Vladimir Putin made a speech at the plenary session of the St Petersburg International Economic Forum.
Also took part in the SPIEF session are President of China Xi Jinping, President of Bulgaria Rumen Radev, Prime Minister of Armenia Nikol Pashinyan, Prime Minister of Slovakia Peter Pellegrini and UN Secretary-General Antonio Guterres. The discussion is moderated by journalist, RT TV Channel presenter Sophie Shevardnadze.
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Sophie Shevardnadze (retranslated): Hello, everyone,
I am Sophie Shevardnadze. I am very glad to be able to moderate today's plenary session, because the St Petersburg Forum is a unique platform that brings together businessmen, officials and leaders whose paths would never otherwise have crossed, anywhere in the world. We meet each year to figure out how to move the world forward.
I had the opportunity to talk with our speakers shortly before the start. I think they are committed to having a candid conversation. In any case, I very much hope that we will have one today.
And now, the traditional speeches by heads of state. Mr President, you are first.
President of Russia Vladimir Putin: Good afternoon, friends and colleagues, ladies and gentlemen.
I am happy to welcome to Russia all heads of state and government, all participants in the St Petersburg International Economic Forum. We are grateful to our guests for their attention and friendly attitude to Russia and their willingness for joint work and business cooperation that always rests, as business leaders know well, on pragmatism, understanding of mutual interests and, of course, trust in each other, frankness and clear-cut positions.
I would like to take advantage of the SPIEF venue to tell you not only about the goals and tasks that we in Russia have set for ourselves but also about our views on the state of the global economic system. For us this is not an abstract conversation, nor an academic discussion. Russia's development, simply by virtue of its size, history, culture, the human potential and economic opportunities cannot take place outside the global context, without the correlation of the domestic, national and global agendas.
So, what is the state of affairs today or at least how do we in Russia see it?
Technically, global economic growth, and I hope we will mostly talk about that since this is an economic forum, has been positive in the recent period. In 2011-2017, the global economy grew by an annual average of 2.8 percent. In recent years, the relevant figure was a bit over three percent. However, we believe, and countries' leaders and all of us must frankly admit that regrettably, despite this growth, the existing model of economic relations is still in crisis and this crisis is of a comprehensive nature. Problems in this respect have been piling up throughout the past few decades. They are more serious and larger than it seemed before.
The architecture of the global economy has changed dramatically since the Cold War as new markets were becoming part of the globalisation process. The dominant model of development based on the Western "liberal" tradition, let us call it Euro-Atlantic for the sake of argument, began to claim not just a global, but also a universal role.
International trade was the main driver behind the current globalisation model. From 1991 to 2007, it grew more than twice as fast as global GDP. This can be accounted for by the newly opened markets of the former Soviet Union and Eastern Europe, and goods pouring into these markets. However, this period turned out to be relatively short-lived by historical standards.
The global crisis of 2008-2009 ensued. It not only exacerbated and revealed imbalances and disproportions, but also showed that global growth mechanisms were beginning to fail. Of course, the international community learned its lesson. However, truth be told, there was not enough will or, perhaps, courage, to sort things out and draw the corresponding conclusions. A simplified approach prevailed whereby the global development model was allegedly quite good and, essentially, nothing needed to be changed since it was enough to eliminate the symptoms and coordinate some rules and institutions in the global economy and finance, and then everything would turn out just fine. There were many hopes and positive expectations back then, but they quickly vanished. Quantitative easing and other measures failed to resolve the problems and only pushed them into the future. I am aware that quantitative easing was discussed at this and other forums. We at the Government and the Presidential Executive Office never stop discussing and debating these matters.
I will now cite data from the World Bank and the IMF. Before the crisis of 2008-2009, the global trade in goods and services to global GDP ratio was constantly growing, but then the trend reversed. It is a fact, there is no such growth anymore. The global trade to global GDP ratio of 2008 has never been recovered. In fact, global trade ceased to be the unconditional driver behind the global economy. The new engine represented by state-of-the-art technology is still being fine-tuned and not operating at full capacity. Moreover, the global economy has entered a period of trade wars and mounting direct or covert protectionism.
What are the sources of the crisis in international economic relations? What undermines trust between the world economic players? I think the main reason is that the model of globalisation offered in the late 20th century is increasingly at odds with the rapidly emerging new economic reality.
In the past three decades, the share of advanced countries in the global GDP in purchasing power parity decreased from 58 to 40 percent. In the G7 it dropped from 46 to 30 percent, whereas the weight of the countries with developing markets is growing. Such rapid development of new economies that, apart from their interests, have their own development platforms and views on globalisation and regional integration processes does not correlate well with the ideas that seemed immutable relatively recently.
The previous patterns essentially put the Western countries into an exclusive position and we should be straight about this. These patterns gave them an advantage and an enormous rent, thereby predetermining their leadership. Other countries simply had to follow in their wake. Of course, much happened and is still happening to the accompaniment of talk about equality. I will speak about this as well. And when this comfortable, familiar system began to grow rickety and competition grew, ambitions and a striving to preserve one's domination at all costs surged. Under the circumstances, the states that previously preached the principles of free trade and honest and open competition began to talk in terms of trade wars and sanctions, and resorted to undisguised economic raids with arms twisting, intimidation and the removal of rivals by so-called non-market methods.
Look, there are many examples of this. I will only mention those that concern us directly and that are common knowledge. Take, for example, the construction of the Nord Stream 2 gas pipeline. I saw in the hall our partners who work with it professionally, not only Russians but also our friends from Europe. This project is designed to enhance energy security in Europe and create new jobs. It fully meets the national interests of all participants, both European and Russian. If it did not meet these interests, we would have never seen our European partners in it. Who could force them into this project? They came because they were interested in it.
But this does not match the logic and interests of those who became used to exclusiveness and anything-goes behavior in the framework of the existing universalist model. They are used to letting others pay their bills; therefore, endless attempts to torpedo this project are made. It is alarming that this destructive practice has not only affected traditional energy, raw materials and commodity markets but it has also leaked into new industries that are now taking shape. Take the situation with Huawei. Attempts are being made not just to challenge it on the global market but to actually restrict it in an off-handed manner. Some circles already call this "the first technological war" to break out in the digital era.
It would appear that rapid digital transformation and technologies that are quickly changing industries, markets and professions, are designed to expand the horizons for anyone who is willing and open to change. Unfortunately, here too barriers are being built and direct bans on high-tech asset purchases are being imposed. It has come to the point where even the number of foreign students for certain specialties is limited. Frankly, I find it hard to wrap my mind around this fact. Nevertheless, this is all happening in reality. Surprising, but true.
Monopoly is invariably about concentrating revenue in the hands of a few at the expense of everyone else. In this sense, attempts to monopolise an innovation-driven technology wave and to limit access to its fruits take the problems of global inequality between countries and regions and within states to a whole new level. This, as we all know, is the main source of instability. It is not just about the level of income or financial inequality, but fundamental differences in opportunities for people.
In essence, an attempt is being made to build two worlds, the gap between which is constantly widening. In this situation, certain people have access to the most advanced systems of education and healthcare and modern technology, while others have few prospects or even chances to break out of poverty, with some people balancing on the verge of survival.
Today, more than 800 million people around the world do not have basic access to drinking water, and about 11 percent of the world's population is undernourished. A system based on ever-increasing injustice will never be stable or balanced.
Exacerbating environmental and climatic challenges that represent a direct threat to the socioeconomic well-being of all humankind are making the crisis even worse. Climate and the environment have become an objective factor in global development and a problem fraught with large-scale shocks, including another uncontrolled surge in migration, more instability and undermined security in key regions of the planet. At the same time, there is a high risk that instead of joint efforts to address environmental and climate issues, we will run into attempts to use this issue for unfair competition.
Ladies and gentlemen,
Today we are facing two extremes, two possible scenarios for further development. The first is the degeneration of the universalist globalisation model and its turning into a parody, a caricature of itself, where common international rules are replaced with the laws, administrative and judicial mechanisms of one country or a group of influential states. I state with regret that this is what the US is doing today when it extends its jurisdiction to the entire world. Incidentally, I spoke about this 12 years ago. Such a model not only contradicts the logic of normal interstate communication and the shaping realities of a complicated multipolar world but, most importantly, it does not meet the goals of the future.
The second scenario is a fragmentation of the global economic space by a policy of completely unlimited economic egoism and a forced breakdown. But this is the road to endless conflict, trade wars and maybe not just trade wars. Figuratively, this is the road to the ultimate fight of all against all.
So what is the solution? I am referring to a real solution rather than utopian or ephemeral one. Obviously, new agreements will be needed for drafting a more stable and fair development model. These agreements should not only be written clearly but should also be observed by all participants. However, I am convinced that talk about an economic world order like this will remain wishful thinking unless we return to the centre of the discussion, that is, notions like sovereignty, the unconditional right of every country to its own development road and, let me add, responsibility for universal sustainable development, not just for one's own development.
What should be the subject of discussion in terms of regulating such agreements and such a common legal environment? Certainly not the imposition of a single and the only correct canon for all countries, but above all, the harmonisation of national economic interests, principles of teamwork, competition and cooperation between countries with their own individual development models, peculiarities and interests. The drafting of such principles should be carried out with maximum openness and in the most democratic manner.
It is on this foundation that the system of world trade should be adapted to current realities and the efficiency of the World Trade Organisation enhanced. Other international institutions should be filled with new meaning and content rather than broken. It is necessary to sincerely consider, rather than just talk about the requirements and interests of the developing nations, including those that are upgrading their industry, agriculture and social services. This is what equal conditions for development is all about.
Incidentally, we suggest considering the creation of an open, accessible data bank with the best practices and development projects. Russia is ready to publish its successful case studies in the social, demographic and economic areas on an information platform, and invites other countries and international organisations to join this initiative.
With regard to finance, the main global institutions were created as part of the Bretton Woods system 75 years ago. The Jamaican currency system that replaced it in the 1970s confirmed the preference of the US dollar but, in fact, failed to resolve the key problems, primarily, the balance of currency relations and trade exchanges. New economic centres have appeared since then, the role of regional currencies has increased, and the balance of forces and interests has changed. Clearly, in the wake of these profound changes, international financial organisations need to adapt and reconsider the role of the dollar, which, as a global reserve currency, has now become an instrument of pressure exerted by the issuing country on the rest of the world.
Incidentally, I believe the US financial authorities and political centres are making a big mistake as they are undermining their own competitive edge that appeared after the creation of the Bretton Woods system. Confidence in the dollar is simply plummeting.
The technological development agenda must unite countries and people, not divide them. For this, we need fair parameters for interaction in key areas such as high-tech services, education, technology transfer, innovative digital economy branches and the global information space. Yes, building such a harmonious system is certainly challenging, but this is the best recipe for restoring mutual trust, as we have no alternative.
We need to join our efforts, being fully cognizant of the scale of the new era's global challenges and our responsibility for the future. To do so, we need to use the potential of the UN, which is a unique organisation in terms of representation. We should strengthen its economic institutions and use new associations like the Group of 20 more effectively. Pending the creation of a set of rules like this, we need to act in accordance with the current situation and actual problems and have a realistic understanding of what is happening in the world.
As a first step, we propose, speaking diplomatically, to conduct a kind of demilitarisation of the key areas of the global economy and trade, namely, to make the distribution of essential items such as medicines and medical equipment immune to trade and sanctions wars. (Applause.) Thank you very much for your understanding. That also includes utilities and energy, which help reduce the impact on the environment and climate. This, as you understand, concerns areas that are crucial for the life and health of millions, one might even say, billions of people, our entire planet.
The current global trends show that a country's role, its sovereignty and place in the modern system of reference are determined by several key factors. They are undoubtedly the ability to ensure the safety of its citizens, to preserve its national identity and also to contribute to the progress of world culture. And there are at least three more factors that, in our opinion, are of key significance. Let me expand on that.
The first factor is a person's wellbeing and prosperity, opportunities to discover their talents.
The second factor is the society's and state's receptiveness to sweeping technological change.
And the third factor is freedom of entrepreneurial initiative. Let me start with the first item.
Russia's GDP per capita at purchasing power parity is about $30,000. South and Eastern European countries are at the same level today. Our priority for the coming years is not only to become one of the world's top five economies. It is ultimately not a goal in itself but a vehicle; we have to reach and stay at the average European level in all major parameters reflecting the quality of life and people's wellbeing. Given this, we have identified national goals on the growth of the economy and people's incomes, decreasing poverty, increasing life expectancy, improving education and healthcare, and preserving the environment. The national projects we are implementing are designed to address these tasks.
