Isolated? Not! Russia Calling Again!

Investment Forum Russia Calling! Plenary Session

It’s again that time of year for VTB’s Russia Calling! Investment Forum, the 15th edition taking place December 4-5 in Moscow with this year’s theme: "The Future of Capital and the Capital of the Future." Putin’s part in the plenary session lasted just under two-hours, so the following read will be long. The hall is again filled to capacity showing very well that Russia isn’t at all isolated as NATO would like the world to believe. The theme IMO is fascinating given Russia’s plans that extend to 2030 and beyond where investment flows are anticipated to grow at a very rapid rate. After Putin’s opening speech, VTB CEO Andrei Kostin gives a bit of history before opening the Q&A portion of the forum. So, let’s jump-in:

Vladimir Putin: Ladies and gentlemen, colleagues, good afternoon!

I am glad to welcome the heads of leading domestic and foreign companies, investors, and experts to Moscow. The Russia Is Calling! Forum once again brought together representatives of business circles from dozens of countries around the world to help establish new contacts, outline promising projects, and, of course, discuss key trends in both global markets and the Russian economy.

Let me start with an assessment of the state of affairs here in Russia.

You know that in 2022, our entrepreneurs, companies, and entire industries faced serious challenges. Because of the actions of some, let's say accurately, some countries or, more precisely, their leading elites. These countries have shown themselves to be unreliable partners. Many production and logistics chains, as well as cooperative ties that had been developing for decades, were put under attack and even destroyed.

We often hear in the political, military, and economic spheres that these countries were tasked with inflicting a strategic defeat on Russia, including in the economic and technological areas, cardinally weaken our country's industry, finance, and services, create an insurmountable shortage of goods on our market, destabilize the labor market, and reduce the number of employees in the country. the standard of living of our citizens. It is obvious that these plans have failed, failed. After a difficult period, the Russian economy has not only fully recovered, but is also making qualitative structural changes, which is extremely important, and perhaps the most important result of our work in the economy over the past two or three years.

Russia's technological, production, and logistics potential is being developed. Ties with promising partners are being strengthened.

Last year, Russia's gross domestic product grew by 3.6 percent, as is well known, and in January-October of this year it increased by 4.1 percent. Moreover, the growth is mainly concentrated in the manufacturing sectors of production, in sectors with high added value. So, in 10 months, our manufacturing industry has increased by more than eight percent, or more precisely, 8.1 percent. In particular, the automotive and mechanical engineering industries are showing faster growth rates. In the high-tech sector with high added value and skilled jobs, the influx of specialists is also increasing. In September, the number of people employed in the IT sector increased by 8.1 percent compared to the previous year, in the manufacturing industry-by almost four percent, by 3.9 percent.

Structural changes in the labor market are indicated by a decrease in unemployment in regions where it was traditionally high, as well as an increase in employment among young people under 25 years of age. But we know that youth unemployment is a problem in so many countries around the world. We also have such a problem, or, more precisely, already existed. Here, the unemployment rate is below nine percent, although at some times and even more recently, it went beyond 20-25 percent in some regions of the country. Overall, Russia has a record low unemployment rate of just 2.3 percent. Against the background of most of the world's leading economies and developing countries, this indicator is minimal.

For example, in many European countries it is seven percent or higher, while in our country, I repeat, it is slightly more than two percent. For comparison, so as not to be unfounded: in Italy-7.6 percent, in France-7.3, in Canada – 5.4, in Greece – 11, in Brazil – 8, in Sweden – 7.6 percent.

Economic growth has a positive impact on the budget system. In January-October of this year, the surplus of the country's consolidated budget and extra-budgetary funds turned out to be about 2.5 trillion rubles, while expenditures–-I want to emphasize this, I think that people in this hall understand what I am talking about—expenditures amounted to less than 35 percent of GDP, which corresponds to the level of 2021. This suggests that the Government and the Central Bank are pursuing a very balanced policy. In other words, taking into account the objectively increased spending on individual items, we generally do not inflate public spending, but work to improve its efficiency and implement a responsible approach to the budget sphere.

Our goal is to gain a foothold on the trajectory of long-term sustainable economic growth, ensure high-quality investment dynamics in the real sector by modernizing production facilities and increasing labor productivity. This is, of course, the general line of our development.

At the same time, of course, it is important to avoid distortions of key macroeconomic parameters and avoid unbalancing individual industries, including, of course, it is necessary to restrain inflation. So far, as you know for sure, it is at a fairly high level, including in comparison with those countries that I have already mentioned. This is 8.8 percent in annual terms. To achieve positive results here, coordinated and joint actions of the Government and the Bank of Russia are necessary. I emphasize that this is not a call, not a wish, but, I think, a direct guide to action. Yes, in fact, our colleagues from the Central Bank and the Government are well aware of this and coordination is taking place.

It is necessary, of course, to use all the tools of economic policy wisely in the fight against inflation, while avoiding structural excesses, including the risks of increasing the income gap of citizens and reducing the income base of Russian regions.

I have already said that the main response to the inflationary challenge, of course, is to increase the supply of goods and services on the market, so that their volume meets domestic demand both from citizens and businesses that are planning to modernize and expand their production, expand their capacities, invest in construction and purchase equipment. to development projects.

In this regard, I ask the Government to set clearer priorities in support measures provided to industries from the federal budget, as well as to continue fine-tuning the regulatory framework and remove excessive administrative barriers to business operations.

All these mechanisms should primarily work to expand output, open production facilities, and strengthen Russia's technological sovereignty. Yes, it should be borne in mind that we are operating under objective conditions of curbing inflation, implementing strict approaches to fiscal policy, and should adjust our credit policy accordingly.

At the same time, the retail loan portfolio has almost stopped growing since August. In turn, the corporate loan segment continues to grow. I think that here, in this audience, there is no need to explain that, in general, this is the result that we are striving for at the current stage, including on ways to contain inflation. Corporate loans are still growing – which means that companies ' investment plans are being implemented, while the retail loan segment is experiencing a certain decline. As a matter of fact, the financial and economic authorities were striving for this.

I ask my colleagues to monitor all the dynamics, avoid sharp fluctuations and decrease in the loan portfolio of the banking system, and also ensure that its structure, that is, the structure of the industry and sector of the economy where loans are attracted, so that it allows us to solve strategic tasks and achieve national development goals.

In particular, it is important to pay attention to the debt burden of companies with state participation, and we have been constantly talking about this with our colleagues lately. It has recently increased significantly, this load. Of course, it is necessary to take into account the large-scale investment programs of state corporations, as well as the social functions that they perform. I won't go into details here, as our Russian colleagues are well aware of what I'm talking about right now.

I have already instructed the Government, together with the Bank of Russia, to take a decision on managing the loan portfolio of state-owned companies, so as to avoid excessive debt burden and an imbalance in the corporate lending market in general to the detriment of other industries or companies and enterprises.

Let me remind you that for many small and medium-sized companies that play an increasingly prominent role in the economy, the availability of loans and borrowed funds is a key factor in investment activity. Here we have set a specific goal: by 2030, investment should add 60 percent in real terms to the level of 2020.

Taking into account all the difficulties, investments in fixed assets of Russian businesses are growing for the third year in a row, despite all the problems that we have or that they are trying to create from the outside.

Here are some figures. In 2022, investment growth was 6.7 percent, in 2023 – already 9.8 percent, and for 9 months of this year, the pace is comparable-plus 8.6 percent.

In order to support the desire of businesses to invest in development, expand capacity, and create jobs, we will certainly continue to strengthen the capital market and support companies entering the stock exchange with their securities. By the end of the decade, the capitalization of the Russian stock market should approximately double and make up two-thirds of the gross domestic product.

I would like to note that this year alone, 19 primary and secondary placements of shares were held in Russia, and issuers were able to attract 102 billion rubles.

The result is quite satisfactory, good, but small across the country. I repeat, the Russian capital market should be more actively involved in financing projects for the development and structural changes of our economy.

