Ryan Chilcote (as translated): Good morning! We have Russian Prime Minister Dmitry Medvedev here today. Forty-five minutes from now, he will deliver a keynote speech here in Davos, at the World Economic Forum. Mr Prime Minister, thank you for coming. By the way, you are the first leader who agreed to be interviewed without wearing a coat, the Russian style.
Interview with Bloomberg TV
Interview with Bloomberg TV
Interview with Bloomberg TV
Interview with Bloomberg TV
We talked about two years ago when you were convincing investors to invest in Russia, but they are still skeptical. What are you going to tell them this year?
Dmitry Medvedev: I’ll tell them to come to Russia and invest. Scepticism on the part of investors can be explained in various ways. We checked our numbers and saw that three or four years ago, 7% of investors believed that we were doing what was necessary in order to create the right investment environment. Now, 30% of investors believe this. Perhaps that’s not a lot, either, but that’s progress anyway. We will continue to do our best to build the most favourable investment climate possible in our country.
Ryan Chilcote: Today, you will speak about privatisation, among other things. The government has announced its plans to sell shares in state-owned companies in the amount of $10-$20 billion this year. What are the companies that are most likely to be sold in 2013?
Interview with Bloomberg TV
Dmitry Medvedev: Last year, we earned a fair amount of money from the privatisation, receiving about $5 billion from the sale of Sberbank shares alone. We have several privatisation deals scheduled for this year, including Russia’s largest ship-owning company Sovcomflot, Russia’s largest state-owned VTB Bank and several other major assets. We will continue to monitor the situation on the market and take appropriate decisions. I hope that we will be able to reach the goals that we have set ourselves, and profit from privatisation even more than last year.
I’d like to say one more thing about privatisation. It is not only about the money, although the budget does need it. Privatisation is also a political course, so it’s partly an ideological matter. The point of privatisation is to find an owner that is more efficient than the state, because the state cannot always be an effective owner. I believe this is as important as making money.
Ryan Chilcote: Let me ask you a question about the goals of privatisation. Is it about raising funds or reducing state involvement in the economy? Last time we met, you said that your goal was to pare back the government’s involvement in the economy. However, it has increased instead ... Why is it that despite your focus on reducing its effect on the economy, it is, in fact, growing?
Interview with Bloomberg TV
Dmitry Medvedev: No, it’s not. There are some high-profile things that people are using to draw conclusions about our political course. In fact, the government’s involvement in the economy is diminishing. That’s the way it is. However, you often hear people say, well, you say you are reducing the government’s involvement in the economy, but then Rosneft goes ahead and buys an interest in TNK-BP. I have repeatedly explained this situation, and I will say it again: we had to do it that way. When the partners got into a squabble, we had to decide who will get the appropriate share of stocks. The government was forced to purchase it. First, it doesn’t mean that it was done once and for all, and, second, the state is also selling its interest in Rosneft, and that is what privatisation is all about. When the state buys a certain asset, such an acquisition is offset by selling an underlying asset, such as TNK-BP (I’m referring to Rosneft), and a fairly significant portion of it will be sold.
Ryan Chilcote: Rosneft is the second largest oil production company traded on the stock exchange – it is very interesting to investors. When BP gets its share, it will own about 20% of the company, while 70% of it will belong to the state. When does the state plan to cut its ownership and give up its controlling stake? Earlier when you listed the companies to be privatised this year, you did not mention Rosneft.
Dmitry Medvedev: I mention it now because such understandings exist. I believe key companies should be sold at a time when the necessary economic trends are emerging on the market. If it is profitable to sell part of Rosneft in exchange for an appropriate asset now, then it should be done. Let's wait and see what happens on the stock market and how the oil companies will be traded. In any case (I have said this and can say it once more) for the state to control a number of crucial processes it is enough to have a blocking stake.
Ryan Chilcote: When you talk about the sale of government stakes in state-owned companies (you spoke about Rosneft, VTB – Russia’s second largest lender – and Sovkomflot – Russia’s second largest shipowning company) are you talking about the sale of shares on the stock exchange or searching for strategic investors?
Dmitry Medvedev: Various options are possible. In principle, in my opinion, it is now more important for us to sell on the stock exchange and to test our shares as on the London stock exchange, which happened, for example, with the sale of Sberbank stock when we made $5 billion… But we also sold part of the stake on the Moscow stock exchange because our strategic goal is, of course, to promote trade in shares on the Moscow stock exchange. We should be moving along both lines.
As for a strategic investor, this is possible, but it seems to me a public offering is more important for our shares to gain a real quotation and valuation by the market.
Ryan Chilcote: These state-owned companies, for example you mentioned VTB… In fact, that was the second sale of VTB shares. VTB shares now have a lower price than during the IPO two years ago. Do the shares have to rise in value compared with the initial IPO for you to decide to sell further stakes? With the stock exchanges yielding very good results, it may be assumed that now is a good time, the right time to sell.
Dmitry Medvedev: As a matter of fact, this is our idea today – to sell at the right time. It appears to me now is not a bad time.
