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Vladimir Putin: Good evening, ladies and gentlemen,

A meeting in Ljubljana has just ended. In fact, President Bush and I have given fairly detailed accounts of our negotiations, but if the topic arouses interest and there are additional questions I will be pleased to answer them. That applies to any questions you may have.

For starters I would like to say that of course we had expected a positive result from this meeting. From the outset we planned the meeting in such a way as to produce a result. I must say that from the very first minute of our meeting I got the impression that President Bush had a similar attitude.

We had planned the walk in the alleys that you have seen there. It was expected to last much longer and the talks in an enlarged format were also expected to take more time, but the conversation between the two of us followed such a course that I personally thought it would be a pity to lose time on protocol meetings. Fairly early on I told the President that I was glad that we had an opportunity (by “we” I mean the Russian side) to start our relations from a “clean slate”, while of course taking all the positive baggage accumulated before into the present day and tomorrow.

I had been told that the President was not a good listener, that he liked to talk himself and became fidgety after five minutes, waiting for the interlocutor to finish. It turned out to be completely different. The President turned out to be a very attentive and interested listener. He reacts keenly to everything he hears. He listens, analyses what he is told and is very frank in expressing his own position. A very trusting atmosphere was established immediately.

I must say that I, like him, I think, had a certain plan for our talk. I proposed to start by discussing specific issues, the issues that cause the greatest concern in the world, in the relations between the two sides, that create a certain atmosphere, including the problems of antimissile defense. He heard me out and then said: “Listen, let us talk about the way relations between our two countries have been shaping up in recent years in general, the current status, where we are now and let us look to the future.”

This is what I had in mind when I said at a news conference that the President, like a historian, had suggested discussing a wide range of issues and taking a broad look at Russian-American relations.

So in that sense he took the initiative and changed the character of our conversation, but I had nothing against this approach. And I think these are not just formal words that we said at the news conference. Indeed, the situation that has arisen can be described as a high level of trust.

In general I must say that the President is an agreeable interlocutor and a nice man. We know the debates that raged during the course of the election campaign in the United States, and how hard it was to arrive at a decision. But we can already say with confidence that we are pleased to have such a new partner. Let us hope that it will develop positively.

Now I am ready to take your questions.

Jill Dougherty (CNN): On behalf of our correspondents thank you very much for this opportunity to talk to you.

My first question. Before the summit you said that you wanted to learn as much as possible about the new antimissile defense proposed by Mr Bush. Have you managed to find out more? Do you have a good idea of the substance and scale of the programme? Is it enough to make Russia think, for instance, about reviewing its position on the ABM?

Vladimir Putin: The President’s starting premises cannot but evoke a positive reaction. The President says that Russia and the United States today are not enemies; moreover, they could be allies, as he said in Warsaw. And we should look at the whole package of previous agreements from that point of view. We have nothing against it.

Our partners in the US have said and are continuing to say now that we should give thought to the threats we all face and that will arise in the future in connection with the development of missile technologies.

Opinions regarding that thesis vary in my country, but I personally share it. We must give thought to it. And I think the President is right in that we should think about the way armaments develop in the most dangerous area, in the area of missiles. And of course, we need to look at what will be the situation in that sphere in ten, fifteen or twenty years.

Has anything changed in our relationship on this matter following my meeting with President Bush? I think some things has changed. We have agreed that our experts will identify and discuss purely technical matters: what exactly do we understand by the term “threat” and what prevents us from countering these threats jointly or separately, if that is what our partners choose? Precisely what elements of the ABM Treaty prevent us from overcoming the threats we have yet to identify together? We have yet to determine a common position on that.

When we speak about the 1972 Anti-Ballistic Missile Treaty and its possible modification or, as you heard earlier, a possible unilateral withdrawal of the United States from that treaty, in any case we are talking about countering missile threats. And yet it is not the only threat.

To use professional language, what is the gist of the problem? It is not about sending a missile; the goal is to deliver a weapon of mass destruction. In the event it is a nuclear weapon, it is to be delivered on the territory of a potential enemy. And this can be done not only by missiles, at least not only with the help of ballistic missiles, which are the subject of the 1972 ABM Treaty.

