesses, which have been promised tax and oversight breaks. This sounds good, but the reality is quite different. The situation with small businesses has been deteriorating for years. The State Duma recently adopted new taxes for trade and last year it proposed introducing new payments from sole proprietors to pension funds (the proposal was later withdrawn). As a result, about one third of sole proprietors closed their businesses. Actually, any businessman knows how many certificates and regulatory acts have recently been approved. Will all of these innovations, which are harmful to business, be cancelled?

Dmitry Medvedev: Mikhail, for as long as I’ve monitored the development of small businesses – and I was directly involved in business projects as a defence lawyer in the 1990s – businesspeople have always complained that things were getting worse and that the pressure on them was increasing. This is not quite so, really. There are many problems, but it wouldn’t be accurate to say that the situation has been deteriorating for years. I’d like to say that there are over 5 million businesses in Russia, mostly small businesses. This is an impressive figure. As for relative indicators, Russia is not at the top of the list in this sense, because only about 25 percent of people are engaged in small business. This isn’t bad compared to 10 or 15 years ago, but not enough compared to other modern economies. The figure should be about 50 percent, and then we’ll be able to say that we have a modern economy.

In Conversation with Dmitry Medvedev: Interview with five television channels

Now I’ll talk about the issues you mentioned. Of course, there are always challenges. But we don’t intend to introduce so many and so large additional fees as is rumoured. We’ve only introduced one additional payment recently, not 22: the fee for the right to trade in four areas, which is why there have been four different names for this fee, this single payment. Moreover, it has only been introduced in three cities – Moscow, St Petersburg and Sevastopol, which are federal cities. When will it come into effect? In the middle of next year. And lastly, how will it be calculated? This will be done by the federal cities themselves. And second, this payment will be deducted from other payments, if any. In short, this decision does not spell doom for small businesses.

And then – we are sane people, after all – if we see an imbalance, we’ll certainly correct it. In other words, we are not increasing pressure on small businesses, but you are right that the existing pressure is strong as it is. Speaking about all kinds of certificates, inspections and approvals – there are too many of them, I agree. Therefore, our primary goal is to switch to electronic communications on all issues related to the private sector, so that businesses don’t have to waste time on obtaining these certificates, and only have to submit reports within the established deadlines. You mentioned the presidential address, which explicitly states the need to introduce “oversight holidays.” That is, if a small business is going about its business right, provides the necessary information and has passed inspections over a certain period, then such a company may remain inspection-free for the next three years. I believe this is important. Of course, we will need to see how this rule is applied in practice (the Government is drafting a proposal on this issue), but overall it is an important measure to make things for small businesses less complicated. Therefore, saying that the pressure is mounting ... I wouldn’t say that. Of course, we will make all the necessary decisions to remove current problems for small businesses.

Sergei Brilyov: Mr Medvedev, before this interview, we got together in order to share our ideas and realised that we all have questions about ongoing and future reforms. Perhaps I'm biased, since I have many scholars and academics among my friends outside the profession, but I’d like to begin with the reform of the Academy of Sciences. It is currently on the back burner due to dramatic events in our country. Meanwhile, we are talking about millions of jobs and the chance for our country to break new ground. Are you satisfied with the way it’s being carried out? I also have a specific question for you. Are you getting information about the reform progress only from the appropriate federal agency, or, given your university background, you have ... what’s the right term? Certainly, not the agents of influence, but some informal sources of information in the academic and university community who share with you how things are in reality? In other words, do you receive different kinds of reports from the federal agency and from your friends in academia?

Dmitry Medvedev: The first friend in the academic community who shares information with me is the president of the Academy of Sciences. Almost after every Government meeting (the president of the Academy of Sciences attends all Government meetings by virtue of his position), he tells me what he likes and what he doesn’t like about the reform. This is a direct line with, so to speak, the elite academic community.

Seriously though, of course, I have many other friends whom I talk to about this.

Sergei Brilyov: What do they tell you?

Dmitry Medvedev: You do know the situation, don’t you? It was not just a question of reforming the academic sector. It is such a difficult environment, such a subtle matter…

Sergei Brilyov: So sensitive. So delicate.

Dmitry Medvedev: Sensitive indeed, and you can’t reform it just by issuing a bunch of documents. Scientific research has reached a certain level in Russia. It has problems, but it also has good prospects. So when the Government initiated this reform, when this decision was made and later developed into law and supported by the President – our job was to split the economic component – property management – from the scientific research process per se. In other countries, academics never have to manage their properties.

