Russian G20 Sherpa talks to TASS about summit in Hamburg, digital economy, hacker attacks

— There is one week left to go before the G20 summit in Hamburg begins. Sherpas have the last round of meetings on their schedules. Do you have time to finish up your work?

These are the last days before the final document is approved - the process will last for 3 days and nights, as it usually happens, and will result in the final communique of the leaders and probably a separate statement on counterterrorism efforts. However, we cannot rule out that German Chancellor Angela Merkel may want to contribute to the document during the summit.

— What will the summit in Hamburg be like? Will it be a traditional format or are there any new concepts?

Traditionally, the leaders' meetings are held behind closed doors. Reporters attend only the speech by the summit’s chairperson. The summit’s official opening is scheduled for around noon on July 7. The first session will traditionally be devoted to the issues of global economic growth.

However, this year an unusual format will be introduced. A separate meeting will be held even before the opening ceremony. This will be an informal discussion where only the G20 leaders will take part, without invited countries and the heads of international organizations. The meeting will be devoted to political issues - fighting terrorism and organized crime, regional conflicts as well as other sensitive issues. This is the Chancellor's personal decision. She would like to start the summit with it, to discuss these issues in a closed-door format, and then move on to the usual G20 agenda.

— So, after all, has politics been dominating the economy?

It is certainly present at the leadership level. This is the third summit, starting with Antalya in 2015, where we see political issues, especially the fight against terrorism, included in the official program. However, this does not affect the regular work of the G20. Of course, we also discuss individual, primarily financial and economic aspects of certain political problems. Nevertheless, we can say that there is no full-fledged political discussion in the G20 at the working level, only at the leadership level.

— Politics nevertheless forms new working conditions for the G20. Brexit, the change of leadership in the United States and France, the upcoming elections in Germany - does this affect its work?

All these events were discussed in terms of possible economic consequences for the G20 commitments, including 2% growth of total GDP by 2018. This year, the revision of a number of decisions by the US administration is looming over everyone. This is one of the risks for further strengthening of economic growth, because development should be based on open, free markets. However, in general, the overall work of the G20 was not affected. The G20 does not change its priorities, the overall focus is on ensuring sustainable balanced economic growth and cooperation on financial topics.

— You mentioned the target for G20 countries to reach 2% GDP growth in 2018. Do you consider this goal achievable?

Each country’s growth strategy consists of some blocks of structural reforms – in the areas of trade and investment, macroeconomic policy, and employment. They are long-term measures that will yield results with deferred perspective. First, it is challenging to estimate them in numbers, and second, they may not provide an immediate effect right after adoption.

I think we still have a certain capacity. We can be close to reaching the goal at hand in time. And further on, I am sure, it will only deepen, and we will see the effect of the decisions taken over time. Probably, it will drive our total GDP up even more than 2%. As far as I understand, November 2018 is the deadline, which means we have ample time.

— The Chinese President Xi Jinping, who hosted last year’s summit, listed the decisions to thwart tax evasion and tackle corruption among the key upshots of the leaders’ meeting in 2016. How is the German chairmanship promoting those priorities?

 I agree with the view that the tax issue is one of the most successful within G20, but let me remind you that it was first added to the agenda of the ‘Group of Twenty’ during Russia’s presidency in 2013. Back then, the Base Erosion and Profit Shifting (BEPS) Action Plan was adopted on countering tax base erosion and profit shifting. The ‘Group of Twenty’ proceeds with this work together with the OECD. And we consider it one of the G20’s most significant achievements.

This year the work continues. In particular, the ‘Group of Twenty’ discussed approaches to the so-called non-cooperative jurisdictions that are not ready to share tax information and follow base recommendations in this area. The success of those actions depends on how many countries outside the G20 join the Action Plan. This process is underway, and the ‘Group of Twenty’ has made substantial progress in this direction, including this year.

The efforts to tackle corruption also continue. Currently, one of the issues being hashed over, is the responsibility, particularly of legal entities, for corruption. The German chairmanship has also taken up one of the initiatives that had been promoted during Russia’s presidency, on fighting corruption in sports. 

I will add here one aspect – countering the illegal trafficking of wild flora and fauna species. This is a very sensitive issue for Russia. Unfortunately, we still witness a lot of wrongdoing in this area, and it is hardly possible to solve those problems without major international cooperation that the G20 has entered into.

— The digitalization of the economy is one of the top priorities for the G20…

Speaking about Russian priorities within the G20, I would place the development of digital economy at first place. This is a top priority on our domestic agenda now, this is critical for boosting our competitiveness over the next few years and for laying the groundwork for developing new sectors of the economy, and for economic growth. The Russian Federation is getting prepared to adopt a new plan for the digital economy field. In this respect, we are extremely interested in discussing the topic within the ‘Group of Twenty’ platform.

