Putin in St-Petersburg
Russian Federation President Vladimir Putin speaks at the 25th St. Petersburg Economic Forum, on Friday, June 17, 2022.
Everyone is talking about Putin. No one should know what he really says. Here is his speech.
Best friends, colleagues! I warmly welcome the participants and guests of the 25th International Economic Forum of Saint Petersburg to his birthday. It is taking place at a difficult time for the entire global community, when the economy, markets, and the fundamentals of the global economic system are under attack. Many trades, manufacturing, and logistics relationships previously disrupted by the pandemic are now being put to new challenges. In addition, important business concepts such as corporate reputation, inviolability of property, and confidence in world currencies have been thoroughly undermined – sadly undermined by our partners in the West, and it has been done deliberately, out of an ambition to perpetuate outdated geopolitical illusions in the name of to keep.
Today I will give our view – by “our” I mean the Russian leaders – on the situation the world economy is in. I will discuss in detail how Russia is acting in these circumstances and how it is planning its development in a dynamically changing environment.
Russia in the midst of the current situation of the world economy
A year and a half ago at the Davos Forum, I emphasized once again that the era of the unipolar world order is over - I'm just starting with it, there is no escaping it - it is coming to an end, despite all efforts to preserve it, all efforts to maintain it by any means necessary. Change is a natural course of history, because the civilizational diversity of the planet, and the richness of cultures, are difficult to combine with political, economic, and other patterns, patterns do not work here, patterns are imposed crudely and without alternative from a center.
The flaw lies in the idea itself, according to which there is a power, albeit a strong one, with a narrow circle of vassals — or, as they say, states — entitled to it. All the rules of business and international relations are enforced, if necessary, solely in the interest of this power. They all work in one direction, the game is in one direction. A world based on such dogmas is certainly not sustainable.
The United States, which declared itself the victor in the Cold War, declared itself ambassadors of the Lord on earth, having no obligations, but only interests, and those interests are canonized. They do not seem to realize that in recent decades new centers of power have emerged on the planet, which are becoming more and more powerful. Each of them develops its own political systems and government institutions, implements its own models of economic growth, and of course has the right to protect them in order to guarantee national sovereignty.
We are talking about objective processes, about truly revolutionary, tectonic changes in geopolitics, in the world economy, in the technological sphere, in the whole system of international relations, in which the role of dynamic, promising states and regions is greatly increasing, whose interests are not can no longer be ignored.
The system will not return to the old state
I repeat: these changes are fundamental, decisive, and unstoppable. And it is a mistake to think that one can sit out the period of turbulent change, as they say, wait, that supposedly everything will return to normal, that everything will be back to normal. That will not happen.
However, it seems that the ruling elites of some Western states harbor exactly this kind of illusion. They do not want to notice the obvious but cling tenaciously to the shadows of the past. For example, the dominance of the West in world politics and economics is believed to be an unchanging, eternal value. Nothing lasts forever.
Moreover, our colleagues do not simply deny reality. They try to counter the course of history. They think in terms of the last century. They are trapped in their own delusions of countries outside the so-called golden billion, considering everything else as the periphery, their backyard. They still treat these countries as colonies, and the people who live there regard them as second-class people because they consider themselves exceptional. If they are exceptional, then everyone else is second-rate.
Hence the tireless urge to punish, to destroy economically, those who stand out from the general ranks, those who will not blindly obey. Moreover, they rudely and blatantly impose their own ethics, their conceptions of culture, and their ideas of history, sometimes questioning the sovereignty and integrity of states and threatening their very existence. Suffice it to recall the fate of Yugoslavia, Syria, Libya, and Iraq.
The Cancel culture is directed against all dissenters
If a dissident cannot be hunted down or pacified, then one tries to isolate him or, as they say, “cancel” him. Everything is used, including sports, the Olympic movement, a ban on culture, and masterpieces of art – just because their creators are of “wrong” descent.
Such is the nature of the current onslaught of Russophobia in the West and the insane sanctions against Russia. Insane and, I'd say, thoughtless. Both their number and the speed of the stampede have no precedent.
The attack on the Russian economy has not worked
The calculus was clear: audacity to destroy the Russian economy in one fell swoop, destroying corporate chains, forcibly removing Western companies from the Russian market, freezing domestic assets, and thereby destroying industry, finances, and people's living standards. to meet.
It did not work. Obviously, it hasn't worked, hasn't happened. Russian entrepreneurs and authorities worked in a targeted manner and professionals, citizens showed solidarity and responsibility.
We are gradually normalizing the economic situation. First, we stabilized the financial markets, the banking system, and the trading network. We then started to saturate the economy with liquidity and working capital to maintain corporate stability, employment, and jobs.
The gloomy predictions about the outlook for the Russian economy that was announced at the beginning of spring have not come true. At the same time, it is clear why this propaganda campaign was blown up, where all those sayings about a dollar for 200 rubles and about the collapse of our entire economy came from - all this was and remains an instrument of information warfare, a factor of psychological influence on Russian society, on domestic business circles.
Incidentally, some of our experts have succumbed to this outside pressure, in their forecasts they also assumed the inevitable collapse of the Russian economy and the critical weakening of the national currency – the ruble.
We must always assess the situation fairly and realistically
Life has disproved such predictions. However, I would like to emphasize and note that in order to continue to be successful, we must assess the situation as honestly and realistically as possible, at the same time be independent in our conclusions and, of course, believe in our own strength – that is very important. We are strong people and overcome any challenge. Like our ancestors, we solve every problem. The entire thousand-year history of our nation bears witness to this.
Literally three months after the massive sanctions package, we have quelled the rise in inflation. As you know, inflation, after peaking at 17.8 percent, is now at 16.7 percent and is falling. Economic dynamics are stabilizing, public finances are stable. Next, I will make a comparison with other regions. Yes, of course, that's too much for us. 16.7 percent is high inflation. We must and will work on that, and I am sure we will achieve a positive result.
