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President of Russia Dmitry Medvedev: Have you all woken up yet? I’m not asking those of you from the Far East, of course, but the Muscovites.

Colleagues,

Our meeting today is devoted to developing the Far East and strengthening Russia’s influence in the Asia-Pacific region. A while ago, we met within practically these same walls to discuss the Far Eastern Federal District’s social and economic problems and the opportunities for building up cooperation with the two neighbouring countries of China and Mongolia. The objective was to strengthen and diversify the eastern regions’ economies and develop their social sectors. Of course, we also looked at how to capitalise better on our foreign cooperation ties.

This last year has not been easy, but despite the economic downturn, trade with Asia-Pacific region countries continues to grow. Our bilateral trade with China increased more than 50 percent over the first quarter of this year compared with the same period in 2009, and our trade with the Republic of Korea was up by a whole 80 percent in this same period. Cross-border cooperation is also on the increase between our border regions and northern areas of Mongolia and China’s northeast provinces.

But regrettably, at the same time, the crisis has pushed a number of the Far Eastern Federal District’s social and economic indicators downward. Industrial output in the district has fallen. Sadly, one in five people here has an income below the subsistence minimum. Most of the district’s regions continue to rely on federal subsidies. As for modernisation, the innovation that we are all pursuing now, the share of innovative production in the district is only one percent if even that.

All of this is only adding to the already difficult demographic situation. We have not succeeded in stemming the population outflow from here as yet. Over the last 20 years, since 1991, the district’s population has shrunk by a quarter. This is unquestionably the most worrying and most dangerous trend in the district, and something that requires our constant attention. It will take a common effort from all of us to change this situation. In this respect, much depends on the state authorities, on business, on the social policy we carry out, and of course on our determination to work hard and make a serious effort for the future.

The Strategy for Social and Economic Development in the Far East and Baikal area through to 2025 is being carried out with the goal of making the Federal District more competitive in general. Building up our ties with our Asia-Pacific neighbours will also create major development opportunities. Why, because the Asia-Pacific region has been growing at a rapid pace for more than two decades now. It is a real powerhouse of growth. Even when the global crisis hit its peak, GDP growth rates in the region did not dip below 3.5 percent. The most developed economies in the region were the first to emerge from the recession and exit the crisis with new competitive advantages. Not only is this region becoming the centre of global economic development today, it has also in many ways become a centre of political cooperation too. I remind you that GDP growth of around 7 percent on average is forecast for the region this year. You can compare this figure to the forecast for Europe. The Chinese economy is expected to grow by 9.5 percent, and India’s economy by more than 8 percent.

The Asia-Pacific region has immense technology and investment potential. It is also a region with a dearth of energy resources and often lacking raw materials too. At the same time, consumer demand has been stoked ever higher, and this could provide our eastern regions with much-needed opportunities for internal development.

I draw your attention to three tasks in this context.

The first task is to take the region’s and all of Russia’s economic cooperation with the Asia-Pacific region countries to a new level. The Government should have an action plan for strengthening Russia’s position in the region ready for approval by the end of this year. This plan will present long-term development forecasts for the Far East that take into account our eastern territories’ potential and the integration processes underway in the Asia-Pacific region.

We need to put special emphasis on free trade agreements. There are more than 50 such agreements in the Asia-Pacific region, and they form the foundation for the future of the region’s economic community. We need to reflect on how to make best use of this experience. In this context, talk on the lines that a completely uniform system should be in place throughout all of Russia is an argument I will not accept. 

Second, Russia has clear specialisation on the Asia-Pacific region’s high-technology markets. But this applies to high technology in the fields currently open to us. This includes the energy sector, of course, which is absolutely a high technology sector if we approach it in the right way and not just see it as sending oil from one country to another. Then there is also aircraft manufacturing, and the space sector, of course. In these sectors we need to establish new production chains and launch new multilateral technical cooperation and other projects. At the same time, we should make use of our neighbours’ experience in establishing an attractive investment climate and developing special economic zones. We are to provide modern banking, logistics, consulting and information services, and of course, we must try to offer reliable risk insurance. 

Furthermore, Russia is the main supplier of fossil fuels for a number of countries in the region. This is one of our traditional economic sectors, but this makes it no less important, especially as it contributes considerable revenue to our budget, as we all know. What is required here is an advanced energy infrastructure. We therefore need to raise investment for oil refineries, petrochemicals, raw materials extraction and transport in the Far East, and build up capacity in our Far East ports.

Construction of the Eastern Siberia-Pacific Ocean pipeline is proceeding at an active pace. The first section has already been brought on line, and we are in the process of establishing an integrated production and gas transportation and supply system too. What so far is our country’s first and only liquefied natural gas production plant was inaugurated on Sakhalin island last year on February 18. It is one of the biggest such plants in the world and was built as part of the Sakhalin-2 project.

