Updated 06:53 p.m. Moscow Time
MOSCOW, October 2 (RIA Novosti) – Russia needs to make a “true industrial breakthrough” in the coming years and create powerful national companies in the manufacturing industry, Russian President Vladimir Putin said Thursday.
"Our task is to make a true industrial breakthrough in the coming years, to create strong national companies in sectors of the processing industry that can produce competitive goods," the president said during the investment forum "Russia Calling!"
The objective of boosting national economy has been a priority for Russia in recent years. Specific targets to be reached in the coming years were outlined in the Concept for the Long-Term Social and Economic Development.
The strategy is an action plan for Russia’s shift from an export-dependent and resource-based economy to an innovative one. Such a shift would build up Russian potential in the sphere of high technologies and would make its industries more competitive.
The problem of strengthening national industrial production has become more urgent lately, given the Western sanctions against Russia over its alleged role in the Ukrainian conflict.
Russia Plans No Restrictions on Capital Flow
Russia does not plan to impose any restrictions on the flow of currency and capital in the country, Russian President Vladimir Putin said Thursday.
“I would like to stress that despite difficulties we did not increase the tax burden on business and does not plan to impose any restrictions on currency or capital flow,” he said during the Russia Calling investment forum.
Earlier in the day, the head of Russia’s Central Bank, Elvira Nabiullina, said that if Moscow returns limitations on moving capital, then the country will be thrown back several years, but rumors of that are unfounded.
On Tuesday, Bloomberg cited two sources as saying that Russia’s Central Bank is studying the possibility of temporarily limiting capital movement if capital outflow from the country increases. The Bank of Russia immediately denied the move.
According to the Central Bank estimates, Russia's net capital outflow in the first half of 2014 stands at $74.6 billion, with a prospect of reaching $90 billion by the end of the year. The outflow is expected to drop to $35 billion in 2015.
The Russian Economic Development Ministry projects the capital outflow to reach the level of $100 billion in 2014, and $40 billion in 2015.
Russian Authorities Will Form Additional Stocks of Durability in Financial Area
Russian authorities will form additional stocks of durability in the financial sector, Russian President Vladimir Putin said Thursday.
"Moreover, we consider it necessary to protect ourselves from possible risks in a number of more sensitive sectors. For this we will form additional stocks, first and foremost in the financial sector," Putin said during the Russia Calling investment forum in Moscow.
The Russian financial sector is one of the sectors targeted by western sanctions imposed on Russia over the Ukrainian crisis. The West accuses Moscow of meddling in Ukraine's internal affairs, which the Kremlin has repeatedly denied.
Russian Economic Development Minister Alexei Ulyukayev said the Russian government would support the companies and institutions hit by the sanctions, among which there are several large Russian banks, namely Bank of Moscow, Gazprombank, Russian Agricultural Bank, VEB, VTB Bank and Sberbank.
Putin responded to the measures by saying that the sanctions are ineffective and never yield any results but only inflict certain damage on those who use them.
Inflation Linked to Moscow’s Response to Sanctions, But It Is Temporary
The recent increase in inflation in Russia is linked to restrictions imposed by Moscow on countries that sanctioned Russia, but it is temporary, Russian President Vladimir Putin said Thursday.
"As far as the small increase in inflation in concerned, I think it is linked mainly <…> to the food basket and our actions to restrict food imports from our partners as a response to sanctions against the Russian economy," he said during the Russia Calling investment forum.
"I'm absolutely sure that this is temporary," the president added.
Earlier on Thursday the head of Russia's Central Bank Elvira Nabiullina said that the growth in Russian consumer prices for the end of 2014 is forecast to be approximately eight percent. Earlier, Russia expected a seven-percent inflation rate for 2014.
Russia to Provide Economic Growth Through Structural Reform, Not Pumping Liquidity
Russian authorities plan to provide for economic growth through structural reform and not pumping it with liquidity, Russian President Vladimir Putin said Thursday.
“We nonetheless need to provide for growth not through pumping it full of liquidity or with some other financial instrument, but with structural transforming in Russia’s economy,” Putin said during the Russia Calling investment forum in Moscow.
Russia Set to Actively Use National Currencies in Trade of Energy Resources
Russia intends to actively use national currencies in trade of energy resources and other foreign trade activities with China and other states, Russian President Vladimir Putin said Thursday.
"In future we plan to actively use national currencies in trade of energy resources and other foreign trade payments with China and other states," Putin said during the Russia Calling investment forum.