The Government, together with the Central Bank, needs to prepare a package of additional incentive measures for issuers of shares to make entering the stock market more profitable and interesting for them, including increasing demand for securities, ensuring effective protection of investors ' rights and the necessary information transparency of the company.

I would like to remind you that instructions have already been given in this regard, and we need to step up and strengthen our work in these areas.

Dear colleagues, what else would you like to draw your attention to? Today, mostly small companies enter the stock market, while many large organizations that are leaders in their industries are still not represented on the stock market. This means that measures to support issuers should take into account both the needs of small businesses and promising startups and encourage large businesses to place their shares.

For example, it would be possible for them to link the receipt of subsidies from the state or soft loans with access to the stock exchange. It seems to me that this is quite fair. Of course, we also invite investors from friendly countries to our stock market. As I have said many times, Russia is part of the global economy, and we welcome counter–flows of capital.

At the same time, we focus on domestic sources of financing, so that our citizens and retail investors can invest their money and earn money within the country. Such investments and their profitability would be no less attractive than opening bank deposits. Today, experts estimate that over 32 million Russian citizens are interested in buying securities. Their total assets exceed nine trillion rubles. [About 20% of population]

Over the past few years, important decisions have been made to ensure the influx of so-called long money into the market and expand the set of relevant tools. So, this year, a program was launched to support voluntary long-term savings of citizens. Contributions to them are insured and co-financed by the state, and you can get a tax deduction for the funds deposited. As of November 22, over two million 100 thousand depositors took part in the long-term savings program, 145 billion rubles were attracted.

Let me remind you that a more ambitious goal has been set here: in 2026, the amount of funds raised under the program should exceed one percent of GDP, that is, it should amount to at least two trillion 300 billion rubles, and in the future it should steadily grow.

I would like to add that this year the so-called individual investment accounts of the third type have been created to accumulate citizens ' funds. With their help, you can invest for a long time, perform operations on the stock market and at the same time receive tax benefits.

I propose to supplement the functionality of this tool, to make it so that the investor can choose an account for crediting dividends on shares registered on individual investment accounts, that is, he can use the income received at his discretion and, importantly, at any time. Of course, such a regulatory tool will increase the interest of potential investors in this work together with the state in this case.

I also note that from January 1, 2025, shared life insurance of citizens will be launched. In fact, it combines the principle of classical insurance and investment, when a citizen simultaneously invests in assets, shares, receives income from them, and at the same time insures his life and health. As we agreed, we need to guarantee the return of these funds, provide for their state insurance in the amount of two million 800 thousand rubles.

In addition, it is necessary to propose tax incentives, first of all, tax deductions for the amounts paid. I ask that the relevant federal laws be prepared and adopted in the near future.

I would like to add that there is a proposal to create a financial mechanism that will become a real family savings tool and allow all working family members to receive a tax deduction. Accordingly, the amount of funds covered by this deduction should increase to at least one million rubles per year. I ask the Government, together with the Bank of Russia, to determine the parameters of this family support mechanism and implement these decisions.

Dear colleagues!

The Russian banking system and stock market are dynamically developing on the basis of modern technologies. Approximately three-quarters of our adult citizens use mobile phones, the Internet to transfer funds from bank accounts, and various financial services. More than 80 percent of payments for goods and services in our economy are made in non-cash form.

At the same time, the Bank of Russia is gradually introducing a digital ruble. As part of the pilot project, replenishment of funds and transfers of digital rubles between individuals and legal entities were worked out. The project already covers more than nine thousand citizens and 1,200 companies, and their number continues to grow. As agreed, starting next year, payments using the digital ruble should be used in the federal budget system, and from July 1, 2025, this possibility should be available nationwide.

Here I will say a few words about the use of the ruble in international payments. We continue to build the infrastructure that should make such operations more convenient for business and reduce costs. In particular, it is planned to introduce an experimental legal regime so that banks can debug the methods of remote identification of customers, of course, without creating risks in terms of" anti-money laundering " legislation.

In addition, we will apply a flexible approach to tax registration of non-residents, similar to how our banks already operate when opening accounts for such companies. I ask the Government to speed up the preparation of the relevant documents, and the State Duma to ensure their adoption in the near future, in the coming months.

I would like to note that the level of digitalization of financial services in Russia exceeds the global level, which confirms the high technological efficiency of this area of the domestic economy, its aspiration to the future, the ability to set big goals and work ahead of schedule.

According to experts, one of the main long-term factors of global growth will be the introduction of a national digital infrastructure in the financial sector. In some jurisdictions, for example, in the European Union, Australia, and Singapore, only certain elements of such infrastructure are being developed, while in Russia, all its elements have already been formed and are working successfully. And this is not only a great achievement of our developers and specialists, but also a serious competitive advantage of the domestic economy, a powerful lever for its development in the modern world.

Russia's leading position in financial technologies allows us to flexibly build relationships with foreign partners, promote integration projects, and benefit from the integration of our countries ' economic potentials. In particular, I am referring to the work on the investment platform that we are currently working on with our BRICS colleagues. In any case, we are starting this work. In general, all our colleagues agreed that this is an interesting, useful work for everyone and has good prospects. It is designed to become a significant tool for supporting our economies, providing financial resources to the countries of the Global South and East.

The rapid development of information technologies demonstrated by Russia and our advanced solutions in the financial sector will be a significant contribution to the development of this platform, a factor in its success–-I have no doubt that it will be achieved-–which is necessary for the development of international business cooperation, for increasing mutual investment and building new production chains.

In this regard, let me say a few words about the investment climate in Russia. As you know, the World Bank is no longer present in our country, which means that it cannot assess the domestic business environment, but other objective structures can do so. We certainly have the appropriate intellectual potential.

This year, the Agency for Strategic Initiatives of Russia evaluated the business climate in our country and compared the results with other countries. Moreover, the ASI used the same approach as the World Bank in its new rating. More than 800 criteria were taken into account: from opening businesses to solving problems of insolvency.

The study showed that Russia is among the global leaders in the investment climate rating. At the same time, Russia is certainly ahead of all other countries in terms of the level of the regulatory framework and the quality of public services rendered. In terms of such parameters as business registration, real estate management, it is confidently ranked second.

Of course, a number of areas require additional efforts, as we can see and understand--additional efforts on the part of the Government, the regions and the business community in general, with which the Government is constantly in contact. I am referring to the development of labor relations, simplification of international trade, rules of international trade, connection to engineering infrastructure. A lot has been done in this regard, but there is a lot to work on. And some other issues require special attention on our part.

I am sure that our colleagues will organize a systematic work and in contact with business will make significant progress in the near future.

Dear friends!

Russia unites the efforts of the state, society and business in strengthening economic sovereignty, achieving technological leadership of our country, developing a stable, nationally oriented banking system and a strong financial stock market. And, of course, we invite to this work foreign partners from all countries that are interested in this and interested in such cooperation. Of course, such aspirations will be supported at all levels of government in the Russian Federation.

Thank you for your attention. I wish you all the best.

Alexander Kostin: Dear Vladimir Vladimirovich,

I would like to once again express my deep gratitude for the fact that you are once again taking part in our forum. This is the 15th performance at our 15th forum. But since our forum is almost the 15th anniversary, and since the audience has changed quite significantly over the years, I would like to tell the story of our forum's appearance and the story of your participation in this forum, too, literally within two or three minutes.

It was back in 2009, at the height of the global financial crisis, which came to us from the United States. Now we know that all the darkness comes from there. And I had a conversation with Joseph Ackerman–-I think one of the most prominent investment bankers in Europe—the head of Deutsche Bank, who said to me: Andrey, be sure to tell Vladimir Vladimirovich Putin that there can't be a great country without a powerful investment bank.

I came to Moscow, went to Vladimir Vladimirovich, and said: Vladimir Vladimirovich, there is a great country, but there is no investment bank, we need to create one. Vladimir Vladimirovich had a very quick reaction, unequivocal, he said: how can I help you?

