Tuesday, March 25, 2008


"Without any doubt, Russia as a nuclear power carries the entire set of obligations connected to this status. We live in a very dangerous and complicated world when the number of nuclear countries is increasing, when there is a high threat of nuclear terrorism. And the task of any country belonging to the nuclear club is to take the utmost care in fulfilling its duties. Therefore it is very important to have contacts within the framework of existing international procedures and to prepare new agreements connected to cuts in strategic offensive weapons....

President Putin and President Bush have very good personal relations. And I consider that were it not for these relations, then interstate relations today would perhaps look a lot worse. I told President Bush of this by the way in a telephone conversation when he phoned to congratulate me. Work is underway. The experts are working, employees of the foreign ministry and the defence ministry are working. It’s natural that we might have the most different proposals, and that the Americans could have the most different proposals. But I would like to point out separately that we are not happy about the situation around Georgia and Ukraine. We consider that it is extremely troublesome for the existing structure of European security.

I would like to say that no state can be pleased about having representatives of a military bloc to which it does not belong coming close to its borders. This is something that is even more difficult to explain when the vast majority of citizens of one of the states, for example of Ukraine, are categorically against joining Nato while the government of this state follows a different policy. So this is real democracy. At the very least in such situations it is usual to hold a referendum".

Dmitri Medvedev, as interviewed in the Financial Times, 25 March 2008 in www.ft.com.

In today's edition of the Financial Times there is a long interview with Russian President-Elect, Dmitri Medvedev, conducted by the FT's editor, Lionel Barber. In print in the English language, it is probably the most extensive set of questions and answers that the Russian President to be, has yet provided. And, how does he carry it off? What general impression does Medvedev make on one? Overall, Russia's next President comes across as someone who wishes to appear as both his own man, with his own priorities, and, at the same time, as someone who is both willing and able to carry on the Putin legacy. In conjunction with Putin of course, right besides him, as the next Prime Minister to be. Hence a certain degree of timidity or hesitancy appears from time to time in his responses. At least that is the way that they appear to this reader. And, yet if one reads quite carefully between the lines, if one parses his words, it appears to this reader that Medvedev is in some ways a quite different kettle of fish, to the current Russian incumbent. First off, Medvedev is much more of a 'lawyer', than Grazhdanin Putin was and is. The law is very much the basis of the mental framework in which Medvedev operates in. As he himself mentions in the interview: "I am a lawyer down to my bones". Insofar as the law, nominally at any rate, even in Russia, requires that the authorities pay homage to certain forms and formalities, that cannot be other than a positive change for Matushka Roissya. Similarly, it again would appear that Medvedev is much less inclined, for reasons of both personal preferences as well as perhaps the fact that he very much not a complete product of Sovietskaya Vlast that Putin was, to be less viscerally antagonistic to the West (EU and USA). While that does not mean that one should look automatically for diplomatic concessions from Medvedev, it does mean I do believe that going forward Moskva will be more likely to treat bumps in the diplomatic road much more carefully than has been the case for the last few years. It seems to this observer at any rate that relations with other powers, will be treated in a cordial if at times merely correct manner. Id est, there is a good likelihood that we will not be treated to the sometimes diplomatically primitive and childish 'tit for tat', policies that we have come to associate in the last couple of years with Matushka Roissya. Especially vis-`a-vis the UK and some of the Baltic states as well as Poland. Even Medvedev comments on the prospects of the Americans basing their anti-missile defence system in Poland and the Czech Republic, appears much more moderate in tone and content than some of the previous comments made by Putin, et. al.

Does the above mean that Medvedev will be in power that thing most beloved of Western foreign ministries: a weak touch diplomatically speaking? Obviously not. Irregardless of his own personal preferences, Medvedev is very much at this point a creature of the power structure that has brought him to where he is today. It will be quite awhile yet, if ever in fact, that Medvedev will be 'his own man', and, not merely 'his master's voice'. However if nothing else, the interview in the Financial Times, does indicate that Medvedev is perhaps the very best candidate that Putin and his circle, indeed in all of official Russia for the position that he will soon be officially occupy. One can only hope that he is as moderate sounding and as intelligent as he appears to be. On that note, I urge you all to read the entire interview which I attached for your collective perusal.

Interview transcript: Dmitry Medvedev, published: March 24 2008.
By Lionel Barber, editor of the Financial Times, Neil Buckley, Moscow bureau chief, and Catherine Belton, Moscow correspondent, interviewed Dmitry Medvedev, president-elect of the Russian Federation, in the Kremlin, Moscow, on March 21 2008. Below is an edited transcript

"FINANCIAL TIMES: Mr President Elect, what will be your top three priorities when you take office?

DMITRY MEDVEDEV: I think these priorities are completely obvious. The main one is to continue the social and economic course which has emerged and evolved in our country in recent years. The goal of this course is to improve the quality of life for all Russian citizens.