The second field is accelerated technological development. It offers truly colossal opportunities. Our priority is to be among the front-runners, those who use these technologies and convert them into a real breakthrough. Thus, according to experts, the introduction of artificial intelligence will add 1.2 percent annual growth to the global GDP. It is twice as much as the impact from the global IT growth in the early 21st century. The world market of goods with AI will increase almost 17-fold by 2024 to total around half a trillion dollars.
Just like other leading nations, Russia has drafted a national strategy for developing AI technologies. It was designed by the Government along with domestic hi-tech companies. An executive order launching this strategy will be signed shortly. A detailed, step-by-step road map is incorporated in the Digital Economy national programme.
Russia has capable research potential, and a good starting point for designing the most advanced technological solutions. And this refers not only to AI, but also to other groups of the so called end-to-end technologies. In this connection, I propose to our state companies and the leading Russian private companies to partner with the state in promoting end-to-end research and technologies. These include, as I said, artificial intelligence and other digital technologies. These are, of course, new materials, genome technologies for medicine, agriculture and industry, as well as portable sources of energy, technologies for energy transfer and storage.
The practical results of such a partnership should be the production and promotion of successful breakthrough products and services both in the domestic and foreign markets. This is an opportunity for the state to build its powerful sovereign potential, and for companies - a chance to enter a new technological era. We discussed all these issues at a special meeting in Moscow just a week ago. Following the meeting, respective agreements will be signed shortly with Sberbank, Rostec, Rosatom, Russian Railways and Rostelecom. A package of corresponding documents has already been prepared. I ask our leading fuel and energy companies - Gazprom, Rosneft, Rosseti, Transneft - to join this work, this large-scale project. I give the Government a directive to manage this effort.
How will the state and large companies cooperate? Under the partnership agreement, the companies invest in research and development, they invest in competence centres, start-up support, training personnel in research, management and engineering and in attracting foreign specialists. The state, in turn, will provide financial and tax incentives, generate demand for domestic hi-tech products, including through government procurement, that is, it will guarantee a market. We will keep working on this. Our Chinese friends may also buy a bit more of our new products.
We need to fine-tune the system of technical standards, and even introduce a sort of experimental legal framework. An adequate and flexible legal environment is a key issue for new industries, and establishing it around the world brings new problems; there are many sensitive issues both for state security and for the interests of society and its people. But in order to achieve results, it is critically important to speed up the decision-making process, so I ask our colleagues from the Government, experts, and the business community to offer an effective mechanism for this.
New industries will require specialists with new skills. We are moving quickly to upgrade programmes and education content for this. As you may know, in August, Kazan will host the WorldSkills Championships, during which, at Russia's initiative, the first ever competition in the competences of the future will take place, including machine learning and big data, composite materials technology and quantum technologies. I wish every success to our team and the participants in the competition.
I would like to mention that we have created a new platform, Russia - An Ocean of Opportunity, to encourage personal and professional growth. It holds competitions, in which schoolchildren, young people and people of different ages from Russia and abroad can take part. A human resources project like this is unprecedented in scale. It drew over 1.6 million people in 2018 and 2019 alone. We are committed to promoting this system, to making it more effective and transparent, because the more daring and talented people engage in business, science and public and social administration, the greater success we will achieve in handling development issues and the more globally competitive our country will be.
The third factor in the country's competitiveness, which was mentioned earlier, is a favourable business environment. We are working on this consistently and will continue to work on it. Today, if we look at a number of services for businesses and the quality of the most in-demand administrative procedures, we are similar to, and in some cases even outperform, countries with strong and deep-rooted traditions of entrepreneurship.
Healthy competition between regions to attract entrepreneurs, investment and projects has been gaining momentum. The efficiency of management teams has increased a lot. A serious incentive for this change was the development of the National Investment Climate Rankings for the constituent regions of the Russian Federation. In keeping with an established tradition at the St Petersburg International Economic Forum, I would like to announce and congratulate the winners of the 2019 National Rankings. They are Moscow, Tatarstan, Tyumen and Kaluga regions and St Petersburg. (Applause.) I also applaud them.
As for the pace at which the investment climate is improving, the leaders are Yakutia, Primorye Territory, Samara Region, Crimea and North Ossetia, Perm Territory, Nizhny Novgorod Region, Udmurtia and Ivanovo and Novgorod regions. I would like to take this opportunity to ask the heads of the regions and the presidential envoys to these federal districts to step up their work to attract private capital to the national programmes and our other development projects, including through the Russian Direct Investment Fund and other modern and effective mechanisms.
As I mentioned, there are some positive changes in the business climate, notably, administrative procedures, but there are still urgent problems that worry business. First, we still have to deal with the archaic nature and obvious excesses of the oversight bodies, as well as the unjustified and sometimes simply illegal interference of law enforcement in the business environment, in the operation of companies.
This year we launched a deep and comprehensive reform of monitoring and oversight. It is the largest reform in the post-Soviet era. Starting January 1, 2021 the entire old, largely obsolete legal framework will cease to operate. It will be replaced by a clear-cut system of requirements: any duplication of government body authority should be eliminated, grounds for random inspections or audits restricted and a risk-based approach established.
The information service that is to be launched this year will make it possible to objectively compare information from oversight bodies on the one hand and entrepreneurs on the other. Any incongruities must result in a timely response.
As regards the relationship between business and law enforcement, the logic of our actions includes the further liberalisation of legislation, the strengthening of the guarantees and rights of ownership, the removal of even formal opportunities for abusing the law to exert pressure on business, and the constant cleansing of authority agencies and the judicial system of unscrupulous personnel. More transparency in the business environment is a major condition for the effectiveness of this work. This is also very important, colleagues. This year there will be a digital platform, a kind of a digital ombudsman that entrepreneurs will be able to use to report any illegal actions by representatives of law-enforcement agencies. I think such openness can become a guarantee of trust between the public, business and the state.
Overall, we must ensure the transformation of the government management system based on digital technology as soon as possible. The goal is to comprehensively upgrade the effectiveness of the performance of all government bodies, reduce the speed and improve the quality of decision-making. I would like to ask the Government to present a specific plan of action in this regard in cooperation with the regional governors. We have spoken about this many times.
Colleagues, Russia has repeatedly carried out large-scale projects of spatial development in its history. They have become symbols of deep and dynamic change in the country, in its forward progress. Such comprehensive projects are being implemented now in the South of Russia, the Far East and in the Arctic. Today we must think about the upsurge of the vast territories of central and eastern Siberia. We must draft, accurately calculate and coordinate a development plan. This macro region contains very rich natural resources, about a quarter of all forest reserves, over half of the coal reserves, substantial deposits of copper and nickel, and tremendous energy reserves, many of which have already been developed.
In addition, there are unique opportunities for agricultural development. There are over 300 sunny days in the Minusinsk Hollow area. This makes it possible to establish a new powerful agro-industrial complex there as well. Russian and foreign experts believe that up to several trillion rubles of investment can be attracted to this macro region, up to 3 trillion, provided, of course, that the government also invests in the development of infrastructure, the social sphere and housing. The development of areas in central and eastern Siberia, not as a raw materials base, but as a scientific and industrial centre should turn this region into a link between the European part of Russia and the Far East, between the markets of China, the Asia Pacific Region and Europe, including Eastern Europe, and attract a fresh, well-trained workforce.
I would like to ask the Government to draft the necessary programmes in cooperation with the expert community and the Russian Academy of Sciences and to report back to me in autumn.
Ladies and gentlemen, friends,
Today in Russia, we have embarked on implementing truly strategic long-term programmes, many of which are global in nature, without exaggeration. The speed and scale of today's changes in the world are unprecedented in history, and in the coming era, it is important for us to hear each other and pool our efforts for resolving common goals.
Russia is ready for these challenges and changes. We invite all of you to take part in this large-scale and equitable cooperation. I am grateful for your attention. Thank you.
Sophie Shevardnadze: Thank you, Mr President. You have identified very important issues, including the fact that the existing rules do not suit anyone in today's world. We will consider this at length during our discussions.
President Xi, your turn, please go ahead.
President of the People's Republic of China Xi Jinping (retranslated): President Putin, colleagues, guests, ladies and gentlemen, friends,
I am very pleased to attend the St Petersburg International Economic Forum at the invitation of President Putin. I want to sincerely thank President Putin and our Russian friends for the warm welcome and hospitality.
St Petersburg is Russia's sea capital and the internationally renowned crown jewel of the Baltic Sea. Thanks to three centuries of tradition and its rapid development, the city radiates the charm of classicism and the elegance of modernity. We have a lot of admiration for this.
Yesterday after lunch, President Putin and I had a boat trip along the Neva River. I was delighted by the interesting story he told me about the history and the culture of your country and this city.
"The city on the free Neva, the city of our labour glory..." the song that President Putin once played on the piano clearly demonstrates the special place that St Petersburg has in the heart of the Russian people.
Since its foundation in 1997, the St Petersburg International Economic Forum has never stopped expanding and strengthening and has become a unique platform for extensive discussions in the name of cooperation.
This year, the St Petersburg Forum is being held under the following banner: we are setting the agenda for sustainable development which meets the general concerns of the international community and is of great importance.
The modern world is undergoing profound change, unparalleled in centuries. The growth rates in emerging and developing economies are unprecedentedly high.
The unprecedented growth rates and the intense competition are unfolding amid a new round of scientific and technological revolution and industrial transformation. The global governance systems and processes have become disproportionate and dysfunctional as never before.
In a changing world, joint efforts and mutually beneficial cooperation is the correct path to follow for all countries without exception.
Globally, sustainable development is, perhaps, the best common denominator of global cooperation. The UN agenda for sustainable development to 2030, in the spirit of harmonious coexistence between people and nature, which takes into account the needs of the current and future generations, provides a new vision for global development. It focuses on three main interrelated areas: economic growth, social development and the environment.
This year marks the 70th anniversary of the People's Republic of China. As the world's largest developing economy and a responsible global power, China is firmly adhering to its commitments in sustainable development and has won widespread recognition and respect for its successes.
China attaches particular importance to promoting international cooperation in sustainable development. This is corroborated by the Belt and Road initiative that I launched in 2013, which is designed to provide mutual benefits and universal development. This initiative is largely consonant with the UN agenda in the area of sustainable development to 2030 in terms of goals, principles and methodologies, and enjoys the support of the international community.
The Second Belt and Road Forum for International Cooperation was held successfully in Beijing in April. The participants agreed on the high-quality implementation of the Belt and Road initiative based on the principle of joint discussion, joint implementation and shared use. According to the concept of openness, environmental friendliness and integrity, cooperation will be carried out with high quality and for the benefit of the people and sustainable development.
As we form the global network of interconnectedness and partnership, we will effectively couple the Belt and Road initiative with the sustainable development agenda, ensure harmony between the economy, society and the environment in the interest of green, low-carbon and sustainable development.
Of course, we cannot do without sincere, trustworthy and likeminded partners in international cooperation. Russia is not only our largest neighbour and a comprehensive strategic partner, but also one of the most important and most prioritised partners in all areas of cooperation.
In the spirit of sustainable development, our countries are actively cooperating in renewable energy, and consider scientific and technical innovation, the digital economy and electronic commerce as drivers in new cooperation. They also enjoy fruitful cooperation in the protection of cross-border resources and in managing cross-border nature reserves.
Mr Putin and I agreed on certain aspects of integration in the Belt and Road initiative and the EAEU. At the same time, the initiative to jointly implement the Belt and Road project is compliant with Mr Putin's idea of a major Eurasia-wide partnership. They can complement each other, which, in my opinion, will boost regional economic integration in the interests of common sustainable development.
Ladies and gentlemen, friends,
Sustainable development is not just a natural but also the inevitable result of the development of production capacity and technological progress.
Most of the world's countries strive to achieve this. As people say, where there is a will, there is a way. It is impossible to stop people from striving for a better life. We are ready, together with all of our partners, to turn statements into practical steps and to jointly turn a new page in sustainable development.
First, it is important, through joint efforts, to form an open and diversified global economy in the spirit of joint implementation and common use. China will gradually expand its openness, in particular, access to our market, and create a favourable business environment for fair competition. We will promote economic globalisation, as well as a multilateral trade system, and will make efforts to overcome irregularity and inequality in the development of the global economy.
We are determined to create mutually beneficial trade cooperation based on equality and mutual trust. We will strive to achieve synergy between the Belt and Road initiative and the UN agenda on sustainable development until 2030, as well as reveal the potential of the South-South Cooperation Assistance Fund, and the UN-China Peace and Development Fund, and to provide more opportunities for the developing countries. China is ready to share with all our partners its technological development and experience, in particular 5G technology, as well as to create additional key advantages and change the model of economic growth.
