World Economic
Forum Founder and Executive Chairman
Klaus Schwab:
Mr. President, welcome
to the Davos Agenda Week.
Russia is an important global power, and there's a long-standing
tradition of Russia's participation in the World Economic Forum.
At this moment in history, where the world has a unique and
short window of opportunity to move from an age of confrontation
to an age of cooperation, the ability to hear your voice, the
voice of the President of the Russian Federation, is essential.
Even and especially in times
characterized by differences,
disputes and protests, constructive and honest dialogue to
address our common challenges is better than isolation and
polarization.
Yesterday, your phone exchange with President
Biden and the
agreement to extend the New START nuclear arms treaty in
principle, I think, was a very promising sign in this direction.
COVID-19, Mr. President, has shown our global vulnerability and
interconnectivity, and, like any other country, Russia will
certainly also be affected, and your economic development and
prospects for international cooperation, of course, are of
interest to all of us.
Mr. President, we are keen to hear from your perspective and from
that of Russia, how you see the situation developing in the
third decade of the 21st century and what should be done to
ensure that people everywhere find peace and prosperity.
Mr. President, the world is waiting to hear from you.
President of Russia Vladimir Putin:
Mr. Schwab, dear
Klaus,
Colleagues,
I have been to Davos many times, attending the events organized
by Mr. Schwab, even back in the 1990s. Klaus [Schwab] just
recalled that we met in 1992.
Indeed, during my time in St
Petersburg, I visited this important forum many times. I would
like to thank you for this opportunity today to convey my point
of view to the expert community that gathers at this
world-renowned platform thanks to the efforts of Mr. Schwab.
First of all, ladies and gentlemen, I would like to greet all
the World Economic Forum participants.
It is gratifying that this year, despite the 'pandemic', despite
all the restrictions, the forum is still continuing its work.
Although it is limited to online participation, the forum is
taking place anyway, providing an opportunity for participants
to exchange their assessments and forecasts during an open and
free discussion, partially compensating for the increasing lack
of in-person meetings between leaders of states, representatives
of international business and the public in recent months.
All
this is very important now, when we have so many difficult
questions to answer.
The current forum is the first one in the beginning of the third
decade of the 21st century and, naturally, the majority of its
topics are devoted to the profound changes that are taking place
in the world.
Indeed, it is difficult to overlook the fundamental changes in
the global economy, politics, social life and technology.
The
coronavirus 'pandemic', which Klaus just mentioned, which became a
serious challenge for humankind, only spurred and accelerated
the structural changes, the conditions for which had been
created long ago.
The 'pandemic' has exacerbated the problems and
imbalances that built up in the world before.
There is every
reason to believe that differences are likely to grow stronger.
These trends may appear practically in all areas.
Needless to say, there are no direct parallels in history.
However, some experts - and I respect their opinion - compare
the current situation to the 1930s. One can agree or disagree,
but certain analogies are still suggested by many parameters,
including the comprehensive, systemic nature of the challenges
and potential threats.
We are seeing a crisis of the previous models and instruments of
economic development. Social stratification is growing stronger
both globally and in individual countries. We have spoken about
this before as well.
But this, in turn, is causing today a sharp
polarization of public views, provoking the growth of populism,
right- and left-wing radicalism and other extremes, and the
exacerbation of domestic political processes including in the
leading countries.
All this is inevitably affecting the nature of international
relations and is not making them more stable or predictable.
International institutions are becoming weaker, regional
conflicts are emerging one after another, and the system of
global security is deteriorating.
Klaus has mentioned the conversation I had yesterday with the US
President on extending the New START. This is, without a doubt,
a step in the right direction.
Nevertheless, the differences are
leading to a downward spiral. As you are aware, the inability
and unwillingness to find substantive solutions to problems like
this in the 20th century led to the WWII catastrophe.
Of course, such a heated global conflict is impossible in
principle, I hope.
This is what I am pinning my hopes on,
because this would be the end of humanity. However, as I have
said, the situation could take an unexpected and uncontrollable
turn - unless we do something to prevent this.
