OREANDA-NEWS  On 21 October was announced, that RUSNANO delegation visited Tedzhon in the course of their visit to South Korea, where it met with representatives from a number of organizations specializing in the area of nanotechnologies. On the way to Tedzhon, the head of delegation Anatoly Chubais was interviewed for the Korean newspaper JoongNang Ilbo by its correspondent Yu Chol Chzhon.

You have probably already met with many Korean partners. Have there been any certain business results?

Our trip is not yet completed. In fact, up to now we have only worked for one day, so at this point its too early to sum up any results, but already, impressions have been formed on both sides, and contacts have been outlined. Yesterday weve reached a preliminary agreement with two Korean companies who will make applications to realize projects with our participation.

What are these companies? Private companies?

Yes, private companies, but not giants. Today we will visit Samsung and perhaps there we will succeed in agreeing for something.

What is the objective of your trip in general?

We have two objectives. The first is presenting our corporation and the RUSNANO brand. We want to introduce ourselves: we are a recently emergent company that has only been around for one year. Ideally, of course, we also want to agree on collaboration, and expand our portfolio with Korean projects. It is necessary to solve a whole range of tasks to achieve this, each task having a number of internal queues. The second objective is to understand the nature and origin of the Korean innovation process: how and from what it was formed in your country.

You say that RUSNANO was created back in 2007. Why did Russia decide to found such organization?

I would say there are two reasons. The first is a fundamental one Russia had passed a very difficult transitional stage, where the foundations of a market economy were created. Now these bases have started to work. This is observed in the accelerated GDP growth rates (7-8% per year), in the scale of currency reserves (550 billion dollars), a budget surplus, and a positive balance of trade. Once these basic macroeconomic indices reached a positive level, Russia had to determine further development directions within this positive trend. Apparently, this had to be a primary task for the country.

The second reason is that although our country still retained from the USSR a strong heritage in fundamental science, and a good, even for the international level, education system, there was practically no modern innovative business. A considerable part of the economy is built on the raw materials industry and mineral mining. This is good by itself, but it is unsatisfactory, and it is from precisely these resources that an obvious priority area has emerged the creation of an innovative economy. We should not just mine more oil and gas, we should develop the modern sector of our economy by adding further value and, obviously, the natural resources are present to do this.

About two years ago, having an understanding of these reasons in mind, the President came out with the nanotechnological initiative. Following this a whole series of solutions from both a financial and organizational nature were accepted. In financial relations, several government programs on the realization of scientific works in nanotechnologiy were formed. In the applied field our corporation was created with the primary task of commercializing the results of research and development. Our company obtained capital of more than 5 billion dollars to solve this task, or exactly 130 billion roubles. Approximately the same amount was set aside by government for carrying out research work. Our main scientific partner is the Kurchatovsky Institute, a well-known scientific organization with a strong scientific school. This is our main scientific partner, the main scientific coordinator, while we lead the applied part.

Recently, when President Lee Myung Bak visited Russia, a memorandum of understanding for mutual collaboration was signed between RUSNANO and the Korean Ministry for Education, Science and Technology. What specific topics might possibly depict the most successful collaboration between our two countries?

This memorandum is very important for us, since it was the starting point for the trip to Korea, despite being in an outline form. The document covers our agreements to exchange information in the scientific and technical sphere, to coordinate our efforts in this area, and to exchange information on the development of road maps and foresight. These are very important areas for us, but details are not defined clearly in the memorandum yet. In this sense, the result of our trip will most likely supply the answer for your question. On the basis of the memorandum, which, as I said, is an outline, we need to familiarize ourselves with specific organizations and enterprises today and tomorrow. The results of the trip will help us understand what our priorities are, whether they lie in semiconductors and electronics, for example, or in biotechnology or other areas. Thus far my words are preliminary; in some of these industries Ive mentioned, we have already seen some interesting products. But it wouldnt be right to speak of reaching any conclusions yet, as we still have not seen everything that we would like to.

Is Korea now first in the list as a partner of Russia? Or are there are other countries with whom you would like to collaborate?

Our starting point is the fact that there are from three to six leading countries in the sphere of nanotechnologies. Each has its own advantages and specialties. This includes the USA, Japan, Germany, Korea, China, Israel, and Taiwan. While I would not like to rank them in order, it is clear to me that Korea, not the largest country among them, has attained a great deal in terms of scaled result, and, certainly, we would like to collaborate with Korea.

Is this your first trip aimed at establishing collaboration?

For me personally, yes, although corporate representatives have already visited the USA, Israel, and China.

Prior to your work with RUSNANO, you worked in the Unified Energy System of Russia, and we know that the Far-Eastern branch of your company has been trying to supply energy to North Korea. There was such a plan Victor Minakov has visited Korea many times are you aware of it?

Yes, of course, I know about this plan. From my point of view, its a reasonable, interesting idea, although its still at a very early stage. The business parameters have not been established, because it is understood that realization requires not only a business project, but also a serious political resources.

Do you mean a solution to the North Korean problem?

I had a wider approach in mind. The fact is that our idea consisted not only in supplying electric power to North Korea. As it is known, North Korea and South Korea actually have an integrated system, in spite of the particular state of these countries relationship. And, from the point of view of power generation, supplying energy to North Korea means supplying energy to the entire Korean Peninsula. This means there is the potential to supply electric power to South Korea. Therefore we understood that the solution to this problem lies in advancing discussions by the six-party commission and the corresponding political decisions. From the point of view of electrical engineering, this is a very interesting idea, and I do not believe that it is dead. On the contrary, I believe that there is life still in it, especially because in the Far East we have witnessed reorganizations within UES of Russias reform program. In the Far East, Energy Systems of the East has been formed as a single energy company. It potentially has the same capabilities that we had, and I do not exclude the possibility that in time this project might pass from the plane of theoretical consideration to that of practical realization.