Allow me to remind you what the Federal Agency for Scientific Organizations is responsible for – around one thousand major academic and research facilities, thousands of organisations, tens of thousands of smaller facilities including land, buildings and structures. Managing all these properties is not something scientists and academics do – they have different responsibilities. In this sense, I believe that the agency is fulfilling its mission. Now, have there been any scientific achievements? This is the central question of course. I don’t think we should expect any breakthroughs in one year, although the Government has fully extended the planned financing for research and academic projects even despite the difficult situation. Government spending on science has not been cut. On the contrary, we keep thinking how we can increase the funding for the sector. I expect there will be a cumulative effect.

Let's look at what has been happening in the sector over the last few years. One of the measurements is the number of Nobel Prize winners. Although Russia does not top the list, as far as I remember, we had two Nobel Prize winners before the 1917 revolution, nine in the Soviet period and four in the post-Soviet period. Some of them live in Russia and some don’t, but in any case, they graduated from Russian universities and while working on their research projects, they relied on their prior research and academic work in Russia.

There is a goal to strive for and a course to follow. I think that on the whole the aim set during these transformations is being achieved. Is everyone happy? Perhaps not – some people like it, others don’t. Still others think that everything should be in the hands of one person. As I see it, the situation is on the whole normal because, first, we’ve managed to merge three academies (having many academies is a luxury for any country). Today we have a single academy as distinct from what was the case only recently. We no longer have an agricultural academy, or a medical academy. True, there are academicians who are handling these matters. But the most important thing is that the academicians don’t have to be concerned with the current economic routine and can devote themselves to research. And this is absolutely right. As far as the future is concerned, let’s wait and see. I think we are on the right path.

Sergei Brilyov: I’ve just made a calculation in my mind – you didn’t count Nobel Prize winners for literature and peace, did you?

Dmitry Medvedev: No, I meant Nobel Prize winners in exact and natural sciences.

Sergei Brilyov: I see.

Marianna Maksimovskaya: Mr Medvedev, if we are on the topic of reform – why has the Government farmed out the crucial healthcare reform to the regional authorities? You certainly know that medical workers were protesting in Moscow not so long ago, although these protests went almost unreported by TV, and in general there were almost no discussions, even though there are many points of debate.  I must add, of course, that doctors think the healthcare reform is vitally needed. But what is going on now is not a reform but a disguised cut-back in spending. This will only result in increased prices of medical services.

Sergei Brilyov: It’s not quite correct that there are no discussions. I had two on my show within two weeks.

Marianna Maksimovskaya: Almost no discussions. It’s absolutely insufficient. We are talking about a crucial problem on the national scale, a problem of importance for everybody from babies to adults. Inviting two guests to your show, Sergei, is totally insufficient for people to understand…

Irada Zeinalova: Marianna, we ran long stories on this issue. We discussed it, if anyone saw…

Marianna Maksimovskaya: Colleagues, what I’m talking about is…

Mikhail Zygar: My dear friends, Marianna isn’t asking you this question.

Irada Zeinalova: No, but she means us.

Dmitry Medvedev: So  that’s not enough. Let’s proceed based on what Marianna says. Alright not enough.

Marianna Maksimovskaya: What do you really think – are you happy with the way this is going, the way this healthcare reform is happening?

Dmitry Medvedev: Marianna, now you say that all of this is happening on the regional level… Everything is happening in the regions. Now, you and me, we live in a region, even if the region is called Moscow. Reforms cannot be implemented within the Garden Ring. Reforms cannot be implemented within the Kremlin or the Government  House. Reforms should be implemented on the ground. And this is where they are being implemented. This is in the hands of the Moscow city government and this is absolutely all right. If this was handled by other people, then there would have been other claims, like, they simply don’t know what they are doing, they are not in charge of the healthcare system, they have invented something and are starting to do something… So it’s appropriate that this is being done on the regional level. This will continue to be done in the regions because all of our medical facilities (except for federal medical institutions) are concentrated in the regions. People receive medical services in the region [where they live]. This can be a village, a small provincial town or the main city of a Federation member, but it’s still a region.

Now, regarding what’s being done. There are certain decisions, guidelines for all the regions to follows. Every region chooses the pace and method of these transformations. But methodological decisions, indeed, were made on the federal level, and in this respect the federal centre isn’t shirking its responsibility. But to reiterate, all of this is being done right there on the ground.

