Vladimir Putin's address:
Ladies and gentlemen,
Yesterday we held a very productive meeting within the CIS Council of Heads of Government. And we continued our dialogue today as part of the EurAsEC and Customs Union "troika" meetings.
I'd like to begin by saying that all member states have shown a keen interest in advancing post-Soviet reintegration and streamlining the guiding principles of our cooperation within the EurAsEC and other regional alliances. We have already picked up some momentum and we're ready to continue down this road.
The formation of the common customs territory of Russia, Kazakhstan and Belarus was completed on July 1, 2011. The response of the economy has been positive, a fact that we have highlighted more than once. Our three-way trade grew by one-third, which is a good indicator. Work is also moving along on schedule with the upcoming launch of the Common Economic Space, which will become operational, as planned, on January 1, 2012.
The Common Economic Space will open up new markets to our companies, providing uniform and comfortable rules for working among each of the three ember countries. Of course, the mechanisms of the Common Economic Space will require further streamlining, and special attention will have to be paid here to the efficiency of supra-state bodies. I'm referring above all to the need to modernise the Customs Union Commission and to set up a standing board, as the scope of this body's responsibilities continues to expand. This will become a permanent body, to which our countries will assign certain powers in areas such as macroeconomics, tariff regulations, industrial subsidies and natural monopolies.
The EurAsEC court will also begin its operations on January 1, 2012. The court will help establish legal safeguards for all economic players. Let me emphasise once again that it is the EurAsEC that has served as the foundation for both the Customs Union and the Common Economic Space.
Close interaction becomes all the more valuable in times of economic volatility, which we understand perfectly well. We're determined to continue coordinating our anti-crisis efforts. We've already created tools for mutual support. I'm referring here primarily to the EurAsEC anti-crisis fund. We placed a special emphasis on this today, at the suggestion of our Kazakh counterpart. We are not trying to force the issue here – rather, we are seeking to coordinate our positions, working out in advance which tools we can use together and when, with regard to the start of all these mechanisms.
We will combine our efforts to carry out the tasks that we share for the promotion of mutual trade, industrial cooperation and the support of business. All this will help us to enhance the solidity and competitiveness of our national economies.
Our integration is an open project. Further down the road, we will be glad to see Kyrgyzstan, Tajikistan and other post-Soviet states join us in this process. We are willing to cooperate with everyone who is interested in creating sustained partnership.
During the meeting, we considered a draft declaration on the establishment of the Eurasian Economic Union. We expect the "troika" heads of state to sign the declaration as early as December. The idea of setting up the Eurasian Economic Union will thus assume a concrete shape.
Let me remind you that Kazakh President Nursultan Nazarbayev was one of the initiators of this idea.
I also consider it necessary to step up the process of codifying the regulatory basis of the Common Economic Space and the Customs Union, thereby paving the way for a treaty on the Eurasian Economic Union. This comprehensive document will cover all of our areas of cooperation, ranging from macroeconomic and customs policy to the coordination of migration and visa regulations down the line.
I believe that the concept of the Eurasian Economic Union has a great future ahead of it. It has already won wide support, both politically and with the general public. And we are determined to make consistent efforts to translate this idea into reality.
Thank you for your attention.
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Question: Mr Putin, I've got a question for you. Yesterday you said there were three states that had chosen not to join the CIS Free Trade Zone Agreement at this point. Why did they make this decision at the present time, and how likely are they to change their minds before the end of this year, as was announced yesterday? In addition, you said the accord had been signed with certain exemptions. Which commodities and merchandise do these exemptions apply to? Is fuel on that list? And have there been any agreements as to when these exemptions may be abolished?
Vladimir Putin: This was in reference to exemptions for those categories of commodities and merchandise that are of special budgetary interest to Russia and other member states. These are goods, the export of which brings substantial revenue into our treasury coffers, and they include fuel and metals.
As for the “non-allied” countries, they had doubts precisely about those exemptions. They were also dubious about the rules having to do with applying customs regulations and protection measures. I suppose they're just taking some time to analyse the situation, and I imagine their economic interests will eventually lead them to join the zone, perhaps even before this year’s end. That’s what I have to say in response to both of your questions.
Yes, we regard these exemptions as temporary. They will eventually have to go. But we have not established any timeframe so far, and we will be making decisions about the timing over the course of our consultations with our partners.
