Anatoly Chubais' interview with Die Welt newspaper
Interview of Anatoly Chubais, Chairman of the Board, CEO of the Russian Nanotechnology Corporation, to Die Welt newspaper Die Welt: Mr. Chubais, it must be difficult times for you?
Chubais: Why?
Die Welt: In the early nineties, you privatized the entire Russian economy and now you have to (indifferently) watch how not only in Russia, but also around the world, governments nationalize banks and enterprises.
Chubais: I don't see this as a disaster. I believe that, firstly, it is inevitable, and secondly, this way the foundation is laid for the future of the second stage of privatization.
Die Welt: How? If once the state has become the owner, it is unlikely to be ready to retire again (go out of business).
Chubais: This is really a problem. Governments of all countries of the world find it difficult to part with property over which they have gained control. There is always a risk that you will like to manage large enterprises, appoint and remove directors, etc. To overcome this temptation, you will need to show some will, make an effort.
Die Welt: You keep up with the times and have been the head of a large state concern for six months now. Your state corporation RUSNANO should raise Russia to the world top of nanotechnology. How many of your 130 billion rubles (3 billion euros) of start-up capital evaporated during the financial crisis?
Chubais: We were even able to increase our capital and now we have 136 billion rubles. We have placed the money correctly. The funds were placed in deposits in large private and state-owned banks in Russia, which showed a high rating of long-term creditworthiness. It is important for us to invest temporarily available funds as reliably as possible.
Die Welt: What are you doing with all this money?
Chubais: The purpose of the Corporation is the commercialization of scientific and technical developments in the field of nanotechnology. We must ensure the construction of an innovative business in Russia, which by 2015 should produce nanotechnology products worth 900 billion rubles (20 billion euros). We invest in projects that private business offers us. Currently, the Corporation has already approved for financing ten projects from various industries - from the production of LEDs to photovoltaics and medical equipment.
Die Welt: And you, as a state concern, provide yourself with the majority in projects, as is customary in Russia?
Chubais: No, we act only as a minority shareholder. This business model has a chance of success only when there is a private majority strategic partner. Otherwise, we would not be able to develop hundreds of projects. We provide loans on very favorable terms for up to 10 years, which is extremely profitable in Russia now. In addition to financial support, we are ready to provide active administrative assistance. As soon as we understand that a business can run a project on its own, the corporation leaves it.
Die Welt: In the USA, Silicon Valley is considered a haven (pillar) of innovation and private entrepreneurship. Is the state corporation system chosen in Russia? Why?
Chubais: To be honest, I personally am quite wary of the institute of state corporations. In my opinion, this is an indisputable institution. But we work in the field of difficult, venture, innovative. The volume of Russian production is minimal, we actually need to start from scratch. For example, last year, nanoproducts worth from four to five billion rubles were produced in Russia. This is extremely small. Without government support, this sector, which has a huge potential for growth, cannot fully develop. Therefore, we give cheap loans for a long time, and only a state corporation can afford this. We want to be as transparent as possible, we will report according to international financial standards, and we will entrust the assessment to international rating agencies.
Die Welt: You ignore the laws of the market in this way.
Chubais: If we were a joint-stock company, the owners would have criticized me long ago. One example: we are opening a factory for the production of LEDs in Yekaterinburg. Minority shareholders would say: Why in Yekaterinburg, and not in Taiwan? It's more profitable there, there are fewer costs. To be honest, I would have problems answering them. We are fulfilling a state task here, which sounds like this: Russia as a platform for the development of innovative technologies should have a future.
Die Welt: And if one of your companies goes on the stock exchange…
Chubais: I don't rule it out. Future stars will certainly appear among the projects with our business partners. Why can't we have an enterprise of such importance (scale) as Intel or Applied Materials?
Die Welt: Have you been able to persuade Russian oligarchs to invest in the nanoindustry yet?
Chubais: Yes. Do you need names? Please: Mikhail Prokhorov. He is our partner in the project for the production of new generation lighting equipment (LEDs). We work with applications from V.Yevtushenkov, V.Vekselberg, A.Mordashev.
The interest is present. But our strategy of creating a nanoindustory in Russia is not aimed at oligarchs. First of all, we want to cooperate with small and medium-sized businesses. These are companies with sales of five to ten million dollars. We don't need five projects with five oligarchs, but 500 with 500 medium and small entrepreneurs.
Die Welt: RUSNANO supports only Russian enterprises?
