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Russia and the World - A View From Abroad

Anförande Andrei Sacharov Foundation Conference, Moskva, Ryssland

Thanks for the invitation.

It's always a pleasure to be in Moscow - and in Russia.

I think this is the 15th time that I am in Russia since taking office as Foreign Minister of my country.

And each visit is a reminder of the complexity, vitality and challenge of Russia

It is also a great honour to speak at this year's Sacharov conference. And to pay tribute to his courage, his clear-sighted vision and moral authority.

The theme for this session is a demanding one:

''Russia and the world'' is about a relationship, and first you have to have a notion about the world. The megatrend of our age is globalisation.

And we are now in the early stages of the third phase of that great historical process. The first was the one dominated by Europe during the period up to 1914.

The second was the one dominated by the United States, starting in earnest in 1945.

And the third is the one that will gradually be dominated by the rise of Asia. Perhaps we can date it from the beginning of the opening up of China in 1979.

Russia was a latecomer to industrialisation - as indeed was Sweden.

But by 1914 Russia was one of the fastest developing European economies.

Swedish companies looking to the future - the telecommunications giant Ericsson among them - were looking at moving their headquarters from Stockholm to St Petersburg.

The revolution in 1917 obviously put a rapid stop to this. Russia retreated from the world.

And for all of the rhetoric of the 1960's of overtaking America after the devastating wars we know that the reality was the reverse - of a Russia falling further and further behind.

Since two decades back Russia is returning to the world. It is seeking to integrate, to cooperate and to modernize - although sometimes in ways not entirely clear, and heavily burden by the legacies of the tragedies and mistakes of the past.

And it does so as the transformation of the global economy accelerates by the day.

It is about the return of Asia to the place it had in the global economy before the ascent of Europe a couple of centuries ago, but it is also about the unprecedented revolution in science and technology.

The majority of all the scientist that have ever lived are alive and working today - transforming our tomorrow.

Globalisation is the product of two developments - the opening up of societies and markets on the one hand and the revolution in science and technology on the other.

And the revolution in information technology is at the heart of these dynamics. Let me quote what Andrei Sacharov wrote on this as early as 1974:

"I foresee a universal information system (UIS), which will give everyone access at any given moment to the contents of any book that has ever been published or any magazine or any fact."

"The UIS will have individual miniature-computer terminals, central control points for the flood of information, and communication channels incorporating thousands of artificial communications from satellites, cables, and laser lines."

"Even the partial realization of the UIS will profoundly affect every person, his leisure activities, and his intellectual and artistic development. ...But the true historic role of the UIS will be to break down the barriers to the exchange of information among countries and people." (Saturday Review/World, August 24, 1974)[30]

And this is clearly what we are seeing today.

Ericsson did not move its headquarters to St Petersburg a century ago. It is still in Stockholm.

But today approximately half of its production is in China and a further quarter of it in Estonia with the rest spread between India, Brazil and Sweden.

And the company is world leader in its field. Change will certainly continue.

The European Union is today the world's largest integrated economy and the world's by far largest trading entity.

It certainly has its problems in the South, but in the North and around the Baltic Sea - Germany, Poland, Sweden, Estonia, Finland - we are booming.

And we have an ambitious economic 2020 reform program to improve our competitiveness.

Integrated our single market even further. Strengthen research and development. Develop free trade around the world.

Turkey - perhaps the most dynamic European economy today - is seeking to join. Ukraine is negotiating for an important deep and comprehensive free trade agreement. We have just concluded a ground-breaking FTA with South Korea and are rapidly moving towards one with India.

Within a decade or so we must assume that the economies of the European Union, China and the United States will be of roughly equal size.

And within the same timespan we can assume that

80 per cent of the global middle class will be living in countries that we in Europe previously called developing.

This will be a better world. More open societies. More open economies. A world more open to change, to opportunities and to a better future.

There are those who believe that China with its more authoritarian model will eventually overtake us all. Let me beg to differ.

To catch up and copy is one thing.

To innovative and forge ahead is something very different.

For a country to be able to break new paths it must allow its citizens to break new paths. It is by allowing creativity, entrepreneurship and freedom to flourish in all sectors of society that a nation can start breaking grounds that have not been travelled before.

And we all know that China is not there.

And whether the political changes necessary to bring the great Chinese nation in that direction will come in the next decades or not we simply do not know.

This is the world in which also Russia must find its place.

A world of rapid globalization, integration, modernization and innovation. A world in which it is easy to fall behind - but were opportunities for are vast.

Russia's place in these global processes is important, but not yet clearly defined.

