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Following Russian-Finnish talks, Prime Ministers Vladimir Putin and Matti Vanhonen hold a joint news conference

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Transcript of the beginning of the meeting:

Matti Vanhonen (as translated): Mr Prime Minister, ladies and gentlemen, we have just signed a new agreement on the Finnish lease of the Russian part of the Saimaa Canal for 50 years. This agreement is very important for transport, but its symbolic significance is perhaps even greater.

It was very important to sign the new agreement in advance, before the previous one expired, so that the local economy, businesspeople and public could plan their life and work ahead of time.

Today, important agreements have also been signed in nanotechnology, diesel engine manufacturing and shipbuilding for the Arctic. These agreements are major milestones that show that economic cooperation between Russia and Finland is making steady headway.

Our trade declined over the past year, but Russia has nevertheless maintained its status as Finland's most important trade partner.

This year has already seen positive trends in trade between our two countries, and cooperation agreements such as these are extremely important for the future of our countries and their economic development.

We covered a lot of ground during today's talks on our trade and economic cooperation. We discussed issues pertaining to transport, import duties on timber, mobility and a number of issues in EU-Russian relations.

As for timber duties, which play a very important role in south-eastern Finland, we have agreed to continue to study possibilities for resolving this issue, with due account for local economic interests.

We have also discussed issues regarding the Baltic Sea and safe navigation in its waters. Needless to say, a recent disaster in the Gulf of Mexico is very indicative in this respect.

We have agreed that it is very important to increase our capabilities to respond to oil spills, and we discussed measures that Finland is taking to prevent possible accidents in the Baltic Sea, and, in particular, in the Gulf of Finland. It is very important to increase safety in this area.

I have mentioned only some of the issues we touched on at our talks today. The talks were very fruitful and helpful. I can only say that Russia and Finland's work together has been very successful.

One more thing: our day began with the inauguration of a new high-speed train between Helsinki and St Petersburg, which will begin running between our two cities in December of this year.

The agreement for this project was signed in 2006. Since then, we have discussed the details of this project at each one of our meetings. We're happy to see that this project is almost complete.

We visited the train driver's cabin today, which was very interesting. I even felt a desire to get behind the wheel myself and go.

Mr Putin, please.

Vladimir Putin: It's still too early for us to drive the train; it will start operating in December. But it's clear that everything is going according to plan. We're on schedule. Everything that the Prime Minister and I planned is being executed. And it is very nice.

This is my second meeting with the Prime Minister this year. It has been very productive, as have been all our previous official meetings. We touched on practically all aspects of our relations today.

I'd like to extend my special gratitude to the government and, most importantly, to the people of the city of Lappeenranta for a very warm welcome.

When I lived and worked in St Petersburg, I regularly visited this town, either on the way to Helsinki, or just to meet up with friends and spend a holiday here. And so today's visit, of course, brings back a special feeling. And so let me say again that I'd like to express my sincere gratitude to the people of this town for their apparent good will towards our meeting today.

Lappeenranta is a very important transport gateway. Here the Saimaa Canal begins, which is a critical economic artery and a tourist route.

As you saw, we've just signed the agreement extending Finland's lease of the Russian part of the Saimaa Canal and adjacent territories for 50 years.

Two Finnish politicians are known for building good-neighbourly relations between the Soviet Union and Finland: Presidents Juho Kusti Paasikivi and Urho Kaleva Kekkonen. Of course they lived in a different era. It was a totally different world. And different people can look at the past differently. But the policy of strengthening neighbourly relations between our countries proved fruitful at that time and continues to bear fruit today. It is thanks to this policy that the lease agreement was signed, first for almost 40 years, and now for another 50 today. This is an obvious benefit.

These negotiations lasted several years, and today they concluded in the signing of the agreement. These were tough negotiations. Each side brought up a lot of issues that needed to be addressed. But even the most difficult issues can be resolved if there is goodwill, and Russia and Finland do have goodwill. Despite a decline in trade during the downturn, Russia retains its position as Finland's top partner in trade and the economy.

Our Finnish partners actively invest in projects in St Petersburg, the Leningrad Region, Karelia, the Kaluga Region and the Moscow Region, and Russia welcomes their decisions.

In the first quarter of this year trade grew by 30%. We continue to work together in high-tech industries, transport and communications. Naturally, we discussed our cooperation in the timber industry in detail today.
Russia and the European Union will soon launch a large, joint programme called the Partnership for Modernisation. I hope our Finnish partners, including those from the business and scientific communities, will take an active part in this programme. We discussed our work together in this area in detail today. It is certainly holds great promise.

Thank you for your attention.