Is work going on at the moment?

Im not ruling that out.

You are well known throughout the world, and not only in Korea, as the ideologue and leader of the economic reforms of the 90s. Many call you the father of privatization. What is your evaluation of the results of reform?

To give you a brief answer, I would say the following: I think that in the course of the Russian economic reform, which was carried out under extremely difficult conditions, a number of errors were made, including regarding privatization.

Briefly, what was the main error?

I will answer your question, but first, let me finish. Errors were made, but at the same time, I believe that the goal of reforms was achieved. If we speak specifically about privatization, then everything is straightforward. What is the main goal of privatization? The creation of private property. And private property in Russia was indeed created. The reform was successfully completed. In this sense, the task that was set (and note the vast majority of analysts, specialists, economists, and politicians considered it unfeasible) at that time presented an enormous risk. The problem was resolved. But to return to the errors there were a lot, and I am ready to talk about them. For example, we understood that the readiness of the population was very low from all points of view, including the knowledge of such elementary things as what a private owner is, and how to manage control of private property. So apart from there being the opportunity to acquire actual businesses, the State also sanctioned the emergence of professional intermediaries and investment trusts, who knew where money ought to be allocated, and where not to. These intermediaries were called check investment funds. We worked hard in creating them.


Yesbut not exactly Investment funds, which collected the vouchers from the population and allocated them most effectively. In Russia more than 400 Check Investment Funds (CHIF) were created. They collected more than 40 million vouchers from the population and all 400 went bust. This was one of the major mistakes of privatization. I later realised that the roots of this error lay not in the fact that we did not complete the legal basis this was done very thoroughly, in great detail, so it was not because we paid too little attention to this. Instead, it was due to the fact that in a market economy at such an early stage of development as Russias at the beginning of the 90s, it was impossible to create an institute as complex as an investment trust.

To take one example, in Russias banking system, the creation of bank supervision in its traditional concept: a system of control, legal base, instruction of specialists, people who track the work of banks under the aegis of the Central Bank; so here, bank supervision in Russia in my understanding was created only by 1999-2000, that is, it took 10 years to create a bank supervision system in our country.

In conducting privatization we did not have 10 years; we had two or three. We did what it was possible to do by this time. But the creation of ChIF was a mistake. Even to attempt it was not necessary. That institution is simply not operational in the kind of economy we had at that time in Russia. Well, there were many other mistakes as well. As you know, 40 million people lost their privatized checks I could spend a long time telling them about the immaturity of the institution, or the readiness of the economy, but this would neither comfort nor quiet them. They will continue to believe that I am an enemy of the people and robbed Russia.

Was the emergence of the oligarch concept also the result of market reform?

The emergence of oligarchs bears a very indirect relation to privatization. Many are used to assume that privatization created oligarchs, but that is really just a journalistic clich. But to try to answer this question more broadly and seriously, then the emergence of oligarchs is the result of two fundamental prerequisites. The first is the creation of a market economy. The second is immaturity of the State and the market economys management system. In this sense, I firmly believe that in the 90s in Russia the emergence of oligarchs was an unhealthy but completely inevitable stage. The problem consists not in the fact that there were seven oligarchs. The main task, to my mind, must not be the oligarchs destruction; it must be an increase of their quantity.

Do you believe then what happened with Khodorkovsky was also a mistake?

Yes, of course, I protested heavily against this from the very beginning and my views havent changed.

Is the financial crisis really so serious? How much longer will it last?

There are already no doubts whatsoever that this crisis is serious. It is widely acknowledged that this is the deepest financial perturbation since the Great Depression. It is clear that the crisis is not yet over. Further dramatic events await us, connected with the bankruptcy of important financial institutions. There will not only be failures in the financial sphere, obviously, but in the property sector as well. There will be a decrease in growth rates in the world economy, recessions in some European Countries and, quite possibly, in the USA. In my view, we have not yet reached the bottom. Clearly, if were speaking about specific causes, the economic crisis originated in the USA.

But if we speak about this at the more fundamental level, it seems that today it can be said that the foundations of the worlds financial and economic systems require reconstruction. These foundations were laid after the Second World War, when the USA and Europe actually led the world in the economic sense and could, strictly speaking, dictate their will to the rest of the world in the financial sphere. At precisely this point, the Bretton Woods world financial system arose with its institutions, which, again, was governed by the USA and Western Europe. This system was adequate for that time. After this passed 40 years of the Cold War in which the Communism was defeated. Unfortunately, the USA came to a wrong conclusion from this, believing that having defeated their main enemy, they would always be the most powerful. It is perfectly obvious that today there cannot be a single country that leads the world, just as it is impossible for a single country to solve a global problem. In the final analysis, while the USA had under 50% of worldwide GDP in the mid-1940s, that figure now stands at little more than 25%. Today the US is not the only country in the world. There is a number of others, dynamically developing countries like China, Russia, Korea, Brazil, and India. Therefore, existent world financial and economic systems demand revision.

What can you say about Russias situation? Will there be a crisis similar to the one in 1998?

No. The situation now differs dramatically from that of 1998. In 1998 Russias foreign debt was 150 billion dollars, today 50 billion dollars. In 1998, currency reserves totalled 3 billion, while today - 550 billion. The cost of oil in 1998 was 8 dollars, but today it is just under 100 dollars per barrel. Entirely different situations. Today we have everything to avert the crisis.