My second point is that we need to step up efforts to build a tolerant society of universal prosperity that puts the interests of a common person at the forefront. Improving people's wellbeing is the top priority of any state. China is continuing to work hard to eliminate poverty this year to completely move the rural population out of poverty by 2020. More than 11 million new jobs will have been created by the end of this year. Enormous efforts go into vocational training, volunteering and charity, as well as protecting the rights and interests of socially vulnerable groups.
We are willing to step up cooperation and exchange experience with all our partners in cutting poverty and improving social security so that the peoples in different countries live in prosperity and feel happy and protected.
My third point is that we need to adhere to the course of green development in the name of building a beautiful home where people and nature live in harmony. As the famous Russian writer Dostoevsky said, beauty will save the world. Preserving the beauty of nature for our grandchildren and great-grandchildren is the glorious mission of our generation.
China is by no means pursuing development at the expense of the environment. For us, green mountains and emerald waters are untold treasures for the sake of which we will conduct an uncompromising struggle, including the development of green industry, renewable energy sources, resource-saving technologies and circular economy.
In international cooperation, we will focus more on the environment and environmental activities. We are willing to jointly address current challenges in global climate change and biodiversity conservation, in particular, by way of proper implementation of the Paris Agreement.
Ladies and gentlemen, friends,
Peace and development remain the top priorities of our time. The fates of different nations are now closely interrelated as never before. The interests of all countries are unprecedentedly integrated, and the trend towards peace, development, cooperation and a win-win approach is irreversible.
At the same time, new problems and challenges are arising amid increasing anti-globalisation, hegemonism and power-based politics. Once again, humanity is at a crossroads. Sustainable development as the best way out of the current situation overlaps with the initiative to form humanity's single destiny community in terms of goals and values. They will serve as the common good for all of humankind and the world in general.
In conjunction with all other countries and guided by the sustainable development concept, China will work for the benefit of the common future of humankind, advance multilateralism, improve global governance systems, promote sustainable peace on the planet and open a bright and prosperous future hand in hand with other nations.
Sophie Shevardnadze: Thank you, President Xi.
President Radev, please.
President of Bulgaria Rumen Radev (retranslated): Ms Shevardnadze, Messieurs Presidents and Prime Ministers, Mr UN Secretary-General, ladies and gentlemen,
First of all, I would like to thank the organisers, primarily President Putin for his invitation and this opportunity to take part in this prestigious forum. It is a great honour for me to be next to President Xi Jinping. I am happy that as a committed advocate of multilateral diplomacy I will be able to discuss issues of sustainable development with UN Secretary-General Guterres and with the prime ministers of Slovakia and Armenia.
The St Petersburg forum has asserted itself as a venue for meetings on large economies with big politics, a platform for discussing key issues of global development today. The participation of the President of a 7-million strong Bulgaria, the prime ministers of Slovakia and Armenia next to the two global leaders is a very powerful message about the importance of one of the strongest ideas in sustainable development, notably, that this kind of development is made possible only through the contribution of all states.
For me, participation is an indication of the recognition of Bulgaria's ability to build bridges between different regions and cultures.
In the new millennium, sustainable development has moved to the top of the international agenda. In our time, some countries took advantage of globalisation whereas others lost. Our planet is being stifled by the super-exploitation of its riches and enormous trade traffic.
We are seeing an increase in population and a decrease in resources. In the digital era, free movement of capital without clear-cut rules generates risks for the most vulnerable societies, while overconsumption, which has turned into a symbol of personal economic success, has already become a threat to our common future.
The undermining of the international legal order and the transition to a polycentric world generate instability. The annual growth of defence spending is a clear sign that the security environment is not improving and that mistrust is increasing.
The pursuit of technological supremacy designed to achieve political supremacy isolates science in a narrow geographical framework, triggers scientific migration and widens the gap between states, which President Putin described in detail.
Uneven growth has turned many beliefs inside out and has given birth to a new world. Who could have imagined 20 years ago that China would be the primary champion of free trade while the US would push protectionism? Who could have claimed that Europe, which had been promoting a model of tolerance, would see neo-Nazi and nationalist movements rise up due to the pressures of social disparities and migration?
This is the reason I believe that sustainable development cannot be fulfilled solely by reaching a set of economic, social and environmental goals explicitly designed in the UN 2030 Agenda for Sustainable Development and enshrined in the European Union's major policies and programmes.
Coping with existing challenges requires a comprehensive approach with a wide range of tools - from political to cultural. A new supra-national outlook should be bred in the planet's residents, and while the young already possess it, we, the politicians, still cannot afford it since the world remains an arena of competition and conflicts between nations.
Nevertheless, nature is sending an imperative call to overcome the limitations of our own egotism. Our predecessors overcame their differences and established the post-war global order for the sake of peace. The UN was a key to this, and they displayed this wisdom at the onset of the Cold War.
We must do the same now; however, this time, it should be done for the survival of the planet and humankind. A new economic paradigm should offset the scarcity or lack of resources with human capability and genius. This paradigm should rely on knowledge, technology and innovation. I am confident that it should be a green economy rooted in the concept of open science, in a new consumer culture, in new manufacturing ethics that should be included in education curricula and economic strategies.
Sustainable development necessitates more effective global security mechanisms. They should help limit the use of unilateral actions and force and create privileged conditions for dialogue and multilateral diplomacy, which is under pressure, as well as prevent polarisation and radicalisation.
Sustainable development includes the prevention of financial crises, which implies a more accurate regulation of financial markets. Global consensus is needed to fight corruption, which has emerged as a cross-border phenomenon, money laundering and tax evasion, as well as on limiting the operation of offshore jurisdictions. I am confident that all political leaders are well aware of these problems, and in this regard, they must show one single will.
Sustainable development is impossible without security and social peace. Eliminating a massive famine is not enough for true stability. That is why migration waves are not subsiding, and the number of refugees is increasing. It is insecurity and poverty that lead people to emigrate and that fuel xenophobia and nationalist movements in their host countries. So we need an effective model that can provide for security and stability, investment in the economy, in education and healthcare in the countries of origin of these migration waves.
Sustainable development is impossible without sustainable trust. I will give this example. Seventy years ago, Bulgaria was the second country to recognise the People's Republic of China and establish diplomatic relations with it. Since then, relations between our peoples have been developing in a spirit of trust and friendship, despite the political environment. We could even say that because the first state that recognised China no longer exists, we could say Bulgaria was the first.
And that is why sustainable development is not only a political and economic challenge; it is a stage in the cultural maturation of humankind. It is based on mutual recognition and acceptance of national culture codes. Cultural differences have a major effect on the security environment. When they are not identified, recognised or accepted as something the other has a right to, they create distrust, risks to security, and consequently, to sustainable development. It is the lack of cultural communication that underlies the other's perception as an enemy.
I would like to quote an outstanding Bulgarian revolutionary Gotse Delchev, who said more than 120 years ago: "I understand the world solely as a field for cultural competition among the peoples."
I am quoting this for a reason, because my country is proud of its contribution to the treasury of world culture. A prominent citizen of St Petersburg, Professor Dmitry Likhachov, called my homeland a country of spirit, because Russia inherited its writing script from Bulgaria. Both Christian religion and Old Bulgarian Slavonic language spread to Russia from our land. Many millennia later, in 1878, Bulgaria gained its freedom through Russia, for which thousands of Russian soldiers gave their lives. We Bulgarians never forget this. It is an example of how strong cultural ties can withstand historical trials and tribulations.
I remember another world-famous citizen of St Petersburg - maestro Valery Gergiev, whom I have the privilege to know personally. From Beijing through Brussels to Washington, he asserts the power of culture, which sweeps away borders, proving that the eternal power of art is above any divisiveness.
During his last concert in Sofia, the Mariinsky Theatre Orchestra gradually softened its sound to pianissimo. Quieter and quieter, until the sounds in the crowded room had completely subsided, and the audience not only listened, but absorbed every sound, as if for the first time we heard the quiet but distinct voice of each of the 150 instruments, all at the same time. After the concert, I asked the maestro: "How is this possible? How could we hear and understand the quiet part of the performance better than the louder parts?" He answered: "Force is important. But melody and harmony are far more important."
It may be time for us politicians to cut the decibels, because we are still far from the harmony that the citizens of the world expect from us; but this is a good time for us to start listening to each other. I think the number of people aspiring to act like the conductor of the world orchestra is constantly growing, but each of them comes with their own music score, often without even having greeted the orchestra.
If we want to achieve the sustainable development of mankind, we need to write and establish clear rules for a five-line staff and the notes themselves, and should write the music together, taking into account the specifics of each individual instrument in the orchestra. I think the platform for such work is the United Nations. Until we begin to respect this organisation, use its powerful potential, strengthen its means and mechanisms, we will not be able to produce a melody - only fragmentation, tension and conflicts.
I wish this forum success, more harmony and the achievement of the goals set forth in the UN 2030 Agenda.
Sophie Shevardnadze: Thank you very much, President Radev.
Rumen Radev: May I take a minute, please?
I am tempted to take advantage of this great forum and to address the world business at the forum. I highly encourage you to come and invest in Bulgaria. I will use just one single example, and this example is the German-Bulgarian economic cooperation. Twenty years ago we started from ground zero. There was nothing. Now we have thousands of German companies operating in Bulgaria and growing and expanding in Bulgaria. Last year we scored 8.3 billion euro trade turnover. We exported products for 4.3 billion euro to Germany. However, this is not food and wine, as many could expect. We produce in Bulgaria and export to Germany high added value products: electronics, machinery, sophisticated and complex systems and components for all types of German cars. Our capital Sofia is in top ten worldwide for start-up companies and IT development. So, take your chance. Thank you.
Sophie Shevardnadze: Thank you very much. During our discussion you will be able to speak more on why business should invest in Bulgaria. Thank you for your wonderful speech.
Mr Pashinyan, you are next, please.
Prime Minister of Armenia Nikol Pashinyan (retranslated): President Putin, President Xi Jinping, President Radev, Prime Minister Pellegrini, Secretary-General Guterres, Ms Shevardnadze,
I will start with traditional words of gratitude for holding this meeting, for a chance to share ideas on the paths of development for our country and the challenges our government faces in reaching these goals.
Today, Armenia is going through a vital period in its contemporary history. Radical changes are taking place in the country in terms of political stability and unprecedented levels of the legitimacy of the authorities. The ultimate goal is creating a competitive and technologically advanced economy and a modern society based on the universal principles of equality, justice and rule of law.
What is the essence of the changes? Briefly, they are aimed at raising the efficiency of our political, state and economic institutions.
Armenia is a land-locked country with limited economic and natural resources, and a difficult geographical situation from the point of view of logistics corridors and the geopolitical peculiarities of the region.
All these issues are in a way pushing us to constant activities to increase competitiveness and efficiency. What does that mean to us?
First, it means increasing the efficiency of the public administration system. I can say with confidence that we have already managed to achieve tangible results. The country has done away with systemic corruption and the activities of artificial monopolies and oligopolies have been brought to a minimum.
However, in the course of our efforts to improve the economic and political environment in our country, we faced a fundamental problem. The country's judicial authority, unlike the executive and legislative branches, where we see major progress and the optimisation of institutions, has not undergone any tangible transformation. As a result, there was a huge gap in public trust in the judiciary, and this in turn creates serious obstacles to the country's development as a whole.
All our efforts to protect capital and create equal conditions for economic activity and a favourable environment for attracting foreign investment will not bring about the desired result if the judiciary does not undergo a major transformation. Therefore, creating a truly independent judiciary, free from corruption and political influence, is a pressing problem for our society and a priority in the Armenian government's reform strategy.
The second point is making full use of the potential of foreign economic ties and participating in international integration projects. For countries such as Armenia, the institutionalisation of access to the centres of the global economy and activity is very important. This primarily concerns our cooperation with the Russian Federation and participation in the Eurasian Economic Union.
We are committed to further improvement of our strategic partnership with Russia and the most productive participation in the Union. For this purpose, we will make every effort to improve cooperation mechanisms and maximise the integration between the members of our association. This also applies to our CSTO membership.
I would like to emphasise our interest in expanding the geography of the EAEU's foreign economic relations. China is of particular importance in this sense. I am pleased to note that over the past month, our bilateral relations have been rapidly advancing with that country, which plays a key role in the global economy.
As a Eurasian Economic Union member we think it important to establish institutional interaction between different integration associations and projects. I believe the idea of aligning the EAEU and the Silk Road Economic Belt is a priority. The idea is quite logical and rational.