To understand the situation at that time, our investment market was completely dominated by foreign banks, such as Deutsche Bank, JP Morgan, Morgan Stanley, and Goldman Sachs. Russian banks did not have any practical investment opportunities. There were small boutiques, and then mostly organized by foreign citizens, such as "Renaissance". And all of them, on the other hand, held some kind of forums for investors. I said: Mr President, can we make sure that you perform here, but don't perform anywhere else? And Vladimir Vladimirovich came in 2009, came in 2010. He came, we were very worried, and in 2012, when he was re-elected President, we decided: Well, the President probably won't come. Come. And all these years it comes. And I turned this forum into what it is today. This is probably the most important investment forum, which is of interest not only to the financiers of our country, but also to the huge interest of financiers around the world. And today we have more than 400 representatives from different countries in our audience, we have about 35 countries. Yes, the list of participants has changed significantly, but I am sure that investors in the West are paying close attention to what Vladimir Vladimirovich is saying here.

By the way, we thanked Mr. Ackerman, and we almost completely took away his staff in Moscow, about 100 people. At first, he was offended, then calmed down and even boasted somewhere that he had made such a decisive contribution to the creation of an investment bank and business in Russia.

It really was an important event. Since then, the bank has really taken a key position in the Russian investment services market, and has largely replaced Western banks, which, however, have now left.

This is why this forum has been around for 15 years. I think it's very important. And of course, the central place is always occupied by the speech of Vladimir Vladimirovich Putin. And what is especially characteristic of our forum is, of course, the open dialogue that the President conducts with the audience.

I have heard a lot from the forum participants: it is impossible for the country's leader to answer all the questions of the audience for an hour or even more, this does not happen. This happens to us, so I suggest moving on to our second part-these are questions and answers.

And please, Mr Putin is ready to answer your questions today. But please: we are limited only by time, so fast and short. Please introduce yourself, what country you are from, what field of activity you are from, and I think Mr Putin will be ready to answer any question you may have.

Thank you.

: (as translated)Question Good evening!

Thank you so much for the opportunity to ask a question.

A. Kostin: Where Are You From?

Question: I am from Germany, I am the head and main shareholder of an investment company in Germany. Thank you so much for the opportunity to ask a question.

Mr. President, you have repeatedly said that sanctions harm the economy, including the countries that imposed them. In particular, they hit them very hard. To be honest, I absolutely agree with you. Germany now, I think it is obvious to everyone, the current German government is not acting in the interests of the country, in the interests of the German economy. The fact is that Germany itself is seriously affected. Many German companies were forced to leave Russia.

A lot of German companies have left Russia, so my question is: if times change, if the situation changes, if the government changes in Germany, in other European countries, and if they allow these companies to return to the Russian Federation, how would you react to these companies? Will you give them a second chance, or will the damage caused by the sanctions be irreversible?

Thank you so much for your response.

Vladimir Putin: I have already said, in my opinion, and at the last forum, and in general, at any opportunity, I keep saying this all the time: we did not expel anyone, we did not squeeze anyone out of our market.

I probably won't tell you a big secret either: despite political pressure, many partners, including those from Western Europe and the United States, have not left the Russian market. Some of these companies continue to operate in the same mode, which is about half of the companies, and some have transferred control to individuals and organizations under their control. And about a quarter of them have actually left, and some of them continue to withdraw from the Russian economy, including the largest German companies.

I don't want to say that the German economy and European economies in general are going through difficult times solely as a result of the severance of ties with Russia, but the severance of ties with Russia certainly plays a serious role. And not only because the Germans and other Europeans have lost the opportunity to receive stable Russian energy resources at reasonable prices, although this is a very important component, I will say a few more words about this now, but also for other reasons.

It is impossible to sell your products on our market, it is impossible to supply components to those enterprises that were previously established by European, including foreign, investors in our country. It is impossible to use logistics routes that also brought a certain profit. It is impossible to use the European currency, the euro, for settlements, and the use of the euro by the global economy as a tool, as a reserve currency, also brought significant profits to the European economy as a whole.

The result is known. Entire large companies are being shut down, particularly in Germany, while others are suffering losses. Glass production, as you know, chemical production, fertilizer production and agriculture are suffering losses because of this, and they have lost a lot of the Russian market. European agriculture, in particular in Germany, has lost not only our energy resources, gas, which is an essential component in the production of fertilizers, but also fertilizers themselves. Entire enterprises are being closed down, the metallurgical industry, as a result, along the chain, the automotive industry is the most important branch of the economy.

The result: this year, according to our experts and international experts, the euro area economy will grow by about one percent, or even a little bit, while Russia's economy grew by 3.6 percent last year, and this year it will grow by about four, 3.9, or maybe even four percent.

As for the manufacturing industries, as far as I know–-if I'm wrong, please correct me–-in Germany, the decline in manufacturing will be 4.6 percent, while in Russia, growth will be 4.4 percent. And manufacturing industries will grow by more than eight percent, or 8.1 percent.

Among other things, the Americans forbid you to use the Russian market, to use our relatively cheap energy resources, and in the United States itself, conditions are being created for more profitable participation of European, including German, investors in the United States economy. This, frankly, is not very allied behavior, to put it mildly. But I don't want to go into these details here, as they are well known in Germany. Will we create conditions for those who want to return? We will not create any special conditions. We didn't push anyone out, we didn't forbid anyone, our doors are open.

The problem is different. The problem is that during this time, over the previous two years, companies from other countries have started to occupy many of the niches that were vacated as a result of the departure of our European partners. And the so-called import substitution by Russian brands, the number of which is growing significantly, is proceeding at a very rapid pace, such as, frankly speaking, we ourselves did not expect.

Therefore, it will be quite difficult to simply return to their former, as they say, places. But we will not create any special obstacles to this. The question is not about us, but about the political decisions that are taken at the level of the European Commission and in individual European countries, including Germany. You are welcome. It's not about us, it's about you.

You know, I just remembered something while I was talking. When I was working in Germany, a friend of mine told me a story. If he hears me… I haven't seen him in 30 years, and I don't know what he does. Here he was, walking around Berlin, so to speak, walking not just for entertainment purposes, but for official needs. I went to the bank of the river Spree, where my German grandfather is sitting, fishing. My friend asks him: how are you, fishing? He turned around, looked up from bellow and said: no. Pause. My friend asks: why? Another pause. This German fisherman turns: the wind is from the east. To which my friend replies: all the problems, all the dirt from the East. The German sat for a while, thought about it, turned around and asked: are you a Pole? Honestly, I'm not making anything up. My friend thinks about it and says: no, it's worse. Now the German was thoughtful, raised his eyebrows, looked at him in silence, and gave him no answers at all.

Why did I just remember that? Now anything from the East is better than anything from the West. Look at the conditions that are being created for the German economy here in Russia and by your traditional allies and partners. Right now, we're only talking about the business environment.

But our doors are always open. We have always had very good relations with Germany for decades, and we understood each other very well. And the distinctive feature of German investments was that they did not seek to get quick money, they invested for a long time, in industry. And now see what problems Volkswagen has. Well, why did Volkswagen leave the Russian market? Not only would I work here, not only would I sell my products even in conditions of a high level of localization of these products, but I would also continue to supply components and receive wonderful revenue.

We have never done anything non-market, no measures of non-market regulation, although it is impossible to call it regulation, we have not created for our German friends in the Russian market such as were created in other places, in particular, environmental investigations there and so on. Now you can do anything, everything can be blamed on the management of Volkswagen, just not to notice your own mistakes. In this case, I am talking about those regulators at the government level who make the appropriate decisions. It's not their fault. Management is always to blame. And now Volkswagen employees have been blamed, who are now going on strike by the thousands, as businesses are closing and thousands of people are being thrown out on the streets. To prevent this from happening, you don't need to make any decisions in the economic sphere for political reasons.

