Presidente de Rusia Vladímir Putin participó en el Foro de Inversiones ‘¡Rusia os llama!’
Fuente: Sitio del Presidente de Rusia
Vladimir Putin took part in the annual Russia Calling! Investment Forum hosted by VTB Capital. The plenary session is entitled “Building Partnerships. Bridging Differences.”
President of Russia Vladimir Putin: Good afternoon, friends, ladies and gentlemen,
I am very pleased to welcome the participants and guests of the traditional, already tenth, Russia Calling! Forum to Moscow.
This year again, the forum brought together senior executives of leading Russian and foreign companies, investment funds, and eminent experts whose work, at least part of it, is associated with Russia and who are interested in our country.
Before opening the discussion, I would like to provide a brief overview of the situation in the Russian economy. Overall, it is steady. Russia's GDP is estimated to have increased by 1.5 percent during the first three quarters of this year.
The industrial output showed higher growth rates, exceeding forecasts and adding 3 percent, with the manufacturing industries adding 3.2 percent.
Key indicators, such as inflation and unemployment, are at low levels with unemployment at 4.7 percent and inflation around 3.5 percent. Based on the Central Bank’s forecasts (Ms Nabiullina may have already mentioned this), we planned it at around 4 percent, but the current number is 3.5 percent, as far as I know.
Despite the external attempts to exert pressure and well-known internal difficulties, the Russian business is making long-term plans and increasing investment in development projects.
The volume of investment in fixed assets grew by 4.1 percent over the first nine months of 2018. Such business optimism shown by investors and their positive outlook are an important measure of business confidence. We highly appreciate that and will support such positivity.
Of course, it is obvious that the current economic growth rates are not enough to bring about a major improvement in living standards for our citizens. We are open about it, we are aware of it, and are creating an entire development programme in order to change the state of things.
As I have already said, we are seeking to achieve growth rates above the global average and to firmly establish Russia among the world’s top five economies. It is by addressing structural challenges that we can lay a solid foundation for getting this breakthrough effort off the ground.
First, we need to improve productivity, primarily by introducing modern and better performing technologies in the non-oil and gas sectors.
We will improve the vocational training system in order to be able to constantly develop and expand competences and ensure effective personnel development.
Second, we will direct substantial resources towards infrastructure development and provide all the possible assistance to private companies to this effect. Roads and railways, seaports and river ports, air travel, power supply, communications – in all these areas we intend to step up our efforts manifold in order to enhance connectivity within the country with convenient and safe communications.
Let me emphasise that this is also essential for enabling Russia to be proactive in its international economic ties and expanding our export opportunities.
Third, we will do everything it takes over the next several years to promote priority growth of the digital economy. We will form a regulatory and technological framework for introducing digital solutions in public administration (we have already started moving in this direction, and this effort has gathered significant momentum), as well as in utilities and urban infrastructure, the industrial sector, transport, education and healthcare.
We will create fundamentally new industries and business platforms based on digital solutions, and will stimulate the development of Russian companies – global leaders in the digital era.
Of course, to ensure investment growth, to attract capital to the Russian economy, we will continue to improve the business climate, reduce the administrative burden on businesses and offer investors new, more convenient mechanisms to expand their business.
The implementation of plans for the development of Russia’s economic potential will certainly require large government investment; you have probably heard the figures. As a reminder, in 2019–2021, the plan is to allocate 2.3 trillion rubles from the federal budget for these purposes.
At the same time, I would like to note that, despite the obvious growth of expenses, we have not opted for weakening the budget policy. We will further maintain a responsible approach to financial management and ensure the necessary balance of revenues and expenditures of the state treasury.
Such long-term predictability of macroeconomic, financial, and monetary policy is extremely important for both domestic and foreign investors.
This, ladies and gentlemen, is what I wanted to say at the beginning. We still have a small discussion scheduled – I am at your disposal.
Thank you for your attention.
President and Chairman of the VTB Bank Management Board Andrei Kostin: First of all, thank you very much for coming. Indeed, this is our 10th anniversary forum. If I may, I will take just two minutes of the audience’s and your time to briefly remind everyone how it all started 10 years ago.
The creation of this forum is directly related to the creation of VTB Capital investment bank, which took place 10 years ago in a very unlikely period amid the global crisis, when many investment banks were scaling down their operations.
