Transcript of the news conference:
Vladimir Putin: Good afternoon, ladies and gentlemen.
Our meeting with Mr Mykola Azarov has just finished. We appreciate very much that the new Ukrainian prime minister has chosen Moscow as the location of his first official foreign trip. We see this as a confirmation of our Ukrainian partners' determination to strengthen relations with Russia, achieve real, positive change in bilateral relations and overcome the artificial burdens of the recent past, which have prevented us from fully realising the vast potential of our bilateral partnership. This approach certainly serves the fundamental interests of our peoples.
Ukraine is Russia's leading trade partner. Our national economies are closely interconnected, and many of our industrial facilities in mechanical engineering and transport work together as a single manufacturing unit.
More than that, we share special responsibility for European energy security. I am confident that there is no alternative but coherent, genuine teamwork focused on real results. That was why today's talks focused on the problems and possibilities for our economic and trade relations.
Trade between our two countries fell by more than 40% last year due to the global crisis, which of course represents a significant deterioration. This decrease affected practically all trade, including in raw materials and finished goods. It is also obvious that pre-election political problems in Ukraine made matters even worse. This was not an unprecedented situation, but if we call a spade a spade, certain attempts by Ukraine to disassociate itself from Russia and sever decades-old economic ties-attempts that I find downright absurd-have certainly had negative effects.
Our common goal is to rectify the situation quickly, today, and put bilateral relations back on a trajectory of sustainable growth, fully taking advantage of the broadest possible cooperation to launch joint strategic projects in energy, metal production, petrochemicals, telecommunications and the agriculture industry.
Meeting these challenges requires a favourable investment climate. We should encourage mutual investment, starting with the removal of the many obstacles to Russian businesses in Ukraine. In return, if there are such obstacles for Ukrainian entrepreneurs in Russia, we are ready to consider appropriate action on our part to remove them. We welcome the new Ukrainian government's readiness to discuss and, most importantly, address these issues.
Naturally, we discussed the future of our energy and natural gas partnership. As I see it, this partnership should rest on firm legal principles and strict compliance with relevant agreements by all parties involved, which will ensure the continuous operation of the entire gas transmission system, including the transit of gas to Europe and consumers in Ukraine.
We call on our partners to prioritise support for cooperation in high-tech sectors such as nuclear energy, aeronautics and space technology, as I have already mentioned, including the GLONASS satellite navigation system. We have significant experience working together in these sectors. Now is the time to launch new initiatives on the basis of this experience, therefore making Russia and Ukraine more competitive in foreign and third-party markets.
We have a useful mechanism for cooperation: the Committee for Economic Cooperation. Mr Azarov and I have just agreed that the next meeting of this committee will be held in Moscow quite soon, in April. There are also opportunities for using this format to not only harmonise the principles of our relations but also expand major projects.
In conclusion, I would like to thank our Ukrainian colleagues for their constructive work and for the trust-based and frank discussion on all the items on today's agenda.
Thank you.
Mykola Azarov: Distinguished Mr Putin,
Ladies and gentlemen, members of the media,
This has been our first meeting, and Mr Putin has listed in great detail the main issues we discussed at it, so I don't need to repeat it all over again. I would like to stress that we have had a substantive and absolutely frank conversation. I think we have identified all those issues that caused misunderstandings and conflicts in the past. We have not gone into details on who was to blame, but I think we have agreed that such things are not to be repeated in our relations.
We have also agreed to cooperate closely in our preparations for the next meeting of the Intergovernmental Commission. As I see it, the commission should specifically address all the issues we discussed today and try to find mutually acceptable and beneficial solutions. It is my profound conviction that we can settle even the most difficult issues.
In conclusion, I want to say that I am profoundly convinced that our relations, Russian-Ukrainian relations, have a bright future. And we will work to ensure that declarations and statements become practical results in this future. This is our main objective.
Thank you for your attention.
Russian and Ukrainian prime ministers answer journalists' questions:
Maria Vassilyeva, One Plus One: Good evening, I am Maria Vassilyeva, One Plus One studio, Ukraine. I have a question for Mr.Putin. It is no secret that the new Ukrainian authorities consider the current price of Russian gas to be unfair and are seeking a substantial cut. On what terms could Russia do this?
And a question to Nikolay Azarov: What can Ukraine offer in exchange for a price change? And can you reveal the secret, what is the content of the proposal to create a gas transportation consortium with Russia? What will Russia's role be in it? And another question, how can Ukraine interest Russia considering how much Russia has already invested in building bypass gas pipelines?
Thank you.
Vladimir Putin: Excuse me, what is your name?
Maria Vassilyeva: Maria Vassilyeva, One Plus One.
Vladimir Putin: Masha, you can't imagine how grateful I am to you for asking this question and for the way you formulated it.
First of all, I would like to say that we do not believe the parameters of this contract to be unfair or discriminatory. As you know, the contract is the result of much travail and scandal. I would say, at an unfair cost to Russia, Ukraine and our consumers in Europe. We finally found a compromise after prolonged and very difficult negotiations.
