Dmitry Medvedev has given an interview to the Vedomosti newspaper on its 15th anniversary…

Above: Dmitry Medvedev with Vedomosti Editor-in-Chief Tatyana Lysova, Deputy Editor-in-Chief Kirill Kharatyan and Economics Desk Editor Filipp Sterkin (Link)

Question: Clearly, events surrounding the crisis in Ukraine and Crimea’s unification with Russia have had a big impact on the economy and the investment climate. Businesses now face a different environment than they were expecting. People want to know what course of action the Government is planning for the economy. Which goals will have to be postponed until better times?

Dmitry Medvedev: These are certainly tough times for the economy, the country and Russians just trying to live their day-to-day lives. As a senior government official, I can tell you it seems like we’ve been dealing with economic shocks from beyond our borders since 2008. Even before that, it was not all smooth sailing.

You asked about our course of action for the state, society, business and individuals. We are not changing course. We may not reach our targets exactly as planned, but the policy documents remain unchanged. That includes the national development programme to 2020, the presidential executive orders of May 2012, the Government’s policy guidelines to 2018 and the state programmes that we’ve approved. However, we understand the gravity of the situation, and we will have to make some adjustments.

The economy is dealing with external shocks and structural imbalances. We had planned for much higher growth, but we believe that this year the economy will grow by half a percent, or perhaps slightly more. Next year, it will grow by about 1 percent. That’s too low, but economic conditions are difficult around the world. The forecast for global GDP growth is around 3 percent. European economic growth has been revised down to around 0.9 percent; the US economy is growing slightly faster at about 2 percent. So you can’t say that other countries are doing much better than us, with the exception of a few rapidly growing economies like China.

Question: Back in May, in an interview with Bloomberg, you said that “Russia is obviously now part of the global economy, which is what we wanted.” However, the sanctions and counter-sanctions cast doubts on Russia’s turn toward globalisation. Are we witnessing a change in Russia’s economic trajectory or something more temporary? What will become of Russia’s plans to create an International Finance Centre, for example?

Dmitry Medvedev: Globalisation is the only game in town, whether we like it or not, and the current political controversy won’t change that. Of course, the International Finance Centre is an important goal. We aren’t abandoning the idea by any means, but we are realists and we understand that the financial centre, as originally conceived, is not possible under sanctions. Eventually the sanctions will belong gone, but the goal of building the IFC isn’t going anywhere.

Question: How has the addition of Crimea changed Russia’s priorities for its regions? Where will the bulk of the country’s resources and efforts be directed?

Dmitry Medvedev: Russia is a big, complex country, so we can’t afford to have just one priority. But there are some regions that require a more significant investment. We’ve created a ministry for the development of the Russian Far East, and this remains a priority. The programme is not as extensive as we wanted – just 350 billion roubles from the federal budget – but we hope for much more substantial private investment, both domestic and foreign. The same applies to the Caucasus, where two programmes are underway: Southern Russia and Development of the North Caucasus Federal District. Their combined budget is over 300 billion roubles as well. And now there’s Crimea, which has been severely underfunded for the past 20 years. When I went there for the first time in 2004, I was surprised. It was like stepping back into the Soviet Union. Some of my friends who are doctors recently shared their impressions of the state of healthcare in Crimea: “We knew that everything would be from the Soviet era in Crimea. But we thought it would be like the late 1980s, not the mid-1970s.” Both social commitments and infrastructure have been massively underfunded. Therefore, we have approved a large 650 billion rouble programme using mostly federal funds, which we are going to invest in infrastructure, social welfare, healthcare and education.

Question: Does this amount include the construction of a bridge to Crimea across the Kerch Strait?

Dmitry Medvedev: Yes, of course, it includes the bridge and the power industry there. We need to create independent power sources in Crimea that will be part of the Russian grid. Crimea experiences electricity shortages, and it’s becoming a politicised issue.

However, the situation is even more complicated than that. Some parts of Ukraine suffer from power shortages and rely on electricity produced in Russia. And those responsible for the unwise decision to limit the supply of electricity to Crimea must realise that symmetric responses are possible.