Of course, we consulted with senior bank managers and leading experts. I talked with the head of Deutsche Bank Josef Ackermann, a renowned investment banker, and he told me: ”Andrei, when you see Mr Putin, tell him there is no great country without a powerful national investment bank.“
When I came to see Mr Putin after that (he was prime minister at the time) to give a report, he, first, approved this initiative and, second, said: “How can I help?”
Like in a fairy tale, I thought about asking him to grant three wishes, but then I remembered that the more wishes, the worse the fairy tale turns out, so I made just one wish: “Mr Prime Minister, may I ask you to come to our conference (back then, every self-respecting investment bank hosted conferences), and not go to others?” He said nothing about other conferences, but positively stated he would come to us.
Of course, even in my wildest dreams I never thought that 10 years would pass and every year Mr Putin, regardless of the weather, political climate and his busy schedule, would come to our conference. This made the forum what it is now. I believe it is our country’s leading financial forum, and, of course, you come here primarily to be able to listen to and \ talk with Mr Putin.
Mr President, I was searching my memory to come up with some numbers. We had 300 investors at the first forum where you spoke, now we have 2,200, with over 500 coming from more than 63 countries. I hope your efforts were not in vain, because the great nation of Russia, I believe, now has a dependable national investment bank. Thank you so much for supporting us all these years.
Colleagues, we will now have a Q&A section. This is a democracy. You can ask questions from the floor. Mr President often picks the speaker himself. But while you are preparing, let’s have the first question.
This is not something we have prearranged, but I think, The Wall Street Journal has an interesting question: One of your government’s key economic priorities is to increase investment to 25 percent of GDP. You have set similar targets in past election campaigns, but with little success. What makes things different this time around? What makes you think this is a more realistic target today?”
I can tell you that we touched on this topic this morning, and Alexei Kudrin said that as a rule when specific instructions by the President or the Government are not fulfilled, punishment follows, but when we set strategic goals and they are not met nobody seems to be responsible. Who will answer for this now? And an additional question from me. Who will be held responsible for failing to meet this target?
Vladimir Putin: First,I don’t think people come here to see me or hear me speak, I am not the biggest attraction in Moscow. They have things to do and to discuss among themselves, and it is very important to talk with their colleagues from the Government, from the Central Bank and to get a feel for what makes Russia tick.
To start with, 2008 and 2018 are very different. There was a crisis then and times are also hard today, but the causes of the crises are different.
Today, I think, there is a sense that in spite of any crisis phenomena or artificially created difficulties, the Russian economy is adapting to the challenges, is feeling confident, creating conditions for domestic development, and this, in my opinion, is the factor I mentioned when I talked about this.
GDP growth is 1.5 percent, not that much, but investment in fixed assets outstrips GDP growth, 4.1 percent. This shows that investors have confidence in tomorrow and understand the policy pursued by the Russian financial authorities. It is stable, reliable and predictable, and the economy adapts to external shock, as indicated by the factors I have mentioned.
As for punishment, with us it is usually a case of (you know the expression) “the rewards go to the uninvolved and the punishment to the innocents.” Let’s not go down that road and try to decide who should be punished. We need to think about what needs to be done to fulfil the ambitious plans we have set for ourselves. We do have such a plan.
Andrei Kostin: Colleagues, feel free. You have the opportunity to have a direct dialogue. Please, go ahead.
Akar Tolga: Dear President, I would like to ask you. There has been much discussion about moving away from the dollar to achieve greater diversification, whether to make payments, to engage in foreign trade and for foreign reserve purposes. Interestingly, one of the impediments to this are governments themselves. They keep signing agreements in dollars whether they are for loans or for trade and they continue to keep the currency for reserve management. Russia is no exception. What can governments do to support this diversification? Thank you very much.
Vladimir Putin: We are not seeking to walk away from the dollar – rather, the dollar is walking away from us. (Laughter, applause.) Those who take these decisions are not just shooting themselves in the foot but a bit higher, because this instability in making payments in dollars is causing quite a few economies to look for alternative reserve currencies and create settlement systems independent of the dollar.