We are to make use not only of the traditional instruments we have at our disposal but also of new instruments that we have – it must be admitted – not yet learned how to use as we should. This concerns in particular instruments such as concessions. By the way, I want to inform you that I have signed amendments to the federal law on concessions. These amendments concern the particular provisions regarding conclusion of concession agreements for housing and utilities facilities, and also the participation of state and municipal unitary enterprises in concession agreements. Changes have also been made to the legal status of the parties to concession agreements, the conceding party and the concession holder, including as regards their rights and obligations, and making it possible for one party to replace another in concession relations. A broader definition too is given to the sites that can be made the object of a concession agreement. This now includes not just real estate but also the totality of real estate and movable assets. I hope that these amendments will be put to use, including here too.

Third, we need to strengthen Russia’s role in the Asia-Pacific region’s organisations, namely, in APEC, the SCO, ASEAN, and the BRIC group. Russia already has a solid footing in these groups, but we should recognise that people are nonetheless looking to us to be more active. This will require better coordinated efforts of our foreign ministry and other relevant agencies. We are offering our vision of how to build a polycentric and non-bloc based security and cooperation architecture in the region.

The APEC forum, in which we will hold the presidency in 18 months’ time, offers new opportunities for Russia to strengthen its role in the region and to help us in implementing our long-term social and economic strategy and foreign economic strategy for the period to 2020. Tomorrow, in Vladivostok, we will look over the facilities being built on Russky Island in preparation for the APEC summit. After the summit these facilities will become the base for a powerful education and innovation centre – the Far Eastern Federal University.

There are excellent prospects for developing our partnership and dialogue with ASEAN. This plays an important part in promoting Russian goods, technology and investment to the Asia-Pacific markets. I hope that the second Russia-ASEAN summit in Hanoi this autumn will give a boost to this development.

I am sure you all realise that integration with the Asia-Pacific countries offers huge potential for helping to develop the Far East’s economy and all of Russia. This does not mean that we should shift our focus to this area alone, because we are one whole country, of course, and we can achieve some of our objectives by relocating goods, services, works and labour from one part of Russia to another. But the Asia-Pacific region is nonetheless a very big resource and we must use this opportunity to develop our ties with this region for the good, above all, of our Far East.

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Foreign Minister Sergei Lavrov: Today’s meeting ultimately confirms at the practical policy level the objective fact that we are an inalienable part of the Asia-Pacific region. Our eastern regions are an organic part of this vast region every bit as much as China’s eastern provinces, the islands of Japan, Hawaii or the Philippines. Of course, being competitive as a country requires more than just geography, military might and abundant raw materials. Only a modern Russia, a Russia capable of energetically promoting its interests, will be able to take its full place in the Asia-Pacific region’s cooperation system.

The centre of global economic development and political cooperation is shifting to the Asia-Pacific region today. The region itself is going through great change that directly concerns Russia’s interests. The region’s countries are becoming increasingly interdependent. Regional integration is accelerating, and transformation of the security and cooperation architecture has begun. All of this will have a big impact on the nature of international relations in the world today, and we therefore must not simply play an active part in these processes but must ensure that they give us a worthy place.

One of the cornerstones in this work will be the drafting on your instructions, Mr President, of a comprehensive action plan for strengthening Russia’s position in the region. This action will translate into practical terms the provisions in this area set out in the foreign policy concept that you approved in July 2008. I think that the work on this action plan should take into account the overall positive political climate taking shape in the region as far as our interests are concerned.

Although potential for conflict does still exist in the region, there are no direct threats to Russia’s national security here. We have no serious differences with any of the Asia-Pacific region countries. The region’s countries are generally friendly towards Russia and see our country as a factor for balance and stability. Our bilateral relations with many of the region’s countries are growing, and these countries hope that we will contribute to sustainable economic development in the region and want to develop their cooperation with us.

The Asia-Pacific region has solid and in many ways unique modernisation potential that we could make more active use of. We have before us a broad field of opportunities in this respect.

To give one good example, South Korea has its own Silicon Valley, which could certainly become one of our Skolkovo’s partners. Incidentally, together with representatives of our economy, science, education and finance ministries, business communities and innovation centres from both countries (Russia and South Korea), we plan to hold a joint brain-storming session on modernisation and innovation just before the preparations for the next Russian-South Korean summit.

The region’s biggest countries (China and India) are our strategic partners in bilateral relations and also in multilateral forums, above all through the BRIC group, the cooperation mechanisms established between our three countries, and also in the SCO, in which Russia and China are members, and India has observer status. It is important that China and India look upon Russia as a comfortable partner. Our countries share the same basic interests and objectively the same fundamental approach to how to organise our world. This makes our relations stable and predictable and creates good opportunities for economic cooperation.

China is a big market for our export sectors and an important trade partner for our country’s eastern regions. China has financial resources that we could attract as investment in modernising the Siberian and Far East economies. This is an important factor in supporting the course we have set on full-fledged involvement into the Asia-pacific region’s integration.

