Press Conferences

26 april, 2010 23:55

Prime Minister Vladimir Putin answers journalists’ questions following talks with Ukrainian leaders

Prime Minister Vladimir Putin answers journalists’ questions following talks with Ukrainian leaders

Question: What are the results?

Vladimir Putin: We have held interim talks to prepare for the Friday meeting of the Inter-Governmental Commission. We have discussed future cooperation opportunities in the nuclear industry. I have already said this to the press. We have submitted some large-scale proposals.

This concerns power generation, nuclear engineering and the nuclear cycle. In effect, this implies work in the nuclear fuel sphere. This can be accomplished in one go. We are ready to do this in toto or gradually, sector by sector.

We have also discussed future cooperation in aviation and shipbuilding. These are the three main aspects we discussed today.

Question: Won't the new agreements become a drain on the Russian budget?

Vladimir Putin: Yes, of course they will. There is no choice. These expenses are stipulated in the 2010 Russian budget's revenues and expenditures. The budget will not receive $3 billion in 2010. This is obviously a revenue shortfall.

This is a substantial amount even for the Russian budget. We have now started drafting the 2011 federal budget. Another $4 billion revenue shortfall will be posted next year. This is a lot for any country, including Russia.

Question: How will you cope with the budget deficit?

Vladimir Putin: We will use reserve funds to reduce the budget deficit. You have hit the nail on the head here. In effect, this will mean a higher budget deficit. Ukraine will have an even lower budget deficit, if it drafts the budget in line with reduced gas prices. This year, Russian and Ukrainian budget deficits were stipulated at more than $6 billion and just over $5 billion, respectively.

These substantial figures but I'm confident that we will cope. I would like to draw your attention to the fact that current gas prices were reduced by $100, or 30%, at the expense of the Russian federal budget, rather than Gazprom. This was done by charging zero export duties.

Question: Mr Putin, could you tell us whether certain stages of the agreement can be modified? I am talking about more specific compensation for gas transportation volumes via Ukraine.

Vladimir Putin: This year, we have expanded gas deliveries to Ukraine itself by 6 billion cu. m. Although we are not discussing anything at this stage, it is technically possible. This depends on European consumption volumes, rather than on Russia and even Ukraine.

European consumption continues to rebound and to expand. It is possible that increased volumes of deliveries and gas transportation will be required.

Remark: According to some sources, this issue can be resolved in summer.

Vladimir Putin: That depends on the market, rather than on me, on you, on Mr Yanukovych or on Mr Azarov. Consumption volumes will increase if the European economy makes a speedy recovery. Greater consumption volumes will facilitate additional gas-transportation volumes.

Question: Is Russia ready to invest in the modernisation of Ukraine's gas transportation system? Won't investment in South Stream and the Ukrainian gas transportation system prove exorbitant?

Vladimir Putin: We have not discussed the possibility of modernising the Ukrainian gas transportation system yet, although it is not ruled out. We consider investment in additional infrastructure to be important. I'm referring to transit country political risks.

Our plans would be more modest if the political risks were smaller. We have already launched the construction of Nord Stream. As you know, we have started building a pipeline along the bed of the Baltic Sea, which will annually transport 55 billion cu. m. of gas. If necessary, its capacity can be increased.

Question: Who will cede a 20% stake in project South Stream to Electricite de France?

Vladimir Putin: We will do this on a par with Italy.

Remark: Will you contribute 10% each?

Vladimir Putin: Yes, that's right.

Question: Mr Putin, you have mentioned a customs fee.

Vladimir Putin: Customs duties, not customs fees.

Remark: Duties. We will join the World Trade Organisation (WTO), sooner or later. Consequently, the rules will have to change. What happens then?

Vladimir Putin: We have been holding WTO-accession talks for the past 16 years. And Ukraine is going to get a $3 billion bonus this year already.

Question: So, when will you join the WTO?

Vladimir Putin: It's unclear.

Question: Don't you plan to do this in the near future?

Vladimir Putin: We do have such plans, but we haven't joined the WTO yet. We are currently negotiating. As you know, these issues are very complicated. Just look at Ukraine's accession terms, at the losses Ukraine's economy has sustained by abolishing certain customs duties, for example. Just look at the aircraft industry. We cannot do this because we cherish our aircraft sector. This is a complicated negotiating process for us.

We have reached numerous agreements in this sphere and on the fleet issue. We have discussed shipbuilding issues today. Yes, I believe that our fleets can cooperate fruitfully. If the Russian fleet stays on for 25 years after 2017, as has been agreed, this means that we will load Ukrainian shipbuilding facilities to capacity, including ship overhauls and other fleet repair and construction projects. This also implies joint work.

But I have leafed through the Ukrainian press yesterday and today, and I can see that heated debates are expected to take place in the Verkhovna Rada. Frankly, I find such debates about the Russian fleet to be somewhat unexpected because we had discussed the possible extension of the Russian fleet's deployment in the Crimea with the previous Ukrainian government, including Yulia Tymoshenko, for the past few years and fairly recently. Nobody had objected to this.

Question: Will this sour your relations with Yulia Tymoshenko?

Vladimir Putin: No, it won't. I realise that this is a domestic political issue. That's the way this issue has always been treated. Nobody, including Ms Tymoshenko, has ever objected to discussing the issue of extending the Russian fleet's stay, not in conversations with me at any rate. However, the proposed price seemed absolutely exorbitant. I would eat Yanukovych and your prime minister taken together for these allocations, but not a single military base in the world is worth so much money. There is no such price. The ten-year contract is worth $40-45 billion. It would be possible to build several bases with this money. For us, this is an issue of cooperation with Ukraine, rather than just the financial aspect. Naturally, military cooperation strengthens mutual trust and promotes closer cooperation in the economy, politics and social projects. In reality, that is the most important thing.

Thank you very much.