Transcript of Medvedev Interview

Translated excerpts from Reuters interview with President Dmitry Medvedev, conducted earlier this week at the Kremlin:

Reuters: Could you set out your priorities for the EU-Russia summit?

Medvedev: I think it should be a successful summit, and I hope that we can make progress on the most complex problem of recent times - preparing a framework agreement between Russia and the European Union. Besides that, naturally, we will look at all those questions that have accumulated, in an absolutely amicable way, even though in some areas the work has perhaps not proceeded as intensively as we all would have liked.

Nonetheless, the time and place of the summit oblige us to look at all areas of the relationship between the Russian Federation and European Union.

We have many joint projects. I will mention just one figure that surprised even me: Russia is the third-largest exporter to the countries of the European Union. The fourth most important market for EU products is the Russian Federation.

Reuters: But is there any particular priority issue?

Medvedev: You know, it seems to me that the main priority now is just to keep moving in all the directions we have already set out. What do I mean? If we are now ready to sign a new framework agreement with the European Union, that is the main task. It must be a serious document but, at the same time, not burdened with absolutely concrete things; to a large degree, it should be a framework agreement that will set out the basic positions for development in the years ahead.

From the legal and organizational point of view, that is the main priority of the summit. In terms of priorities for the relationship between Russia and the European Union - this is a relationship between the Russian Federation, a major European state that defines itself and conducts itself as part of Europe, and the European Union, a community representing a significant number of European governments.

And there are priorities in the areas where we traditionally work together, which I have not mentioned yet. ... I mean energy cooperation, including investment elements; I mean political cooperation; I mean cooperation in fighting international crime; I mean social contacts.

Reuters: Do you think the European Union is a difficult partner? There are often disagreements among EU members, sometimes concerning Russia.

Medvedev: No, I think the European Union is a comfortable partner on the whole. The European Union is not a united body but a union of various governments, and one of the key principles of the work of the European Union is the principle of European solidarity.

And EU solidarity can at times create problems for the functioning of EU mechanisms. Sometimes this creates problems for our relationship if we know, for example, that a significant number of EU governments are ready to develop the relationship in a certain way, while one government, or a few governments, have the ability to block the move.

But this is the EU's internal issue. This position is based on its internal documents. We respect it, although we understand that it does not add flexibility in EU decision-making.

But sometimes this harms not only EU-Russian relations but damages the interests of the European Union itself. Look at the Treaty of Lisbon, where one state can block the efforts of dozens of other states. ... So I don't consider the European Union a hard or difficult partner. But it is a partner that periodically encounters difficulties.

Reuters: During the presidency of Vladimir Putin, some EU countries criticized Russian foreign policy. Will the situation change during your presidency? What are your foreign policy priorities?

Medvedev: You know, I think it is quite normal for one country to express ideas critical of others. There's nothing wrong with that. From time to time, we also take a critical view of certain actions. Overall, we are attentive and serious when we are criticized by our partners.

As far as our foreign policy is concerned, it will not be determined by the volume of criticism but by domestic considerations. ... Its essence is consistent - to preserve the national interests of Russia.

The defining values are freedom, democracy and the right to private property. And these are the values we will bring to our relations with our international partners. In this sense, our foreign policy cannot be characterized as liberal or conservative or anything else. It must be a policy that supports and furthers our national interests. And that is its essence.

Reuters: If the essence of foreign policy is to remain the same, will there be differences in nuance or tone?

Medvedev: You see, there are always nuances of tone, nuances of pronunciation and nuances of style - it's obvious. Every individual is different. Politicians are also people and they should also have their own tone and their own style. But that does not change the basic tenets of policy. Of course stylistic details sometimes have meaning. But it is secondary.

Reuters: We are approaching another summit в the G8. What proposals will Russia bring to this summit and what do you expect from it?

Medvedev: The summit in Japan comes at a difficult time for the global economy and for many people. It is obvious that the main issues are the global financial crisis, the food crisis and climate change. We view them as key for us too, and we are preparing our own proposals for discussion at the G8 summit.

The G8 countries have a special responsibility for the development of the world economy, for maintaining stability on the planet, and a full-fledged economic regime.

We and other members of the G8 could consider a range of new mechanisms to support a global economic and financial balance and form the basis for a new international financial system, to clear away the old, poorly functioning international mechanism, to think about how to guarantee food security in the future and look at the practical realization of these topics.

This could include signing international conventions that would guarantee balanced distribution of food on this planet.