Following the imposition of the western economic sanctions over the country's alleged role in the Ukrainian crisis, Russia has held a number of bilateral consultations on a possibility of increasing the use of local currencies in mutual payments with China, India, Argentina, Turkey, Vietnam and other partners.
Since the deterioration of Russia's relations with the West, Moscow has also increased its trade and technology cooperation with Latin America, BRICS and Asia-Pacific.
Russia Views Cooperation With Latin America, BRICS, Asia-Pacific As Priority
Russia views improving cooperation with Latin America, BRICS and Asia-Pacific as its priority, Russian President Vladimir Putin said Thursday.
"We will maintain our course toward expanding and diversifying foreign trade. Among our priorities is to deepen business, trade, investment and technology partnership with Latin American countries, Asia-Pacific states and our BRICS partners, including China and India," Putin said during the Russia Calling investment forum.
Russia has been looking to reinvigorate its alliances in Latin America and Asia-Pacific as part of its foreign policy pivot to balance out its souring ties with the West over Moscow's handling of the Ukraine crisis.
In the wake of western sanctions against Russia's key economic sectors, Moscow has energized its trade and technology cooperation with all major South American countries, and also with China, which is now Russia's largest trade partner, with bilateral trade flows of $100 billion.
In July, Russian President Vladimir Putin also said Moscow intended to increase the "economic component" of its cooperation with Latin America, primarily focusing on bolstering mutual investment.
Russia Mulls Privatization of Major Stakes in Energy Companies
The Russian authorities are considering the possibility of putting large state packages of energy companies on the market, Russian President Vladimir Putin said Thursday.
“We are currently considering the possibility of entering the market with large packages of our major state-controlled energy companies,” Putin said during the Russia Calling investment forum.
Putin said that any final decisions on the issue will be based on market developments.
The Russian leader explained that Russia is not planning on abandoning its controlling stocks in energy companies but part of the shares may be sold as early as the end of 2014.
“We are not excluding the possibility of selling some shares of our large energy companies, of which the government currently holds the controlling part. But, so far we are not planning on leaving the controlling shares, but looking into the possibility of selling some of these,” Putin said.
“It may be too early to say, I have not yet heard if the government has already talked about this or not, but if not, then in the near future. We are looking into the possibility and, most probably, they will be sold, maybe even this year,” Putin added.
In late August, Russian Economy Minister Alexei Ulyukayev confirmed the government's plans to privatize 19.5 percent of Russia's oil giant Rosneft. The privatization will most likely take place in two tranches. Currently, the main shareholder (69.5 percent) is state-owned Rosneftegaz. BP owns another 19.75 percent, while the remaining 10.75 percent is publicly traded.
Rosneft is one of the leaders in Russia's petroleum industry. The company’s activities include hydrocarbon exploration and production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.
It is one of the companies targeted by the western sanctions imposed over Russia's alleged role in the Ukrainian crisis. Other companies on the blacklist are Gazprom, Gazprom Neft, Lukoil, Novatek, Surgutneftegaz and Transneft.
Russia Not Leaving Controlling Stocks in Energy Companies, Some May Be Sold in 2014
Russian President Vladimir Putin on Thursday said the country is not planning on abandoning its controlling stocks in energy companies but part of the shares may be sold by the end of this year.
“We don’t exclude the possibility of selling certain shares of our large energy companies which the government today holds the controlling shares. But we are so far not planning on leaving the controlling shares, but are looking into the possibility of selling some of these,” Putin said during the Russia Calling investment forum in Moscow.
“It may be too early to say, I just haven’t heard if the government has already talked about this or not, but if it hasn’t yet, then in the near future it will become known. We are looking into the possibility and, most probable, they will be sold, maybe even this year,” Putin added.
Putin Sure More States Will Join Eurasian Economic Union
Russian President Vladimir Putin said Thursday he was sure that more states would join the Eurasian Economic Union in future.
"The process of Armenia's accession to the Eurasian Economic Union is about to be completed, and the dialogue with Kyrgyzstan continues. I'm sure that the number of participants in this union will grow in future," the Russian leader said during the Russia Calling investment forum.
"At the same time, we would like the Eurasian Economic Union to establish close ties with other integration structures in Europe and Asia. Such cooperation will make the global economy more stable. And, of course, the dialogue with our main trade partner, the European Union, is of particular importance," he said.
