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OFFICIAL WEBSITE OF THE GOVERNMENT OF THE RUSSIAN FEDERATION

Dmitry Medvedev’s statement for the press on his trip to the Amur Region and the Kuril Islands

Transcript:

Question: Are you satisfied with what you saw, especially here in the Kuril Islands, and in the Amur Region?

Dmitry Medvedev: Let me start with the Amur Region, because I was there yesterday. My reaction is generally positive, despite the understanding that there are some problems with the pace of construction and a lag in some areas. Overall, I have a sense that we are entering the home stretch of the first stage in the construction of the Vostochny Space Launch Centre. Everyone is working in the regime that had been agreed and which we finally managed to establish, so the civil construction and the work on the equipment should be completed in the agreed timeframe. All other issues should be resolved when these results are achieved.

The emotional aspect... Yesterday, when I was walking around the space centre, I saw for myself that we have excellent, cutting edge engineering solutions. To be frank, there aren’t many space centres of this level. Not a single country in the world can boast of such solutions because it is the most advanced space centre – not because we are the most progressive country, although it is clear that we aren’t far behind either, but it really is going to be the most advanced space centre in the world with successful solutions that can meet the challenges of the civil space exploration and a variety of other tasks.

Now regarding the Kuril Islands. Here, too, my reaction is very positive. I liked everything I saw. I have visited Kunashir several times, but this is my first trip, together with you, to Iturup. Of course, the Kurils look completely different now from the way they were five years ago, when I was here for the first time. Now they have good paved roads – not everywhere, but nonetheless they have quite a few. There is an airport, which is where we are now, and it is an up to date airport. I hope that after they finalise some of the details here, it will function like a completely modern airport, capable of servicing the aircraft which currently arrive here six times a week. There are jobs and good conditions at the fish processing plant and fish farming. Finally, the island has cultural life, and today we saw the new house of culture that serves as a multi-purpose recreation centre. It has facilities for sports and for a variety of leisure activities. I hope that in the near future the renovation of the island’s schools will begin.

In other words, living standards on the Kuril Islands are being upgraded to those of the Sakhalin Region and the rest of the country, which is gratifying, because the islands were a picture of desolation and degradation only recently. Very positive changes have happened here over the past few years as part of the programme for the [socioeconomic] development of the Kuril Islands through 2015 and a new development programme that I approved recently.

Question: Mr Medvedev, it is rumoured in Japan that our relations will sour because of your visit here. What do you think about this?

Dmitry Medvedev: Our stance on this issue is very simple: We want to be friends with Japan, our neighbour. We have a positive attitude towards Japan, but this has no connection to the Kuril Islands, which are a part of the Russian Federation and incorporated in the Sakhalin Region. So we have routinely visited the Kuril Islands and will continue to visit them when necessary.

I’ve recently urged the cabinet members to visit the Far East more often. They will regularly report to me on their visits to the key areas that need to be monitored by the Government. This include the Far East and the Kuril Islands, the North Caucasus Federal District and, lastly, Crimea. I believe that this is a reasonable decision. It fully concerns the Kuril Islands, so our [Japanese] colleagues should accept this fact: we will carry on as planned.

Question: Mr Medvedev, can you say a few words about a personal part of your visit? You’ve visited a military unit. Are you satisfied with what you’ve seen there?

Dmitry Medvedev: There’s nothing personal about it; it was routine work and part of the visit’s agenda. I inspected the troops’ deployment and also attended the drills of the machinegun-artillery regiment that is stationed there. I’ve seen that the standards of combat interaction in the Eastern Military District, including the units deployed on the Kuril Islands, are quite high. I hope they will carry on in the same manner, because we need a modern combat-ready military group in the Kuril Islands. These conditions are the result of the Supreme Commander’s decisions. I have a positive impression from my visit there. But it is not a personal part of the agenda at all; I had no such plans. It’s true that I’ve toured the bay and hope to have time for a little fishing on the weekend. Or maybe I’ll go to the Primorye Territory.

Question: Mr Medvedev, may I ask you a question on economic issues? A weakening rouble is among the main topics nationwide. What does the Government plan to do about this? And my second question is: What do you think about restricting the movement of capital?

Dmitry Medvedev: First, let’s discuss the causes of this process. I believe everyone knows them, and it’s no secret. This matter is generally quite understandable in the context of economic processes. Certainly, the rouble’s recently declining exchange rate is linked with plunging oil prices. We have to admit that oil prices have hit an all-time low in the past six years.  These prices can be correlated with the dollar’s fluctuating rate and compared with those of the 1980s and 1990s. Simple calculations show that oil prices are at one of the lowest points in the past 30 to 40 years, although they haven’t hit the all-time low. This, of course, seriously influences the positions of the Russian national currency and weakens the rouble.  There are some other factors, including the generally unstable capital market, the situation around Chinese currency and the situation in neighbouring Kazakhstan, although the latter may not be as important. As you know, Kazakhstan has also decided to abolish a currency corridor, and this has weakened the tenge. The Russian and Kazakhstani economies are interlinked, and therefore we cannot ignore what’s happening there.