And finally, the most important thing. The most important thing I want to draw your attention to. You represent the Federal Republic–-you speak German! Why are you asking me questions in English? The most important thing is the level of sovereignty.

A. Kostin: We don't have a translation from German.

Vladimir Putin: It's okay to lie–-he didn't have a translation from German.

A. Kostin: Please ask the next question.

Vladimir Putin: Did you want to add something? Our colleague from Germany wanted to add something.

A. Kostin: Can you tell him something in German, Mr Putin?

Girls, give the microphone to the gentleman who asked in German, from Germany. Vladimir Vladimirovich says that he wants, in my opinion, to make some kind of comment, no?

(They speak German.)

A. Kostin: In the "Diamond Hand" they would say: an untranslatable pun.

Vladimir Putin: Our guest said that he was warned that there is no translator from German. And I said that the question is not even in the translator, the question is in sovereignty.

You know, I once went to Mr. Schroeder's birthday party in Hanover, where it was modest but dignified – everyone spoke English, and even the Hanover Girls ' Choir sang songs in English. It's embarrassing, you know? That's what it's all about. The level of sovereignty should be inside, and this is where it all starts.

You know, I don't want to open this discussion. We must discuss economic issues.

A. Kostin: Good.

So, please, the first sector.

:(as translated)Question Mr. President, thank you very much.

I represent the Sultanate of Oman, director of a pharmaceutical company.

My question concerns the motivation of the Russian Federation to turn South. Please tell me, how strategic and long-term is this decision? Of course, if we talk about the major economies of China, India—this is one thing. And to what extent is Russia interested in maintaining economic relations with the small economies of the Global South?

And the second part of my question is this, Mr. President: if we assume a scenario of normalization, not necessarily political normalization, but business normalization with the West, do you expect that Russia will continue to consider the Global South as a priority?

Thank you.

Vladimir Putin: You know, of course, that everything that is happening in the field of security and politics is stimulating structural changes in the relations that are currently developing in the world.

When we say or I hear that Russia has turned to the East, towards the Global South… Yes, Russia has not now turned towards the Global South and East, no. Russia has been doing this for a long time, since the 2000s, keeping in mind the trends of world development and the development of the world economy. Calmly, in stages, but we have been doing this for a long time.

Our relations with China are developing regardless of the events that are taking place, for example, in the Ukrainian direction. China has long been our largest trade and economic partner.

You have just said that Russia will continue to have relations with large countries and large economies, and what will happen if relations with the global West normalize, although the global West does not exist, but everything is becoming less and less global, because its share in world GDP is constantly decreasing. But the share of the Global South and East is growing. And, according to the same World Bank, the IMF, the growth rate of developing countries ' economies will be twice as high as that of those countries that are called developed—twice, and some economies are developing at a completely unusual pace.

Just look at Ethiopia. In my opinion, over the past ten years, there has been an increase of 118 or about 120 percent, which is a phenomenal figure.

Bangladesh–-there are more than 80 percent. Many economies of other countries in the Global South and East are also developing in the same way, so we naturally focus on where we see growth and where the number of our partners increases, and they do not look back at the shouts from the outside.

By the way, as for these restrictions, threats, and sanctions against third countries that cooperate with us: do you understand what's going on? People who do this, they seem to have a good education, they finish all sorts of Oxfords, Cambridges and so on, and it seems that they should be smart people. But from what they do, I don't even understand if they are. Or maybe they are both well-educated and smart, but something prevents them from responding quickly and effectively to real changes in the world. What's stopping them? This is, you know, what is popularly called arrogance or snobbery. They believe that they are: a) allowed to do anything; and b) they will do everything, no matter what.

And the world is changing, and everything can not be done. What do I mean by that? That by their actions they are pushing the pace of creating a multipolar world. It is becoming absolutely inevitable, this process, and it is actually producing some results, because more and more countries participating in international communication, participants in economic activity understand that focusing on still premium markets, on powerful ones that have a good level of technological development, is important, but this is no longer enough if we need to look and we want to look to the future. Therefore, we will certainly continue to do so in the future. I hope that relations with our Western partners will eventually normalize, primarily because they themselves are interested in this, and we have an interest, of course. But despite this possible and, I hope, inevitable normalization process, a significant amount of our cooperation will not only continue, but will also develop with our current partners, as we say today, with friendly countries, because this is simply an inevitable process.

A. Kostin: Thank you.

Who's next?

N. Mehrabova: Nailya Mehrabova, Member of the Supervisory Board of Azersun Holding, Azerbaijan.

Vladimir Vladimirovich, thank you for your speech. Thank you for being with us today.

In your opinion, what are the prospects for using the potential of BRICS countries to create a joint digital infrastructure? Is it possible to create a single international digital payment system in this context?

Vladimir Vladimirovich, can independent developers who would like to do this count on your support?

Thank you.

Vladimir Putin: This is a very important and interesting topic. Together with our BRICS colleagues, we are trying to pay due attention to this. I repeat, not only because someone creates some problems for us, and they are, of course, serious, to a certain extent we are hindered by problems with calculations, but also because the most important thing is that the world economy is developing, our relations are developing, as I said, answering the question I have just spoken to your colleague about both large and small economies.

The number of partners is increasing, and everyone wants not only safe ways of economic communication and settlement, but also modern means of settlement that would reduce costs and increase the reliability of the international financial sphere. Of course, this also involves the use of modern technologies, including digital technologies. And we will certainly do it. But it's not just about creating digital payment systems.

As part of BRICS, we have proposed to our partners, and this is generally supported, the creation of such a digital investment platform, which should also include payments in digital units.

Which way are we going here? We agreed to create a working group based on the BRICS Development Bank, which is actually being created now. We discussed this in Kazan and with representatives of the People's Republic of China, with our friends from India, from Brazil–-with all our partners. Everyone generally agrees with this.

We want to create a digital platform that will allow us to invest in the promising, growing markets of South Asia and Africa, and do it in a reliable way that would be protected from inflation and would allow regulators, central banks, to quickly and flexibly respond to the ongoing processes in our association.

In other words, if there is a shortage, it would be possible to issue an appropriate electronic instrument. If there is a surplus, we could take something out of the market, and so on. In principle, this is a fairly easy-to-create tool, you just need to agree on the directions of its development and investment in certain countries, in certain projects. [A digital Bancor?]

In my opinion, our experts suggest this, and it would be very interesting both for those countries that will create such a tool, and for those who will use it, bearing in mind that the emerging markets of Africa, Latin America, and South-East Asia need these investments.

If we find good, promising joint projects, invest in them, and then get a return on the work of these facilities, then this tool will be very reliable and very promising.

And of course, in this sense, we are interested in attracting the widest range of our friends and like-minded people. This also applies to one of our promising strategic partners, such as Azerbaijan.

Alexander Kostin: Mr President, if possible, let us develop it. Recently, Mr. Trump, before reaching his White House-– “his own," because many guests may not know that we have our own White House nearby, where the Government works, good decisions are made there, and different decisions are made there, in Washington–-has already stated that if the BRICS countries do not use the dollar, it will impose 100% duties against all these states.

And this is probably the first such threat to other states. Still, before that, the Americans had nightmares about specific banks, saying: we will punish banks, companies. This is probably the first time that a newly elected president has said this in a head-on way that states will be punished and all products will be taxed at 100%.

We all know that Americans are very sensitive to this topic, because America's strength is in the dollar, of course, because money is invested in the dollar. If there is no dollar with its positions, then, of course, the American economy will fail with its huge debt, with everything that this dollar brings—huge revenues to banks and so on.

What do you think: will such a step by the new president finally undermine confidence in the United States, in its politics, in its financial system, and force the BRICS countries and other states to run away from the dollar even faster and get rid of this system, and try to create new forms such as those being worked out within the BRICS framework?