The federal budget surplus is half a trillion rubles
According to the results of the first five months of this year, the federal budget ended with a surplus of 1.5 trillion rubles and the consolidated budget with a surplus of 3.3 trillion rubles. At the same time, the federal budget surplus amounted to nearly half a trillion rubles in May alone, more than a fourfold increase from May last year.
Today our task is to create the conditions for an increase in production and an increase in supply on the domestic market and, in a balanced way with the growth in supply, end-demand, and bank lending, to recover.
Concrete solutions for the economy and citizens
I have already said it: we have taken special measures to supplement the working capital of the companies. Below that, companies in almost all sectors will be given the right to defer insurance premiums for the second quarter of this year. At the same time, the processing companies have more options: they can use the postponement in the third quarter. In fact, it is an interest-free loan from the state.
In the future, the deferred insurance premiums do not have to be paid in one go. This can be done in equal installments over 12 months from June next year.
Moreover. Since May, the interest rate on preferential mortgages has been lowered. It is now nine percent. At the same time, the preferential mortgage program itself has been extended until the end of this year. As I said, the aim of such a measure is to help citizens solve their housing problems, to support the construction sector and related sectors, and we employ millions of workers there.
After a sharp rise in the spring, interest rates in the Russian economy are gradually falling, and the Central Bank is cutting the key interest rate. In this regard, I think it is possible to lower the interest rate on preferential mortgages again, now to seven percent.
But what should you pay attention to? The duration of the program will remain unchanged – until the end of this year. This means that our citizens who want to improve their living conditions with this benefit will still have to use it this year.
The maximum amounts of the loans also remain the same: 12 million rubles for Moscow and Saint Petersburg and six million rubles for the other parts of the Federation.
I would add that in general, it is important for us to increase the availability of long-term finance and credit for the economy. In the near future, the emphasis on business support should shift from tax incentives to market-oriented bank credit mechanisms.
It is essential to support this process. Therefore, in order to increase the capacity of the VEB Project Finance Factory, we will allocate Rs 120 billion from the National Welfare Fund. Such a measure will provide additional credit for demanding initiatives and projects amounting to about half a trillion rubles.
Sanctions on weapons inflict significant damage on their creators
I have already said that the economic blitzkrieg against Russia had no prospect of success. At the same time, as you know, and the practice of recent years clearly shows, the sanction weapon is double-edged. It inflicts similar and even greater harm on the same ideologies and designers.
And it's not just about the current obvious consequences. We know that among the leaders of the European countries at the level of informal talks, as they say, there are secretly discussed very disturbing prospects that sanctions can be imposed not only on Russia, but sooner or later on any offending state, this could affect anyone, including the members of the EU itself and European companies.
It hasn't gotten that far yet, but European politicians have already dealt a major blow to their economy – they've done it themselves, with their own hands. We see how the social and economic problems in Europe and also in the United States have worsened, how the costs of goods, food, electricity, and car fuel are rising, how the quality of life of Europeans is declining and the competitiveness of companies is being lost.
Experts say immediate, "countable" losses to the European Union from sanctions fever alone are likely to exceed $400 billion next year. This is the price of decisions that are inconsistent with reality and against common sense.
These costs will be borne directly by the people and businesses of the European Union. Inflation growth in some eurozone countries has already exceeded 20 percent. I talked about our inflation, but the eurozone countries are not conducting special military operations, and inflation in those countries – in some of those countries – has risen to 20%. The United States also has unacceptable inflation, the highest in 40 years.
Yes, of course, inflation in Russia is still in double digits too. But we have already indexed social benefits and pensions, and increased the minimum wage and the living wage, thus protecting the least fortunate citizens. And here too, the high-interest rates made it possible to keep the savings of the people in the Russian banking system.
It is of course understandable for company representatives: A high base interest rate puts pressure on the economy – and that is understandable. For the citizens, it is in most cases a plus: they have returned a considerable amount to the banks at a high-interest rate.
In Russia, the population and the economy are not the ones that suffer
This is the main difference from the countries of the European Union, where the growth of inflation leads directly to a decrease in the real income of the population and eats up their savings, and where the current crisis mainly affects low-income citizens.
The increase in costs for European companies and the loss of the Russian market also have serious long-term consequences. The result is obvious – the loss of competitiveness in the world and a systematic slowdown in the growth rate of the European economy for years to come.
All this leads to an aggravation of deep problems in Western societies. Yes, of course, we have enough problems of our own, but I have to talk about that now because they constantly point the finger at us, but they also have enough problems of their own. I also talked about that in Davos. A direct consequence of the actions of European politicians and of this year's events will be a further worsening of inequalities in these countries, which in turn will further divide their societies, and the problem concerns not only the level of prosperity but also the value orientations of the different groups in this society.
Yes, now these contradictions are being repressed, “swept under the rug”. Democratic procedures, elections in the same Europe – to be honest, sometimes you look at what is happening there, which forces are coming to power – it all looks like a canvas, because political parties alternate in power, just like twins. However, its essence does not change. The real interests of citizens and the national economy are being pushed further and further into the backyard, to the periphery.
In the West, there is a gap between the wishes of the people and those of those in power
Such disconnection from reality, from the demands of society, will inevitably lead to a revival of populism and the growth of extreme, radical movements, severe socio-economic changes, degeneration, and, in the near future, a shift of elite. The traditional players, as you can see, are constantly losing. Some new formations emerge, but if they differ little from the traditional ones, they too have little chance of survival.
All the attempts to put on a good face in a bad game, all the talk of supposedly acceptable costs in the name of pseudo-unity cannot disguise the bottom line: the European Union has finally lost its political sovereignty and its bureaucratic elites are dancing to the tune of others, accept everything they are told from above, and harm their own people and their own economy, their own business.
What else is fundamental here? The worsening situation in the world economy is not a matter of the last few months. Now I will focus on things that I consider extremely important. What is happening now is not the result of the last few months, of course not. Moreover, it is not the result of a special military operation by Russia in the Donbas. Such statements are an overt and deliberate distortion of the facts.