I also consider the policy of enhancing cooperation between the EAEU and the European Union promising. I think this cooperation is quite possible and even inevitable in the mid-term, if not in the immediate future.
Armenia has a treaty with the EU on comprehensive and enhanced partnership which we are set to make the best use of for designing and implementing our reforms. The EU partnership is in no way at variance with our Eurasian Economic Union membership; it supplements the enriching of our opportunities with new and comparable advantages.
Third is the maximum efficiency of the human resource potential of the country. Our major asset is people, and government activities pursue the creation of conditions for the free fulfilment of the creative, intellectual and business potential of our citizens. We are in fact determined to turn Armenia into a paradise for talented people.
We see Armenia's future in developing an innovation economy. There is no alternative for a country like Armenia.
The technology sector is among our priorities. In this context education gains special significance for us. Armenia inherited a good school of physics and mathematics from the Soviet era. Today we are doing everything we can to consolidate and apply this potential.
The IT sector has grown five-fold in Armenia in the past seven years. It has become a driver of the country's economic growth and its most promising industry. Education and innovation, cooperation and integration, the established rule of law and effective management - this is where we see our potential advantages that will allow us to fully utilise our resources and build conditions for sustainable economic development.
Honestly, I think we have already embarked on that road because the first quarter showed 7.1 percent GDP growth in Armenia. Economic activity increased by 9.2 percent in April. So, we also invite international business to invest in Armenia. We even have a slogan for potential investors - we invite them to Armenia to become richer and to make our country more prosperous.
Sophie Shevardnadze: Thank you, Prime Minister Pashinyan.
Prime Minister Pellegrini, please go ahead.
Prime Minister of the Slovak Republic Peter Pellegrini: Dear Mr President Putin, dear Mr President Xi Jinping, dear Mr President Radev, dear Mr Prime Minister Pashinyan, dear Secretary-General, excellences, ladies and gentlemen.
It is a privilege for me to join you today, in this discussion devoted to sustainable development goals. And I am very pleased that organisers opted for this topic, and my special thanks goes to President Putin for opening the gates of St Petersburg to world leaders and thinkers from all around the world. Thank you very much.
Three and a half years ago, the international community came together in even wider setting, and we committed to work together for humanity. The adoption of the 2030 Agenda and its 17 sustainable development goals was a remarkable success. We are here to understand it is a global reference framework for development worldwide, with a clear vision and benchmarks, taking into account the 4th Industrial Revolution, climate change, security threats. Never before we had a universal strategy ensuring coherence among economic, social and environmental policies, and this is the 2030 Agenda. We need everyone onboard. Sustainable development is our duty towards future generations.
Recent UN reports show urgent need for more progress. We have to understand that each one of us deals with the issues of sustainability on a daily basis. But the time is running out, and the chances of achieving some of our goals are already at risk.
So where are the leaks? From my perspective, there are two main issues. First, on financing. The 2030 Agenda draws our attention to a number of elements which are crucial for sustainability but tend to be overlooked. We need five to seven trillion US dollars of global investment annually, and that's between seven to ten percent of the global GDP. A year ago, at this place, Christine Lagarde said that we are seeing storms in the forecast. And she warned against the level and the burden of national and corporate debt, financial fragility which will result in significant capital outflows from emerging and low-income countries and the determination of some to rock the system that has presided over the trade relationships.
60% of global GDP is created in the private sector. So we cannot no more rely on public funding only, and make forecasts on financial fragility. I see public figures here, sitting next to business leaders, so let's talk on how to combine public and private resources in a meaningful way. The good news is that many businesses are willing to help out. But the bad news is, only 17% of the businesses have actually introduced any relevant plans or policies to materialise this support. So clearly, we really need to make some effort here.
Sustainability requires a framework for business planning and decision-making, too. There is a lack of experience of Slovak companies in the development business when compared to traditional donors, but we try. The 72nd UNGA presidency under Slovakia called for a better implementation; it was our idea to host a high level event dedicated to the topics of the FD SDG financing. Representatives of businesses, think tanks, investment banks and non-traditional donors came together to take stock of various initiatives and best practices in removing barriers to investment and development. You can find them assembled in the toolbox, an online repository of lessons learned on the website hosted by UNCTAD. It already contains more than 40 examples to learn from, and is constantly updated.
Which brings me directly to the second issue, to which I would like to draw your attention - namely, on communicating and networking. Unlike the millennium development goals, sustainable development goals apply to all, not only to developing countries. But it is not for the UN alone to deliver on them. We have to change our rhetoric when communicating SDGs. We have to find a common language that enables us to communicate across cultural and geographical boundaries. We need shared responsibility for the world, stressed Chancellor Angela Merkel at the Global Solution Summit in March this year. Also emphasised by President Macron: at a time when our collective system is falling apart, sadly, it is most in demand. And I could not agree more. Interdependence has to become a driver and not an obstacle. And we need to infuse this agenda and its spirit into all areas of our work. In Slovakia, we have taken the necessary steps to integrate the 2030 Agenda into our long-term national development framework. We are going even further by linking the SDGs to our national investment plan until 2030 which should boost the financing for sustainable development. But we need a vision of where we want to have our country and the whole European Union in eleven, in the next eleven, in the next ten, in the next twenty, thirty years. And we cannot implement all SDGs in all their height, width and length. We have therefore decided to define our national priorities for the implementation of the 2030 Agenda. And this was done in a broad stakeholder participation process, respecting the principles and values of an open government.
My country is indeed aiming at using our role, weight and leadership in international organisations to push the SDG agenda forward. As a current chair in office of the OSCE, we are determined to help foster peaceful, just and inclusive societies which are free from fear and violence in line with SDG 16. And I would like to say very clear and very loud: there can be no sustainable development without peace and no peace without sustainable development. And we support meaningful and comprehensive dialogue among states as well as with other partners at the national, regional and international levels.
Dear President Putin,
Last year, you called for a technological breakthrough and mentioned very importantly that we must be receptive to innovative ideas and technologies that make a difference in people's life and determine the future of the country and the world. These are your words, Mr President. In May 2019, Slovakia chaired the OECD Ministerial Council under the theme, Harnessing Digital Transition For Sustainable Development Opportunities and Challenges. And the mission is to use the potential of the new digitalisation era and to ensure it is for the benefit of all.
In my keynote speech to the OECD ministerial, I suggested that digital humanism needs to become the decisive philosophical orientation of the 21st century. Digital humanism means that human beings remain the central focus of the digital transformation, while digitalisation should be approached in its entirety and complexity for the improvement of people's life and the preservation of our planet. Digital humanism that seeks to enable people to achieve things they never believed possible, empowered by the use of technologies. And it is our job as policymakers that they do so while representing the law, ethics, fundamental freedoms, democratic principles and human rights.
Slovakia as an industrial country also has to cope with the situation of producing in a more and more virtual world. A decade ago - a utopia, in ten years - a reality. Just as companies have to learn how to do sustainable business, young people have to gain skills for living sustainable lifestyles. We have to bear in mind that more than 50 percent of the world population is under 30. Youth play the central role in development. They are actors of changes; youth is at the same time actors of environmental changes.
Ladies and gentlemen, the chances of achieving some of our goals are already at risk. We need action, and we need it now. And we need to stay united.
Thank you very much.
Sophie Shevardnadze: Thank you, Mr Pellegrini.
Mr Secretary-General, please go ahead.
UN Secretary-General Antonio Guterres: President Putin, heads of state and government, ladies and gentlemen, all protocol observed.
I am very pleased to be making my second visit to this prestigious forum as Secretary-General of the United Nations. And I thank President Putin and the people of the Russian Federation for hosting this dynamic gathering.
St Petersburg was home to many of the seminal events that marked the 20th century. And today, the St Petersburg Forum embodies the 21st century truth: global challenges require global solutions. No country and no organisation can do it alone. And we need political leaders, the business world, scientists, scholars, philanthropists and civil society to join hands in addressing shared threats and pursuing common opportunities. And that is why we are here.
For nearly 75 years, the arrangements established after the Second World War have saved lives, advanced economic progress, upheld human rights and prevented a third descent into global conflict and catastrophe. Yet, today international cooperation is under immense pressure, and the values of the United Nations Charter are being challenged and undercut.
Today I would like to highlight several imperatives on which the spirit of St Petersburg, the spirit of international cooperation, can help us prevail. First, building a fair globalisation that works for all. No one can doubt the many benefits of globalisation. More people have risen out of extreme poverty than ever before; more people are living longer and healthier lives. But the waves of prosperity and growth have not reached all, and there remains a vast backlog of despair. Hunger is again on the rise. Inequalities are stark, especially within countries. And levels of youth unemployment are in some parts of the world simply alarming. Discrimination against women remains pervasive, and signs of unease are everywhere we look. Growth is slowing down, and trade tensions are heating up. And financial markets become uncertain. Debt is rising, limiting what countries can do to achieve their goals and undermining their ability to act when the crises strike. We need a global economy that works for all and creates opportunities for all. And the 2030 Agenda for Sustainable Development points the way. The 17 Sustainable Development Goals are the world's agreed blueprint for building a safer, more equitable world and leaving no one behind. But we are not yet on track. And we know what works, and we have important gains to build on. And so I continue to call for more robust commitment to the world's agreed blueprint for a better future. Political support is crucial, but the business community has an absolutely vital role to play.
Second, we must address the global climate emergency. We are in a race against time, and we are losing the race. In fact, the reality is proving to be worse than scientists had foreseen. We are also coming to recognise how climate impacts are accelerating the drivers of conflict, for instance, in the Sahel, and even paving the way for expansion of terrorism and extremism in that region. Yet, as global warming speeds up, political will has sometimes slowed down. At the time when we know that technology is on our side, and when businesses and civil society are more and more engaged, this lack of political will could be tragic. We need a green economy, not a grey economy. We need a rapid and deep change in how to do business, how to generate power, how to build cities and how to feed the world. That means putting a price on carbon, ending subsidies to fossil fuels. And we need to recognise that this is a race we can win, but we have the tools to tackle the climate crisis. Climate action could also yield a direct economic gain in $26 trillion compared to business as usual through 2030, according to a recent economic analysis. And that is why I'm convening a Climate Action Summit at the United Nations in September to mobilise the ambition that can reap these gains. And I'm asking leaders to come not just with speeches, but with concrete plans and commitment, including on financing. And I'm asking that they do this not out of generosity, but out of enlightened self-interest. Climate change is the most important systemic risk the world faces at this time.
Ladies and gentlemen,
One of the primary roles of the United Nations is to look to the horizon and to identify emerging challenges and opportunities and bring people together to advance our collective well-being. It is in that spirit that next Monday, a high-level panel that I established last year, and this is co-chaired by Jack Ma of Ali Baba and Melinda Gates of the Gates Foundation, will issue its report on recommendations on the future of digital cooperation.
Technology continues to transform our world. From bioengineering to artificial intelligence to data analytics, and from education, health to e-governments and the green economy, digital technologies can turbocharge our work for the sustainable development goals. Yet, as much as technology is a vector of hope, it is also a source of fear.
We know there will be a massive disruption in the labour market - with an enormous amount of jobs both created and destroyed with artificial intelligence. And that is why we need a massive investment in education, but also a different sort of education, not just learning things, but learning how to learn and learning across the lifetime. And we also need a new generation of safety nets for effective social protection for the people negatively impacted.
Obviously, the risks go well beyond the labour market. We already see the crippling impact of cyberattacks as well as the threats to privacy and violations of human rights. And the internet is simultaneously a remarkable vehicle for connecting people and a weapon for dividing them through the spread of hate speech. And while the digital age is taking ever deeper root, nearly half of the world's population is still not online. Our shared challenge is to reduce digital inequality, to build digital capacity and ensure that new technologies are on our side and are a force for good.
Ladies and gentlemen,
A new global landscape is taking shape, even as age-old challenges remain. In today's world we live with a strange paradox: the challenges we face are global and can only be addressed globally. No country alone, no organisation alone can provide the solutions we need. But at the same time, multilateralism is under attack. Agreed norms are being eroded, and tensions are rising. We are threatened by global warming, but also by global political warming. They are both dangerous, but they are both avoidable.
It is true that we are slowly moving towards a multipolar world, and that is in itself a very positive evolution. But as history tells us, multipolarity alone does not guarantee peace. Europe was multipolar 100 years ago, but the multilateral framework for cooperation and problem-solving was not there, and the result was a catastrophic world war. It is vital that the world has multilateral institutions and architecture, and that international relations are based on international law.