Now, regarding Moscow, I will remind you that Moscow has the most extensive system of outpatient clinics, simply because Moscow is the largest Federation member. As Mr Sobyanin told me, there are about 350 outpatient clinics in Moscow. What kind of clinics are they? We recently sat down to discuss this. These are very different clinics. Some of them are modern and some are not in great shape. Even providing all the outpatient clinics with modern equipment is not the final solution. So the decision was made to, as they say, optimise this medical system, in other words, to integrate the capabilities of several outpatient clinics so that any person can receive a service within this perimeter, within this contour, instead of running around to various medical institutions. This has been done.

As for the members of the medical profession, indeed care and tact are called for here. Obviously, quite often there is a surplus of medical personnel. This does not mean, though, that the staff employed by outpatient clinics or hospitals should simply be dismissed. This is my first point.

Second, the Moscow authorities should maintain a constant dialogue with the medical community and work with head doctors and directly with the medical staff. All the more so, since a significant portion of medical personnel reside in the Moscow Region and can relocate to work in the Moscow Region. This is a perfectly reasonable approach.

We should go ahead and simplify this, but not at the expense of the quality of medical services. On the contrary, this effort should take us to a whole new level of medicine in Moscow and Russia in general.

To accomplish this, we need modern medical facilities on the one hand, and highly trained and motivated professionals on the other. The situation with healthcare professionals is fairly skewed in our country (I remember that back from the time when I worked on this national project). Physicians were in scarce supply, and this problem still exists. We have so far failed to create an institution of general practitioners. Medical specialists also pose problems. We still need to align the number and the specialisation of doctors who work in Moscow, and this is something the city should deal with.

There’s another problem - hospital beds. Hospital beds are, unfortunately, ineffective. Lots of funds are invested in them at a time when they are either not used or misused as patients are brought in just for them to have a break. As you may be aware, patients don’t actually spend too much time in hospital beds anywhere in the world. Most importantly, patients need high-quality medical services, such as surgery. A few days at a hospital and the patient should move on and start the rehabilitation process. Therefore, reorganising hospital bed use is also a task in healthcare, including in Moscow. I hope that the problems faced by the Moscow healthcare system will be effectively resolved using these measures.

The only thing I would like to point out is the need to be more tactful with healthcare professionals, because this is a respected profession and many of them are prominent doctors and, of course, deserve to be treated properly. However, the reform must go on, including in Moscow, no doubt about it.

Irada Zeinalova: Mr Medvedev, attention or inattention are an emotional category that cannot be measured by instruments. I mean that some things can nevertheless be assessed. We need money to reform the Academy of Sciences and healthcare – yes, it’s about money again. You say that everything is fine because we have reserves.

Dmitry Medvedev: Yes, Irada, we need money. Do you know where to get it?

Irada Zeinalova: One solution was proposed by the President in his annual address – an amnesty for returning offshore capital. But we need a law to convince people to return it, and as far as I can see, we need it urgently. When will the Government prepare for this? How much money might be returned? And who would bring this money back?

Dmitry Medvedev: Irada, these decisions should be carefully considered, which is why the capital amnesty decision proposed by the President in his annual address, which we discussed only yesterday, will take time. It will take more than a week to prepare the right documents. This is my answer to your question about the timeframe.

As for who could return it and who we expect to return it, I’d like to remind you that…

Irada Zeinalova: What would convince them to return it?

Dmitry Medvedev: I’d like to remind you that we made the first attempt in this sphere in 2007, and the result was not good. However, the idea of returning money, the idea of capital amnesty is not to return as much money as possible, although this would be an additional bonus, but to do this in order to normalise the investment climate. A normal investment climate means that business conditions here are the same as in other parts of the world.

Dmitry Medvedev: "The idea of returning money, the idea of capital amnesty is not to return as much money as possible, although this would be an additional bonus, but to do this in order to normalise the investment climate. A normal investment climate means that business conditions here are the same as in other parts of the world."

We don’t create offshore areas in Russia, although we mulled the idea and we’ll soon create special priority development areas that are similar to offshore zones, to a degree, but it will be a different model with different criteria. But this is an entirely different issue. So, we should tell all our businesspeople, “It’s time to come home,” because they can do as well here as in other areas. This is a challenging task. So the fiscal goal of reclaiming or returning money is only a secondary goal. The main goal is the investment climate. On the other hand, foreign experience shows that amnesties can be both successful and not. Consider Italians, to whom we are often compared because they have not always been law-abiding. I think they conducted such a reform, capital amnesty, about 12 years ago, and the result was quite impressive: about 50 or 60 billion euros.

Irada Zeinalova: Maybe Italians are simply more trusting?

Dmitry Medvedev: Hardly. Do you know any Italians? I think they are very shrewd businessmen who can teach you a thing or two.