As for the climate, there are already many documents and many international agreements. We also need to consider how to respect the interests of those countries that are participating in the Kyoto protocol and those that don't want to. Because it's impossible to deal with the climate with just one group of governments when another group doesn't take part in agreements. Either we all start to work on it or we need to give up these efforts altogether. For that reason, I think this must be a central issue at the G8.

Reuters: You must be aware of the current economic downturn in the majority of the G8 states, while the situation in Russia is the reverse. What can you do to avoid the overheating of the economy and consequences of that, including inflation?

Medvedev: As a matter of fact, overheating is present in most states. We are also watching closely not to allow overheating in our own economy. ... Nonetheless, inflationary processes are universal, and today they are present in the majority of the world's economies.

We, in our turn, are trying to change this situation, without allowing the economy to overheat or causing any macroeconomic imbalances that could whip up inflation. I hope we will cope with these problems, because high inflation makes full-fledged development of economic projects impossible, but most delicate - it deals a painful blow to our people's interests.

As for our relations with other states, I definitely feel that the system of regulating international financial ties that has been in place - maybe for the past few decades - has turned out not to be too efficient.

You can work your economic muscles to such an extent that everything will be great at first, but if this economy reaches such a size that its crisis affects the international economic situation, this will already be a problem more than for a single state. Even if it is a very powerful state, this will be a global problem. And even understanding the cyclical nature of the development of the world's economy, one can smooth out these more difficult periods. We should simply cooperate on these issues. As far as I am aware, my colleagues from the other G8 states are also now preparing their proposals on this matter. And, maybe, this is a very important topic for discussion now.

Reuters: Mr. President, as far as Russia and Russia's economy are concerned, there is a problem: Inflation is rising, and spending is rising at the same time. How are you going to tackle this problem? Are you going to cut spending; are you going to raise interest rates or revalue the ruble? What are you going to do to lower inflation in Russia?

Medvedev: You have correctly noted the two trends. Actually, inflation has accelerated. We will definitely take measures - and are taking already - to bring it down. These include limits on excessive state spending. We should also influence the so-called monetary causes of inflation, and other, nonmonetary factors that have an impact on inflation. The government worked out such a program, and it is being implemented now. As for interest-rate policy, of course we could not pursue interest-rate policy in isolation from the general situation. It is determined both by the current level of inflation and the situation with international financial institutions. For instance, I mean the state of international financial liquidity. Because, as we see it, money now flows freely from one state to another, depending on the interest-rate policy pursued by the surrounding world. So we will adjust our interest rate policy, proceeding from this. But there must be no surprises here.

Reuters: Talking of today, can you say clearly that Russia will have a soft landing?

MEDVEDEV: Well, I don't believe we have any supernatural overheating. But you should watch these trends closely. As for slashing inflation, we would like it to be not pretty soft, but maybe even hard and steady. This is why, even before the outbreak of the international financial crisis, we had set up a goal for ourselves to achieve annual inflation of 5 or 6 percent. As for today's situation, it is in fact two times higher, and we must act toughly and clearly to limit these inflationary tendencies to cushion the trends linked to rising prices for staples in the world. This poses a problem for us too, because Russia's economy and Russia's consumption of food are heavily dependent on food imports. Unfortunately, we don't have food self-sufficiency yet - like Russia had, say, 100 years ago. And this is yet another task we must tackle in the next few years.

Reuters: Following on from what you said, I would like to ask about the weak dollar. Is the G8 able to take some measures to cope with the problem of the weak dollar?

MEDVEDEV: The dollar has indeed become a global problem. A decision about the fate of the dollar can only be adopted by the nation that uses it as its national currency. The United States is the issuing center for the dollar. But, to our regret, the state of the entire international financial system hinges on the state of things in the dollar zone.

The global financial system is currently to a significant extent propped up by the dollar. There is also a euro zone, and there are ideas of creating regional reserve currencies. This idea is being discussed in the Arab world and in a number of other states, and we are thinking about it. We think the ruble could potentially aspire - as a freely convertible currency - to the role of a reserve currency to service transactions in those countries that are part of the ruble zone, which use the ruble for payments. We have yet to take a number of steps - in particular, to transfer trade in energy supplies into rubles, but, in general, I think that this is an absolutely achievable task. It is interesting for Russia and for the CIS governments, but, in my view, it is also of interest to the entire world, because it can create a system based on the use of several reserve currencies.

Reuters: As for reserve currencies, do you plan a transition from the dollar to the euro, to use mainly the euro as a reserve currency?