At the same time, we need new forms of cooperation with other international and regional organisations, a networked multilateralism, and closer links with businesses, civil society and other stakeholders with an inclusive multilateralism. And this is the kind of international system we need in the 21st century. Our shared duty for the United Nations and all of you in this room is to show that we care and that international cooperation can deliver. And that is why I'm pursuing fundamental reforms of the UN, so that it can better serve the world and the people. It is why we have also launched the disarmament agenda, strengthened our response to terrorism and extremism, and will soon be launching a plan of action to combat hate speech. It is why we are fortifying peacekeeping, emphasising conflict prevention and pursuing a surge in diplomacy to resolve protracted conflicts that are causing enormous suffering and unsettling the world. And it is why I appeal to all of you to join with the United Nations and with each other to address the very dynamic problems we face at this time, and to build a better world we know can be ours.
We can also reflect more deeply on our direction as a human family when we mark next year the 75th anniversary of the United Nations and post-war cooperation at large. As a committed multilateralist, but also as an engineer fond of evidence and facts, I see no other way for our world than to address all the challenges together, with all those who can contribute working for the benefit of all.
Sophie Shevardnadze: Thank you very much, Mr Secretary- General.
Dear participants, I will try to arrange things in a way that will allow us to discuss the important issues that you have identified in your speeches. Some, such as climate change, even overlap.
Since this is an economic forum, with your permission, I would like to start with what I believe is the most important economic news, specifically, the tariff war between China and America.
President Xi, the first question is for you. The world's two largest economies, China and America, stand in opposition. At the same time, they are so intertwined and influence so much the global economy that it is completely unclear how to defend your own interests and not burn your own house down in the heat of the moment. We are aware of what kind of a negotiator and a "terrific" businessman Mr Trump is. The first thing he does is break off the existing treaty, then stop playing by those rules. Then, the necessary talks begin, and eventually he gets a treaty that is good for him. Anyway, this was the case with NAFTA and Japan. How will this play out with you?
Xi Jinping: Thank you.
Perhaps I have an answer to this question in my files, I am not sure. (Applause.)
In fact, you have raised the issue of the relationship between globalisation and anti-globalisation and the waves around these matters. I outlined our position on globalisation in my speech saying that we are strong supporters of globalisation. An alleged change in China's position was just announced. China has already become the largest proponent of globalisation. This is an objective trend. This is the way it is, because globalisation is a historical trend which will continue unabated. Anti-globalisation is also a development today. I think it is similar to a small section in a big wave, which can cause certain fluctuations, but is unable to stop the general trend of globalisation.
Globalisation is a double-edged sword, it cuts both ways. Typically, one benefits and the other suffers. This is a matter of sharing benefits and interests. But we should not cut off our noses to spite our faces. We should not maintain a one-sided and protectionist approach.
Of course, fundamental values do not always correspond to the wishes of each interested party: sometimes they do, sometimes they do not. If you are talking about global benefit, then we must adhere to this principle, and the world will be harmonious. We should not be self-serving.
We can see that today the issues and problems of economic globalisation require immediate solutions. Some ideas arise from the process of globalisation management, technical malfunctions can appear in this machine for globalisation management, but we should adhere to the trend and defend the existing multilateral trade system. We are not suggesting that we need to start all over again and turn everything upside down. We should consider how to improve the existing system and mechanisms.
President Putin just said in his speech that the most important thing is that there are many countries in the world, and that all of us are brothers; there are big and small countries, but everyone is equal. It is necessary to proceed from mutual respect in resolving disputes.
I believe that social systems and the development path of all countries should be respected. For example, new economies are developing and the role of developing countries is growing based on the existing world order with consideration for the latest changes. Therefore, new countries with emerging markets and developing countries - their right to vote and their participation in international organisations must be respected. Only this will allow us to reach more rational processes.
We always adhere to peaceful coexistence. Despite the existing difference of opinions, it is still necessary to find points of contact and properly resolve disputes that arise. I hope for such mutual respect in building relations with all countries.
Sophie Shevardnadze: Thank you, President Xi.
President Putin, President Xi has defined the tariff war as a fight between globalisation and anti-globalisation. I do not know whether you see it like that, but my main question is: where is Russia's place in this fight for economic supremacy, and should Russia choose one economic paradigm?
Vladimir Putin: There is a good Chinese proverb that says "when tigers fight in the valley, the smart monkey sits aside and waits to see who wins."
But things change. And this picture is also changing. What is changing exactly? The fact is that today, we adhere to the same principles that the world was guided by only recently, and the United States, the world's leading economy by a number of indicators, remains exactly as it was, a high-tech economy that has always promoted the ideas of free trade and democracy in the international economic arena. But today we see what is happening - they are introducing a different practice - I said as much in my remarks. As strong competitors emerge and gain strength, such tools suddenly become unacceptable to them, and various restrictions come into play like tariff wars and tariff restrictions. This, by the way, causes great damage.
Yesterday I met with the leaders of large investment companies, and cited these figures to them - these are not our figures, these are international figures, from international institutions, the World Bank in particular - if by 2022 these restrictions are still growing at the same rate as today, it will lead to a 2 percent decline in global GDP growth and will cut global trade by 17 percent. We are certainly not happy about this scenario.
Allow me to remind you that during the global economic and financial crisis of 2008-2009, global GDP growth slowed by exactly 2 percent, while trade growth slowed by 10 percent. If today's trend continues, everyone here, including your colleagues, ladies and gentlemen, will face big problems and tremendous losses. Business will incur losses. Who will they shift their losses to? To our citizens. New jobs will not be created; on the contrary, jobs will be cut. Money will not flow to budgets at all levels, and so on. This will have very serious negative consequences. We do not want this to happen, of course.
Where is our place? It is in the fight for fair, democratic principles in the development of international economic relations. As you know, our relations with China are expanding, and with other countries, too; despite all the attempts to hamper certain projects, trade is growing, thank God. But if trends like today's persist, it will be bad for everyone. We will certainly try to build relations based on equality and on the principles that I spoke of in my speech.
Sophie Shevardnadze: Mr Guterres, nevertheless, the confrontation between the US and China in a way extends to the UN as well. The US does not hide, for example, that it does not support China's Belt and Road initiative, fearing that it would give China a geopolitical advantage in the world in addition to an economic advantage.
I know that you repeatedly spoke in favour of this initiative because, as you believe, it is very good for third-world countries. China invests a lot of money in infrastructure. What will come of the differences between your opinions and the policy of such an important UN donor as the US? Or can we say that informal leadership in the UN is going to China?
Antonio Guterres: A Spanish politician once said that politicians are the only animals that stumble twice at the same stone. And the world has stumbled into a cold war, and we all know what a cold war means. I think our duty is to avoid the world to fall into another cold war. And another cold war of two blocs that probably will then be completely separated in a monetary, in a military, but also in a trade and technology perspective. This would be extremely dangerous for us all, and we need to do everything to avoid it.
And we can only avoid it by rebuilding trust, and to rebuild trust, there is a first thing that is essential - to respect international law. And another thing that is essential is to contribute to multipolarity in our world. I do not see the world only as the United States and China, with all due respect for President Xi Jinping. I think it's the United States, it's China, it's the Russian Federation, it's the European Union, it's India, it's many other countries. And it is the capacity for all these countries on an equal basis to have a relationship based on equality, on trust and on respect of international law that we can build a world that avoids this trade war, this cold war. And I think the United Nations must be the platform that helps to make this possible, and we need to learn from the mistakes made in the past. There is no solution that one country alone can promote. There is no solution that one institution alone can promote. If we want to address the enormous challenges we face we need serious international cooperation. And so, it is my true belief that the present situation needs to be overcome and that this sleepwalking into a cold war needs to be stopped.
Sophie Shevardnadze: Yes, of course, we should overcome this together.
We have two representatives of the European Union here. Perhaps we should come to you, Mr Pellegrini? I would like to know the EU's opinion of what is going on because a tariff war of your own is taking shape between you and the US. The US still intends to put tariffs on European cars. This could hit Europe quite hard.
In the case of China, we can say that this conflict has been brewing, it has deep roots, it did not begin today, but in the case of Europe, which is a US ally, I've got the feeling that it is strictly Trump's story. Does the EU share this opinion?
Peter Pellegrini: Thank you for this question.
It is very difficult, because not only the European Union, but also Slovakia as a member of the European Union would have been very strong, it would have a very strong impact on our economy also. You mentioned, for example, the automotive sector. During my visit one month ago with President Trump, I explained to him that an action against the European Union in tariffs on cars and industrial products would impact not just Germany, but also Slovakia, the Czech Republic and, as you mentioned, it means they are allies, and they are friends. And we also do not understand if friends are doing each other such things. So now the side of the offer from the European Union in this moment is not to increase tariffs, but to put tariffs on zero. It would even increase the business between the United States and the European Union, on average maybe eight or nine billion euros from both sides, so it would be a nice win-win situation. So we are lucky in this moment that Mr President postponed his decision for another six months, but we do not know what will be when these six months are over. And we hope we will not start a trade war, because it will not help, even not the United States. It will not just make something wrong towards the European Union; it is also bad for them. I believe that we will be able, in a normal dialogue, to finish this situation in a positive way because otherwise we will lose jobs, as President Putin mentioned, we will lose jobs. We will not have any more such economic growth that we have now, and it will really create not a pleasant situation within the countries of the European Union. So I believe in a healthy brain of all who are involved, that it will be a positive decision at the end. I hope so. But you never know.
Sophie Shevardnadze: Thank you very much.
President Putin, we are talking about allies now. Today China is considered to be Russia's most important ally. You have met with President Xi more than with other leaders. The same is true of President Xi. He even called you his closest friend. Two days ago you signed many important agreements. Trade between China and Russia has reached $108 billion, which is a record. But if we subtract raw materials from this figure, other economic indicators, even concerning military cooperation, in fact show that Chinese-Russian friendship and cooperation are not that close after all. Why?
Vladimir Putin: First of all, I would like to add a few words to what our guest from Slovakia has said. This analysis is absolutely correct. I would like to add just one point: this uncertainty in global affairs and the world economy is now the main factor hampering development. The number of uncertainty factors is increasing very quickly, and this is the main problem today. Mr Pellegrini has made a certain sign, and this sign has different meanings; I hope that common sense will prevail - indeed, I agree with you on this score.
Speaking of our relations with China, this is politics, rather than words. Indeed, President Xi Jinping and I have established very positive personal relations. Yesterday, we spent a lot of time together and discussed a wide variety of matters. We parted at midnight Moscow Time or 4 am Beijing Time. We had a lot to discuss. Later, I said: "I have to apologise to you, I should let you go. Hosts should not treat their guests this way." But this indicates that our agenda is very extensive.
Yes, 108 billion. We strove to achieve 100 billion last year, and we reached 108 billion. We have exceeded this target figure, and our trade continues to grow. Thanks to our joint efforts and to the positions of our Chinese friends, including President Xi Jinping, our trade patterns continued to change and to improve all the time. The share of engineering goods began to increase. True, this share decreased slightly last year, but that was due to a number of objective factors. However, we have no misgivings about this because on the whole we are posting positive trends.
First, the energy sector is a major component of our collaboration, and it also includes a lot of technologies. We have built an oil pipeline system all the way to the Pacific Ocean, with an offshoot to China. It encompasses many modern technologies. By the way, our Chinese partners have teamed up with France and joined the Arctic LNG-2 project with NOVATEK in northern Russia, which will now be implemented. This involves all kinds of cutting-edge technology. Adjacent sectors facilitating these projects are also involved.
We have very good prospects in space exploration and the aviation industry. We are now moving to implement an ambitious joint project to develop a large transport helicopter. There are very good prospects in the nuclear engineering sector and the nuclear power industry, which also involves all sorts of state-of-the-art technologies. The Russian side has designed and built several nuclear units in China, and we have agreed to build two more; two are currently under construction. We have a lot of venues in the engineering sector and the power industry. I was happy to hear our colleagues' reports in Moscow the other day. To the best of my knowledge, there are 11 various groups in various fields. Today, we maintain very deep and wide-ranging relations with China; in fact, we don't have such relations with any other country. Indeed, we are strategic partners in the full sense of this word. We can say this without any exaggeration.
What is especially important is that both parties show intent to provide an equitable approach to resolving problems. That is why our colleagues supported the special relationship with China within the EAEU. We have a very good joint action programme. Yes, there are some difficult issues related to commodity groups and they need to be discussed at the professional level. I can assure you, our experts and Chinese partners debate almost each and every issue, but we always find a solution. We strive to look for these solutions and we find them. In this sense, I am sure we have excellent prospects.
As for global issues in general, cooperation between Russia and China on the global stage is undoubtedly a very important factor of global stability.
