Dmitry Medvedev on the Record

In a rare and prescient interview, Russia's likely next President spoke in September to BusinessWeek about democracy, the economy, and Putin's legacy

On Dec. 10, Russian President Vladimir Putin revealed the name of the candidate he will back in Russia's presidential election in March. Ending months of feverish speculation, the President chose his First Deputy Prime Minister and former chief of staff, Dmitry Medvedev.

Medvedev, who is also the chairman of energy giant Gazprom (GAZP.RTS), returned the favor on Dec. 11, revealing in a speech that if elected he would ask Putin to serve as Prime Minister and head of the government. With this not entirely unexpected development, the long-standing question of what Putin will do after leaving the presidency has at last been answered. The transition may not be very democratic, since Putin clearly will still hold the reins of power. But investors are reassured at the prospect of stability: The RTS stock index ended the day up a half percent, after rising 2% on Dec. 10.

In a rare interview with the Western media, Medvedev sat down with BusinessWeek's Moscow bureau chief Jason Bush in mid-September to discuss Russia's economic and political situation. In their wide-ranging discussion, Medvedev touched on many topical questions, including the legacy of President Putin, the role of the state in Russia's economic development, and next spring's presidential election. Edited excerpts from their conversation follow.

President Putin's presidency is coming to an end. How would you summarize the historical significance of the last eight years?

Fifteen or so years ago, the majority of our people had a feeling of disaster. It wasn't just a disaster for the state, but also a disaster for all those values which people had lived by for decades. During the last eight years, I think the main thing has been achieved. We've stabilized life in the country. We've created a modern market economy, which can secure the nation's development during the coming decades.

When many people look at Russia's economy in recent years, what they see is the growing role of the state. For example, state companies like Gazprom have been expanding. Doesn't this contradict the idea of a modern market economy?

I don't think it does. Modern market economies aren't all the same. If you take, say, the economy of the U.S. and the economies of the EU, we see different types of economy. That was the result of historical development.

As far as our economy's concerned, of course Russia also has its own historical traditions. Even under the tsars, Russia had a high share of state capital. The biggest joint stock companies, formed at the end of the 19th century, were state-owned. All the railways, and the insurance companies, developed as a result of a partnership between the state and private capital. Yet, at the time, Russia was one of the fastest-developing capitalist countries in the world.

Today, I think we have the share of state property that is appropriate for the current level of economic development. There are key sectors—energy, infrastructure—that certainly have a special character for our state and require state attention. I'm not a fan of state domination of the economy. But there are simply some tasks which, in Russian conditions, can't be solved without the participation of the state.

Many people speculate that there are different clans or interests within the state. For example, large state corporations are sometimes described as competing centers of power.

You know, this is just a simplistic, theoretical scheme that's only good for the tabloids. Why? Because if it was really like that, then our economy would have collapsed a long time ago. If someone sitting at the head of some large company made multibillion-dollar decisions based only on their private interests, the whole economy would stop. And just the opposite is happening. Economic growth is 7%.

There were several well-known cases that were particularly worrying for investors. I'm talking about the Yukos affair, the Sakhalin II case (BusinessWeek.com, 12/14/06), the problems with Kovykta (BusinessWeek.com, 4/19/07). Aren't property rights in Russia poorly defended?