Vladimir Putin: First of all, I agree with you that the use of the dollar as a global currency brings the United States a large amount of unearned money. According to our experts, somewhere in the last ten years or so, they received about ten trillion dollars just like that, out of the sky, for the fact that the dollar was used as the world's settlement reserve currency. This is based on bets, placements in their banks, and so on. Ten trillion dollars is very decent, which means that they consume more than they produce. And this is a very important thing.

That is, in fact, the United States, at the expense of the dollar, continues to exploit other economies of the world in its favor. Very few people think about this, but it is a fact, and in this part I agree with you. This is the first one.

Now the second one. You said that the newly elected President Trump threatened that he would impose sanctions and increased duties against those who would not use the dollar. As far as I can tell, he didn't say that. I understand that everything related to the United States causes a certain reaction in our country. As far as I've seen, I don't really have time to look at what's going on somewhere "over the hill", but nevertheless I drew attention to it: he said that if someone prohibits the use of the dollar, restricts it, they will react accordingly. It's not the same thing. It is one thing to prohibit the use of the dollar, but another thing is not to use it. You see, these are completely different things. This is the second one.

The third. After all, the newly elected president has not been in the White House you mentioned for four years. And during this time, there have been some changes in the global economy and in the American economy. His successors and political opponents have done a great deal to undermine the fundamental foundations of the dollar as the world's reserve currency. And first of all, they did it with their own hands, using the dollar as an instrument of political, and perhaps even armed struggle, in order to harm other countries that the current authorities in the United States consider their opponent. We never counted them, but they suddenly decided that we were opponents and started to impose restrictions. And given the fact that the US share in the global economy is declining, which means that the dollar's influence on global economic processes is also decreasing, processes related to the use of other instruments naturally occur.

For example, who can ban bitcoin? No one. And who can prohibit the use of other electronic means of payment? No one, because these are new technologies, and no matter what happens with the dollar, these tools will evolve in one way or another, because everyone will strive to reduce costs and increase reliability. This is an inevitable process, and the dollar has absolutely nothing to do with it.

But if there is a further reduction in the use of the dollar in the world, and with their own hands, then, of course, they will undermine the foundations of their economic power. This is quite obvious, and I completely agree with you here.

And finally, we've never given up on the dollar. Did we refuse? We were the ones who were denied its use. You know, as we say: what we fought for, we ran into—we ran into the problems of the dollar itself. Now, of course, we need to think about what to do next. This all comes from self-confidence, from swagger, including in the economic sphere. This is unacceptable. We need to understand the processes that are taking place in the world, and build our policies based on this understanding, including at the international level.

See what happens and happens naturally. Even countries that are unconditional allies of the United States, they are reducing their gold and foreign exchange reserves, both in dollars and euros, by the way. Over the past ten years, the reduction has been approximately 13 percent–-a significant amount. And this happens naturally, and no one will be able to reverse these processes, especially with the help of sanctions and forceful methods, which are destructive for the economy, and for those who accept it first of all.

A. Kostin: Thank you very much.

But you will probably tell him to be more careful when talking to him.

Vladimir Putin: Mr. Trump is a person who doesn't need any advice or recommendations.

A. Kostin: It's clear.

OK, colleagues, who's next? Sector four, please.

:(as translated)Question Dear Vladimir Vladimirovich, hello!

Dear colleagues, I represent a Chinese company based in Qingdao, a state-owned multi-specialty conglomerate.

I would like to ask you this question. Recently, the Central Bank of Russia has blocked about half of its gold and foreign exchange reserves. However, it does not seem to have caused any serious consequences. It turns out that reserves in fact are not so necessary? But then why accumulate them?

Thank you.

A. Kostin: Thanks for the question.

Vladimir Putin: Of course, the legitimate question is: why increase them if they can be stolen so easily?

By the way, China has large gold and foreign exchange reserves invested in securities of the United States of America. But we can see what is happening: they are gradually decreasing.

Why build them up if you can lose them so easily? First of all, no one thought about this before, that it could be done so easily. Everyone believed that economic decision-makers were very conservative and understood their own risks if they undermined these international rules of law in this area.

But still, the United States and the Europeans went. They didn't take the last step, though. They blocked it, but they haven't completely stolen the money from us yet. We, for our part, were forced to take appropriate measures: send dividends from Western companies that work for us to the so-called "C" accounts, and so on, which also does not cause us any enthusiasm, because this is a forced measure.

Yes, it is true that more than 200 billion rubles are frozen in Europe, more than 100 billion or so, in general – a little more than 300. There are more in Europe, more than 200 there, and less in the USA. But, I repeat, there is no final step towards the withdrawal of these assets yet. Question: Why?

Clearly, this has always been a risk mitigation tool. In the event of any changes in the financial market in conditions where there are some super-profits, the state withdraws part of these super-profits, and then, when incomes fall, the state uses them to support the fulfillment of its obligations in the economy, and above all in the social sphere.

This is such a smoothing tool, and we used this tool.

But the question is legitimate: what should I do with these funds if they appear? Yes, you probably need to think about it. Yes, as a rule, the states that did this in order to prevent this "Dutch disease", when super-revenues appear, they fall from the sky, based on market considerations, and the state, not understanding the risks, begins to use them, especially within its own country, inflationary processes sharply increase. Because the economy does not generate so many goods produced within the country, so that this money supply, which appears out of nowhere, corresponds to it, and inflation, hyperinflation occurs. As a rule, these reserves are invested in foreign assets, including foreign securities denominated in foreign currency.

Yes, it turned out that this is an unreliable method. Where should I invest? In education, in science, in the latest technologies, in real estate, which, by the way, many of our Chinese partners and friends are doing, they are investing in deposits and minerals. These tangible assets are more reliable than the financial instruments of other countries, especially since, as it turned out, they use these instruments for political purposes. In my opinion, I have already said this today, to the detriment of myself. But this is their choice, let them do what they want, and we must do what is necessary to ensure our interests.

I think that investments in technology, education, science, and logistics are the most reliable ones.

A. Kostin: Thank you.

Colleagues, next question. You are welcome.

:(as translated)Question Hello, Mr. President!

My name is Bahram Siri, Director General of the Euro-Asian Corridor from Iran.

Taking into account your efforts to develop the North-South corridor and taking into account the actions of our President, the President of Iran, we have been working very actively over the past three years to create concession structures in Iran for the development of the North-South corridor.

So the question is this. We would be very interested to hear your opinion on the following. What are the prospects for cooperation between the private sector of Iran and the Russian Federation in the development and optimization of the North–South corridor? Is there a plan for joint investment by BRICS, the Shanghai Cooperation Organization, and Eurasec members in this regard?

And one more point: how could Iran and Russia use each other's economic opportunities? In particular, is there a possibility of joint investments in shipbuilding?

Thank you so much for your response.

Vladimir Putin: As for the development of new logistics routes, as you know, this is an inevitable process due to the growth of the economy, with the growth of commodity exchange. Of course, it is stimulated by the fact that we are faced with problems from the outside, including in the logistics sector. We just have to search for new routes, we do it and find these routes. But in any case, this process is inevitable due to the growth of trade turnover in the world and the limited number of routes that take place, their limited capacity, and the growing geopolitical risks.

For example, the Suez Canal – the volume of cargo through it has decreased, which, in my opinion, is regrettable, and not only because the economy of our friendly country-–Egypt--is suffering; the losses there are very large, budget revenues have decreased by almost one third, and we are not happy at all.

This is, of course, primarily due to geopolitical risks and the fact that the United States is actively and rather aggressively operating in the Middle East. This provokes a response from the resistance forces in the region. The economy suffers, logistics routes suffer. Many senders of cargo began to send their ships around Africa and so on. In this regard, and not only for this reason, but also because the volume of trade is increasing, there is a growing interest in such routes as the Northern Sea Route, along the Russian coast in the Arctic. We have already significantly exceeded the volume of traffic since the Soviet era, and this will continue to grow.