The treaty on the establishment of the Eurasian Economic Union was signed by Russian President Vladimir Putin, Kazakh President Nursultan Nazarbayev and Belarusian President Alexander Lukashenko on May 29, 2014 in Astana, Kazakhstan. Apart from the republics of Armenia and Kyrgyzstan, Tajikistan has also expressed interest in joining the organization.
The treaty was in development since November 2011 and will come into force on January 1, 2015. The agreement is based on the provisions of the contractual legal framework of the Customs Union and Common Economic Space that were improved to comply with the rules of the World Trade Organization.
Under the treaty, Russia, Belarus and Kazakhstan agree to guarantee a free flow of goods, services, capital and work force, and to implement a coordinated policy in the energy, industrial, agricultural and transport sectors.
Fundamental Basis for Russian Economic Stability Still Strong, No Budget Deficit
The fundamental factors necessary for Russia’s economic stability, which include a non-deficit budget, significant reserves, and a stable payment balance, are still strong regardless of the volatility of the foreign currency market, Russian President Vladimir Putin said Thursday.
“Yes, we are currently observing strong fluctuations on the currency market and there are a lot of different comments on this. But I will emphasize this: our fundamental factors providing stability are very strong and reliable. This is our non-deficit factual budget, significant reserves, and a strong payment balance,” Putin said during the Russia Calling investment forum in Moscow.
“For example, the current account balance turned out to be more than expected,” the president added.
Russian authorities plan to ensure economic growth through structural reforms, not by means of monetary injections, Putin underlined.
“We nonetheless need to provide for growth not through pumping it full of liquidity or with some other financial instrument, but with structural transformations in Russia’s economy,” the Russian leader said.
On Tuesday, the Russian government presented to the lower house the 2015-2017 draft federal budget, which envisages a deficit of 0.6 percent of Gross Domestic Product. GDP is forecast to increase by 1.2 percent next year, and by 2.3 percent the following year. Inflation is expected to be just 5 percent next year.
Russia Not Planning Total Revision of Post-Soviet Privatization
Russia is not planning to revise the results of the privatization carried out after the collapse of the Soviet Union, Russian President Vladimir Putin said Thursday.
"There will be no total revision of results of privatization. At the same time, one case may differ from another… So if the law-enforcement bodies have any questions in this respect, or concerning the movement of assets, we have no right to bar law-enforcement bodies from investigating this particular case and making a decision on it," Putin said during the Russia Calling investment forum in Moscow.
He also said the Kremlin was mulling privatizing stocks of some government-run energy companies by the end of this year, but added it was not going to give up controlling stocks yet.
Ukraine's Exit from Crisis in Russia's National Interests
Russian President Vladimir Putin said Thursday that Ukraine overcoming political and economic crises is in Russia's national interests.
"We are interested in that we have a reliable and predictable partner and neighbor, Ukrainians are not strangers to us," Putin said during the Russia Calling investment forum in Moscow.
"Ukraine really is in a political and economic crisis," he added.
Ukraine entered its current political crisis in November 2013, which first started with a wave of civil protests, leading to the February overthrow of the then-President Viktor Yanukovych.
After the ousting of Yanukovych, citizens from the former Ukrainian republic of Crimea who refused to recognize the legitimacy of the new government, held referendum where the majority of population voted for reunification with Russia.
In mid-April Kiev began a military operation against independence supporters in the southeastern regions of the country, which have also refused to recognize the new coup-imposed authorities. According to UN estimates, more than 3,500 people fell victim to the violence.
Putin Says Kissinger Once Told Him All Decent People Start With Intelligence
Former US Secretary of State Henry Kissinger once told President Vladimir Putin that all decent people start their career working for intelligence services, the Russian leader recalled during the Russia Calling forum on Thursday.
"I have a lot of respect for him [Kissinger]. He is a very interesting person, a smart one," Putin said at the forum.
"When we first met – it was in St. Petersburg, in the early 1990s, when I was receiving him at the airport – he asked me about my working experience. I just named a few jobs, of course, without specifying the organizations I used to work for, and he just kept asking 'and before that? and before that?' until I snapped at him I had been with Soviet intelligence. He looked at me and said, all decent people start with intelligence – so did I," said Putin, who is known to have been a KGB agent in the Soviet times.
Henry Kissinger, a German-born Jew who fled to Britain amid Nazi persecution in 1938 and became a US citizen in 1942, served with US intelligence during World War Two, working his way up the ranks in the Counter-Intelligence Corps.