* * *

Question: I have a question for both Prime Ministers. Do you think that the deteriorating economic situation in the EU will affect Russian-EU relations, in particular Russian-Finnish relations? The weakening of the Euro and the difficulties in Greece could start a chain reaction that would affect other EU countries. Would this have any impact on relations with Russia? Thank you.

Vladimir Putin: We discussed this issue today. The Prime Minister expressed his views on what is taking place in the EU in this respect.

Everything that takes place in the economy has its consequences.

The EU is our most important economic partner, accounting for more than half of our trade, and we would like to see the EU in good shape, without any crises or cataclysms.

I personally believe that our partners will cope with these difficulties. And they are temporary difficulties. Nevertheless, they will have to sacrifice something. But the European governments are approaching this with sufficient resolve.

Different markets are responding differently to the measures undertaken by the EU governments. Sometimes, this response is negative, for example with regards to the German government's decision on short-selling. But I am not sure that this decision was wrong if you look at it in the medium term. Only the future can show how effective it will be. In my opinion, if there were apprehensions that there had been some speculative strategy against the Euro, this decision was quite justified.

Moreover, all experts agree that the weakening of the Euro creates more favourable conditions for exports, and the EU economy is mostly centered around exports. So, there are both pluses and minuses in this respect.

I have no doubts that the Eurozone and the EU will cope with these problems. The question is at what price. But this depends on the specific steps taken by current EU leaders.

Matti Vanhanen: I agree with my colleague that we in the EU are doing our best to identify the countries that are not complying with existing practices.

This is far from easy, because capital is moving all over the world, practically without any limits, and it is rather difficult to take effective action quickly.

This is connected with two issues. First, the EU is not competitive enough in world markets. Second, some EU countries are managing their national economies improperly.

The best solution here is to engage with the real economy, and I believe that Russian-Finnish cooperation plays a major role in this respect. We must take measures to allow our economy and trade to flourish. These measures should be safe and effective. Only thus can we ensure normal conditions for our national economy.

Question: I have a question for both Prime Ministers. It concerns cases such as those that have received extensive coverage in both the Russian and Finnish news. For example, one involves a Russian grandmother who now lives with her daughter in Finland, while others involve issues of child protection that have recently come up. Please tell us what was said on these issues at the talks, and whether you discussed them at all.

Matti Vanhanen: We have not discussed these issues, as they have to do with the actions of specific government agencies and are not policy questions.

Vladimir Putin: Also, our meeting is not yet over. We are now going to dinner, where we will continue this discussion. We also plan to go fishing; I was invited to go fishing, which will give us an opportunity to discuss these problems, which are so sensitive for the people involved and the public in our country.

First, I want to thank the president and prime minister of Finland for their moral support for the family you have just mentioned. The matter concerns a person of advanced age, who is not in the best of health. She is in Finland now, and has received a deportation ultimatum.

We are perfectly aware that the matter only appears simple at first glance. If she receives a residence permit, this will immediately lead to questions of monthly benefits and free healthcare. This is a practical matter for any country, Finland being no exception. However, there are matters that we could call human problems. Finnish doctors have acknowledged in writing that this elderly woman would not be able to take a journey to Russia; travel may prove to be fatal to her, in which case there should be some sort of exception.

I know that a part of the Finnish public shares this viewpoint. Matters like this should not worsen relations between countries. They simply show that we must think about how to resolve such difficult problems. For my part, I can say that if the lady's family asks that we ensure a good life for her in Russia, we will provide it. Thank you.

Matti Vanhanen: This is an example of the sort of issues that will become more common as people become more mobile.

Vladimir Putin: This is just a matter of money. The issue has to do with budget spending and payments - pensions and healthcare. As a person who is currently dealing with budgets, I understand this position very well.

We need to be honest that other elderly women will come after this elderly woman. Everybody understands this.

Nevertheless, people should always be the primary focus of any government's policies. Let us think about some of our mutual obligations. It is all in our hands. We will certainly discuss this issue, but, I repeat, we will not put any pressure or demands on anybody. We will discuss the problem from a professional point of view, but, I repeat again, concern about specific people matters most.

Matti Vanhanen: Such problems will likely become ever more frequent as the population becomes more mobile. And it is very important that international conventions work effectively, so that the government of every country has explicit rules it can follow.

It is also critical that we make these rules as uniform and equal as possible, that these rules base on the same, equal principles. However, these rules should not ignore the human factor, which is simply impossible to codify in laws and regulations. These are questions that should be discussed between countries and national governments. As for individuals, their problems should be addressed by government agencies.

When it comes to such issues, or issues regarding the sale and purchase of land, we should not forget how such problems can become competitions between two nations.

I would like to address this comment to the press: do not play with people! Do not make them pawns in your game!

Question: Mr Putin, Russia is currently involved in several ambitious energy projects in the Baltic Sea. And here I cannot help but bring up, as Mr Vanhanen did, the disaster in the Gulf of Mexico. Is Russia protected from such disasters, and are they planning to protect themselves and the entire Baltic region?

