Investments into Russia`s regions will add to economic growth – Dvorkovich, exclusive interview

Hello, I’m Laurent Brayard with the Voice of Russia, and I have several questions for you Mr. Dvorkovich. My first question is: Russia is revealing itself to the world. Thanks to the Olympic Games, the world has now learned about Sochi, in addition to Moscow and St. Petersburg. Today you represent in Paris Yekaterinburg’s bid to become the host city of the EXPO-2020. How can the capital of the region, located at the crossroads of Europe and Asia, draw the attention of the selectors?

You are right, as by hosting large-scale events, Russia opens all its regions to the world, not only Moscow, St.Pete or Sochi. The world saw the city of Vladivostok, which hosted this year’s APEC summit and in 2013 it will be Kazan, the venue for the World Universiade. In 2018, six Russian cities, with Yekaterinburg among them, will be hosting the World Cup. That makes a total of 12 Russian cities becoming known to the world. As for Yekaterinburg, it can be a very attractive candidate, as first of all, as you put it, it is located at the crossroads of Europe and Asia. Second, it is one of Russia’s leading research centers, it has plenty of colleges, students and researchers as well as hi-tech production technology implemented by large businesses in the region. The city also has a logistically perfect location, it’s a natural hub ensuring trade flow between Europe and Asia. Another crucial factor is business. If Yekaterinburg has business and rapid growth potential, then it has all chances to succeed.

We’re also interested in the plans of the Russian government on modernization of the region as a scientific, economic and industrial center of the 21st century. What is your vision of the development of Yekaterinburg in accordance with the EXPO-2020 motto - «Global Mind»?

We have three major directions. Number one is research and scientific development. The Ural State University is implementing an ambitious project which envisages the creation of a strong international research center at the University which will attract students both from the neighboring countries and overseas. This is already happening. We expect to see more international lecturers, researchers and professors at our college in the next five years which will make it one of the top schools.

Our second goal is logistics. Yekaterinburg is to become one of interregional hubs connecting European and Asian countries. This idea is a significant part of the Global Mind conception. And our third direction is industry. Yekaterinburg will see projects by global international companies, including those in plane making, namely the Boeing titanium production. There will also be energy and medical technology projects.

Speaking about the economy, it should be noted that Russia feels confident amid the crisis. Perhaps, not only can EXPO-2020 in Yekaterinburg introduce a not too well-known Russian region to the world, but also show the Russian model of economic development and an example of financial stability and well-being?

I think that arranging large-scale events like this inevitably helps to concentrate on priority investment targets, so we would be able to pull our resources together and develop those projects which will make for the region’s development and link it with other Russian regions. As for investments and infrastructure, they have the largest profit multiplier which will add to economic growth.

Russia is implementing the idea of a single Eurasian economic space. What is your opinion, is it possible to draw a parallel between the EurAsEC and the space generated by the Rome Treaty of March 25, 1957?

Of course, we are building up the Customs Union and an expanded Eurasian economic space. Our goal is the Eurasian Union based on universal principles which underlay the single customs space and

a barrier-free space with free movement of capital and services, a space with uniform standards and harmonized economic legislation. We are not inventing a bicycle but rest upon empirical global experience, including that of the EU. What makes the Eurasian Union so special? It is a project of a bigger scale which, if closely bound with the EU, will form a single economic space from the Atlantic to the Pacific. Thus, we are interested in creating the Eurasian Union and a single economic space with the EU. This is the major peculiarity of the current project.

Sounds like a lot of work. The crisis of the eurozone, obviously, has not had a significant effect on the situation in Russia. The ruble withstands the European shocks, and demonstrates stability. What mechanisms of Russia’s financial system made it possible to ensure this stability? Can the Russian ruble become a reserve currency? Is it possible to imagine that in the future the Customs Union will have a single currency?

First of all, in our opinion this is not the crisis of the euro but a debt crisis of European banks while the euro is a stable and attractive currency. And we are happy with this fact as it provides for a reliable cooperation with the EU and allows diversifying risks. The ruble has really strengthened recently mainly due to Russia’s conservative budgetary policy and tough regulations of the banking system. Russia’s Central Bank acts as an independent financial and monetary policy regulator. Its actions are aimed at ensuring financial stability. Russia also succeeded in maintaining rather high economic growth pace – some 4% a year which boosts a demand in the Russian ruble despite the negative influence of a significant capital outflow. What we need in the future is to improve our investment climate to make the ruble attractive not only for those living in Russia but also for foreign investors. This is a complicated but possible mission. The International Financial Center project, privatization of large companies, development of trade in energy stocks – all these factors can make the ruble one of the regional reserve currencies. I don’t know whether the Customs or the Eurasian Unions would have a currency of their own. This measure has been much discussed as it has both advantages and risks. I think that time will show. The matter hasn’t so far been decided.

Laurent Brayard

Voice of Russia