We have a whole program of building ice-class vessels and icebreakers. Such a large number of icebreakers in the world simply does not exist. We already have seven nuclear-powered icebreakers, 34 with a conventional propulsion system and seven with a nuclear engine. We still have plans for further construction of these icebreakers.

The climate is changing, and the number of days for unhindered navigation of vessels is increasing. And here we see the interest of many countries, including, first of all, our Asian partners–-India, China, and many others–-in using this route and working on this route. We have a whole program of developing ports in this region, access roads, and so on.

Of course, the North–South corridor is also very important in this regard. In fact, it is already in operation, and the volume of traffic along the North-South corridor is constantly growing. Moreover, cargo goes by road, by rail, and across the Caspian Sea. They are constantly increasing.

As for our plans with our friends in Iran, as you probably know, this is Rasht Astara, where, in my opinion, 160 kilometers, 162 kilometers need to be laid. We will certainly do this, we have agreed and signed documents. There are a number of technical issues that should be resolved in accordance with our agreement with our Iranian friends, and should be resolved by the Iranian side. We are talking about ensuring the construction of appropriate railway tracks on the lands that should be free for the implementation of such projects.

There are certain difficulties, but it is clear that access to the Indian Ocean, to the Persian Gulf, is extremely interesting from an economic point of view for many senders, because it is a direct, seamless movement of cargo directly from the Baltic Sea, from St. Petersburg and, I repeat, to the Persian Gulf and the Indian Ocean.

Partners in both the north and south are interested in this, including, as I have already mentioned, our Indian friends. I am confident that these projects will be implemented. This will require, of course, a solid investment, but in general they are calculated. It is already clear to us how much it will cost, and we have the resources to do so.

Of course, we are interested in attracting more participants and investors for these projects. There is also interest in this, among other things, because it minimizes geopolitical risks and creates conditions for stable operation.

As for bilateral relations, our trade and economic ties are stable and reliable, and we will definitely record an increase in trade turnover this year. We have good, large-scale projects in the logistics sector, as we have just discussed, as well as in the energy sector and industrial cooperation. By the way, and in the field of security.

Therefore, bilateral cooperation has good prospects, including, as you mentioned, with the Eurasian Economic Community–-the Eurasian Economic Union. We have signed a free trade agreement here. I think that the Iranian leadership has shown interest in working more closely with the Eurasian Economic Community, including as an observer on a permanent basis. We welcome this and will continue to do so.

Among other things, we have completed a fundamental agreement that will regulate all issues related to our cooperation in the future. I hope that it will be signed during the upcoming visit of the Iranian President to the Russian Federation.

A. Kostin: Thank you.

Colleagues, who's next? You are welcome.

Sun Tianshu: Dear Vladimir Vladimirovich, good afternoon!

My name is Tianshu. I am the founder of the Russian-Chinese digital trading platform KIFA.

This year marks exactly 31 years since I have been living and working between Russia and China. Over the years, I have seen with my own eyes how you are creating a modern, new Russia with your wisdom and strong will. Therefore, I would like to express my deep respect to you on behalf of the Chinese business community.

Vladimir Putin: Thank you.

Sun Tianshu: I have a very simple question for you. Now on the streets we see that every day there are more and more Chinese new cars. But most of these machines are delivered from China ready-made.

I would like to ask you whether there are plans to partially or completely localize the production of Chinese cars in Russia, so that Russian-Chinese cooperation is not only trade, but also investment?

Thank you.

Vladimir Putin: Indeed, we did not start relations with our Chinese friends in the automotive industry yesterday, but the real work was started in 2015. In other words, we started discussing these projects earlier, and in 2015, in my opinion, the first production facilities were set up in Tula, and then in Kaluga.

Firstly, this is not even due to the fact that, say, German manufacturers have started to leave us, but primarily due to the fact that Chinese producers have begun to make goods better than in Europe, and cheaper. This is the main indicator.

We consider the measures taken to combat the Chinese automobile industry in Europe and other markets to be absolutely incorrect and harmful to world trade, global production and the global automotive industry. They are politically motivated and will not bring any good results, because they will inevitably reduce the competitiveness of those with whom China competes in this segment of the world economy and global production. It's just that Chinese goods have become better and cheaper in quality, that's all. Our Chinese friends managed to attract the most experienced, most interesting and promising specialists, including those from the once leading countries of the global automotive industry, and managed to create truly competitive products.

But, of course, just like any other country, I want to emphasize this, just like the People's Republic of China itself, and indeed any country in the world, any economy, we strive for maximum localization, that is, for the production of car components in our market, in our economy, in our production facilities.

For this purpose, there is a well-known tool—SPIC, a special investment contract, where the level of support from the state is directly proportional to the level of this very localization. This tool is well-known. I won't go into the details of how much of these benefits can be obtained there as a percentage, or how much should be localized within the country as a percentage, but such work is being carried out.

We do the same with our Chinese friends, and we pursue the same policy. Everyone understands and understands this policy. The issue is the pace, timing, and amount of government support. But we will agree with our Chinese friends on this issue, and we are doing so, as well as in other areas of our cooperation.

And I would like to congratulate the Chinese manufacturers on the brilliant results they are achieving in the automotive industry.

Thank you.

A. Kostin: So, colleagues, please.

:(as translated)Question Mr. President!

I represent Sun Pharma, one of the leading pharmaceutical companies in India, which has been operating in Russia for almost 30 years.

Mr. President, we know that Russia has experienced a huge outflow of foreign investment, and, in fact, there has never been a similar episode in world history. My question is: how do you think Russia will adapt to this situation? How is she going to do it?

Thank you.

Vladimir Putin: As you know, Russia has practically adapted to this situation. Yes, the outflow of foreign investment was obvious, it is true. But, first of all, investments in fixed assets are growing, as I have just said, and this is an obvious thing. Also, because new brands are being created, we support our domestic manufacturer.

Apparently, this was unexpected for those who introduced certain restrictions in the sphere of economic cooperation. You probably thought, as I said in my speech, that production facilities would be closed, and thousands of people would be out of work on the streets. And we have an unemployment rate of 2.4 percent. All enterprises are working, but there are not enough workers.

Of course, we need to ensure the investment process. In general, we managed to create it. In particular, investments from friendly countries are growing. I won't mention the figures now, but they have grown significantly, significantly. And it is impossible to block these channels, because this is due to economic interest. This is not done for political reasons, but it is happening.

I am sure that those who prevented this are probably already thinking with regret about the decisions that were made earlier: they do not work. The only thing missing is the flexibility of those who did it, in order to somehow adjust their position. But our Government and the Central Bank, in addition to creating conditions for reliable investment and preserving these investments, have also developed a whole system of support for promising, most important areas of economic development, including within the framework of the program of national projects and achieving national development goals.

We have formulated such programs, and we try to identify the most important areas of activity and support high-tech industries. The growth of the manufacturing industry by 8.1 percent is saying something. And this is not only at the expense of defense enterprises; it works in the economy as a whole, in industry.

Therefore, we created appropriate conditions and provided financial institutions with liquidity. It is clear that there are issues related to the key rate of 21 percent, but the volume of loans issued by Russian banks to economic participants, primarily enterprises, is still growing.

I repeat, here we can talk about complex issues, this is obvious, but nevertheless, investment is growing. In particular, this was done and managed to be done, because at the first stage we ensured uninterrupted, clear and confident operation of Russian national financial institutions. The set is basically not secret, everything is there that we did, you can read it in more detail. But in general, in these areas of action, we have achieved the result that you have just mentioned and that I confirm: yes, indeed, this is the case.

Alexey Kostin: Colleagues, we have been working for almost an hour and a half. Let's have maybe two more questions. Who is brave? Come on, please.

Vladimir Putin: There are many brave people.

A. Kostin: There are a lot of bold people, yes.

:(as translated)Question Thank you very much, Mr. President, for the opportunity to ask you a question.

