Vladimir Putin's Interview
to Bloomberg. Part Three
The third part
of Vladimir Putin's interview to the international media company
Bloomberg is being published. The interview was recorded
on September 1, 2016, in Vladivostok.
September 2, 2016
11:30
Vladivostok
Interview
to Bloomberg.
See also
John Micklethwait: You've
just talked about the Russian economy, we'll come back and I ask
you about reserves in just a second. But it struck while you're
talking in detail in all the ways Russia got stronger. You're
about to go to G-20 you have studied and watched the west many
times. You've been to G-20 more than any other leader
at the moment. Have you ever been to G-20 where the west is
seen more divided, more in doubt, more distrustful in itself. Look
at all those things happening in Europe — you look
at migration, you look at Brexit, you look at America with all
the election and the problems with that. Does the West seem
particularly disunited at the moment to you. How do you explain
that?
Vladimir Putin: There
are many issues in the global economy in general
and in the western economy as well: population ageing, drop
in labour productivity growth rates. This is obvious. The overall
demographic situation is very complicated.
Then,
the specialists themselves, and you are one of the best
specialists in this area, probably believe that in the course
of EU expansion, for example, some elements concerning
the readiness of some economies to enter the Eurozone have
not been taken into account.
It is very
difficult to enter a single currency zone having fairly weak economic
parameters and maintain a favourable state of the economy,
not to mention positive growth rates. We have witnessed it not only
in Europe, but for example in Argentina (nearly 10 years ago
or more), when they tied the national currency
to the dollar and later they did not know what to do about
it. It is the same with entering the Eurozone…
Vladimir Putin: I hope
so, because we believe in the fundamental principles
of the European economy. We see that leaders in Western Europe
(there are some debates of course, we also see that and analyse it
all) stick to, I cannot say right or wrong ones, it always depends
on someone's view, but I think, very pragmatic approaches
in addressing economic issues.
They do not misuse
financial instruments, financial injections, but, first of all, seek
structural change. This is urgent for our economy as well, maybe even
more urgent bearing in mind the problem that we cannot yet deal with,
namely the prevalence of the oil and gas sector
in the Russian Federation and, as a result, dependence
on revenue from oil and gas.
This is also
evident in Europe, not the dependence on oil and gas, but
the fact that structural reforms are long overdue, and I think
that the leading economies are very pragmatic and efficient
in addressing the issues facing the European economy. That is
why we keep approximately 40 percent of our gold and foreign currency
reserves in euros.
John Micklethwait: You
expect that Europe won't keep the existing membership, and they going
to lose more like they lost Britain?
Vladimir Putin: You
know, I do not want to answer your provocative question, though
I understand that it may be interesting.
John Micklethwait: Come
on, many, many times you've criticized Europe…
Vladimir Putin: Well,
yes, I have criticized it, but I repeat: we keep 40 percent
of our gold and foreign currency reserves in euros, we are not
interested in the collapse of the Eurozone, but I do
not rule out the possibility of decisions being made that would
consolidate a group of countries equal in economic development
and this, in my opinion, will lead to a consolidation
of the euro. But there can also be some interim decisions
in order to keep the present number of members
of the Eurozone unchanged. This is not our job, but we always follow
the actions of our European partners closely and we wish them
luck.
Now, regarding that
criticism you spoke about. I have criticized foreign policy, but that does
not mean that we should agree with everything. Indeed, we criticize a lot
of things, we think that our partners make many mistakes (may be we make
mistakes too, no one is immune to making mistakes), but as for the economy,
I repeat that, in my opinion, the European Commission
and the leading European economies are acting very pragmatically
and are on the right path.
John Micklethwait: Can
we talk about the Russian economy. I know you will say that exchange
rate a lot depends on central bank and the exchange rate is
set by the market. I saw back in July, on July
the 19th when the ruble was 62,9 with the dollar you said
the ruble is too strong, you criticized that. And a ruble is now
come down to 65 to the dollar. Is it weakened enough
to make you happy? Or do you want to see it weakening further?
Interview
to Bloomberg.
Vladimir Putin: I did
not criticize the Central Bank's position. I have always thought and I still
think that the Central Bank should act independently. Indeed, it does, you
can take my word. I do not interfere in the decisions
of the Central Bank and I do not give instructions
to the Bank management or to its head.