Once again: the goal is to create a normal and business-like investment climate.

As for how this can be done, this should be a law that will answer two questions. The first question is what should fall under the amnesty, and this question deserves to be discussed in more detail. Should we only provide amnesty for money, or also other property entered in declarations? Both options have their benefits, which we will discuss. Anyway, the question of what should be amnestied is on our agenda. Money? Yes, but there are other assets which the owners can officially declare as their property.

And second, what penalties will those who return their money or other assets avoid? They will avoid tax penalties, but we should think about other penalties too, such as criminal penalties, because this can prevent the return of capital. In this case, we will have to adopt a decision to lift criminal responsibility from those who officially return their money to Russia or enter it in their declarations while keeping it in a foreign bank. The next question is which articles will not be applied to these people: only articles on tax violations or also on property laundering. In short, this is a difficult combination of questions.

We need to find the best possible plan that will be attractive to our businesspeople. At the same time, it’s not all the same to us where they earned their capital, because we should not be welcoming income from drug or weapons trafficking back home. This idea has not been formalised yet; I’m only saying it out loud. But it is a very difficult issue that will entail a lot of effort for the Government, which will need to adopt visionary decisions.

Irada Zeinalova: What about those who refuse to return?

Dmitry Medvedev: They will have no other chance. They will have missed this opportunity and there will be no other chance. If we find their money, the owners will be held liable, in particular for tax violations.

Vadim Takmenyov: Mr Medvedev, you are surely aware that no matter how optimistically we discuss various problems today, the Government won’t be criticised any less. It has been criticised in the past, it’s criticised now and it will continue to be criticised, all the more so given how complicated the current situation is. Do you think that all of your cabinet ministers were prepared for such trials? And doesn’t it seem to you that perhaps this is precisely the time to replace some with crisis managers? The people would appreciate that.

Dmitry Medvedev: “If only someone somewhere somehow…” You’re right, the Government will always be criticised, it’s normal. Any person who joins the Government or public service in general, be it a public office in the executive branch or the legislative branch, should be prepared to face criticism. This is normal. As for the present Government, it has already come together as a team. True, there may be people who could do something better, while others would fare worse, or who evoke more negative emotions, or, on the contrary, generate positive emotions. This is normal. By the way, it depends to a considerable extent not on the individual, how they look or talk or what kind of impression they produce, but, unfortunately, on their position. There are positions that, no matter what you do, will always trigger a lot of questions from people. I can’t think of an example

Marianna Maksimovskaya: The healthcare minister.

Dmitry Medvedev: True. The healthcare minister, for example. We have a wonderful healthcare minister, but, naturally, the healthcare minister will always be under fire because health matters concern every person in our country… Or the education minister, or a whole number of other positions. On the contrary, there are more advantageous positions where you come and do something and you’re immediately patted on the back. Nevertheless, the Government has come together as a team. It works, it’s a team. But it’s not a structure that was created once and for all. Let me remind you that we have repeatedly changed it. Cabinet members have come and gone. Not so long ago we even dissolved a whole ministry. It’s good that the ex-minister has found himself a new job and even a new surname. So, everyone is free to shape their own destiny.

On the other hand, we have new ministries, which work on a territorial basis: the Ministry for the Development of the Russian Far East, the Ministry of North Caucasus Affairs, and the Ministry of Crimean Affairs. It seems to me that this is in fact evidence that the Government is not some frozen monolith, but a living organism. We have agreed with the President that we will conduct such reorganisations if necessary.

Mikhail Zygar: Mr Prime Minister, lately, we polled our viewers on what they thought was the main word of the year. The majority of viewers responded with “krymnash” [Crimea-is-ours], spelled as one word with all lowercase letters. This is, of course, the central event, the main victory. Now, what is the price of this victory? After all, an economic price has to be paid for the boost in political popularity the authorities have received. Have you calculated all the economic implications of Crimea being ours?

Dmitry Medvedev: Crimea is not an economic category. When we speak about Crimea, every Russian citizen understands. We understand that it is our history, our fate, and our one-time pain, and that there is a very large number of our people who this year voted to return to the Russian Federation. It is a legal fact that everyone must reckon with. So Crimea is not simply a peninsula, not simply wonderful beaches, sanatoriums, healthcare facilities, and a wonderful climate; it is also our history and our present fate, and this is what I would proceed from in the future. But of course our task today is to integrate Crimea into Russia’s legal and economic system. I don’t know whether you have been to Crimea since the well-known decisions were made.

Irada Zeinalova: I have been there twice.

Mikhail Zygar: Not since the well-known decisions, no.