My name is Clover Light and I'm from Nigeria, which is the largest economy in Africa. I speak English because we were an English colony.

Vladimir Putin: Why do they speak English in Germany? They weren't exactly a colony.

Question: We have recently seen a significant increase in the volume of contracts that Russia enters into in Africa, and contacts are growing between Russia and African countries. Why is this being done, and what does Russia want to achieve through this cooperation with African countries? What do you think about the response of your colleagues in Africa to such contact attempts? And one last thing, Mr. President: Africa is with you!

Vladimir Putin: Thank you very much, especially for your last comment.

As for Nigeria, it is indeed one of the largest economies and is developing very fast, very fast, at a good pace, and has good prospects not only because there are many opportunities in the energy sector, but also because the economy is diversifying in general. We are very happy and welcome for you, and we are confident that your country will continue to develop at the same pace in the future.

As for the growth of trade turnover, I have already said this, but I will only have to repeat it. The African continent has very good development prospects. Yes, we, and you, are even more aware of all the problems that exist in Africa, but the prospects are very good.

By the way, these are not our estimates, but the estimates of the world expert community, including the Western expert community. Many of my friends from Germany and other European countries say that they also want to develop and increase their activity on the African continent.

The level of urbanization is still lower than the world level. The global urbanisation rate is approximately 65 per cent. By the way, I think we have 75% in Russia, and the same is true in Asia. What does this mean? This urbanization will grow one hundred percent, and the population growth rate is very high. This means that there will be a catch-up increase in the standard of living. This is unavoidable. This means that modern means of farming will be used and modern technologies will be introduced. In other words, this is just a natural process of expanding our cooperation with Africa.

Among other things, Africa seems to be a geographically rather remote continent, but a continent close to us in spirit, because Africa is home to very courageous, freedom-loving countries that value their sovereignty and, relying on it, make and, we are sure, will make decisions in the interests of their peoples and their countries. In this sense, Africa is a reliable partner.

We have a lot in common with the peoples of Africa. I'm talking, of course, about the years of struggle for our independence and liberation from colonialism. Nothing has ever separated us from the African countries and peoples of Africa. Everything that exists only unites us.

We are particularly pleased with the development prospects of the African continent. Of course, we will do our best to raise the level of development. Unfortunately, the trade turnover there is not as large as we would like, about 25 billion, but the prospects are good.

At the two forums that were held at the highest level, we have already felt the mood of African leaders. No one asks for anything. Everyone is talking about only one thing: to build mutually beneficial cooperation. And we will certainly do this, we will create new tools.

We have now decided to create a special fund to develop our cooperation with African countries. I am confident that we will step up our efforts both bilaterally and in terms of working with various African associations. I am sure that the result will be and will be very good.

Question: Andrey Leonidovich, thank you for your kind words.

Dear Vladimir Vladimirovich, hello!

My name is Harun Celik. I was born and studied in Turkey, but I have been living and working in Russia for the last 15 years. Baltikstroyalliance Company.

My question is as follows. There are different approaches to dealing with inflation in the world: from ignoring the fact to strict price regulation. In Russia, this is mostly the prerogative of the rather independent Central Bank. Could you explain the reasons for Russia's choice of such a governance model on this issue?

Thank you.

Alexander Kostin: Excuse me, are you from Turkey?

H. Celik: Yes, yes.

A. Kostin: Well, I see. Why inflation worries are clear.

Vladimir Putin: Yes, indeed, the inflation rate is quite high. What is the current rate in Turkey—80 percent, right? It fluctuates, but it's about the same.

Less than 50? Great, I congratulate you. Just recently it was 80–-already less than 50. In fact, this is really good progress and a good trend, the right one. And the pace is high. So I really congratulate the country's financial authorities on this result. But just recently it was 80, now it's less than 50. This is good, great.

As for how this work is structured in Russia: indeed, according to Russian law, the Central Bank has its own powers, which do not overlap with the powers of the Government of the Russian Federation in the field of combating inflation and regulating this area.

The main task, the main burden of this work is on the shoulders of the regulator – the Central Bank of the Russian Federation. As you know, our inflation rate has increased, as I have already said, to 8.8 percent now, and it has increased compared to last year. Then it was somewhere around 7.5, now 8.8.

Therefore, the Central Bank was forced to raise the key rate to 21 percent. There are critics, many of them, who say that this suppresses development. There are those experts who believe that this is inevitable. There are those who say that 21 percent of the key rate compared to the inflation rate of 8.8 percent is too much.

I'm not going to give ratings right now, whether this is good or bad. I just want to say that, of course, there are certain difficulties for the real sector of the economy, but lending to the real sector continues. There are pros and cons in terms of placing and growing income from placing household funds on deposits.

On the one hand, this is good, deposits have increased, the income of people who keep money on deposits in banks is growing, and this is good. But not everyone has deposits in banks. And for those people who do not have the opportunity to have bank accounts, this burden associated with inflation is not an easy burden. In other words, the least affluent segments of the population are burdened by the fact that prices are rising. But without deposits in banks, they do not receive additional income. And there are probably still a lot of them, if not the majority, compared to those who have good bank accounts. We should also think about this.

Now, as for the production part. Yes, of course, as I said in my speech and have just repeated, loans to the manufacturing sector continue, and investments continue. But the most important thing here, the most important tool to fight inflation, is still to ensure a sufficient output of goods and services that are consumed in the economy as a whole. This is a very important point. And here, of course, it is very important to achieve such a balance when the economy would develop, and goods and services would enter the market in the right volume, the right quality and at the right prices, at the right tariffs, and inflation would fall to the desired indicator. And we had the required figure of four percent by a certain year. I hope we will reach it.

The most important thing here is good, highly qualified and solid cooperation and work between the Government and the Central Bank, despite the fact that their functions are delineated in the law of the Russian Federation, and the independence of the Central Bank is guaranteed by law. I think that we will continue to work in this way, in this paradigm. We will not confuse the duties of the regulator and the duties of the Government.

I see my task as focusing them on working together to determine the golden mean in this financial and credit sphere.

And a lot depends on the Government, because in the context of an increase in the rate, of course, many participants in economic activity are experiencing certain difficulties, and it is very important for the Government to determine what is a priority for economic development and technological growth. There are tools that the Government can use to ensure the strategic interests of developing the Russian economy–-I won't list them now, but there are many of them: the Industrial Development Fund, and so on–-where the state and the Government provide incentives for bank rates, and so on. A whole set exists.

It is necessary that the set of tools that the Central Bank uses in its policy and the set of tools that the Government uses to maintain economic growth and technological development of the country are combined with each other.

And this requires the joint work of the Central Bank regulator and the Government. So far, we have managed to do this. I hope that this process will be supported in the near future, in the near future, with the final result of ensuring both economic growth and curbing inflation.

A. Kostin: Thank you.

Colleagues, I would like to thank all the participants of our forum today. I would like to thank the speakers of our morning session: Elvira Sakhipzadovna [Nabiullina], Maxim Gennadyevich [Reshetnikov], Maxim Stanislavovich [Oreshkin].

Vladimir Putin: After all, my colleague has already taken the microphone. You are welcome.

Question(without translation).

Vladimir Putin: Kostin said "finished," and the transfer ended immediately.

A. Kostin: Please enable translation: not everyone learned Chinese.

:(as translated)Question Dear Mr. President,

I have been working at the Greenwood International Center for 20 years. I remember when I participated in the Eastern Economic Forum in 2018, when I listened to your speech and also had the opportunity to communicate. And now this time I also have a great opportunity to communicate with you.

The Greenwood International Trade and Economic Center currently has approximately 14 countries, of which 100 companies conduct their trade and commercial activities, including Turkish companies, and more than 180 Chinese companies are currently developing relations with their Russian colleagues on the basis of our center. We reach agreements.

