The U.S. ‘infected’ the world with the crisis – Putin

Vladimir Putin has again put the blame for the global financial crisis on the outgoing U.S. administration. But speaking during his annual televised Q&A session with the public, the Prime Minister said that Russia can weather the economic storm.

The session lasted for about three hours. The Russian Prime Minister and the leader of the most popular Russian political party, United Russia, covered a variety of issues ranging from the global financial crisis to relations with Europe and the United States to purely domestic topics.

Watch the full version of Vladimir Putin’s Q&A session:

Part 1
Part 2
Part 3
Part 4
Part 5
Part 6

‘The U.S. started the crisis, but we can weather it‘

Russian Prime Minster Vladimir Putin has again put the blame for the global financial crisis on the outgoing U.S. administration.

“The crisis started in the USA, there’s no need to prove it now. The authorities in that country mishandled their power and infected the world with the crisis,” he said.

But despite the trouble that all world economies face now, Russia’s performance in 2008 was good, Putin said. Inflation is expected to be just 1% higher than early estimates, while real incomes grew by 12.6%. The economy will grow by about 6.8% as compared to the estimated 7.5%.

Putin made an assurance that the country can whether the financial storm. He said all social initiatives the government have promised will be implemented, but he added Russia must be prepared for a difficult time.

“This will be a difficult period in the world economy and in ours too. We have to be morally, organisationally, financially and even politically ready for this,” the Prime Minister warned.

He added: “Russia has seen worse problems, after all, it is over 1000 years old.”

As an example of a worse crisis, the Prime Minister mentioned the 1990s, when “we faced problems of territorial integrity as well as the total disintegration of manufacture and the social sphere”.

Putin said that today Russia is in a completely different position. He believes it has a strong chance of overcoming the financial problems with minimal damage to the economy and the Russian people.

Adequate response to U.S. steps

Vladimir Putin said Russia will be responding adequately to any steps by the new U.S. administration.

“When a government changes in any country – even more so in a superpower like the U.S. – there is change. We expect the change to be positive,” he said.

Putin described how there were positive signs from Washington during the recent NATO summit in Brussels, where Georgia and Ukraine were not given the Membership Action Plan and Russia was invited to renew informal dialogue with the alliance.

And if Washington chooses not to push ahead with its plans for the anti-missile defence system in Europe, Russia will take adequate steps in response, Putin promised.

“We are told that Russian interests should be taken into account when building relations with it. If these words are not just hot air, if they are transformed into real policies, our reaction will certainly be adequate and our American partners will feel it at once,” Putin said.

Russian war ships under U.S. nose

Vladimir Putin stated Russia does not need to place its permanent military bases in Cuba and Venezuela.

“But we have agreed with Venezuela that our war ships can use its ports for refilling and replenishing their food supplies. We don’t have such an agreement with Cuba but I think their leadership won’t object,” he went on to say.

Then he added: “I wish to reveal a secret to you. When we announced that our war ships will go to Venezuela for joint exercises we got a lot of requests from other countries to use their ports for our ships”.

Integration with Europe

Russia is building ties with the emerging markets of Asia and Latin America, but Putin told viewers that the U.S. and the European Union remains Russia’s major partners.

Moscow is keen to develop energy co-operation with Europe. Putin claimed great progress has already been made in this field. Among others, European companies have been given access to the extraction of hydrocarbons in Russia. The two sides are also developing new links – for example, the gas pipeline Nord Stream.

“Joint work will contribute to the transparency of our relations,” Putin said. “In politics, there are a lot of relics, a lot of fears from the past – especially among ‘young Europeans’. But I hope that with time the leadership of these countries will come to realise we should look into the future rather than stick to the past”.

Olympics assured

A teenager from the republic of Kabardino-Balkaria in Russia’s south asked Putin if there is a chance that “the West could take the Winter Olympics from Russia” after the war in South Ossetia.

The Prime Minister pointed out that decisions on hosting Olympic Games are taken by the International Olympic Committee, and not politicians.

“I hope the IOC will be free of politics just as it has been for decades,” he said.

Putin added that despite attempts by some politicians to protect their clients in Georgia, public opinion in the world is shifting in favour of Russia on the issue.

The 2014 Winter Olympics in Sochi will be funded in full, Putin said.

“As for the financial resources for the preparation, they have been allocated and won’t be reduced. We’ll implement all our plans.”

'The rouble will be stable'

The government won’t allow any rapid changes in the exchange rate of the Russian rouble, said Putin. The currency has seen some devaluation over the last two months.

“We were saving this money to use it in case of any crisis, and that’s what we will do,” Putin said.

The Prime Minister said the considerable reserves that Russia has will be enough, if used prudently, to maintain stable exchange rates.

