Russia’s President Vladimir Putin has given lengthy assessments of the situation in global policy and economy when speaking at the plenary session of the 25th St. Petersburg International Economic Forum (SPIEF), and further offered a number of recommendations for building a multipolar system.
He also talked about the various tasks Russia faces at present and the future – tasks of supporting economic development of the country, stimulating domestic business activity, creating conditions for comfortable doing business and, opportunities and prospects opening this process for players of the entire global market and strengthening external trade and investment ties.
President Putin participated in a plenary meeting held on June 17, alongside with Kazakh President Kassym-Jomart Tokayev and Egyptian President Abdel Fattah el-Sisi, the latter by video link. Chinese President Xi Jinping delivered a video address to the participants.
While emphasizing the problems currently faced by the world’s economy at large, unfair competition among states, trade and financial wars, sanctions, restrictions, and so on, he asserted that the era of the unipolar world order has ended.
The United States, having declared victory in the Cold War, develops its own political systems and public institutions, implements its own models of economic growth and, of course, has the right to protect them, to ensure national sovereignty, he said, and added “but our partners in the West, for the sake of ambitions, in the name of preserving outdated geopolitical illusions really don’t understand that the world based on such dogmas is definitely unsustainable.”
The current global changes are fundamental, pivotal and inexorable. However, it seems that the ruling elites of some Western states are just in such illusions. They do not want to notice obvious things, but stubbornly cling to the shadows of the past. For example, they believe that the dominance of the West in global politics and economics is an unchanging, eternal value. Nothing is eternal, according to Putin.
Moreover, they rudely and shamelessly impose their own ethics, views on culture and ideas about history, and sometimes question the sovereignty and integrity of states, create a threat to their existence. Suffice it to recall the fate of Yugoslavia and Syria, Libya and Iraq. This is the nature of the current attack of Russophobia in the West and insane sanctions against Russia.
Putin also spoke about the Russian economy. The gloomy forecasts regarding the prospects for the Russian economy, which sounded at the beginning of spring, did not come true. People, businesses and various sectors are receiving respective assistance and support. Such support has helped mitigate the fallout from sanctions. The economy is smoothly adjusting to new challenges, macro-economic stability is being maintained, all social programs planned earlier are being fulfilled, the administrative burden is being consistently reduced, and conditions for projects are being improved.
Economic dynamics are stabilizing, public finances are stable. Literally three months after the massive package of sanctions. According to the results of the first five months of this year, the federal budget was executed 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 in May alone amounted to almost half a trillion rubles, exceeding last year’s May figure by more than four times.
In the future, deferred payments on insurance premiums will not need to be paid, as they say, at once. This can be done in equal installments within 12 months starting from June next year. Further. Since May, the rate on preferential mortgages has been reduced.
After a sharp rise in the spring, interest rates in the Russian economy are gradually declining, the Central Bank lowers the key rate. In this regard, it possible to once again reduce the rate on preferential mortgages, now to seven percent. In the near future, the emphasis in supporting business activity should shift from fiscal stimulus measures to market bank lending mechanisms.
This process should definitely be supported. Thus, to increase the capacity of the VEB Project Finance Factory, we will allocate 120 billion rubles from the National Welfare Fund. Such a measure will provide additional lending for in-demand initiatives and projects in the amount of about half a trillion rubles.
And it’s not just about the current obvious consequences. The leaders of European countries, at the level of informal conversations, as they say, very disturbing prospects are being furtively discussed, that sanctions can be applied not only against Russia, but also against any objectionable state, sooner or later they can affect everyone, including the EU members themselves and European companies.
“So far, things have not come to this, but European politicians have already dealt a serious blow to their economy – they themselves did it with their own hands. We see how social and economic problems have become aggravated in Europe, and in the United States too, how the cost of goods, food, electricity and automobile fuel is growing, how the quality of life of Europeans is declining, and the competitiveness of enterprises is being lost.” Putin said.
What else is of fundamental importance here? The worsening of the situation in the global economy is not a matter of recent months. What is happening is not the result of recent months, of course not. Moreover, it is not the result of a special military operation carried out by Russia in the Donbass. Such statements are frank and deliberate distortion of facts, he explained.
The world has been consistently driven into such a situation by many years of irresponsible macroeconomic policies of the so-called G7 countries, including uncontrolled emission and accumulation of unsecured debts. Moreover, these processes only accelerated and intensified with the onset of the coronavirus pandemic back in 2020, when both supply and demand for goods and services drastically decreased on a global scale.
So, if at the end of 2019 imports, imports of goods to the United States amounted to about $250 billion a month, by now it has grown to $350 billion. It is noteworthy that the growth amounted to 40 percent – in proportion, this corresponds exactly to the unsecured pumping of the dollar money supply in recent years. They printed, distributed money, and for this money they raked out all the goods from the markets of third countries.
According to the UN, back in February of this year, the global food cost index was 50 percent higher than in May 2020, and the composite commodity index doubled over the same period. In the context of an inflationary storm, many developing countries have a reasonable question: why exchange goods for dollars and euros, which are losing weight before our eyes? The conclusion suggests itself: the economy of imaginary entities is inevitably replaced by the economy of real values and assets.