MEDVEDEV: Certainly, we are using the euro as a reserve currency anyway. And while our reserves were mainly concentrated in dollars, now we use the euro practically on an equal basis with the U.S. dollar, partially using other currencies as well - sterling in particular. But, naturally, the euro is one of the reserve currencies for Russia, and potentially a very good reserve currency. Nevertheless this does not cancel the other objectives I mentioned.

Reuters: Mr. President, as we know, Russia aspires to attract foreign investment. But today foreign investors are worried by what is happening at TNK-BP, where some of its shareholders are using administrative resources, including tax police and security services, to resolve ownership issues. The EU has already raised this issue with Russia and has asked Russia's government to protect European companies, in particular BP, in Russia. What is your response?

MEDVEDEV: The one I always give in such situations. First, one should always select the right partners, and second, use only those procedures that are law-based. What I mean is that the situation surrounding TNK-BP is a situation in the private sector. On the one hand, there is a foreign, a British company. But on the other hand, there is an absolutely private Russian company. They should have agreed on the principles of their cooperation for years to come. The state has nothing to do with this, nothing at all. And if they are locked in a conflict now, it must be resolved by lawful means. I, as a lawyer, just cannot think of anything else. ... I can only call attempts to use the state to resolve internal corporate disputes illegal. Neither the Russian nor the British partners should resort to such policies. They themselves should find a solution, in line with those memoranda signed, within the framework of the existing charters, using the judicial procedures envisioned in this case. This is my advice to you. Otherwise, you have a pretty strange situation - sometimes we are told that the state interferes excessively in the work of private companies, but in this situation they say, "Well, you had better interfere, look, they are kicking at each other, and something needs to be done." The state should not become mired in such disputes.

Reuters: So you don't want Gazprom or Rosneft to take a stake in this company?

MEDVEDEV: You know, I didn't lead such conversations even as chairman of the board of directors. As far as I know, there are no proposals about the sale of the stakes in question to Gazprom or Rosneft, so there is nothing to talk about. If there are offers, they will be considered. But state companies have no objective right now to acquire stakes from private companies.

Reuters: As far as the state's involvement in the economy, particularly in the energy sector, is concerned, do you think it will grow or decrease, and is it sufficient now?

MEDVEDEV: I do not think it is possible to identify a sufficient level. In the Soviet Union, most economists believed that the state should control everything. This was a distinctive feature of the Soviet planned economy run by directives (from the Kremlin). There could be a totally different model, where practically all companies are private and the state is nearly absent. Finally, there could be models in which both the state and private business are represented in the economy. The measure of the necessary and sufficient state presence should be decided for every specific situation.

In my opinion, there are no grounds at the moment for speaking about any expansion of the state's presence in the economy. The state is not interested in this. On the contrary, we are continuing our policy of privatizing our assets, which started more than 10 years ago. A number of major companies, first and foremost energy firms, as well as some defense companies, have returned to state hands. We believe that this is important to guarantee the strategic interests of the economy in the years to come. But any additional strengthening of the role of the state, increasing its presence in the economy, is not foreseen. On the contrary, we will take action to reduce the presence of the state in the economy.

Reuters: I want to follow up on the question concerning fuel. High oil prices bring considerable revenues to the Russian economy. Similar revenues in some countries, like the Gulf states are actively used to investing in the economies of other countries, into buying assets and banks. Will Russia be more active in this area, and what in your opinion are the aims of such investment, what are the aims of the state?

MEDVEDEV: Yes, this is an interesting topic. Of course, the top priority in investing additional revenues from energy sales is placing this money into our economy, promoting business inside the country, maintaining a normal situation in the social sector, in the pension system. All these processes have been established by law in this country and will continue.

At the same time, we believe that it is necessary to invest these funds in foreign assets to make sure that Russia plays a proper role in international markets, to support our opportunities in various countries and to build up our relationships with these states in a proper manner.

Not long ago, I chaired a meeting that ended with a decision that money from our national wealth fund and other state funds will be invested not only in foreign assets, but also in Russian assets.

As far as foreign assets are concerned, I can say that, naturally, they should be attractive, first-class assets, protected assets that will bring a guaranteed income even in a conservative scenario.

But I believe that the problem is broader. I believe that not only the state, but also Russian business should actively invest free cash left over from domestic investment into major projects abroad. Well, perhaps not only in major projects but in medium-size and small projects as well, because this would strengthen economic stability and create mutual dependence. This is useful not only for Russian businessmen, but also for the general economic situation in the world, for developing specific economies.

