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Day Two takeaways at SPIEF: Russian, French, Japanese leaders focus on global economy

May 25, 23:24 UTC+3

The Russian leader drew attention to “actual undermining of the foundations of a multilateral cooperation system”

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© Mikhail Mentsel/TASS

ST. PETERSBURG, May 25. /TASS/. Fair competition with mutual respect and trust is a guarantee of successful development, Russian President Vladimir Putin said on Friday presenting Russia’s view on the major problems of and key tasks for the global economy at a plenary session of the St. Petersburg International Economic Forum. 

The Russian leader drew attention to “actual undermining of the foundations of a multilateral cooperation system” and noted that “open markets and fair competition are gradually being replaced by all kinds of exemptions restrictions, and sanctions." This kind of situation is fraught with a global systemic crisis, he warned, adding that in such conditions “the openness of the country, its commitment to active participation in global processes and integration projects” is seen in Russia as a key development principle.

It became evident from the speeches by French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe that these countries largely share Russia’s approaches and views and are ready for constructive cooperation in the interests of a sustainable and lasting development of the global economy. 

Managing Director of the International Monetary Fund (IMF) Christine Lagarde warned about three “clouds” facing the global economy, with the darkest of them stemming from attempts by a number of global players to break down the existing economic system.

Fair competition instead of sanctions 

"Today, we are seeing not even erosion, but the actual undermining of the foundations of a multilateral cooperation system that had been built over decades. Instead of the necessary natural evolution, it's breaking down, and quite severely. Breaching the rules becomes the rule. Open markets and fair competition are gradually replaced by all kinds of exemptions restrictions, and sanctions," Putin said, adding that many countries are using restrictions as an official tool in their trade policies.

He drew attention to the fact that not long ago major summits used to be crowned by a joint statement of leaders pledging to refrain from further protectionist barriers. Now, in his words, it is impossible to agree on even such symbolic steps. 

“There are a lot of businessmen in this room and you know it only too well that withdrawal of a party to a contract from the legal framework and the breakdown of agreements always implies considerable risks and losses. It is a hard and fast rule of business practices. On a global scale, such behavior of a state, especially a key player, is fraught with the most negative, if not destructive, consequences,” Putin stressed.  

According to the Russian leader, the disregard for existing rules and the loss of mutual trust may add to the unpredictability and turbulence of technological changes. “Such a confluence of factors may lead to a systemic crisis that the world has either never witnessed before or has not experienced for a long time. It will affect all economic actors, with no exceptions,” Putin emphasized.   

He stressed that it is necessary to “elaborate a model of growth that will provide an adequate response to the present-day challenges.” “Naturally, we are not trying to idealize the situation. Rivalry and conflict of interests, these things have always existed and obviously will always exist. However, it is important to have respect. The ability to settle disputes under fair competition rather than through limiting it is the source of progress, a basis for stable and sustainable development of each nation, for the implementation of the colossal research potential that the world has,” Putin stressed. 

Bolstering sovereignty 

The French president, who took the floor after Putin, focused on the necessity of strengthening sovereignty, including economic sovereignty. “We cannot trust each other if we don’t respect ourselves. I think it is necessary to undertake efforts to defend sovereignty,” Macron said, adding that sovereignty is essential as a basis for cyberspace and the protection of information. “Strong sovereignty is needed to comply with all global rules,” he asserted.

 The French president admitted that in the recent past, Europe “might have had insufficient sovereignty,” which resulted in NATO’s failure to comply with its obligations regarding Russia. It was a mistake, he stressed. “All of this led to a reasonable awareness of Russia,” Macron noted. “We failed to organize a space of trust, which Russia had the full right to expect, and it fueled apprehension as well.” In his words, he would like to bring this to an end by standing up for the idea of a multilateral approach in global politics. “My first decisions, which have been related to France and which I defend at the European level, are aimed in that direction,” Macron noted.

Pursuing a peace treaty 

Japanese Prime Minister Shinzo Abe focused on bilateral cooperation issues. He stressed that a peace treaty between the two nations would become a solid basis for large-scale cooperation and would help bring prosperity and peace to Northeast Asia. “The islands, once the core of the dispute, will become a symbol of Japanese-Russian cooperation opening new possibilities as a logistics stronghold,” he said, adding that the Sea of Japan in such an atmosphere would turn into a “logistics highway.” 