Next we are aware of the threat from the so-called “rogue states”. You know what armaments these states have. This is not our terminology, it is rather American terminology. For those who don’t know, these are Soviet SCUD missiles. And what are Soviet SCUD missiles? In fact, they are updated German V-1 and V-2 rockets, the rockets that Germany fired at London during the Second World War. North Korea has made the greatest progress in modernising them. But there is a limit to modernisation, and it has already been reached. One can increase the size and the number of fuel tanks but, I repeat, the limit of modernisation has been reached.

Building missiles of a different generation is a very different story. One can steal an element but creating a modern missile attack system is a challenge of a very different order. It requires absolutely new materials. It requires an absolutely new type of fuel, a new-generation fuel. It calls for a highly developed and costly system of test ranges. It calls for a large number of elements of the whole programme. To sum up, it calls for an absolutely different kind of economy and an absolutely different level of science and technology in the country that has the ambition to develop such technologies. It calls for a sustained rate of economic growth. It would take decades.

Now let us look at what we know about the situation in the sphere of antimissile defense. The programme will cost an estimated 50–60 billion dollars. Let us look at what exactly we must accomplish.

Do you know the speed at which a ballistic missile flies? 7–7.5 kilometers per second. To knock it out an antimissile must fly at the same speed, which makes 15 kilometers per second when combined. It is like hitting a bullet with another bullet. Is it possible at present? Experts say: “Not today”. And practical tests have proved that it is impossible. And what if it is not one bullet but ten, twenty, a thousand? Two thousand, three or five thousand? That is the nuclear potential of Russia and the United States. Then we should think what we need to prevent these threats. I repeat, we have yet to determine what these threats are.

We are told that the “rogue states” pose the main threat. But we know that in February this year the new American Globe-2 tracking station began operating on an island in the north of Norway. It used to be the site of the Globe-1 station, which detects the launch of missiles. Now they have an additional station there which detects the launch and tracks the flight. What has that to do with rogue states?

In general, all these questions need to be carefully studied by experts and call for a very high degree of confidence. An element of trust is emerging. And I think this is the main achievement of my meeting with President Bush.

Does that answer the first question?

Dana Lewis (NBC): Condoleezza Rice said on Sunday that the anti-missile defense system cannot prevent a war and that the United States would go ahead with its system, with or without Russia. Don’t you think it marks a tougher stand compared with what you discussed with President Bush?

Vladimir Putin: I was talking with President Bush and not Condoleezza Rice, although she was present. We have agreed that our experts at all levels would be in touch and would work together. Dr Rice’s contact is Mr Rushailo, Secretary of the Russian Security Council. I think they will have a positive dialogue.

If she said that the Treaty does not prevent war, I don’t know which of them – Rushailo or Rice – are planning a war and when it is supposed to start. I think that might be the subject of a special conversation. We should find out what she had in mind.

But we have noted other pronouncements by leading members of the Administration. The Secretary of State, for instance, said the following. And as a military man he is an expert, one could say. And he said: “The US does not seek to wreck the 1972 ABM Treaty, but it is firmly committed to creating an effective, but limited anti-missile defense.” We have taken note of Mr Powell’s statement. I think it is a very serious statement. The US does not aim to wreck the ABM Treaty. That is a serious signal for us.

We too think that an anti-missile defense must be effective. Mr Powell said: “At the same time it should be of a limited character”. We need to understand exactly what that means. It is a subject for discussion and negotiations. It is a serious statement. Does that answer your question?

Dana Lewis: Yes, thanks.

Elizabeth Palmer (CBS): During your meeting in Ljubljana President Bush said he would send high-ranking representatives of his Administration to Moscow to discuss specific matters. What in your opinion are the main topics on which you would like to achieve the greatest degree of coordination, the greatest progress in your relations in the near future?

Vladimir Putin: Actually, I have already told you. I have nothing to add. When we discussed it and when the President said it, I think he meant the discussion of the problems connected with strategic stability and the ABM Treaty.

We have agreed (it was my suggestion) that our experts should look not only at where the threats exist but at what parts of the 1972 Treaty impede countering these threats today, specifically.

