Chairman of the Skolkovo Foundation Arkady Dvorkovich participated as a distinguished speaker during a panel session titled “The Policy Makers’ Challenge: Navigating Through a Recession”. The session was part of the #GMIS 2020 virtual summit taking place online from September 4-5.
Chairman Dvorkovich’s co-panelists were the Hon. Soraya Hakuziyaremye, Minister of Trade and Industry of the Republic of Rwanda, and H.E. Nurul Majid Mahmud Humayun, Minister of Industries of Bangladesh. H.E. Bandar Ibrahim Alkhorayef, Minister of Industry and Mineral Resources of Saudi Arabia, opened the session, which took place online on 5 September 2020. Mr. John Defterios of CNN moderated.
Screenshot: Sk.ru.
The GMIS (Global Manufacturing & Industrialisation Summit) is a Skolkovo Foundation partner and the #GMIS 2020 theme was “Glocalisation: Towards Inclusive and Sustainable Global Value Chains”. The event brought together experts from across the world to discuss the impact of digitization and the changes underway in the manufacturing sector with the advent of Fourth Industrial Revolution technologies. In this context, Mr. Dvorkovich gave his views during the session with regard to Russia’s role in fighting the Covid-19 pandemic and the changes that are currently underway and likely to happen not just to Russia itself but to much of the world economy.
John Defterios: “I saw today that the RVIF was suggesting in liaison with the United States and the United Kingdom that they’d like to see the vaccine, the Sputnik V, fast tracked to see if we can get it onto the market in rapid succession here. How important, in your view, Mr. Dvorkovich, is the development of a vaccine not only in Russia - a second one is in the pipeline - but in other countries around the world, in terms of restarting innovation and manufacturing?
Arkady Dvorkovich: “I think the development of a new vaccine against Covid-19 is really critical to stabilize the global economy. We don’t know which is the most effective and safest one yet, but we believe that the one developed recently in Russia is safe and the preliminary estimates are that it is effective. The faster it goes to market in other countries, the faster economic recovery will happen. That is not the only thing though; drugs and medical treatment are equally important and these will help fight the disease that created the crisis in the global economy. We are very flexible with regards to using our vaccine around the world and we are open to seeing new discoveries and developments.”
John Defterios: “There’s an argument that not just Russia but that many countries are trying to rush to get this out. Does this outweigh the concept in the manufacturing world that we will have to live with Covid-19 for probably six to nine months? Is that the reality, despite the developments we see in Russia and other countries?”
Arkady Dvorkovich: “Yes, I think it is still the reality and it’s not going to be an overnight solution for everything. The manufacturing sector will suffer from the crisis and the development of vaccines gives hope that it will end in a relatively reasonable timeframe towards the end of 2021.”
John Defterios: “A contraction for Russia, which as you know is a pretty stable economy - you’ve seen the pressure of oil and gas prices - is not fantastic, but you’ve seen your budget break even around the same level. What influence is this going to continue to have on growth and is there a conscious strategy not to be overly dependent on the gas exports to Europe and oil exports worldwide, in particular to China?”
Arkady Dvorkovich: “The effect of lower oil, gas and commodity prices on the Russian economy is quite significant, but not all of the decline can be attributed to oil and gas; I would say that two or three percentage points are related to the decline in prices, and the rest is the overall effect of Covid-19 on the economy. The agricultural sector has grown quite steadily in recent years and we already have quite large grain exports from Russia to the rest of the world. But still, diversification is the priority and we very much want it to come from manufacturing and with continuous growth in agriculture as well. Innovation is a big part of that and we believe that Russia can take a good niche in the global economy bringing innovation forward.”
John Defterios: “There seems to be quite a trend here when there is such a shock from something like Covid-19 that the major countries of the world start to cocoon, if you will. We see the tensions between the US and China, for example. What is Russia’s position on this in making sure that the agreements you have in the region - for example with Central Asia, your partnership with China, the inroads you’ve made with India and Europe - don’t get thrown away because of cocooning or protectionist tendencies during a crisis?”
Arkady Dvorkovich: “The appearance of economic islands is a very dangerous trend that can be seen all over the world. To some extent it is an emotional reaction to what is happening in the global economy and many governments have been scared by the risk of not getting the right goods and services in time, which could then damage local economies. As a result, more localization is going on everywhere, including in Russia. What you try to do is to find out what the crucial things are to produce rather than just turning the whole economy into a single island. We have been stating and hold the position that we are ready to be as open as other countries. We cannot just keep our eyes closed to the protectionist policies that other countries are taking, including against Russia through sanctions. But certainly there is no intention to close the economy and we will always be in favor of a more open economy since it would benefit Russia; we have huge export potential, and if we close our market to other countries then they will do the same to us.”
John Defterios: “You have almost a million confirmed cases in the country and that was initially quite a shock. What have we learned about the operations of government, the medical sector, the resilience of manufacturing, the resilience of the Russian people during this crisis? In your view, what does the strategic nature of what you learned through the system mean after Covid-19?”
Arkady Dvorkovich: “Well first of all, we will learn all the lessons after this is over, but it is clear that our health system was able to manage the crisis. The Russian government took a careful approach not to allow the disease to develop very rapidly in order not to overburden hospitals and the health system in general; so I would say that we never had a crisis in the health system in any location. Most of the hospitals are operating on two thirds or three quarters of their capacity in terms of treating Covid-19, leaving reserves in the system that can be used if the crisis worsens; but it’s stable right now. Also, when compared to March and April, doctors now know how to treat the disease, leading to a relatively low mortality rate compared to other countries. We are proud of our doctors and our health system; they are heroes. What we found as well was that given the structure of our economy it was relatively easy to mobilize resources and start producing things that are really needed for the crisis, including medicine, protection equipment, medical equipment, cleaning products, disinfection products and all the other things that are needed to fight the disease. Our companies and our regions were very responsive to the requests from the government and started to produce the things that we needed very quickly.”
John Defterios: “Let’s wrap up the session by looking at the gender differences because of the crisis we’ve been through. I know that it’s the case in Russia, Bangladesh and Rwanda right now that there’s no shortage of competent female ministers - one has joined us today - but can we have a gender boost as a result of Covid-19 and open up the workforce in a much more pervasive way in all economies across the world? What is the influence as a result of this, do you think?”
Arkady Dvorkovich: “Well, first of all, we just don’t know what will happen with the structure of the workforce altogether after the crisis. How many people will work in offices and factories? How many will work from home? An opinion poll shows that 20-25% of people will not return to offices after the crisis and it will certainly affect the gender structure as well, since working from home in some cases is easier for those women who unfortunately have a large amount of responsibilities in the household as well. Men are sometimes not prepared to do the same. I know this when thinking about myself. On the other hand, I think that we have to do more to give women everywhere better access to higher positions; another concern is the level of pay since there is inequality in this regard as well. My second job right now is as president of the International Chess Federation and we have established a minimum for the number of women in top management and in the top tournaments. We are on the right track, we know that this is the right agenda and I think that we will have a change; unfortunately it’s not going to be revolutionary, it’s going to be step by step, but it will happen.”