The Central
Bank observes the economic situation and, of course, I keep
in touch both with the managers and the President
of the Central Bank, but I never give instructions. If
I said that the ruble had become too strong, I did not say that
the Central Bank's position was wrong, I said that it added pressure
to export‑oriented sectors of economy. We all understand that this is
true. When the ruble is weaker, it is easier to sell, to produce
here for a cheap ruble and sell for an expensive
dollar, get revenue in dollars and then exchange it for rubles
and get a bigger income. This is simple.
But if we speak
about fundamental things, regulation of the rate is actually
the function of the main regulator, namely the function
of the Central Bank. And it should think of how
the economy and industry react, but also of its fundamental
tasks in order to ensure the stability of the rate.
The stability of the rate is the main issue
and the Central Bank manages to ensure it one way
or another. This was finally achieved after the Central Bank switched
to a floating national currency exchange rate.
The Central
Bank should take into account other things as well: the stability
of the bank system in the country, the increase
or decrease of money supply in the economy, its influence
on inflation. The Central Bank has a lot to handle
and it is best not to interfere with its competence.
John Micklethwait: You
personally, would you like to see ruble a little bit weaker still,
with their help? I know it is not you job but you made a comment
before. What do you say now?
Vladimir Putin:You
know, my position is that the rate should align with the level
of economic development. Because it is always about a balance,
a balance of interests, and it should reflect this balance.
A balance between those who sell something across the border
and those who benefit from a low rate, as well
as a balance between the interests of those who buy, who
need the rate to be higher. A balance between national
producers, for example, agricultural producers who are interested
in it. Here we have 40 million Russian citizens involved
in the sphere of agriculture one way or another. This is
very important. We should not forget either about the interests
of the regular consumers who need the prices
in supermarkets to be a little bit lower.
Therefore, let me
reiterate that the rate should not meet the interests
of a specific group or one or two groups, it should meet
the fundamental development interests of the economy itself.
John Micklethwait: So
you are no longer complaining. I will take it that you are not too unhappy
where it is?
Vladimir Putin: I did
not express any disagreement, did not complain. I simply noted that one
of the groups, especially exporters, would prefer to have
a weaker rouble.
John Micklethwait: You
mentioned earlier Russia used to have $500b. Now it is $400 billion. You
have this target to get back to $500 billion. What you think is
the realistic target? And your opinion: should the central bank
be buying more dollars in order to push it back up towards $500
billion?
Vladimir Putin: The Central
Bank is constantly purchasing, purchasing and selling and vice
versa – this is their job. I believe that over the last six
months gold and foreign currency reserves increased
by 14 percent.
John Micklethwait: They
gone back up a little bit, but they haven't been buying dollars
in the same systematic way as they did once.
Vladimir Putin: You
and I know very well about the necessary level of reserves
of the Central Bank as well as the purpose. We can
tell the general public that the gold and foreign currency
reserves of the Central Bank are not designed to finance
the economy, but rather to ensure foreign trade turnover. Therefore,
we need this level to be able to provide the necessary foreign
trade turnover for such an economy as Russia’s
for a period of at least three months. If everything stops
functioning our level will be able to ensure our trade turnover using its
gold and foreign currency reserves for at least six months
or more, which is more than enough.
Therefore today we
have an absolutely sufficient level of gold and foreign currency
reserves in order to ensure economic stability and sustainable
foreign trade turnover. All other issues – purchasing and selling
of currency – are related to the regulation
of the national currency market. However, it is still difficult
to say what will be the reaction of the Central Bank
and if it would lead to increasing the gold and foreign
currency reserves. Let us not forget that we have two governmental reserve
funds: the Reserve Fund and the National Wellbeing Fund that
represent together $100 billion.
John Micklethwait: I want
to jump back — all these things affect budget. You have budget
deficit, you just given some more money which you mentioned earlier
to pensioners. You will have to borrow sometime. Are you likely
to go this year? And will you go to the domestic market
or will you go to the international market to borrow money?
Vladimir Putin: There
is no such need at the moment. We do not have to borrow
in the external market, but we have used and are using this
traditional instrument in international financial relations. We have
issued financial instruments in the past, and there is
a strong demand for them, it is simply unnecessary now. Given
the cost of borrowings and the $100 billion
in Government reserves, there is no reason for us to borrow. We
should review the situation carefully. Besides, borrowings are possible,
but we must understand what is more profitable at this point. This is one
point.
The second.
The deficit. Last year the federal budget deficit was
2.6 percent. I think you would agree that this is a rather
acceptable level. This year, we expect a slightly higher deficit
of about 3 percent, maybe a little more than 3 percent. It
is also an absolutely acceptable level. But what are we seeking
to achieve? We are seeking to optimize budget spending.