There are some very concrete things that should be determined by experts. This includes the speed of the missiles, and what makes the difference between “strategic” or “tactical” antimissile defense and so on and so forth.

The 1972 ABM Treaty has a mechanism of its modification built into it. Modification has already taken place, but we should understand what specifically the subject of discussion is now. And as we have said repeatedly, and I said it at a news conference in Ljubljana: the Treaty is linked with other agreements, including those on the problems of non-proliferation. There are no direct links in the Treaty, but even so non-proliferation agreements are connected with the 1972 ABM Treaty. And if we scrap it altogether then threshold countries will find it much easier to declare themselves to be nuclear powers. Will the world become a safer place? I doubt it. We should look at the problem from that side.

That is why we say that we share the concerns of our American partners, but we believe that these concerns should be addressed by joint efforts, otherwise some third forces may slip in through the chinks opened by our disagreements and we won’t know what to do about them.

Going back to your question, when we hear that some programmes will be implemented either with or without us, we cannot prevent it. If you want to go ahead without us, you are free to do so. We cannot force anyone to cooperate with us and we do not seek to. We propose cooperation, we propose joint work. But if there is no need for it, OK, we will act on our own. What will be the result? Because the Treaty is connected with the strategic offensive arms reduction treaties, START I and START II, and they contain a mechanism of controlling and monitoring the nuclear missile sphere.

For instance, we speak about the reduction of strategic offensive weapons. Imagine that we scrap the 1972 ABM Treaty. That automatically excludes START I and START II from the practice of international relations.

And if so, we won’t be able to verify each other and determine how many missiles we have decommissioned, whether we have just taken off the warhead and put it beside the missile or whether we have destroyed it. This so-called rebound potential may be so great for Russia and the United States as to render the issues of nuclear weapons control irrelevant. There will be no control. You can take off the warhead today and put it back tomorrow. Who can verify it if we rule out that element of control, if we scrap the START I and START II Treaties? And that will inevitably happen if we scrap the 1972 ABM Treaty. All these issues are interconnected with this problem and this Treaty.

We are not imposing ourselves on anyone, we are not trying to scare or blackmail anyone. We offer cooperation. And if it is acceptable, we will gladly do it. If not, we will go it alone. I don’t think that the United States and Russia, and indeed humanity as a whole stand to gain from this. I don’t think so.

But I had the impression that President Bush was committed to such cooperation, that he wants and seeks a dialogue. And I would like to confirm this and I would like to repeat that this was very important for me personally and for the whole Russian delegation. I think that is the main thing.

Patrick Tyler (New York Times): Mr President, you have spoken about threats and your readiness to look at these threats together and fight them together. If that happens won’t China, which objects to the creation of any anti-missile defense system, feel more threatened and show its discontent? That’s the first question. In other words, do you think that the relations between Russia and China may change for the worse?

And the second question, with your permission, is about Iran. You are engaged in joint projects with Iran, you are helping Iran to build a nuclear power plant. Sergei Ivanov said in his time that the United States was supplying similar nuclear reactors to North Korea. But I’d like to point out that the United States stipulates that North Korea should give up its military nuclear programme.

Could you set the same initial conditions for your nuclear cooperation with Iran?

Voice: Can you answer in English?

Vladimir Putin: No, I'm afraid it’s still rather difficult for me. I tried to say a few words in English to the President. He pretended to understand me. I am very grateful to him for that. But I will answer in my native tongue to be better understood.

Regarding China’s attitude to these problems. The question should be put to Jiang Zemin. Your question implies that China takes a negative view of any kind of missile defense. I don’t know that it is true. But the 1972 ABM Treaty already envisages a certain anti-missile defense system. It envisages antimissile defense of two areas. The United States has chosen the site where its land missiles are deployed. And Russia has chosen Moscow.

As far as I know, China does not object to what is written in that Treaty, so it would be wrong to say that it is against any antimissile defense. The way I understand our Chinese colleagues, they are opposed to scrapping the Treaty.

I had a telephone conversation with Chairman Jiang Zemin today. I told him that I had passed on the message he sent through me to President Bush. And I must say that the President reacted very positively when I said that China believed the incident with the plane was as good as closed. The President’s reaction was also fairly positive and calm, and he said it should be forgotten. And today during our conversation, Chairman Jiang Zemin said he was looking forward to meeting with President Bush in Shanghai this autumn and that he was very glad he had agreed to have a separate discussion on American-Chinese relations at the APEC Summit, and that China was preparing for it.