The compromise consists of our adopting market pricing both for gas and for gas transit. It is a balanced contract that takes into account the interests both of Ukraine and the Russian Federation. This contract is how the world generally does business, and it is working.
I would like to stress that the wellbeing of European consumers depends on fulfilling it, because the contract also regulates transit to Europe.
Of course the buyer always wants to buy cheaper and the seller wants to sell for more. Again, in our opinion, this is a balanced document. Why am I grateful to you? Because of the way you put the question. If the question of price revisions is raised, the natural response would be, in return for what? That is how you asked it: what are our colleagues prepared to offer in exchange?
I would like to tell you that Nikolay Azarov and I have of course discussed all these problems. We have discussed them privately and in a broader format. We have agreed that no subject is taboo. But it would be appropriate to discuss energy cooperation in a comprehensive manner, at least regarding energy.
We have now agreed to have these discussions. We will consider these issues in a most friendly manner. We will work as partners.
The results remain to be seen, and we will inform you when we reach a conclusion.
Nikolay Azarov: I would like to explain to Masha in simple words that while it is easy to be drawn into something that is not good for you, it is very difficult to get out of it.
But Vladimir Putin is absolutely right when he says that every aspect of our cooperative efforts should be considered in a comprehensive manner. And, Mr Putin, I will say to you that for one buyer the price may be acceptable, but for another it seems too high. It depends on the buyer, his income and on how he reacts to this price.
So, one cannot consider the gas issue beyond the context of our relations in general.
Of course, we will try to find a compromise from our side. We are quite candid about this. We must find some form of compensation. What will it be? We have a good month's worth of work ahead of us. I think we will find something that will be good for Russia and, of course, good for Ukraine.
Now on the subject of the gas transportation consortium. The matter has been discussed so many times at the government level and in the media that there is no need to spell it out. This is good for Russia, Europe and for Ukraine. Modernisation of the gas transportation system - how can it be anything but beneficial?
Though Russia, because it is building pipeline bypasses, could still start having second thoughts about investing in modernisation. But we have a great interest in investing in modernisation and in involving Russia. That too would be a subject for our negotiations.
Vladimir Putin: About our investments in alternative gas transportation systems. This is not about bypassing Ukraine; it is about creating the infrastructure potential to pump additional volumes of gas to Western consumers.
I have to tell you that we have indeed contributed considerable political input and we are ready to invest serious amounts of money. This is not just our project, it is an international project. It involves Russia, Germany and Holland, and France is joining it. Consumers in practically every European country are waiting for gas to be pumped through that gas transportation system. Contracts for gas supplies through this system have already been signed.
We are entering the final phase of construction for this pipeline system. The construction of the submerged section will begin on April 1. By June or July of next year we will complete the system and gas will start flowing to consumers by late 2012.
V. Kondratyev, NTV: I have this question. Ukrainian journalists, and in general many people are asking a very mundane question. You were recently in Belarus, and you also discussed gas prices. So people wonder why we set the Belarusian price at half the Ukrainian price, even though former ideological differences are receding into the past. Why such discrimination, why such unfairness? What is the reason for it?
Vladimir Putin: Is this a question from a Russian journalist? Or from the Ukrainians? Who are you working for?
Question: If you like, it is also a question from me personally. I am confused myself. If we are in a new situation, why do we insist on market pricing, why are the prices different?
Nikolay Azarov: What has Ukraine done wrong?
Vladimir Putin: Who do you work for?
Voice: Well, if Nikolay Azarov answers it...
Nikolay Azarov: No, the question is addressed to Mr.Putin.
Vladimir Putin: The answer is simple. I would like to draw your attention to the following: We are adopting European style pricing policies for Russian consumers inside the country, too. Of course, we are doing it carefully and gradually. That is one thing.
Another thing. We are introducing the same pricing formula with Ukraine as with all our partners, including Belarus.
What is the difference? For Belarus we have decided on a phased transition over several years. Incidentally, we had also established a transitional period for Ukraine. If you remember, last year we agreed that the gas transit rate would remain the same as before, but we offered, I think, a 20% discount on European market pricing. This year it is finished, no discounts.
But what is the difference, why is gas in Belarus cheaper by one third (not by half, but by one third)? Because we are building a Union State with Belarus that includes a Customs Union. We have an arrangement with Belarus whereby we do not charge an export customs duty for gas, that is, 30%. That accounts for the difference in price. By the way, this is an incentive for integration in the post-Soviet space, in this case between Russia and Ukraine.
A. Kharunsky, Ukrinfo: Moving away from the gas topic. At the start of the meeting today, the Ukrainian Prime Minister said Ukraine is considering some new projects for Russia.
What are these projects? How did Russia react? And in general, since trade has dropped 40%, were any benchmarks set during the talks? To what level will we try to bring our relations in the near future?
And on the theme of gas again, it was mentioned today that the price of gas would be pegged to the volume of gas purchases. Is it about preserving the guaranteed volumes of gas purchases to which the previous Ukrainian government agreed?