There is a chance
that we will face a formidable break-down in global development,
which will be fraught with a war of all against all and attempts
to deal with contradictions through the appointment of internal
and external enemies and the destruction of not only traditional
values such as the family, which we hold dear in Russia, but
fundamental freedoms such as the right of choice and privacy.
I would like to point out the negative demographic consequences
of the ongoing social crisis and the crisis of values, which
could result in humanity losing entire civilisational and
cultural continents.
We have a shared responsibility to prevent this scenario, which
looks like a grim dystopia, and to ensure instead that our
development takes a different trajectory - positive, harmonious
and creative.
In this context, I would like to speak in more detail about the
main challenges which, I believe, the international community is
facing.
The first one is socioeconomic.
Indeed, judging by the statistics, even despite the deep crises
in 2008 and 2020, the last 40 years can be referred to as
successful or even super successful for the global economy.
Starting from 1980, global per capita GDP has doubled in terms
of real purchasing power parity. This is definitely a positive
indicator.
Globalization and domestic growth have led to strong growth in
developing countries and lifted over a billion people out of
poverty.
So, if we take an income level of $5.50 per person per
day (in terms of PPP) then, according to the World Bank, in
China, for example, the number of people with lower incomes went
from 1.1 billion in 1990 down to less than 300 million in recent
years.
This is definitely
China's success.
In Russia, this
number went from 64 million people in 1999 to about 5 million
now.
We believe this is also progress in our country, and in the
most important area, by the way.
Still, the main question, the answer to which can, in many
respects, provide a clue to today's problems, is,
what was the
nature of this global growth and who benefitted from it most...
Of course, as I mentioned earlier, developing countries
benefitted a lot from the growing demand for their traditional
and even new products.
However, this integration into the global
economy has resulted in more than just new jobs or greater
export earnings. It also had its social costs, including a
significant gap in individual incomes.
What about the developed economies where average incomes are
much higher?
It may sound ironic, but stratification in the
developed countries is even deeper.
According to the World Bank,
3.6 million people subsisted on incomes of under $5.50 per day
in the United States in 2000, but in 2016 this number grew to
5.6 million people.
Meanwhile, globalization led to a significant increase in the
revenue of large multinational, primarily US and European,
companies.
By the way, in terms of individual income, the developed
economies in Europe show the same trend as the United States.
But then again, in terms of corporate profits, who got hold of
the revenue? The answer is clear:
one percent of the population...
And what has happened in the lives of other people? In the past
30 years, in a number of developed countries, the real incomes
of over half of the citizens have been stagnating, not growing...
Meanwhile, the cost of education and healthcare services has
gone up.
Do you know by how much?
Three times...
In other words, millions of people even in wealthy countries
have stopped hoping for an increase of their incomes.
In the
meantime, they are faced with the problem of how to keep
themselves and their parents healthy and how to provide their
children with a decent education.
There is no call for a huge mass of people and their number
keeps growing.
Thus, according to the
International Labour
Organization (ILO),
in 2019, 21 percent or 267 million young
people in the world did not study or work anywhere.
Even among
those who had jobs (these are interesting figures) 30 percent
had an income below $3.2 per day in terms of purchasing power
parity.
These imbalances in global socioeconomic development are a
direct result of the policy pursued in the 1980s, which was
often vulgar or dogmatic.
This policy rested on the so-called
Washington Consensus with its unwritten rules, when the priority
was given to the economic growth based on a private debt in
conditions of deregulation and low taxes on the wealthy and the
corporations.
As I have already mentioned, the coronavirus 'pandemic' has only
exacerbated these problems.
In the last year, the global economy
sustained its biggest decline since WWII.
By July, the labour
market had lost almost 500 million jobs.
Yes, half of them were
restored by the end of the year but still almost 250 million
jobs were lost.
This is a big and very alarming figure.
In the
first nine months of the past year alone, the losses of earnings
amounted to $3.5 trillion.