Last year, the issue was first raised as a new element, as an understanding of the fact that we live in an entirely different digital world. Discussions within G20 have demonstrated the lack of an equal understanding of what we mean by a digital economy. Questions touching on regulation, personal data protection, defending consumer rights have surfaced. We all are participants in digital interaction, though not just on a national level – I am not only talking about Russia, but about other countries as well. On an international scale, not only are common rules of the game lacking, but so is the protection of consumers in the new digital space. Also, the issues of digital literacy are related to this, as this new environment requires new approaches to education. All this will be set into the final communique. The leaders’ discussion also implies that a separate session devoted to the digital economy’s issues will be held.

— How does Russia find itself when compared to other countries in terms of digitalization?

Definitely as one of the leaders! Our indicators of Internet access are among the highest. Around 70% of households have access to broadband internet, although in rural areas this figure is slightly lower – around 60%. Our particular fields have most up-to-date technologies. Have a look at the websites of many Russian banks – they are much more convenient than the websites of well-established global leaders! On the whole, Russia’s IT sector is considered to be one of the most successful throughout the globe. That is why not only are we listeners, but we are also an active participant of this discussion within the “Group of Twenty.”

— Is the e-commerce taxation issue under consideration by the G20?

So far the issue has not been discussed. Before we deal with taxation issues, we need to reach general agreements on regulation guidelines. But so far, there are no common approaches to this. It is necessary to understand who interacts in this environment, under what rules, how to protect their information, how to provide access to the data. Meaning there is an open field for work so far. But this is a very interesting and promising area.

— This area concerns new threats such as hacker attacks, cyber terrorism. Does the G20 discuss these topics?

Of course! When discussing the digital economy, it is impossible to avoid this topic. The UN is the main site for developing general principles for responsible conduct in this area. Countries of the “Group of Twenty” have different approaches towards control over the Internet, and the state’s role in this process. But until recently, we had managed to reach a compromise. No matter how the views of various countries differ on any issue, when we manage, (even by making concessions or meeting our colleagues halfway), to hammer out a single solution this is where the main power, the sense of the G20’s work is - when leading global economies reach a consensus. Information security aspects will be discussed and this will be reflected in the final communique. Let’s see how detailed their presentation in the final document will be.

— How do tackling employment issues correspond with development of a digital economy?

 You have mentioned a very relevant point. In the G20 we deal with the digital economy rather in terms of employment because technological shifts are one of the global factors that influence today’s labor market. Solving the problem of developing new skills and reducing the gap in digital literacy remain key elements that allow economies to retain jobs and help people adjust to new situation in their lives. This year, the G20 paid serious attention to the gender gap in digital skills. It may seem strange, but for a number of G20 countries this is a serious problem.

In Russia, we should speak about a generation gap. Young people are complete ‘experts’ in using gadgets, they deal with digital technologies better than professionals. But the older generation feels uncomfortable with the latest hi-tech. The goal of both Russia and the G20 is to ensure that these people are able to find solutions for themselves in terms of employment and modern digital trends.

— What is the situation in Russia regarding gender equality?

In Russia, the situation is more or less fine. A very large number of women are working, which is related to the system inherited by Russia from the Soviet Union, including social security. The International Labor Organization (ILO) admitted that a social safety and social security net like Russia’s especially for working women, can hardly be found in other countries and that helps, of course.   

But there are problems here as well. That is why the discussion about gender equality, the role of women in the economy is also relevant for Russia. According to some statistical observations, there is a gap in wages for men and women in Russia. There is also some inequality in the representation of men and women in corporate governing bodies. Studies that were conducted in many countries show that a stronger role by women in economies will contribute to general economic growth.  In particular, this brings new and more stable aspect in labor teams, which makes it possible to turn out more effective results. That is why I am glad that you mentioned this aspect. This is the priority for Chancellor Merkel. This year even a special session at the summit in Hamburg will be dedicated to the role of women in the economy. For Russia this issue is quite relevant.

— Speaking about labor resources one cannot leave out migration. Is it still a pressing issue for Europe and in particular for Germany?

Migration is a serious issue on the agenda this year and this is a priority for Germany. At the summit, a special discussion will be devoted to this issue. Economically, migration brings advantages to economies because it allows countries to fill labor markets with a work force. But for Germany it is the aspect of forcefully displaced people and refugees, which is more sensitive. This issue is directly linked with conflict zones in the Middle East and North Africa and the G20 has also dealt with this topic.