Chubais: No, we also accept applications from foreign companies, including German ones, and support them on the same terms. To date, we have 800 applications, 45 of them from abroad, 3, by the way, from Germany. The only condition is that the production should be located in Russia.
Die Welt: Russia, like no other country, has had to suffer in recent years because of the departure of scientists. How are you going to find bright heads for the high-tech industry in Russia?
Chubais: Scientists and researchers who have left (immigrated) from Russia, this is a huge value. Only 35,000 Russian specialists work in Silicon Valley, in Israel, as well as in Germany, their number is tens of thousands. It would be wrong to try to bring all these people back to Russia. The right goal is to create a new relationship with them. We must offer not just new forms of communication, but new forms of work that are acceptable to them. The task is not to impose some of our ideas on them, but, on the contrary, to get from them a vision of how they would like to interact with Russia. Why can't a researcher from abroad come to Russia to give lectures or work here for six months?
Die Welt: How much is Russia affected by the financial and economic crisis?
Chubais: Russia has suffered a lot. Much stronger than one would expect. We have to withstand two very painful blows at the same time. First: our own exports. 85 percent of our exports are oil, gas and metal. If in previous years export revenues amounted to another $ 500 billion, this year they will reach only $ 250 billion. There was no such dramatic decline even in the 90s. Secondly: the financial system. Until the beginning of September 2008, capital was imported into Russia in large quantities. Then, in September, in parallel with the bankruptcy of Lehman Brothers, an unprecedented outflow of capital from the country began.
Die Welt: The economy "was dehydrated."
Chubais: Our country was on the verge of losing the banking system. This would mean the collapse of the entire financial system: more salaries would not be paid, bills would not be paid.
Die Welt: Did Prime Minister Vladimir Putin do the right thing when he started spending foreign exchange reserves and announced powerful programs to support banks and enterprises?
Chubais: I think so. Only thanks to the wise policy of the government, which in the best of times accumulated enough gold and foreign exchange reserves, the worst was prevented. Of the $560 billion in foreign exchange reserves, only $420 billion is now left, but it was the right thing to use the reserves for this purpose. This was the only way to save the Russian banking system.
Die Welt: After a decade of growth, Russia's economy should shrink by 0.2 percent in 2009. What consequences will this have for the self-consciousness of the largest country on earth?
Chubais: Over the past eight years, real wages have grown by 10-12 percent annually. This year, on the contrary, the real incomes of the population will decrease by 2 percent. This will affect everyone: from the oligarchs, who are now losing their billions, to the middle class and the poorest segments of the population. Social tension may arise. This, however, also applies to such a giant as China. The Chinese premier is quite optimistic about 8 percent growth. If economic growth is lower, I don't know if China will be able to remain stable this year. Hundreds of thousands of young, energetic, aggressive people will not be able to find a job.
Die Welt: Do you give advice to the government?
Chubais: No. I have already participated in this more than enough. I've had enough.
Die Welt: How long will your employment contract actually last?
Chubais: That's a good question. Five years. But I have to check it out. In any case, I do not want to leave RUSNANO until 2015 - regardless of the validity period of my contract.
Die Welt: Last summer, as the head of the energy holding RAO UES of Russia, you completed the privatization of the electric power sector. Would it be possible to implement such a gigantic project today?
Chubais: We were extremely lucky then. Another six months, and the reform would have failed. We have managed to attract about $ 40 billion of investments in the energy industry and to interest Western concerns as an investor, for example, E.ON.
Die Welt: You recently attended the World Economic Forum in Davos. What is remarkable about the current Forum?
Chubais: Confusion. It's the 19th time I've been to Davos and I've never met a situation before where even senior managers can't tell what's going on and they don't know when the crisis will end. This makes the situation unique. The world does not know what is happening to it. One thing is clear for sure: we are experiencing a global recession. The numbers look catastrophic. Falls with such dynamics have never happened before. Even compared to 1929. Then the Great Depression gripped the United States, but not China, India and Russia, it also did not affect Europe. Today it is rampant all over the world.
Die Welt: When will the worst be over?
Chubais: I can't tell you that. I don't think that in 12 months a crisis of such a serious scale will be overcome. To begin with, you need to survive the year 2009. Maybe even 2010 and 2011.
Published on the website of RUSNANO Group of Companies on 20.02.2009
Portal "Eternal youth" www.vechnayamolodost.ru24.02.2009