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Interview to the Ukrainian media

May 16, 2010, Gorki, Mosсow Region

Svetlana Leontyeva: Mr President, could you specify what agreements or arrangements may be reached and what agreements may be signed?

President of Russia Dmitry Medvedev: I will start by saying that it is the first official visit of the President of Russia to your country in quite a time. I am very glad because, first, I simply missed Ukraine. True, I visited Kharkov but it was a working visit. Now, it is going to be a full-fledged official visit with all relevant attributes. Of course, it is not the protocol issues that matter but what we are going to reach.

Recently, we have made quite serious mutual steps to restore full-fledged, warm, sincere and friendly relations which are traditional for our countries. This time too, I would like to take further steps together with President Yanukovych. It is going to be a whole range of agreements, which are being prepared and agreed upon now. They relate to cooperation in co-production, energy sector, humanitarian exchanges, and to cooperation on interregional and international problems. The latter are the kind of documents that are usually signed by heads of state themselves. There is a whole set of declarations, agreements on Black Sea region security, on Transdniestrian settlement and on issues of European security. This whole package is going through the final stage of mutual approval. I hope that by the time of my arrival specific documents will have been prepared. The remaining details are being cleaned up now.

Svetlana Leontyeva: Will some joint venture agreements in the field of aircraft building, transport, power industry be signed?

Dmitry Medvedev: You know, in fact now we study carefully enough all these issues of cooperation in the field of aviation. As far as the aviation cooperation is concerned, we have quite a good potential. It has a historical character, and our leading companies, I mean Antonov and the United Aircraft Building Corporation, maintain direct contacts. At present, we study a range of ideas, in particular, for continuing cooperation related to some models, such as AN-140 and AN-148. And moreover for one of them now we consider a possibility to launch an assembly line in the facilities of our United Aircraft Building Corporation. The same plans exist for some other models of airplanes and helicopters.

Whether joint ventures may be created? I leave this possibility open. But in this case we should reach a final agreement. Anyway, I consider industrial cooperation in the field of aircraft industry absolutely logical, because our technological basis is quite similar, if not to say, identical. We have some common problems because, in general, it is high time to design the airplanes not on a Whatman paper, nor with a Kuhlman drafting unit, but with digital technologies.

In our country I have set the aim to digitalize practically all our new models of road vehicles, vessels, ships and airplanes. The first airplane designed, by the way, in digital form, is the Sukhoi Superjet. This is a new model. I think that if we go on creating something of that kind, we also have to start creating digital models, and in this case it is promising. It will be useful for Ukraine, because that will be an up-to-date model, though relying on the basic model, and for our country too. These are the joint ventures which I would welcome.

Oleg Panuta: Mr President, I would like to touch upon the agreements that you mentioned, in particular Kharkov agreements signed by you and President Yanukovych. In Ukraine there is still an ongoing controversy over the documents signed, the agreements signed. It’s interesting how the Russian citizens reacted to the documents signed?

Dmitry Medvedev: I think their reaction was calmer than that of people in your country. I saw the poll results: the overwhelming majority of the citizens of the Russian Federation support these agreements.

Of course, opinions differ. You know I am an attentive reader both of the Internet and of newspapers. After President Yanukovych and I had signed these agreements I saw that there were not only appreciative remarks praising us for settling, at last, a very important security issue, for helping the Ukrainian partners by reducing the gas prices. There was also pretty much skepticism expressed.

However, the overwhelming majority of comments were absolutely positive because our people regard this as a sign of resuming cooperation, in the broadest sense of the term, the sign of trust, long-standing trust. That is of the intention to build relations not for the current moment, so to say for one presidency, or cadency, as you sometimes put it, in our country this term is not widely used though it is indeed a legal term, but for the future. And this is the nature of the agreements on extending the stay of the Black Sea Fleet base in Sevastopol and on adopting a special price setting regime for the Ukrainian gas consumers.

I think that together these are balanced and useful mutually beneficial agreements, and I would like to stress it again, long-standing agreements.

And what was the reaction in your country?

Oleg Panuta: In our country, the reaction was controversial. Certainly, some expressed their absolute support for your point of view, saying it was a vision into the future. Others think that Ukraine compromised its principles and let itself almost give up its national interests. There are totally opposite points of view while truth, as usual, is obviously somewhere in between.

Dmitry Medvedev: Why am I asking? Of course, basically, this is an internal matter of the Ukrainians, as well as attitudes in our country are an internal matter of the Russians. However, according to the poll results that I have at hand, and these polls had been conducted before we reached the agreement with President Yanukovych, I saw, and since we made them available you might have seen them as well, that even at that moment about 60percent of the Ukrainians supported the idea of extending the stay of our Black Sea naval base in Sevastopol on certain economically beneficial conditions for Ukraine. So I think that in this regard the Ukrainian side had also made no mistake.