Strong inflation already before the military operation in Ukraine
A sharp rise in inflation in commodities and commodities markets was a fact long before the events of this year. The world has repeatedly been driven into such a situation by years of irresponsible macroeconomic policies by the so-called G7 countries, including uncontrolled emissions and a build-up of unsecured debt. Moreover, these processes have only accelerated and intensified with the outbreak of the coronavirus pandemic in 2020, when both the supply and demand for goods and services declined dramatically worldwide.
The question is: what does our military operation in the Donbass have to do with it? It has nothing to do with it at all.
Without inventing other formulas or not wanting to use them, the authorities of the leading western economies simply started the printing press. In such a simple way, they began to cover unprecedented budget deficits.
I already mentioned this figure: In the past two years, the money supply in the United States has grown by more than 38 percent. There used to be such an increase for decades, but here in two years, 38 percent is $5.9 trillion. By comparison, few countries in the world have a larger GDP.
The European Union's money supply has also increased sharply during this period. Its volume has increased by about 20 percent or 2.5 trillion euros.
The West speaks of Putin inflation – a stupidity for the illiterate.
Lately, I've been hearing more and more about the so-called – excuse me, I don't like to pontify here, and I don't like to call myself in any way, but I can't resist – we all hear about the so-called Putin inflation in the West. When I see this, I always think: who is this stupidity for – for those who can't read and write, that's all. Those who can at least read understand what really matters.
Russia, our actions to liberate the Donbass have absolutely nothing to do with it. The current rise in prices, inflation, the problems with food, fuel, and gasoline throughout the energy sector are the result of systematic errors in the economic policies of the current US administration and European bureaucracy. Here are the reasons, and only in this one.
I will also say the following about our operation: yes, it had some significance, but the root lies precisely in this – in their wrong economic policies. For them, the beginning of our operation in the Donbas is a lifeline that allows them to blame others, in this case, Russia, for their own missteps. But anyone with at least a primary school education understands the real reasons for the current situation.
The West prints money to plunder poor countries
They printed money in huge quantities, and then what? Where has all that money gone? Of course: even the purchase of goods and services outside the Western countries – there it flowed, that money has been printed. They literally started "vacuuming", emptying the world markets. Of course, no one thought of the interests of other states, not even the poorest, nor did they want to think about them. They were left with only what our people call kibble, and that even at astronomical prices.
So if at the end of 2019, goods imports into the United States were about $250 billion a month, it has now grown to $350 billion. Remarkably, the growth has been 40 percent – proportionally exactly the same as the pumping of dollar money around in recent years. They printed, they distributed money, and for that money, they sucked all the goods from the markets of third countries.
I want to add one more thing: The United States has long been a major supplier of food to the world market, rightly, indeed, rightly proud of – and there was something – its agriculture, its farming traditions, this is an example to many, and for us too, for that matter. But today, America's role has changed dramatically. A net exporter of food has become a net importer. Roughly speaking, they print money and attract flows of goods, buying food all over the world.
Even higher rates of increase in raw material imports can be seen in the European Union. Obviously, such a surge in demand, unsupported by by-product supply, sparked a wave of deficits and global inflation. That's where it comes from, that global inflation. Almost everything in the world has become more expensive in recent years: Raw materials, consumer goods, and especially foodstuffs.
Yes, of course, these countries, including the states, continue to import, but the balance between exports and imports is already going the other way: there are already 17 billion more imports than exports, I think. That's what it's all about.
Imports of goods with increasingly weak inflation money
According to the United Nations, the world food cost index was already 50 percent higher in February this year than in May 2020, and the composite commodity index has doubled in the same period.
In the context of an inflationary storm, many developing countries have a legitimate question: why exchange goods for dollars and euros that lose value before our very eyes? The conclusion is obvious: the economy of imaginary units is inevitably replaced by the economy of real values and goods.
According to the IMF, there are now $7.1 trillion and $2.5 trillion in foreign exchange reserves worldwide, and this money is losing value at about eight percent per year. In addition, they can be seized or stolen at any time, if the United States does not like the policy of certain states. Now, in my opinion, this has become absolutely real for very many countries that hold their gold and foreign exchange reserves in these currencies.
According to experts, in the coming years, this will be an objective fact, the process of conversion of world reserves will begin – with such shortages they simply have nowhere to go – of currencies losing their value in real resources, and other countries will, of course, do that, – such as food, energy and other raw materials. It is clear that this process will continue to drive global dollar inflation.
In Europe too, misguided energy policies, blind bets on renewable energy and natural gas supplies have led to a sharp rise in energy costs, which has also been observed since the third quarter of last year, made an additional negative contribution to price formation – I repeat, long before the start of our operation in the Donbas. We have absolutely nothing to do with it. They have acted there themselves, prices have skyrocketed, and they are again looking for culprits.
Fertilizer crisis due to miscalculations by the West
The West's miscalculations not only affected the rise in the cost of many goods and services but also led to a decline in the production of fertilizers, mainly nitrogen, which are made from natural gas. Overall, fertilizer prices worldwide are up more than 70 percent from mid-last year to February this year.
Unfortunately, today there are no conditions to change such price trends. On the contrary, against this background, the activities of the enterprises and the logistics of fertilizer deliveries from Russia and Belarus are blocked. This pushes the situation further into an impasse.
It is not difficult to calculate the further course of events. The shortage of fertilizers means a drop in yields, which will increase the risks of undersupply of the world food market, further increase prices, and threaten hunger, especially in the poorest countries, all on the conscience of the US government and European bureaucracy.
I want to emphasize again: This problem has not arisen today, not in the last three or four months, and it is certainly not Russia's fault, as some demagogues are now saying, trying to take responsibility for everything that happens in the world. happens to be blamed on Russia.