Question: I have a question for you, Mr Putin, and for your counterparts. In the newspaper Izvestia, you published an article laying out your vision for Eurasian integration. Alexander Lukashenko wrote a similar article shortly before you. Did you read his article? I'm wondering whether you found any of his points interesting or debatable. Thank you.
Vladimir Putin: Yes, I read his article and I liked it very much. I think it reaffirms the Belarusian leadership’s commitment to post-Soviet integration. Also, the President of Belarus vividly outlined the advantages that our economies stand to gain if our integration plans become a reality. And I fully agree with his analysis.
I'm also with him on his point that these processes have nothing to do with the current political situation in our countries, including Russia -- by which I mean the election campaigns. As you know, these ideas have been under consideration since the late 1990s, or rather, the mid-‘90s… since 1994, to be precise (my Kazakh counterpart touched upon this just now). But we didn’t begin to engage in practical work until the early 2000s, which means this project has no links to the current political agenda in our countries.
I also agree with his point that only the integration of nations as equals can ensure that all parties involved do their best work and stay committed. And that’s the direction in which we are heading already. A few minutes ago, Gazprom executives told me that they had almost closed a deal on Beltransgaz. We are about to create new agreements on energy cooperation with Belarus. Starting next year, the prices will change: they will be even lower than the rates we’ve set for the Customs Union zone in order to equalise the profitability of exports and domestic supplies for producers. The so-called integration discount applies here. We will incrementally be moving toward “equal-profitability” prices, so they will increase somewhat over time. At this point, I'm not in a position to cite any final rates to you. This is an issue that is yet to be settled, and it is certain to come up during a meeting of our two countries’ presidents, which will take place in the near future.
Finally, I was pleased to notice certain transformations in Lukashenko’s world view. I know him as a committed atheist. Yet, in his article, he makes certain allusions to the Bible. In my view, this is a positive thing, which reflects the fact that we are coming closer together in spiritual matters as well as economic ones.
Question: An intensive expansion of the Customs Union’s regulatory basis is currently underway. But there’s a risk that each of the member states may interpret the constituent laws in its own way. There’s also a problem whereby members of the business community are not well enough informed about the [common Customs Union] regulations. How are these problems going to be resolved? Thank you.
Remark: To whom are you addressing your question?
Reply: To the Russian prime minister.
Vladimir Putin: Okay. Yes, this problem does exist, and my counterparts and I discussed it earlier. We have agreed to post our regulatory acts online, making them accessible to the public on the Customs Union’s website 45 days before they go into effect. And if any disputes arise, the companies involved will be able to resolve them through the EurAsEC Economic Court, which begins its operations on January 1, 2012, with its headquarters in Minsk.
Sergei Glazyev (Executive Secretary of the Customs Union Commission): For my part, I can say that our law-enforcement practice is very simple: all of the Commission’s decisions may be applied in any of the Customs Union member countries. There can be no ambivalence or contradictions here with regard to national legislations. Everything will be in full compliance with constitutional law. There have been Constitutional Court rulings to this effect, so we haven’t had a single discrepancy between any of our decisions and a national law.
Question: Returning to the issue that was raised in the articles published by the Russian and the Belarusian leaders in our newspaper, I’d like to pose a question concerning the Eurasian Union, and another on the Customs Union.
First of all, how realistic of a prospect is it for Ukraine and Kyrgyzstan to join the Customs Union? And when might this happen?
As for the Eurasian Union, various practical proposals for this alliance are currently being made, including the newly-voiced idea to create transnational corporations, and possibly, to introduce a single currency. With regard to this, I’d like to ask how far post-Soviet countries are ready to go in their reintegration. I also wonder if any other states have expressed any interest in joining yet. And when can we actually expect this organisation to take shape? Thank you.
Vladimir Putin: How can one join an organisation that does not yet exist? You mentioned the Eurasian Union, but this is still a work in progress. We began by creating the Customs Union. Now we expect the mechanisms of the Common Economic Space to become operational starting January 1 of next year. This will already represent a much deeper degree of integration. But this is just the initial stage in the creation of the Common Economic Space. Along the way, we will have to adopt a large number of regulatory acts, which will require amending legislation that is currently in effect in our countries. And only then will we be able to talk about… If we continue working as energetically as we have been until now, we may see the Eurasian Union take shape in the form of a real organisation by the year 2015. Among other things, we’ll need to make sure our visa regulations conform, etc. Problems like this are not strictly political, though…
As for the prospects of other countries joining in, we have said already – to the media, too, if I am not mistaken – that the Customs Union and the Common Economic Space are open organisations, and we will welcome all neighbours and colleagues there. Many of them – particularly Kyrgyzstan and Tajikistan – are even now displaying interest in joining these organisations. However, Tajikistan cannot do so for geographic reasons: we have no common borders. Its accession will appear on the agenda if Kyrgyzstan joins. For this, our colleagues should meticulously study all membership qualifications and get ready to introduce relevant regulations in their economy and legislation.