It is not just us, believe me – we see what is happening across the world. Look at how the foreign exchange reserves of various countries, including the United States’ closest allies, are shrinking. Dollar assets are dwindling, look at the reports – and this concerns the largest holders of dollar assets. This is the result of this sanction-based policy that targets, among other things, dollar assets.
I think that sooner or later they will wake up to the reality, but as long as the world has to address these sorts of challenges in the economy, the search for alternative options for making settlements and accumulating reserves will continue. We are also doing this like many other countries.
There are long-established practices in some commodity markets, say, in the oil market, but still when people look for a solution to a problem they tend to find it. For example, 70 percent of our exports to EAEU countries and 30 percent of our imports from them are settled in rubles.
We are actively working together with our major trade and economic partners to create systems that would not be linked to SWIFT. We are working to ensure the flow of goods.
I have just talked to the Turkish President, your leader – literally, half an hour ago. We discussed several practical issues but I would like to remind you of our military technology deal, the one to supply S-400 missile systems. We understand that if we make payments in dollars, the payments will not go through.
So, we thought of another way of doing this and the deal came off. We will act in the same way for all types of goods and I have cited just one example that is on everybody’s lips.
And so we are not pursuing the objective of moving away from payments in dollars, rather we are forced to do this. I can assure you that we will continue to do this, but not because governments do not want to [make payments in dollars] – we simply do not want to make dramatic moves that could harm us.
Of course, to make the global economy more sustainable and predictable and settlements more efficient and reliable, alternative options will be found.
Andrei Kostin: Next, please.
Raymond Zucaro: My name is Raymond Zucaro. I am the Chief Investment Officer at RVX Asset Management based in the United States. We focus on emerging markets globally. But I really consider myself a student of history. And when I look at what you’ve done for Russia, Mr Putin, I think in history books you will be regarded much like Peter the Great. Restoring Russia to a world power, stopping the European encroachment on the near abroad. And at the same time, being an American citizen, I often look and wonder at the lack of understanding from the US policies and understanding of the world. I was given this gift which commemorates your summit with President Trump in Helsinki. This coin, it was printed in the United States, it has grammatical errors, it has spelling mistakes in Russian. My question for you is really: what would you tell the leaders of my country to better understand the Russian history, to better understand their perspective, your perspective that the two countries can get along better in the future?
Vladimir Putin: As a historian, you know that you need to study history to know it, just read it. There is nothing difficult in that. And when you do this, you will understand the motives of your partners.
History is a useful and very interesting subject. You and I know the saying that to know the future you must know the past. I find it difficult today to make any recommendations, which is a thankless exercise anyway.
You said that Russia is a great power. The United States is a great power as well, with a population of over 300 million and the world’s largest economy. The US dollar is actually the only universal reserve currency. America has huge advantages. It spends $700 billion on defence.
We spend $46 billion and the United States spends $700 billion. This is more than the aggregate defence spending of all the world’s countries. Of course, the United States is a great power. And this is how we treat it. Countries must respect each other and show their respect in practice.
We talked here about all kinds of restrictions, including in dollar-denominated settlements. Or various sanctions and customs tariffs that have been introduced against some countries, for example, China.
According to the WTO, mutual restrictions that have been recently introduced by the G20 countries have reduced global trade by nearly $500 billion. Has this benefitted any country, including an economic giant such as the United States?
This has created windows of opportunity for us. For example, we will export soybeans to China. The United States used to deliver vast amounts of soybeans to China, and now we will do this as well. We have agreed with our Chinese friends to supply them with poultry meat and several other agricultural products.
In fact, the Americans have voluntarily withdrawn from this huge market. Why have they? I believe one must strive for a positive result without trying to harm one’s partners but instead looking for joint spheres of operation so as to ultimately make cooperation more effective.
This will benefit all sides. But everyone stands to lose from unilateral and politically motivated harmful measures that are illegal from the viewpoint of international trade law.
What can I recommend here? Abandon this policy and start looking for points of contact. We are ready for this, and we want this, as I have said more than once. I hope to discuss this with the US President, if we meet in Argentina. As I understand and feel, this is what he meant when we talked during the lunch in Paris, where we sat across from each other. We had about an hour to talk with each other and with the other colleagues who sat next to us.
Overall, I believe that President Trump is favourably disposed. We must find the points of contact I have mentioned, but this depends on the US administration, not me. You need internal consensus in the United States, which would motivate the US elite to work with its partners.