It is a new colonial policy of the West
Of course, we are happy to hear that we are so powerful and all-powerful: we are blowing inflation up in the West, in the US, and in Europe, and we are doing something there that will give everyone a fever. Perhaps it would be nice for us to feel such power, but that is not true. The situation has matured over the years, fueled by the short-sightedness of those who are accustomed to solving their problems at the expense of others, who have trusted and still rely on the financial issuance mechanism to drown out trade flows and increasing the deficits and causing humanitarian disasters in certain regions where there is peace. I would add: This is essentially the same predatory colonial policy, but of course in a new form, a new edition, much more subtle and refined. You won't immediately understand what's going on.
The most important task for the entire global community is now to increase the supply of food to the global market, while also meeting the needs of countries that are particularly in need of food.
Russia, which guarantees its internal food security, and its domestic market, is able to significantly increase its exports of foodstuffs and fertilizers. For example, the volume of our grain deliveries could increase to 50 million tons next season.
We will direct our deliveries as a priority to the countries where their need for food is greatest and where there is a risk that the number of hungry people will increase. First of all, we are talking about African countries and the Middle East region.
Europe is as rigid as the millstones of the 18th century (and the US is taking advantage of it)
However, there are difficulties here, also through no fault of our own. Yes, formally about Russian grain, food, and fertilizers… Besides, the Americans have imposed sanctions on our fertilizers, followed by the Europeans. Then the Americans took it and canceled it – they realized what they were doing. But the Europeans did not. Their bureaucracy simply works like millstones in an 18th-century mill. Therefore, everyone understands that they have done something stupid, but somehow, for bureaucratic reasons, it is difficult to unscrew it.
I, therefore, reiterate that Russia is ready to play its part in rebalancing world markets for agricultural products and, of course, we welcome the openness to a dialogue on this issue on the part of our UN colleagues, who express the seriousness, understand the world food problem. The subject of such a conversation could be the creation of normal conditions – logistical, financial, transport – for an increase in Russian exports of foodstuffs and fertilizers.
As for – I can't help mentioning this, unfortunately, there is a lot of speculation about it – Ukrainian food supplies to the world market are concerned, we don't interfere. For God's sake. We have not undermined Ukraine's Black Sea ports. Have them de-mined and take them away. We will monitor the safety of the pilotage of these civilian ships. There is no doubt about it.
Ukrainian grain production irrelevant to the world
But what is it about? USDA estimates six million tons of wheat; our estimates are about five. And seven million tons of corn elsewhere. Everything. And if we consider that 800 million tons of wheat are produced in the world, then five million tons for the world market, you understand, make no impact at all.
Still, there are export opportunities, and not just through the Black Sea ports. Export via Belarus – the cheapest way, by the way. Through Poland, Romania – as much as you want. There are five or six takeout options.
It's not about us, it's about the assumptions of the people in power in Kyiv. Let them decide for themselves what they do, and in this case, at least they should not look to their masters abroad, from overseas.
But there is also the danger that this grain will be used to pay for the weapons delivered. Then it gets very sad.
The West has refused to honor previous commitments
As I have said before, the modern world is going through an era of fundamental change. The international institutions are collapsing and failing. Security guarantees are devalued. The West has fundamentally refused to honor its previous commitments. It is simply impossible to make new agreements with it.
In the current situation, against the background of increasing risks and threats to us, Russia's decision to conduct a special military operation was forced. Difficult, sure, but forced and necessary.
It is the decision of a sovereign country, that, incidentally, has the absolute right to defend its security under the UN Charter. A decision aimed at protecting our citizens, the people of the People's Republic of Donbas, who were subjected to genocide for eight years by the Kiev regime, and neo-Nazis, who have been given the full protection of the West.
The West not only tried to implement the “anti-Russia” scenario but also pushed for active military development on Ukrainian territory, literally pumping Ukraine with weapons and military advisers. He still does now. Frankly, nobody cares about the development of the economy, about the well-being of the people who live there, they just don't care. But there is money for NATO to gain a foothold in the East, targeting Russia, to cultivate aggression, hatred, and Russophobia.
Fighting for Russia's Right to Sovereignty and Culture
Today our soldiers and officers, the militia of the Donbas, are fighting to protect their people. They defend Russia's right to free and secure development as a great multinational country that makes its own decisions, determines its own future, relies on its history, culture, and traditions, and rejects all attempts to subvert externally imposed pseudo-values of dehumanization. and impose morality.
All the tasks of the special military operation will surely be solved. And the key to this is the courage and heroism of our soldiers, the consolidation of Russian society, whose support gives strength and confidence to the Russian army and navy, a deep understanding of the correctness and historical justice of our cause - the build and strengthen the sovereign power of Russia.
What do I want to emphasize? Sovereignty in the 21st century cannot be partial or fragmentary. All its elements are equally important, they reinforce and complement each other.
That is why it is important for us not only to defend our political sovereignty and national identity but also to strengthen everything that determines the country's economic independence, financial, personal, technological independence, and autonomy.
The West believes in fairy tales about Russia's weakness
The very construction of Western sanctions was based on the false statement that Russia is not economically sovereign, but extremely vulnerable. They were so enthralled by the propaganda of myths about Russia's backwardness, about the country's weak position in the world economy and trade, that they apparently believed it themselves.
In planning their economic blitzkrieg, they failed to notice the true facts of how our country has changed in recent years, they simply ignored them.
And these changes are the result of our planned work to establish a sustainable macroeconomic structure, ensure food security, implement import substitution programs, form our own payment system, and so on.
Of course, the sanctions restrictions have presented the country with many difficult tasks. Some companies still have problems with parts. A number of technological solutions have become inaccessible to our companies. The logistics are broken.
But on the other hand, all this opens up new possibilities for us – we often talk about it, but it's true. All this is an incentive to build an economy with full, not partial, technological, industrial, human, and scientific potential and sovereignty.