But here is what I would like to single out in your question, and I think it has been well formulated. Of course, we should think through all our actions in this sphere and be mindful of how other nuclear powers might react. In that sense it is important that our actions be transparent, so that no nuclear power feels infringed upon, so that they don’t feel that some collusion is taking place behind their backs, otherwise the result may be counterproductive. It won’t add to international security but will make the world more vulnerable.

Do you know how many ballistic missiles China has?

Patrick Tyler: Eighteen.

Vladimir Putin: And you also know its economic potential. So, we must proceed very carefully. I repeat, nobody should feel infringed upon. We should follow the principle of “doing no harm”.

Our American friends talk about future threats and preventing future threats. So, we all recognise that there is a certain balance and as a minimum we must not upset it today, not to provoke an arms race. And of course our actions should be within certain limits. So the “nuclear club”, every member of the “nuclear club” must be aware of what is going on and of our negotiations with the American partners. But of course all the countries are thinking about their own security.

Patrick Tyler: Does Russia intend to take a common position with China on the issue?

Vladimir Putin: We intend to preserve the balance of security created in the world as a whole, and in that sense, China is an essential component. And not only China but other nuclear states. We know for example the position of France. I don’t think we have the right to ignore France’s opinion on the issue. Other nuclear states are watching closely all that is happening in this sphere.

I repeat, I have nothing to add: our actions should not give rise to fears that somebody will be bypassed or cheated, they should not create a situation that would spur the arms race. That would be very dangerous. That is why we state that the balance is there. Yes, there are some threats we should think about together, let us think about them together. Because, while preserving the balance, we must improve the quality of security. We should all be together without upsetting the balance. That is how one should see our contacts with China.

Regarding Iran. We have a complicated relationship with Iran. It is our neighbour. And the history of the relations between our states goes many centuries back. Iran, I think, is experiencing a process of renewal and gradual integration into the world community, as confirmed by the results of the recent elections. I have met with President Khatami here in Moscow. He is a very modern man, a strong man and a worthy partner. I think he intends to move his country towards integration into the international community. We understand the concerns of the United States and the concerns of Israel. We take them into account in our relations with Iran.

When we are told that we seek to rearm Iran, I think we should get our terminology clear. We believe that the political theses that are sometimes used to squeeze Russia out of the arms market, including from the Iranian arms market, are simply an instrument of unfair competition. That is why we have cooperated with Iran, and we have certain obligations in the sphere of military-technical cooperation and we will abide by them.

But there is a sphere that is of particular concern to the United States, and the President told me about it in Ljubljana. It has to do of course with weapons of mass destruction: nuclear weapons and missile technologies.

I can tell you what I told the President: no such programmes exist under the plans of military-technical cooperation between Russia and Iran. The Iranian leadership is aware of Russia’s position. Russia has assumed certain non-proliferation obligations and it will fulfill them. Moreover, it meets our national interests. If you ask experts what weapons Iran has and what their range is you will see that I am not exaggerating.

As regards defensive weapons, that is a separate topic and I don’t think it needs to be a cause of concern to anyone.

Regarding other aspects, I should tell you, and it is not a secret, that European countries are actively promoting their relations with Iran. Germany has extended a DM 2 billion credit through Hermes. US business circles have contacts with Iranian officials. It may be a secret for somebody, but not for us. We know who met where and when. I have given the names to President Bush.

Patrick Tyler: Are you suggesting that the Americans are doing business with Iran?

Vladimir Putin: They are preparing to. They are preparing to start broad cooperation, and they are doing the right thing. But I don’t see why we should be left behind.

You have mentioned the nuclear plant that the United States is helping to build in North Korea. That is an appropriate reminder. That is precisely the kind of nuclear plant we are helping to build in Iran. Nothing out of the ordinary is happening. Experts will tell you that it is absolutely unconnected with the possibility of producing nuclear weapons. You say that the United States is building a nuclear plant in North Korea on condition that the country would not produce nuclear weapons. So, you believe this to be effective. Then why is North Korea presented to us as a “rogue state” that poses a danger?