Mohammed Bassatne: My name is Mohammed Bassatne, I am the CEO of BB Energy Trading. My question really relates to the relationship between OPEC and Russia. Over the past few years, there has been a lot of collaboration regarding the curtailment of production. And of course, the main issue here is that many people believe that this is at the cost or at the advantage of the shale oil industry. I would like to get your view on that. On the same token, because of this curtailment of production, some might argue that that does affect directly the technology and innovation in the Russian oil sector. How do you see that going forward and do you believe that this strategy is a long-term one for Russia, to keep on curtailing the production at the cost of other players?
Vladimir Putin: You know, we have organised work with OPEC countries – the 15 member-countries and 12 non-members – and we have come to terms on working jointly on the world markets to balance supply and demand.
It should be said, I think, that we have managed to do this for the first time in the organisation’s history – all agreements have been implemented 100 percent. There was nothing like this ever before in the organisation itself. I must admit that this took place thanks, to a large extent, to Saudi Arabia’s position. This, in effect, is the achievement of Saudi Arabia and the Crown Prince, who was the one to initiate this work. And it has led to positive results.
As for shale oil, we did not have, do not have now, nor, I hope, will ever have – at least, Russia will not have – the objective of undermining someone’s business, including those in shale oil. But it was necessary to balance the market and raise the price to a level, where the industry itself will become viable and see the return of investments.
What was the danger, after all? That the flow of investments to the industry will be suspended. As a matter of fact, this was what began happening. A subsequent price surge was inevitable, but this would have been largely destructive for both producers and consumers. This is why our objective and aim was to work jointly and to be flexible and also meet the interests of both producers and consumers. And we have succeeded in this.
If I recall rightly, back in the year 2013 a barrel cost around $43 and this year it was $72 a barrel during the first 10 months. Recently, the price went down but then went up a bit again. As I see it, $60 a barrel or round about that price is absolutely acceptable and it is fine with us.
We are satisfied with it because our expenditure budget is based on approximately $40 a barrel and next year’s expenditure budget will hinge on $43. What I mean is that the price will be $43 a barrel, while the point where shale oil production is profitable is anywhere between $35 and $45.
There are different options, we know this. The profitability margin could be as high as $60 a barrel but on average it is anywhere between $35 and $45 a barrel. Therefore, the price I am speaking about is balanced and fair. If need be – we are now in contact with OPEC – we will continue this joint work.
Ravi Ruia: Your Excellency, friends here. My name is Ravi Ruia, I am the co-founder of the Essar Group in India, along with my brother Shashi Ruia. Your Excellency, we are involved with Essar Group in different businesses. We are in the oil refining and exploration business, in spill manufacturing, power generation, port infrastructure, metals and mining. Our total revenues are around $15 billion a year. Your Excellency, in the last two years, with active cooperation and assistance of VTB Bank, we have been instrumental in bringing in a large investment from the state-owned oil company Rosneft into India, which has given access to Russia to a very large market in India of over 1.25 billion people. It is a total investment of almost $13 billion, which is the largest investment ever made by a Russian private company into the Indian private sector. And it has given a big, major outlet for potentially Russian crude into India and access to over 4,000 to 5,000 filling gas stations in India where our product will be directly given to Indian consumers. Your Excellency, we are also looking at how else we can bring in more Russian investment into India, which would add to the growth of both Indian market and access to Indian population as well as add to Russian export. For instance, in the power generation sector, India genuinely believes that there is large potential for Russian power equipment to come into India as the Indian power generation is growing. This is the background of our group. We are now looking at, Your Excellency. My question to you, Your Excellency, is the economic growth in India is at 1.5 percent. And now that the oil price has recovered, what measures do you envisage to take it to a sustainable high level of 3 percent? Thank you.
Andrei Kostin: Do you mean in Russia?
Ravi Ruia: Yes, in Russia.
Vladimir Putin: First of all, I would like to say that we have really good constructive relations with India, thanks also to our friendly personal ties with Prime Minister Modi, who is a serious politician and a really reliable partner.
It is largely thanks to his efforts that we are moving our relations forward in many fields. Yet we are not satisfied with the current state of our relations. It is beyond the capabilities of both India and Russia. We can increase the volume of our trade and economic ties and mutual investments manifold, yes, many times over.