The Kerch Bridge is a really important project. We need to build it in a reasonable time frame, because we expect the flow of Russians and cargo travelling to Crimea and Sevastopol to increase.

Question: There are reports that the contract is for 228 billion roubles and may go to Stroytransgaz.

Dmitry Medvedev: First, the decision hasn’t been taken yet. Second, the amount may be revised, although it certainly won’t becheap to build. We started discussing the ideaa while ago, before Crimea’s status changed, and even then we realised that it would be an expensive undertaking. Back then it was a multinational project, where as now it’s a domestic construction project with vital importance for our people.

Question: So you’re assuming the standoff between Russia and the West won’t last long and neither side will escalate sanctions?

Dmitry Medvedev: Sanctions are always a stupid idea. They backfire and you end up hurting yourself. There are many examples of sanctions throughout history: both legitimate sanctions passed by the UN and illegitimate sanctions imposed by individual countries. More often than not, they haven’t done any good. However long they last, eventuallythey come to anend. Economic sanctions are generally followed by political ones. In politics things are often asymmetrical, and there are worse things than economic restrictions, such as possible cracks in the global security system. I hope this isn’t what our Western partners want and that the people calling the shots aren’t crazy.

I can give you an example that many seem to have forgotten. Sanctions were imposed on China in 1989 following Tiananmen Square. Those sanctions were very similar to the ones we are facing. Did they hurt the Chinese economy? No, they didn’t. Has China deviated from the course it set for itself in the late 1980s? No. Is China a successful economy? Without a doubt. It will soon be the largest economy in the world. Did the Chinese system change as a result? Did China feel punished? No. They mobilised their internal resources without cutting themselves off from the outside world. To a certain degree, the sanctions helped the People’s Republic of China.

Question: In your last interview, you said that “politicians need sanctions to reinforce their convictions and demonstrate their power and strength.” When Russia imposed its own sanctions, was it also about demonstrating its power and reinforcing its convictions? Why was the decision taken without considering the effect on Russian companies? Why did the Government neglect the interests of Russia’s retail and fish processing industries?

Dmitry Medvedev: We weren’t the ones who started it. In fact, we were too patient. There was an urge to retaliate sooner, but it was the President’s position not to respond. But after several waves of sanctions, a decision had to be taken. Importantly, this political decision is supported by the vast majority of Russians.

As for the damage, there is no doubt that these measures constitute force majeure circumstances for the business community, to use the legal term. No one can be held liable in the event of force majeure circumstances. Was it possible to do something…

Question: …milder?

Dmitry Medvedev: Unfortunately, no. We thought about it. We waited for several days so that shipments that were already en route could be delivered. As much as we are committed to helping businesses, had I decided to make an exception for all shipments that had been paid for in advance, trust me, all shipments for the rest of the year would have been documented as prepaid before the sanctions. All kinds of schemes would have been invented.

We discussed this issue with companies, and they later acknowledged that they don’t pay in advance for shipments. It wouldn’t make any sense for them, since they have established economic relationships and consequently there is no need to use letters of credit or to pay in advance. Cargoes are paid for upon delivery, especially when it comes to perishable goods.

That said, there are businesses that have a different perspective on this matter. After the meeting held in Kursk, all the agricultural producers approached me to say “Finally! This is what we’ve been asking for.” We heard this from major associations of dairy, meet, grain and fruit producers, as well as small farmers. We are receiving similar feedback from regional governors, who are asking the government not to reverse course, as creating a modern agriculture industry in Russia will be impossible otherwise.

We have to admit that some European countries, like Poland, have done a great job creating an efficient fruit growing industry. But Russia is immense, and has warm regions with wonderful conditions for growing fruit and vegetables. Why do we always have to eat imported fruit? Retailers used to pretend not to notice domestic agricultural producers, big and small alike. Working with foreign suppliers was more convenient for them, and they were unwilling to bear the cost of disrupting these arrangements. But they will have to now. I chaired a meeting recently where retailers and agricultural associations had nothing but good things to say to one another. This is the way it should be. Russia is the world’s largest agrarian country with 9% of the world’s crop land and 20% of the fresh water reserves. Russia should be able to feed itself and others.