I believe that even in such uneasy times we employ a very
pragmatic approach towards economic and social issues. We do address major
social problems and deliver on our promises to our people.
The Government
has just announced a four percent indexation of pensions. There
has been no indexation in the second half of the year, but
early next year we will make a one-time payment of 5,000 rubles
to each pensioner, which is actually comparable
to the indexation. We act in a pragmatic and careful
manner. We reduce spending on budget items that do not constitute
a priority. We are not going to waste our reserves and burn them
for any political ambitions. We will act very carefully.
I hope that
there will be no particular need for us to attract external funding.
It is worth noting that despite the fact the turnover is smaller now
we are still maintaining a trade surplus. I believe that we now have
a trade surplus of $45 billion for the first half
of the year. Year-on-year inflation has dropped several-fold.
Several-fold! Year-on-year it was about 10 percent compared to last
August, but now it is only a slightly more than 3 percent.
The unemployment rate of 5.7 percent is also acceptable. Our
microeconomic indicators are stable and it gives me reason to believe
that we will calmly and steadily pass this uneasy period in our
economy, which has already no doubt adapted to the current situation.
John Micklethwait: The G-20,
this one will be the last times when you'll see Barack Obama.
And as you well know there is American election on the way
and as you well know there is a choice in that between
Hillary Clinton and Donald Trump. Who would you rather have
at the other end of the telephone if there is geopolitical
situation — Donald Trump or Hillary Clinton? Do you have
a feeling at all?
Vladimir Putin: I would
like to deal with a person who is able to take responsible
decisions and implement the agreements reached. The name does
not matter. Of course, this person is to have the trust
of the American people, then he or she would not only have
the wish but also the supported political will to implement all
these agreements.
We have never
meddled in the domestic affairs of any state and we never
will. We will keep a close eye on what is happening and wait
for the election results and after that we will be ready
to work with any Administration given that it wants to work with us.
John Micklethwait: Can
I just push you on that? Back in 2011 you accused Hillary
Clinton of seeking to trigger the protests that you were facing
in Russia at the time. And by the contrast when
I look at some of things that Donald Trump said about you back
in 2007 that Putin is doing a great job, in 2011 he praised your
no-nonsense way, the next year he said you is new best friend, next year
he said you're outsmarting the Americans, he said you have good ratings to get
… And I can go on like that. And you are really telling me
that if you have a choice between a woman, who you think may've been
trying to get rid of you, and a man, who seems to have
this great sort of affection to you, almost bordering
on the homoerotic, you not going to make a decision between
those two, because one of them would seem to be more favorable
towards you?
Vladimir Putin: You
know, actually I have already answered your question, but I can put
it differently, say it in other words: we are ready to deal with any
President, but of course, and I mentioned that, it depends
on the readiness of the future Administration. We always
welcome when somebody says he or she is ready to work with Russia.
But if anybody, just like you said, (inaccurate translation possibly), wants to get
rid of us, then this is a different approach. However, we will get
over it; you never know who is going to lose more with such
an approach.
Here is
the thing: I have seen several times that anti-Russian cards are
being played during domestic campaigns in the United States.
I find this approach very short-sighted.
At the same
time we receive different signals all around that in fact, everything is
fine. The same situation occurred with the previous administrations
during the election campaigns, claims that everything will be restored
later. I do not think it matches the level of responsibility
shouldered by the United States. I suppose it should be more
sound, calm and balanced.
As for the criticism
we receive, you know, even Mr. Trump's team criticize us.
For instance, one of the participants or members
of his team claimed that Russia was giving money to the Clintons
through some funds and that in fact Russia is controlling
the Clinton family. This is nonsense. I do not even know where
Bill Clinton delivered his speech and I know nothing about any funds.
Both parties simply use it as a tool in their internal political
contention, and I am sure it is a bad thing. But again, we
welcome the fact that somebody expresses readiness to work with
Russia whatever the name of that person.
John Micklethwait: Can
I ask one last question on Donald Trump. Some people say that he is
too volatile to be an American president. You would be happy with him
as American president in the same way as you would be happy
with Hillary Clinton in that role.
Vladimir Putin: We
cannot decide for the American people. After all, despite
the scandalous behavior of one and, by the way,
the other candidate (they are both scandalous in their own ways),
they are smart, they are really smart and they are aware
of the leverages they should use to make the voters
in the United States understand them, feel them and hear them.