Dmitry Medvedev: But before then?

Mikhail Zygar: Everyone had been there before.

Dmitry Medvedev: Well, I’ll tell you frankly that when I went to Crimea I had mixed feelings. On the one hand, everything was very beautiful, but on the other, it was terribly untidy, the economic situation was very difficult, and we…

Mikhail Zygar: There are plenty of untidy places in our country.

Dmitry Medvedev: But, you know, it immediately strikes you there, because after all, this is a place where we’ve invested a lot of effort over centuries, for which our predecessors fought and shed their blood. So, this is a separate story. That’s why I believe that we should put Crimea in order, but not at the expense of other regions. A special programme was developed to this end. This programme is designed for the period until 2020 and costs approximately 680 billion roubles. We have raised these funds. To reiterate, we did not pinch these funds from other regions. It is not a case of taking a little bit from everybody. These are special funds, allocated specially for Crimea.

These funds will be used to develop Crimea’s infrastructure, to build good roads there, to renovate healthcare facilities and holiday hotels there, to create modern resort infrastructure, and generally ensure normal life there, because, to repeat, Crimea is not only a place for recreation; it is also a place where about 2.5 million new Russian citizens live, and they should live in decent conditions. We should do all we can to ensure that they feel like all other citizens in our country.

We are already accustomed to the fact that pensions and public sector wages in our country are at an average level. There, in Crimea, they were significantly lower. During this year we have gradually raised public sector wages there to average Russian levels. I believe that this is a very good solution for them and not a bad achievement. The same goes for pensions, both civilian and military. In other words, you’re right: There is a lot that needs to be done there. However, this does not undo the main thing – the will of the people who wanted to return to Russia, and they have.

Irada Zeinalova: Mr Prime Minister, I would like to ask you about the gas debt. It seems that we have come to terms with Ukraine. They have paid for the December gas and they have pledged to pay another $1.5 billion before the end of the year. However, Russia believes that this isn’t everything. What do you think is the right way to proceed in this situation? Go to a Stockholm court or reach an amicable agreement?

Dmitry Medvedev: All that we have been doing in recent years was to try and reach an amicable agreement with our Ukrainian partners. In recent years (by the way, I would even like to comment on this issue separately), we have granted over $80 billion worth of gas discounts to Ukraine. Over $80 billion! I mean for the period of the 1990s and the beginning of this millennium. How? We sold them gas at $40-50 per 1,000 cubic metres.

And it’s only relatively recently that we transitioned to civilised pricing.

Regrettably, it was far from always the case that our Ukrainian partners responded in an equally civilised manner. Usually it was endless bickering, occasionally verging on blackmail, and very often, regrettably, accompanied by simple, common-or-garden stealing from the pipeline.

To put a stop to this, we went over to contract-based relations both in sales and transportation. I think it’s an important achievement.

Moreover, at some juncture – during my presidency – it was decided to sell them gas at a discount, and similar decisions were taken later. But, regrettably, this discount didn’t help and they ended up accumulating a huge debt. No matter how we calculate it, it amounts to billions of dollars.

For now, we have coordinated with them gas trade terms for five months from 1 November of this year to 31 March 2015. And we’ve given them another discount to prevent the Ukrainian economy from suffocating. We are not indifferent to what is happening to Ukraine – that much is clear. We are not indifferent to what is happening to the Ukrainian people. This is why we’ve given them a discount. As a result, the price was reduced by 100 dollars compared with the contractual price. And now they are starting to buy this gas. They have even prepaid several hundred million euros for the first instalment.

But they should also repay their debt to us. We’ve agreed the sum – 3.1 billion dollars. They’ve repaid part of it and are supposed to pay the rest before the end of this year. I hope they will. At any rate, we’ll be trading with them on an absolutely pragmatic basis: they pay money and we supply gas. No money – no gas. We have partners in Europe who are urging the Ukrainians to join the EU as associated members and to move towards Western Europe. Let them help the Ukrainians. We already have, by the way. Let me remind you that we have granted them a three-billion-dollar loan, on which they have so far made all the required payments. I mean they are servicing the loan, as they say. An annual coupon payment has been established. I hope they will continue to pay because if they don’t, a default will follow, which will be disastrous for the Ukrainian economy, which is already in a lamentable state. This is how things stand; we’ll see how the situation develops.

Irada Zeinalova: What about the controversial delta? We believe that they still owe us money, whereas they think they don’t owe us anything. What’s the solution?

Dmitry Medvedev: You know, I think that we can come to an agreement on that. We can always sit down and find a compromise. If we fail to do so, there are already several lawsuits lying at the Stockholm Arbitration Court, and we can meet there for further discussions.