Of course, such a complex problem cannot, as they say, be solved in the blink of an eye. We must continue our systematic work toward the future. That is exactly how Russia operates, implementing long-term plans for the development of the economic sectors and the strengthening of the social sphere. And the current trials only make adjustments and refinements to these plans but don't change their strategic direction.
Basics of the Russian economy of the future
And today I would like to speak about the fundamentals on which our country and our economy will develop.
The first is openness. Truly sovereign states are always committed to an equal partnership to make their contribution to the development of the world. And on the contrary, those who are weak and dependent, are usually busy looking for enemies, sowing xenophobia in order to eventually lose their originality, and independence, and blindly follow their leader. Russia – although our Western friends literally dream of it, so to speak – will never go down the road of self-imposed isolation and autarky. We will also expand and continue to develop exchanges with all those who are interested in working with us. There are many, I will not list them. That's the vast majority of people on Earth. Now I'm not going to list all those countries, everyone knows them.
I won't say anything new if I remind you that anyone who wants to continue working and cooperating with Russia is openly pressured, sometimes even directly threatened, by the United States and Europe. Such blackmail, however, means little when it comes to countries led by sincere leaders, who clearly understand where others stand and where nationally their own interests, the interests of their peoples, lie.
Russia will establish economic cooperation with such states and promote joint projects. At the same time, we will of course maintain contacts with Western companies that continue to operate successfully on the Russian market despite the unprecedented “arm-twisting”. Such companies also exist.
Expansion of transport capacities
We see the development of convenient and independent payment infrastructure in national currencies as a solid, predictable basis for deepening international cooperation. And to help the companies in our countries to build logistical and cooperative relationships, we shape the development of transport corridors, increase the capacity of the railways, and the transshipment capacities of the ports in the Arctic, eastern, southern, and other directions. Including the Azov-Black Sea and the Caspian Sea basins, they will become the main part of the North-South Corridor, providing stable channels of communication with the Middle East and South Asia. We expect freight traffic on this route to steadily increase in the near future.
But it's not just international trade that counts. Russia wants to build scientific, technological, cultural, humanitarian, and sporting cooperation based on the principles of equality and respect for partners. At the same time, our country will strive for responsible leadership in all these areas.
Confidence in entrepreneurial freedom
The second principle of our long-term development is the reliance on entrepreneurial freedom. Any private initiative aimed at the good of Russia should be given maximum support and scope for implementation.
The pandemic and current events have confirmed the importance of flexibility and freedom in an economy. It is the private sector that, in dire circumstances and against the background of attempts to slow down our development by any means necessary, has proved that it can compete in global markets. Adapting to rapidly changing external conditions is also at the expense of the private sector. Of course, the dynamic development of the economy must be ensured by relying on the private sector.
We will continue to reduce red tape. That's why we had a moratorium on scheduled inspections of small businesses from 2016 to 2018. It was later extended, in total until the end of 2022. In 2020, this moratorium also applied to medium-sized companies. In addition, the number of unscheduled inspections has almost quadrupled.
End of company inspections when safety is not an issue
But we have gone further and, in March this year, waived planned inspections of all entrepreneurs, regardless of company size, on one condition: if their activities do not pose a major threat to citizens and the environment. As a result, the number of planned inspections has become six times smaller than the previous year.
Why am I telling this in such detail now? It is a fact that after the introduction of inspection moratoriums, the number of violations by entrepreneurs – such a result – has not increased, but decreased, and the number of violations has decreased. This speaks of the maturity and responsibility of Russian business. It must be motivated and, of course, not forced to meet standards and requirements.
This means that there is every reason to take another cardinal step forward: permanently and relentlessly refusing to carry out most inspections at all Russian companies whose activities do not involve significant risks of damage. It has been clear to everyone for a long time: there is no need to inspect every one. A risk-based approach should work. I call on the government to define the concrete parameters of such a reform in the coming months.
And here's another very sensitive issue for business, and today it's also about our national security and economic sustainability. In order to reduce and minimize all kinds of abuses and loopholes for putting pressure on entrepreneurs, we consistently do away with the vague norms of criminal law regarding so-called economic offenses.
In March, a law was signed that states that criminal charges against entrepreneurs for tax crimes can only be brought on the proposal of the tax authorities – and nothing else. In the near future, a bill should be passed to shorten the statute of limitations for tax crimes and to refuse to bring criminal proceedings after full repayment of back taxes.
In general, the decriminalization of a number of so-called economic structures must be approached carefully but at the same time thoroughly. For example, those related to work without a permit or accreditation. Now, this is a very sensitive issue because of the illegal behavior of, for example, our western partners who refuse to issue such permits.
The state should not interfere in the work of entrepreneurs
In such cases, our state agencies, as they say, should not single-handedly house Russian companies, although our entrepreneurs are not really to blame. They understand what is at stake. Even those who work in small businesses understand that very well. The license has expired, and the Western partners are not renewing – well, what should they do? Close the case, right? Whatever it is, the way works. Of course, everything must remain under state control, but their work must not be disrupted.
They should also consider raising the liability threshold for non-payment of duties and other compulsory payments. In addition, we have not changed the parameters for determining large and particularly large losses for a long time, despite the inflation that has accumulated. Such a discrepancy between the legal norm and the reality of life must of course be corrected. From 2016 to today, inflation has risen to about 50 percent, and these parameters have not changed – they need to be changed, of course.
Finally, the reasons for detaining entrepreneurs and prolonging the preliminary investigation should be reconsidered. It is no secret that these standards are very often applied where there is no objective necessity.
As a result, companies are forced to cease or completely shut down their activities already in the research phase. Not only are direct losses and market positions and jobs lost, but the reputation of the companies and their executives is also damaged.
I draw the attention of law enforcement officers to this: This practice must end. And I call on the government to work with the Supreme Court to prepare appropriate legislative changes. I request that you complete this work by October 1 of this year.