However he pointed out: “Of course, there will be some correction (of the rate) in accordance with the prices for our traditional export goods – energy, metals, fertilizers.”

The Russian government is not planning to restore the previous limits it imposed on currency trading, according to the Prime Minister.

“We are not planning to restrict the liberal laws of currency import and export that we introduced in July 2007, when we completely liberalised the currency market. We do not intend to change these rules,” he said.

Supporting banks and real sector

The real economy will also have massive help from the state, if the money poured into the bank system is not enough, Putin said.

“Of course, money within the banking sector is not enough, as the current crisis conditions are unique. Previously, the world economy has never faced a financial crisis on such a large scale,” Putin admitted. “Therefore, we made the decision to provide the real economy with direct support. That’s why, around 175 billion roubles ($US 6 bilion) will be poured into the real economy in the form of long-term loans for business.”

He reminded his audience that the government will insist on the banking system closely cooperating with the leading Russian businesses and ensuring that the money reaches those it is intended for.

“We will request that banks inform us on the volume of credits they provide for three sectors of the economy – agriculture, defence and small businesses. There’s also a long list of industries that we think need support,” he said.

He told viewers that only the banks which do not waste taxpayers’ money are being supported. Putin added that the Russian banking system now faces trust issues rather then problems over liquidity.

Russian energy sector

Energy has long been a major source of development for Russia, but Putin said it is now undergoing a crisis and needs support.

“Earlier the state got almost 80 per cent of energy companies’ super profits in taxes. Thanks to this we have created a fund of $US 450 billion – a sort of airbag for the economy,” he said. “We have now alleviated the tax burden on oil and gas companies, which are certainly suffering losses. This is related both from the decreased prices and also to the fact that taxes still remain rather high. At present oil companies in Russia are losing around $68 from each tonne of exported oil.”

The Prime Minister announced the government’s plans to help energy companies: “Starting January 1, 2009, we intend to further cut tax on the extraction of minerals. In this case many companies will be able to pull out of the red and some will even make a profit.”

Putin added he hopes these measures will also help reduce domestic prices on oil products.

Aviation support

Replying to a complaint by a resident of Khabarovsk in Russia’s Far East, Vladimir Putin pledged support for long-range national aviation flights. He said the government will spend 900 million US dollars to subsidise flights to the Far East in 2009 and twice that much in 2010.

“Flying to South Korea is easer then flying to Moscow! That’s not right,” the Prime Minister said, adding that the situation undermined the country’s territorial integrity.

Putin stressed the need for a complex solution, including the replacement of Soviet-era planes with more efficient and reliable modern ones.

He added that Russia should buy foreign aircraft, if the national industry is not planning to produce similar vehicles in the future, or lease them, if a Russian-produced alternative would be available in a decade or two. This way the renewal will not damage national aviation industry.

Ending the monopoly in the fuel industry will also help Russia’s airlines, Putin said.

South Ossetia and hanging issues

A man asked Vladimir Putin if the rumour that he threatened to hang Georgian President Mikhail Saakashvili “by one thing” was true.

The question was apparently a hard one for the Prime Minister. He didn’t comment on the allegations, but replied instead with a rhetorical question: "Why just one?" He then reminded viewers about the story of another hanging – that of Iraq’s former leader Saddam Hussein, executed in 2006.

Putin said Russia’s response to Georgian aggression against South Ossetia was far more adequate then America’s intervention into Iraq on the “false pretext of searching for weapons of mass destruction.”

According to the Russian Prime Minister, the attack on Tskhinval “was a crime against Russian citizens, against the people of South Ossetia, and against Georgian people as well.”

“It was a terrible strike at her (Georgia’s) territorial integrity. If not for this aggression, Russia would continue its effort to create conditions for re-integration, and now it is impossible.”

Putin suggested Georgians themselves should decide how politicians responsible for the August war be taken to justice.

He also pledged to continue Russia’s support of South Ossetia.

“We have considerable financial resources allocated for the reconstruction of South Ossetia in our budget,” Putin said. He stressed that it is being done on request by South Ossetians themselves.

Russia-Ukraine energy row

Vladimir Putin spoke about Russia-Ukraine relation, notably in the energy sphere.

“The debt of Naftagaz [Ukraine’s state-owned energy company] for the gas delivered in September, October and November 2008 is $US 2.4 billion,” Putin said.

“Our dialogue with Ukraine is not an easy one. Currently Ukraine gets Russian gas at a price almost twice lower than Europe. How can we reduce prices now, if they have not paid for the last year yet.”

Prime Minister Putin noted, though, that agreements with Ukraine are of commercial nature and disputes will not be settled by administrative means. He promised the transfer to market prices for Ukraine will be “mild”.