Let me repeat again that we are willing to accept them. Moreover, regarding the Kazakhstani proposal, we have formulated the idea and included it in the documents we passed. We have set up a workgroup to bring Kyrgyzstan’s accession to the Customs Union closer. As for Ukraine, this is a sovereign choice of its nation and leadership. As I see it, economic interests and pragmatic views cannot fail to make our Ukrainian colleagues at least pay close attention to the Union. Economic reasons demand them to make calculations, acquire a vision of the future, and do away with their outdated political phobias. To be sure, we’d be the last ones to impose our opinions on anyone. If, at a certain stage of its development, Ukraine makes feasibility studies, pen in hand, and sees that it will be a reasonable step, we will willingly engage in a direct dialogue on Ukraine’s accession to these integration organisations.
Mr Massimov, take the floor please.
Karim Massimov: I think you are right, Mr Putin. Integration unions should emerge step-by-step. This is a matter not only of political declarations but also of pragmatic moves. We agreed to establish the Customs Union. It’s up and going now, and we see the practical results we need. Now, we are moving on to the next stage, the Common Economic Space. Here, we must also use up all the benefits and opportunities it offers.
As I look, let’s say, at the experience of United Europe, I wonder if the political situation occasionally causes us to make rash decisions. It wouldn’t do us good to make decisions that we’d be unable to implement later; such an example can be seen in certain European countries. We, on the contrary, are very steady and consistent, and we thoroughly weigh all the steps we take. When we come to a decision, we implement it. If we cannot implement something, we tell each other openly and honestly that we should shelve it for some time. That’s what is so good about our cooperation. It is voluntary, pragmatic and beneficial to all parties involved. That’s what makes it so attractive, at any rate, to Kazakhstan. I think all partners in these organisations will say the same. That is why common currency and the visa issue are outside today’s agenda: these matters demand thorough preparations to avoid whatever eventual misunderstandings.
As far as the accession of new members’ is concerned, we decided today to set up a workgroup for Kyrgyzstan’s accession. It is a sensitive issue for Kazakhstan, given it is a neighbouring country. As a Customs Union member and on our obligation to Russia and Belarus, we had to equip a full-fledged border with Kyrgyzstan. We did it from scratch where there had been no border at all. That was to the detriment of Kyrgyz businesses and people, and they have claims on us now. We are telling them: “Let’s work quicker, colleagues. We cannot make the desired decision on our own any longer: everyone has to be on the same page.” The same concerns all countries bordering Kazakhstan.
As I see it, there’s no alternative to integration and free commodity circulation. I think that the emergent economic situation and the principled decision we passed today to coordinate our macroeconomic policies and establish a relevant workgroup will prove quite soon that we are on the right path and that we couldn’t have taken another one.
There are many pluses but also certain minuses – there are challenges, and criticisms levelled on us from within and without. I think that this is a watershed moment, and we have made a pivotal decision. I am absolutely sure that people will say later that it was made just in time. Thank you.
Mikhail Myasnikovich: I would like to add a few words in support of what the other prime ministers have said. We should realise that integration, especially in the Common Economic Space, is a process that implies development and everyday work. It’s a living organism. We have already elaborated a package of documents, agreements and provisos for development, which the Belarusian president mentions in his recent press contribution. This package is for all to comply with. Some people expect to pick out the best from this package, and let others tackle the problems. They will not have their way with the principles and approaches we have elaborated. If they are recognised, if the national legislation is unified and complies with the demands of the Common Economic Space, with its current three member states, then we can consider prospects for its enlargement, but we must not engage in cherry-picking.
Vladimir Putin: I agree with my Kazakhstani colleague. Things are easier for us than, say, for integration in Europe as we share a past, and possess common transport, energy, communications and other infrastructures. We have a huge, deeply rooted cooperation. European countries have never had anything like it, while we inherited it from the Soviet national economy. We speak one common language, too. We don’t need translation into 27 languages – which is more of an economic factor than a cultural one.