In addition, the Security Council has issued a special instruction to analyze situations where criminal cases are initiated but not brought to justice. The number of such cases has increased sharply in recent years. What is behind this is clear to everyone. Often a case is opened without sufficient justification or is used to put pressure on companies or certain individuals. In the autumn we will discuss this issue separately and take further decisions on the legislation and organization of the work of law enforcement agencies.
Of course, the regional management teams play a major role in creating a modern business environment. On the platform of the Saint Petersburg Forum, I traditionally point out the areas of the Federation that have made significant progress in the national investment climate rating maintained by the Office of Strategic Initiatives.
Many regions have benefited economically
Here we have changes in the top three. Moscow and Tatarstan, who remain in the lead, were joined by the Moscow region this year. Over the course of the year, it rose from eighth to the top, to the top three. The regions of Tula, Nizhny Novgorod, Tyumen, Novgorod, Sakhalin, Saint Petersburg, and Bashkortostan also top the ranking.
Separately, I would like to mention the regions where the greatest progress has been made: These are the Kurgan region – an increase of 36 places, the areas of Perm and Altai – an increase of 26 places, Ingushetia – with 24 places and the Ivanovo region, which has 17 places has risen.
I would like to thank and congratulate our colleagues in the regions for this work.
And, of course, the focus of federal, state, and local government teams should be on supporting citizen entrepreneurial initiatives in small towns and individual settlements, and remote areas. We too have such examples of success. These include creating popular software and selling eco-friendly products and goods from our own production throughout the country through domestic websites.
It is important here to create new opportunities to adopt modern trading formats, including electronic platforms, as I mentioned earlier, to reduce logistics, transport, and other costs, including by using modernized branches of the Russian Post.
Small business employees, the self-employed, and start-ups should also be helped to acquire additional skills and competencies. Appropriate measures specifically targeting small towns, rural areas, remote areas, and territories, I ask you to include in a special line in the national project for the development of small and medium-sized enterprises.
Lasting success is related to home, family, and children
True, lasting success, dignity, and self-esteem come when you connect your future, the future of your children, to your home. Many of us have been in a relationship for a long time, and I know the feelings of many of our business leaders and owners. I have often heard from you that doing business is much more than making a profit as it is, and changing lives around you, and contributing to the development of your hometown, region, or country as a whole is an extremely important matter for self-fulfillment, serving of people and society is not something they can replace. That is the whole meaning of life, the whole meaning of work.
Recent events have only confirmed what I've been saying all along: a home is safer. Those who did not want to hear this clear message lost hundreds of millions, if not billions of dollars in the West – such used to be the supposed quiet haven of capital...but no more!
I would like to say once again to my colleagues, including those who are in the Chamber today and those who are not: please do not step on the old rake. Our country has enormous potential and the tasks that require the use of its energy are endless. Invest here, invest in the creation of new businesses and jobs, in the development of tourism infrastructure, and support schools, universities, health, and social services, culture, and sport. I know a lot of people do – I just want to emphasize it again.
Thus the Bakrushins and the Morozovs, the Shchukins and the Ryabushinskys, the Akchurins and the Galeevs, the Apanaevs and the Matchevs, the Mamontovs, the Tretyakovs, the Arsanovs, the Dadashevs, and the Gadzhevs understood their mission. Many Russian, Tatar, Buryat, Chechen, Dagestani, Yakut, Ossetian, Jewish, Armenian, and other merchant and business families who have not offended their immediate heirs have engraved their names in the history of our country forever.
By the way, I would like to emphasize something else. For heirs, potential heirs to capital, it is still unknown what is more important: the money, property, or reputation they have inherited and the merits of their ancestors for the land. This is certain, no one will waste it, excuse the bad manners, no one will drink it.
And what will be left for future generations of heirs – a good name will remain with them forever. And that will surely guide them through life, from generation to generation, will help them, sustain them through life, and make them stronger than even the money they can inherit, or their possessions.
The third principle of our long-term development is responsible and balanced macroeconomic policies. In many ways, it was this line that enabled us to withstand the unprecedented pressure of sanctions. But again, for us this policy is important, not only to meet the current challenges but also in the long term. We will not repeat the sad experience of our Western counterparts who have started a spiral of inflation and have thrown their finances out of balance.
Long-term stabilization of the economy
Our aim is to develop the economy in a stable manner in the coming years, reduce the inflationary burden on citizens and businesses, and reach the target inflation rate of 4% in the medium and long term. I started with inflation and now I would like to add: four percent – we still have such a target.
I have already instructed the government to develop proposals for new fiscal rules. They should ensure the predictability of fiscal policies and create the conditions for maximum use of the external economic situation. All this is necessary to strengthen the foundation of economic growth and solve infrastructure and technology problems, which is the basis for improving citizens' well-being.
Only spend as much as you have earned
Yes, some of the world's reserve currencies are suicidal now, that's for sure, at least they have suicidal tendencies. Of course today it is pointless to "sterilize" our money supply with their help. But the key principle – spending, based on understanding how much you've earned, remains, and no one has given up. We understand this.
The fourth principle of our development is social justice. The country's economic and business growth, industrial potential, and scientific and technological potential must have a strong social incarnation. Such a development should lead to a reduction in inequality, not a worsening of it, as is the case in some other countries. And frankly, we are not masters at solving these problems either, we still have many issues and problems here.
Reducing poverty and inequality is the demand for domestic products and across the country, so narrowing the potential gap between regions, creating new jobs right where they are most needed is generally a crucial condition for further economic development.
I would like to emphasize that the positive dynamics of citizens' real incomes and the reduction of poverty is the main indicator of the effectiveness of the work of the government agencies and of the state as a whole. Moreover, despite all the objective difficulties, tangible results must be achieved here already this year, and such a task has been assigned to the government.
Once again, we provide targeted support to the most vulnerable groups of citizens: retirees, families with children, and also people in difficult life situations.
Pensions are always raised more than inflation
Pensions increase annually by a percentage that is higher than inflation. This year they have been increased twice, including by a further ten percent from June 1.