I apologize for interrupting you.

Maria Tchmil: It’s ok.

Mr Medvedev, your Ukrainian counterpart Mr Yanukovych has recently talked about the idea to merge Naftogaz and Gazprom. He said that it was impossible on equal terms as Ukraine would want to; yet at the same time, Ukraine does not want to participate as a minority shareholder in such an alliance.

Are you offended by this refusal? What do you think about the probable merger, about the expediency of this idea?

Dmitry Medvedev: I am not offended by the refusal because I have not discussed this issue with President Yanukovych yet. There is some talking about it but the issue has not been discussed at the presidential level by now. This is my first point.

My second point is that any kind of merger is possible only on the pragmatic basis. No matter how high we think of each other, what good feelings we have towards each other, a merger is only possible for pragmatic reasons. However, alliances are not only possible but are necessary in certain situations. I am not going to analyse how it is possible to merge Gazprom and Naftogaz. First of all, there is no use in such an analysis since, I would like to reiterate, there have been no full-scale negotiations on this subject. And secondly, it requires adequate calculations. I will remind you that Gazprom is worth between $150 billion at the lowest estimate and $200 billion at a high estimate, relatively high. Naftogaz is worth less, with all due respect.

However, today we are talking not about some merger that might be quite difficult both for our Ukrainian partners and for the work in general. Yet, if we are considering joint projects, joint ventures that would merge different gas and gas transportation assets not through a direct merger but through consolidating separate elements, then I believe that it is quite possible; and it is possible on a mutually beneficial basis and with due account of the aspirations of both parties. We already have such projects not only with our close neighbors and friends like Belarus, for example, but also with some European countries and such major companies as Eni, as the main German gas company that handles these issues, I mean E.ON AG. We have the following pattern with them: we take several assets and merge them. This is less difficult and quite interesting, on the other hand.

Finally, let me remind you that there are several major shareholders in Gazprom. When they invested in Gazprom, it was one sum of money and now it is quite different money. I was the chairman of the Gazprom Board of Directors for quite a long time, and as far as I remember the biggest package of shares was held by our German partners, somewhat 6% that was worth more than $20 billion at the peak of Gazprom’s capitalization, given that they initially invested probably 15 times less. That is why this topic requires a separate thorough analysis.

Yet, right now I would neither reject nor predict anything. We will meet with Mr. Yanukovych and discuss it.

Svetlana Leontyeva: Mr President, during the informal CIS summit that took place here in Gorki exactly a week ago you said that all leaders, heads of the CIS states were ready for the most fruitful cooperation with Ukraine. Did you mean any projects or initiatives that we are not aware of?

Dmitry Medvedev: Nothing of what you are not aware was discussed, because we cooperate openly. After all, Ukraine is so much a CIS member state as others, and Ukraine never cancelled its membership and no one was ever trying to isolate Ukraine.

We had quite difficult relations and disagreements with the former President, as well as with the former government, but even then we were meeting and adopting joint programmes at various summits, such as, for example, the CIS economic development programme through 2020. At first sight, it might look somewhat abstract, but in fact it is quite important because we must understand and be able to predict the general direction of our development. It affects both our mutual trade and investment plans. I reviewed respective statistics; our bilateral trade over the last three month from January throughout March amounted to $7 billion having nearly doubled. I can't attribute that solely to the fact that now you have a new President and new Government, even though this certainly made its contribution too. Yes, perhaps, it was due to the effect of economic recovery, but also due to the effect of a new team coming to power. That shows we can reach quite serious figures, practically pre-crisis figures. I am sure that this process is positively facilitated not only by economic aspects but, of course, political factors as well since a considerable portion of programmes that could be carried out was suspended which was quite sad indeed.

Svetlana Leontyeva: Which programmes may be unfrozen now?

Dmitry Medvedev: The very ones we are discussing. We could really advance our cooperation in the field of aviation, outer space including means of satellite communication such as the GLONASS system. That is quite interesting for both countries. There are also outer space programmes, such as the Dnepr Programme of commercial space launches. There is a whole set of ideas in the energy sphere I mentioned. Apart from a direct cooperation between Gazprom and its Ukrainian partners, I am sure we could think of participation of Russian companies in modernisation of a number of large industrial facilities in your country. Of course, we should do it on a mutually beneficial basis. We used to cooperate quite well, indeed. If we are able to restore such cooperation, the volume of trade will no doubt get higher, and most importantly, not only due to the larger exports of energy resources, of oil and gas, though they do contribute to it, but also due to technology-intensive projects.