Vladimir Putin: The Gulf of Mexico is certainly far away, but we sympathise deeply with the people affected by this disaster, which is becoming a global event. The answer is simple: we need improved regulations and technologies, as well as unconditional compliance.

What projects is Russia implementing in the Baltic? Everyone knows the Nord Stream project, including in Finland. As is common knowledge, the project does not involve oil production, but a natural gas pipeline system that simply rests on the bottom of the Gulf of Finland and the Baltic Sea.

First, gas is not oil, and a leak would not cause environment pollution.

Second, a gas pipeline is not an oil well that cannot be plugged. A pipeline can be cut off, and with modern technology this can be done almost instantaneously.

Third, we are using cutting-edge technologies and complying with safety regulations.

Last but not least, the prime minister has proposed that we establish a permanent monitoring system for the construction and operation of the pipeline system.

I have issued relevant instructions to the appropriate Russian government agencies. We agree with Mr Vanhanen's proposal and we will think of how to implement it.

One Russian petroleum company, LUKoil, produces oil on the continental shelf in the vicinity of Kaliningrad. I visited the same sort of platform recently, a platform owned by the same company in the Caspian. It uses the latest technology and will not release even a single kilogram of waste into the sea. All waste is put into containers, carried ashore and disposed of.

However expensive this technology may be, we call on all companies in the world to apply it, so as to maintain a level playing field and so our companies are not unduly burdened with the costs of addressing environmental issues.

Oil transport is another problem. We have discussed this issue in sufficient detail today. Here there are new technologies and proposals on what should and can be done in this field. We are working at it, and we will continue this work. Thank you.

Matti Vanhanen: I fully agree with the prime minister that the gas pipeline will not cause such problems. The risks pertain to shipping, especially oil tanking, as well as to other large vessels that carry huge amounts of oil or heating oil. But if a disaster occurs, it is essential for all countries to have sufficient equipment to deal with oil spills. According to our calculations, Finland needs equipment to collect 30,000 tonnes of oil from the sea surface within three days. Though both our countries have increased our capabilities in this area, we will not reach this level before 2015. Other Baltic countries should also increase their capabilities in this area.

But it is still important to prevent ships from running aground. An international navigation monitoring system known as Gofrep [Gulf of Finland Reporting System] is currently in place for the Gulf of Finland. It is jointly operated by Russia, Finland and Estonia, and is very similar to an air traffic control system.

The next step for improving this system is for every vessel coming into the Gulf of Finland to report its route in advance, with exact coordinates. We need to eliminate human error in shipping.

We know that some oil transporters in the Baltic basin are willing to join the system. A relevant memorandum has been signed, and I am confident that the idea will be jointly developed.

Vladimir Putin: Our ships are already equipped with the Russian-manufactured GLONASS global navigation satellite system. The vessels of all the other countries operating in the Baltic should also use this system.

Question: Prime Minister Putin, I want to ask you about land purchases in Finland by Russian citizens. The matter raises concerns for Finnish citizens and politicians alike. I know that one of our parliamentary commissions will examine this issue. Russians are the second-largest ethnic minority in Finland. Do you understand Finnish citizens' concern?

Second, what is your opinion on the rights and living standards of the Russian minority in Finland? Do you have any ideas how to improve these rights and living standards, both through government measures and at the level of relations between ordinary people?

Vladimir Putin: I cannot say that I know the entire range of problems, but any country should be glad when non-residents buy real estate in the country, due to the economic benefit. Because this always supports the real estate market and creates favourable conditions for investment in general. However, every country has the right to regulate such purchases as it sees fit.

We believe that these regulations should not clash with the principles of a market economy, and should correspond to the level of neighbourly relations between Russia and Finland.

As a rule, an overwhelming majority of issues between countries are settled on the basis of reciprocity: we treat you the way you treat us.

I assure you that Finland has many interests in Russia. I want to stress once again that relations between our two countries are at an unprecedented height, despite problems connected with the international economic downturn and any disputes.

Russian-Finnish relations serve as a good benchmark for many other European countries in building relations with the Russian Federation.

Russian-Finnish relations are certainly a factor for European stability. And of course, how we build relations on the problems at hand depends on us, those who now serve in the governments, and on you, those who shape public opinion.

We should all continue to bear our responsibility and understand it, and to look to the future, as the prime minister and I did today by signing the document extending the lease for the Saimaa Canal for another 50 years.

Matti Vanhanen: As for real estate, reciprocity is important to Finland as well. I think that this is an issue that our governments should discuss. At present we are leasing a part of the Saimaa Canal, and I hope many Finnish citizens will purchase property in Russia in the future.