We have managed to turn around the economic situation - we have become a much stronger state in this regard. Russia has joined the seven biggest economies in terms of purchasing power, but that’s not all. The main challenge now is to translate these economic successes into social programmes to show that developing the economy improves the lives of every Russian citizen. In recent times we have begun to implement some social programmes in the areas of education and healthcare and I believe that it’s very important to maintain and develop these programmes, getting on with the full-scale modernising of work in healthcare and education, as well as making it possible for the majority of Russian citizens to improve their housing conditions, which is also very important. And finally, Russia has pursued and will be pursuing a well-balanced foreign policy, aiming to defend its own interests in a non-confrontational way, so that Russia’s positions will contribute towards strengthening world security. Thus there are several priorities – to maintain economic stability, to develop economic freedoms, to promote social programmes and to ensure that Russia sustains its position in the world.

FT: The world economy is slowing down. We have a financial crisis in America. There is a risk of the oil price falling. Is the Russian economy heading for a cold shower this year?

DM: I am certain that we have adequately prepared ourselves against the various problems that have emerged on the world financial markets. What makes us confident is that over the last eight years we have managed to create a stable macroeconomic system. Our financial reserves, our gold and currency reserves, are higher than ever before, reflecting the overall state of affairs in the Russian economy. So in this regard we are insured against fluctuations occurring on the commodities and stock markets, although we’re not closed off from the complexities being experienced by the world economy.

Russia has an open economy today and we need to be thinking about this. What can we counter the global financial crisis with? Only a sensible, well thought-out domestic financial policy, which would help mitigate the problems on the world financial markets. We must watch over the stability of all financial indexes, our Russian financial indexes. We must make sure that our budget is well balanced. We mustn’t allow any ill-considered expenditure. And we must be thinking about how to strengthen our own financial and stock markets. Today both are islands of stability in the ocean of financial turmoil. Foreign investors’ interest in Russia’s financial and stock markets is as high as ever and we welcome this kind of investment. Though of course we must watch that our internal spending does not go beyond the existing framework, to make sure that we maintain our situation of macroeconomic stability. This is also a challenging project. And we are making every effort to deal with this.

But inflation remains a rather serious issue for the Russian economy, although this is also a problem now for many other countries. We must suppress the inflationary surge which developed in our economy towards the end of last year. This surge was actually a consequence of the integration of Russia’s economy into the world economy. This is a price that we are essentially paying for our presence in the club of world economic powers. Naturally there are other factors contributing to our inflation, in particular we don’t yet have a full scale internal market of food products. We are forced to buy many food products from overseas, and given the way prices are going up on world food markets, this is also having an impact.

FT: Do you therefore support the price freeze on core food products?

DM: Strictly speaking there was, and is, no price freeze in the classical sense. Indeed, agreements were signed at the end of last year about the level of mark-ups used by retailers, so as not to exceed reasonable market limits, but no more than this. Firstly, these decisions were adopted not by acts of state or government, these were agreements between sellers and producers of agricultural produce. Secondly, these covered no more than 10 to 15 per cent of agricultural products. The problem also lies in the fact that food products hold quite a significant place in the Russian citizen’s consumer basket – a fact that we cannot ignore. The conclusion is simple: we need to develop our own economy and agriculture.

FT: You will have a very important partnership with Vladimir Putin. So who will have the last word?

DM: I think the point is not who says the final word, but what the political and legal system of the Russian Federation looks like. This system sets out quite clearly the respective areas of competence of the two main levels of power, that of the presidency and the executive - what I mean is the actual scope of the president and the government. It is the constitution itself that predetermines the answer to the question of who takes decisions on what issues. It is the president who sets out the main directions of domestic and foreign policy. He’s the commander in chief, he makes key decisions on forming the executive. He’s the guarantor of rights and freedoms of Russian citizens. The government has its own very extensive area of competence. It is the government which implements all economic activities, adopting the most important decisions in the economy. The government’s competence is quite extensive and its structure includes a considerable number of executive bodies. The government’s job is complex, large and challenging. And it’s completely obvious that it has enough of its own business to attend to. In other words it’s all simple. Russia is a presidential republic with a strong executive authority.

FT: We are at a unique point in Russian history. A popular leader has voluntarily given up power, is giving up power, on time and is transferring it to a new successor. This has never happened before. But Russia doesn’t have a happy history of two people running the country. Why are you so confident it will work?

DM: I agree with your first statement but I cannot accept the other. As to the fact that it’s a unique situation, you are right. Russia’s history knows practically no examples of a successful leader at the peak of his popularity moving on to a different post. But President Putin said from the start that he would strictly adhere to Russia’s constitution and would only work for two terms. This means that at last Russia is seeing the formation of a fully fledged tradition of respecting all procedures that follow from the constitution and other laws. The incumbent president is an effective leader and he’s ready and able to continue to work to advance the development of our country, to make sure our development continues in the way set out eight years ago. This is why this tandem, or this team of two, was formed between the presidential candidate and the Russian president as a possible future prime minister. I am confident that our tandem will prove to be absolutely effective. But what I cannot agree with in your statement is the fact that a dual power arrangement will emerge in this case, of a type which has historically resulted in various negative consequences for Russia.