Question: But how long will Russian agricultural producers be content? What if there’s peace in Ukraine in the near future and the sanctions are lifted? Would it still make sense to refocus their businesses?

Dmitry Medvedev: That’s a reasonable question. If our partners come to their senses, and these pointless sanctions are lifted, we will respond accordingly. The presidential order expressly states that the Government is entitled to change the duration of the sanctions. I hope by that time Russian suppliers will have already gained a foothold in grocery stores.

I went to a store recently to see things for myself. I went to Magnit in the Krasnodar Territory, a nice store by the way. The only imported food I saw there were Turkish grapes.

This is why we embarked on the programme to support underdeveloped parts of the agricultural sector, such as fish farming, hothouse vegetable growing, fruit growing and segments of the livestock industry that still need our support, including beef and dairy production. We will certainly invest in them. I can’t tell you the precise amount yet, but we’re talking about tens of billions of roubles.

Question: Can I ask you a procedural question regarding the sanctions? How are such political decisions taken? Was it a spontaneous decision?

Dmitry Medvedev: Absolutely not. Neither the President nor the Government would ever take such decisions spontaneously.

Question: Whose idea was it?

Dmitry Medvedev: Those with expertise in foreign trade and the economy, naturally. You don’t want me to name names, do you? (laughs)

The decision was preceded by closed-door meetings, after which the issue was brought to the attention of the President, who signed the executive order and issued instructions to the Government. After that, I gathered everyone together one more time to go through all the goods affected. It was only after all these steps that I announced during a Government meeting that a document had been signed to impose restrictions on imports of certain products from countries that supported the sanctions against Russia.

Question: So everything seemed to happen so quickly – the Government issued the resolution the very next day after the President signed the executive order – because everything was prepared in advance?

Dmitry Medvedev: Of course, we discussed it in advance. That said, when such decisions are being prepared, it is impossible to consider everything, which is why another resolution had to be passed to lift the import ban on lactose-free milk and baby fish. I can’t rule out further adjustments, since our first priority is not to harm Russians, while the second priority is to use this situation that we didn’t create in order to benefit our country and our economy.

Question: Back in spring, both Government and Kremlin officials said that there won’t be any sectoral sanctions. Do you expect new sanctions, and if so, what sectors do you expect to be hit and how might Russia retaliate?

Dmitry Medvedev: I hoped that our partners would be smarter. Alas.

You’ll have to ask them if there will be new sanctions. If there are sanctions related to the energy sector, or further restrictions on Russia’s financial sector, we will have to respond asymmetrically. I brought up some options during a meeting of the Government. For example, we could impose transport restrictions. We believe we have friendly relations with our partners, and foreign airlines of friendly countries are permitted to fly over Russia. However, we’ll have to respond to any restrictions imposed on us. If Western carriers have to bypass our airspace, this could drive many struggling airlines into bankruptcy. This is not the way to go. We just hope our partners realise this at some point.

Moreover, these sanctions have done nothing to bring about calm in Ukraine. They are wide off the mark, as the vast majority of political leaders recognise. Unfortunately, we are seeing the inertia of a certain way of thinking and the temptation to use force in international relations.

Question: Do you see a real opportunity for a settlement in Ukraine?

Dmitry Medvedev: Unfortunately, the Ukraine crisis continues unabated, which is a terrible tragedy. Hopefully, it will be resolved, provided the Ukrainian leaders show good will and seize the proposals put forward by Russia. President Putin has released his peace plan, and Ukraine seems to have accepted it. Representatives of the opposing side, the militias, also accepted the plan, albeit with certain caveats. Now comes the delicate work of achieving a durable peace. I hope that these efforts will succeed.

Question: Russian businesses are being forced to scale back ties with Europe. They are shifting their focus to Asia instead, particularly China. But won’t that make us dependent on China?