Sophie Shevardnadze: Can Russia-China trade relations replace economic relations with the West for Russia?
Vladimir Putin: Russia can what?
Sophie Shevardnadze: Can trade relations between Russia and China take the place of economic relations with the West for Russia?
Vladimir Putin: You see, we are not creating military alliances with China. Yes, we are strategic allies. We are not working against anyone; we are working in our interests and in the interests of our partners. We are not going to replace anything with anything. Our relations with the European Union, for instance, have always been multifaceted. Mutual trade was over $400 billion, then it fell to half of that figure, but that was absolutely not though any fault of ours: it was not us who imposed all these restrictions. Now trade is approaching $300 billion, which means that common sense is prevailing.
So these two things are not mutually exclusive. We are ready to work with everyone, including the United States. Mutual trade there is minimal, though: it was $30 billion, then it fell to $20 billion when Obama was in office, now under Donald Trump it grew by $5 billion, in spite of some 30 sanctions packages he imposed against us. By the way, the Trump administration imposed more sanctions than anyone, but mutual trade still has grown somewhat. We do not set anything against anyone and we are ready to work with everyone.
Sophie Shevardnadze: President Xi, I began my greetings by saying that the St Petersburg Forum unites leaders who would not meet anywhere else in the world, but all of you are united by your dream of the Belt and Road infrastructure. The trade route from China to Europe cannot be imagined without Russia, and at the same time Russia is not directly involved in this project, it is connected with the Belt and Road initiative. What does this mean in terms of China's investment in Russia? Will you invest as much in Russia and our infrastructure as the other member countries?
Xi Jinping: It is true, the Belt and Road initiative is developing more dynamically now. At first, it was very simple: six years ago, I came up with an initiative of the Silk Road Economic Belt in Kazakhstan, in Astana. Then in Indonesia I suggested the idea of the Maritime Silk Road. It was very simple at first: we wanted to rekindle the historical memory of dynamic exchanges between all peoples of the world and to resume these exchanges in the modern world. That is why I proposed this initiative. It was well received.
In ancient times, the Silk Road comprised a limited number of routes, whereas now most countries expressed their interest in taking part in this initiative. We signed relevant agreements with some 130 countries and 30 international organisations. The result exceeded the achievements of the original Silk Road. This initiative is now being developed all over the world, even in Latin America and the Pacific.
This year, we held the second Belt and Road forum. During the first summit, only heads of state and government of 29 countries, and, of course, heads of international organisations, including UN Secretary-General Antonio Guterres, were invited. This year, in response to the great interest in the forum, we invited some 30 heads of state, heads of government, as well as Mr Guterres and the head of the International Monetary Fund. The hall was full, so we were not able to invite more people, like here, at this forum.
What I am saying is that we have this mutual attraction. We adhere to the principles of joint discussion, joint implementation and sharing. This is not just China's idea - it will benefit everyone. Those countries that did not want to participate at first, said maybe that was a Marshall Plan Chinese-style. But we do not want that. We do not want to dominate. We have no such plans.
Perhaps, at first, some participants alleged it was a Chinese canonisation plan. We have never done canonisation all over the world, never since ancient times. We are ready to adhere to the principles of joint benefit only, while at the same time building our own solutions. According to this principle, we have long collaborated with our good neighbour, Russia. We have signed a $20 billion agreement and held restricted and expanded format meetings with President Putin. We never have enough time. We talk about more and more problems, and our contacts are deepening. So we want to streamline our own affairs through the promotion of the Belt and Road initiative, first of all, and then we will work towards a community of shared future for humankind.
I am sure that this dream will come true.
Sophie Shevardnadze: Thank you, President Xi.
Vladimir Putin: May I add something?
Sophie Shevardnadze: Of course.
Vladimir Putin: You know, Mr Guterres and I attended the last Belt and Road event in Beijing; I think he will confirm this. Do you know what I noticed?
First, all the important global players came. The European Union was represented at various levels, by various countries, but there were practically all the leading countries in the European Union.
And the second thing I noticed, and I think the Secretary-General will confirm this, I would like to emphasise it again. I don't know if it is my good friend Xi Jinping's manner, or the Chinese philosophy - they never impose anything on anyone. They propose. They propose, in fact - I might get it wrong - at the first stage, an investment of over $120 billion in various spheres, and $70 billion I think has already been invested.
As for Russia, we have established almost 100 companies with our Chinese partners, created 13,000 jobs - good, high-tech companies - in the Far East alone, in the priority development areas there.
As for the integration of the EAEU and President Xi Jinping's idea, the Belt and Road initiative, we have specific projects together. There is a road from China to Kazakhstan, which means large infrastructure projects, and we have to build our road all the way to Kazakhstan. We are actually behind schedule, because Kazakhstan has already done their part. There are other projects of this kind. We have very specific plans for joint work, and we are completely satisfied with them. And I am sure that we will move forward very successfully.
Sophie Shevardnadze: Thank you.
I will certainly return to the Belt and Road initiative.
Mr Radev, let me ask you too: should Europe be integrated, the EAEU?
But, Mr Putin, first a question for you. We are speaking now about Chinese investment, but here in this hall there are not only Chinese investors, but investors from all over the world who have invested in Russia or would like to invest in Russia. There was this recent case with American investor Michael Calvey and his partner Philippe Delpal, who were detained.
You always say at all platforms that the law enforcement agencies and security services should not interfere in economic issues too much. You also constantly emphasise that the rule of law is above all. But here it is a bit selective, because Michael Calvey was put under house arrest, while Philippe Delpal was remanded in custody. This shocked investors because it looks like you say one thing and then do the opposite. Who should they listen to? To you, your guarantees, guarantees of President Vladimir Putin, or should they be guided by what the security agencies are doing?
Vladimir Putin: In all cases they must be guided by Russia's current legislation. This relates both to the government and Russian and foreign businesses. I understand what you are talking about. I am concerned about this too, otherwise I would not be speaking about it today, but everyone must respect the law. When we say that law enforcement agencies should not unjustifiably interfere in the life and activity of business entities, this is our position. But this also means that all participants in this process, including businesspeople, must abide by the law.
What about this case? There was a violation; as you know, he has been accused of embezzling 2.5 billion rubles. Some people, including many of those present here, his Russian partners, claim he did not do it. Maybe. But it is the law enforcement agencies' job to find out. We have a judicial system for this purpose.
I very much hope that everything will be done in a transparent and clear way, with the participation of those who defend the position of our American partner, and that just and lawful decisions will be made. On my part, my colleagues from the Government will monitor the situation. The Prosecutor General, I see he is here, Mr Chaika, will carefully watch and manage this process.
As for the fact that someone was put under house arrest and someone was remanded in custody. This also relates to what our French friends told me, that someone has a place to stay in Moscow and someone does not. How can someone be put under house arrest if he has no house or no apartment? But we will consider this issue.
I spoke about the humanisation of these procedures and we will move in this direction. If there is a possibility to avoid keeping someone in jail while investigating a case, we need to strive to use this possibility. Our actions in the near future will be aimed at humanising such processes.
Sophie Shevardnadze: Agreed. I am not trying to defend anyone in this case, this is not my competence. It is true, your partners, very reputable people, vouched for Mr Calvey. I am talking of something else now. Investors were scared by the Calvey case. This is what they see: Mr Calvey has worked in Russia for 15 years, and if he failed and did not understand the rules of the game, what would happen to them if they come to this country tomorrow? The rules are obscure, and this is the problem.
Vladimir Putin: Listen, take the Bible and read: "thou shalt not steal" and "thou shalt not covet your neighbour's wife," et cetera, you can find everything there. Mr Calvey has been accused of embezzling 2.5 billion rubles. This must be proved by the law enforcement agencies or the charges must be dropped. That is it, nothing special.
Look at what happens in other countries. Businesspeople in the US can be sentenced to 100-150 years in prison, and everyone is fine with it. Do not steal, behave and you will be fine.
But, I repeat, we will monitor the situation carefully. And I want to say, there are generally accepted legal regulations. Until there is a guilty verdict, everyone is considered innocent, including Mr Calvey. He is considered innocent and I hope that all the procedures will be conducted in accordance with Russia's legislation, in a transparent and open manner, and that the Prosecutor General's Office will monitor the situation.
Sophie Shevardnadze: Thank you.
Mr Radev, I would like to ask you the same question as I asked Prime Minister Pellegrini, this time as a representative of the European Union, and get back to the Belt and Road initiative. The EU believes that it is better to present a united front. What do you think? Perhaps, Bulgaria is better off discussing participation in this project directly with President Xi?
Rumen Radev: It is a vitally important initiative for us, for all the 17 countries, we have already 17 countries on board. We also support the One Belt One Road initiative, but we need to be more effective and more efficient when we work together. We need to know more about each other. Last year, the Prime Minister of China Li Keqiang visited Bulgaria. When he was in my office, we started discussing all the untapped opportunity and potential behind this initiative. I told him, okay, you are going to invest in Europe, we are going to work together, but let's open a centre for global partnership for this initiative in Sofia. Why? Because we need feasibility studies for all the projects, we need to optimise them, we need to establish clear criteria on how to have better efficiency, how not to waste money, which is not worth to do, but to allocate the money for some other activities. Also we need more information about our legislation. We need to project information to China about EU procedures and rules and tenders, everything. So this idea was taken into consideration; it was proposed at the summit of all the prime ministers participating in Sofia in July last year. And very soon we are going to open this centre in Sofia. It is a clear example that we are going forward, and we have great expectations behind this initiative. Of course, there are some concerns in some countries, Western, from the members of the initiative, but if we compare the volume of China investment in the UK, in Germany - they are huge, there is a huge investment in those countries. So we should not be concerned. Of course, we should debate all the clear rules for transparency and competition, and we are going to help.
Sophie Shevardnadze: But still, would you prefer to discuss your participation in this initiative directly with President Xi or while presenting a united front together with the EU?
Rumen Radev: If I have a chance to discuss those problems, of course, Bulgaria has its national interest, we are highly interested in China initiatives, in China investment, in mutual projects, so, of course, we are ready.
Sophie Shevardnadze: Thank you.
Mr Pashinyan, this year, Armenia chairs the Eurasian Economic Union. A relatively small, but I must add, an absolutely wonderful country is now, so to speak, coordinating all these huge economies on an immense territory.
You mentioned that your country has recently signed a cooperation agreement with the EU and that this act does not conflict with the EAEU. So far. But if your country continues moving towards the EU, wouldn't you expect Brussels to ask you to leave the EAEU?
Nikol Pashinyan: Thank you for the question.
First of all, I would like to say that there is no movement towards the EU because Armenia is staying exactly where it is. It is very important to make this clear, since, as I have already said, we cooperate with the European Union on matters that have to do with our internal reforms.
But there is something I would like to emphasise. The EU is very interested in improving relations with Russia. I do, of course, talk to European leaders; all of them support Armenia's intentions to develop relations with the Russian Federation. This is a very important point. What I am saying is that we are open with our Russian partners about our relations with the EU before, and we are also open with our European partners regarding our relations with the Russian Federation. The only exception is certain defence matters.
Indeed, very many European leaders are interested in settling relations with the Russian Federation. I think the presence of two European leaders here speaks for itself. And I believe a lot of people in the world have now realised that geopolitical games do not benefit anyone, and certainly not those countries that become drawn into them. In this context, Armenia's position is clear: we are not going to take part in any geopolitical games and we are going to develop relations with the Russian Federation. Yes, we take part in the Eurasian Economic Union, in which we now hold the Presidency. During my recent visit to China I said we are very glad to have a good relationship with China.
Why are we interested in these relations? China, the EU and the Russian Federation pursue global stability, and in these relations we are primarily interested in global stability and security. Needless to say, we are aware of our role as an EAEU member state. We will facilitate the improvement of relations between our partners. Of course, our opportunities in this respect are not so broad but we will make our contribution to global security, stability and cooperation.
Sophie Shevardnadze: I would still like to specify something. Is it correct to say that in this case Armenia has unequivocally made its choice in favour of the EAEU?
Nikol Pashinyan: We are members of the Eurasian Economic Union.
Sophie Shevardnadze: I know.
Nikol Pashinyan: In other words, this is the only economic integration process in which we are taking part. We will continue our participation in it and we will continue developing relations in this process. But this does not mean that we will not have any relations with China. We will maintain bilateral relations with China and contribute to the development of ties between China and the EAEU.
Sophie Shevardnadze: And what about the EU?
Nikol Pashinyan: We cooperate with the EU. I spoke about judicial reforms in our country. It is very important for us to create a judicial system that would match European standards. I think this is a very good goal because when we talk about European standards we mean a truly independent judiciary that is free of corruption and political pressure.