Each branch of power must deal with its own set of affairs. The president is guarantor of the constitution. He wields the powers that we’ve just talked about. The government deals with its respective business. This is perfectly normal. We’re not surprised to see former heads of governments in a number of European countries subsequently holding posts of vice premiers or foreign ministers despite their considerable personal popularity. So I think the way we can guarantee a normal political situation, and continue successfully along the course we set some time ago, is through observing the law, based on the theory of separation of powers.

FT: In your important speech in Krasnoyarsk you spoke of the importance of freedom in all its aspects. Can we therefore expect a thaw, some easing of restrictions on media and political assembly?

DM: I really said practically the same thing I said a year ago in Davos - namely, freedom is better than non-freedom and I do believe that it is the all-important principle of life of any society and any political system.

Speaking about the mass media, I believe that the last eight years have seen our media come a long way. From the rather weak and wilted media that served the interests of individual business groups, or just separate individuals, they turned into a powerful social force.

Eight years ago, the overall capitalisation of the media fell short of even $1bn. I think that now we are talking about tens of billions of dollars, at least $50bn, that’s how I would estimate the worth of the media market in the Russian Federation. What is this if not strengthening the position of the media?

And this is very important, for the modern media market - and you know it better than I do – is developing very rapidly. And unless one invests in new technologies, one may fall behind the times, thus simply losing one’s readers and viewers. For example, the FT, as far as I understand, has not only a paper version but, naturally, also an electronic one, putting everything that is published in the paper onto the internet. Also adding video and audio files, posting all kinds of information on YouTube and so on. This requires money, this requires effort. I’m very glad that our major media, both electronic and printed have been given the opportunity to operate in this global space.

I can talk you through how my morning typically starts. I turn on my PC to check on the news. I look at the sites of our major TV channels, which already feature the main news items. I look at the sites of major Russian and foreign media. I look at Russian media sites, some of which have a positive attitude towards the authorities, and some of which are in tough opposition to the authorities. This is a normal global information flow, giving the citizens of Russia as well as other citizens the right to free access to information. There are already 40 million internet users in Russia. But the point is not just the internet, the point is that technologically speaking the media has become different today. And I am not trying to present the situation as ideal. There are plenty of problems. There are problems, conflicts, within the editorial teams, problems between editorial teams and owners. As a matter of fact, this is the case in other countries as well. And sometimes both the authorities and companies do not like what’s being published or said about them in the media. We need to be calm about this. Acting within the legal framework that we have, that is, working out legal, corporate norms of behaviour of the media, their interaction among themselves and their interaction with the authorities. That is why I am confident that our media have a very good future.

FT: You are a lawyer, a very experienced lawyer so I would like to ask what concrete steps you will take to strengthen the rule of law in Russia?

DM: I really am a lawyer, perhaps to a greater degree than is necessary. You could say I am a lawyer down to my bones. But this also adds certain advantages.

I think that we should move in three directions. One direction is the assertion of the supremacy of the law in our society. The Russian legal system is fairly young, it is about 15 years old. But on the other hand it is based on the traditions of the continental Romano-Germanic law family and in this sense it was easier for us to build our legislation than it perhaps was for other countries. What do we need to do? We need to assert the priority of laws over legal documents and over decisions that are made by the executive power and individual acts. We finally should turn the constitution into an act of direct action. The second task flows from the first one. Unfortunately - I have spoken about this many times - Russia is a country where people don’t like to observe the law. It is, as they say, a country of legal nihilism.
Unfortunately this tradition was formed not today, not now, but in essence over many years. Even before the October Revolution, in this sense not everything was as great as we would have liked. And today we need to make sure that every citizen understands not only the necessity and desirability of observing the law but also understands that without such a relation to the law there cannot be a normal development of our state or our society. And this is very difficult to do because the habit of violating the law, of violating the rules of behaviour is very developed and exists even on the everyday level.

You mentioned Krasnoyarsk but at another major event – a social forum that took place in Moscow – I made a point of making a rather obvious example: some of our people don’t even think that when they buy pirate records that they are violating someone’s intellectual property rights. We need to change the system of thinking, the mindset. In this sense we should try to create a new attitude toward the law in the country.

And finally, a third very important thing connected to the legal system and the implementation of laws in our country is an active and effective court system. Here there have also been negative traditions that have formed over the 18th and 19th centuries and today we have to make all the necessary efforts to make sure that the courts in Russia are independent and objective and act on the basis of existing procedural legislation. To a significant degree this depends on the position that the state takes on the one hand, and on the other hand on the corporation of judges itself. Judges throughout the whole world are very respected people. For the majority of law school graduates, the position of judge is the summit of a legal career, the crowning of a legal career. And we should do all that we can to make sure that those who take the position of judges understand their responsibility for the decisions they take, for the fate of people that they hold on the basis of the law.