Irada Zeinalova: Gazprom says it’s still worried about European gas transit. Sometime in the future, we will complete the construction of the pipeline which will bypass Ukraine. Does this mean we are done with the South Stream? According to our European partners, they believe that there’s still room for discussion. Under this scenario, we will bring gas to Turkey, to a hub, and they will take it from there using their pipelines. Do you, as someone who is no stranger to Gazprom in terms of your background, think that they will build their own pipelines? Could you please explain how it will work? What will happen now?

Dmitry Medvedev: The story of South Stream is fairly sad, because it’s a win-win project involving eight countries that costs a lot of money but provides enormous advantages. The construction of the entire infrastructure was estimated at about $15 billion, if I've got the numbers right.

We've come a long way. Gazprom did a fair amount of work developing the engineering infrastructure. We reached agreements with everyone, but the project fell through. It has been mothballed, and a decision has been taken to abandon it, because, unfortunately, Bulgaria has withheld its permission. But this is not about Bulgaria. Unfortunately, in this case, Bulgaria acted as a regular member of the European Union, which came under the pressure from both the European authorities in Brussels and, frankly, the Americans. The European Commission has also adopted a position that is not constructive.

I discussed this issue with them on several occasions. As did our President, as well as the Chairman of the Board of Gazprom as he travelled back and forth trying to talk things over and reach an agreement. What they told us was that, in fact, they didn’t need such a project. Well, if they don't need it, they don't need it. Is this case, we will increase the capacity of the Blue Stream or create additional capacity on the Black Sea, as you mentioned, and build a hub in Turkey, from where our gas will go to other countries. This is also an interesting project open to our EU and other partners. However, it will be a different project with different terms and conditions that are subject to discussion.

Mariannna Maksimovskaya: Mr Medvedev, Russia’s involvement in the Ukraine crisis and the incorporation of Crimea have isolated the country. Is it at all possible under the current leadership to make up with the West and, most importantly, put the country back on the common European path of development? Or has the new phrase “Russia is not Europe” become our motto for years to come? Is this a new cold war?

Dmitry Medvedev: But, Marianna, who has ever said that Russia is not Europe? I have always said that Russia is Europe.

Mariannna Maksimovskaya: That’s the phrase used by the Culture Ministry. They’ve made it a national motto…

Dmitry Medvedev: You should take it up with the Minister of Culture. Possibly he has his own ideas on the matter.  

Mariannna Maksimovskaya: He is your subordinate, so you are in a better position to talk to him about it.

Dmitry Medvedev: I imagine he was misunderstood. Russia is certainly part of Europe and European civilisation. This goes without saying. I have always said so, and Mr Putin said so, too.

Of course, Russia is a nation with a history, culture, and traditions all its own, but we are still part of Europe even as we look to Asia, too. That’s first.

Second, we haven’t fallen out with anyone and we haven’t declared war on anyone, though some people are anxious to find a pretext for a quarrel with us. They say we are misbehaving and violating norms, so they threaten us with sanctions and say they will stop trading or communicating with us. They don’t want to see many of our statesmen. So this isolation wasn’t our choice.

It’s an odd choice, to be honest. I’ve looked back at how it was in the 20th century. And even in the 20th century, when there was the Soviet Union, a thoroughly ideological country that set  itself in opposition to anyone outside the socialist camp – even then the other countries did not go so far as to impose restrictions on, say, speakers of parliament.

What is the point of it all? Who benefits from it? I think some of our partners are pursuing selfish political ends, which is unfortunate.  

So we have no cause to argue with anyone, and we are not. We are always ready to continue our contacts with Europe, the United States, and other countries.

Vadim Takmenyov: Mr Medvedev, as for quarrelling and making up – I've been wanting to ask you about this for a long time. You have recently been to Myanmar, where you met with Barack Obama, if memory serves, with whom you have…

Dmitry Medvedev: It was not a meeting; we just had a word in the corridor.

Vadim Takmenyov: But you talked with each other, which is what matters. You seem to have maintained a relationship with him since you were president, and it doesn’t matter if these are good or bad relations. What did he tell you? Maybe you told him, “Barack old friend, it’s time to calm down. We are not enemies…”

Dmitry Medvedev: This is exactly what I told him.

Vadim Takmenyov: And what did he say in response?

Dmitry Medvedev: You know I really do have good relations with the US President. I think he and I have done a lot of good things in our time, or at least we have tried to.

