Д.Медведев.Встреча.Клуб «Валдай».12.09.08.Part 5

Meeting with the Participants in the International Club Valdai.Part 5
September 12, 2008
GUM Exhibition Centre, Moscow

Встреча с участниками международного клуба «Валдай».
12 сентября 2008 года
Москва, Выставочный зал ГУМа

Now with regard to the consequences of the crisis on world financial markets, the problems that have emerged for the stock market and foreign investment. I would certainly make one fairly basic observation: there is nothing to be melodramatic about here. Because of its status, because of its role in the global division of labour, because of its geographical features and intellectual capacity, Russia will always be a magnet for investment. In order to destroy all this, you would need to erect an iron curtain. But even during the Soviet period there was investment in Russia. Of course we have no intentions of creating problems for investment cooperation with the western world or with our Asian partners. On the contrary, we have done and will do everything to ensure that the investment climate in Russia is everything that it should be. We cannot violate some fundamental principles concerning constitutional freedoms in order to attract investment. But in every other case we will work round the clock to ensure that our country has a normal business environment.

I do not think that what is happening in the world is all that unusual. The world economy is cyclical, the things it values remain the same. I would draw attention to the fact that the Russian Constitution includes the same rights and freedoms that are subscribed to in other parts of the civilized world. The protection of property rights remains one of the top priorities of the state. And we are only now beginning to realise how important it is for us to ensure full protection of property for Russian citizens, foreign companies and foreign investors in Russia.

I have already been obliged to hold forth on the value of property rights. I believe that due to a number of factors in Russia for almost the entire twentieth century there was no real idea of property in the ordinary sense. And our task is to create it, to give it our full-fledged guidance and protection. This is perhaps the cornerstone of a normal investment and business climate. Nothing else means much in this regard, not even military developments, as paradoxical as that might sound, because problems of a military kind can be resolved, whereas economic development and social development never stop.

There is another point worth making. The world today has fallen back from its peak economic development. Unfortunately we have probably not yet hit the bottom. Recent developments on the American financial market are naturally reflected in all the other markets. If we are going to speak about the respective contributions of recent crises to the fall in Russias stockmarket indices, I would rate their contributions as follows: 75 per cent of the drop or correction in the stock indices is related to the effects of the international financial crisis and 25 per cent to our internal problems, including the aftermath of the war in the Caucasus.

Despite all these difficulties, therefore, I remain in this respect quite moderately optimistic. I believe that the resources available to our companies to restore the values of Russian stock indicators is huge. There are two reasons for this: the first is that until now Russian blue chip stocks, the most attractive Russian companies, have still not reached their peak: their worth has not yet been fully appreciated. They are still undervalued. And the second reason is that, given that our market is still growing, still evolving, in this sense it is more risky than traditional markets, and this makes for all the variability in the markets, or as economists say, all the market volatility. There is nothing to be frightened of. We simply need to take a deep breath and calmly continue to pursue developing the economy, as a matter of fact to go on doing what we have been doing.

There was a meeting held yesterday on precisely this topic, dedicated to the development of Moscow and Russia as a new financial centre. I believe that in this sense we have very good prospects, both in terms of turning Russia into one of the financial centres and making the ruble a reserve currency. Banks now have a range of foreign exchange holdings and foreign exchange earnings in different currencies. Our task today is to make major financial participants keep a portion of their reserves in rubles. This is perfectly plausible task, given that the ruble at the moment is a freely convertible currency, Russia is one of the very important economic players, Russia trades in various goods, including commodities, and its cash holdings are very significant.

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