One of the investment projects you have mentioned is, indeed, the largest foreign investment in the history of the Indian economy – the acquisition by Rosneft, if I am not mistaken, of a stake worth $12 billion in one of India’s largest oil refineries. I hope it is not the last investment of this kind.
Of course, we would welcome Indian investments in Russia. We know that the Indians are working effectively and on a large scale in the pharmaceutical industry. We would welcome the further development of our ties in this sphere, but, of course, not only in it.
You mentioned power generation. Our electrical engineering has always developed very well. We still need to do a great deal in some segments of this market, increasing or launching the production of some types of equipment. But overall, we have good technology and high quality products as well as the necessary personnel and system of training. We can certainly work actively together in this sphere.
As for increasing the pace of economic growth, I have mentioned this before, including here. We have a special programme for increasing the growth rate in this area. First of all, we must increase labour efficiency based on novel technology, including digital technology, so as to be able to improve our infrastructure, education and healthcare.
Speaking about infrastructure, we plan to considerably increase the traffic capacity on our roads. We will direct ample resources, both public and private, that we will earmark for this in the next five or six years.
For example, we plan to increase the efficiency of our railways, considering that we need to export such commodities as coal, oil, which involves pipelines, and gas.
We will also expand our ports, especially in the Russian Far East and Eastern Siberia. We will continue to develop our seaports. Just to remind you: the volume of transhipment in our ports has increased from 300 million tonnes in 2013 to 1 billion tonnes last year, a record-breaking achievement.
This is not the end of the road. We will continue working on this. We will seriously increase investment in healthcare and education, because attaining the results we need is impossible in a modern economy without healthy and highly educated people.
We will also expand the internet, so that it is accessible in every, even the smallest village, and so on. This is the long list of goals we have mapped out within the framework of our national projects. I strongly hope that this will produce the required results.
Ewan Thompson: Thank you. Ewan Thompson from Neptune Investment Management in London. You mentioned the plans to increase the investment rate in the Russian economy while still maintaining the fiscal strength. How do you see the capacity of the Russian banking sector to help accelerate the economy? What role will it play in financing this growth? Thank you very much.
Vladimir Putin: We are fully aware of the potential of our banks, of our banking system as a whole, how it compares with the leading world banks, what resources they have today, what opportunities, what they can do and, most importantly, how they are developing.
We have several leading banks; one of them is VTB Bank. We can also see the difficulties they are facing, their achievements and successes. For several years, the Central Bank has been consistently making efforts for the rehabilitation and strengthening of the Russian banking system. Sometimes it is painful and affects people’s interests, but ultimately, it serves the interests of the citizens of the Russian Federation, so that its banking system, its financial institutions where people keep their savings are reliable and stable.
For this, we have adopted a number of legislative acts, a number of laws that ensure depositors’ interests. We also recently decided to split the licences. There are two types of licences now that require different amounts of capital from banks, I think, one billion and 300 million, that would be, say, a general licence and the other one.
Here is the difference: in the latter case, these banks, mainly regional ones, should be less burdened by reserves and other requirements from the regulator. We believe that regional banks should be able to work more flexibly. I hope it will be so. And regional governors are asking us about it, suggesting what we should do.
Overall, the banking system is developing successfully and steadily, and its profits are at a good level. Their total capital is 90 trillion rubles, I think. In the first nine months of this year, they made almost 1.5 trillion rubles. We can see what is happening here, and we know what to do next to strengthen our financial system.
Jean-Pierre Thomas (retranslated): It’s Jean-Pierre Thomas, adviser of the former French President Nicolas Sarkozy for the cooperation between France and Russia and now President of the Thomas Vendome Investment. Mr President, I will ask you a question about the US sanctions. Is there finally some positive side of the sanctions on the Russian economy you want to comment and we can work on? Because we read, for example, a very interesting, a very successful story of import substitution in the sector of agriculture, or agrosector, and all the sectors of the Russian economy.
Vladimir Putin: I believe any restrictive measures that are politically motivated and illegal, and let me emphasise that they are illegal, in terms of international law and WTO norms, are detrimental for everyone, including for those who introduce them.
