No Going Back

From Izvestia, June 20, 2022, p. 2. Condensed text:

‘Nothing lasts forever.’

The plenary session is always the centerpiece of the St. Petersburg International Economic Forum (SPIEF) [see Vol. 74, No. 24, pp. 8‑10]. . . .

The slogan of this year’s 25th forum was “New Opportunities in a New World.” So, it was only appropriate that [Russian President] Vladimir Putin started his opening speech (which at times sounded a lot like a state-of-the-nation address – something he has yet to give this year) with an overview of the recent changes in the world order. The era of the US-led unipolar world is over, the president said. A number of fast-growing nations and regions are playing an increasingly important role in the world today, he said, and it is no longer possible to ignore their interests. “It would be wrong to assume that one can simply wait out this time of radical transformations, and that sooner or later things will go back to normal. No, there will be no going back,” Vladimir Putin said. “Some people just refuse to accept the obvious. They keep clinging to the shadows of the past. For example, they think that the West’s domination in global politics and economics will last forever. But they’re wrong. Nothing lasts forever.”

In addition to criticizing the US, the president spoke at length about the EU, which, in his words, “has lost whatever political sovereignty it had left, and its bureaucratic elites just do as they are told.” As for the Group of Seven countries (meaning that Japan, Canada and the UK got their share of criticism as well), for years they pursued irresponsible macroeconomic policies, which resulted in the current problems, including surging inflation. “Russia’s efforts to liberate the Donetsk Basin have absolutely nothing to do with this. The current price hikes, inflation, shortages of food and gasoline, energy issues – all this comes as a result of systemic mistakes in the economic policies of the current US administration and European Union bureaucracy,” Vladimir Putin said. “I admit that our operation may have had some effect on the situation, but it is their misguided economic policy that was the primary factor.” . . .

‘No way. Let them keep doing their work.’

Domestic issues were also high on the agenda. The president announced a whole range of government measures that provide support for families and businesses. For example, the president proposed a permanent ban on most inspections for Russian companies where the risk of causing major harm is low. “It is perfectly obvious to everybody that it makes absolutely no sense to check every single company. Inspectors should adopt a risk-based approach,” he said. The president instructed the government to design specific terms for such a reform within the next few months. . . .

“Businesses are tired of inspections. Regulators should give them a break and stop harassing them,” Vladimir Prokhorov, the owner of Udacha [Success] Group and a member of Business Russia’s general council, told Izvestia.

The president also urged lawmakers to take a closer look at the possibility of decriminalizing a number of economic offenses. . . . He also said the time has come to revise the list of grounds on which businesspeople can be taken into custody and those for extending the maximum time allowed for investigation.

Also, Vladimir Putin proposed a totally new instrument for supporting businesses – industrial mortgages. This means that the companies that want to purchase production facilities will be entitled to long-term subsidized loans at a rate of 5%, he explained.

Industrial mortgages will help small and medium-sized companies contribute to Russia’s economic development, Vladimir Prokhorov said. . . .

The president also said that the subsidized mortgage rate for families should be lowered from 9% to 7%. The timeline will remain the same: The program will continue until the end of this year. . . .

The president also mentioned Russia’s current demographic problems. The situation remains extremely difficult, he said. Fewer than 100,000 infants were born in Russia in April [2022], which is almost 13% less than in April 2020, the president pointed out. Because of that, Vladimir Putin asked the government to keep working on additional measures to support families with children. In the future, Russian families should have two, three or more children, he said.

Speaking about business prospects, Vladimir Putin said that recent developments have demonstrated the old maxim that it is always safer to stay in your home country. Those who ignored this obvious truth lost hundreds of millions, if not billions of dollars, in the West, he said. He encouraged business owners to invest in Russia, creating new industries and new jobs. There are plenty of interesting challenges waiting for someone to take them on, the president said. . . .

Development versus nice packaging.

Vladimir Putin reminded the audience that Russia has no intention of isolating itself from the rest of the world. Actually, many partners from European countries will sooner or later return to the Russian market, because “they have no choice.” But this has not happened yet; some [Russian] soft drink companies, for example, are now using less colorful packaging for their juices, because of the shortage of dye. . . .

“When making a decision, you should always have a clear understanding of what is more important: to be independent and sovereign, to rely on yourself and be able to develop going forward, or to have nice packaging right now,” Vladimir Putin said. . . .

[Kazakh President] Kasym-Zhomart Tokayev, who was sitting next to Putin and vowed not too long ago that his country would not help Russia evade sanctions, said Kazakhstan will certainly help Russia make up the shortage of some goods resulting from Western manufacturers’ decision to withdraw from the Russian market. At the same time, Vladimir Putin pointed out, Russia will not focus on import substitution alone. If all we do is try to replace other countries’ goods, he explained, no matter how good our substitutes are, we will always be in the position of catching up. Russia should design its own products and technology, which will become new world standards, he emphasized.

Questions and answers.

Naturally, a lot of attention was given to the special operation in Ukraine [see Vol. 74, No. 8, pp. 9‑13]. Any military conflict is always a tragedy, Vladimir Putin said. But Russia was forced to make this decision, which was not easy, he said. Russia’s actions were in line with the UN Charter, the president explained: Russia first recognized the self-proclaimed republics in the Donetsk Basin [see Vol. 74, No. 8, pp. 3‑8]and then agreed to provide them with military assistance.

When asked by the moderator about the special military operation, Kasym-Zhomart Tokayev described the Donetsk and Lugansk people’s republics as quasi-states and said Nur-Sultan was not likely to recognize them [see Vol. 74, No. 24, pp. 15‑16]. Territorial integrity and the right to self-determination, he said, are two principles in the UN Charter that contradict each other. Hence the difference of opinion regarding territorial disputes. . . .

Russia, however, is not going to change its position on the issue. Vladimir Putin promised that Moscow will never abandon Donetsk and Lugansk. At the same time, the president did not say unequivocally whether the two republics would become parts of Russia. Other politicians present at the plenary session did not address this issue either. Federation Council vice-speaker Konstantin Kosachov said the timeline for future integration between Russia and the Donetsk and Lugansk people’s republics will be informed by the situation on the ground. . . .

Vladimir Putin did answer a question about the red lines, which, if crossed, would force Russia to hit Ukraine’s decision-making centers. Despite everything that is going on today, Russia’s relations with Ukraine will improve sooner or later, the president said. He reiterated that Moscow will have no objection if Ukraine joins the EU. “The EU is not a military organization or a political bloc, unlike NATO. Therefore, we have always said that our position here is consistent and understandable. We have nothing against it,” he said.

The decision to join an economic alliance is the sovereign choice of every country. And it is up to the economic alliance to decide whether it wants to accept this country as a new member, Vladimir Putin said.