For this we need two things: a modern law that contains all the best traditions of law on the status of judges and procedure.

And the second thing is wages, the incomes of judges. I think that in a fairly short time we can create an extremely effective legal system, because in the end all the most important decisions on conflicts between companies, on civil and criminal cases are taken by judges. Our citizens should not fear the court and should whenever necessary go to court.

FT: As you say that is a monumental task...

DM: That’s true.

FT: Would you say then that the only way that Russia will have the rule of law is if [the powers-that-be] respect the independence of the judiciary?

DM: It really is a monumental task. I agree with you that the only way that Russia can count on having the supremacy of the law is in the situation when the powers-that-be respect the independence of the courts and of judges. The authorities should realize that the final say in deciding different types of conflicts is made by the court. If this is a local conflict then this is the court of the local or municipal level. If it is at an appeal stage then this is the higher courts. And lastly we have a system of constitutional justice which is applied when there is a conflict over whether one law or legal act or the other is in line with the constitution. In this sense the authorities should proceed on the basis of the absolute independence of the court system.

Proceeding from the well-known theory of the separation of powers, the courts are also a power. You probably mean should the executive power observe the decisions that are taken by the court? Without doubt yes. In exactly the same way as they should observe the laws.

FT: But are you going to tell officials in the Kremlin not to obstruct the courts or interfere with the judiciary and the judicial process?

DM: No one can interfere in the decision of a court: not officials sitting in a small region in a little Siberian town, nor people working in the Kremlin. The problem is not so primitive because as in any country the court system does not exist in a vacuum. It exists in the same society as the political system. The question is what is the authority of any judge, whether it’s a judge of the lowest level or the chairman of one of the highest courts. This authority should exist without doubt.

FT: I’d like to talk about the Russian definition of democracy and your definition of democracy as a lawyer. Does the Russian definition allow for individual rights and limited state power?

DM: Democracy is a way of managing society and the state when the citizens hand over part of their authority to people elected by them. This is so-called representative democracy.

There is also direct democracy when citizens take decisions themselves on how they should live, on the main questions of the development of the country, in referendums. This is direct democracy.

You see my definition of democracy as the power of the people is in no way any different from classic definitions that exist in all countries. At the same time I considered and consider that democracy as a value and as a form of political regime has a universal character and does not need any additional coding.

However, I would like to point out that when interpreting democracy there are two dangerous extremes. The first is the understanding of how democracy can be developed in one state or another, in one country or another outside of its historic or territorial context. Each democracy has its history and its nationality. And the democracy in Great Britain that grew up in an era of unwritten constitutions is in some ways different from a democracy that exists at the beginning of the 21st century. Our democracy is very young. It’s less than two decades old. It was the case that before this there was no democracy in Russia, not in tsarist times and not in Soviet times. We should take this into account in our everyday democratic practice. On the other hand, there is another extreme when analysts – foreign and some Russian ones – claim that Russia is not capable of democracy; that this is not its path of development, and that no universal human values can work in Russia. Russia is a European country and Russia is absolutely capable of developing together with other states that have chosen this democratic path of development.

Therefore following on from these two extremes, I think Russia has every opportunity to build a developed democratic society and a full-fledged democratic state.

FT: So you would describe yourself as a democrat?

DM: I am a supporter of the values of democracy in the form that humanity has developed them over the last centuries. Let the degree of democraticness, or liberalness or conservativeness of one official or politician or another be determined by others.

FT: Are you a Westerniser or are you a Slavophile? The world wants to know.

DM: If I lived at the end of the 19th century, I would probably be able to answer this question easily. I suppose that having read the best examples of Russian classic literature it would be possible to give a direct answer to this question. But the world has changed and today we have to be modern. That’s why I am basing my position on Russia’s interests.

FT: We’ll talk about those priorities in a minute, but you mentioned Russian literature and I too have read lots of Russian literature. I love Russian literature. Do you have a favourite character?

DM: It’s difficult to speak of a character but I could tell you who I like the most out of the writers. From childhood I have loved Chekhov, Bunin and many works by Dostoevsky. We discussed the characters, of course, during Russian literature lessons in Soviet times. But this is something you do at school and I’m not a teacher of literature.

FT: No but you are, as I recall again, you are a lawyer. I wonder whether you can give us any sense that in pursuing the rule of law you may seek to re-examine one of the highest profile cases in Russia, the Khodorkovsky case, and whether you may consider a pardon or dropping the new charges? Because as you know a Swiss court has said it is politically motivated, and as president you have the power?