Russia has recovered relatively quickly from the last economic crisis and modernization is the buzzword of the day in your political discourse.

But there are evidently different views on what modernization really means - or how far it needs to be carried.

Economic modernization in this age of globalization requires capital, technology, knowledge and investments from abroad.

This applies to every country - my own not excluded.

The European Union is Russia's largest and natural partner in this cooperation. Both at the Union level and with individual member states.

Russia has signed partnerships for modernization both with the Union as such and with individual member states, and we are taking a number of steps to facilitate a cooperation that looks promising.

Russian foreign policy has also become oriented towards serving the goal of this cooperation, which is very welcome.

Generally better relations with the EU member states and the US contribute to rebuilding the trust that was damaged a couple of years ago - even if there are significant issues that are still unresolved and make the road more difficult.

Economic and industrial cooperation is a way of building a long-term partnership that can increase trust and narrow differences.

Swedish companies have always seen Russia as a promising land, offering opportunity and attracting and rewarding talent, and several of our big companies have been in Russia for more than a hundred years.

According to recent data from the Russian central bank, during the last four years, Sweden was among the top ten investor countries, and if you don't count off-shore countries, we are actually among the top five investors.

Given the size of our economy, I think that is a solid testimony to our confidence in Russia's long-term future. But true modernization is not only about foreign investment and importing new technologies from abroad.

It is primarily about creating genuine conditions of growth, through institutions that encourage private initiative through transparency, predictability, confidence and longer planning horizons.

Or, put another way: through the rule of law.

I don't really have to go deeply into these issues here, because they are so well known, and they have been graphically described at the highest political level here in Moscow.

Only yesterday, President Medvedev in a speech in St Petersburg argued that the future of countries to a large extent is decided by the quality of their legal systems.

There are a number of international studies of the domestic conditions for growth and investment, where Russia actually has fallen in a number of international rankings.

There is an informed discussion inside Russia about whether modernization can be limited to the technological and economic fields, or whether it requires broader reforms of the institutions and even of the political system itself.

I believe the answer is an obvious one. Two things seem obvious to me.

The first is that only Russia itself can decide this, of course, through its own procedures, in its own time, and taking into account its own historic experiences, often painful and tragic.

But the second thing seems even more obvious: according to the view from abroad, or at least from the European experience, there is indeed a clear link between institutional change and modernization.

Only through competitive politics and competing media can you fight the obstacles to development, only that way can you formulate alternatives, correct mistakes and win broad understanding and acceptance for necessary but painful decisions.

Andrei Sakharov would of course not see democracy and human rights in a utilitarian perspective, as instruments of a successful modernization strategy.

They are necessary and absolute values by themselves. Both our countries have adhered to the European Convention on Human Rights.

But equally clearly, as seen from abroad, no modernization or successful adaptation to global change can do without them.

So coming back to the title of this session, ''Russia and the world, a view from abroad'', I think it is fair to say that observers outside Russia tend to revert to same set of basic questions:

Is Russia prepared to modernized in order to become a fully integrated member of an international transparent and rule-based community?

And how much change can the political system handle, and how essential is continued short-term stability, both to the elites and the majority of the Russian people?

For the first question, Russian membership in WTO is emblematic, but not exhaustive - it is only one part and just the beginning of the answer.

As for the focus on stability - that is quite understandable, given the excess of dramatic and traumatic changes that Russia has been subjected to during a century.

But this inheritance, however bitter, may in itself be an obstacle that has to be overcome, if Russia wants to integrate successfully in the world.

The view from abroad is that these questions are well understood in Russia, indeed there is a qualified debate reflecting this, but that there is uncertainty ahead whether the present system is prepared to face the costs and risks of far-reaching change.

Meanwhile, the world around Russia continues to globalize, at dazzling speed.

The globalizing world wants Russia to become a fully integrated part, not just an advanced exporter of energy and raw materials.

The world needs the brilliance of Russian scientists, such as Andrei Sakharov, and the dynamism of a younger generation of Russian entrepreneurs.

And of course it needs Russia as a partner in solving global political challenges.

It also needs a Russia which itself feels comfortable with being a part of the international community of norms and values, a less ambivalent Russia.

Geographically, Russia is both in Europe and in Asia, but culturally and historically, Russia is very clearly part of our common Europe.

The EU is aware that serious challenges from globalization are awaiting its member states, and its ''Strategy 2020'' aims at getting the Union into shape for facing them.

A successful Russian modernization would help Russia to meet the same challenges, and indeed lay the foundation for a partnership that both sides need and will benefit from.

This would clearly be beneficial for the future of Russia - but also for Europe as a whole.

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