You represent France, and you have been working on cooperation with the Russian Federation. There are obvious facts that are objective and backed by statistics. The European Union was and still is Russia’s largest trade partner, but Russia-EU trade is now at about $236 billion, while it used to be at $450 billion. Do you see the difference?
According to the European Parliament, the fallout from the decline in exports to the Russian market resulted in the loss of 400,000 jobs in the European Union. How is this not detrimental both to the EU economy and its people? Does this not lead to social issues? After all, this is about families, their incomes, and their children! This is where decisions of this kind lead. Of course, we also feel the pinch.
However there is also a positive side to this story, even though this situation has a negative impact on Russia and its economy. Once the Russian economy adjusted to this kind of actions on behalf of our partners, and this adaptation was real as everyone could see, I believe that advantages started to outweigh the disadvantages.
First, since you also belong to the investment community, you will understand that in this situation, if this macroeconomic policy remains in place, and given the resilience of the Russian economy that we see today, there are opportunities to make a profit in Russia.
This is what many believe. Some of our partners are willing to co-invest in any project carried out by the Russian Direct Investment Fund (RDIF) with no questions asked.
So when the RDIF has a project, its partner automatically invests in anything the RDIF works on. What does this tell us? This shows trust not only in the fund, but in the Russian economy as a whole.
And how about the profit margins? Are they above average in Russia?
CEO of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev: Three or four times above average.
Vladimir Putin: So the profit margins when investing in the Russian economy are three to four times higher compared to other markets. These are the concrete results of this work, you see?
As for the import substitution, it was not our choice, but it turned out to have a positive effect. You have cited the example of our agriculture. Our agricultural production has increased several-fold. If there are people from our agricultural companies here, they will definitely tell you they do not want the European sanctions to be lifted.
Because this would create additional competition on Russia’s domestic market, although internal competition is increasing and is replacing foreign competition, which is having a positive antimonopoly effect.
You have said about our agriculture that our farming exports were just over $13 billion in 2013. We thought it was a great deal. In the first ten months of this year, our agricultural exports reached $21 billion. This is a good achievement for us.
Russia has become the world’s largest wheat exporter – not just grain but specifically wheat exporter. Other farming sectors have grown as well. The most complicated situation is in the vegetable sector, but it is growing steadily too.
We need money for growing some vegetables in greenhouses. The loans have been provided, and this sector is developing too. But it is not just agriculture.
Look, we produce between 95 and 98 percent of vehicles at home. In the past, we imported a large number of them, but now we make them ourselves. Between 95 and 98 percent in transport engineering. The figure for the automobile industry is 85 percent. Part of this result is due to the deep localisation we have achieved under agreements with our partners, primarily European ones.
We only produce 48 percent of oil and gas equipment so far, but the process is gaining momentum, and if new restrictions are introduced we will achieve our goals here just as we did in transport engineering, bringing the share of Russian-made equipment to some 90 percent. That is, if someone wants to shut themselves out of the Russian market.
I need not say anything about military equipment. We hardly import any now. We regularly monitor the situation. I do this personally, meeting with representatives of the defence industry and the Armed Forces twice a year. We spend a week in Sochi discussing all the relevant issues.
Last year we invested 600 billion rubles in the import substitution programmes, including 120 billion from the federal budget. All this is good, as you can see, yet we would like to change this form of relations as soon as possible and to restore a normal system of economic relations and international trade.
Michael Henry: Michael Henry from Wellington Management in Boston. Thank you very much for being here today and for thoughtful comments. My question to you is to look forward a little bit. You are obviously the most dominant figure in Russia domestically, politically and the face of Russia abroad. But I am wondering if you could tell us what you think Russia would look like the day after President Putin exits the political scene.
Vladimir Putin: Why the hurry? I am not going anywhere yet. But I can tell you the following: Russia is already feeling confident, self-sufficient but it is also open to cooperation with all our partners, including the United States. I hope that this realisation will eventually come to them and the need to solve our common problems and matters will encourage us to work together efficiently.
As concerns Russia’s development, I have just talked about this in my speech, as well as just now, when I was answering a question. We have a whole range of national projects. I hope they will be carried out more or less but they are large-scale and ambitious tasks. But if we confidently follow the path to their solution, the country will be heading towards changing for the better.
