opposition is growing up the new president's rebranding is the topic for peace in the bell and he's gas in cross talk that is next on. the low and welcome to cross talk i'm peter lavelle returning to the russian presidency for the third time by the mayor putin has pledged to unify the country and continue reforms to expand the economy however this time around he does face growing opposition and a restless middle class russia has been in the process of rebranding itself will putin give the same.

to cross putin's inauguration i'm joined by nicholas was here in new york he is a award winning independent filmmaker and journalist in ottawa we have paul robinson he is professor at the graduate school of public and international affairs at the university of ottawa and here in the studio with me to discuss russia's economy and investment environment is he had a stock we saw volek chief economist at deutsche bank or a gentleman cross type rules in effect that means you can jump in anytime you want on a course if i go to you first in new york before we get to what mr putin may do or may not do over the next six years how would you characterize that the coverage of the russian political scene and the presidential election specifically over the last few weeks and months. i think generally speaking there is there's a you know russian bias if you look at the coverage over the last you know year leading to the election and you know this goes back to this historical roots

starting with the you know the great britain and the. crimean wars and the. english afghani wars so this is clearly you know a bias that we always seen in the media starting in the u.k. and to some extent in the u.s. you see a lot of negative bias and i think that you have an equal story if i'm going to regret it when you say it with you and your and but you say with you new york i mean but let me get more specific than i mean i think you're right i mean it goes back and i russian ism is something part and parcel of western political culture but in this election it's extremely anti putin they just don't like this man. yeah it's true and it's kind of interesting because you see with the bush administration you had the much more closer collaboration much more respect it seems to me that although i don't think it's the case with obama but the state department mostly has made you know in my in my view very misplays the colorations

even before they had the result of the observation mission in russia so there's this anti puttin. bias is there and you know it's it's unfortunately it seems to me that we're still in a cold war fear and it's rather strange when you when you you know remember clearly summarize we stated the cold war was finally over when nine eleven have after nine eleven happened and you know bush that they work with the russians very well you know when when we went into afghanistan so it is coming back to some kind of a very cold war. you know atmosphere is a very strange strange phenomenon to my view point and i don't find go to you you wrote in the american conservative an article entitled or putin's philosophy and you said the russian leaders paradoxical strong state liberal conservative is and what is that it by the way i love the article and that's why we have you on the

program how would you describe that to my viewers. well there's a long historical tradition in russia which sees a strong states not as being in a call to liberal reform but as essential to it and up without the state that the result will probably be anarchy whereas we might say benign autocracy can initiate political reforms social reforms and economic reforms to move the country forward so. putin is fond of for instance quoting study been. a typical example of this someone who believed in a strong stay. who believed in the rule of law who used quite brutal methods to suppress revolution but at the same time tried to entrench property rights tried to hunt civil liberties tried to produce a rule based state look at poll for you to stay with you would you call putin a reformer then. i a gradual on yasser entity that has been progress and the years it has been in

office i wouldn't call him a liberal democrats in the senate out in the west understand it but all they see russia is not the same today as it was twenty years ago but it's extremely obvious so the idea of this is some reactionary is very strange ok that kind of dovetails very closely to what i want to ask you i mean let's talk about the nature of reform over the last twenty years i mean people like to look at very specific things media has a very closed very small time frame but i mean as an economist take us through the last twenty years i mean would you call that reform i mean i've lived here through the last thirteen yes well what i would say is that some of the most successful reforms we've seen in russia over the past twenty years have been in the shaded to some degree either directly or indirectly by putin so if we're talking about one of

the first successes of foods and this is of course the introduction of the thirteen percent flat income tax and that's a completely different philosophy in terms of tax policy in russia something that really work to do people pay their taxes now well very much so it's one of the most successful cases of you know lower tax rates really leading to a far more significant revenue intake then another decision that was actually very much important to repairing russia's image in the west was the decision to prepay russia's external debt and as a result russia has one of the strongest balance sheets in the world today. you know a country that had more than one hundred percent of g.d.p. in terms of its debt is now less than ten percent of g.d.p. on top of that i would say russia is a creditor nation exactly. that creditor nation because on top of the. you