I am telling you that we are not going to transfer nuclear technologies to other countries, including Iran, if only out of concern for our own security. Of course we can imagine that somebody, some people may try, by-passing our laws and the official policy, to sell something to earn some money. We will do everything we can to stop it. But that applies not only to Russia, but to any other country.

You know the US laws about the training of professionals and students. For instance, an Iranian student comes and signs up for a college or university course, but after that no one has the right to forbid him to transfer to another training programme. Look at these teams of experts, look at what is happening in this sphere, and you are sure to feel concerned in connection with the training of Iranian specialists in the United States. Just look into it.

I think we should stop pointless mutual recriminations; we should work together in order to effectively counter the spread of nuclear weapons and missile technologies. This may suit our special services staff, they are involved in a difficult struggle between Russia and the United States, and they find it easier to continue in this way, because it does not require any internal changes or call for any particular efforts, it is easier for them to accuse each other than to pool their efforts to counter the real threats. It applies equally to our special service and to yours.

Patrick Tyler: So you are proposing cooperation between the intelligence services of Russia and the US so that they could share the information on these problems affecting Iran and other countries?

Vladimir Putin: I propose that the special services of Russia and the United States pool their efforts in countering the threat of proliferation of nuclear and missile technologies regardless of the country to which these technologies may leak. Actually, I know what I am talking about, I worked there for a long time. For decades our countries worked against each other. So, certain positions have been established, the human resources and experts have been selected, all this took decades to put in place. It is far easier to continue as before than to become aware of what is happening in the world and understand where the threats come from and change something. It calls for insight and certain efforts. It is more difficult.

We are talking about new threats. One of them is national terrorism, ethnic intolerance and religious extremism. I think that it is a very good area for joint efforts of the special services. Especially since the United States really suffers from these threats: terrorist acts are committed, your military and civilians die. This is a real threat, including for the United States. People die. And the same happens in our country.

I’ll tell you something that may meet with a mixed reaction, but I feel it is my duty to be honest about it. I sometimes get the impression that members of our secret service and yours, and I think yours do it more frequently, try to use some elements in the continuing duel between the special services and thus damage the national interests both of the United States and of Russia. I think it springs from misconception of the course of development of international relations and misconception of the current threats.

If today we permit ourselves to use some extremists to promote our national interests at the expense of others, tomorrow the same extremists may turn their weapons against us. It is an extremely dangerous means to achieve a goal. In fact, it is almost certain to be counterproductive.

As an example, we must determine our position with regard to the Taliban. What, after all, is our ultimate goal? They have destroyed 1000-year-old works of art, famous statues. The media made only a passing mention of it, and everyone has forgotten it. But it is horrible. It is a disaster. It brought home to us what sort of people they are. And yet, there has been total silence.

It is a known fact that there are bases for training terrorists who act not only against us, but against you too. We all know about it. And there are many other issues on which we could pool efforts with you.

Paul Quinn-Judge (Time): We can see this as a follow-up on the subject. You have exchanged some clear words, you have had a very candid conversation with the President, but what puts you on the alert and worries you about the behaviour and the policy of the US Administration?

If possible, you have mentioned the confrontation between the special services. In what area do you find the actions of Western special services particularly alarming?

Vladimir Putin: Regarding the first part of your question, I can say the following. It is not that we are worried, but we look with some anxiety at the possibility of unilateral actions. However, we are prepared for them.

I am sure that within the next 25 years it will not cause substantial damage to the national security of Russia. Any actions, including unilateral ones. Moreover, if we face unilateral actions and the collapse of START I and START II, I think our nuclear potential will be strengthened. It will hardly require any financial injections.

If we look at START I you will see what I mean. Existing missiles can be fitted with new warheads. The cost will be negligible. Almost nil. Thus Russia’s nuclear potential will be increased by several times.

But what worries us is that it may upset the existing balance. Other countries may embark on uncontrolled armament programmes and many of these countries are close to us. And that is what worries us. However, the United States is more vocal about these concerns. But in fact, our concerns are much greater. Because it will be a long time before the missiles now owned by the “threshold countries” will be able to reach the territory of the United States. So I am absolutely sincere when I say that we have a common platform with the President in discussing this topic.

