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President of Russia Dmitry Medvedev: Ms Federal Chancellor, Participants,

It is my pleasure to welcome you to this tenth round of consultations, which is taking place in St. Petersburg for the second time now, more than seven years after first being held here. I hope that with its historic facades and modern development St Petersburg, our northern capital, will provide the perfect inspiration for our work together. We have agreed to alternate our working sessions with dinners. I hope you are all in high spirits now and we can continue our work.

A year has gone by since our bilateral summit in Wiesbaden and many events have taken place since then. Russia held its presidential election and reorganised its Government, though most of the faces here today are familiar to our German colleagues.

We had an intensive schedule of summit meetings over this time — this is the fifth meeting in the last seven months with Ms Merkel – and contacts at ministerial level have also been intensive.

Summing up what has been accomplished, I especially want to note the pleasing fact that our bilateral trade is now close to a new record of $60 billion. I think the High-Level Working Group on Economic and Financial Cooperation has done a lot to help us reach this result.

We hope that the Intergovernmental Working Group on Security will also carry out its mandate in full. We think it an important component in our relations and hope for new proposals to make its work more effective. This is all the more relevant now at a time when the international security system is undergoing fundamental transformation. This is a difficult and responsible process that is taking place and it is in this context that the Russian Federation has put forward its proposal to conclude a new and binding treaty on security in Europe. Incidentally, this idea was first raised during my visit to Berlin.

Russia would like to see a treaty of this nature become an island of stability for the entire European continent. It should be based on the principles of international law and on a balance of all countries’ interests, without implying, of course, an end to various integration groupings, blocs and organisations that exist on the European continent. We have given our German partners documents that set out our vision of this issue. Germany’s voice as one of our country’s most respected and responsible partners is very important for Russia. We have always valued Germany’s balanced and pragmatic approach to European cooperation. Our ongoing dialogue on global security issues and strengthening regional stability, including as regards the situation in the Caucasus, has significant influence on the international agenda. We are ready for a frank discussion of these issues, and we are also ready of course to discuss Russia’s relations with NATO and with the European Union. I think that in this respect we should not overlook the importance of the principles of mutual security, the indivisibility of security, a balance of interests, and joint responsibility for building Greater Europe.

As countries that are both members of the G8, we have particular responsibility for global stability. It is with this in mind that we will cooperate on fighting threats such as proliferation of weapons of mass destruction, international terrorism, drugs trafficking, regional conflicts, including the issues of Kosovo, the Middle East and Afghanistan, and the Iranian nuclear issue.

Of course it would be wrong to ignore the influence external factors have had on Russian-German cooperation of late. We think the negative impact these factors have had on our relations has been minimal, and this is linked not only to the interdependence of our economies and their reciprocal influence on each other, but also to our mutual commitment to dialogue. This desire for dialogue is shared by the decision makers, by those responsible for setting international policy, both in Moscow and in Berlin.

Of course we do not always share the same views. There are some issues on which we have considerable differences, but we try (and our German partners do the same) to understand each other and work together in the name of a common future, and on the whole we are successful. This is something we talked about today at the Petersburg Dialogue Forum.

We think the German initiative to work together through the Partnership for Modernisation has been very successful. This partnership sets a new emphasis with confirmed promise for the future, and we are ready to continue our work on this project.

We would like to hear from the ministers how to step up cooperation in the areas of demography and energy efficiency. We discussed this issue with business leaders at lunch just before. There are a number of good ideas in this area, including academic and educational exchanges and other socially important vectors. We are very keen to achieve concrete results and we hope they will soon follow.

Dear German partners, our meeting is taking place at a moment when the world financial markets face a very serious situation. We will not analyse this situation anew here. We all know the causes and we share many common views in our assessment of the economic model that has brought this crisis about.

Clearly, the ability of one country to dictate its rules of the game does not work, unfortunately, in this situation. Russia has built up a foundation solid enough to enable it to continue its modernisation efforts and create the conditions for a new wave of investment, but we also seek cooperation in these areas, of course. We could look precisely at cooperation on financial affairs, including support for the establishment of new financial centres to provide an alternative, joint drafting of a set of common rules, and cooperation in reforming international financial institutions and the world financial and economic system in general. Of course, our traditional areas of cooperation in the economy, energy sector, transport infrastructure, automobile industry, aviation industry, and now the high-technology sector too, are also important to us.