DM: You absolutely correctly pointed out again that I am a lawyer in the way I think. Therefore I am going to answer you as a lawyer. All the procedures connected to one criminal case or another – including the Khodorkovsky case – should be and can be realised exclusively on the basis of the law – and not on the basis of the opinions of one respected person or another, or of high placed officials, all the more so of foreign courts.

Proceeding from the existing system of the separation of powers, if we proceed from the doctrine of the independence of the courts, of the independence of the activity of the courts, then no one should interfere: neither a village elder nor the president of the country. But we should all act in the framework of the procedures set out in the civil and criminal procedural laws. And in the framework of the authority which particular branches of power have.

FT: You have also said that you wish to tackle corruption, which is a very serious problem. How does one do this when just – I have been driving in the streets and I heard stories, my wife was stopped yesterday by a traffic cop – and people pay the police because they don’t want to go to the police station and have their papers checked. How do you stop and change this?

DM: It is a very difficult problem and the main thing is to take away the motivation for corrupt behaviour. The example which you gave is very characteristic. This is also a consequence of scorn towards the law. When a citizen gives a bribe to the traffic police, it probably does not enter his head that he is a committing a crime by doing this: it is not an administrative violation, I would like to say, but it is a crime. People should think about this. And this is the root of it all.

What do we need to do? I said in my speech that we have to prepare a plan to fight corruption in the country. It should include three sections as a minimum. The first is legislative changes in the sphere of criminal law and process in line with our international obligations and the current situation in the country.

This is probably not the most difficult part. It is impossible to stamp out corruption with amendments to the law. The second is a much more complicated process – the creation of a counter-corruption stimulus, and this depends on a number of very significant factors: the general standard of living in the country, the level of wages, on how strictly laws are implemented against those who break the law, against those who are corrupt, against those who take bribes or commit other corrupt actions. And finally perhaps the highest form of demotivation for people who intend to commit some kind of crime, like taking a bribe and so on, is when it becomes clear that they should not do this because it could destroy their life. When a person is not just afraid to take bribe but when it is unacceptable for other reasons. When it is indecent and can destroy your future life and your career and your pension. This is what stops the police and other civil servants from committing such actions in other countries.

Thirdly, it is what I spoke of, changing the perception of law and the mindset of people. In such a way, it is laws, a system of incentives, and improving the general economic climate in the country. And forming a modern perception of the law.

FT: I have some important questions on foreign affairs but before we do that just a couple of others on domestic issues. One is an easy question: are you going to bring in new blood or is everyone going to be from St Petersburg? Russia is a big country.

DM: You know I don’t think that the current system of power is completely based on people from St Petersburg, although there are quite a lot of them. This is a normal thing in life: everybody relies on the people they have worked with and know. But in my opinion there should be a sensible balance in any team between the people that one knows well from one’s former work in other places and other towns, and the professionals who come from other directions who already work and worked or could be hired. Therefore I don’t intend to use preferences based on territorial principles.

We have a lot of clever and creative people who come from other places.

FT: OK, after the easy question, the hard question. Recently a gentleman called Viktor Cherkesov, who is is a senior official, said that members of the security forces were fighting each other for wealth and influence in Russia. How as president can you stop this?

DM: Firstly the security services were not created in order to fight against each other but to follow their constitutional task to defend the social order. At the same time in any state the security services do compete against each other. This is the guarantee that multi-sided information on the situation in the country will be put on the leader’s table. If we’re talking about violations committed by an employee of the security services then these are to be investigated and the corresponding punishment is to be meted out in the same way as for any illegal activity committed by any other public servant. Therefore there is nothing to comment on when we’re speaking about violations or crimes.

You are correct to say that the security services in every country compete for influence. But they don’t compete for wealth.

You know I want to tell you that I have no information that the Russian security services are competing for wealth. But if I were to get information that representatives of any law enforcement structure are involved in competing or fighting for material wealth then such people will be immediately fired and charged with crimes.

In our country everything should be controlled by the law and by the corresponding structures that exist to oversee the implementation of laws.

FT: Will you reduce the role and influence of the state owned enterprises in the Russian economy and how can you increase the role of the small enterprises? This is very important.

DM: Indeed it is important. About state companies: we have a fairly large number of state companies. There are historic and economic reasons for this. But at the same time only about a third of GDP is created by state companies. A significant number of the state companies have been privatised and this process will continue.

However there are state companies whose existence is necessary for the economic security of the country as a whole. I mean infrastructure monopolies such as Gazprom or Russian Railways, defence enterprises which produce military equipment.

By the way, only about 20 percent of oil is produced and refined by state companies. From this perspective our industry is much more private than Norway’s. But at the same time apart from this I would like to say that the number of state companies, of state shareholding companies and state enterprises should be exactly the number required to ensure the interests of all the country but no more than that. We of course will continue the course that Russia has taken toward creating a full fledged private economy, which would of course preserve the aspects that I have spoken of.