And what was the second part of your question?

Paul Quinn-Judge: A follow up to what you said about the special services, especially the way they use…

Vladimir Putin: What worries us about their activities?

Paul Quinn-Judge: Where in particular does it happen?

Vladimir Putin: Nothing worries us in particular because both sides perform poorly. They aren’t doing anything useful. They are simply getting in the way.

Basically their main job is information support of the political leadership. But I think they are doing very little to neutralise the real threats our states face. Having said that, there are some instances of positive work. You know, for instance, about a series of joint operations of American and Russian special services to cut the channels through which drugs are brought to North America. If there were a greater degree of trust we could cooperate much more effectively in preventing terrorist attacks. And on the proliferation of weapons of mass destruction and missile technology, that is another sphere in which we can combine our efforts.

But on the whole, I repeat, I see no great threat there. Western special services use the notion of “frothing.” We have our share of such people. But on the whole there are many competent professionals there. I very much hope that they will ensure the national interests both of the United States and of Russia. And they will be able to pool their efforts to counter the threats both our countries face.

Susan Glasser (The Washington Post): To elaborate on what was said about one specific country, Iran, I would like to mention what President Bush said after your meeting on Saturday as specific areas you differed on during your discussions. He mentioned such issues as Chechnya and issues connected with your activities in the Caucasus and in Georgia, he mentioned that country.

And the third issue he mentioned was the situation with the freedom of the press. True, he voiced these questions in very general terms, in the abstract, and did not specify anything.

I would like to ask what exactly was said on the subject and what you answered in your dialogue with President Bush to the concrete concerns he indicated. Because he sounded a bit too general when presented with such questions later.

Vladimir Putin: We did discuss the topics you mentioned. The President looks at things realistically. I understand that you can give any kind of twist to the material, but if you want to look each other in the eye, to listen and to hear what you are told, some things need to be assessed objectively.

When we talk about Chechnya, and I am tired of repeating the same things, I think it is impossible not to understand it. Though sometimes I catch myself thinking that the people who don’t deal with this every day could do with having some things repeated for their benefit. The President of course knows about all the problems, but now, in answer to your question, I will recap some points. I am even ready to reveal some of the details of what I told the President on the issue.

We are all familiar with the events that took place in the Caucasus in the preceding decade. In 1995 Russia agreed to the independence of Chechnya, although it did not legally recognise it. It totally withdrew from Chechnya. It dismantled all the government agencies, pulled out its army, police, the Prosecutor’s Office and the courts. Everything was dismantled. I must tell you that it looked like a national humiliation, but Russia did it in order to achieve reconciliation. Then Russia encountered other problems.

To all intents and purposes we had encountered the physical annihilation of the Russian-speaking population in Chechnya, yet Russia failed to react to this, it was in about the same state as the US was after the Vietnam War. Russia was in a shock after 1995.

More serious processes began. The territory of Chechnya, which was not controlled by any authorities, started being used as a bridgehead for a criminal invasion of the Russian economy, because there were no borders. Yet, Russia failed to react to that. Attacks on neighbouring Russian territories, Dagestan and other Russian regions were being launched almost every day. People started selling their homes and leaving. There was no one to talk to because there were no authorities in Chechnya. There was no one to present claims to. And our law and order agencies there were absolutely powerless, they were even afraid to cross the border in pursuit of criminals.

What was the outcome? A large-scale attack by several thousand armed men on Dagestan under the slogan of seizing additional territories from Russia and creating a new state that would stretch from the Black to the Caspian Sea, the United States of Islam, as they called it. That was too much, that was outright aggression.

What would you suggest that we do? Talk with them about Biblical values? They even interpret the Koran in their own way. And they consider everyone who wears a cross to be an enemy.

I told the President: “Imagine that some armed people come along and want to grab half of Texas. Can you imagine that?”

