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Medvedev on Russia's response to the West's "Soviet" approach to business

0 20 May 2014

Dmitry Medvedev has spoken out on a number of internet and business related issues in a wide-ranging interview with Bloomberg’s Ryan Chilcote. 

In the run up to the St Petersburg Economic Forum, which will go ahead without many Western CEOs warned by their governments to stay away, Medvedev accuses the West of adopting a “Soviet” approach to business, by “bringing ideology to market relations and the economy”. 

Medvedev accuses the US and its European partners of “destroying international economic ties” and, through its sanctions on Russian MPs, “destroying the very fabric of international relations”. In doing so, it risks initiating a "second Cold War". 

According to the Russian Prime Minister, one ‘victim’ of this approach are foreign payment systems operating in Russia, such as Visa, MasterCard and American Express. While Visa and MasterCard (both American companies) are by far the most popular card providers in the country, the government’s recent decision to implement a national payment system has cast doubt over their future in Russia and has led some experts to suggest that it may not make financial sense to stay in the country at all. 

Medvedev offered a forthright defence of the government’s policy, which was drafted after MasterCard and Visa blocked cards belonging to account holders of 4 Russian banks owned by individuals on the US sanctions list. He argued that:

“I am an ordinary holder of an international bank card – to be more precise, a Russian card issued by a foreign payment system. I would like to stress that I do not have a relationship with a foreign state. I have a relationship with the bank that issued my card. And it never occurred to me that my payments depend on the political stance of a foreign state. Therefore, I would like to note that in the context of our law – and, I’m sure, also US and EU law – what Visa and MasterCard did was a direct violation of their contract with Russian clients – not a bank, but concrete individuals who trusted these payment systems. If I were a lawyer, which I’m unfortunately not at the moment, I would have gladly spent my time and effort to take these payment systems to court. I think that this is a gross violation of effective contracts and agreements. As far as I can see, our partners at Visa and MasterCard are aware of the weakness of their position, but they had to take this decision upon the recommendation of the Treasury Department and the State Department.

I’d like to remind you that the world is monitoring this conflict because if I were a Chinese or Brazilian, I’d think: Why should I carry cards that largely depend on the stance of the US administration? Better choose the Chinese way. As you know, our Chinese partners are developing a national payment system, which, considering the global nature of the Chinese economy, is already influencing global payment systems.

In other words, this is a very bad precedent, but not for Russia, although Russians were not pleased when they had to transfer their accounts to other banks. It is bad for these companies, for MasterCard, Eurocard, and Visa.

So, we don’t want to break off any ties. We want MasterCard and Visa to stay and work in Russia. That said, they must honour their obligations, not in relation to Russia, but towards individual clients who use their cards.”

Medvedev also talked at length on one of his pet topics - the internet. When asked whether he agreed with President Putin’s description of the web as “a CIA project”, he answered “yes and no”. Clearly wary of contradicting his boss, he admitted that although

“at the outset, (it) served a defence purpose… it grew into the World Wide Web, serving as a universal phenomenon, bringing together huge numbers of people. I have never made an ideal out of the Internet, but I do believe that there is no other thing in the world with such a great unifying potential, since it creates communication opportunities, and it should be properly appreciated.”

Medvedev tried to play down fears about the future of major social networks like Twitter and Facebook in the country, after the deputy chief of Russia’s internet regulator suggested that both could be shut down “in a matter of minutes”

The Prime Minister described that as “a poor choice of words”, but affirmed that “everyone who works in the Russian segment of the Internet must comply with Russian regulations. That’s not debatable.”

When asked to comment on founder Pavel Durov’s description of Russia as a place “incompatible with internet business” Medvedev described the former head of the country's most popular social network as “very talented” but with “many illusions”, and suggested that Durov’s exit from the project were a result of “an argument with the company’s shareholders and business partners”, and not “political circumstances”.

As for censorship - Medvedev rather understatedly suggested that “people using any social media should be a bit more polite so that social media is a more civilised environment”. 

Which rather depends how you define ‘polite’…


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