Andrey Vandenko
State capitalism.
Vladimir Putin
Yes.
Andrey Vandenko
What is it that makes today's titans of industry better than the oligarchs from the 1990s? The mere fact that you know them and trust them?
Vladimir Putin
I've known both these and those. The difference is …
Andrey Vandenko
You were not President then.
Vladimir Putin
Well, I was Prime Minister then, and I became President in 2000.
Andrey Vandenko
Yes.
Vladimir Putin
I knew them all.
Andrey Vandenko
And...
Vladimir Putin
And I worked with all of them.
Andrey Vandenko
And...
Vladimir Putin
The point is not to crack down on some...
Andrey Vandenko
But that’s what happened...
Vladimir Putin
...or twist their arms or any other body parts. Absolutely not. Do you know what really matters? It’s to keep them away from running the country, from influencing political decisions. It is clear that everybody was, and is, looking to make moves and lobby their own interests. This has not changed. The difference between the 1990s or 2000s and today, is that they used to directly influence the decisions taken by the state on its internal, economic, and even foreign policy issues as well as security issues. A modern CEO does not enjoy this privilege.
Andrey Vandenko
But do they try?
Vladimir Putin
Not any more, actually. They have realized that it is impossible and don't even bother trying.
Andrey Vandenko
You made that clear?
Vladimir Putin
They are struggling to protect their interests. For instance, we are currently discussing oil and gas prices with our Eurasian Economic Union partners. Of course, they stand their ground. That's understandable. But they are not trying to exert pressure from the inside. They simply clarify their position, providing arguments to prove they are right. But this refers to a very limited segment of their practical interests. This is natural.
Andrey Vandenko
And what about all this active state intervention in the economic sphere over the recent years? Look at all these state corporations established in those years of affluence. Is that alright? In the second half of the 2000s, as they say, when there was windfall cash which could be put to use.
Vladimir Putin
This is not true. There are different assessments regarding the state's involvement in the economy. They vary. Some judge that the state's intervention in the economy is excessive, others believe it is not. Different methodologies lead to discrepant results.
Andrey Vandenko
So how do you see it?
Vladimir Putin
I believe that on the whole, we have managed to find the balance. If I'm not mistaken, only 7 or 8 out of our 20 biggest companies are partially state-owned. Is it 7 or 8 out of 20 biggest companies, I'm not sure. Seven, I believe, where the state is a co-owner. The figure is either 7 or 8, so I might be off by a notch, which is no big deal, I think. The question is not whether they are private or public. The question is how they work. If they are effective, profitable, and generate public revenues, then the question is whether privatization should be the overall goal at all. Take Canada, for instance. I remember talking with my Canadian counterpart, they had privatized their railway system. In the end, the Americans bought it. The Canadians have come to regret it. Here we need to be very careful and take calculated decisions. Besides, public-private companies are some of the major contributors to public budgets at all levels. Rosneft is number one, followed by Gazprom and Lukoil. Then come Tatneft and Sberbank.
Andrey Vandenko
Lukoil is private.
Vladimir Putin
Yes. That's what I am telling you: the largest companies are the biggest taxpayers.
Andrey Vandenko
It is a common belief, an axiom, that the government is not an effective owner.
Vladimir Putin
This axiom is nothing: you have to look into the way a particular business operates. Applying a generalized approach here is as useless as calculating the average body temperature of all the patients in a hospital. As you know, this argument is often used when people start asking, quite reasonably, why is it that my neighbor and I feel really bad, while life in our country on the whole is fine. You see. It’s the same here, both sides of the coin. Therefore, while the generalized approach might be correct, as a methodology, we should take and examine each particular case.
Andrey Vandenko
In other words, you believe that reprivatization is not a bad thing?
Vladimir Putin
Right. I don't think it is a bad thing. Well, you know, there are different…
Andrey Vandenko
Your adviser Yumashev thinks differently.
Vladimir Putin
Well, that's what advisers are for: their job is to give opinions. There are different approaches and different visions. A decision-maker must take every opinion into account. That's what I'm trying to do. Here’s another problem: the Central Bank is being heavily criticized. For having taken too many financial institutions under its control, for having spent too much money, for having paid large dividends to the shareholders, and so on and so forth. It was actually not to the shareholders that most of the payments went. The shareholders were hardly paid anything. The bank was paying citizens to minimize their losses from this or that institution failure, in the long run… I know, some people will just have a look, get angry, and say: "I suffered damages". But the Central Bank's task was to prevent millions of people from suffering this damage, to prevent weak financial institutions from borrowing too much money from people, from the population, just the way real estate developers would do to the defrauded homebuyers. And then just flee, to reappear somewhere in London, as usual. That is why we had to resort to resolution procedures at some point. Whether it was done well or badly, is another question. The Central Bank took away the assets of these financial institutions, but not for good, and it is not going to keep them forever. They will be reorganized and reintroduced into the market. The Central Bank has a relevant plan, they brief me.
Andrey Vandenko
Speaking of profits. A public corporation’s status and its top management’s free market salaries are a mismatch, aren’t they?
Vladimir Putin
They don’t match well.
Andrey Vandenko
When he is paid...
Vladimir Putin
They don't. I agree with you.
Andrey Vandenko
…one million a day!
Vladimir Putin
Listen, I find this outrageous myself, honestly. I’ll tell you this.
Andrey Vandenko
Vladimir Vladimirovich...
Vladimir Putin
Many things are not as simple as they might look at first sight. I’ve already had a word with them on that score. What’s their answer? They hire many foreign specialists, who work effectively and are worth something on the market, that is on the international labor market. They have to hire them and pay them a wage equivalent to the cost of their services on the international labor market. But if they are to be paid this way, their bosses are entitled to be paid more. Do you know where else this has happened? Civil aviation pilots. Precisely the same thing. We were forced to hire foreign pilots, in particular, those with experience flying Boeings and European planes. We had to raise their pay to meet European and US standards. Now the military pilots eagerly take co-pilots’ jobs, because in the Air Force they are paid less than in civil aviation. This distorted the labor market, affecting the Defense Ministry. So we’re seeing the same here.
Andrey Vandenko
Well, Vladimir Vladimirovich, how much are air pilots paid? Half a million a month?
Vladimir Putin
The second pilot gets something around 300,000-350,000 rubles.
Andrey Vandenko
While a top manager gets a million a day. Mind you, a day! Vladimir Vladimirovich, this looks a little bit too much.
Vladimir Putin
I do not know about the daily rate, but it does look a bit too much. I agree.
Andrey Vandenko
As far as foreign specialists are concerned, that’s something… Well, it doesn’t sound like the most...
Vladimir Putin
No-no-no, why?
Andrey Vandenko
I mean, it's important.
Vladimir Putin
No, no. Otherwise they would have to be paid less than their subordinates.
Andrey Vandenko
Maybe they should be paid less, then.
Vladimir Putin
Does that happen anywhere? Should we be an exception? It doesn't work like that anywhere in the world.
Andrey Vandenko
Really? Okay then.
Vladimir Putin
But, honestly speaking, I find this annoying and preposterous. I agree.
Andrey Vandenko
They’ve got to be more modest.
Vladimir Putin
Yes. That’s true.
Andrey Vandenko
Fine then.
Vladimir Putin
I fully agree with you.
Andrey Vandenko
Perfect.
Sources: Aeroflot - Russian Airlines, International Monetary Fund, Federal Antimonopoly Service of Russia, Central Bank of Russia.