I am not even talking of all the different types of complications that are going on in the world. I would not like, of course, such problems to occur here. But I know that in the US and in Great Britain and in Switzerland they have had to take measures to nationalise companies because of the financial crisis. I spoke of this because in concrete situations the state should determine for itself what is necessary to keep and what needs to be freed and what should be returned so as to ensure economic stability.

Let’s take for example the state corporations, not the state joint stock companies, but those corporations that were created in recent times in the communal housing sector, in nanotechnology. They have been created for a certain period of activity only and after this they should either be privatised or liquidated. As far as the state shareholder companies are concerned, I spoke of this too in Krasnoyarsk. I think it is absolutely reasonable to increase the number of independent directors in these companies who will represent the interests of the state as the shareholder. This is mainly because as a rule independent directors understand the business better and can receive remuneration for this, as opposed to state officials, and at the same time it is their duty to act in the interests of the state as the main shareholder.

FT: Let’s talk about foreign affairs. Is Mr Putin right that the west, the world, will find you, in his words, no easier to deal with?

DM: Of course he’s right. You asked whether he is right or not and he’s right.

FT: He’s right on most things?

DM: Of course. He is an experienced and effective leader of the country.

FT: But he went on to say that you are no less of a nationalist, in the good sense of the word. How do you define that term, then: a nationalist in the good sense of the word?

DM: I will first of all explain what I understand by a successful leader of the country, of Russia and not just of Russia. A modern head of state should conduct an absolutely objective and balanced, and as far as possible effective economic policy based on the priorities of market values and property rights.

It is not important how this leader is characterised, whether it is as a liberal, a democrat or a conservative. In my view in the modern world any head of state who wants to be effective should proceed from these values I mentioned before.

As far as foreign relations are concerned, then independent of any label that is stuck to one leader or another, any effective leader of the country has to take care of defending the interests of his country, and look after this constantly and along the entire perimeter of the country.

On the foreign relations track, you can’t be a liberal, a conservative or a democrat. You have to base your position exclusively on the interests of one’s country. If there is such an understanding of the balance between domestic and foreign policy then such a leader can be successful. That is why Putin is right.

FT: Is it in the interests of Russia to improve relations with Britain now?

DM: Without any doubt. All that we have today reflects two sides. We have very good economic ties. Just magnificent. Over the last year, investment by Great Britain into Russia increased 3.7 times – almost four times – and totals about $26bn, plus a few kopecks. Barclays has only just bought a Russian bank for about $800m. Therefore there are no obstacles for the development of economic ties. They are the most powerful they’ve been for the entire period of Russian-UK relations. And this is very good.

But bilateral political contacts have been rolled up to a significant degree. There are a series of limitations – imposed, by the way, not by us but by the government of Great Britain – on contacts between the security services and exchanges and so on. And this is, of course, not so good. It’s not a tragedy. We can of course of restore the entire volume of full bilateral cooperation. Of course [this would be] without preconditions and understanding the independence of each other. After I was elected president, Gordon Brown was one of the first to congratulate me. So we are open to the re-establishment of cooperation to the full extent.

FT: Do you expect that to happen? Will there be real progress when you meet Mr Brown?

DM: Time will show

FT: Do you really believe, though, that the British Council is spying?

DM: I am not the head of the security services but at the same time the information that from time to time appears in the press and the reports that I get as one of the leaders of the country show that there is a problem with this. But this is not very surprising because these types of organisations are traditionally used for the collection of information.

FT: And this week there was a raid on TNK-BP. Do you believe some people saying this is an attempt to sabotage an effort on both sides, in Moscow and the UK, to improve relations?

DM: We need to sort out what happened. In any case the information I received shows that in this case we are talking about the commercial collection of information in the interests of other companies. And such a type of commercial espionage is a crime according to the law of any country. But it is clear the case is being investigated at the preliminary stage and as far as I know documents have been seized and the people that were charged are not in custody. But proceeding from what we have been speaking about for the past two hours, I would like the final decision to be taken by a court and not by the judgment of analysts or politicians.

As far as I understand this is not about a state crime but about a crime in the economic sphere. Unfortunately this is a common thing, but we need to wait for the result. Our companies also try to observe each other and try to get some kinds of materials.

FT: Do you see Russia as a great power? And what national security objectives will you follow, for example on nuclear proliferation?

DM: Without any doubt, Russia as a nuclear power carries the entire set of obligations connected to this status. We live in a very dangerous and complicated world when the number of nuclear countries is increasing, when there is a high threat of nuclear terrorism. And the task of any country belonging to the nuclear club is to take the utmost care in fulfilling its duties. Therefore it is very important to have contacts within the framework of existing international procedures and to prepare new agreements connected to cuts in strategic offensive weapons.