At the same time Putin warned that if “Ukraine starts stealing gas from the transit pipe, Russia will cut supplies to the country”.

Putin also said supplies to Europe will not in any way be affected.

Immigrant workers must give way

Putin has proposed to lower the quota of foreign employees by 50%, in response to the global financial crisis.

“Talking about the difficult situation on the labour market, I have a good reason to believe that it is justifiable to lower the proposed foreign workforce quotas by 50% at least,” the Prime Minister pointed out.

He said that the quota on the international workforce will be decided based on requests from the regions and still needs to be confirmed by the central government.

“The quantative requests have already been formulated. They are currently at around three million people. However, in reality, the number of foreigners working in the Russian territory is significantly higher. According to our calculations, the number is higher than 10 million people,” Putin said.

Putin has proposed to lower the quota of foreign employees by 50%, in response to the global financial crisis.

“Talking about the difficult situation on the labour market, I have a good reason to believe that it is justifiable to lower the proposed foreign workforce quotas by 50% at least,” the Prime Minister pointed out.

He said that the quota on the international workforce will be decided based on requests from the regions and still needs to be confirmed by the central government.

“The quantative requests have already been formulated. They are currently at around three million people. However, in reality, the number of foreigners working in the Russian territory is significantly higher. According to our calculations, the number is higher than 10 million people,” Putin said.

Democracy at work

There were many questions from ordinary people who asked the Prime Minister for help with practical issues like relations with local authorities.

Putin called on citizens to be more active in defending their rights when they do not agree with the decisions of local administrators.

“Under the law in force, mayors of municipalities are elected through direct secret voting of citizens. If a city government does no respond to citizens’ demands, it should feel the reaction of the people at the next elections,” Putin said.

Crackdown on extremists

Nationalist extremism in Russia is causing irreparable damage to the whole of Russian society, according to Vladimir Putin.

The Prime Minister was asked whether he thought penal measures against nationalist extremists should be toughened as a result of the brutal murder of a famous Yakutian chess player, Sergey Nikolaev, in Moscow.

“Russia has become a great nation only thanks to a tolerant attitude towards those ethnic groups which compose it. Russia can only remain a great nation if every people, every ethnic group, feels at home within Russia,” the Prime Minister said.

“Those dull-witted, and simply stupid, obtuse people, who impair this principle, supposing that they are acting in the interest of the Russian people, they are the ones who cause those same people irreparable damage,” Putin pointed out.

The reaction to this phenomenon can only be one, according to the Prime Minister: “The issue isn’t in the toughening of measures, but in making them unavoidable”.

Putin said the government’s duty in this situation is to create a common feeling of intolerance towards such national extremism and make sure that the government structures bring the initiators to justice in due course.

“I believe that one of the Moscow courts is currently examining one of such cases,” the Prime Minister concluded.

Hot topics in brief

Responding to one of the questions from the audience, the Prime Minister said he believes sexual violence against children should be punished more severely.

“Such crimes are on the rise both in the world and in this country. In this respect, I believe more severe punishment is necessary,” Vladimir Putin said, noting that the current law envisages 8 to 15 years in prison for violence against children.

Putin lashed out at countries that demolish Soviet-era monuments to World War II soldiers.

He said: “It’s a crime! And those who do it are digging a pit that they will fall into”.

A question submitted through Internet inquired: “What do you think about a country where chaos starts with the election?” Putin’s reply was short: “What’s the country you’re talking about?”

Lighter moments

Amid the serious topics discussed, there were nonetheless a few light-hearted incidents to raise a smile. One man asked Putin where he should buy a Christmas tree! Putin responded by saying he hoped the economic troubles would not lead to a Christmas tree crisis in the country, and wished a Happy New Year to all Russians.

As for Putin himself, he will be celebrating the New Year at home.

One viewer wondered what happened to the tiger cub that Putin was given for his birthday earlier this year. The Prime Minister said the cub is in a zoo in the Krasnodar region in southern Russia, where specialists take care of him. He suggested that anyone interested should pay a visit.

A little girl, Dasha Varfolomeeva, called in to ask the Prime Minister, or Uncle Volodya as she called him, to make her New Year wish come true.

“I would really like to have Cinderella dresses for me and my sister,” Dasha said, also confessing that her family lives solely on her elderly grandmother’s pension.

To the sound applause from the audience, Putin pointed out that the girl should not only focus on her own wants, but also think about her grandmother’s New Year wishes. He proceeded to invite the family to one of the many New Year celebrations in the Kremlin and promised to “think of something” in terms of presents.

When asked about his attitude towards traditional Russian baths, known as banya, Putin was short: “It’s positive. I like all things Russian.”

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