Reuters: Mr. President. I want to ask you a question. What do you think is the biggest national security threat for Russia?

MEDVEDEV: I think the group of threats in the modern world is absolutely the same for everyone. Threats to Russia's economy are linked to international financial instability, the food crisis and related issues. Other factors are terrorism and international crime and problems that emerge from these processes.

All this creates natural problems for the Russian Federation because we are an open society and a huge amount of cargo and passengers pass through the country. As an open state, Russia faces similar problems to other members of the international community.

We also have specific Russian problems. First of all poverty, which we have not yet defeated. Resolving this problem is the main task for the government. We are going to work hard at this, using all of our economic might.

The second problem is corruption. Corruption is a systemic challenge, a threat to national security and a problem that leads to a lack of faith on the part of citizens in the government's ability to bring order and protect them.

We need to strengthen the judicial and legal systems, and that's something we have already begun.

Reuters: I want to touch upon politics, namely, your relationship with the former president and current prime minister, Vladimir Putin. As you have said earlier, you work in tandem. My question is: Will Vladimir Putin be a transitional premier, or do you intend to work with him throughout all your presidential terms?

MEDVEDEV: You know, I think we really have a good alliance to solve the complicated problems faced by Russia. We will work as long as is needed to achieve the goals before us. Within the framework of the law, of course.

Reuters: State control over media has been a feature of Putin's presidency. Will you continue this course or bring about changes? Will independent TV channels emerge in Russia?

MEDVEDEV: First, I cannot agree with you that this was some kind of typical feature of my predecessor's presidency or of anyone who has held this post in Russian lately. We have no special controls on media that are different from those forms of control that exist in other countries.

As far as media is concerned, I've had the chance to say more than once that electronic media, print media and the so-called new media like Internet are absolutely free.

Of course, their editorial policy is decided by their owners. If it is about privately owned media, they decide the policy. State-run channels have appropriate editorial councils.

But I cannot believe that these editorial councils, these management bodies conduct any specific policy. I believe that we have an absolutely mature, modern television, which shows life in Russia in all its diversity, shows all political figures present on the current Russian political scene, shows problems and achievements.

In this sense - I have said this and am ready to say this to you - I believe that our television is pretty mature and of good quality. It is interesting to watch. I think a considerable number of people agree with me.

But those who do not like, say, some specific programs or channels - thank God we are living in a free society - can switch to other channels, can view foreign channels, private channels, can open a newspaper, get onto the Internet and get whatever they wish. There are not today, have not been in the past and will never be the problem of information being closed in Russia. You should have no doubts about this.

Every country has its political losers who complain that there are no free media because they aren't on television every day. But that is their problem, not a problem for the media.

Reuters: Taking a step back, I want to ask you a question about corruption. Could you say what specific measures you are going to take to fight corruption?

MEDVEDEV: It is a very painful and difficult problem for our country. Unfortunately, our traditions are not terribly good in this sense. I have said more than once and will repeat that the neglect of the law, so-called legal nihilism, has deep roots in the national conscience. We will have to fight hard against this.

With regard to corruption, as a combination of crimes that paralyses state mechanisms in many cases, such a threat can only be handled by a systemic response. And we have such a response - I am not saying it will be ideal. Today, we are preparing key points of what we call our anti-corruption plan. What is this? This is a combination of several systemic measures.

First, these are legal measures. That is, preparing a set of special laws, including a separate law on fighting corruption.

Secondly, these are economic institutions that should block corruption, including special rules concerning the way officials handle documents and citizens. There is also the creation of economic motivation for officials not to commit corruption-related crimes.

Generally speaking, there is nothing new. Such motivation has been created in many countries, and the level of corruption there was considerably reduced because it is pretty obvious that, 100 years ago, practically all states faced this problem as they started developing the basis of a full-fledged market economy.

And third, it's about ideals and trying to affect people psychologically. I am talking about developing good habits of law-abiding behavior among the people. We are not going to do it as some kind of primitive state propaganda. But nevertheless, we really should help people to be guided by law in their actions, rather than any other instincts.

This is the most complicated thing, but we intend to handle it. This could be the third element of the anti-corruption plan.

You know, since the time that people started using safety belts, the ones they use in cars, a need to fasten them has become part of peoples' consciences. It is there in their mentality and cannot be changed by any bans. Unfortunately, people do not all fasten their belts in our country.

Reuters: Thank you very much for such an interesting conversation.