One of the most important projects that has received our constant attention and political support is the Northern Stream project. We think this project has clear advantages and will benefit all participants. We hope to move forward in accordance with the timetable we planned. And we hope that countries outside the region, who have no connection to the project at all, will not try to influence its progress.

I ask the different ministers to inform the Federal Chancellor and myself about the state of progress on specific issues. We would like to hear from the head of the bilateral High-Level Working Group on Strategic Cooperation about the state of progress in implementing the most important of our joint projects.

I now give the floor to Federal Chancellor Mrs Angela Merkel.

Federal Chancellor of Germany Angela Merkel (Retranslated from Russian): Thank you very much, Mr President.

Colleagues, it is with great pleasure that the members of the Federal Republic of Germany’s federal government have come here today. It is with particular pleasure that we have come to this most beautiful city that receives us today. St. Petersburg is a city that never fails to impress, and so the venue was well chosen indeed.

This is the second time St. Petersburg has been chosen to host our consultations. We have a very intensive programme this time and a busy agenda. As always, we have discussed a whole range of foreign policy and security issues. We have different opinions on some issues, and have already had a wide-reaching exchange of views on these matters, including the conflict in the Caucasus. But the results show that despite our differences, the stable and ongoing contacts between our countries enable us to keep our dialogue going, and as far as Germany is concerned, I can say that we have done our part within the European Union to work together with the French presidency and, having adopted the six-point plan, take the road that will let us move forward.

I think this shows just how important it is to have constant, consistent and intensive contacts based on trust and knowledge of each other, mutual knowledge of each other. This is a sign that we can continue our cooperation.

There is absolutely no doubt that regional proximity, history and tradition bind us closely together and give us many common interests, and these interests can help us build a successful union.

I think that the signature today of the agreement between the companies E.ON and Gazprom at the Petersburg Dialogue Forum today, for example, was an important contribution.

The Petersburg Dialogue Forum complements our intergovernmental consultations and is an event of scale and importance. It was particularly impressive to see today how young people from the Petersburg Dialogue parliament spoke about their activities with such openness and confidence. We can see in them the emergence of a new generation that has already made its own what our generation had to discover and learn about.

We spoke about the many practical aspects of our cooperation, and the different ministers will report on this now. The working groups have put the main emphasis on cooperation in the economy, energy sector, politics, and energy efficiency on one side, and cooperation in the healthcare sector on the other.

We discussed the fact that our countries each have their strong points that we can combine to create a win-win situation in which both sides will benefit. We discussed this today and examined very interesting projects indeed.

In Germany we have the German Energy Agency, which could provide an interesting example for Russia so that a similar agency could be set up here on the basis of a public-private partnership. This is a very promising idea.

Aside from this, in the area of raw materials, energy production and the ‘energy mix’, we talked about a number of possibilities for cooperation, which have been mentioned already today. Our economy ministers will probably give us a more in-depth assessment.

Concerning the crisis on the financial markets, we realise that the possibilities for action at national level are limited. We feel our interdependence and we feel the global interdependence too. Our economy ministers will also report on this later.

I think we have great potential for cooperation in scientific research, and we should develop this potential further because scientific research is the foundation for building up high-value-added production that does not depend on energy resources. Russia cannot base itself on energy raw materials alone, of course, and must expand its possibilities for creating new sources of value.

I think these intergovernmental consultations between Russia and Germany also help us to learn about each other’s positions within the different international organisations. We know there a good many problems on which we differ in opinion. These include disarmament agreements and unresolved conflicts: in Trans-Dniester and the Western Balkans. There are other unresolved conflicts that could rapidly become urgent. These are all areas where we have much work to do over the coming years.

Speaking for Germany, we will do our part to ensure that cooperation between the European Union and Russia intensifies, and also pick up the pace of cooperation on the Russia-NATO Council, because I think that if the two sides begin to talk to each other it will be possible to overcome the conflicts.

We are pleased to be here. I think that some of my colleagues would like to stay longer in this impressive city of St. Petersburg. Thank you very much for your hospitality. I wish you all good consultations.