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Russian-Italian interstate consultations

November 26, 2013, Trieste

Top-level Russian-Italian interstate consultations in expanded format took place in Trieste, Italy, under the chairmanship of Vladimir Putin and Prime Minister of Italy Enrico Letta, with members of both countries’ governments taking part.

The talks began with a meeting between the President of Russia and Prime Minister of the Italian Republic Enrico Letta. Consultations then continued in the presence of their respective delegations.

Following the interstate consultations, a package of cooperation agreements was signed in the presence of the President of Russia and the Prime Minister of Italy.

The documents deal with, among other things, cooperation in the fight against crime, in social and labour issues, in healthcare, regarding the protection and return of stolen cultural property, and in connection with the Year of Russian Tourism in Italy and the Year of Italian Tourism in Russia in 2013 and 2014.

Documents on cooperation in customs and banking sectors, in culture, on creating a joint venture and a Russian-Italian investment fund were also signed.

Several signed documents relate to cooperation during the international prospecting and extracting of hydrocarbons, regarding reciprocal oil deliveries, as well as the partnership between Skolkovo Development Fund and the [Italian] company ENI.

Vladimir Putin and Enrico Letta also made ​​press statements and answered journalists’ questions.


Press statement and answers to journalists’ questions following Russian-Italian interstate consultations

President of Russia Vladimir Putin: Ladies and gentlemen, Mr Prime Minister,

Before I summarise the results of the Russian-Italian intergovernmental consultations, let me say a few words about the first day of my visit.

Yesterday I met with Pope Francis. We discussed the development of relations between Russia and the Vatican, and agreed to expand our contacts in the spheres of culture, science, education and healthcare.

Russia’s and the Vatican’s positions converge with regards to defending traditional Christian values , promoting interfaith and intercivilisational dialogue, and making moral considerations a bigger part of international relations.

During our talks we discussed the situation in the Middle East, and the current state of the protection of the rights and interests of the Christian population in the region. We also discussed the Syrian issue separately.

In Rome a similarly substantive discussion took place with the President of Italy, Mr Giorgio Napolitano. We exchanged opinions on key areas of Russian-Italian cooperation, cooperation between strategic partners. Along with this we discussed the prospects for humanitarian cooperation in particular detail.

We discussed the need to intensify bilateral exchanges in cultural spheres, and to increase the contacts between our citizens. We also talked about the simultaneous Years of Tourism dedicated to Russia and Italy, which will be held in 2014 in our two countries.

The discussions we had today in Trieste, first with Mr Letta in a restricted format, and then as part of a regular round of interstate consultations with heads of key ministries and departments, had a very full agenda. After the press conference we will go on to meet with Russian and Italian business leaders.

Economic cooperation issues are at the centre of our attention. Italy is Russia’s fourth largest trading partner, and bilateral trade is growing. This year, despite problems in the European and global economies, it will grow by 24 percent. I think that it will reach – and maybe even surpass – the $50 billion mark. Behind these figures there are jobs and continued economic activity.

Investment cooperation is developing. Over the past four years Russian investments in Italy have quadrupled, reaching half a billion dollars, and Italian investments in Russia grew to a billion. The memorandum we signed during the visit, between the Russian Direct Investment Fund and the Italian Strategic Fund, provides new opportunities for expanding mutual investments. You just witnessed the signing of this document, which provides for about $1.4 billion.

Together with our Italian partners, we set ourselves the goal of moving on to full-scale industrial cooperation. We intend to further encourage business contacts, including between small and medium-sized businesses. This work is taking place within the Russian-Italian Economic Cooperation Council and the working group on industrial districts.

We exchanged views on the prospects for cooperation between Russia and the European Union, which Italy will chair in the second half of 2014.

In addition, we touched on a number of international issues, among them the Syrian crisis. Italy has made an important, substantial contribution to its resolution, including during discussions at the G20 summit in St Petersburg.

We also talked about the Iranian nuclear problem. I am confident that [the Geneva Accord] the decision on Iranian nuclear programme will have a beneficial effect on the safety and stability of the entire Middle East, while ensuring the security of all countries in that region, including Israel.

In general both parties expressed their interest in closer international cooperation. This is important, given that next year Russia will chair the G8, and Italy will hold the presidency of the Council of the European Union.

In conclusion, I would like to thank Mr Letta, and all our Italian colleagues and friends, for the very warm welcome and joint work. I share Mr Prime Minister’s views: our consultations were very successful, and we hope very much and are confident that it will act as an additional impetus for the development of our interstate relations.