Donald Trump is targeting the traditional Republican voters,
the average person with an average income, the working class,
a certain group of entrepreneurs and those people who embrace
traditional values. Mrs. Clinton is focusing on a different part
of the voters trying to influence them in her own way
as well; so they attack each other and in some cases,
I would not want us to follow their pattern. I do not believe
they are setting the best example. But this is the political culture
of the United States, which one should accept as is.
The United States is a great country and it deserves
non-interference and no third-party comments.
Answering your
question for the third time, I can tell you that we will work
with any Administration and with any President in whom
the American people have placed their trust. That is, of course, if
they wish to cooperate with Russia.
John Micklethwait: Let
me ask you about other country. Another person you'll meet at G-20 Theresa
May. Britain has ended up in the same situation as Russia, it is
in Europe, but not, likely not to be in European Union. Will you
approach them with a free-trade deal?
Vladimir Putin: Well,
I would like to finish my answer to the previous
question. You have been working as a journalist for a long
time. You are quite knowledgeable and you understand all the threats
that may arise from a tense international environment, don't you? Especially
if there is tension between major nuclear powers of the world. We all
understand this.
Of course, you
are the one asking me questions. It is you who is the interviewer,
not I. However, let me ask you a question: do you want another Cuban
Missile Crisis? Or don't you?
John Micklethwait: No,
nobody does.
Vladimir Putin: Of course,
nobody does.
John Micklethwait: But
that is one reason why I asked about Donald Trump because he is seen
as a more unpredictable force than Hillary Clinton.
Vladimir Putin: And you
too would prefer that Russia maintained good relations with both
the United Kingdom and the United States, wouldn't you?
I would prefer it as well. If anybody in the U.S.
or in the United Kingdom says: ”I would like
to establish good partnership relations with Russia“, then both
of us, you and me, should welcome that. So should people like me
and people like you. However, we have no idea yet what would actually
happen after the elections. That is why I am telling you that we will
work with any President designated as such by the American
public.
As for the United
Kingdom, we have a meeting scheduled with the Prime Minister
in China on the G20 sidelines. We had a telephone
conversation. Unfortunately, the relations between the United Kingdom
and Russia have not developed in the best possible way; however,
it has never been our fault. It was not we who decided to discontinue
relations with the United Kingdom; it was the UK who preferred
to ”freeze“ our bilateral contacts in various fields. If
the United Kingdom considers it necessary to start a dialogue
on certain issues, we are ready for that, we are not going
to pout or sulk. We take quite a pragmatic approach towards
cooperation with our partners and we believe that it would be beneficial
for both our countries.
We were speaking
about our largest oil company Rosneft, and I recalled
in the beginning that almost 20 percent of it (19.7)
belongs to BP. Who’s company is that? British Petroleum, isn't it?
I suppose that is not bad. I have to tell you that British
Petroleum’s capitalization is significantly related to the fact that
it owns more than 19 percent of Rosneft, which has vast oil reserves
both in Russia and abroad. This has its impact
on the company's stability as well.
Thus, BP found
itself in a difficult situation after the tragic events
in the Gulf of Mexico. We did everything we could
to support it. Britain is interested in this, isn't it? I think
it is. The same is true of other areas.
We are marking
the anniversary of the Arctic convoys. You know about that,
don't you? We really do consider members of the Arctic convoy
to be heroes. This is true. I am not saying this
as a fashion of speech. Indeed, that is exactly what they were.
We know that the conditions in which they fought were appalling. Time
and again they faced death in the name of a common
victory and we remember that.
John Micklethwait: Do
you think Britain might be more compliant or more likely to do
a deal with Russia now it is outside or going to leave
the European Union?
Vladimir Putin: Britain
is leaving and has de facto left the European Union;
however, it has not withdrawn from its special relationship with
the United States and I believe that the UK's relations
with Russia depend on Britain's special relationship with the United
States rather than on its presence in or absence from
the European Union. If Britain pursues a more independent foreign
policy, it might be possible then. And if it is guided by commitments
to its allies and considers this to be of a bigger
national interest than its cooperation with Russia, so be it.
After all, this is
not our choice; this is the choice of our British partners,
the choice of priorities. Anyhow, we obviously understand that, being
a United States' ally and having a special relationship with it,
the UK in its relations with Russian has to make
an allowance for the opinion of its partner ‑
the U.S. We take this reality as a given fact, but let me
underscore once again that we will be ready to do as much
as Britain will be ready to do in order to resume our
mutual cooperation. This does not depend on us.
Part Four to be
published.
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