Dmitry Medvedev: Trade between Russia and China now stands at $100 billion per year, compared to $450 billion with Europe, which represents almost half of Russia’s foreign trade. So, Russia needs to have a presence in the Asia-Pacific region. We should trade, solicit investments and work with China, India, Vietnam and other big and not so big regional actors. The turn toward Asia is overdue. We are not doing it because of the sanctions or the deteriorating political situation, but because we owe it to ourselves to diversify our trade. It will help us develop Siberia and the Russian Far East. So, I don’t see any particular problems, provided we take reasonable decisions. China is the largest trading partner of the United States. This fact also causes debate there, but no one questions the independence of the United States.

Question: We discussed the impact of sanctions on businesses, but there is also the damage to the overall economy. How does the Government assess the likelihood of galloping inflation and the Central Bank’s decision to raise rates? It appears the decision came as a surprise to the Government.

Dmitry Medvedev: Obviously I don’t want to see inflation go up. We are pursuing a tough policy based on inflation targeting, and we aren’t about to abandon it. I want to reiterate: we are not discarding either the fiscal rule, or inflation targeting. We may use a variety of tactics, but our core macroeconomic policy remains unchanged. Of course, the inflation forecast must be adjusted in response to market conditions. We are discussing this forecast with the Ministry of Economic Development, the Finance Ministry, and the Central Bank. I held several meeting on this topic last week. Inflation needs to be dealt with, not talked about, because inflation tends to accelerate, and expectations can make it worse.

Regarding the Central Bank’s key rate decision, it is certainly coordinating its activities with the Government and the President, but the Central Bank’s independence is precisely what ensures stable monetary policy. We cannot weaken our monetary policy.

Question: First Deputy Governor of the Bank of Russia Ksenia Yudaeva is concerned that the introduction of the sales tax could exacerbate inflation. Is this possibility being considered, and what are the chances of the sales tax actually going into effect?

Dmitry Medvedev: The decision on whether to adjust existing tax rates or introduce new taxes is still pending. Frankly, there are pros and cons to any option. For example, high inflation is a con. In any case, our decisions, which will come in the near future, will not affect personal income taxes.

The only issue is the tax rate on dividends. It’s strange that dividends are taxed at a rate lower than the already low personal income tax rate. They need to be evened out. I believe it’s fair and no one will object.

It’s tough to choose between increasing the VAT or introducing a sales tax. Sales tax was repealed in 2003. It was difficult to enforce, so before we decide to reintroduce it, we need to be sure that we will be able to collect it effectively. We need to have electronic verification of payment, which is a complex procedure.

We will go over these issues once again and see if we can streamline budget expenditures for a number of government programmes, and make a balanced decision. I think we will be able to do that before the end of the month.

Mind you, there can be no perfect solution under the circumstances. Clearly, every option will have a downside.

Question: Is the Government really looking into the possibility of using British law in Crimea for the purposes of conducting business transactions?

Dmitry Medvedev: I’ve heard people say that, but it sounds a bit far-fetched. Russia should use Russian law. The focus should be on bringing Russian law closer to international standards. Under certain circumstances, our businesses may enter into transactions governed by foreign laws. However, transactions between two Russian economic agents made in Russia for property located in Russia must be subject to Russian law.

Question: You have mentioned on several occasions the possibility of using public funds to stimulate industrial growth. However, as far as we understand, we still have a problem, even if the sales tax is introduced and pension savings are frozen in 2015, and the budget deficit is 0.5 percent of GDP…

Dmitry Medvedev: Let’s wait for the actual decision, because so far we are still at the consultations stage. The budget should be drafted to maintain stable macroeconomic conditions that keep inflation in check and don’t create additional problems. I think we are close to finding the right solution. In 2013, the deficit was 1.3 percent. Did we feel the pinch? Not really. So it’s important to understand that we are operating within the boundaries that we set for ourselves.

Question: The conflict in southeast Ukraine is not just a political issue, but also an economic one. Ukraine is in a state of economic paralysis. One million Ukrainians have already fled to Russia, and the rest are hoping for our help. What is the Government’s position on this? Are we ready to bear additional costs?