As for our stance, recent experience shows that, in these situations, the most important thing is to stay calm and avoid any hasty decisions. Currencies grow weaker and become devalued, but they eventually rebound, just like the rouble has done over the last year. And oil prices were not the only reason. This was also due to the fact that Russia had been denied access to capital markets, and that sanctions had been declared against the national banks. Still, I believe this process will not go on forever. Naturally, it is linked with energy prices. Nevertheless, the Government and the Central Bank will monitor these processes. The Central Bank will make the decisions under its authority. Of course, we (I mean the Government) will also help the Central Bank to obtain additional currency revenue. As I see it, our exporter companies will sell additional currency proceeds in the near future, and this, too, will influence the rouble exchange rates. So together with the Central Bank, we will implement some agreed-upon measures.

But I want to say once again that the current situation is not good for the rouble exchange rate, but it’s logical because it is connected to oil prices. It’s impossible to influence this through one-time measures. These attempts are pointless. Most importantly, I’m confident that the situation will stabilise soon, and that the rouble will taper off at average normal levels that were recently posted.

Regarding capital flow restrictions, I don’t think this would be a good idea even today because it would cause fundamental changes in the market. These changes would probably not influence the situation seriously, but they could take us back into the 90s. It’s common knowledge that such restrictions were introduced back then and enforced for a long time. To be honest, they didn’t have direct impact on the currency rate. Just look back to the events of 1998 when capital flows were restricted. Unfortunately, it didn’t influence the processes, nor did it change the rouble’s exchange rate, especially during the full devaluation of 1998. Nevertheless, these issues are within the Central Bank’s purview. Certainly, we’ll also discuss these things with our colleagues, and I’ve already voiced my position: I don’t think this measure would yield positive results.

Question: Let me ask a clarification question. Did we understand you correctly that the Government and the Central Bank are returning to the practice of supervising exporters’ sales revenues?

Dmitry Medvedev: No, you got it wrong. We haven’t relaxed this supervision, nor are we going to in the future, because these are indeed fundamental things that influence the state of the economy. We shouldn’t have a situation where the rouble is weakened by falling oil prices, we start supervising something, and say: “Exporters, behave!” Then things improve, the rouble grows stronger, and we say again: “OK, relax.” No, both the Government and the Central Bank should control these things continuously. I’ve held a meeting with exporters, and the Central Bank naturally works with them on a permanent basis as sales continue as usual. They know all this and sales will continue.

Question: I have a question regarding the Kuril Islands, where we are now. The economic situation being what it is, it’s natural that people should want to save money. At the same time, we have these large-scale projects, these global concepts – the Priority Development Area and all that. Won’t the economic situation impact these massive plans?

Dmitry Medvedev: I think that, on the contrary, when things are difficult (and, in fact, the economic situation is far from ideal) we should introduce new economic models as energetically as we can, particularly in the Russian Far East, which has been underfinanced for decades. If we create priority development areas or free port models, we must launch them as soon as possible to get our money back as soon as possible. Our task, after all, is not flooding the Russian Far East with federal money – there won’t be enough of it anyway – our task is creating conditions for private investment by investing in infrastructure, which is in large measure the government’s responsibility. Therefore, this work will be continued, as will the programme for the development of the Kuril Islands. As you may know, the Government has discussed a new version of this programme for the next period at a recent meeting. We’ll proceed from that.

Question: Mr Medvedev, let me ask you a question. Mr Yakunin’s dismissal is a current issue right now. Do you have any comments?

Dmitry Medvedev: What can I say except what’s done is done? A couple of days ago I signed a directive to assign a new company head, former First Deputy Minister of Transport and now Russian Railways President Oleg Belozyorov, and a directive to release Vladimir Yakunin from the post. Mr Yakunin has been transferred to another important job. I hope he succeeds because I believe he has done a lot for the development of Russian Railways. He ‘inherited’ a rather difficult legacy, a huge corporation employing a million people servicing the entire country. The company had problems at the time. However, the railway system was being developed. This doesn’t mean the situation is perfect now. The industry needs investment. There is a whole range of issues to deal with, such as commuter trains. This is primarily a job for regional officials rather than Russian Railways. We just need to come up with a general model. Still, a lot has been achieved, and I hope the new manager will continue this work. He is a man with great energy, with knowledge and ambition. He understands the economy of railway transport and other transport issues. He has every chance to make a contribution to the development of the Russian railway system, which is the largest infrastructure monopoly and the world’s most extensive railway system. The entire economy depends on the condition of this industry. So I believe everything will be fine.

Question: Mr Medvedev, let me clarify one thing about the space centre. You just mentioned that construction must be completed on schedule and that other decisions will be made depending on all the circumstances. Does this mean that the Federal Space Agency (Roscosmos) can still use some loophole to postpone the first launch until 2016?

Dmitry Medvedev: You know there are certain deadline parameters and Roscosmos is following those guidelines. This was discussed at yesterday’s meeting. It is true I am responsible for some of the decisions made. I also gave certain instructions and pushed certain buttons in order to speed up the process. There are issues that can be explained but also issues that are more difficult to explain. For example, I don’t like the way the general civil projects are going – specifically, residential construction. These are simple facilities and they must be built quickly. The launch schedule is a different issue. The state corporation is responsible for these preparations. We must not allow any mistakes and must do everything to see that the launch succeeds. This is more important than deadlines. However, the formerly set deadlines remain per presidential directive. They have not been revised.

Alright, colleagues, that’s it. I wish you all a good trip home.

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