Jacob Grapengiesser: Jacob Grapengiesser from East Capital. I want to ask you about the relationship with Ukraine. First of all, maybe a bit on the incident in the Kerch Strait, what really happened there and why those vessels were kind of taken into Russian custody. Secondly, there are elections in Ukraine next year. Do you think there will be anti-Russian propaganda or campaigning from the Ukrainian politicians to score some points in the elections possibly? And will that lead to more tension with Russia? Thirdly, how could you normalize the relationship with Ukraine in the long term?
Vladimir Putin: As concerns the incident in the Black Sea, it was obviously a provocation organised by the current officials – I think, by the incumbent president, ahead of the presidential election in Ukraine to be held next March.
The current president is, I think, fifth in the popularity rating and there is a chance he may not make it into the second round. Therefore, he needs to do something to escalate the situation and create unsurpassable obstacles for his rivals, especially in the opposition.
Why do I think so and why am I even certain that this is the case? Look, there was an incident (I will speak about it in a minute) in the Black Sea. But it is a border incident, nothing more. What happened in 2014 when Crimea decided to join Russia? That was a different story, a big one.
What about the painful civil war in southeastern Ukraine, in Donbass, in the Lugansk region, when government forces deployed tanks and heavy artillery, even aviation? It was a war while no martial law was declared.
Now, a small Black Sea incident resulted in martial law. This is clearly a measure taken because of the presidential election. It is absolutely obvious.
Now regarding this incident, or provocation, to be exact. Certainly, this is a provocation. Look, last September roughly the same convoy of Ukrainian military ships passed through the Kerch Strait under the Kerch Bridge to the Sea of Azov.
They fully complied with all agreements and requirements, informing the border guards about what ships made up the convoy, who they were and where they were going. We provided them with a pilotage service and quietly led them to their destination in the Sea of Azov.
What happened this time? They did not respond to our border guard’s requests. They entered our territorial waters. I would like you to note that they entered our territorial waters which were ours before Crimea became part of the Russian Federation. That is, they entered the waters which have always been Russian territorial waters.
Without responding to our border guards, they proceeded to move towards the [Kerch] Bridge. Neither did they respond to our proposal to moor the ships at the marina. Our proposal to take a pilot – even after the violation of our state border they, nevertheless, were offered to take a pilot – was met with silence, there was no reaction whatsoever.
What should border guards do in a situation like this? Military ships had entered Russian territorial waters and were not responding to our border guards and it was unclear what they were going to do. What did the border guards have to do? Had they acted differently, all of them would have been put on trial. They were fulfilling their military duty, the order they were given and, as things stand, they were fulfilling their legitimate functions to protect the territorial integrity of the Russian Federation.
I believe that the same would have been done in your country, it is absolutely clear. Also, it was discovered that two Ukrainian Security Service officers were among the crew members and, in fact, were in charge of this special operation. They have acknowledged they were Ukrainian Security Service officers. These are clear signs of a provocation that had been planned in advance so it could be used as a pretext for introducing martial law in the country.
This has nothing to do with the efforts being taken to put relations between Russia and Ukraine back on track. This is a game to exacerbate tension, this is an immoral game that is being played in the country in order to neutralise someone’s political opponents. You know, sometimes it is amazing to see…
In fact, I have already got used to many things but today’s Kiev authorities…They have succeeded in selling anti-Russia sentiments and they have nothing else to sell. It seems that no matter what they do, they always get away with it. If they ask to be given infants for breakfast they will probably have them served. Well, we will be told, they want to eat and that is it.
This is a very short-sighted policy. It will not lead to good things because it tends to unnerve today’s Ukrainian leadership in a way that it does not urge them to get down to normal political work within the country and start pursuing normal economic policy.
They have economic problems in addition to social and financial problems and they never stop to beg, asking the International Monetary Fund to give them money. But these are the future generations who will have to pay this money back. As for their work to promote cooperation with their neighbours, there is nothing good to speak about.
As for long-term prospects, no matter what happens, no matter who is today in power in Kiev, the Russian and Ukrainian people have always been brotherly and very closely connected and will remain as such for ever. This political scum will come off. (Applause.) One day, the Ukrainian people will assess its today’s leadership in the way the Georgian people have assessed the activities of [Mikheil] Saakashvili.
To be continued.