Simultaneously with pensions, the minimum wage was increased by ten percent, as well as the living wage, to which many other social benefits and payments are linked, are also expected to rise accordingly, directly affecting the incomes of approximately 15 million people.
Over the years we have built a cohesive system to support needy families with children. State aid is available to a woman from early pregnancy until the child is 17 years old.
The well-being of the people, and their prosperity is the main factor of demographic development, and here the situation is extremely difficult, given the overlapping negative demographic waves. Less than 100,000 children were born in Russia in April, which is almost 13 percent less than in April 2020.
Will Ukraine become the new Israel?
I call on the government to continuously monitor the development of additional measures to support families with children. They must be fundamental and commensurate with the magnitude of the extraordinary demographic challenge we face.
The future of Russia is families with children
The future of Russia is a family with two, three, or more children. That is why we should not only talk about direct financial support – we should in particular adapt the health system, education, and all areas that determine the quality of people's lives to the needs of families with children.
The national social initiative, which the regional teams and ASI are implementing together, aims to solve this problem. In the autumn, we will evaluate the results of this work and summarize the results of the quality of life assessment in the regions, so that best experiences and practices can be applied as widely as possible across the country.
Another fifth principle on which Russia bases its economic policy is the priority development of infrastructure.
We have already increased direct budget expenditure for the reinforcement of arterial roads. A large-scale project will begin next year to build and restore the core network of federal and state highways. In five years, at least 85 percent of the length should be brought to a standard condition.
Such a new instrument as budgetary loans for infrastructure is actively used. They are issued for 15 years at a three percent interest rate. I already mentioned that the demand for it was much greater than we originally planned. The regions have many well-developed, promising projects – we cannot delay their start. We are still thinking about what to do with this support measure. There was some discussion about it last night. Anyway, all I can say for now is that this tool works reliably.
Modernization of housing and infrastructure
A separate issue is the modernization of housing and communal services. There are many problems here. The sector is chronically underinvested, estimated at 4.5 trillion rubles. More than 40 percent of the networks need to be replaced. Hence the low returns and high losses. At the same time, every year about three percent of networks deteriorate and become unusable, and no more than two percent are replaced by new ones, meaning the problem gets worse every year.
I propose to consolidate resources and establish a comprehensive program for the modernization of housing and community services, synchronized with other plans for infrastructure development and capital repairs of the housing stock. The task is to radically change the situation, and consistently reduce the proportion of aging networks, as we are doing by rebuilding emergency shelters and repairing roads. We will discuss the issues of housing and community services and the development of the building complex in detail with governors next week at a meeting of the Presidium of the State Council.
In addition, I separately propose to allocate more money to projects to create a comfortable urban environment in small towns and historic settlements. This program works well for us. I propose to allocate another ten billion rubles annually for these purposes from 2023-2024.
We will allocate additional resources to the renewal of cities in the Far East. I urge the government to set special limits for these purposes in the framework of the programs for infrastructure budget loans and for the modernization of housing and municipal services, as well as for other development programs.
Shaping and developing rural areas
Our absolute priority is the comprehensive planning and development of rural areas. People who work in the countryside, feed the countryside and, as is now clear, a significant part of the world, must live in comfortable and decent conditions. In this regard, I am asking the government for additional resources for the profile program. Export duties on the sale of agricultural products can become a source of financing here. This is a permanent resource. Sure, it may fluctuate, but it will be permanent.
At the same time, I separately propose to expand the programs for the reconstruction and modernization of rural cultural houses, regional and city theaters, and museums by allocating six billion rubles for these purposes in 2023 and 2024.
An extremely demanding and important task of the people is what I have just said in the field of culture. I will give you a very recent example: during the presentation of the “Hero of Labour” medals, one of the recipients from Yakutia, Vladimir Afrikanovich Mikhailov, directly asked for help in a closed area in the construction of a cultural center in his native village. . Of course we are certainly working on that. But the fact that it is being talked about at all levels shows that it is in high demand.
I also make a little digression, which is appropriate now, with the onset of summer – the traditional time for a vacation here in Russia.
Every year more and more tourists visit the most beautiful natural sites of our country: national parks, nature reserves, and protected areas. It is estimated that the flow of tourists this year will exceed 12 million people. It is important that government agencies, businesses, and tourists know what is and is not allowed in these areas, where it is possible to build tourist facilities and where it is strictly prohibited, where it poses risks to unique and endangered ecosystems.
The State Duma is already considering a draft law that would regulate the organization of tourism in specially protected areas and create a civilized base for such activities.
In this regard, I would like to point out the following: all decisions taken here must be considered and balanced, and we must take this seriously.
I would especially like to emphasize the task of saving and preserving Lake Baikal. In particular, this is the aim of a unique project for the integrated development of Baikalsk, which should become the benchmark for sensible, environmentally-oriented management.
Eliminating the damage to Lake Baikal and creating an ecoregion
It is not only a question of eliminating the damage to nature caused by the activities of the Baikal pulp and paper factory but also of bringing the city to a fundamentally different level of life and making it the hallmark of Russian create ecotourism. The project must be carried out with the most advanced technologies and environmentally friendly energy sources.
In general, we will develop clean technologies to achieve the targets set for the ecological modernization of enterprises and to reduce harmful emissions to the atmosphere, especially in large industrial centers. We will also continue to work on the circular economy, green projects, and climate protection projects, which we discussed at length here in the Forum last year.
In this regard, the sixth, in my view, transversal development principle that unites our work is the achievement of true technological sovereignty, the establishment of an integral system of economic development that does not depend on foreign institutions for critically important parts. We must build all areas of life to a qualitatively new technological level, where we are not just users of foreign solutions, but hold the technological keys to create goods and services for generations to come.
In recent years we have paid a lot of attention to import substitution and we have achieved success in a number of areas: the agro-industrial complex, the production of pharmaceuticals, and medical devices, the military-industrial complex, and a number of other areas.