Dmitry Medvedev: First, let’s talk about the refugees. This is a humanitarian tragedy. We recognise that, and we are making more funds available to the Russian regions dealing with the influx. Substantial funds. Recently I had to sign a number of decisions providing almost a billion roubles in funding for refugees.

Now, with regard to the economic situation in southeast Ukraine, in addition to residential buildings, industrial facilities have been destroyed. Rebuilding them is a big challenge. But that’s for the Ukrainian authorities to decide, since they consider these regions part of Ukraine.

Those who order the use of artillery, tanks and aircraft against their own people and cities should understand the colossal economic price this entails. And those who encourage such actions must understand that they will have to help rebuild. But this support is nowhere to be seen.

In any case, we will, of course, help southeast Ukraine. We are already providing humanitarian aid to the regions and people that are closest to us.

Question: Turning back to domestic economic policy: the decision to impose a freeze on pension contributions for 2015 has been made, although we all remember President saying that it won’t happen.

Dmitry Medvedev: The President did not say that. Some members of the Government said that. This goes to show that all officials need to be careful and disciplined in their statements. Until a final decision is reached, individual opinions should be confined to work meetings.

The decision was taken to add the funded part of the pension to the insured part for 2015, and there’s nothing dramatic about it, because the money doesn’t actually go anywhere. The situation with the nongovernment pension funds was not transparent, and we still have time to evaluate it next year.

Once this is done, we will decide on the funded part of the pension. Officials on both the economic and social side of government are aware that the country cannot get by without long-term financing. The only question is how well the current funded part of the pension is doing. This should also be taken into account as we continue to adjust the pension system. Second, long-term financing, which everyone is so fond of talking about, never made it to the economy. That’s bad news. It just goes to show that the system wasn’t effective.

Question: The low yield has nothing to do with the pension system and everything to do with underdeveloped financial markets and regulations.

Dmitry Medvedev: I agree. That’s exactly why we needed to fine tune them and make them more effective. However, we can’t just give away the money from our pension system. As is well known, money needs to be watched at all times. High standards of accountability should apply to the people who handle the money. The best situation is in the banking sector, especially now that the Central Bank has begun to clean things up. The situation on the insurance market, which is less transparent, is worse, and things should be straightened out there. Just look at agricultural insurance. The situation was even worse with the pension funds. Now many of them have been brought up to code, and we will take this into account when deciding on further improvements in the pension system. The decision will be taken in 2015.

Question: The National Wealth Fund (NWF) is the state’s main source of long-term financing. Originally, it was regarded as a safety cushion for the pension system, but now it is becoming a tool for infrastructure development. Is it possible that more funds from the NWF will be allocated for these purposes? What’s your take on this issue?

Dmitry Medvedev: While, on the one hand, money must be put to work, the National Wealth Fund and the Reserve Fund form the foundation of our financial system. Therefore, we must spend this money sparingly. We have chosen several infrastructure projects based on a 60:40 approach, such as the Baikal-Amur Railway, the Trans-Siberian Railway, a railway to a coal deposit in Tyva, and several other projects. We are not going to greatly increase their number. The Reserve Fund money can be used only to maintain financial stability during a crisis. These funds amount to 6.5 trillion roubles. This is big money for any country, and we appreciate that. That’s why all decisions on spending NWF funds are discussed in the Government and then coordinated with the President.

Question: The other day, the President said that investments coming from the NWF may not be increased, but funds may be reallocated.

Dmitry Medvedev: We must stick to the priorities that we have identified. Certain things can play out a little faster than others. So if we believe it’s necessary to reallocate funds, we will do so. However, it will be a targeted decision. As for the proportions, I’ve already answered that question. As you may be aware, the NWF spending rules are such that every rouble invested from the budget must be matched by one and a half roubles of private investment.

Question: Can the outlandish request by Rosneft to finance its debt of 1.5 trillion roubles be met?

Dmitry Medvedev: This figure only looks imposing, but everything doesn’t have to be done in one year. I recently held a meeting on Rosneft’s investment programme: the company needs to maintain its production levels, because Rosneft is a major source of tax revenue. As such, we should help it maintain its level of investment. We are now considering specific variables and types of support.

