Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education
BBCi CATEGORIES   TV   RADIO   COMMUNICATE   WHERE I LIVE   INDEX    SEARCH 

BBC NEWS
 You are in: Talking Point: Forum
Front Page 
World 
UK 
UK Politics 
Business 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
Forum 
In Depth 
AudioVideo 


Commonwealth Games 2002

BBC Sport

BBC Weather

SERVICES 
Friday, 20 July, 2001, 08:41 GMT 09:41 UK
Quiz Russia's Economy Minister
German Gref is the minister shaping Russia's economic reforms, from the shake up of tax and land codes, to the break up of industrial monopolies.

Appointed by President Vladimir Putin in May 2000 - and like him a graduate of Leningrad University's law faculty - his brief also includes sport, tourism and ensuring that Russia's frozen northern territories are adequately supplied.

The overall state of the Russian economy was described last week by World Bank chief, James Wolfensohn, as better than it has been for a long time.

But what are the prospects for the Russian economy? Does the Russian Government have what it takes to cut the powers of the bureaucrats and oligarchs, and introduce a transparent market economy?

Can Mr Gref create the conditions for a much-needed influx of foreign investment?


Transcript:


Newshost:

Hello and welcome to the cyber-studio of the BBC's Moscow studio. Today Russia's Minister for Economic Development and Trade German Gref is on the air on the BBC's Internet site.

Many messages have been sent in to the site ask about the prospects for Russia's economic development. Irina from Russia asks: "It would be interesting to hear Mr Gref's opinion about the following ratio: the higher the price of oil products, the more stable the economic situation in Russia". Do you agree?


German Gref:

Partly yes, partly no. The higher the prices of hydrocarbon raw materials, I would say, the more stable is the budget situation in Russia. The budget situation, but not the economic situation as a whole. Because, unfortunately, the disproportionate development of any individual sector - in this case hydrocarbon raw materials - is fraught with the danger of destabilizing the whole economy.


Newshost:

Russia and the world economy, Russia's relations with the outside world - we have very many questions from listeners and visitors to the BBC site on this theme. Yevgeniy from Russia asks: "On what principles will Russia's relations with the IMF be constructed over the next two years, and does Russia intend to take credits?" And there is a question from John King from Oregon, USA: "How do you intend to monitor the distribution of foreign aid in Russia and, to put it simply, how do you intend to halt the theft of foreign funds arriving in Russia?"


German Gref:

I think I shall start with the last question. I think that the information about foreign aid is rather out of date because today we are receiving virtually no foreign aid at all. At present we are not planning to bring in IMF credits. Everything will depend on how the economic situation looks in 2003. I think that it is possible that we may need to restructure our debt and we have preliminary agreements with the main creditor countries on this. But Russia's relations with the IMF have fundamentally altered. Today we are doing what the IMF recognizes as correct; we have begun a phase of IMF monitoring of the government's actions and assessing these actions from the point of view of improving Russia's creditworthiness and capability of repaying our debts to the IMF and at present we have no immediate plans to have recourse to borrowing from the IMF.


Newshost:

President Putin set the government the task of completing the talks with the WTO by the end of 2001. Now this date is clearly being postponed - why?


German Gref:

You know, the date for entry into the WTO was never specified. It is impossible to do this.


Newshost:

The date for the completion of the talks - that is what was stated.


German Gref:

It was said that the basic negotiations should be completed by the end of 2001. Quite a high rate of progress was chosen. To date we have completed the talks on practically 80% of the tariff positions on the commodities market. There is a whole range of major problems, there is the position adopted by our partners in the talks which has become rather more complicated. They have put forward some demands which differ from those which we initially agreed to and those which we saw as acceptable. We are now holding political consultations with the main partner countries in the talks. If these consultations are successful, then the timetable for ending the main stage of negotiations by the end of this year will not change. If this process drags on a little then, of course, it will be postponed. I have already stated the reasons.


Newshost:

Jill Bane in the UK would like to know what your ministry and the Russian government are doing to stimulate foreign investment in the Russian economy and to support the inflow of capital including from medium-sized businesses and not just from mega-corporations.


German Gref:

Well, you know, if one takes practically all the regulations which have been adopted in the country and all the real actions of the government in the economic sphere - they are all directed towards achieving this aim.


Newshost:

Aleksey from Russia asks you what specific steps Russia plans to take to halt the outflow of capital. Aleksey believes that apart from economic methods aimed at improving the investment climate, it is necessary to tighten controls.


German Gref:

You know, this is a political choice. You can either tighten controls or you can liberalize the economic regime. There is no third way. We are moving away from tightening controls as we believe that in this case it is absolutely ineffective. It is extremely difficult today to halt capital by administrative methods. With today's banking technologies and the regime of universal prohibitions which still exist today - this regime of prohibitions is useless from the point of view of the outflow of capital. Moreover, the experience of developed countries including Great Britain - Thatcher carried out a wholesale liberalization of currency legislation and this brought in a mad inflow of investments into Great Britain. Although, according to the logic of the question that has been asked, the outflow should have increased.

At present we are going along the other road. We are trying to create an economic environment which is advantageous for the investment of capital and to remove prohibitions on investing it. This will be the very best indicator of the economic climate which is being created in the country; in the final analysis this is an evaluation of the government's activities. The outflow of capital is a result. It is a diagnosis. And it is quite senseless to combat a diagnosis; it is necessary to combat the causes of the disease.


Newshost:

Here is a question from Andrey K. from Russia: When will Russia start to put people in prison for tax crimes and when will units of the Federal Tax Police Service really get down to work?