As for the rest, we are very happy to have an opportunity to facilitate the improvement and development of ties between the EU and Russia. I think in some cases Armenia can even become a bridge between the EU, Russia, China and Iran. You know that the EAEU signed a free trade agreement with Iran. We believe Armenia can also play and will play a key role in this issue.
Sophie Shevardnadze: Mr Putin, the Prime Minister of Armenia believes that Armenia can play an important role in the rapprochement of the EU, Russia and the EAEU. But so far, we see that when all post-Soviet countries drift towards the West, it always happens against the backdrop of heightened tensions with Russia. So far, it has been impossible to achieve a compromise. You often say that the rules of the game are violated. This also happens because the world is changing and the current rules cannot keep up with it. As far as I can see, it is impossible to integrate into both the EAEU and the EU. You write these rules to a large extent, at least regarding the EAEU. Can you influence the situation so that it is not always a matter of making a forced choice but of mutual cooperation?
Vladimir Putin: Look, Charles de Gaulle once spoke about a united space from Portugal to the Urals. I later added, "to Vladivostok." There are no serious tensions. There are concrete things that we need to take into account during these integration processes. First, integration processes are inevitable, we are witnessing them all over the world, and we are part of this global process. Naturally, we join our efforts with the republics of the former Soviet Union. We share a common language, common infrastructure; there are many things that unite us and create natural competitive advantages. This is all very natural.
But there are certain issues we need to overcome to be part of the integration process, to interact with the European Union. What issues, for instance? Technical regulations: they differ in Russia and the EU. Do you see what I mean? These are absolutely concrete issues. The issue of whether to put a screw in this way or that way, or the matter of how snow loads on buildings differ here and there, because we have more snow in Russia. This is a very natural thing, you see? And we cannot adopt their technical regulations in industry tomorrow, it is not possible. I admit that in some areas European standards are better. Some regulations, like phytosanitary supervision, are tougher in Russia. Therefore, when we speak about allowing their products into our market, we say, please take into account our phytosanitary regulations. Some countries are fine with it, some are not. We need to explain to our partners that such issues cannot be dealt with unilaterally.
Or take technical standards. We say: yes, we will be ready to take your rules and standards, but it will require time and money because we will have to buy new equipment and introduce these standards. This will take time, years, and it will require hundreds of billions in investment. It can't be done overnight. Our partners should understand this. They should show understanding for this.
When we held corresponding talks with them on this issue, which were linked to our neighbours, we told them that to even out everything we would need about 15 years with 20 industries. But it was reduced to one industry over two years. In effect, these talks actually became prohibitive. You understand how difficult it will be to come to terms. Further, the European Commission was ready to talk to every EAEU country but not with the EAEU as a whole because it would be more difficult to talk to us in Russia's presence. But eventually, as we see, our partners are now willing to talk with the EAEU as well.
Incidentally, note that in Nur-Sultan, formerly Astana, we said trade in the EAEU was growing. I do not want to quote the figures for fear of making a mistake. But trade between our countries with third countries has increased even more. What does this indicate? It shows that when we follow common rules based on WTO principles, it is easier to cooperate with all of us. This cooperation is more reliable and transparent and gives additional impetus to cooperation between the EAEU and third countries. We only welcome this, and there are no disagreements. All we need is goodwill to overcome the natural obstacles. We are ready for this and will do it with pleasure.
Nikol Pashinyan: I would like to add to this, with your permission. When we talk about the Belt and Road, project this is not a matter of choosing between this project and the EAEU. Armenia faces this issue in other cases because if infrastructure is built in Armenia, in our region, under the Belt and Road project, there will be integration between Iran, Armenia and Georgia. I think this will facilitate the EAEU's development as well.
If Armenia, part of the EAEU, becomes a more progressive state with well-developed economic, political and judicial systems, this will benefit the EAEU and add new nuances to its image. I would like to recall that, as President Putin said, it is very important to take into account the peculiarities of every country. What is possible in Russia may be impossible in Armenia, what is possible in Armenia may be impossible in China and what is possible in China may be impossible, for instance, in Bulgaria. However, we should focus on the values that unite us. I believe there are many values that unite Armenia and Russia, and I believe these values are immutable.
Sophie Shevardnadze: Thank you, Mr Pashinyan.
Mr Putin, we say there are no serious conflicts between the EU and the EAEU, that time and will are needed. However, Ukraine is a graphic example of how a country can be literally split between these two poles of attraction. In this context I am curious why you have not congratulated Vladimir Zelensky on becoming President?
Vladimir Putin: Well, he has been clinging to the same rhetoric so far, calling us enemies and aggressors. He must somehow make up his mind on what he wants to achieve and what he wants to do. We are not renouncing all contact with him. We will work with him.
Sophie Shevardnadze: Yes, because you are the President of an enormous power. As of today, he is very popular in his country and has a high rating.
Vladimir Putin: Very good.
Sophie Shevardnadze: You do not have a history of relationships. One small gesture can completely change the course of events. You know this, Mr President. Why not meet him without preconditions?
Vladimir Putin: Have I ever refused to do this? Nobody has made such an offer to me.
Sophie Shevardnadze: But are you ready to meet him?
Vladimir Putin: Listen, I do not know this man. I hope we will get acquainted someday. Judging by everything I've seen, he is a good specialist in the area he has worked in until now. He is a good actor. (Laughter.) I am serious and you are laughing. But it is one thing to play someone and another to be someone. Obviously, acting requires talent. Many talents. You can change your role every ten minutes. The prince and the pauper - every ten minutes, and you have to be convincing in every role. This is really a talent.
In order to deal with the affairs of the state, one needs different kinds of qualities. One needs certain experience, knowledge, the ability to identify the main problems, see them, find the instruments to solve them, the ability to form a team of capable people, establish good relations with them, believe in them, give them a chance to think freely and come up with their own solutions, choose these solutions - which is very important - and be able to explain to millions of people the motives behind choosing these solutions, and, most importantly, have the bravery and strength of character to take responsibility for their consequences.
I am not saying that Mr Zelensky lacks these qualities; he very well may possess them. There may be a lack of experience, but experience, as people say, can be gained, it comes quickly. Does he have all the other qualities that I mentioned? He very well may have, but I do not know as he has not shown them in any way so far. But what we see is contradictory statements: he says one thing during the election campaign, and another thing afterward. Time will tell. We will see.
I am not saying that he ruined everything with his statements without having done anything yet, no. We will see.
Sophie Shevardnadze: I would like to ask you about Belarus. This year Armenia chairs the Eurasian Economic Union, and Belarus will chair it next year. You often meet with not only the Chair, but also the President of Belarus - in Sochi, in Nur-Sultan. There has been much talk about Russia and Belarus uniting: in terms of both economies and political structures.
President of Russia Vladimir Putin: Pardon, bad talk?
Sophie Shevardnadze: Much talk.
President of Russia Vladimir Putin: Ah, much.
Sophie Shevardnadze: Much talk, yes.People also say that the unification of the two countries has something to do with the year 2024. Is there some truth is this?
President of Russia Vladimir Putin: No, and there cannot be. I will tell you why: because it just so happened historically that we are a single people - and I believe that Belarusians, Russians and Ukrainians are one people, I have said this many times before, many times, and that is my opinion, I am convinced of this.
At one time, Ukraine did not exist at all. The Zaporozhian Sich actually joined the Russian Empire but not as Ukrainians or Russians. What mattered then? History, language and religion, and they all considered themselves Russian. Later, Ukraine was formed as "U Kraya," that is, on the edge of the empire. Proximity to European culture and partial inclusion in Catholic Poland created a desire to be closer to Europe in this part of the population - this is a completely legitimate desire and there is nothing wrong with it.
Prior to World War I, the countries that were preparing to fight Russia began forming the idea of Ukrainian identity. This is natural. By destabilizing its potential enemy, they tried to split it up and take part of it. This idea was embraced and developed. Part of the population really acquired its own identity, and there is nothing terrible about this. It is a natural process. So, we treat this with understanding and respect.
The same is true of Belarus. Again, I am deeply convinced that there is only one nation. But it so happens that we live in different countries. Different states were formed. I have expressed my view on this many times. There are no grounds today for a state association. We do not have plans or goals like this. We plan to develop our Union. I am sure our people are interested in this.
Incidentally, much has already been done in this respect, including in the social area. I am referring to labour rights, free movement and so on. In some respects, the EAEU has already left behind our Union State. Much of what was written in the Treaty on the Union State has not been fulfilled. Mr Lukashenko and I have discussed whether we can fulfil some of what we did not fulfil before in the present context, or add something more current. In effect, our whole discussion revolved around these issues. It was constructive and comradely. Apparently, it is our fault that we provide too little information for the media and the public. If we did it properly, there would be no rumours.
Sophie Shevardnadze: So it is good that I asked this question.
Vladimir Putin: It is good that you are here at all and ask these questions.
Sophie Shevardnadze: Mr Radev, I would like to go back to international investment and projects.
Back in the day, Bulgaria wanted to implement the South Stream project on its territory, but was then forced to halt it under Brussels' pressure. I know you were not the president back then, but you surely know more about this than I do. What was Bulgaria's motivation in killing the project?
Because today, there is TurkStream that runs from Russia to Turkey; we are talking about a line that could potentially run through your territory as well. Will you be able to defend your interests this time and overcome your European partners' scepticism? Basically I ended up asking you two questions.
President of Bulgaria Rumen Radev: President Putin has just mentioned something very important: to be able to take responsibility for your own decisions, so I can take responsibility for my own decisions. At that time, I was not at that position. So I will not go back to history, but not to forget, Bulgaria is part of the EU, and Bulgaria develops its energy policy based on the energy policy of the European Union, which means diversification of roots, sources and suppliers, security of supply and competitiveness.
Of course, Bulgaria and Russia, we have been strong strategic partners in the field of energy for decades. Bulgaria is 100% dependent on Russian gas, on Russian nuclear technologies and fuel for our nuclear power plant, and we had a very fruitful discussion with President Putin and his team yesterday about how to continue our strategic cooperation for the future. Because there are some changes in Bulgaria. There are changes on the European gas market, on the European map for gas supply. Bulgaria has been modernising and expanding its gas transitioning network; we are building reverse capabilities. Also we have initiated an interconnector between Greece and Bulgaria for LNG gas supply, and all this means that Bulgaria is developing the capability for a gas distribution centre and establishing its own gas exchange capabilities. This provides more opportunity for Russia to deliver more gas to Bulgaria and to change the direction, so this gas could flow to Central Europe through Bulgaria, which is a good opportunity for Russia.
Of course, we also need to - this is my opinion, we discussed this yesterday - we need to transform also our relations in how to contract, how to deal with the price of gas deliveries, because there are new changes, I said, on the market. We have two approaches: one is fixed, long-term prices for pipeline gas, and the other approach is more flexible prices coming from LNG capabilities, yet they are very limited. For today, they are limited, but they are already on the market, so I hope we will find the best approach to meet our interest and to continue being strategic partners in energy.
President of Russia Vladimir Putin: I will only add a couple of words. President Radev mentioned the issue of pricing - let us go back at least a little to discussing economic issues. He said that there is a long-term fixed price and a more flexible one. Allow me to make a small comment here. The price indeed is long-term, but not fixed. It is linked to a whole range of energy products, first and foremost, to crude oil. Oil price fluctuations lead to gas price fluctuations. The price is absolutely fair and market-oriented. This is the pricing formula. This does not mean, of course, that such a formula must continue unabated for eternity. We are ready for discussion. But this has to be done, of course, at the level of economic entities.
Speaking of South Stream, many people in Bulgaria regret it falling through - I say this mildly, many of them. What did Bulgaria lose? $3 billion of investment, a thousand new high-paid jobs and $400 million worth of transit fees annually. That is it. These are the direct losses for the Bulgarian economy. And they are worth regretting. And I think it is quite clear why this happened. Let us be frank: there are certain costs to the Western integration system, which you talked about. This has to do with sovereignty limitations. By the way, we never face such issues at the EAEU; we can disagree and argue till we are blue in the face, but every decision is made unanimously, unanimously or not at all. Problems occur, too, but it is not always the same in the European Union.
I have said many times, and I will repeat it again: today, the European Parliament makes more binding decisions for the EU countries than the USSR Supreme Soviet once did with respect to the Soviet republics. This leads to some difficulties, hence the complicated processes within the EU. But that's beside the point now, as we are talking about building new routes that will diversify our commodities supply to Europe. How many years have we been working on the second leg of Nord Stream? South Stream even had to be postponed.
