Vladimir Putin: Isolated groups deepen imbalance, problems should be solved together

VLADIVOSTOK, November 14. /TASS/. The formation of confronting economic blocs is counterproductive, Russian President Vladimir Putin said in an exclusive interview with TASS ahead of the G20 summit in Brisbane, Australia. “I believe it will be very bad if some blocs begin to crop up again. That’s very counterproductive and even harmful to the world economy,” Putin said. He reminded of the “WTO, which has established certain rules of the game,” adding that “there is the mechanism called the IMF.” “Discussions are underway over perfecting the international financial mechanisms and international trading relations,” Putin said. “The Doha round of WTO talks is stalled. Why? The divergence of approaches and interests between the developing economies and the developed economies is the reason,” he said. “In the meantime, in one case there emerges an imbalance of capital and in the other, imbalances of commodity flows,” Putin said. “In the advanced economies there is a great amount of free capital, and the question is about the effective, reliable and safe placement of this capital in those regions and those economies of the world which will ensure stability, protect property and generate some profit, some revenues for the advanced economies.” “For this reason they export capital, and the developing countries form the commodity flows,” the president added. “Some would like to be certain their capital is well-placed, and others, the recipients of the capital need the certainty that the rules of the game will not be changed at the sole discretion of those who export capital, including for political reasons.” Putin also said that “the world economy and finance these days are exceptionally dependent on each other.” “By drawing capital from international financial markets our financial institutions finance our companies that import finished products from the very same industrialized economies, thereby supporting jobs, the social sphere and economic growth,” he said. “If we stop doing that, disruptions will follow there. These are in-depth matters. They are not lying on the surface, they are not obvious at first sight,” he added. The president cited the example of Russia’s cooperation with Germany, which maintains some 300,000 jobs. “If there are no contracts, these jobs may be lost. True, some new bearings can be found, but it still remains to be seen what these bearings are. It is not so easy,” Putin said. Therefore, he said, it is essential to resolve all the emerging problems only through joint efforts. “The United States is contemplating the creation of two associations: one trans-Atlantic, and the other, trans-Pacific. If these are going to be two self-isolated groups, the end result will be not the elimination of imbalances in the world economy but their exacerbation,” Putin said. “Of course, we are for doing away with these imbalances, for working together, but this task is achievable only through joint efforts,” he said. “It is essential to present a common front to address all these issues that emerge on the way,” Putin said. “Why am I so certain that only joint efforts can be effective? The GDPs of BRICS countries calculated at the purchasing power parity are greater than those of the G7,” the president said. According to him, the GDP of BRICS stood at $37.4 trillion dollars, while that of the G7 was $34.5 trillion. “What if they (G7) are told: ‘No, thank you, we shall be doing this and that here on our own and we don’t care how you will carry on?’ There will follow nothing but worse imbalance. If we really wish to decide something, we should decide it together,” he said. Speaking about the future of the so-called new G7 that may comprise BRICS, Indonesia, Turkey and Mexico, Putin reiterated that decisions must be made jointly. “Everything is interrelated in the modern world, and if some regional associations, like the one we are building these days - the Eurasian Economic Union also involving Belarus and Kazakhstan - are to be created, they should emerge only as addenda to the existing global instruments that must be operating in compliance with these global rules,” he said. Read more