But the point at issue is not our personal relationship, which is normal and even good, but the adequacy and predictability of your partners. Unfortunately, I must say that the current US administration is not acting adequately or predictably, no matter how well I think of my colleagues, partners and the US President.

Speaking of predictability, it is very important to understand what your partner will do, what the heads of state and government will do. What are Americans doing now? They are introducing sanctions and trying to create a separate front against Russia. These are definitely unfriendly actions. As they say, the ball is in their court now. If they decide to resume normal relations and take a different path, we will be ready for this no matter who is US president. It’s not the name of the US president that matters to us but the essence of our relations.

Sergei Brilyov: Mr Medvedev, let’s forget about outside views for a while, because some things look really strange even when seen from the inside. Here are a few examples from the recent past, and they do not concern a particular party, or rather, they concern all parties. Well, we won’t talk about the dismantling of a monument to Steve Jobs in St Petersburg, but saying that Leo Tolstoy’s “Anna Karenina” doesn’t comply with traditional values is completely out of bounds. The proposed reintroduction of the term “enemy of the nation”, with arguments from Roman law, is not acceptable either, considering our recent history… And a proposed ban on the use of dollars…

These are only rumours so far, which is why I am not laying the blame on any one party. But are these proposals reasonable? I fully agree that we need to bring order to the country, especially considering the current complicated world situation. But wouldn’t doing this with all kinds of bans look more like a battle between common sense and retrograde thinking, if I may say so, than between conservatives and liberals?

Dmitry Medvedev: Well, there are many initiatives, some of them funny and others idiotic…

Remark: But some people support them…

Irada Zeinalova: And use them to draft legislation.

Dmitry Medvedev: You're right, some of these ideas tend to become draft laws. However, nothing of what you mentioned was signed into law. If we were talking about a series of laws on this subject that has already been adopted, it would be a major surprise to all of us, to say the least. However, these are only initiatives. Yes, there is a certain line of behavior out there and, perhaps, someone wants to become part of it by showing that they, too, have a position of their own. They can do that, but most important is where it stops. Our people always try to stick to a certain line of behaviour, as they used to say, ebb and flow with the general party line. You just mentioned that the monument to Steve Jobs was destroyed, correct?

Remark: It was dismantled.

Dmitry Medvedev: I see. Well, that is, of course, totally nonsensical. First, it’s unclear why they built it, and if they did, why then dismantle it? But we saw worse things when people first donated money to build churches and then destroyed them in the 1920s.

Marianna Maksimovskaya: Mr Medvedev, here’s an important point. Judging from the press (I won’t say anything about television to avoid starting an argument with my colleagues), it seems to me that we’ve been living in Ukraine, not Russia, for almost a year now. We started 2014 with promise, here in Russia, with the Olympics, and are finishing it with a sense of general aggression which is hanging thick in the air. There is the search for foreign and domestic enemies, which Mr Brilyov has already mentioned, and jingoism, which often slides into chauvinism. What do you think should be done to bring down the degree of hatred in our society?

Dmitry Medvedev: Ms Maksimovskaya, you are asking me what I can do for you as TV anchors to change your perspective? I’m not sure I understand your question. All of you who are sitting at this table are those who create the atmosphere on television. Frankly, you are by far not the least important people on television, but rather, television executives. If you think that there’s too much aggression on television, then build your policy so as to make it more straightforward and calm. Television mirrors what happens in reality, I hope you’ll agree with me on this. Indeed, the year started out with our glorious, triumphant victory at the Olympics and Paralympics. We were all enormously proud of it. Then there was Ukraine, followed by these sad and dramatic events, in fact, a civil war. Obviously, it affected TV programme policy.

I would probably agree with you, and probably most of our people would agree with the following statement. Indeed, Ukraine is important. Our brothers live there. The conditions there are very difficult. There’s the situation in southeastern Ukraine, where a civil war is still going on, but there are also events in Russia, and we should not forget about that. There should be no feeling that all we think about is Ukraine and nothing else. This is true, but this, my colleagues and friends, is up to you.

Mikhail Zygar: I have an important question to ask. It is not about the independent media, nor their problems no matter where they broadcast from. It’s about common problems. You know, one has the impression that many politicians and economists, who are commonly regarded as liberals, who implemented very important reforms during the initial years of the Putin presidency, and who were influential during your presidency, have lost their voice or stopped communicating their views to the President – wittingly or unwittingly. Is this true? And what has happened to you? Are you no longer a liberal or were you never one to begin with?