Question: In other words, you believe that the additional budget revenue from Rosneft will cover the cost of the government support?

Dmitry Medvedev: I have no doubts about the company’s performance in the medium to long term. The investment will certainly pay off.

Question: What other ways to secure long-term financing are being discussed by the Government, perhaps, in conjunction with the Central Bank?

Dmitry Medvedev: I have already signed off on a programme that will be launched soon to promote industry and import substitution. It is based on providing long-term financing to participants at a reasonable rate pegged at one percent of inflation. This programme focuses primarily on medium-sized businesses. Small businesses are covered by the Vnesheconombank programmes and special bank lending programmes. Major companies have access to the NWF. Unfortunately, now they are almost completely closed off from Western markets, but in general they do have this resource. I believe that medium-sized businesses with projects worth 500 million to one billion roubles will benefit from this programme.

Question: This is the part of the programme that the President announced in May. But he also mentioned tax breaks for greenfield projects. Are these tax benefits included in this programme as well?

Dmitry Medvedev: Growth and development must be encouraged in places where they are lacking and where there are no sources of income. We are now discussing a new type of special tax treatment and ways to promote industry in what are known as advanced development areas. This draft law is being prepared primarily for the Russian Far East, but will subsequently be applied across Russia. This is a slightly different treatment than free trade zones or special economic zones. This law is almost ready.

Question: What will these advanced development areas specialise in?

Dmitry Medvedev: High technology should obviously be the focus – anything that helps improve our technological capabilities.

Question: When you were President, you promoted technology and innovation, but many of the initiatives you started back then have either stalled or been abandoned.

Dmitry Medvedev: With Russia facing all kinds of sanctions, now is not the best time for promoting innovation. Nevertheless, we remain committed to this policy, and all innovation institutes are up and running.

For example, in Skolkovo everything is proceeding as planned, and both public and private funding has been provided in full. Almost one thousand start-ups are already operating in this hub. I regularly visit them, and I must say that they are very interesting and dynamic ventures. Foreign companies have all stayed, and all their projects remain on track despite pressure from some of their foreign bosses. As for government policy in general, it is set by the country’s leadership and above all the President. Pretending that Russia is in the same situation as in, say, 2009, doesn’t make any sense. There were other challenges, difficulties and priorities at that time. If things have changed since then, that’s to be expected.

Question: Why was the procedure for opening investigations into tax-related crimes changed at this point in time? What changed in this respect?

Dmitry Medvedev: When I took this decision, there were many complaints regarding arbitrary actions by law enforcement in tax-related proceedings. On the other hand, it is important that such cases are properly investigated so that criminals don’t escape punishment.

A different scheme has been enacted, under which various types of evidence can be used, while investigative authorities are permitted to obtain an opinion from tax authorities, thereby combining the legal assessment of the investigator with the economic assessment of the tax authority.

Question: As the person behind this initiative, are you satisfied with it in its current form?

Dmitry Medvedev: I am. The key thing is that it should be functional, so that cases can be investigated without putting any strain on businesses.

Question: What is your perspective on the merger of courts and the liquidation of the Supreme Arbitration Court? What are the potential consequences?

Dmitry Medvedev: The President and I have discussed the situation with the judiciary on a number of occasions. There are two types of judicial systems in the world: those that distinguish between ordinary and commercial courts, and those that don’t. The issue is not the system itself but how well it works. We often hear from Russian and foreign business people that our courts sometimes fail to deliver.

The Arbitration Court has definitely played a very important role and has accumulated important experience. It has issued rulings on the most challenging cases. All of which is still valid, nothing is being thrown away. It is now crucial that the Supreme Court becomes an effective body and retains highly-qualified staff. As a lawyer, I can confirm that the most complex cases are related to economic, tax and property disputes. It should be noted that the new court has yet another challenge to contend with – relocating to St Petersburg. This won’t be easy, since judges are people, and not all will be able to move with the court. I hope that the judges will be offered decent conditions there. This initiative has special meaning, since it will create some geographical separation between the judiciary and other branches of government.