Now in our center a lot of attention is paid to the Chinese automotive industry. Car manufacturers, such as leading Chinese brands, are also involved in this process. We would like to take this opportunity to invite you to come to Greenwood Park to talk with us and exchange views. If you have the opportunity, we would be happy for you to discuss specific issues with us in a good, friendly atmosphere. Your support and attention are very important to us. In the future, we would like to know how Russia as a whole will improve the investment climate, how it will adjust its course in our field of activity. We would also like to know your opinion on these issues.

Thank you.

Vladimir Putin: We have a whole set of tools that support a very good level and a good atmosphere for our potential investors. And first of all, this is connected with guarantees of preserving the invested capital in the property and receiving income from these investments. We will certainly develop and support these two main areas.

I am sure that everything that has been done, especially in the direction of developing our relations, trade and economic ties with the People's Republic of China, the results of this work speak for themselves. There has never been such a volume of trade turnover as between Russia and China. This is already more than $ 240 billion, if we speak in dollar terms. This is the best evidence that the instruments used by both sides–-both in China in relation to Russian investments and Russian economic operators, and in relation to Chinese ones in Russia—are effective.

But we constantly analyze everything that happens in this area. And first of all, of course, this is the merit of the Government of the People's Republic of China and the Government of the Russian Federation, because they keep constant control.

The main problem that we have today is the problem of calculations. There are no secrets here, this is clearly connected with that. But we already have almost 90 percent of our trade turnover serviced in national currencies, in yuan and rubles. In addition, we will also use the electronic capabilities of central banks. Now active work between central banks is carried out at the expert level. Plus, the investment platform I mentioned earlier is part of the BRICS group.

We will use all these and other possible tools to ensure that our cooperation is: a) reliable; b) secure; c) creates broad prospects for development.

Thank you very much for inviting me to visit your organization. You said that you would also create a good atmosphere for discussion. I can guess what kind of environment will be created, and I'll be happy to stop by sometime.

A. Kostin: Thank you very much, Vladimir Vladimirovich.

Vladimir Putin: Let's move to this side, and here's the final question.

Alexander Kostin: Mr President, who do you choose?

Vladimir Putin: But still. You are welcome. There's someone standing up, come on.

Question: Good afternoon, dear Vladimir Vladimirovich!

I have been working and living in Russia for more than 10 years. I worked in the oil and auto industries. The first time I saw you up close was in the city of Kaluga, more than 15 years ago. I am now the official trade and economic representative of China's Jiangsu Province in Russia.

As you know, interregional cooperation plays an important role in economic development. I would like to ask a question about visas. What possible measures can Russia take in the coming years to facilitate international travel, in particular for business, study and tourism purposes? What is Russia's policy on supporting family members of foreign citizens who work in Russia for a long time, including minor children, in obtaining a visa and entering educational institutions?

I would also like to invite you to visit the Jiangsu Province of China. There is a saying in China: there is heaven in the sky, Jiangsu on earth. Jiangsu is waiting for you.

Thank you very much.

A. Kostin: It is better to go to Jiangsu first, of course.

Vladimir Putin: Thank you very much. This is an important issue, and it concerns those people who are actually engaged in building our cooperation and strategic partnership between Russia and the People's Republic of China. Through the hands of people like you, the results I have just mentioned are being achieved.

Here are a few things that you noticed. This is visa support. We do this, and all these issues are resolved on the principles of reciprocity in all countries. I believe that we are doing this with our Chinese friends more than in our relations with third countries, and we will continue to do so. This is the first one.

The second thing that is very important, and I agree with you, is regional cooperation. The volume of interaction between the regions of the Russian Federation and the People's Republic of China is constantly growing, and this is natural, because people know each other, constantly travel to each other, understand what is happening in the regional economies, and see opportunities for development. I am told about this by all my colleagues, the heads of the regions of the Russian Federation that border the corresponding provinces of China, and even those that do not border, continue to develop this cooperation at the regional level.

Here, of course, it is very important to create the necessary conditions for people who are engaged in promoting these mutual interests from both sides, including taking care of family members.

But I would like to note that even today, family members of foreign specialists who live permanently in Russia have the right to study in Russian educational institutions. Moreover, I will say that unlike many other countries, such people, family members, have the right to get a job in the Russian Federation.

Probably, we need to constantly analyze what is happening in this area and look for additional opportunities to support those who see these problems at a professional level, because, so to speak, it is easier for them to see it from their own level, bearing in mind that they are engaged in this type of activity.

You mentioned the Chinese proverb about Jiangsu Province. I immediately remembered another saying: whoever sits higher sees further. Here you are already high enough and see these problems better than many others. Thank you for noticing this. I made a note for myself, we will definitely think about what we can do in addition.

I promised to move to this sector. Please give me a microphone.

I feel like it's impossible to finish it, you can only stop it.

:(as translated)Question Mr. President, thank you so much for this opportunity.

I represent India. We know that BRICS is now actively engaged in supporting the growth of small and medium-sized businesses. How would you like to create a special forum or platform where small and medium-sized enterprises can step up their work and feel protected in the BRICS context?

Vladimir Putin: You know, this is a very good offer, and we are trying to do it. But since you have drawn attention to this, I will ask my colleagues, those who analyze the situation in the framework of BRICS in the main areas of cooperation, and we will definitely draw the attention of our Brazilian colleagues to this, since they are currently heading BRICS, they will be heading it from next year.

This is very important for us, because as part of the import substitution program, we have a large number of new Russian brands entering the market, replacing those of our former Western partners who voluntarily left our market. They do it very successfully, very much and very successfully. And not only in the production of consumer goods, but also in IT technologies, in high technologies in the broadest sense of the word.

And in agriculture, by the way, the number of our producers is growing. In 1988, the Soviet Union imported $ 35 billion worth of grain to the Soviet Union. Last year, we sold 66 million tons of grain. And all this is largely done at the expense of producers, farmers, and so on. That is, in all sectors of the Russian Federation, including high-tech ones, the need to expand the sales opportunities of their products is growing. We are extremely interested in this.

I know that at the suggestion of Prime Minister Modi, the same policy is being implemented in India. Everyone knows his message well: do in India. For our part, we are also ready to place certain production facilities in India.

Let me remind you that the largest investment in the Indian economy, at least recently, was made by our company Rosneft, which invested $ 20 billion in the Indian economy. And the fact that the Prime Minister of India and the Government are creating such reliable and stable conditions is not least due to the fact that the Indian leadership is pursuing a nationally oriented policy in all areas, including the economy.

We consider investments in India to be stable and highly profitable, but we are also interested in supporting our producers.

Thank you for this idea. We will definitely work this out.

Alexander Kostin: Colleagues, let's finish this.

Thank you very much, Vladimir Vladimirovich.

Vladimir Putin: Thank you. And thank you very much to our organizers. [My Emphasis]

Again, fascinating as usual. I see President Putin has mastered the art of Guanxi very well, which is why he’s so successful with China. The many investment mechanisms/tools devised by Russia went mostly unmentioned this time, while more focus was devoted to international issues, particularly BRICS investment plans. Trump’s tariff threat generated much humor in Russia and elsewhere, this forum as well, while Putin’s parsing was done quite well. The Primacy the Outlaw US Empire once enjoyed was destroyed by its own actions, a very major fact to which many remain blind, including those whose actions did the deed. The unique conditions that allowed for that Primacy to be attained won’t happen again. One last observation worth repeating is Russia’s “guarantees of preserving the invested capital in the property and receiving income from these investments,” which is connected to the inflation issue. The programs for Russian citizen investment in Russia’s development were explained in detail on several previous occasions and present an excellent opportunity. However, can it also provide the basis for polarizing Russian society between those able to save and invest versus those unable—IMO, the last thing Putin or any of his team want to spawn is a Rentier Class. The issue of German colonization and anecdotal stories were very telling and confirm the tales Dr. Hudson has told along similar lines. One question begged: Will the issue of sanctions be made part of any Ukraine settlement? IMO, no because attaining the security agreement is far too important to be linked with anything else.

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