According to the IMF, there are now $7.1 trillion and €2.5 trillion in global foreign exchange reserves, and this money is depreciating at a rate of about eight percent per year. But besides, at any moment they can also be confiscated, stolen, if the United States does not like something in the policy of certain states. Well, this, in my opinion, has become absolutely real for very many countries that keep their gold and foreign exchange reserves in these currencies.
According to experts, in the coming years, this is an objective analysis, the process of converting global reserves will be launched – they simply have nowhere to go with such deficits – from currencies losing their value into real resources – other countries, of course, will do this, – such as food, energy, and other raw materials. Obviously, this process will further spur global dollar inflation.
Putin also talked about the principle of developing social justice. The growth of the economy and business initiative, industrial opportunities and scientific and technological potential of the country must have a powerful social embodiment. Such development should lead to a reduction in inequality, and not to its exacerbation, as is happening in some other countries.
The reduction of poverty and inequality is the demand for domestic products, and throughout the country, and hence the reduction of the gap in the potential of the regions, the creation of new jobs exactly where they are most needed, in general, a determining condition for further economic development.
He emphasized that the positive dynamics of real incomes of citizens, the reduction of poverty is the main indicator of the effectiveness of the work of government bodies and the state as a whole. Moreover, tangible results here, despite all the objective difficulties, must be achieved already this year, and such a task has been set for the government.
In recent years, Russia has built a coherent system of support for needy families with children. Assistance from the state can be received by a woman from the early stages of pregnancy until the child reaches 17 years of age. The well-being of people, their prosperity is the most important factor in demographic development, and here, taking into account the overlapping negative demographic waves, the situation is extremely difficult. In April, less than 100,000 children were born in Russia, which is almost 13 percent less than in April 2020.
Regarding the fifth principle on which Russia builds its economic policy is the advanced development of infrastructure. Next year, a large-scale plan for the construction and repair of the backbone network of federal and regional highways will start. Within five years, at least 85 percent of its length must be brought to a standard state. Such a new tool as infrastructural budget loans is actively used. They are issued for 15 years at a rate of three percent.
Putin, in addition, proposed consolidating resources and launching a comprehensive program for the modernization of housing and communal services, synchronizing it with other infrastructure development plans, as well as capital repairs of the housing stock. The task is to radically change the situation, to consistently reduce the share of obsolete networks, resettling emergency housing and repairing roads.
In addition, he proposes to increase the amount of resources for projects to create a comfortable urban environment in small towns and historical settlements. Then, allocate additional funds for the renewal of cities in the Far East. This will be within the framework of the programs of infrastructure budget loans and the modernization of housing and communal services, as well as other development programs.
Next year, a large-scale plan for the construction and repair of the backbone network of federal and regional highways will start. Within five years, at least 85 percent of its length must be brought to a standard state. Such a new tool as infrastructural budget loans is actively used. An absolute priority for is the comprehensive arrangement and development of rural areas. People who work in the countryside, feed the country, and, as it is now clear, a significant part of the world, must live in comfortable, decent conditions.
Putin discussed internal tourism. Every year more and more tourists seek to visit the most beautiful natural places of our country: national parks, wildlife sanctuaries, nature reserves. It is estimated that this year the tourist flow will exceed 12 million people. It is important that government agencies, business, and tourists know what is permissible and what cannot be done in these territories, where it is possible to build tourist facilities, and where it is strictly prohibited, where it creates risks for unique and vulnerable ecosystems.
In general, he said it is necesary to develop clean technologies in order to achieve the goals set for the environmental modernization of enterprises, reduce harmful emissions into the atmosphere, especially in large industrial centers.
In this regard, the sixth, in my opinion, cross-cutting principle of development that unites our work is the achievement of true technological sovereignty, the creation of an integral system of economic development, which, in terms of critically important components, does not depend on foreign institutions. We need to build all spheres of life at a qualitatively new technological level and, at the same time, be not just users of other people’s solutions, but have the technological keys to creating goods and services for the next generations.
In recent years, much attention has been paid to import substitution, and has achieved success in a number of areas: in the agro-industrial complex, in the production of medicines, medical equipment, in the military-industrial complex, and in a number of other areas.
Russia has the personnel, scientific and technological reserves to develop products that are now in high demand, including household and construction equipment, industrial and service equipment. Today’s task is to increase capacities, to establish the necessary lines in a short time. And one of the key issues is comfortable conditions for the work of enterprises, as well as the availability of prepared production sites.
What is important here? The first is funding. The second is taxation. In clusters, it is necessary to ensure a low level of conditionally constant taxes, including insurance premiums. The third is support for production at the starting, early stage, the formation of a package of orders, including the provision of subsidies for the purchase of finished products of such enterprises.
Fourth, simplified administration, including a minimum or complete absence of inspections, as well as the operation of enterprises in a comfortable and easy tax and customs monitoring mode. Fifth, and perhaps most important, it is necessary to create mechanisms for guaranteed long-term demand for new innovative products that are just entering the market. Putin concluded that the priority is to make stronger Russia.
There were about 2,700 business representatives from 90 countries in attendance – far below the 13,500 participants from 140 countries reported during the pre-Covid pandemic, according to SPIEF’s website. Under the chosen theme ‘New Opportunities in a New World’ that reflects the changing global situations, the conference runs from June 15 to June 18 and it is the 25th St. Petersburg International Economic Forum (SPIEF) since its establishment.