Thank you very much for your attention, and to Trieste: a special thank you for your hospitality.

Question (translated from Russian): This question is about international affairs. I would like to hear President Putin’s response. 

Nine years after the event, Ukraine is going through a repeat of the Orange Revolution, which was politically tangible for the entire world. The opposition leader is in prison and has declared a hunger strike. There is an unprecedented exchange of accusations going on between Moscow and Brussels, with each accusing the other of meddling in Ukraine’s internal affairs concerning its international relations. 

President Putin, do you think there is some kind of right balance that would enable Ukraine to find its own place between Europe and Russia?

Vladimir Putin: I agree with you completely that this is a decision Ukraine must make for itself.

Concerning the conflict between Brussels and Moscow. Perhaps that is where all the problems are hidden. I will allow myself to quote our Russian position on this matter.

A free trade zone agreement has been signed and is in effect between Russia and Ukraine. This means our rates for a whole range of key customs items are reduced to zero. And this agreement states that if one signatory to the agreement enters into a similar agreement with a third party, then any of the free trade zone agreement signatories has the right to withdraw or cancel its privileges provided to the other signatory under that agreement.

If Ukraine signs a free trade zone agreement with Europe, then – as I’m sure you know – it is committing to reducing customs rates by 85% two months after ratifying the agreement and, I believe, up to 95–98% in a span of three years. This means that if we maintain a free trade zone with Ukraine, we have every reason to believe that goods originating in Europe will directly enter our market, transiting through Ukraine’s territory either as European products, or labelled as Ukrainian goods. This poses a serious threat to our economy.

We are holding talks with the European Union; we have been holding talks with the EU for 17 years on the terms and conditions of Russia’s accession to the WTO, and achieved certain acceptable resolutions. Now, over the course of five or six years, we have been holding talks directly in a bilateral format – talks with the European Union on adopting a new, so-called framework agreement. And here, we still have many discordant positions. So we are not ready to throw open our doors to European goods.

We want to develop relations with the European Union and will probably do so. We understand that cooperating with the European Union gives us certain hopes for the structural reform of our economy, for modernisation, and we plan to use this cooperation in exactly that key. But any expert will tell you that this modernisation requires time, money and investment. Thus, we cannot open our market in just two months.

Therefore, I would like to ask our friends in Brussels, my personal good friends in the European Commission, to refrain from harsh statements. Should we suppress entire sectors of our economy to please them?

In some European nations, the current unemployment rate is 25%, and as high as 40% among youth. The unemployment rate in the Russian Federation is 5.2% to 5.3%, one of the lowest in our recent history. We do not want any bump in unemployment or to see entire sectors of the Russian economy shut down. In agriculture, these include the livestock sector and agricultural engineering, and industrial sectors include the aviation industry, automotive industry and so on.

And I would assume that this topic needs to be depoliticised, that we should agree with President Yanukovych’s suggestion and discuss all these things thoroughly in a trilateral format. I feel we could even initiate direct contacts between businesses in Russia, Ukraine and the European Union, direct contacts between business communities, so that the people actually creating the economy can meet, talk to one another, voice their concerns, formulate their approaches and suggestions; and we, in turn, can take the corresponding administrative measures.

In any case, the choice of whom to sign a free trade agreement with, and whether to remain in a free trade zone with Russia – this is the sovereign choice of Ukraine itself, and we, without any doubt, will respect the choice, whatever it may be.

Question: Mr President, rather than asking a question, I would like to clarify something. The question from our Italian colleague was very politically correct and broad. Could you please be more specific: is it true that you offered Mr Yanukovych a chance to review the gas agreement if he rejected the European Union? Is it true that, in any case, you promised him a significant loan? If so, how big was it, and what were the conditions?

Vladimir Putin: You should be working in the NKVD.

Concerning the gas agreement and loans. Our contract – not between us, but between Gazprom and Ukraine’s NAK – I believe was signed through to 2019. And we did not even discuss the possibility of reviewing the contract itself. Gazprom has already signed several addenda to this agreement. One of them concerns the deployment of the Russian fleet in Crimea with payments in the form of lower gas prices. The price reduction was $100 dollars, I believe, per 1,000 cubic metres. By today, starting from the time the contract was signed, Russia has received $10 billion less than it should have, and that money remains in Ukraine.