And yet that was exactly at issue in Russia. And you know it. I sometimes think about what is happening in the media and I don’t believe that nobody understands it. If a campaign is being mounted, I think it is simply a deliberate attempt to use the situation in Chechnya in order to destabilise the Russian Federation. I can think of no other explanation. Everything is forgotten: beheaded foreigners, the British, and New Zealanders, and public executions of Chechen citizens in squares. Nobody pays any attention, as if it hadn’t happened. There are public calls for the extermination of Jews. The leaders of the so-called “rebel” movement publicly called for the extermination of Jews on television. Nobody pays any attention to it.

To us the issue of Chechnya’s independence or non-independence is not a fundamental issue. The only fundamental issue is this: we will not allow this territory to be used as a bridgehead for attacking Russia. This is just not on.

This was how we discussed the situation with the President. The international community has never recognised the independence of Chechnya. We believe that it is a constituent part of the Russian Federation. And we believe that it will remain so now and in the near historical perspective. And of course we must bear the responsibility for what is happening there. Unfortunately, it involves huge humanitarian problems. We are ready to cooperate with international organisations in tackling these humanitarian problems.

We assume that whoever breaks Russian laws must be brought to account. It applies equally to our servicemen and civilians. We make no distinction, we assume that we must enforce the law on that territory. It is a matter of principle. We are not going to act like occupiers. It is our own country and behaving in that way would be counterproductive. We are well aware of that and we are not going to launch any reprisals. Nobody needs them. That would be counterproductive. We do not need to be persuaded. Does that answer that part of the question?

Susan Glasser: Yes.

Vladimir Putin: You are all rational grownup people, you are very experienced people. But can you imagine a different line of behaviour on the part of Russia after the attack on Dagestan? Can anyone suggest a different line of behaviour? For years we tried again and again to establish a dialogue and to agree on something. It is impossible to agree. And there is no one to agree with. Maskhadov was not in control of anything. The territory was broken up into little pieces. Every piece of territory was headed by a so-called field commander. There is no one to talk to. I am responsible for a vast country. People get killed every day. I can imagine what would happen if it were in any Western country. You would have had an uprising. In my country people are patient, they have endured it for so many years.

Now about Georgia. We have complicated relations with Georgia only on issues related to fighting terrorism. At one point we suggested to Shevardnadze that he allow our troops stationed on the bases in Georgia to move to the border between Russia and Georgia on the Chechen stretch and seal that border so that the militants could not move to Georgian territory. He agreed. Yeltsin talked by phone with him and he said: “Yes, I agree. OK.” Yeltsin told him: “Defense Minister Sergeyev will be over tomorrow.” He said: “OK. I’ll be waiting for him.” The following morning he called Sergeyev and said: “You know, we have agreed with Yeltsin that you would come over. I have thought about it and I have changed my mind. Don’t come.” You know the result.

The Georgian authorities say that there are no militants one moment and agree that there are another moment. But we know the situation on the ground. People are kidnapped and crimes are committed all the time. I assure you that there are many militants in the Pankissi Gorge and in the Akhmeta district. We know the names of all the leaders, and I told Shevardnadze about it. It’s easy to know them because they chat on the phone all the time and we listen. It is not a secret, I must tell you. The Georgian authorities have actually lost control of the region. I think it is now an internal problem for Georgia.

That is why we had to introduce a visa regime. Because clearly, when there was a visa-free regime, terrorists and thugs could easily enter Russian territory from Georgia.

The Georgian authorities seem to have forgotten how Chechen terrorists used the heads of Georgians as footballs during the Abkhazian crisis. Yes, unfortunately, that is a fact. Having said that, some Georgian leaders say: “We remember it, we know.” And I reply: “What difference does it make that you know it?” That is in fact the only problem that there is in the relations between our states. We understand that it is a problem for Georgia. And we understand, I understand why Shevardnadze, for example, has changed his mind. There are many ethnic Chechens living in that region. And he was afraid that if our troops moved in it would trigger disturbances and so on. That was a danger.

But is the situation any better now? That is an issue that requires confidence, courage and joint action. Otherwise, there will be no result. It may last a very long time. We will strengthen the border, we will strengthen our presence on that border. What will Georgia do with the terrorists who are sitting there?

We have no problems on any other issues. We are conducting negotiations, admittedly not easy negotiations, on the bases and we are working towards an agreement. You know that we are already withdrawing weapons from there and we will comply with our obligations on flank limitations.