Recently our colleagues visited - I mean our American colleagues, Ms Rice and Mr Gates - and we spoke of several questions on ensuring international security. We welcome such contacts although we have rather a lot of differences of opinion. Of course we are not happy about the fact that plans are actively being implemented related to the third positional region for missile defence. We consider that such types of decisions break the fragile balance of forces and facilities in Europe, and not only in Europe.

At the same time we are ready to consider the proposals that our American partners brought. We did not start all this but we need to move somewhere in order to make sure the situation does not radically deteriorate. The talks have taken place and the initiatives that our American partners brought are being considered by us. We could say the same thing about the question of signing a new Start agreement. Here there are also still complications because we would like this agreement to be not just an empty piece of paper but one that would absorb the entire experience accumulated by our countries in the 70s, 80s and 90s. In this sense, probably on its basis, it should not just be a Start agreement but a series of other procedures and positions that are being discussed today. But certain movement in this sense has begun.

FT: Is there a possibility of a legacy deal between President Putin and President Bush even if the Nato summit gives an offer on membership preparation for Ukraine and Georgia?

DM: President Putin and President Bush have very good personal relations. And I consider that were it not for these relations, then interstate relations today would perhaps look a lot worse. I told President Bush of this by the way in a telephone conversation when he phoned to congratulate me. Work is underway. The experts are working, employees of the foreign ministry and the defence ministry are working. It’s natural that we might have the most different proposals, and that the Americans could have the most different proposals. But I would like to point out separately that we are not happy about the situation around Georgia and Ukraine. We consider that it is extremely troublesome for the existing structure of European security.

I would like to say that no state can be pleased about having representatives of a military bloc to which it does not belong coming close to its borders. This is something that is even more difficult to explain when the vast majority of citizens of one of the states, for example of Ukraine, are categorically against joining Nato while the government of this state follows a different policy. So this is real democracy. At the very least in such situations it is usual to hold a referendum.

FT: You are coming to power to assume the highest office after an enormously popular and strong leader. I am tempted to think about Margaret Thatcher and John Major, except Margaret Thatcher had to leave. My question is you’ve worked with Vladimir Putin for many years. What have you learned from him and his leadership in the last eight years, and his style?

DM: I learnt a lot from President Putin. And in fact our relations stretch back seventeen, eighteen years. When we first met I really was a young person. I was 24, and he was younger than I am now. But he was already much more experienced having gone though the school of service in Russia and abroad, in the Soviet Union. You know what struck me first was his meticulous attitude towards information and how he tries to investigate to the most thorough degree every problem that he comes across – and came across, even in that period. And how he takes decisions only on the basis of such a complex and overarching analysis. I think this is very important for any leader, and even more so for a president. And here there is something for many people to learn from President Putin.

Any leader and any boss should examine a question with the greatest thoroughness. And then, after having made a decision, implement it with the same degree of intensity.

These are exactly President Putin’s qualities and this is why he is such a popular and effective leader. And it’s also very important that we are tied by friendship and by trust. This is very important in politics. It is only in this way that we can solve the large scale problems that face the Russia state and society. Russia needs the maximum consolidation of power, consolidation of the Russian elite and consolidation of society. Only in this case we can attain the goals we have set in front of us. I am convinced that we will be able to do so.

FT: Tell me one thing: when did you know you were going to be president, I’m still curious? And how did you feel?

DM: I found out that I was going to be president on the night of March 2 to March 3 when the voting results were disclosed. This is when I felt I could become the president of Russia. All the rest – with the greatest respect – is just the discussion of various people but not the results of the elections.

As far as my feelings go, I had many different feelings. I am not going to hide this. It is absolutely clear that the president carries the greatest responsibility for the state of affairs in the country. It is the kind of function, or mission if you like, that you can’t just turn off with a light switch and go to sleep and stop being the president.

This is a very difficult job but someone has to do it, anyway it’s so interesting. I am convinced that everything should develop according to the optimistic scenario for our country. And therefore the last thing I would like to say is this, and it is absolutely concrete. In June we will hold the next St Petersburg Economic Forum. It is a serious platform. I plan to address it and we hope that many guests will come, many foreign politicians and many representatives of business from different countries including from Great Britain. I would like to invite you to participate in this event and we can continue our discussion there". www.ft.com

Tuesday, March 18, 2008


"Let us admit it fairly, as a business people should,
We have had no end of a lesson: it will do us no end of good.

Not on a single issue, or in one direction or twain,
But conclusively, comprehensively, and several times and again,
Were all our most holy illusions knocked higher than Gilderoy’s kite.
We have had a jolly good lesson, and it serves us jolly well right!

....Then let us develop this marvellous asset which we alone command,
And which, it may subsequently transpire, will be worth as much as the Rand.
Let us approach this pivotal fact in a humble yet hopeful mood—
We have had no end of a lesson, it will do us no end of good!

It was our fault, and our very great fault—and now we must turn it to use.
We have forty million reasons for failure, but not a single excuse.
So the more we work and the less we talk the better results we shall get—
We have had an Imperial lesson; it may make us an Empire yet!"

