Oleg Deripaska - Chief Executive, RUSAL HARDtalk


Oleg Deripaska - Chief Executive, RUSAL

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called him an arrogant posh boy. And now it is time for HARDtalk. In

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post Soviet Russia, a small band of businessmen became unimaginably

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rich. These so-called oligarchs command assets worth billions of

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dollars, but their position isn't without its perils in the era of

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Putin. Disloyalty to the Kremlin can have grave consequences. Today

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we speak to Oleg Deripaska, a billionaire many times over, the

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architect of a vast business empire that currently faces significant

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economic and legal challenges. Is the politics of Russia proving to

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be bad for business? Welcome to HARDtalk. Thank you. You have had

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to live with the label of oligarch for many years. Do you resent it?

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do not think it is about me. In the 1990s are was in Siberia or when

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the privatisation was happening. I consider myself an industrialist.

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Interesting that she did not consider yourself to be an oligarch.

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Do you think that is true of the Russian people? Mr Putin was still

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talking about the era of the 1990s, the privatisation of same many post

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Soviet assets. He said he would ensure that that oligarchy never

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again happens in Russia. Politicians never revealed the

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truth. It is not on the Russian again it any more. The 90s are of

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be. To quote some of the words of the campaign. When eight campaign

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do rueful pit in said during the campaign, in the 90s, it was the

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being, ponder, whole sectors of the economy were destroyed, stolen.

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They ground Russia into the dust. - - one of Vladimir Putin's campaign

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managers said that. He is the official campaign manager for

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Vladimir Putin. Whatever was said in Russia during the campaign is

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not about business, it is about politics. It was a tough time.

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People went into the streets because they were unhappy about the

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elections. A one to talk to you about the future. Your business

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empire employs hundreds of thousands of people inside and it's

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good Russia. Our audience would love to here how you build the

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business up. You were a nuclear scientist at University. Within any

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very few years you were running the biggest aluminium smelting plant in

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Siberia, I believe it. How did that happen? You have to leave in a

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small village in the northern Caucasus. You have to work very

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hard. It was a small, but it demanded extensive work because we

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did everything by hand. We worked after school, went to sleep, went

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to school, went back to work. That is how you can be trained to

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understand that you can grow everything by yourself and rely on

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yourself. Been University, two years training in Siberia. Then

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after university, like thunder there was no university, no-one

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would support mustardy if I wanted to go for a PhD. -- support my

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study. Hard work and tough times, because, no-one puts it politely,

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it was something of the Wild West in the post-Soviet Russian economy.

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T get as far as you beat in any top industry - minerals, aluminium your

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speciality - you had to fight some tough battles. You had to be

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prepared. Is strong, to a lot of sport, be focused, work hard,

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respect people for what they can do, not for what they promise to do. UK

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and differentiate yourself from the country. Th country. Thntry of Russia

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was in transition. No-one knew how to do it. -- the end her country of

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Russia. After the Second World War, 30% will GDP was borrowed. The

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economic transition was painful. I do not know when you have last been

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in Russia. It is a different place. I have seen it and I do want to

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talk about where Russia goes now. But just finishing these thoughts

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about the foundations of your business. What about the law? It is

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on the record that in the US you have had visa problems because of

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associations that the US believes you have had with criminal

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enterprise, the same in Canada. What have your response been to

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there's allegations but my first, I offered them to come and check.

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one wants to do it. The stories were in newspapers. It is important

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what some people think. In Siberia, Moscow, the south of Russia. Eight

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you my story and they knew what had it. If you went to what she

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described as the Wild West now you would not recognise it. -- what you

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describe. It is a safe area. It is better an hour. We have no other

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option. -- is better now. DD you do things than that you are repeated

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it to acknowledge you regret now? No. Part of your success was your

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ambition to build the business. You were not happy with the original

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smelting plant. He wanted more and you came to dominate through Rusal,

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be huge aluminium company that you started. Looking at what has

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happened to your business in the last five years, do you believe

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that in the end you went too far? That you were captured by hubris?

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It was a crisis. Our industry still suffered a lot because of the

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European situation. Our customers were in the sectors of

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transportation, construction and packaging. He was a tough

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environment for them in 2008, 2000. Lots of subsidies for Hoppen

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manufacturing etcetera.... Hoppen manufacturing. Court of Arbitration

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for at. The same for new material for construction and packaging. I

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am confident that the aluminium industry is good for development.

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At the end of 2008, the beginning of 2009, how could stick you

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can't...... how close the bit you can't to going bust? You were worth

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billions of dollars at that time. It is still a business. There are

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not auditors. From that position of enormous wealth and success, you

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had major problems. There you can tell me how close you came to

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insolvency, to going bust. Not very close. I know how banks think, how

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they treat their clients. I was capable of demonstrating in an

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efficient way that there was no problem for them. I assured

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everyone that Clegg was no problem with the company and it was capable

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of getting through the crisis. No- one got a hit it. You pay your

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debts in full. -- got a haircut. Not completely, but we had as its

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value it much more than the debts. You still have a huge business, you

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are still worth billions of dollars. People who used to be closed you

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are convinced that you made some bad decisions. Victor was the

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chairman of Rusal, working alongside you. He quit the company,

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saying it was in deep crisis. He said it was overburdened with debt,

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entangled in lawsuits and social conflict. He said the management

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had adopted strategies without the approval of the board.

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everything is true. I have for it to show what week and... what we

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can achieve from different strategies. To talk and to walk.