know the prepayment that was made russia also accumulated significant reserves fiscal reserves and the oil funds now they amount to nearly one hundred fifty billion dollars and this is one of those examples of a country that is guided by rules whereas some of the countries in the west while declaring those fiscal rules were actually not really following you know you can you spell france. go ahead do you well one of the things that has been really focus a lot on this campaign after the inauguration was the protest movement here in moscow and in the western media gave an enormous amount of coverage and i witnessed myself how protesters resorted to violence not the police but protesters did and now western media is basically saying they're justified but actually in fact they've really did hurt their own agenda by pushing violence because we haven't seen that we saw protests after the parliamentary election and then now after the

inauguration it's the opposition has done this and i find it really interesting is that right now and i'm going to surprise a lot of viewers it's the opposition in this country that are is anti-democratic because they want to accept the outcome of an election. well i think it's a it's a tricky question because i think you know the problem i had with the media was the western media the word the way they were covering the whole election is that yes there were protesters there is dissent there's no doubt the growing dissent in russia. but there's also no doubt that you know put in the united russia they won the election and what was surprising during the cover of the whole coverage is that you know you were talking about a rigged election for the elections yet there were irregularities in the elections it wasn't perfect but actually united russia had lost and went from you know sixty to two to fifty percent so while put in and united russia where actually losing you had you know the state department and other other western in all governments

and the media talking about him actually reading the election so i found this very very surprising tactless specially whether you know a nation like russia when you look at twenty years ago after yeltsin putting took over the budget crisis you know the oligarchs controlling the politics the tax system that he had to reform nobody that this big you know rich not paying anything and he was able with a thirteen percent to do really reorganize and give russia you know the prestige it had lost in russia lost one third of its a group cultural you know land one third of its population the army change so there's now there's not much context into work what putin was in was able to accomplish at the same time i think it's true to say that there are the you know there are problems with. some some you know of really probably some

some you know the irony. with which of putin lead the country with some of this probably has with dissent you also saw put in kind of you know. like brushing away protesters and not being very intelligent to you so a lot of remarks like that i think that in the future is going to have problems doing that as well i'm showing that i'm calling that there is going to rebranding putin because you know this is what he's going to polish i can go to you one of the ironies of course of all of the protest movement is that these protesters are the primarily have benefited from the time that putin and medvedev have been in office now putin again i mean these protesters are the middle class the didn't exist for the most part did it all during the soviet union was this and i know you have a middle class that they created this political elite and now they're going to have to deal with them because they're real political force they're very vocal and they're smart. yes there was a sort of marxist dialectic going on here where by. creating new classes which ran

. creates political tension in the future i think the real problem russia has in this regard is not so much a lack of freedom as a lack of access to power so that. many people feel less empowered now than they did in soviet days even though they're freer because at least in seven days even there was a party in every office so you knew who the party guy was you knew who to go to you knew who they were where they were whereas now power is more is more distance and you don't really know often who really has power because it's hidden is behind the scenes and therefore intelligent educated people who who want things to change have no way of influencing it and that leads to frustration so unless something can be done about that structural problem there will be continued tensions in the future after a short break we'll continue our discussion on flight of your putin's for third term stay.

in. height fifty two meters. more than one thousand times. skin thickness thirty centimeters the guinness record. commemorating the battle of stalingrad. other than. on our team.

and. welcome back to crossfire i'm people about to remind you we're talking about the current political situation in russia.