According to the Japanese prime minister, the eight-point cooperation plan he offered back in 2016 that provides for expanding his country’s cooperation with Russia in the energy sector, in the area of small and medium-sized businesses, and the industrial development of Russia’s Far East meets “the goals and objectives for the period up to 2024” set by the Russian president in his inaugural speech. Japan, in his words, “is making its contribution by means of concrete projects” and is seeking “to stimulate, mobilize social and economic reforms in Russia.”  

He stressed that cooperation between Tokyo and Moscow is essential for progress in the process of the complete, final and verifiable denuclearization of the Korean Peninsula.

Three clouds 

Christine Lagarde, the IMF managing director pointed to the three clouds looming over the global economy. They are countries’ sovereign debt, their financial fragility and attempts by a number of global players to break down the existing economic system.

She estimated the current debt of sovereign states at 162 trillion US dollars, or about 225 percent of the global GDP, the biggest figure ever. This financial fragility stemming from the United States’ tougher monetary policy, may trigger a capital drain from countries with rapidly developing markets and medium levels of income, she noted. And the darkest cloud, in her words, is seeking to write off the rules regulating the movement of capital, services and goods. 

Keeping the Iran deal in place 

The Iran nuclear deal following Washington’s decision to withdraw from it and its further sanctions against Tehran headlined the key topics at the session, since these extraterritorial restrictions infringe upon interests of many companies.

“The so-called Iran nuclear deal has been fixed in a relevant resolution of the United Nations Security Council. It is a multilateral legal document. And if we want our actions to be predictable, we must stick to commonly recognized rules. Unilateral actions lead to a dead-end and are always counterproductive,” said the Russian president and called on all participants in this process to “speak to each other openly to find a solution.”

He once again spoke categorically against any unilateral sanctions and restrictions. He recalled his speech at a Munich Security Conference several years ago when he had warned about the inadmissibility of a state using its legal norms extraterritorially. “And now, here we are. I think if we thoroughly analyze what is going on and react to it timely, we will have less problems like these,” he added. 

The French president also spoke in favor of keeping the Iran nuclear deal in place. He said that it was his country’s “sovereign choice” to sign the nuclear deal with Iran. “I want us to respect each other, so that there won't be any kind of interference,” Macron insisted. “If we sign an agreement, we need to stick to it, no matter who decides to leave. What is signed, must be followed.”

He hailed the idea of Europe’s common measures to protect its companies that can be affected by Washington’s anti-Iranian sanctions. At the same time, he was downbeat on such measures on a national level as companies must assess their risks and make decisions independently. He said he thinks it is wrong and unacceptable to use taxpayers’ money to support such companies.

IMF Managing Director Christine Lagarde noted that the loopholes in US laws, including in what concerns the policy of sanctions, have adversely impacted many companies, even American ones, as the judicial and court systems are non-transparent. She stressed that this problem of trust needs to be addressed.

Russia’s president also raised similar concerns. “The situation in the world is such that it is as though everyone is playing football, but at the same time, they are applying judo rules to it [the match]. So, we end up with this interesting game, it's neither football, nor judo. It's just chaos," Putin said.

About football  

The topic of football was not left out in the cold either ahead of the upcoming FIFA World Cup in Russia. The first to raise it was Japanese Prime Minister Shinzo Abe, who said he wants to see his country’s team face Russia in the finals.

"Let us imagine that the Samurai Blue (Japan’s name for its national football team) gets three victories and then meets with Russia in the final. But to be honest, (French President) Emmanuel (Macron) imagined right then and there how the French national team defeats Japan with a considerable advantage in the score,” Abe said as he smiled and looked at the French leader. 

Macron told a news conference after Thursday’s talks with Putin that he may come to Russia to support his country’s team if the squad manages to make it through the quarterfinals. 

Meanwhile, the Russian leader pledged that Russia will do its best to hold the upcoming 2018 FIFA World Cup at a decent level so that all guests and football fans from around the globe could ‘feel at home’ during the championship. “And as for a team bound to win the championship, I would say that let the best one win,” Putin said.  

The St. Petersburg International Economic Forum, running between May 24 and 26, is one of the world’s key economic discussion platforms, held under the auspices of the Russian president. 

Traditionally, it assembles foreign chiefs of state, key public figures, heads of international organizations and major companies, leading world experts, analysts and media. This year, the forum’s events are be held under the slogan: “Creating the Economy of Trust.” TASS news agency is acting as an information partner and the official photo hosting agency of SPIEF. TASS is also the operator of the zone of SPIEF’s presentations with the support of the EY consulting company and the Foreign Investment Advisory Council in Russia.

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