German Gref:

People are already being put in prison for tax crimes. I think that after we make the tax legislation realistic from the point of view of the interests of the tax payers - for it is no secret that the nominal and real tax burden in Russia differ by more than double; under such a high level of tax burden one in every two taxpayers is a criminal. We could imprison them all, but then who would produce the GDP? We have separated this task into several stages. First of all to make the tax legislation acceptable to make it possible and advantageous to pay the real taxes specified by the laws. And then after this will naturally follow a tightening up of the administration of the taxes and pursuit of those who fail to pay their taxes as, let us put it this way, as inveterate violators of the interests of society.


Newshost:

A question from San Jose, California. Are you satisfied at the passage of the tax code through the Duma? Do you think that it is sufficiently in line with Russia's present interests, because the man who sent in this question visited Russia and lived here quite a long time and he believes that until those who produce the bread earn a good living, the whole country will not earn a good living.


German Gref:

One can agree with this assertion. I am not very satisfied with the process of the passage through the Duma, but I am satisfied with the result.


Newshost:

Here is a question about frankness. Some visitors to our site consider you to be a frank politician. It seems that you are even acquiring some political adherents. Maya writes: "Esteemed German Oskarovich, allow me to express genuine admiration for your conduct during the first reading of the Land Code in the State Duma. I understood that in our country, in Russia, there has appeared a Politician with a capital P." Are you a politician or a technocrat, or are you a rule-applier, a bureaucrat? Do you feel yourself to be a politician?


German Gref:

Thank you Maya for your support but I must say that I do not feel myself to be a politician. I really feel that I am a technocrat who has temporarily joined the authorities in order to try to build a more rational state and ensure that when I depart from this official state post it will make my life in this state easier. And I want my son to have a future which will not need to be linked with the civil service. It should simply be possible to go anywhere without having to apply to a state official, to live and fulfil oneself.


Newshost:

Please excuse this question, but are you already planning your departure?


German Gref:

You know, anyone who does not plan his departure is just living from day to day. I do not think that I was made for the life of a bureaucrat and my team which works with me are people who have come in to achieve a specified aim. We wish to create a normal society in which people can live without applying to the authorities. This is the main thing, to free the business sphere and the sphere of public life from bureaucratic tutelage.


Newshost:

Many people consider you to be a member of Putin's team in view of the fact that you have emerged from the environment of the St Petersburg intelligentsia. How did you get to know the president and what is the level of your relations with him?


German Gref:

We got to know each other quite a long time ago, while we were working in St Petersburg. We worked together in the St Petersburg mayor's office and we have known each other from there for quite a long time, of course. As far as relations between us are concerned, you know, one must know our president in order to speak about the level of personal relations. When it is a question of work the level of personal relations is of not the slightest importance. In working with Putin, there is only thing which is important - how well you can back up your arguments. If you have the strength to argue your position it means you will win in various disputes. If your arguments are insufficiently weighty, it does not matter how close you are to the president. It is of not the slightest significance.


Newshost:

Many people say that the president intends to carry out the socio-economic modernization of Russia by authoritarian methods. Do you personally think this is possible? Can there be an authoritarian modernization in Russia just like, as it is fashionable to say, in Chile - that is disregarding democracy, liberties and so on?


German Gref:

I think that is impossible.


Newshost:

Does this square with what is happening to the mass media and the situation in Chechnya? Does this not contradict what you are doing?


German Gref:

Different means have to be used in different situations. In the Chechen situation I think that it would be totally stupid to go out to the battling militants and call on them to set up a parliamentary republic. We saw that aggression was stemming from there and in effect granted them total independence. And when it is a question of applying such methods to a state, there can be no means other than those used there. As far as Russia as a whole is concerned, the only medicine for its illnesses is to build a civil society.


Newshost:

And how do you fell about this? Are you optimistic? Is progress being made? Many people consider that this process has come to a standstill. Many people in Russia believe this, and abroad too, in the West.


German Gref:

You know, these are very personal feelings. Everyone has his own place of work. Someone who has lost his job, say, at some radio station or newspaper, has the right to such an opinion. If one looks at the situation as a whole, I think that there are no grounds for drawing such conclusions. I do not think that in our country freedom of speech or individual freedom has suffered in any serious way. Moreover, I would like to say that all the measures which have been undertaken in all spheres of the economy, judicial protection of individual rights, the liberalization of social life bear witness to just the opposite. Then again, I would like to say that Putin's image as someone who has emerged from the Federal Security Service is superimposed on all this. But I would like to say that I have known Putin for many years and I view him as a graduate from the legal faculty and a man with a wonderful education, and that is the number one thing - while his professional propensities are number two, three or ten.


Newshost:

You know, I recently heard a politician give this description of the president: Vladimir Putin is an economic liberal but is absolutely no democrat. He is not interested in the procedure, what is important to him is the final result. Do you agree that the Russian leadership - perhaps this applies not only to Putin - there is a certain Machiavellianism, a striving to gain one's end at any price?


German Gref:

I would agree that the Russian leadership has a great desire to achieve its aims, but there are very precise scales which assess what price can be paid for this. The president very frequently reiterates that we need to achieve economic growth at any cost, but whenever the question of social stability is placed on the scale, such decisions are never taken. Weighing up the consequences when attempting to achieve one's aim is perhaps one of the main distinguishing features of today's authorities, today's Putin.

See also:

11 Jul 01 | Country profiles
Country profile: Russia
Internet links:


The BBC is not responsible for the content of external internet sites


Links to more Forum stories