Oleg Panuta: Mr President, theoretically industrial cooperation may quickly bring results, the quick effect of the joint efforts. In your opinion, do we need any supervising agencies to promote it or is it sufficient to make the business communities of the two countries feel that they are supported by the governments, or at least to make sure they do not experience any obstructions?

Dmitry Medvedev: I had been engaged in business for ten years so I can say that the best thing for any business is absence of interference. But it will never be like that, no doubt there will be some obstacles anyway. It is the way the state governance is organised, and the way bureaucracy is, so the business people will encounter some hindering all the same.

Speaking seriously, I believe that we should give a certain impetus to it at the state level. That is why during my visit I am planning not only to hold the official events such as negotiations with President Yanukovych and the meeting of the Russian–Ukrainian Interstate Commission, but a meeting with the business people as well. I consider it very useful, particularly taking into account that many contacts were frozen. I will not conceal that in a number of cases we even had complaints, some of which are now partially withdrawn, concerning the way Russian investments were treated.

Regrettably, it was due to the domestic political squabbles that you were having at that time. Nevertheless now we have to find a way out of this situation and try to make the investment climate as favorable as possible and for this purpose I would like to meet with the Ukrainian entrepreneurs. So we need to give an impetus at the state level, but, in my opinion, direct management of investments and some projects by the state and the government is not always fruitful, particularly when it concerns private investors. It is preferable that they are interested in each other. The task of the government is to protect these investments. There is a well known concept of a government as a so-called ‘night watchman’. Maybe it is an exaggeration but still the government should be on guard, while business contacts are to be maintained by the business elite.

Maria Tchmil: Mr President, the Ukrainian opposition believes that such an abrupt turn in relations with Russia, such an intensification of cooperation are actually aimed at Russia’s drawing Ukraine into the orbit of its geopolitical influence further than it has ever been. What do you think about this?

There are also people who believe that this renders Ukraine’s prospective membership in the European Union impossible. Don’t you think that Ukraine should beware of such a close friendship with Russia?

Dmitry Medvedev: You know, Ukraine is not homogenous and we have already discussed the fact that there exist different opinions in your country as well as in ours. I think that there is nothing to be afraid of, everything is absolutely alright.

As far as the state of our relations a year ago is concerned, they were simply non- existent. What involvement of Ukraine are you talking about then? There were no relations whatsoever. I even refused to send our ambassador to Ukraine because the relations were virtually brought to naught. Business contacts were frozen as well. Of course, oil and gas supplies continued because we could not do without them as they were our contractual obligations. But if we mean full-scale relations, they were literally wound up, so now we are only beginning to ‘unwind’ them. I am not saying that we have now raised them to an unprecedented level. President Yanukovych and I have met six times lately, this is a very high frequency of contacts. When I come to Kiev it will be our seventh meeting. I think that this is to fill the gap that had developed in recent years, at least so that relations be recovered to the pre-crisis level. What will come next, that remains to be seen. I would like to emphasise once more that this should be done on the basis of our national interests, both Russian and Ukrainian, in line with our perceptions of what we all want, on an absolutely pragmatic basis, while at the same time keeping in mind that our two countries are bound by a special sort of relationship, that of very close neighbours and relatives and of historic nature. We cannot but take that into account. This is what the Kharkov arrangements stem from. If it were some other way, we would have never reached such agreements. They are of course a special kind of agreements.

As for whether it will facilitate or complicate something, I shall be honest with you: it can complicate nothing. If the Ukrainian people make the decision that it should seek EU membership – this is your choice. As a matter of fact, each choice should be simply reasonable. We are all participants of the European integration. Let me mention that the trade between the Russian Federation and the European Union amounts to $250 billion which is a significant figure and that is why we are very closely integrated in Europe. If you find it attractive, you should also work in this direction. It is obvious that we all belong to the European family, this is normal. If we discuss, say, the EU membership, we should address this question, strictly speaking, to Ukraine and the European Union.

Anyway, one should closely follow the current developments in the European Union, because there is no need to strive for a place that is not good or secure. Now our European colleagues have to overcome the difficulties they encounter, including the problems of the Euro zone, a considerable number of defaulting countries, etc. And they, in turn, will pay attention to the economic attractiveness of prospective EU members.

That is why this is obviously a slow and rather complex process, but it is for Ukraine to choose. It is a question of national, economic and other policies.