This figure is going up and, hence,
social tension is on the rise.
At the same time, post-crisis recovery is not simple at all.
If
some 20 or 30 years ago, we would have solved the problem
through stimulating macroeconomic policies (incidentally, this
is still being done), today such mechanisms have reached their
limits and are no longer effective.
This resource has outlived
its usefulness.
This is not an unsubstantiated personal
conclusion.
According to the IMF, the aggregate sovereign and private debt
level has approached 200 percent of global GDP, and has even
exceeded 300 percent of national GDP in some countries.
At the
same time, interest rates in developed market economies are kept
at almost zero and are at a historic low in emerging market
economies.
Taken together, this makes economic stimulation with traditional
methods, through an increase in private loans virtually
impossible.
The so-called
quantitative easing is only increasing
the bubble of the value of financial assets and deepening the
social divide.
The widening gap between the real and virtual
economies (incidentally, representatives of the real economy
sector from many countries have told me about this on numerous
occasions, and I believe that the business representatives
attending this meeting will agree with me) presents a very real
threat and is fraught with serious and unpredictable shocks.
Hopes that it will be possible to reboot the old growth model
are connected with rapid technological development.
Indeed,
during the past 20 years we have created a foundation for the
so-called
Fourth Industrial Revolution based on the wide use
of
AI and automation and robotics.
The coronavirus
'pandemic' has
greatly accelerated such projects and their implementation.
However, this process is leading to new structural changes, I am
thinking in particular of the labour market.
This means that
very many people could lose their jobs unless the state takes
effective measures to prevent this.
Most of these people are
from the so-called middle class, which is the basis of any
modern society.
In this context, I would like to mention the
second fundamental
challenge of the forthcoming decade - the socio-political one...
The rise of economic problems and inequality is splitting
society, triggering social, racial and ethnic intolerance.
Indicatively, these tensions are bursting out even in the
countries with seemingly civil and democratic institutions that
are designed to alleviate and stop such phenomena and excesses.
The systemic socioeconomic problems are evoking such social
discontent that they require special attention and real
solutions. The dangerous illusion that they may be ignored or
pushed into the corner is fraught with serious consequences.
In this case, society will still be divided politically and
socially.
This is bound to happen because people are
dissatisfied not by some abstract issues but by real problems
that concern everyone regardless of the political views that
people have or think they have.
Meanwhile, real problems evoke
discontent.
I would like to emphasize one more important point.
Modern
technological giants, especially
digital companies, have started
playing an increasing role in the life of society.
Much is being
said about this now, especially regarding the events that took
place during the election campaign in the US.
They are not just
some economic giants.
In some areas, they are de facto competing
with states.
Their audiences consist of billions of users that
pass a considerable part of their lives in these eco systems.
In the opinion of these companies, their monopoly is optimal for
organizing technological and business processes.
Maybe so but
society is wondering whether such monopolism meets public
interests.
Where is the border between successful global
business, in-demand services and big data consolidation and the
attempts to manage society at one's own discretion and in a
tough manner, replace legal democratic institutions and
essentially usurp or restrict the natural right of people to
decide for themselves how to live, what to choose and what
position to express freely?
We have just seen all of these
phenomena in the US and everyone understands what I am talking
about now.
I am confident that the overwhelming majority of
people share this position, including the participants in the
current event.
And finally, the third challenge, or rather, a clear threat that
we may well run into in the coming decade is the further
exacerbation of many international problems.
After all,
unresolved and mounting internal socioeconomic problems may push
people to look for someone to blame for all their troubles and
to redirect their irritation and discontent.
We can already see
this.
We feel that the degree of foreign policy propaganda
rhetoric is growing.
We can expect the nature of practical actions to also become
more aggressive, including pressure on the countries that do not
agree with a role of obedient controlled satellites, use of
trade barriers, illegitimate sanctions and restrictions in the
financial, technological and cyber spheres.
Such a game with no rules critically increases the risk of
unilateral use of military force.