However, we evidently share certain problems with Europe, so we need to thoroughly analyse the situation there. Our colleagues have made tremendous headway, and we should study their experience and avoid their mistakes. We can do it perfectly well.
As for a common currency, you know that we discussed the matter with Belarus for a long time, and we were making plans that had to be eventually postponed. Now I think that common currency needs well-prepared economic grounds. Meanwhile, a major part of noncash settlements with Belarus are made in Russian roubles even though we have no common currency yet. My Ukrainian colleague asked me yesterday whether we should shift to Russian roubles in transactions between Russia and Ukraine.
Life itself will dot all the i’s and cross all the t’s, and reveal what the more beneficial options are. Different aspects will be accentuated accordingly, and we should not impede development. Our duty will boil down to coordination. We are ready to do so, on the whole, in order to prevent a repeat of the current situation in the Eurozone, where discussions are ongoing about who should be expelled from it. I know that some experts from countries that have not joined the Eurozone are suggesting to start analysing exit strategies. I find this suggestion a bit provocative because it convinces the public that such an option is possible. That’s bad for the Eurozone, and we cannot but feel concerned. We should avoid such errors and be extremely cautious and precise in what we do, proceeding from the current global financial state. Every step we make should be thoroughly prepared by each preceding step.
Question: Mr Putin, what do you think about the prospects for transnational companies to be established in the Customs Union? Prospects are being discussed for a holding to comprise the Maz and Kamaz automobile works. Is it possible to establish such transnationals with participation of Belarus, Russia and Kazakhstan – all the three [Customs Union] countries – in the near future? Thank you.
Vladimir Putin: Of course it’s possible. You have cited an example just now. Maz and Kamaz are good, promising companies but they have ample room for progress to become competitive in the global market. It isn’t enough for Kamaz to win the Paris-Dakar race, though such victories make prerequisites for a technological spurt and are fine for advertising its trucks. However, the company should not rest on its laurels – it needs upgrading. I won’t go into detail. Kamaz knows full well what it can and should do immediately. It is implementing development plans in tandem with foreign partners. Its American partners started manufacturing engines for it, and it has contracts with European companies. Kamaz has excellent prospects for the global market. However, its merger with Maz will much improve its situation. Our free trade zone can promote both companies in a simple way, by removing export and import customs barriers between our countries. Kamaz bases in Russia while Maz is in Belarus. So it’s not a mere free trade zone we are establishing, but a customs zone, which implies closer integration. This situation greatly facilitates the merger of industrial giants.
But for the process to be easier and more attractive, we should deepen our cooperation, including in the currency sphere. We have discussed this problem at length today, and understand what needs to be done. It concerns the timeframe. I am not going to give details but if my Belarusian colleague is able to comment, he will do so, if not, he will leave the matter for later. One way or another, the ball is in the court of our Belarusian friends.
Mikhail Myasnikovich: We have been working hard, not only with MAZ or KamAZ, but also with a number of other companies. We have set up joint working groups and chosen appraisers to consider schemes either to buy their stakes or combine them into larger blocks so that through management companies and by providing them with certain functions we could … The work is proceeding as agreed and planned.
Regarding payments, it is true that many settlements with Russia, practically an overwhelming majority of them, are made in Russian roubles, and the Russian currency is sold and bought on a par with global reserve currencies and is used in our banking operations. As regards the issue raised by Mr Putin, or the deregulation of the currency market, we view it as part of the opening of the Belarusian economy and would like to ask for some time to consider all these issues as a package: how ready we are for the step and what is the timeline in which we can achieve this. But the course is set correctly: towards a deregulation of the economy and its opening, including deregulation of currency markets and currency deals.
Vladimir Putin: I want to draw your attention to this statement by the Belarusian head of government – it is a very important one. We appreciate your problems and understand they are connected with the exchange rate, settlements and the ability to pay for goods and services, mutual deliveries and payments for these mutual deliveries, the opening of accounts, etc. etc. These are all complex issues of economic and financial regulation and very sensitive for any economy. We understand that and will work with our colleagues in a steady and orderly way.
