Source: President of Russia – The Kremlin – English
Foreign heads of state and government, heads of major Russian and international companies and banks, leading experts and politicians from around the world were invited to the forum. Honorary SPIEF guests include French President Emmanuel Macron and Prime Minister of Japan Shinzo Abe.
The plenary session participants also include IMF Managing Director Christine Lagarde as well as Vice President of the People’s Republic of China Wang Qishan.
The forum’s theme this year is Creating an Economy of Trust.
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President of Russia Vladimir Putin: Mr Emmanuelle Macron, Mr Shinzo Abe, Ms Lagarde, Mr Wang Qishan,
Ladies and gentlemen, friends,
I am delighted to welcome all of you to the 22nd St Petersburg International Economic Forum, Russia.
The St Petersburg meetings have become a good tradition. We value the forum’s atmosphere of trust and openness. We have just exchanged opinions, as they say, on the sidelines, about the forum, and Ms Lagarde just told me that she was pleasantly surprised by this friendly atmosphere.
Such a discussion and an informal dialogue are particularly important today when the international political, economic and trade system is undergoing a major strength test, and the environment for doing business and making investments, as well as everyday life, going through dynamic changes too.
The quality, sustainability, nature and speed of growth of the global economy are increasingly determined by new competences and human knowledge, advanced technology and means of communications, which were simply unimaginable a short while ago.
The one who will be able to effectively use these growth factors, to provide a breakthrough in the economy, social sphere, research and education, will significantly improve the quality of life of the people.
We identified these goals as our national priorities. In the near future, the newly formed Government should deploy them into specific action programmes, national projects and legislative initiatives, and provide for the necessary resources to achieve these goals.
In our development we are going to rely on our human, creative and labour potential. We are ready to learn and adapt the world’s best practices, and, of course, to use our own successful experience in tackling the most complicated structural tasks.
We will act primarily proceeding from our national interests. This is natural for any sovereign state.
However, it is possible to pursue one’s interests in different ways – either by ignoring others or respecting the position of one’s partners based on the understanding that the modern world is interconnected and countries are mutually dependent, and every state, especially the world’s major economies, bears an enormous responsibility for the common future.
Russia is part of the global economy. We are taking an active part in integration processes and exerting serious influence on the energy, food and other markets. This country and our companies are deeply involved in international trade, financial and production ties.
This is why we are attentively studying what strategies of economic, technological and social growth other countries are planning to carry out. Naturally, we are not indifferent to what global trends prevail in long-tern perspective.
Until recently, global development was based on two most important, determining principles. The first is the freedom of business, trade and investment, which is recorded in the general rules adopted by the participants in international relations. The second is sustainability and predictability of these rules, which is guaranteed by clear-cut legal mechanisms.
Based on these values and principles, the world economy managed to achieve impressive results and put into the orbit of development the overwhelming majority of international players, the majority of countries.
However, today we are witnessing not even erosion – and I say this with regret – but the undermining of these foundations. The system of multilateral cooperation that was built for decades is being crudely destroyed instead of undergoing natural and needed evolution. Violating rules is becoming a rule.
Open markets and fair competition are gradually replaced by all kinds of exemptions, restrictions and sanctions. Different words can be used to describe these notions but the meaning remains the same. Many countries now use these approaches as their official trade policy tools. And some countries simply had to adapt to this environment, respond and come up with tit-for-tat measures.
Let me highlight a fact that is quite telling. Until recently, a joint statement was issued following practically every leaders’ meeting of the G20 or APEC with calls to refrain from creating new protectionist barriers. Of course, these statements were non-binding, since new barriers kept creeping up, unfortunately. Today, however, we are unable to agree even on symbolic steps.
Let me give you another example: free trade agreements are losing momentum. This process started five or seven years ago. In 2010, the WTO was notified of more than 30 agreements of this kind, but last year this figure was down to just ten. There is a feeling that this downward trend can carry on.
Finally, we used to face what we can refer to as traditional protectionist measures that were also regrettable, of course, and consisted of introducing import duties, technical requirements and covert subsidies. Now, however, we are facing a new kind of protectionism. What is the purpose of all these far-fetched pretexts and references to national security interests? Their purpose is to suppress competition and extort concessions.
The spiral of sanctions and restrictions is only widening, harming more and more countries and companies, including those that never expected to face any trade restrictions or problems of this kind.
Arbitrary action and lack of control inevitably create a temptation to use restrictions more and more at a much broader scale and in any circumstances, without regard for political loyalties, solidarity or pre-existing agreements or cooperation ties dating back many years.
There are many businesspeople in the audience, and you know all too well that when one of the parties to a contract withdraws from the legal framework, the breakdown of agreements always creates substantial risks and losses. This is a fundamental truth for any business. On a global scale, when entire countries and centres of gravity act this way, this may pave the way to the most destructive consequences. This rings especially true today, when disregard for the existing norms and the loss of mutual trust may overlap with the unpredictable nature and turbulence of the ongoing radical technology transformation.
This combination of factors may trigger a system-wide crisis that the world has never faced or has not faced for a long time. It will affect all participants in the world economic relations without exception.
Global mistrust is calling into question the prospects of global growth. The logic of economic egotism does not fit in well with the current specialisation of countries and companies and the building of complicated global production chains. In effect, this may throw the global economy and trade far back into the past, into the era of subsistence farming when every household had to produce everything itself. This inevitably reduces economic efficiency, lowers labour productivity and wastes scientific and technological achievements that can change life for the better.
We are already witnessing alarming trends. The stability of business ties is undermined. Disintegration processes are gaining in strength. Forms of multilateral cooperation are devalued and the efficiency of international institutions and agreements is reduced.
Thus, the international community has so far failed to find acceptable solutions in the World Trade Organisation (WTO), which despite all difficulties and contradictions remains a key link in the global trade system and a major universal venue for resolving disputes and conducting dialogue on the issues that concern all economic actors without exception.
Needless to say, the WTO is not ideal. At the same time, there are no insoluble problems in its system. Giving it up without any replacement means destroying the established balance. In this case there will be neither complainants nor defendants in trade disputes. Force alone will decide who is right.
Naturally, the aim is not to freeze or mothball the existing order and turn into dogma the ideas that have outlived themselves and are no longer viable. Naturally, the world is changing and institutions and rules should be changing with it.
But one thing is clear: these rules must be transparent and uniform for all and should be observed by all international economic players.
It is very important for us to draft and introduce together a legitimate mechanism of changes, which will allow the international community to get rid of obsolete and sometimes inefficient and archaic norms, preserving all the best practices and creating new instruments that meet the requirements of the time.
To be continued.