India is firmly established as one of the world’s innovation leaders and is our partner in fields such as space, including joint operation of the GLONASS system, software development, mobile telecommunications, pharmaceuticals, pharmacology, and aircraft manufacturing. A Russian-Indian computer studies centre is already in operation, and we are in the process of establishing three more joint centres on accelerators and lasers, non-ferrous metals, and bio-medical technology.

One of our new promising partners in the region is Singapore. Our relations with this country intensified after the Russian President’s visit last November. Singapore has very attractive developments to offer in areas such as e-government, transport and logistics systems, and nanotechnology.

Our close friends in the region include Vietnam and Mongolia, with which we have longstanding good relations with a solid political and material base. These relations are receiving new impetus today, including through implementation of the agreements reached during the President’s visit last year to Mongolia, and those that will come out of the upcoming visit to Vietnam.

The increasing interest Southeast Asian countries, in particular Indonesia, Malaysia, Thailand and others, and also Australia and New Zealand, are showing in developing relations with Russia also opens up good new opportunities for our country. These countries are not always straightforward partners, but they play an important part in regional affairs and we need to continue our efforts to build up our ties with them.

I make separate mention of another of the region’s countries – the United States of America. The top-level meetings that have taken place have consolidated prospects for constructive development in our bilateral relations, including our economic ties. The recent summit showed that there are good opportunities for close cooperation in the innovation field. Of course, a lot here will depend on the direction domestic political developments in the USA take, and on how consistently and effectively the agreements reached between President Obama and yourself, Mr President, are implemented.

Over recent years we have considerably consolidated our positions in multilateral and trans-regional groups. This includes APEC, the SCO, the ASEAN regional security forum, the Conference on Interaction and Confidence-Building Measures in Asia, the Asia Cooperation Dialogue and others. Our country finally became a member of the ASEM — Asia-Europe Meeting forum just this year, where Europe was previously represented only by the European Union. We sought this promising membership for 13 years and we finally succeeded. Russia will officially join the forum in October.

Of course, we cannot forget our most important task – preparing to hold the presidency of the APEC forum in 2012. The Russian Foreign Ministry, together with other agencies, is currently preparing the concept plan for the events that will take place during our presidency. More than 100 events will take place in Russia in 2012, including here in this region. By hosting the APEC summit we will be making a clear statement of our intention to be fully involved in regional integration mechanisms on the broadest range of issues, including cooperation in science-intensive and high technology fields. Our contacts with our partners make clear that they want to see from us not just a practical contribution to the common efforts but also leadership in a number of areas. We will try to take these expectations into account in planning our programmes, work plans and concept documents.

I want to make particular mention of Russia’s participation in free trade agreements. This was one of the matters you mentioned in your opening remarks, Mr President. These agreements are gradually giving shape to a more or less integral field of reciprocal commitments to lower barriers preventing the free flow of goods and services, investment and labour. It is important for us to be part of the mainstream integration trend in the Asia-Pacific region at both the political and economic levels. I realise that full-scale work in this direction can only really begin once Russia joins the WTO, but perhaps at the current stage we could take some pilot steps together with some of our partners, with Vietnam, Singapore and New Zealand, for example.

Given ASEAN’s role as one of the pillars in the region’s cooperation architecture, we are interested in developing our partnership with this organisation in all areas. The priority task now, as you said, Mr President, is to prepare for the second Russia-ASEAN summit in Hanoi in October. We are preparing documents for this summit that will add to the legal base we already have. We are working on a joint political declaration of the leaders, intergovernmental agreements on cultural cooperation, and joint work programmes for cooperation in the energy sector and in disaster response. 

Colleagues, it would be an exaggeration, of course, to say that the Asia-Pacific region has no security problems. The nuclear issues on the Korean Peninsula have not been resolved, and neither have long-running conflicts between states and longstanding territorial disputes. The region also faces the global threats of terrorism, cross-border organised crime, proliferation of weapons of mass destruction, and piracy at sea. We also see that military alliances remain in place and are being bolstered, and a closed regional missile defence system is being established, which will not help to build confidence and break down the dividing lines.

Mr President, this makes the task you set of drafting proposals for strengthening the international legal foundations of overall regional security more relevant than ever. We believe that this system should include a requirement to all countries in the region to affirm their commitment to the principles of indivisibility of security and the other universal principles of international law, drafting various agreements on carrying out reciprocal confidence-building measures in military and other sectors, and negotiating dispute resolution and preventive diplomacy measures.

Our contacts show that putting forward such proposals for examination by the region’s countries would be welcomed overall and would be met with understanding, and we are therefore working on this, in close cooperation with our Chinese partners, who share our views.

In conclusion, I want to remind you that on September 2 we will mark the 65^th anniversary of the end of the War in the Pacific. Just today, the State Duma is examining amendments to the law on commemorative dates of military glory. We have proposed that September 2 be included in this list of commemoration dates as the Day of Victory in the Far East and the End of World War II. I think it is very important to include victory in the Far East in this commemoration date’s title.