For Russia it is crucially important to differentiate between two subjects – regular migration and forcefully displaced persons. It is important not to lay responsibility for this crisis on the refugees. We do not consider ourselves to be responsible for the political conflicts that sparked those flows of migrants in any measure. And economically we are ready and will work further with the G20 on this issue. It concerns the integration of migrants into the labor market, their economic adaptation, supporting them with social conditions, providing them with basic social conditions, ensuring their rights on the territories they enter. In this respect the G20 can seriously assist the UN in searching for mutually acceptable solutions. 

— One often links migration with terrorism. Will it be mentioned in the final communique or will the leaders of the G20 approve a separate statement?

It will definitely be there. The German chairmanship is considering an option of issuing a separate statement on this subject, probably in addition to the final communique. This will be finalized on the eve of the summit. The regular agenda of the G20 concerns the economic aspects of fighting terrorism, that is combating its financing. But, as I already said, at the leadership level there will be a wider political discussion.

— Let’s get back to the economy. The G20 has been fighting protectionism in global trade, but protectionism is still here to stay. 

That is a very accurate comment. At every summit of the G20 - and this one will be the twelfth one – the leaders make commitments to fighting protectionism and to promoting open markets but every following year reports by international delegations show that more protectionist measures and restrictions in trade are enacted.  

The 2008-2009 crisis that sent economic shock waves throughout the world impacted the global population’s living standards. Inequality has grown leaving people’s future uncertain in many countries, and this could be seen in these countries’ policies. Protectionism, disintegration and isolationism may probably be the simplest answer. However, as practice shows, as a matter of fact these measures become obstacles over time hindering further development of the industries they were demanded to protect.

Russia is aligned with all… with almost all G20 countries that open markets and trade liberalization are the main conditions for growth of economies. We expect that we will manage to find mutually acceptable solutions in Hamburg, particularly with the new US administration, which will make it possible to end up with practical agreements at the next WTO ministerial meeting in Buenos Aires next year and to give positive signals for achieving results at least on the blocks, where a tradeoff is possible. In the first instance for us, these are access to agricultural markets, domestic support and export competition, as well as anti-dumping issues, promoting investments and the development of online trade which are all new to the WTO agenda. We hope an agreement will be reached in this regard within the Group of 20.

We believe in general terms that even the position of the US administration that is upsetting everyone now will be curbed and reconsidered over time. They are currently revising the decisions they had made and they are gradually changing their attitude, and they will sooner or later – I hope that sooner – come to the understanding that restrictions, protectionism and barriers are not the way out. It is possible to develop on a united platform and on the basis of generally understood common rules in the modern global world, where our interaction is at times more intensive. Certainly, these are WTO norms and rules in the trade sphere. 

 — On the one hand, the struggle to lift sanctions is underway, while on the other hand, more sanctions are introduced…

The sanctions are of a purely political scope that has never been discussed at the summit of the Group of 20. Neither politically sensitive time nor the sanctions have affected the work of the Group of 20. Yes, all leaders are probably slightly economical with the truth when discussing some domestic political topics beneficial for them and accordingly behave slightly more aggressive towards other countries. However, when the need to reach common agreements on the G20’s floor is on the agenda, everyone shows unity in this aspect and understands there is a need to work in concert, without alluding to political preferences.

— You mentioned recent the US administration is revising a series of decisions made by its predecessors. Washington’s withdrawal from the Paris climate accord was one of them. Has it complicated the G20’s activities on climate matters?

I think it was a very unpleasant decision for all G20 countries, and for the whole world. This is because common efforts on combating climate change cannot go on without the involvement of the US, one of the largest greenhouse gases emitters. However, this has not affected the readiness of other countries to proceed with efforts and their decisiveness in implementing the Paris agreements. This is true for Russia. We are not going to revise our commitments within the Paris Agreement framework or to withdraw from it in any fashion. We are methodically working on drawing up the roadmap for its implementation on the UN floor and developing a strategy in this regard on a national level. Moreover, we expect that we will ratify this agreement in the first quarter of 2019.

Very serious discussions will take place at the summit in Hamburg. I’ll reveal a secret to you: talks on the final document are currently underway but we have not even seen a draft document on the climate topic. That is, the German presidency is carrying on attempts to probably find some tradeoffs with the US. We hope the final communique will nevertheless contain the shared opinion of all countries on fighting climate change.

— What is your outlook for the upcoming summit on July 7-8?

 It will definitely be outstanding and highly successful. Further to the final communique, there are many documents containing agreements on various areas of the G20’s activities – in the financial sphere, in the same digital economy, and in the labor sphere. All of them will promote the strengthening of economic growth of our countries and an improvement in the public’s living standards. Therefore, we highly appreciate the German presidency for such intensive efforts this year and look forward to the Hamburg summit.