Medvedev Speaks Against the Pre-election Uncertainty Influencing Russia’s Investment Climate

June 23, 2011

Photo: the Presidential Press and Information OfficeBelow is an abstract from the interview of President Dmitry Mevedev to Financial Times. Full transcript can be found on the Financial Times website.

FT: But you need your second term in order to complete your programme. You have announced a very ambitious programme and for that you need the second term.

DM: Thank you very much for the high evaluation of my programme, it’s very flattering to hear, but the second term is not what I need. The people must provide an answer to this one. They define whether they want to see this person or not and, as an acting politician, I will be guided by that in taking my decision. I think that we will have not very long to wait and I think that the decision will be correct, both for the rest of the federation and myself.

FT: But don’t you think that this kind of uncertainty influences the investment climate in the country? Recently we have seen a very significant outflow of capital flight from the country.

DM: This is a very good question. I think that we all, both the president and the government and the parliament, must do our utmost to make sure that such uncertainties don’t influence our investment climate. What is the difference between an up-to-date, developed economy and an emerging economy? And our economy is emerging, so far. That vicissitude of power as to who is going to be elected, who is going to be appointed, does not have a very significant impact on the investment climate.

For the UK, what is the difference who is going to become the prime minister, or for the United States, who’s going to be the next president. Their investment climate, the strength of their currency, depends to a lesser extent from whether the Conservatives are going to win or Labour are going to win, or Republicans or Democrats.

FT: But this issue ... this question seems to be important for investors.

DM: Yes, for us it is important, yes. I am not going to argue with this one.

FT: You spoke about the diminishing role the state should play in the economy. Of the measures you proposed, which is the most important one to produce a result?

DM: Actually, all of them are important. I am a proponent of systemic measures, rather than a single one. Privatisation, which is on the tip of everybody’s tongue, is still only one of measures. Indeed, we have increased the amount of assets possessed by the state. Some of this property has to be sold now. This is a common thing in the world, in fact. This used to happen in the UK and other countries too. First, something is nationalised and then sold. Now it is time to sell. That’s for sure; because otherwise we cannot develop. However, this is not the only measure to be taken. I did not speak of that yesterday, but I will tell you now that it is very important to change the mentality. The state as a whole and its officials should realise that business cannot be bossed about forever. The economy must be self-regulated. Although my friend Zapatero thinks otherwise, and this is what we are in disagreement about. This calls for a radical change… Very many well-intentioned leaders have grown used to micromanagement, turning to the Kremlin, turning to the president, turning to Putin, turning to ministers with virtually any problem. This is impossible to endure, this disrupts the economy. It seems to me that altering the mentality, the paradigm of thinking is very important, too, plus the measures I spoke of in Magnitogorsk and at the forum yesterday.

FT: How can the mentality be altered?

DM: By leading by example. If I can gather myself up to refuse something, let others do the same. I spent eight years as Gazprom’s chairman of the board and was involved immediately in exercising economic control, because Gazprom is a major Russian [economic] entity. However, the time comes when you have to collect your strength to say: “Enough! It is time to change the management system.” Secondly, the mentality can be altered by applying good laws that should evolve to keep pace with the times.

FT: As far as the case of Sergei Magnitsky is concerned, did you mean the case specifically when you spoke yesterday of firing those suspected of corruption?

DM: No, of course, not. I meant the situation as a whole. The Magnitsky case is a very sad incident. However, it is an incident that needs a very thorough investigation, first of all, what really happened and why he was taken into custody, who was behind that, what deals were clinched by both those he represented and by the other side. I have asked the prosecutor general and Ministry of Interior to work on that. So, I expected their answers. However, everything cannot boil down to a single case. The problem is far more complicated, because there are many cases that remain uncovered while they may be even more complicated than the Magnitsky case.

Source: Financial Times copyright