Dmitry Medvedev: I think I’m the same person I was. It’s very hard to characterise yourself. There is a good saying which I think is true – you are sure to know it – which is attributed to former British Prime Minister Benjamin Disraeli, who said that if you are not a liberal at 16, you have no heart, and if you are not a conservative by the time you are 60, you have no brain. So locate yourself on this scale. How old are you now?

Mikhail Zygar: I’m 33.

Dmitry Medvedev: So, you are on your way from liberal to conservative. But, to be serious, then of course…

Mikhail Zygar: Are the liberal reforms proposed by 16-year olds…

Dmitry Medvedev: I can tell you directly that the absolute majority of proposals formulated by the Government are – and I stress – liberal from the economic point of view. The economic ideas included in the Presidential Address are liberal and are aimed at strengthening free enterprise and private ownership.

Moreover, our partners – I am the head of a political party after all – keep telling us that the Government continues to implement the same old liberal reforms, and that the time has come to part with this Government. This is the mantra I keep hearing from some of our partners, including Communists. So it wouldn’t be correct to say that the proponents of liberal ideas have lost their voice. But each era obviously has its own symbols, and the symbols this year are not the ones you mentioned, but other things of importance to the nation. That’s the truth. They include the Olympic Games and Crimea, which is why discussions of other issues have been pushed to the side. I think this is normal.

Sergei Brilyov: Each era has its symbols, and every moment has its reason. The last question goes to Vadim.

Irada Zeinalova: Ask about the New Year.

Vadim Takmenyov: Yes, it’s just around the corner…

Dmitry Medvedev: The New Year will come.

Vadim Takmenyov: Yes, I know that it’ll come, no matter what.

Dmitry Medvedev: Sorry, Vadim, but I was suddenly struck by how fast time flies. It seems such a short while ago that we met at this table, almost the same exact people.

Mikhail Zygar: I hope this isn’t the last time we meet.

Dmitry Medvedev: No pessimism, please!

Vadim Takmenyov: Actually, I wanted to ask if you were planning an office party in the Government, but on second thought, I doubt you would answer the question.

Dmitry Medvedev: Why? I’ll give you a completely sincere answer. I believe that office parties must be paid for by the employees themselves.

Vadim Takmenyov: Are the ministers chipping in?

Dmitry Medvedev: As for office parties at government agencies, the iron rule must be: No funding from the budget. If people want to celebrate, have a glass of champagne and something to eat made right here in Russia, that can easily be arranged. The Government members will mostly likely chip in for a restaurant.

Irada Zeinalova: Mr Medvedev, will you spend the New Year holiday in Russia?

Dmitry Medvedev: Yes, in Russia, and I hope to be able to ski.

Irada Zeinalova: What about those who don’t know any state secrets but can’t travel abroad, do you think it’s right that they will have to spend the holidays in Russia?

Dmitry Medvedev: Those who haven’t signed a confidentiality agreement or a recognisance not to leave, who don’t know any secrets in the narrow sense of the word, can easily spend holidays abroad.

Irada Zeinalova: But take a neighbourhood police officer in Siberia, who cannot go abroad because he is a member of the police force. Do you think…

Dmitry Medvedev: I think that those who aren’t in possession of any secrets can travel anywhere they like. That’s my view.  

Vadim Takmenyov: Mr Medvedev, let’s pretend (I know, it’s easier said than done) that you’re surrounded by friends.

Dmitry Medvedev: I am, indeed.

Vadim Takmenyov: I hope so. What would you say to your friends, if they asked you very informally, without any bureaucratic language, on a human and personal level: What good memories do you have of 2014? How has 2014 been meaningful for you personally? What are your best personal memories?

In Conversation with Dmitry Medvedev: Interview with five television channels

Dmitry Medvedev: Like for the majority of our people, our victories at the Olympics stand out in my memory. I was deeply involved in the Games and it was an exciting event for me. I remember when we took the last gold medal, I was walking on air. I actually felt like a winner, same as our athletes. Of course, I remember Crimea. There’s nothing to hide: we have always considered this is our land. The fact that the people who live in Crimea chose to return to Russia speaks volumes. It’s the most important event of the year no matter what we think about subsequent developments. It is really very important. Finally, just like anyone else, I’m glad that all my friends and relatives are alive and well. This is perhaps more important than ever.

Sergei Brilyov: Friends, there are 21 days to go to the New Year. Thank you all for coming. Mr Medvedev, thank you very much. Happy New Year!

Dmitry Medvedev: Thank you all. I hope this is not the last time we saw each other, as Mr Zygar said.

Sergei Brilyov: Absolutely not. Friends, this was our yearly programme In Conversation with Dmitry Medvedev. See you next time. All the best!

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