An Overproductive Meeting
The economic crisis was discussed at the Asian Pacific Economic Cooperation summit on Saturday and Sunday in Peru. But the unexpected openness of APEC Business Advisory Council cochairman Oleg Deripaska made a bigger impression on Kommersant special correspondent Andrey Kolesnikov than the speeches of heads state or even George W. Bush’s farewell.
The APEC summit, which was closed to the public, ended for the day on Saturday, and Russian President Dmitry Medvedev met with U.S. President George W. Bush. Not only was the Marriott Hotel, where Bush was staying in Lima, cordoned off, but several blocks around it were as well. It seems lame ducks demand particular care. It was a strange meeting. The Americans set it up in a narrow corridor and there was very little press. But, surprisingly, there was no pushing. I even saw an American film crew give their place to a Russian one. The White House pool had never acted that way before.
I soon saw what they had already known. Bush came out to greet Medvedev, who smiled broadly and waved. Bush looked preoccupied and sad. He was sad, and he didn’t try to hide it. The Washington press corps has been seeing that mood for a while now, and it is beginning to rub off on them. It seems it is painful for Bush to give up his power.
Bush began by noting that this would be their last meeting while he was in office. He had always tried to maintain “cordial” relations, even when they had had disagreements, he said.
“Thank you, George,” Medvedev answered without waiting for the translation. “Yes there are places where we differ, sometimes sharply.” The Russian president emphasized the last word. “On the whole, we worked well together and now we will continue our work.” With that they turned and headed through the doors to their private meeting. Bush looked back and waved goodbye to the reporters before going in.
An hour later, their meeting was over, and Medvedev was supposed to receive new Japanese Prime Minister Taro Aso at the Hotel El Olivar, where he was staying. Russian Foreign Minister Sergey Lavrov came up and told the press that Medvedev and Bush had talked about fighting piracy of the coast of Somalia. So Bush did find another war to wage.
“So we can expect a joint attack on the pirate forces by a unified Russian-American fleet?” I asked.
“We will act in the field of international law,” Lavrov replied, looking as though he had certain regrets about it. But neither he nor presidential aide Sergey Prikhodko denied that joint operations by Russia, the United States and the European Union were possible.
When asked if the presidents discussed the U.S. missile defense system in Europe, Lavrov replied that “[U.S. Secretary of State] Condoleezza [Rice] and I discussed that, and we will meet again in December.”
Before the meeting with the Japanese prime minister, VTB bank president Andrey Kostin also came out to speak to the reporters. He is a member of the APEC Business Advisory Council, which also met Saturday. “The measures being taken in the world in connection with the crisis mostly coincide with the measures of our government,” he said. “The course is support for the real sector. The hope is that the crisis will last two more years… We discussed that at the summit as well.”
Eventually, the talk turned to Kostin’s bank.
“If the government a bank to take on heightened risks, the government has to take on part of them itself,” he said.
In the meantime, the meeting between Medvedev and Aso was starting. “We met briefly in Washington. I would like to say that I was very impressed by your speech there. It was interesting and meaningful. You made several insightful statements describing how Japan extricated itself from difficulties,” Medvedev told the prime minister.
“As you noted I had to deal with the financial crisis as soon as I assumed office,” Aso replied. “Japan and Russia are important neighbors in Asia and the Pacific but our border issue remains unresolved. We must delineate the border because this problem is destabilizing the region. I know that as a lawyer, you are familiar with this problem. I would like our bilateral relations to become normal.”
“There are no insoluble problems,” Medvedev replied. “You can see what representative delegations we have here. Let them do something useful; let them make an effort with this.”
The delegates glanced back and forth, knowing that they have about as much chance of success now as they did under Yeltsin.
The meeting between Medvedev and Aso lasted an hour and a half. Then cochairman of the Business Advisory Committee Oleg Deripaska was supposed to talk to the press. He was not eager for his moment of glory, though, and had to be literally pushed in front of reporters by Kostin. He briefly said that the businessmen of the APEC had decided to solve the crisis. The main thing was that the weakest countries not suffer. That didn’t mean Russia, of course.
“I think this summit will allow us to move farther than we did in Washington,” he added, “because here we are discussing practical measures.”
A reporter asked him about his own finances. “You’re supposed to transfer two tranches of $700 million each to Mikhail Prokhorov. Did you find the money?”
“We found it, we found it,” Deripaska assured him.
“We can be happy for you,” the reporter replied.
“Why for me? You should be happy for Prokorov!”
Deripaska said he was impressed with the chief executive of Hong Kong. “He earned Hong Kong $120 billion in a very short time. He has something to say,” he noted. “This crisis is not financial. It is a crisis of overproduction. In the West there was legitimate demand, and there was credit that came from cheap consumer credit. To our happiness, we were not distracted by that. The country is just not that rich and we didn’t have time take out those credits… That is the advantage of our country. We will rise from the bottom quickly, and that will be sometime in March or April, because our public still has something to buy apartments, cars - nonessentials, so to speak. Western consumers won’t buy anything in the next 12 months, unless, of course, the government, as they said earlier, begins throwing money onto them from helicopters to boost demand.”
He began to talk about industrial policy. “Not only the inefficient part of production has to be closed down, but that which won’t be used today… Today we have a mountain of commodities materials that they continue to produce because it is not possible to close down that inefficient production immediately. Until the world digs out from under that mountain, the growth phase will not start in the real sector of the economy. What is really happening? That mountain, the lack of liquidity, is leading to price competition, that is, dumping. For the government, there is a unique chance to buy what it would not be able to buy in three years except for big money. Now it can buy it up and warehouse it. Then, in three years, when the next growth stage begins, it put its budget funds to a better quality use.”
“What will happen to the rubles?” someone asked him.
“Whatever you want,” he replied. “It all depends on the government.”
“Will you close your Soyuz Bank?” they asked.
“There’ll be new investors in it.”
“That’s all. Read the newspapers.”
He repeated the need for “brains” in business and said that the government is doing a lot. When asked about the recent raising of the refinancing rate, he said that “The refinancing rate doesn’t mean anything now.” Nonetheless, he called raising it a mistake. “People were afraid of inflation. But what will happen now, in the first month of deflation? Will even one person be happy? Inflation comes from growth. A balance has to be found between supply and demand. It has to be done by hand.”
Deripaska said that the situation was a unique opportunity for Russia to do what it had been unable to earlier. “Continue roads, tunnels, solve transportation problems, receive any equipment, machines and mechanisms practically for free from the developed countries,” he enthused.
“And how will you participate in that?” they asked him
“I have my secrets,” he said.
All the Article in Russian as of Nov. 24, 2008