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Putin: Current tense geopolitical situation mainly related to economic challenges

June 17, 14:41 UTC+3
According to the Russian president structural problems in the global economy have not been overcome, competition on the global markets will intensify and barriers for technology flows will appear
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© Mikhail Metzel/TASS

ST.PETERSBURG, June 17. / TASS / Structural problems in the global economy have not been overcome, and it hasn't been possible to restart growth just yet, Russian President Vladimir Putin during his address said at the St. Petersburg International Economic Forum (SPIEF-2016).

Structural problems accumulated in the global economy persist. It hasn't been possible to restart growth just yet," he said.

"After the 2008-09 crisis, it was possible to partly reduce the financial balances, to restrict, if not to overcome the problem of rising debt, to make cash flow transparent and manageable," said Putin.

The president expects competition on global markets to intensify and barriers for technology flows to appear.

"Restructuring of complete branches is inevitable; many production facilities will lose their value, the demand for trades and competencies will change and competition will intensify on traditional and on emerging markets," Putin said. "Actually we already see attempts now to reserve and monopolize the benefit from new generation technologies," the head of state added.

Control over chains of cooperation for technology benefits maximization is rather tough, Putin said. In our time it is impossible to restrain technologies for a long time, the president said. "Such attempts may result in closing the fundamental science sphere currently open for exchange of knowledge and information on joint projects and dividing barriers will also appear there," Putin said.

According to Putin the current tense geopolitical situation is mainly related to economic challenges.

"The current geopolitical tensions are also related to the economic uncertainty, to the depletion of previous sources of growth to some extent," Putin pointed out.

"There are risks that it [the geopolitical tensions] may strengthen and even be artificially provoked," he added.

Large Eurasian partnership with EAEU, India, China, CIS countries

The Russian leader has also called to work on creation of a large Eurasian partnership involving the Eurasian Economic Union, India, China, the Commonwealth of Independent States and others.

"With our partners we believe that the Eurasian Economic Union may be one of the centers of formation of a broader integration path," Putin said, noting that this issue was discussed at the meeting of Heads of the EAEU in late May in Astana.

"We suggest considering creation of a large Eurasian partnership with the Eurasian Economic Union as well as countries that we already have a close relationship - China, India, Pakistan, Iran, and, of course, our CIS partners, and other interested countries and associations," Putin said.

"In June together with our Chinese counterparts we plan to give the official start of negotiations on the establishment of a comprehensive trade and economic partnership in Eurasia with the participation of the Eurasian Economic Union and China," he added. He hopes that "it will be one of the first steps of the formation of a large Eurasian Partnership". According to Putin, the realization of this ambitious project will be discussed, in particular, at the Easters Economic Forum, which will be held in Vladivostok in early September. In addition, the President noted that the "Big Eurasia project" will be opened for Europe as well.

Within the framework of a common Eurasian circuit, Putin said, "major technological problems, could be solved, new participants could be motivated and engaged in the process of technological development."

According to the President, for one thing, partner countries could simplify and unify regulations in the field of industry cooperation and investment, as well as phytosanitary, customs regulations, etc. "In the future we could gradually move to lowering and then abolishing tariff restrictions," Putin said. He suggested that this work "relies on a network of bilateral and multilateral trade agreements," taking into account different depths, paces, and levels of interaction, market exposure and readiness of national economies for such steps.

"All these agreements should be aimed at the future, create base for joint harmonious development based on efficient and equal cooperation," he added.

In general, speaking about integration within the EAEU, Putin recalled that in 2025 in the framework of this association, "a single market of energy and hydrocarbons will be created, as well as financial market." At the same time, more than 40 countries and international organizations expressed interest in creating free trade zone with the Eurasian Union, Putin said.

Putin has urged development of cooperation within flexible integration entities

During his address he said:

"Technological and economic tasks in the current situation have such scale and nature that we can develop effectively only by joining forces and building cooperative ties," he said.

The president stressed that such cooperation can be effectively built in the framework of flexible and open integration entities that encourage competition in scientific research, a variety of technical solutions that allow their members states to fully use their competence and potential.

Resumption of economic growth in Russia

The head of state hopes that Russia will soon be able to provide for resumption of economic growth.

"Russia was able to solve the most pressing current problems in the economy. We expect the resumption of growth in the near future," Putin said.

He also noted that it was possible to maintain reserves, and to significantly reduce the outflow of capital from the country. According to the president, comparing with 1Q 2015, the capital outflow declined five-fold.

According to the president inflation at 4-5% is achievable in the medium term.

The president considers it necessary to support export-oriented companies.

"The government is already taking efforts to support export. The Russian Export Center has been set up," he said, adding that another step is to "form a system of supporting export-oriented companies."

According to Putin, Russia’s import-substitution program is aimed at manufacturing products that may be competitive globally. "Import-substitution is an important stage of boosting non-energy export, integrating our companies in global production technological alliances as strong efficient partners rather than those playing supporting roles," he said.

New technology revolution

Putin suggests that companies investing in efficient technologies should obtain more access to financial resources.

"The legislation, tax regulations and technical standards will raise companies’ interest in enhancing labor efficiency and introducing labor-and energy-efficient technologies. Meanwhile the enterprises that are ready to address those tasks have to get a wide access to financial resources, including via mechanisms of development institutions," he said.

The technology potential is fairly significant in "digital and industrial technologies, robotic engineering, energy, biotechnologies, and healthcare," Putin said. "Discoveries in these areas may lead to a real technology revolution, explosive growth of labor productivity," the president said.

"It is already taking place and will take place definitely," Putin said. "Restructuring of complete branches is inevitable; many production facilities will lose their value, the demand for trades and competencies will change and competition will intensify on traditional and on emerging markets," he added.

 Vladimir Putin has instructed the government to speed up the removal of all barriers, which prevent the formation of future markets, envisaged by the National Technology Initiative (NTI)

"I am asking the government to speed up the removal of administrative, legal and other barriers that hinder the development of markets of the future," the president said.

SPIEF is important site for dialog

Vladimir Putin believes that the St. Petersburg Economic Forum has become an important site for a dialog and exchange of opinion.

"Today the forum has become an important site for meeting each other, having talks and exchanging opinion," Putin said.

In his opening remarks Putin recalled the early days of the forum and that St. Petersburg’s first mayor, Anatoly Sobchak was the forum’s brain-father.

Putin thanked the leaders of countries and heads of international organizations, as well as businessmen who have gathered for the forum. By tradition the forum has served as a club for discussing strategic issues, he remarked.

"Such a discussion is still more important today, when the world is undergoing a fundamental transformation deep change concern practically all spheres of life," he added.

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