ok you know if i go back to you. putin is promising more reforms ok and you know after watching much of his reforms in his first two terms in office and look at mr medvedev a lot of reforms have been done but one could say the easier reforms out of the disaster of the one nine hundred ninety s. they could go catastrophe here reforms have been put into place i want to talk about political reforms later but let's look at the economy and of course what putin has said made it very clear he wants to attract foreign investment ok yeah this is this is clearly the biggest challenge for russia because what russia is grappling still with is major capital flight and that's firms of russia lost more than eighty billion dollars a lot explaining my view is that what that means is that is i mean russians are going to invest abroad and not in their own country we're talking about that figure so that means. inflows minus outflows and essentially what this means is that

both russia is getting less capital in and more capital is probably leaving the country as well so what does putin have to do to stop that or reverse it so in order to reverse this i think several issues will be key one is the anti-corruption measures and proving the investment climate specifically with regard to cooption cutting red tape cutting licensing lowering the intervention of the state into the economy all of these issues that we're actually starting to hear from from from the authorities more and more and we've seen some very important progress in the course of the past year but more needs to be done on this front and i think this micro-level issue of corporate governance of anti-corruption measures including through privatization i think this will be one of the you know let's be fair here over the last twelve years i've heard about fighting corruption here and

some progress has been made ok a lot of the little fish what is what is the current political lead have to do what is president putin have to do to really make people take it seriously because corruption is still a huge problem here well i think in order for markets to be convinced i think you clearly need major companies the largest companies of russia's state owned companies show by example far better standards and terms of corporate governance including in terms of transparency in terms of financial reporting and terms of paying dividends and some of these things again we're starting to see we want to see it on a consistent basis from year to year in order for this to be seen by markets as something that is irreversible that is a new paradigm in terms of russia's economic policy i think this is the biggest challenge for for putin and then i think other measures that have to do with pro active development so far what has been the chief. leaved has been stabilization

russia becoming a greater force in the world there were in konami terms in terms of its economic weight but now you need proactive development especially through investment and this is something that again will necessitate greater in flows of capital from abroad but also russians themselves the money that russians have to be put to use and to investment into developing infrastructure ok nick i go back to you i mean we just heard proactive which i think is very interesting here in talking to many members of the opposition they're just rejectionists and this is what bothers me a lot about the opposition in russia and it's extremely spoke small still if you like you look at the protests there rejectionists and i can't help but think and i want to i want to ask paul this is well you know in going back in russian history i feel like sometimes it's nineteen twelve because you have a set of people part of the able to liberal liberal intelligentsia here saying we're not going to talk to the regime we're not going to talk to bizarre we're not going to talk to putin this is a dangerous situation and it's not

a situation where dialogue can be brought about putin says he wants to talk to them but they don't seem to want to talk to him. yeah i think it reminds me of other situations you know we saw this in haiti when there was food was elected the second time. and we saw it in the other other countries as well where where you have sometimes to do with a very irrational position who probably sees you know the power of in the case of russia probably the power of the arab spring where things were so fast and young people were in the streets and social media went on and twitters and so on and there is a sense that in russia you know the last twenty years the growth has been amazing seven percent or more and now it's going to go down because of the oil industry and as the economy is not as secure as it was the last twenty years and things are not going to be as good you're going to. you know it's going to happen you going to have more and more young people more aggressive and position will be more

aggressive now you know what will the what will they offer besides a real platform to move ahead and what do they have in mind. in terms of having somebody you know somebody else and put in is not is not very clear what is clear is that you know it's not the way things are moving now with people becoming more and more impatient oppositions you know see the power they have in terms of getting together is that putin is not going to be able to rule the way he ruled for twenty years he's going to have to be much more respectful of these new voices even though they're not they're still a minority in many ways he's going to have to talk to them because otherwise he might just you know you need much more many more people and find himself in six years in a very more a much more difficult position for united russia so i think that you know that's he's going to change his style with i mean i think we've already seen it is only it's only been a few hours even we started to see that if i go to you part when i think it's very

interesting again in talking about the opposition which i'm very happy to see come about i mean after living in russia for thirteen years and try. doing gauge people in a political conversation most people who want to talk about politics all of a sudden the last seven eight months everyone wants to talk about it which i think is absolutely fantastic and it's keeps the political leaders in line but you know one of the things that bothers me is that people in the opposition they do say they believe in democracy but when they lose elections they say it's not fair i mean it's a it's a circular argument because a lot of people than the liberal opposition they are a minority in this country we see it time and again whether it's true and you know when you said it's nine hundred twelve it's more like ninety six when the elections happened and the party that simply refused to join the government and it said you know you either accept our entire platform or you know aren't total reform of the system and destruction of the autocracy and we have nothing to do with you this is a longstanding. problem with liberal society that causes tends to be not very.