Ryan Chilcote: Let us get back to energy for a minute. People are fond of discussing Gazprom: it is the world’s largest gas producer, a monopoly in Russia and has a monopoly on exporting natural gas from Russia. Do you think Gazprom should give up its role as a gas export monopoly?
Dmitry Medvedev: It is nice to speak about Gazprom when you are experiencing freezing weather and realise how crucial Gazprom’s role is for Europe.
Ryan Chilcote: I can assume that if two companies were selling Russian gas to Europe, then perhaps Gazprom and Russia would not be able to dictate gas prices to Western Europe.
Dmitry Medvedev: But that is not the case, while Gazprom is indeed the biggest supplier of gas to the European market, it fulfils its obligations to the letter, and this seems to be very important for Europeans. If we take an overall view of Europe’s hydrocarbon market, the Russian share of it is in the region of 30%, be it gas or oil. Is that a lot? To my mind, that is not very much because other suppliers provide 70%. Gazprom’s role lies in being a reliable provider enjoying long-term relations with European consumers and whose behaviour is understandable and predictable. In this sense I do not believe Gazprom plays the political role so often ascribed to it. This is absolutely not so. Gazprom just makes money. Europe needs Gazprom as much as Gazprom needs European consumers: we are very interdependent.
As regards the situation today, with Gazprom under close scrutiny by some anti-monopoly agencies, you know that we are naturally not opposed to any particular procedures if they are followed in accordance with the law. But I would like to draw your attention to what we consider to be the completely wrong attitude by European institutions on the so-called third energy package. I have to tell you this because the third energy package, even if it pursues completely innocent aims and is designed to reduce the costs of gas supplied to the market and of energy sources in general, it is ultimately destructive to our country’s existing ties, and for Gazprom it means abandonment of previously concluded contracts and the restructuring of existing capabilities. We believe this is a breach of agreements and we will naturally go on discussing the subject with our partners.
Ryan Chilcote: Please answer “yes” or “no” to my question. Do you support Gazprom giving up its monopoly on gas exports?
Dmitry Medvedev: You mean the existing monopoly… the Russian monopoly?
Ryan Chilcote: Yes, the Russian monopoly.
Dmitry Medvedev: I think if this is to be done, all the possible consequences need to be carefully considered. Potentially this is possible, because we have other independent gas suppliers, but we must not lose money: that is the most important thing. Money comes first, everything else is just idle chitchat.
Ryan Chilcote: How do you intend to convince investors that the Kremlin is taking corruption in Russia seriously? President Putin, in various capacities, stayed in power for 12 years, and some people would like to see more done. So how are you going to convince investors that actually the Kremlin is taking this issue very seriously?
Dmitry Medvedev: By our actions. I’d like to remind you that over the past few years, or more precisely, over the past four years, we have created a legislative foundation and have adopted legislation we did not have before. This is a fundamental achievement.
As for applying this legislation, contrary to widespread belief (because no one likes corruption and everyone tries to explain their problems by it), 50,000 corruption cases are currently being investigated. This is a large number, and many of these cases will be forwarded to the courts and will most likely lead to convictions. Is this not part of the fight against corruption? Hence, I believe that the main proof of our attitude is the efforts we have made to improve legislation. But corruption not only concerns officials, as all countries should remember. Corruption also involves those who give bribes. Unfortunately, there is corruption in Russia not only at the executive level, but also in everyday life. I am sorry to say that it also concerns doctors, teachers, traffic police and several other structures. Therefore, we must fight corruption not only at the top but also at the middle levels. And lastly, corruption is an element of mentality.
Ryan Chilcote: I want to ask you about a lawyer named Sergei Magnitsky. He uncovered a $250,000 tax fraud, a situation where the Russian Government had been defrauded of a quarter of a billion dollars in taxes. He was himself put in prison and died in pre-trial detention, accused of tax evasion. He’s now being tried as a dead man. This is a very unorthodox situation in world practice. What should investors think about the prosecution of Sergei Magnitsky in the context of the fight against corruption, especially because he is being tried as a dead man?
Dmitry Medvedev: I am very sorry about Mr Magnitsky, because he died in prison (although, unfortunately, people die in prison in many countries), but he did not investigate anything. He was a corporate lawyer, or an accountant who defended the interests of his employers. He was not a champion of the truth. However, people are, of course, sorry for him because he died in prison. I do not know whether he would have been convicted or acquitted [had he lived]; unfortunately, this is not how it happened. So now we must determine why he has died in prison. This is really very important for the country. Everything else is the politically loaded invention of certain individuals (including some who are here in Davos), who need to justify their commercial transactions in Russia. They earned billions of dollars by trading in Russian assets and took a political stance only when their fraudulent actions were exposed. So the Magnitsky case does not concern the search for the truth, but, I am sorry to say, a politically loaded process.
Ryan Chilcote: Would you like to see the case against him closed?
Dmitry Medvedev: The point is that no one is judging anyone. The ongoing processes are fully in line with the procedures set out in our – and not only our – criminal laws. It’s not about handing down a sentence at all costs. This is impossible because a dead person cannot be subject to civil or criminal responsibilities. But we must establish what happened, so this is not a charge but a journalists’ cliché. There is nothing in our legislation to allow this, the same as in other countries’ legislation. But I agree that this issue must be sorted out.