Creating our own competing technologies instead of copying others
But, and I want to emphasize this, there is a lot of discussion in society about it, import substitution is not a panacea, not a cardinal solution. If we just copy others, and try to replace the goods of others, even with the highest quality copies, we run the risk of constantly just catching up, but we must be one step ahead, our own competing technologies, products, and services that could become the new world standard.
In this regard, I would like to remind you that Sergei Pavlovich Korolev did not follow the path of copying and partially improving the captured missile technology, but looked into the future and proposed a unique batch scheme for the production of the R-7 missile, which paved the way for humanity, and in fact set the standard for the whole world and for decades to come.
This is exactly how the founders of many Soviet Union science programs have advanced, and now our designers are moving forward with dignity on the basis of this groundwork. Thanks to them, Russia has hypersonic weapons that are unmatched in any country in the world. Rosatom occupies a leading position in nuclear technology and is developing a nuclear icebreaker fleet. Many Russian solutions for artificial intelligence and big data processing are the best in the world.
Again, technological development is a transversal direction that will shape not only the current decade but the entire 21st century. We will discuss the issue of building a new technological economy – techno-economy – in detail at the next Strategic Development Council. There are many topics to discuss and most importantly – to make management decisions. I mean the development of engineering education and the transfer of scientific developments to the real economy, providing financing for high-growth high-tech companies. We also discuss the development of end-to-end technologies and the progress of digital transformation projects in individual industries.
I want to emphasize that it is of course impossible to produce anything and everything, nor is it necessary. However, we must have all the critical technologies to quickly set up our own production of any product if necessary. That's exactly what we did when we quickly took up the production of vaccines against the coronavirus, and now we have started producing many other types of products and services.
Have all critical technologies in house
For example, now that KamAZ's unscrupulous partners have left the Russian market, their niche is being filled by domestic companies. In addition, it is not only about supplying parts for the factory's traditional models, but also for the promising series production of long-haul, transport, and heavy vehicles.
I would also like to mention the payment system Mir card, which has successfully replaced Visa and MasterCard in the domestic market and is now expanding its geography and gradually gaining international recognition.
Another example is the St. Petersburg Tractor Factory. Its former foreign partner refused to sell engines and provide warranty services. Who saved? Engine builders from Yaroslavl and Tutaev: arranged the delivery of their engines. As a result, the production of agricultural machinery at the tractor plant in St. Petersburg in March-April this year became a record for the company – it did not fall but became a record that rose.
I am sure that more and more such positive practices and success stories will follow.
Again, Russia has the human, scientific and technological reserves to develop products that are now in high demand, including household and construction equipment, and industrial and service equipment.
Today it is a matter of building capacity and setting out the necessary lines in a short time. And one of the key points is comfortable working conditions for the companies and the availability of prepared production facilities.
I call on the government to submit key data on the new operation of the industrial clusters by the autumn. What's important here?
The first is financing. Projects launched in such clusters must have access to a long-term, affordable source of credit for up to ten years and at an interest rate of no more than seven percent per annum in rubles. We have discussed all these issues, including with our economic bloc. Everyone agrees, let's do it.
The second is taxation. In clusters, you look for a low level of conditionally constant taxes, including insurance premiums.
The third is support for the early stage production, the early stage of order package formation, including the granting of subsidies for the purchase of finished products from such companies. The question is not an easy one, but I think subsidies will be needed. They will be needed to supply the market. They just have to work it out quietly.
Fourth, simplification of administration, including minimal or full exemption from inspections, and a comfortable and convenient way of tax and customs supervision for the companies.
Fifth, and perhaps most importantly, mechanisms must be put in place to ensure long-term demand for new innovative products that are just entering the market. I would like to draw the government's attention to this: this preferential treatment and the corresponding industry clusters should be operational from January 1, 2023.
What I would like to say about this. Both new and already functioning points of industrial growth need to attract and integrate small businesses. At the same time, it is important for an entrepreneur, for small organizations, to see the horizon, and to understand the prospects.
Long-term investment security for companies
In this regard, I naturally urge the Government, together with the SME Association [Federal Society for the Development of Small and Medium-sized Enterprises] and our largest enterprises, to launch an instrument of long-term agreements between state-owned and small enterprises, as well as medium-sized enterprises. Thus, the demand for the products of such companies will be guaranteed for years to come, while suppliers will be able to assume the obligation to set up a new production for this order or to expand existing production.
I would add that we have already considerably reduced the construction time for industrial installations and abolished unnecessarily cumbersome procedures, but there are still large reserves here, there is work to be done, and there is room for movement. For example, it still takes one and a half to three years to build production buildings from scratch, while the purchase of prefabricated buildings is hampered by the still high-interest rates on loans.
In this regard, in order to enable the domestic business community to rapidly expand the production of the necessary products, I propose the launch of a fundamentally new instrument: the industrial mortgage. These are long-term loans on favorable terms and with an interest rate of five percent per year. Companies that intend to buy ready-made land for production are eligible for such loans. I call on the government to negotiate full details with the Russian banking sector without delay so that industrial mortgages can be fully operational in the near future.
The new world order will be multipolar. (Free market competition)
The speed and magnitude of changes in the global economy, finance, and international relations are increasing. The shift from globalization to a multipolar growth model is becoming increasingly apparent. Undoubtedly, the formation and birth of a new world order is a difficult process. We will continue to face many challenges, risks, and factors that are difficult to predict and foresee even today.
But it is clear that the rules for enforcing the new world order will be set by strong, sovereign states—those that do not go the way someone has already mapped out. Only strong states and sovereigns can have a say in this world order that is being reborn or doomed to become or remain a disenfranchised colony.
It is necessary to strive to move forward, to change, to feel the breath of the times, and to show national will and determination to do so. Russia is entering the next era as a powerful sovereign country. We will certainly take advantage of the new enormous opportunities that will open up to us in time, and we will become even stronger.
Thank you very much for your attention.