Maria Tchmil: But at the same time the Russian opposition said that Russia had paid too high a price for the continued deployment of the Black Sea Fleet in Sevastopol.

Dmitry Medvedev: Did our opposition say so?

Maria Tchmil: Yes, it did. In his speech, Boris Nemtsov…

Dmitry Medvedev: Excellent! It shows that the views of the opposition are different from the views of the authorities. It also shows that the opposition is safe and sound and it is willing to be heard. In my opinion, it is natural. The same is true for the opposition to President Yanukovych which said that all this looked very bad, nearly a betrayal of the national interests and so on. But the opposition is supposed to criticize authorities, and authorities should be prepared for this and take it in an easy-tempered way, but they should doggedly pursue the policy they consider appropriate.

Maria Tchmil: That is what I wanted to clarify. Why is it so important to have the Black Sea Fleet based in Sevastopol?

Dmitry Medvedev: You see, in addition to the fact that we have really particular relations, brotherly and historic ties – for now I will not focus on this since it is a kind of an implied factor – we are still very close nations, and will continue to make progress together, side by side, due to our geography if not anything else.

Another matter of significance, let us put it like that, is the European security. In my view, the current pattern of European security is not perfect and the events of the last years demonstrated it very clearly. Both developments around the disintegration of Yugoslavia and Caucasus crisis in 2008 show that we do not have an optimal model to settle various disputes and conflicts emerging within the European area.

For this purpose, first, we need to establish a proper treaty framework, like the one I proposed. I do not claim it is absolutely perfect, we could come up with anything else but something should be done, I mean a new European Security Treaty which in fact could renew the efforts made in Helsinki in 1975 when the work on the Act of the Conference on Security and Cooperation in Europe was carried out.

Second, we realise that even with a number of military blocs, full security cannot be properly achieved. We have NATO in Europe. It is a military alliance retained after the collapse of the two-bloc system and termination of the Warsaw Treaty.

Other military alliances and political entities, such as the CSTO to which the Russian Federation is a party, exist in Europe. Does it actually mean that the whole of Europe is divided among political blocs, and is absolutely safe in this context? No, it does not.

That is why I believe that retaining the existing European configuration is a guarantee of its stability. As soon as there appears some vacuum, a temptation appears to fill in this vacuum with something else. Europe has experienced this more than once.

Now I am not discussing the reasons for the collapse of the Warsaw Treaty, for instance, since they are evident. Moreover, I am not assessing whether it was good or bad for Europe, let historians decide it, but my point is that though such geopolitical changes may have liberated Europe, they also led to negative consequences, for example, to processes of disintegration of states which took a very tough scenario, for instance, the disintegration of Yugoslavia. It is quite clear that it has to do with the consequence of those processes.

That is why I think that the continued presence of our naval base preserves at least the configuration established quite a long time ago, and prevents from intending to divide again some areas of European security. In this particular context, I mean the impact it will produce not only on the Russian Federation and Ukraine, but the whole of Europe. By the way, in my view, it explains why Europe and NATO reacted in a very relaxed way to our agreement with Ukraine extending the presence of the Black Sea naval base in Sevastopol. It is wise.

Svetlana Leontyeva: The relations are very close between our two countries as you have already noted. I know that your family roots on your mother's side can be found somewhere in the Belgorod Region.

Dmitry Medvedev: Right you are. The point is that my relatives on my mother's side do originate from this area. My great grandfather's last name was Kovalev, however my grandmother told me the family name of his ancestors was not Kovalev, but just Koval. So, it evidently makes them relatives with those who live in Ukraine. But I do not know how deep the relationship goes into centuries. It is also evident that this was a unique social microenvironment because my grandmother, a well-bred person with higher education, spoke the language that had certain elements of Surzhik, the mixture of Russian and Ukrainian, all her life long. The atmosphere in the family of my grandparents was quite natural to me when I came to visit them; they were living in Voronezh at that time. Unfortunately, I have not been to the Belgorod Region, but I am planning to go there. That is why I am extremely interested in the history of and in the relationships within my family, with my relatives who lived both in Russia and Ukraine. We will dig deep and see if we can find something else there.

Oleg Panuta: Thank you very much for your answers for the Ukrainian TV audience. We look forward to welcoming you in Kiev, in Ukraine.

Dmitry Medvedev: Thank you. I will come soon. Make sure that the weather be good. Agreed?

Maria Tchmil: Agreed.

Dmitry Medvedev: Thank you.

Maria Tchmil: Thank you. And I wish you to negotiate good agreements.

Dmitry Medvedev: Hope so.

May 16, 2010, Gorki, Mosсow Region