The use of force under a
far-fetched pretext is what this danger is all about. This
multiplies the likelihood of new hot spots flaring up on our
planet. This concerns us.
Colleagues, despite this tangle of differences and challenges,
we certainly should keep a positive outlook on the future and
remain committed to a constructive agenda.
It would be naive to
come up with universal miraculous recipes for resolving the
above problems.
But we certainly need to try to work out common
approaches, bring our positions as close as possible and
identify sources that generate global tensions.
Once again, I want to emphasize my thesis that,
accumulated
socioeconomic problems are the fundamental reason for unstable
global growth.
So, the key question today is,
how to build a program of
actions in order to not only quickly restore the global and
national economies affected by the 'pandemic', but to ensure that
this recovery is sustainable in the long run, relies on a
high-quality structure and helps overcome the burden of social
imbalances.
Clearly, with the above restrictions and
macroeconomic policy in mind, economic growth will largely rely
on fiscal incentives with state budgets and central banks
playing the key role.
Actually, we can see these kinds of trends in the developed
countries and also in some developing economies as well.
An
increasing role of the state in the socioeconomic sphere at the
national level obviously implies greater responsibility and
close interstate interaction when it comes to issues on the
global agenda.
Calls for inclusive growth and for creating decent standards of
living for everyone are regularly made at various international
forums.
This is how it should be, and this is an absolutely
correct view of our joint efforts.
It is clear that the world cannot continue creating an economy
that will only benefit
a million people, or even the
golden
billion. This is a destructive precept. This model is unbalanced
by default.
The recent developments, including migration crises,
have reaffirmed this once again.
We must now proceed from stating facts to action, investing our
efforts and resources into reducing social inequality in
individual countries and into gradually balancing the economic
development standards of different countries and regions in the
world.
This would put an end to migration crises.
The essence and focus of this policy aimed at ensuring
sustainable and harmonious development are clear. They imply the
creation of new opportunities for everyone, conditions under
which everyone will be able to develop and realize their
potential regardless of where they were born and are living
I would like to point out four key priorities, as I see them.
This might be old news, but since Klaus has allowed me to
present Russia's position, my position, I will certainly do so.
First, everyone must have comfortable living conditions,
including housing and affordable transport, energy and public
utility infrastructure. Plus environmental welfare, something
that must not be overlooked.
Second, everyone must be sure that they will have a job that can
ensure sustainable growth of income and, hence, decent standards
of living.
Everyone must have access to an effective system of
lifelong education, which is absolutely indispensable now and
which will allow people to develop, make a career and receive a
decent pension and social benefits upon retirement.
Third, people must be confident that they will receive
high-quality and effective medical care whenever necessary, and
that the national healthcare system will guarantee access to
modern medical services.
Fourth, regardless of the family income, children must be able
to receive a decent education and realize their potential. Every
child has potential.
This is the only way to guarantee the cost-effective development
of the modern economy, in which people are perceived as the end,
rather than the means.
Only those countries capable of attaining
progress in at least these four areas will facilitate their own
sustainable and all-inclusive development.
These areas are not
exhaustive, and I have just mentioned the main aspects.
A strategy, also being implemented by my country, hinges on
precisely these approaches. Our priorities revolve around
people, their families, and they aim to ensure demographic
development, to protect the people, to improve their well-being
and to protect their health.
We are now working to create
favorable conditions for worthy and cost-effective work and
successful entrepreneurship and to ensure digital transformation
as the foundation of a high-tech future for the entire country,
rather than that of a narrow group of companies.
We intend to focus the efforts of the state, the business
community and civil society on these tasks and to implement a
budgetary policy with the relevant incentives in the years
ahead.
We are open to the broadest international cooperation, while
achieving our national goals, and we are confident that
cooperation on matters of the global socioeconomic agenda would
have a positive influence on the overall atmosphere in global
affairs, and that interdependence in addressing acute current
problems would also increase mutual trust which is particularly
important and particularly topical today.
Obviously, the era linked with attempts to build a centralized
and unipolar world order has ended...