"The Lesson", by Rudyard Kipling.

This week is the fifth anniversary of the launching of the Iraqi War by the United States. As many commentators argued at the time, I was an opponent of this pre-emptive, indeed preventative war. Not I will admit for solely moral reasons (although I do admit to being an adherent of the Augustan idea of 'Just War'), but, also for reasons of Realpolitik and Grossmachtpolitik. Id est, the Hussein regime, notwithstanding its many, many flaws and in particular its appalling Human Rights record, was not in any real sense a 'danger' to the United States in particular or the West in general. Certainly not nearly as much as say the Persian regime of Mullahs in Teheran. Hussein, regardless of his busting of the sanctions regime, was in essence 'boxed-in', and contained. His weapons of mass destruction had in fact been destroyed in the early to mid-1990's. He had, the nonsensical arguments of Vice-President Cheney, and his neo-conservative entourage notwithstanding, no real ties with Bin Laden and his followers. And, while it is true that his regime had undertaken a 'religious' turn in the years after the first Persian Gulf War (1990-1991), it was still very much the case that circa 2002-2003, that the Baathist Regime was in many respects a secular bulwark against fanatical Sunni & Shiite Islamist currents. No more of course...

So, what has the five years distance brought us? Many many things. Much of it negative both for the Iraqi people and for the Near East as well as the world at large. But, allow me to focus on one aspect of the war's dividends, namely: the diminution of American Power. Never again perhaps will American power appear to be the colossus that it projected in the aftermath of the successful war in Afghanistan (2001-2002). If one wanted to bookend the apotheosis of American power in the post-1945 period, one would focus on the years from 1991 to 2003. Meaning the time span between the two Persian Gulf Wars. It may seems like a hundred years ago, but, I distinctly remember the hymns of praise that the USA and its military forces were receiving in the year and half prior to the Iraq War. Whether American or European, whether 'conservative' or 'liberal' (albeit of a 'Wilsonian stamp'), all expressed in one form or other views similar to the British expatriate historian Niall Ferguson, that the USA was or should be a 'natural' descendant of the Great British Empire of the 1815-1914 period. And, that the policy of 'overthrow' in Iraq would be the first of a few such efforts. Now of course, in the week that the American conglomerate Bear Stearns has been pushed to the wall, and, purchased for a song, one can quite clearly see the feet of clay if not in fact ankles of clay that make any projection of the contemporary USA, as some type of inheritor of the British Empire to be nonsensical if not daft.

Strictly speaking in GNP terms, the Iraq War is probably one of the cheapest wars in the history of the USA: less than one percent of the national economy goes towards it. Rather what I want to focus on, is the fact that in a certain sense, the whole American effort in Iraq has been sideshow. Perhaps the ultimate sideshow. In a strategic sense, the war has so obsessed American policy makers that they have singularly failed to concentrate on the more important aspects of American governance and policy. Such as the fact that the USA is a huge debtor country and the the momentary period in the Clinton years when the American economy appeared to be in smooth balance has gone by the wayside. Instead the trade deficit has ballooned, the current account deficit has more than ballooned. With until very recently the USA consuming perhaps half of all the available capital in the planet. Tied to which in chronological terms if not necessarily in any post hoc ergo propter hoc sense, is the explosion of commodity prices, in particular that of oil. Control of which some deluded souls, managed to convince themselves was one of the raison d'etres for launching the Iraq debacle. If only it were true! Unfortunately it was and is not true. The war had many purposes but, attempting to 'control' Iraq's oil was not one of them. Unless of course you go into a post-factual argument mode, and surmise that by launching the war, and, imploding the entire Iraq State apparatus, including its oil industry, the Bush Regime really intended to pave the way for oil at $110.00 plus a barrel. However let us pass by this no doubt, yet to be fully explored thesis (apparently unclaimed as of yet. I hereby claim it myself: As the 'Coutinho post-factual argument for oil' thesis).

To sum up. We are in a bit of a mess in Iraq and in the Near East as a whole. And, it will take many many years to get out of it. And, like Kipling's business people, to learn our lesson most thoroughly. Not so much in any geopolitical sense, but, in a very real sense of the USA as a sort of exploded volcano. The prestige of the USA, as a Great Power, has been almost completely squandered by its Iraqi crusade. No doubt, when the next American President, grasps the reigns of power and makes the necessary decision to withdraw from Iraq, the USA will begin to recover. Indeed, it may recover quite quickly in terms of its regional position in the Near East. But, that will not obviate the fact that like Algernon Moncrieff's 'Mr. Bunbury' American prestige and more importantly its will to power, has been thoroughly exploded. And, having been so, will not soon recover. And, certainly when it does so, it will not be the same entity that it was previously. Just as the USA under colossus, of the 1980's, was not the same as the American colossus of the pre-Vietnam war vintage. For good or for ill.