We agreed with Turkey to build the TurkStream, thanks to the political will of President Erdogan, who showed the best qualities of his character and underscored his country's sovereignty, and we will complete it in the next few months. The offshore section has already been laid, fully completed, and now the project is progressing on land; we will finish it soon. So now our European partners will receive gas via a different route, if they want to, of course. I believe southern Europe is interested in this, because, once again I'll repeat, pipeline gas from Russia, considering the distance and volume of deliveries, will always be cheaper, by definition, than liquefied gas from overseas. Always.
Mr Miller hides this, thinks it's a big secret, but in fact, I think the analysts know the profitability of production - it is one-tenth of the cost of liquefaction plus delivery to another continent plus re-gasification. Just cross off a zero, do you understand? He has a good reserve margin in which he can work with the price, but the price must still be fair for both the seller and the buyer.
Sophie Shevardnadze: Thank you.
Rumen Radev: Just a moment. Talking about sovereignty limitations - of course, President Putin has his point of view, but I cannot agree that Bulgaria does not have sovereignty. Because South Stream was not a project just for Bulgaria. It is a pipeline going through Bulgaria to other EU countries, so cancelling South Stream was a collective European decision; it was not a sole Bulgarian decision. This should be clear.
And, of course, I fully agree as well that there is a fixed formula, a very complex formula of calculating the price of the gas; it is called the Netherlands formula. I don't know why, but the name is that. What I'm talking is to be more flexible and to look beyond today, because there is a huge change, and we need to find again the best solution for our two countries.
Vladimir Putin: We will continue to do so, Mr President. You are right, I agree. Thank you very much.
Sophie Shevardnadze: President Putin used the word 'unanimously.' You also said 'unanimously.' In this regard, a short question to you, President Radev, and to you, Prime Minister Pellegrini, regarding the sanctions.
Many European leaders speak out saying the sanctions should be lifted because it hurts everyone, not just Russia. The leaders talk, and the sanctions are extended. Can you venture to not support the extension of the sanctions? The sanctions are only extended unanimously, right? Yes or no?
Peter Pellegrini: There is a position of the European Union, and Slovakia is a part of the European Union; so, in general, we support. But there is also a position of the Slovak Republic. And to be honest, we do not think that sanctions are helping somebody, even not the European Union and even not the Russian Federation. It is the opposite. The exchange between our two countries, or groups, went down, as President Putin mentioned, and now we are happy that it is slowly going up again, and Slovakia will always be first in dialogue, in communication, and not sanctions at the first point. But in general, that is the position of the European Union. There is now a negotiation, a discussion on how long they should still continue, but I will again repeat as the Prime Minister of the Slovak Republic, it is better to sit around the table and to find solutions than to fight against each other with sanctions.
Sophie Shevardnadze: Everyone thinks so, but the sanctions are extended. Can you vote against an extension?
Rumen Radev: I personally do not vote because the Prime Minister represents Bulgaria in the European Council, but anyway.
Sophie Shevardnadze: And if they voted?
Rumen Radev: This question goes a little far beyond sustainable development, but it is an interesting one. Being an EU member, Bulgaria is a part of the EU, understanding the position that sanctions are policy-changing, too, trying to deescalate the tension when there is a conflict. However, everyone who plans to impose sanctions should think about the pros and cons and consequences. Sanctions, they are like a coin with two sides, and the business here knows very well that businesses can suffer from sanctions, in some areas heavily. Sanctions are not fair because they do not hit the politicians, but they affect ordinary people. And sanctions could be circumvented, and I will tell you from our experience that sanctions could lead to black marketing, illegal trafficking, organised crime. We know this from experience during the sanctions upon the former Yugoslavia. And one who plans and contemplates sanctions should calculate very well the outcomes, because sometimes, the real outcomes are different from the planned effect, and they could hit back to those who planned and impose sanctions.
Peter Pellegrini: Sorry, but I always like to say what I am thinking, and this moment, and really, I have to say. It looks sometimes very, very funny, when the biggest supporters of sanctions and those who were fighting for sanctions against the Russian Federation the other day are looking at how they can sell their goods in Russia and how they can invest in Russia and to grow their own business. So for me it is sometimes very, very funny how some people are behaving.
Vladimir Putin: And I don't see anything wrong with that. At least we can work with it.
Sophie Shevardnadze: We have drifted far away from the theme of our forum: Sustainable Economic Development. I would like to have a short Q&A session. You all said in your speeches that the existing rules of interaction, of the existing system of world trade, is not agreeable to anybody in principle; everyone is unhappy here - China is displeased, so is America, as are the EU and Russia. Mr Guterres, you say that something is bound to change.
I would like to hear concrete proposals as to what needs to change, from each of you. Everyone is unhappy but does not want to engage in changing anything; nobody is willing. Let's start with you, Mr Pashinyan. You might want to see integration between the EAEU and the EU, right?
Nikol Pashinyan: Thank you. The situation is such that if everyone is displeased, we must do something to make everyone more content. There is only one way to do this: compromise. We have to work out a compromise. To achieve this, mutual respect is needed, as Mr Putin said, we need to show understanding for each other's interests and respect for them. If all global players see the situation this way and are ready to take responsibility for such compromises - this is clearly not an easy thing to do, but it is in fact the only way, because any other solution will result in big problems.
Sophie Shevardnadze: President Xi, what would you change? You say an anti-globalisation wave is surging, and it hurts free trade among other things. What would you change in the existing trade system to protect free trade, to prevent sliding into protectionism and isolation?
Xi Jinping: I would rather be a creator than a destroyer. We must respect what exists. And we must improve it ourselves rather than upset it or cancel it. I do not want to cause problems for others. Whatever I did, I did it for the sake of being friends with all nations and expanding the circle of friends for China. I see friends around the world, only friends. For example, Russia is our great neighbour. And we are cooperating with the EAEU. We are also strategic partners with the EU, now also in the 17+1 format. We continue developing relations with the ASEAN nations, and we have established a cooperation mechanism with Africa, with most African countries. Our relations are good with Latin America and with the South Pacific countries.
As for the United States... even though we have some trade friction, China and the US are already closely knitted together. We have large investors and the biggest trade between us. You know, every day about 10,000 people fly back and forth from the US to China, so it is hard to imagine a complete separation between the US and China. We are not interested in that, nor are our US partners. President Trump is my friend, and I am sure that he is not interested in this either.
Sophie Shevardnadze: President Putin, what would you change? Maybe you could suggest something specific?
Vladimir Putin: Almost everything has been said here. With a reliance on compromise, we need to seek common solutions, draft common rules and adhere to the norms of international law - what was mentioned and suggested by UN Secretary-General Antonio Guterres. I fully agree with this.
Sophie Shevardnadze: President Radev.
Rumen Radev: I think it is not about the economy, it is not about a trade war, it is about global security. Because trade wars, they touch the deepest layers of our security architecture. I can understand a trade war between the United States and China. I can understand a trade war between the United States and Russia. But I cannot understand a trade war between the United States and Europe. When last year, in May, trade war lasted, some of the European leaders were so frustrated that they started talking that Europe must take its security into its own hands. For a short time period, you can put in one basket, because the economy and defence, they are in one basket. Trade war and being allies - but it is impossible to be in the same basket, an ally in defence and a rival in the economy. In the long run, you will split. If we split, that will have a devastating effect on the transatlantic bond and the whole European and world security architecture. I hope that we will find very soon a feasible solution to fix that problem.
Peter Pellegrini: I think there is a crisis of multilateralism in this moment in the world, so I think we should come back and act again according to the international rules to support international organisations such as the United Nations and the World Trade Organisation. I think that is the best we can do to come back and to respect the international rules, and not to fight against each other.
Sophie Shevardnadze: Mr Secretary-General, please allow me to formulate the question a bit differently, in the context of the UN. You said in your speech that now many important political processes are taking place outside the UN. Can all these changes that we are discussing today be more successful under the UN aegis? If you had the freedom to take radical decisions, how would you reform the organisation you head?
Antonio Guterres: Well, first of all, we are reforming the UN in what we can do to reform the UN, and it is essentially to make the Secretariat and the coordination of our agencies more transparent, more better coordinated and more accountable. But of course, there are central questions, and UN-related, about the way this policy works, the General Assembly works. But looking at the UN, looking at the World Trade Organisation, any other organisation - everything can be reformed, and I am very much in favour of reform, of improvement. By the way, the World Trade Organisation has a reform process taking place. The central question for me is related to the behaviour of the actors. And that is where the major change is needed. And the first change is to re-establish trust in international relations. And to establish trust, there are things that are absolutely essential. First, behaviours need to be rational, and need to be predictable, and need to be in line with international law. If you are able to do these things, we can reform the institutions, we can make them better. If you are not able to do these things, there is no way we will be able to reform the institutions, because we will never agree on the way to do it. So, let us re-establish trust, let us make sure that key actors in the world act in a way that is rational, that is predictable. And if that happens, we will be able to improve the way our organisations work in a fantastic way. But let us never forget: everything is important, but the most important is people, the people that are assuming responsibilities in the way they are able to shape international relations based on trust.
Sophie Shevardnadze: I promise you that we are almost finished. I literally have one last question for my President and for President Xi. This is a geopolitical question because after all I am a foreign affairs journalist and I would not be forgiven by my colleagues if I don't ask. Before the forum I discussed this with my chief, Margarita Simonyan, who cannot be here because she was taken to the hospital for the reasons that you know, President Putin. This is a question about the Korean Peninsula.
Vladimir Putin: Ms Simonyan is pregnant and she says: for the reasons that you know. What do I have to do with this? (Laughter.)
Sophie Shevardnadze: Yes, Kim Jong-un met with Mr Trump, but the talks did not go well. Then he went to Russia. It all comes down to this: who or what guarantees a happy and calm life for the North Korean leader if not an atomic bomb? You, President Xi, and you, President Putin, said in Vladivostok that in general, international guarantees could make a big difference. If everyone agrees with this why not give him these guarantees? Maybe it makes sense to agree here in St Petersburg: two big nuclear powers, we are willing to give guarantees. Mr Trump, are you with us or not? Go ahead please.
Xi Jinping: Indeed, denuclearisation of the Korean Peninsula is already the subject of international agreements. This issue holds the attention of the whole world, in particular, the dialogue between Pyongyang and Washington. I think it is necessary to become convinced of the prospects for this dialogue. The interested parties maintain close coordination. This includes President Putin and me - we are very interested in the problem of the Korean Peninsula. We are working together in a constructive way to advance the process of a political settlement.
It should be said that we need to make sure, keep our confidence in it and further promote this process towards the denuclearisation of the Korean Peninsula. We are sure that there is the potential and good chances for this. The key is to work together in this direction.
Of course, various mechanisms need to be established to remove the mistrust between the key countries - this is what we are striving for, and we need to discuss their decisions.
Vladimir Putin: The issue of the North Korean nuclear programme is definitely a serious and important one not only for the region but also for the whole world. I totally agree, and we pay a lot of attention to this with our Chinese friends. Of course, I would like to reaffirm what President Xi said - the key role should belong to the countries who are the principal rivals - the United States and North Korea.
Nevertheless, we have to say that North Korea abides by its obligations. First it cancelled its nuclear tests and is decommissioning one of the test sites. We hear our US partners say "No, this is not enough." Maybe it is not enough but this is what they agreed to.
On the other hand, we need to consider a mechanism to provide security for North Korea. Of course, they see the example of Iraq and Libya, and they do not want this. We must bear this in mind and take it very seriously. The nature of any guarantees can be a very complicated matter.
I will not hide and I will not reveal too big a secret - this problem was also among those discussed yesterday. I do not have a complete answer now. I think, nobody has such a proposal. By the way, we also talked about this with the Americans, when Mr Pompeo visited. We, and China, are definitely interested in denuclearisation. We want it, we are pursuing it, because the spread of WMDs around the world adds up the risks and threats that we normally forget about in our everyday lives. But they are present, and they are growing, and this of course worries us.
What sort of guarantees do we need? This is the key question. It must be a matter for consideration by everyone. In this case what the UN Secretary-General said is of utmost importance here - trust. Of course, we must propose some sort of a plan. Currently the process is moving along the road map worked out by Russia and China. On the whole, we are satisfied with the way the process is unfolding. We are looking forward to President Trump and the North Korean leader making an arrangement shortly, to re-establish contact and to carry the process further. We will work towards this in every way we can.
Sophie Shevardnadze: Thank you very much.
Thank you all for the interesting discussion.
I wish you good luck in all your endeavours. That's all for today. Have a nice evening!
Vladimir Putin: We all wish Margarita Simonyan the very best. Give her our best wishes.