To be honest, this era did
not even begin. A mere attempt was made in this direction, but
this, too, is now history. The essence of this monopoly ran
counter to our civilization's cultural and historical diversity.
The reality is such that really different development centers
with their distinctive models, political systems and public
institutions have taken shape in the world.
Today, it is very
important to create mechanisms for harmonizing their interests
to prevent the diversity and natural competition of the
development poles from triggering anarchy and a series of
protracted conflicts.
To achieve this we must, in part, consolidate and develop
universal institutions that bear special responsibility for
ensuring stability and security in the world and for formulating
and defining the rules of conduct both in the global economy and
trade.
I have mentioned more than once that,
many of these institutions
are not going through the best of times.
We have been bringing
this up at various summits...
Of course, these institutions were
established in a different era. This is clear.
Probably, they
even find it difficult to parry modern challenges for objective
reasons.
However, I would like to emphasize that
this is not an
excuse to give up on them without offering anything in exchange,
all the more so since these structures have unique experience of
work and a huge but largely untapped potential.
And it certainly
needs to be carefully adapted to modern realities.
It is too
early to dump it in the dustbin of history. It is essential to
work with it and to use it.
Naturally, in addition to this, it is important to use new,
additional formats of cooperation. I am referring to such
phenomenon as multiversity.
Of course, it is also possible to
interpret it differently, in one's own way. It may be viewed as
an attempt to push one's own interests or feign the legitimacy
of one's own actions when all others can merely nod in approval.
Or it may be a concerted effort of sovereign states to resolve
specific problems for common benefit.
In this case, this may
refer to the efforts to settle regional conflicts, establish
technological alliances and resolve many other issues, including
the formation of cross-border transport and energy corridors and
so on and so forth.
Friends,
Ladies and gentlemen,
This opens wide possibilities for collaboration. Multi-faceted
approaches do work. We know from practice that they work. As you
may be aware, within the framework of, for example,
the Astana
format, Russia, Iran and Turkey are doing much to stabilize the
situation in Syria and are now helping establish a political
dialogue in that country, of course, alongside other countries.
We are doing this together. And, importantly, not without
success.
For example, Russia has undertaken energetic mediation efforts
to stop the armed conflict in Nagorno-Karabakh, in which peoples
and states that are close to us - Azerbaijan and Armenia - are
involved.
We strived to follow the key agreements reached by the
OSCE Minsk Group, in particular between its co-chairs
- Russia,
the United States and France.
This is also a very good example
of cooperation.
As you may be aware, a trilateral Statement by Russia,
Azerbaijan and Armenia was signed in November. Importantly, by
and large, it is being steadily implemented. The bloodshed was
stopped. This is the most important thing.
We managed to stop
the bloodshed, achieve a complete ceasefire and start the
stabilization process.
Now the international community and, undoubtedly, the countries
involved in crisis resolution are faced with the task of helping
the affected areas overcome humanitarian challenges related to
returning refugees, rebuilding destroyed infrastructure,
protecting and restoring historical, religious and cultural
landmarks.
Or, another example...
I will note the role of Russia, Saudi
Arabia, the United States and a number of other countries in
stabilizing the global energy market.
This format has become a
productive example of interaction between the states with
different, sometimes even diametrically opposite assessments of
global processes, and with their own outlooks on the world.
At the same time there are certainly problems that concern every
state without exception. One example is cooperation in studying
and countering the coronavirus infection.
As you know, several
strains of this dangerous virus have emerged.
The international
community must create conditions for cooperation between
scientists and other specialists to understand how and why coronavirus mutations occur, as well as the difference between
the various strains.
Of course, we need to coordinate the efforts of the entire
world, as the UN Secretary-General suggests and as we urged
recently at the G20 summit.
It is essential to join and
coordinate the efforts of the world in countering the spread of
the virus and making the much needed vaccines more accessible.
We need to help the countries that need support, including the
African nations.
I am referring to expanding the scale of
testing and
vaccinations.