Karim Massimov: I would like to add something else here. Kazakh-Russian and Kazakh-Belarusian joint ventures have a large potential. They, especially Russian-Kazakh ones, already have extensive experience. I think their cooperation and ability to launch joint projects will make these companies competitive worldwide and able to set the standard in the global economy. I also think cooperation and establishment of transnational corporations, including in the gas sector, will offer very good opportunities both for Central Asia and Europe. That, too, could be an important joint project.
Traditional cooperation in space technology – the Baikonur Space Centre in Kazakhstan and joint space projects – could likewise rank as No. 1 or No. 2 projects in the world. There are very large opportunities here.
New lines of work that are now emerging in, say, nanotechnology, microbiology cooperation and some joint financial projects that have traditionally been strong in Russia are gaining strength in Kazakhstan as well. In some branches of engineering, which were poorly developed in Kazakhstan for some historical reasons, we will be able to draw on new advanced technology and set up joint ventures and transnational corporations on Kazakh soil.
We are also implementing a number of joint projects with Belarus. They are located in Kazakhstan and produce farm machinery – we believe the Belarusian farm machinery industry is highly competitive. They also concern the food industry and some other branches. This has become possible in the past two or three years when we started talking about the Customs Union and it began operating. That has opened up fresh opportunities and given a particular boost to our relations with Belarus in the past two years. And that is only a beginning.
I am confident that this will offer greater scope for mutual trust and teamwork. Thank you.
Question: A question to all three prime ministers. The deadline for launching a single system of state e-purchases was set for. How will it operate? Are the three countries’ information systems ready for it?
And a second question, if I may. Yesterday a free trade zone treaty was signed, and today the prime ministers discussed the Customs Union. The heads of government are saying all the time that the Customs Union will benefit the public. It has benefited businesspeople all right, but when will other people feel the effect? There has been a recent case (this is from personal experience) when citizens of Kazakhstan were unable to fly out of Domodedovo because of long lines at border controls. Are migration cards going to be abolished? Thank you.
Vladimir Putin: The Customs Union and border controls are different things. We are abolishing customs controls but not border formalities. Border controls will fall under the authority of the future Eurasian Union (which we also discussed today), although such controls within the Customs Union will be simplified as well.
Now concerning your question on when people will begin experiencing the benefits of the Customs Union. I will tell you this: its trade has increased by one-third. What does this mean? It means that new jobs have been created and their number is large. I am not in a position to tell you the exact figure, but the numbers involved are big. Goods are in demand and sell on the markets of our countries and, say, to a considerable extent, on the market of the Russian Federation because it is the largest of the three countries that make up the Customs Union. That means jobs are being preserved and with them people who produce these goods keep their jobs. They get their salaries, while local and federal authorities get tax revenues. This is what it means. It is a direct benefit and can be calculated. As for border control problems, we are aware of them and we will work to address and resolve them. Unfortunately, they still abound, and this indicates we need to deepen our integration, up to and including creating the Eurasian Union.
Karim Massimov: I would like to add a few words on state purchases, Mr Putin.
Vladimir Putin: Yes, sorry, state purchases. Our colleague will tell us all about them. We are fully geared up for e- purchases. What is more, for us it is an opportunity to meet our partners halfway. What does this mean? It means Russia is letting our Kazakh and Belarusian partners in Russian state purchases. Producers in these countries can offer their goods and these can be bought by the Russian government. Our system is prepared and so is the Belarusian one. As far as I know, the Kazakh partners asked for a timeout to carry out the required preparations: Mr Massimov will tell us when they will be ready to start.
Karim Massimov: The Kazakh system was really not fully prepared for integration with the Russian and Belarusian ones. As a Union state you have already travelled this path, while we had to catch up. If I am not mistaken, this agreement enters into force on July 1, 2012. All the necessary resources will have been allocated by that time and, as agreed, we will fulfil our commitments within this period.
Here I would like to stress that it is, of course, not only an opportunity for Kazakh and Belarusian companies to benefit from state purchases paid for from the Russian budget since it is the biggest one, but also a chance for Russian companies in Kazakhstan and Belarus. They must compete for the orders on equal terms. That was your decision and your good will and we welcome them. Thank you.
Vladimir Putin: We are making state purchases on a vast scale. Trillions of roubles are involved, and for Kazakh and Belarusian enterprises this is in effect yet another step towards opening the Russian market.
I wish to thank all those present and the media for their attention to our work. I hope they will give an unbiased coverage of its results. Thank you.