Moreover, Ukraine’s Naftogaz has requested its Russian partners – actually, it made several requests already — to make down payments for gas transits to European consumers through Ukraine’s territory, so that these down payments can be used to pay for gas deliveries to Ukraine itself. And Gazprom did this, it has already done so several times, and currently, the volume of such down payments exceeds $4 billion. The Ukrainian side’s debt is over two billion – I believe about $2.36 billion. We made down payments until January 2015. In addition, Naftogaz asked Gazprom to defer current payments until October 1, and then until November. Negotiations are underway, and are being held in a friendly, partnership-oriented tone. We hope that a corresponding resolution will be found.

Now, concerning loans. Our banks, four banks – Gazprombank, Sberbank, Vnesheconombank and VTB – are providing loans to Ukrainian partners, and this is being done on a regular basis. Currently, the Ukrainian borrowers’ debt to Russian financial institutions is approximately $20 billion, just over $20 billion and, I believe, another 280 billion rubles, in other words, another $8 billion. That’s $28 billion, plus another $2 billion for prepaid transit. All these are loans or quasi-loans. The total volume is over $30 billion.

We have been working with Ukraine and will continue to do so in the future, regardless of whether Ukraine decides to sign a free trade agreement with the European Union. Why? Because (as I was telling Mr Prime Minister) we have a very deep level of cooperation with Ukrainian businesses, and stopping Ukrainian businesses would have a negative impact on our own. In this regard, you could even say we are hostages of circumstance. But we will continue to work together on energy resources as well as in the financial sector, and certainly not at a loss to ourselves.

Question (translated from Russian): My question is for President Putin. You met yesterday evening with Silvio Berlusconi, who said that you allegedly said that you are surprised by the legal and political affairs he has become mixed up in. Could you confirm this?

Do you think that in a country where the law is one and the same for all, a politician who has been found guilty should step aside, or do you think he should cry that it’s some kind of coup against him? Did you actually give Berlusconi any advice or propose any help?

Vladimir Putin: I met yesterday not only with Mr Berlusconi but also with Mr Prodi, the Pope, and the President of the Republic of Italy.

What do I want to say in answer to your question? Italy and Russia have established very good and far-reaching cooperation in all different areas. We have the feeling that these relations are something above and beyond any particular political parties. This is something we value greatly. The same goes for Russia with regard to cooperation with Italy. That is my first point. 

Second, we never interfere in our partners’ internal affairs. I stress this point. We do not comment on events in the domestic political life of our partners’ countries, including Italy. But at the same time, everybody knows that Mr Berlusconi and I established a good personal relationship over many years of working together. I would call them friendly ties, and developments on the domestic political scene in Italy do not change them. I think that politicians and ordinary people should and do understand this.

It is not my place to assess Mr Berlusconi’s actions and I will not do so. This is your affair, not mine. But I can say for sure that he has done a lot indeed to develop Russian-Italian ties. I think I have the right to make such an assessment. That is enough.

Question: Unlike my colleague, I am not going to play the secret police interrogator, but rather the peacekeeper, since my question is not about forming alliances against anyone, or to be a counterweight to anything, but about mutually advantageous cooperation.

We saw today the signing of a cooperation agreement between the Russian Direct Investment Fund and the Italian Strategic Investment Fund on setting up a joint investment fund. What projects could this fund invest in? What do you think are the most promising fields for cooperation?

Vladimir Putin: As I said before, our relations are showing very rapid and positive growth. Our trade turnover was only recently at $34–35 billion, but this year we are looking at $50 billion, and maybe even higher. This we have achieved through energy supplies to Italy and cooperation in other areas.

As for the most promising cooperation areas, we are working together in high-tech fields. Today, we also signed documents related to promoting our joint product – the medium-haul Superjet-100 plane. We have already begun joint production of Italian helicopters in Moscow Region. Assembly has already begun. There are plans to shift production of these helicopter parts and technology to the Russian Federation.

We work together in the automotive sector too. Fiat, an Italian company that is very well known in Russia, is working now with one of our big companies, KamAZ, to produce farm equipment such as tractors and combine harvesters. 

There are cooperation opportunities in the agriculture sector, in transport machine building, and in shipbuilding, both civilian and military, which points too, to the high level of trust in our relations. In civilian shipbuilding, there are opportunities for developing specialised equipment for working on the continental shelf. This is equipment our big companies urgently need, and the financial backing is all in place and guaranteed. Finally, we can work together in outer space. The first spacewalk by an Italian cosmonaut was made just recently. This is also a result of our joint work. We work together in science, including in nuclear science. 

In short, there are many interesting and promising areas for cooperation. Indeed, it was also to advance our cooperation in these areas and take it to an even higher level that we got together with our colleagues here. This was the main subject of my discussions with the Prime Minister too today. I think it was indeed successful work. Thank you.

November 26, 2013, Trieste