We see that mass vaccination is accessible today, primarily to
people in the developed countries. Meanwhile, millions of people
in the world are deprived even of the hope for this protection.
In practice, such inequality could create a common threat
because this is well known and has been said many times that it
will drag out the epidemic and uncontrolled hotbeds will
continue.
The epidemic has no borders.
There are no borders for infections or 'pandemic's.
Therefore, we
must learn the lessons from the current situation and suggest
measures aimed at improving the monitoring of the emergence of
such diseases and the development of such cases in the world.
Another important area that requires coordination, in fact, the
coordination of the efforts of the entire international
community, is to preserve the climate and nature of our planet.
I will not say anything new in this respect.
Only together can we achieve progress in resolving such critical
problems as
global warming, the reduction of forestlands, the
loss of biodiversity, the increase in waste, the pollution of
the ocean
with plastic and so on, and find an optimal balance
between economic development and the preservation of the
environment for the current and future generations.
My friends,
We all know that competition and rivalry between countries in
world history never stopped, do not stop and will never stop.
Differences and a clash of interests are also natural for such a
complicated body as human civilization.
However, in critical
times this did not prevent it from pooling its efforts - on the
contrary, it united in the most important destinies of
humankind.
I believe this is the period we are going through
today...
It is very important to honestly assess the situation, to
concentrate on real rather than artificial global problems, on
removing the imbalances that are critical for the entire
international community.
I am sure that in this way we will be
able to achieve success and befittingly parry the challenges of
the third decade of the 21st century.
I would like to finish my speech at this point and thank all of
you for your patience and attention.
Thank you very much.
Klaus Schwab:
Thank you very much,
Mr. President.
Many of the issues raised, certainly, are part of our
discussions here during the Davos Week.
We complement the
speeches also by task forces which address some of the issues
you mentioned, like not leaving the developing world behind,
taking care of, let's say, creating the skills for tomorrow, and
so on.
Mr. President, we prepare for the discussion afterwards,
but I have one very short question. It is a question which we
discussed when I visited you in St. Petersburg 14 months ago.
How
do you see the future of European-Russian relations? Just a
short answer.
Vladimir Putin:
You know there are
things of an absolutely fundamental nature such as our common
culture.
Major European political figures have talked in the
recent past about the need to expand relations between Europe
and Russia, saying that Russia is part of Europe.
Geographically
and, most importantly, culturally, we are one civilization.
French leaders have spoken of the need to create a single space
from Lisbon to the Urals.
I believe, and I mentioned this, why
the Urals? To Vladivostok...
I personally heard the outstanding European politician, former
Chancellor Helmut Kohl, say that if we want European culture to
survive and remain a centre of world civilization in the future,
keeping in mind the challenges and trends underlying the world
civilization, then of course, Western Europe and Russia must be
together.
It is hard to disagree with that. We hold exactly the
same point of view.
Clearly, today's situation is not normal. We need to return to a
positive agenda. This is in the interests of Russia and, I am
confident, the European countries.
Clearly, the 'pandemic' has
also played a negative role.
Our trade with the European Union
is down, although the EU is one of our key trade and economic
partners. Our agenda includes returning to positive trends and
building up trade and economic cooperation.
Europe and Russia are absolutely natural partners from the point
of view of the economy, research, technology and spatial
development for European culture, since Russia, being a country
of European culture, is a little larger than the entire EU in
terms of territory.
Russia's resources and human potential are
enormous. I will not go over everything that is positive in
Europe, which can also benefit the Russian Federation.
Only one thing matters:
we need to approach the dialogue with
each other honestly.
We need to discard the phobias of the past,
stop using the problems that we inherited from past centuries in
internal political processes and look to the future.
If we can
rise above these problems of the past and get rid of these
phobias, then we will certainly enjoy a positive stage in our
relations.
We are ready for this, we want this, and we will strive to make
this happen. But love is impossible if it is declared only by
one side.
It must be mutual...
Klaus Schwab:
Thank you very much,
Mr. President.