Ryan Chilcote: Some people say that the tandem, the system of power where you shared power with President Putin when you were President and he was Prime Minister is now effectively dead, that you voluntarily gave up power for a new arrangement. Would you like to become President again?
Dmitry Medvedev: I have been asked this question persistently, from the moment when Vladimir Putin and I announced our plans. First, I will tell you what we have and what we don’t have. We have a constitution, a written constitution, which clearly outlines the powers of the President and the Government. In this respect, the agreements and the structure or model of power, which we offered the people, have not changed, because we have a President who has the main powers in the country, and we also have a Government and a Prime Minister, who are the supreme executive authority and so have all the powers over socio-economic issues. In this respect, nothing has changed.
As for my personal plans, they remain to be seen. I have never turned down an opportunity, and I am not going to start doing it in this interview. I like my job and I must bring this part of my work and my life to its logical conclusion. What would I do after that? This remains to be seen. So far, I am able to work. Everything else will depend on my decision and, of course, on the political future of the forces which are currently in power in Russia.
Ryan Chilcote: Is it possible – you can say just “yes” or “no” – that in 2018, when Russia has its next Presidential election, you could actually run against President Vladimir Putin? Yes or no?
Dmitry Medvedev: I think that would be wrong. It is impossible. We are from the same political force, so why should we compete with each other?
Ryan Chilcote: Russia lent Cyprus US$ 2.5 million the year before last. Cyprus again needs money. Is Russia willing to lend more money to Cyprus?
Dmitry Medvedev: Only if we are confident that the economic decisions taken by the European Union will be implemented and if our European partners also give something to Cyprus. We really did help Cyprus. I took that decision a couple of years ago. We gave them 2.5 billion, even though our situation was quite difficult too. We believe that we need to look after one another in these situations. We will consider any request made by another state, because we have significant foreign exchange reserves, but we have to understand what is going to happen with the economy of any country, including Cyprus. Where is the plan for overcoming the crisis and where is the involvement of our European partners?
Ryan Chilcote: Yes, there are some who say they would like to do something...and some who would like for Russia to lend Cyprus money or cancel the debt, or restructure the debt. Anyway, okay. Let's move on.
We've already talked about Cyprus. Your are also looking into the possibility of lending money to Serbia. How many other Western European countries have asked Russia for loans?
Dmitry Medvedev: You know, the list of those countries is not that long, thank God perhaps. Yes it's true, representatives of the Serbian government, the Serbian leadership came to us to ask for help. Up to now we've had maybe two or three such requests, not more. Although we do get requests from our partners in the CIS, and from EurAsEC. We get such requests and we also have an anti-crisis fund, which we can use to help these countries resolve their economic problems.
Ryan Chilcote: Cyprus, Serbia – and what other countries in Western Europe?
Dmitry Medvedev: I think so far only those two.
Ryan Chilcote: Another question about the events in Algeria. From the very start Russia said that Western interference in the Middle East could lead to a rise in fundamentalism. What do you think: what happened recently in Algeria, the taking of hostages, people killed, the use of weapons that had made their way there from Libya, do you think that this is evidence of the fact that Russia was right and that US policy in the Middle East is wrong?
Dmitry Medvedev: So it appears.
Ryan Chilcote: And how would you characterise Russian-US relations today? Are they good or bad?
Dmitry Medvedev: I would say that they are stable and on the whole productive. Maybe they are not as good as we would like them to be, but that is a topic for another seminar.
Ryan Chilcote: This question may look as though it has nothing to do with investors but I will ask it anyway. Last month Russia banned US citizens from adopting Russian orphans. Did you support this ban?
Dmitry Medvedev: My position on this is very simple: we need to do everything we can to ensure our orphans, our children, get parents in Russia, get medical assistance in Russia, and if they are in children's homes that they have the right conditions there for their development and health. We are not banning foreign adoption, intercountry adoption is not limited solely to adoptions by citizens of the United States of America. But in principle, it is desirable if all these problems were resolved inside the country, as incidentally is the case in most developed economies. They don't have this problem in the United States, nor in the majority of countries in Europe. Why should we preserve this situation in our country? We need to work towards ensuring that our children, including those without parental care, feel okay in this country. In my opinion that is a worthy goal.
Ryan Chilcote: Should investors be worried about the fact that certain problems exist in relations between Russia and the United States which could adversely affect US business in Russia?
Dmitry Medvedev: No they shouldn't. We have normal relations with the US government and we congratulated President Obama on his re-election.
Ryan Chilcote: You are going to meet with the UK prime minister in Davos. What are you going to say to him?
Dmitry Medvedev: I'll say "Hello, David."
Ryan Chilcote: You will no doubt be aiming to improve relations between Russia and Britain?
Dmitry Medvedev: Of course. That is important for both Britain and Russia.
Ryan Chilcote: Final question. What is your chief aim here at the Davos Forum?
Dmitry Medvedev: To tell the truth about Russia.
Ryan Chilcote: Thank you very much, Mr Prime Minister. It was very nice meeting you for the second time, here in Davos.