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250,000 employees. 10,000 very experienced people in top

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management. It to being a few thousand years of experience in

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different industries. It is not just my decision. A planets pit and

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we exercise that plan.... a plan is Prix p it and we exercise but plan.

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We know how to operate the business and we know our Productions Court

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of Arbitration for Sport production facilities. Eight final thought

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about the state of the business now. Why do Mark think here you face so

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many legal, arbitration, settlement actions in Rusal? Y wound so many

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people convinced you have taken some terrible decisions,

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particularly the decision to buy into pinnacle company and refuse to

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sell when you were offered a decent Just one example - we could have

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sold it for $5 billion. Then we got offered four 9 billion them for 12

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billion. Later 16 billion. Can you do such money in the operation - I

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can tell you not. But the company was so good, I could see. I could

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see it on a global sense. If one company could solve problems,

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either China or India for the next hundred years, this is so unique

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and so well placed in the current market, that to sell them is to

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make a crime. So here and now, you are prepared to say you are not

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prepared to sell out? We have to sell for a fair price. It is a a

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little market. If we decided it and it was decided by the board, by the

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synergy and the investment in our company. You mention that the

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success of the cover is nothing to do with the political connection. -

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- of the company. In Russia today, a very big business like yours

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cannot succeed if you fall out with the Kremlin, Mr Vladimir Putin in

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particular. That is not possible if you have made an enemy of the

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Kremlin? UK and not cross a street on a red light, that is common

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knowledge. -- you cannot. I think it is a little difficult. We have

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to look at the message sent by Mikhail Khodorkovsky to know that

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in Russia, if you upset Mr Vladimir Putin and the Kremlin, the

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likelihood is that you will spend a substantial chunk of your time in

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prison. That was a very difficult case. He was a Spanish too much.

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But at the same time... That is interesting. You think it was wrong,

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unfair, unjust that he now faces a second six-year jail term? I have

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known him for quite a long time. It is difficult for me to make a

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judgement on the court case. There is a lot of legal reports. I think

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he was out of... He came from an organisation. For example, I was

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slightly after he was expelled. He did business to read them. --

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through them. He had a social and political agenda. That is the point.

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Isn't message clear from the clamour that if you are to continue

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as a very big powerful business leader in Russia, you must not step

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into politics and challenge the Kremlin? How do I say it... I do

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not want to go too much into the subject. If you have a big business,

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it will buy you are few seasons of Parliament them you wanted to make

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a fresh Parliament to promote business, they have enough money.

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They just need to have leaders who take the risk. I think the

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parallels you draw with the US and Britain do not work too far.

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agree. It is not my area. I am not a politician. I am not a journalist.

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You are a very big business man with a huge stake in the Russian

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economy, but across the economy, you employ hundreds and thousands

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of people in many businesses. Would you say it has been damaging to

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Russia's economy and to the degree which Russia can attract inward

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investment from overseas to see the Khodorkovsky case, to see what has

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happened to heritage investment in Russia? Would you say this creates

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a very difficult problem for Russians who want to sell

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themselves as a place of foreign business? The Khodorkovsky case

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created a sudden demand for change. You have seen it. Are you behind

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that the mind? Would you support that demand for change? No. Because

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I can see the people who lead us. They are even worse than the people

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in these areas today. This is a Russian reality. We have to leave

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the understanding that we need may be another two generations to

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complete the transition. They will call you oligarchs, they will make

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you are new label. You need to come this of down and see what you can

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do. 20 years ago, we had the Soviet empire which collapsed, created a

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lot of problems. We still have people who believe it was a better

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way to live. We just need to be patient and off and go through and

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create as much opportunity as possible for a country to become

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normal. You talk about patients. The World Bank looked at the

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Russian economy. It is not sustainable in the long run. You

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get figures - the OECD said Russian workers are only 43% as productive

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as the developed Western economies. Russia needs immediate reform. It

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needs a better infrastructure, in needs a rule of law and the courts

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and property rights to be respected and it needs to happen now. Russia

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needs better discipline. We have everything in place. You want a

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honest government in place. Many countries suffer the same problem.

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But we have for the best. I can tell you that if you look at the

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numbers, last year, the Russian automotive market grew. The

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production came not from outside Russia but inside Russia. How many

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factories were developed - you can look at that. Maybe we were not so

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quick to spend like Greece or Spain or Italy. We tried to balance it.

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We have a surplus. You can consider the surplus. As long as the All

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prices are OK, you are OK. Even if the All prices go down, the Russian

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economy will not suffer too much. - - or your -- oil prices. Where do

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you think is a better place to do business - Russia or China? Well

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according to the report, it is certainly not Russia. You are on a

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pile with Nigeria in terms of corruption. I understand. But if

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you ask Syria's businessmen and the big companies. You can ask hundreds

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of people and you will receive 95% answered that Russia is a better

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place to do business now than China. This is a reality. I do not want to

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challenge the World Bank report but just say in my view it as a

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businessman who is doing business in Russia. Indeed elsewhere as well.

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I want to end with this thought. We have a lot of Russian billionaires

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in London. You spend a lot of time in London and rather well know that

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you have social contacts just a few years ago with Peter Mandelson,

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with George Osborne who is now the Chancellor of the Exchequer of this

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country. I wonder if it is important for you to build those

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sorts of political links in the UK and whether you might think of

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establishing yourself here. I would like to spend more time here. Last

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time, I spend less than 15 days. For the future quest mac for the

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future, it may be. It is a struggle for Brasher to go through the

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crisis and Bill dealt country. -- Russia. Are you one of the leading

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