dense or quite absolute. in its demands. the other problem you having is very is an opposition russian has been for twenty years and it's a communist party and it's well organized and it's relatively large but as long as it is me major opposition party then people who don't like the communist really have nowhere else to go but to to the party in power and that makes it much more difficult to create take a liberal or i mean party you know one of the liberal opposition ones who thought you know i was going to say i mean. it was leaving office there's a lot of the rules were changed and liberalized needed to use your for parties to register and people to join those party so i mean in the next election cycle going to. go ahead sir. i don't even like that. during the election never complained that it was too difficult to register yabloko

wasn't you know you have been skiing couldn't register but as soon as they did the rules were liberalized so more people could register there were complaints so that was going to a deliberate ploy by the regime to weaken the opposition by having more and more opposition so already you can't win either way i think though unfortunately we will see it's still early days yet if i will go back to you this seems to me it's an economy of expectations ok because the arab spring was brought up i mean you can look at me in on a sleeves that you know about the price of bread in a lot of cases if you look at north africa ok and russia is completely different here we have a middle class that has expectations is the economy moving in the direction enough is the government prepared to deal yeah well i think you're absolutely right this is a tremendous challenge for putin because on the one hand he's been the one who created essentially the first consumer boom in russia says tree for the first time ever russians finally got a taste of what the consumer boom is after the year two thousand when the central

took office and since then you had double digit growth in real disposable income in household consumption and this forms partly the bulk of the popularity of political capital that putin has but on the other hand the byproduct of this development is precisely the widening of the middle classes which forms part of the protest movement and it is kind of politically it is a mixed bag in the way. in terms of the economic or political implications of the economic modernization that is happening i don't think are you saying that the challenges that putin is facing now is a result of his success yes anyways i think today. we're seeing that putin is a victim of his own success in this respect partly with regard to the political

system because for a significant period of time the system was very centralized on putin himself and that created for agility zone problems that putin the house to resolve during this term i think that will be certainly one of the issues that he will need to address because if i go back to you i try to really kind of humorous actually after reading about how the press treats putin and western media and how what we've heard and from what western capitals over the years now they have to sit down with the man they have to sit down with them at the united nations they have to sit down with him i don't variety of agenda places where you know what i'm looking at the g. eight and things like that i mean it's they're going to have to eat a little bit of crow aren't they. yes i think we've you know we're going to we're going to need we're going to need to put in so many different matters they're going to need you know russia we would love to have the morning you know working with the security council so it's something that i think we going to have to learn to. work

with there's so many things we have to work with russia on like you know global environmental crisis the international terrorism. these armament treaty started you know in your new start so yeah i think we need to learn to respect you know the new president whether we like him or not the media has to change and be more context when they analyze the situation in russia. and why we still need to have you know we're going to zation doing their work and doing it all over the world so yeah this this this for me on on wrote this you know russian sentiment. although you know i was i was reading the press lately i found it a little more balanced in the u.s. i'm going to have to jump in here and we're going to run out of time i know western media doesn't like that i mean putin but the russian people do many things my guest today in new york are no one here in the studio and thanks to our viewers for watching us here are to see you next time remember.

if you want.

a brand new russian passenger plane soon always subject one hundred goes missing during a sales demonstration flight in indonesia with fifty people on board after going off radar on wednesday. a spectacular display of fireworks going clear victory day in moscow marking russia's defeat of nazi germany in the great war. included a grand parade in red square to honor the red on these epic efforts sixty seven days ago. and ukraine's prime minister yulia tymoshenko has moved to the hospital from her prison in a big alleviate concerns over her treatment. international news and commentary live from moscow this is all she was nice of you to shrivel.