Question: Russia’s possible withdrawal from the European Court of Human Rights (ECHR) and the repeal of the constitutional provision on the supremacy of international treaties were publicly discussed recently. What is your view on these issues?

Dmitry Medvedev: There are all different kinds of proposals, some of them are well thought out, and some are not. These are challenging times for international law, in my opinion. Perhaps the time has come to upgrade it. The current international legal framework has been around for a long time, so I don’t think there’s anything wrong with discussing how it can be improved. The ECHR is an important institution which should be preserved, although it is far from perfect in how it functions. Human rights are a very subtle issue, so sometimes, though not always law and morality overlap in the ECHR’s judgments. This is possible, though not desirable. But it’s even worse when law and politics overlap. There were several politically motivated rulings against Russia and other countries. For example, the ruling on the Ilașcu case was deeply flawed from a legal perspective, stating that Russia exercises “effective control” over a foreign territory and is therefore responsible for what happens there. The less politicized the ECHR is, the better.

As for the supremacy of international law, this is a fundamental principle. Abandoning it would set back the cause of human progress by 150 years.

Question: Such proposals are heard from MPs of the party you lead, United Russia. To what extent do you share responsibility for the party’s activities and what do you get from your role as party leader? Why does it do for you?

Dmitry Medvedev: The answer is evident. If you want to accomplish anything in politics, you need people to help implement your policies, people you can trust. As for flawed, irrational proposals, they are a feature of all parties, including ours. What matters to me most is the challenging budget that was prepared by the Government. It requires substantial backing in parliament, and we have this support from the United Russia party. The Government shares responsibility with United Russia for the country’s economic, social and political development. This is what matters most to me as Prime Minister and party leader.

There is nothing unusual about certain MPs having eccentric ideas. Look at other parliaments. If an initiative is voted into law, that means it had consensus support. It is important to understand, however, that the parliament and the party are not there just to serve the Government. Every United Russia MP and member have the right to their own opinion.

Question: A question on the Internet. Are you still an advocate of Internet freedom or have your views on this changed as well in the last couple of years?

Dmitry Medvedev: The Internet is an entirely new, useful and at the same time controversial area of human activity. It can no longer remain an unregulated medium. We should be careful not to stifle it, but we must also be aware of what’s happening online. You can find everything online, from educational courses and blogs to garbage and outright criminal activity banned in any country. Russia has also introduced a number of restrictions related to suicide, pedophilia, inciting ethnic hatred and drugs. These initiatives are having positive results. It’s no secret that during the G8 and G20 summits I tried to persuade my colleagues, heads of foreign states, of the importance of two issues in particular: global Internet governance and intellectual property rights, which have been greatly undermined with the rise of the Internet. However, they haven’t listened yet, not least because the US still has a “controlling stake” in these matters.

Russia’s attempts to regulate the Internet can be debated both from the standpoint of effectiveness and procedure. Take, for example, the hot topic of public WiFi hotspots. Make no mistake, this initiative wasn’t about forcing everyone to carry their passports at all times. After all, there are newer ways to verify your identify, for example, via sms or a credit card. This is what the state does: it tries to understand and counter threats. Most terrorism-related crimes are now committed using the Internet or cellular networks.

Question: Your son is already 19 years old. What do you think about his generation?

Dmitry Medvedev: His generation is definitely different. I consider myself a modern man with varied interests. But things that require concentration and effort from me come naturally to kids that age. It’s like they were born with a computer in their hands. But in general, my son and I share similar interests, especially since he is pursuing a degree in law.

Question: How is he getting along?

Dmitry Medvedev: Not bad. He has high marks. Just like any father I want my son to have a good career, which takes a lot of effort.

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Post by Kyle Keeton
Windows to Russia…

A survivor of six heart attacks and a brain tumor, a grumpy bear of a man, whom has declared Russia as his new and wonderful home. His wife is a true Russian Sweet Pea of a girl and she puts up with this bear of a guy and keeps him in line. Thank God for my Sweet Pea and Russia.