Vladimir Putin: The second part of the question is directed to me. The contract sets certain rules and stipulates certain volumes. But it also allows the supplier, i.e. Russia, to impose fines if the full amount of gas contracted for is not taken. However, we have agreed that we will not impose these sanctions.
Voice: And the first part of the question?
Nikolay Azarov: We, and Russia, made proposals to strengthen cooperation. We are talking about 12 projects and agreements which are pending before our respective governments.
We propose to step up work on these agreements so that they can be discussed by the prime ministers at the meeting of the Intergovernmental Committee and so the processes for implementation can be determined.
The projects concern cooperation in nuclear technology and nuclear power. And there are a number of other very important agreements: space, aircraft manufacturing and so on.
Yelena Glushakova, RIA Novosti: Yelena Glushakova, RIA Novosti. It is no secret that our companies have faced problems in Ukraine in previous years. There was even talk of hostile takeover raids and so on. And not one, but several companies were mentioned. Did you discuss this today and did you agree to any safeguards in this respect?
And again, back to gas: What is Russia's attitude toward the consortiums which were also widely discussed in previous years?
Mr.Azarov, we have a question that is traditional for Russian-Ukrainian press conferences, it is asked every month. Has Ukraine guaranteed March payments for gas before April 7? Thank you.
Vladimir Putin: As for the consortium, we have discussed it. Indeed, Leonid Kuchma, the German Chancellor and I have signed a memorandum to that effect. So, our attitude to this is positive.
I would like to remind you, and I have said this many times and am tired of repeating it, but I will take the trouble and repeat it once more. We proceeded from Ukrainian law. The consortium was not to buy or appropriate the gas transportation system. In accordance with our proposal, it was to remain the property of the Ukrainian state, and the consortium was to raise capital and operate the system under a long-term lease. We thought it was a very attractive proposal and the Ukrainian leadership at the time agreed to it. But later, after quasi-revolutionary events, the project was put on the back burner and was not pursued. Instead a running confrontation over energy issues began.
What was the first part of your question?
Yelena Glushakova, RIA Novosti: Safeguards for our companies.
Vladimir Putin: Yes, we discussed it in some detail today. Nikolay Azarov knows these problems and he has assured us that the Ukrainian Government would once again review all the problem issues and will do everything it can to ensure that justice on all the disputed issues prevails.
Nikolay Azarov: Your question assumes a political course which Ukraine has given up for good. It will never be back. There will be no political course that will allow unfriendly actions by Ukrainian authorities toward Russian companies. It simply will not happen.
Regarding the gas consortium. I barely boarded the plane before all the Ukrainian media reported that Azarov would surrender the pipeline in exchange for some low price or a cut in the cost of gas. Mr.Putin can attest that I did not offer to surrender the pipeline. Did I?
Vladimir Putin: No, you did not.
Nikolay Azarov: I did not.
Vladimir Putin: But there were other proposals.
Nikolay Azarov: But there were other proposals. We do not hide them, we will go public. There are no hidden arrangements of any kind that we cannot reveal to the Ukrainian people.
I have always been supportive of the idea of a gas consortium. I was in the government when the idea was being developed. I still have a positive attitude toward this idea. If Russia is still interested, we will work at it together.
Vladimir Putin: Yes, we are ready to work on it, because, again, we are going ahead with South Stream and Nord Stream. Nord Stream is in the final stage. Of course these projects make us somewhat less interested in cooperation on the Ukrainian gas transportation system. But interest is still there. If it is pursued in the form of a constructive dialogue, we are ready to consider it. We are willing to invest certain amounts in the reconstruction, and the amount of money is considerable. All this will form the subject of our negotiations in the near future.
Mr Azarov did not propose any alternative today: such as, we give you the pipeline and you cut gas prices. Gas prices may change, but the pipeline is still there. Except when there is no gas in it...
Nikolay Azarov: ...gets rusty.
Vladimir Putin: ...it is simply a chunk of iron and even that is hard to sell, because before selling it you have to dig it out of the ground. And that costs money.
We will discuss the range of our relations. We will proceed from Ukraine's membership in the WTO. We are well aware of the implications. But at the same time Mr Azarov and his colleagues have shown an interest in integration processes.
You were asking why gas supplied to Belarus is one third cheaper. Because, as I explained, the price does not include a 30% gas export duty. That is all there is to it. That is the advantage of integration. Anyone can do the math; our colleagues should do the numbers. Everything should be in figures. Weigh what is and what is not necessary, what is good for the Ukrainian state and the Ukrainian people. We are willing to consider such open pursuits. We have agreed to intensify our contacts in the near future.
Yelena Glushakova, RIA Novosti: What about April 7, Mr Azarov?
Nikolay Azarov: Calm down. Ukraine will pay for the gas before April 7. We will honour the agreements, which in my opinion are not very fair for Ukraine. But since they have been signed at the level of business entities and because the Ukrainian Government is responsible for compliance with these agreements, we will honour them, whatever the cost.
Voice: Thank you very much.
Nikolay Azarov: You are welcome.
Vladimir Putin: Thank you.