We render real support to Georgia in the economic sphere. There is no economic issue that we refuse to settle with Georgia. They asked us to reschedule their debts and we did it instantly. They asked us to help with energy, and we did it. They asked us to supply gas, and we did it. And we supply gas at lower prices than to Europe. And at lower prices than to Ukraine. We help Georgia.

You know that 600,000–700,000 Georgians have moved to Russia. Each of them sends 150–200 dollars from Russia every month to support their families. That is not much. But if you make the calculations it works out at about a billion dollars. That is a serious amount for Georgia. And what is more, the money goes to support concrete people.

We do not object to this, we help these people. We offer them jobs, and that means real support for people. We do everything to preserve stability in Georgia.

Now about the media, and I think it has to be the last question.

Ten years have passed since Russia was transformed. You cannot create a new quality overnight anywhere, including the state structure, the mentality and the functioning of government institutions. I think you probably have a better insight into this sphere than I. I will tell you the way I see it and the way I feel about it. And you can draw your own conclusions as to what I said right and what does not correspond to reality.

At the first phase, when fundamental changes took place, the Soviet Union collapsed and the processes of disintegration of course affected the Russian Federation itself. It triggered some destructive phenomena in the institutions of state. They became weakened beyond belief. The legal system, the control system were in a sorry state. It was in this context that the process of privatisation began. And predictably many people took advantage of the weakened state and flawed rules of privatisation. I have said that the rules had many drawbacks. But given weak government institutions even these rules could be broken. It was even hard to say what rules had or had not been broken because they were too complicated.

Clans emerged which made fortunes. I am not exaggerating. We are talking about billions of dollars. While in the United States, for example, people took decades to amass their fortunes, some groups here became billionaires within two or three years. Many of them quickly realised that in order to uphold their position they had to acquire leverage with the authorities. The best leverage on government, I would say a means of blackmailing government, is provided by the mass media. And many national media outlets were de facto privatised, also in violation of the law. Some of these were newly created, but with illegally acquired money.

So, I am deeply convinced that there can be no normal society, there can be no democratic society without the free media. But it must be truly free. It must serve society and not the interests of specific groups, it must not be an instrument of blackmailing the authorities to promote certain economic interests. And not just to promote the interests, but to perpetuate the semi-criminal state in which Russia was for a long time.

For the media to be truly free it is necessary to create an economic base. The media should be an effective business independent of other economic activities and not be a subordinate part of another big economic interest. But that is a complicated process, it calls for effort, time and persistent actions. I repeat, an economic base must be created for the free press. I see that as my task. We will work in that direction.

Deborah Seward (Associated Press): One more brief question. I am interested in the quality of partnership. Do you think that Russia and the US are equals, or is there a senior partner and a junior partner? And a related question. You have stressed the need to preserve the strategic balance in the world. Do you think that it makes sense to restore the bipolar world?

Vladimir Putin: Regarding the junior and senior partner. We take a totally realistic view of the situation and the current state of Russia. If somebody has any doubts about it, I have to disappoint them. After the breakup of the Soviet Union, Russia lost 40% of its territory and about the same share of its economic potential. We are aware of that.

But let me remind you that talk about the senior and junior partner went on even in the Soviet times. I think it is the terminology of imperialism. All are equal in the international arena. And those who think otherwise soon face problems. Because nobody likes imperial ambitions. You don’t even have to do much explaining and uniting. Everybody naturally unites against a potential imperialist.

Those who understand it are in a very advantageous position. But understanding it and acting accordingly is not easy.

Take the European meeting in Nice. Germany is a very big European country in terms of its economic potential and influence, and it was very successful in Nice. I think it was successful because it realised that imperial ambitions do not help, but hinder. Germany proposed building a Europe in which its dominance would not make other participants in the process feel small. The majority in the meeting supported Germany. But first Germany had to realise it all and work out a certain strategy.

And, on the other hand, if somebody wanted to behave in an overweening fashion, everything would have collapsed.

As for Russia, in spite of the loss of much of its potential, we are aware of our positive sides, the opportunities for development, the level of our science, because the main area of competition is in the hi-tech spheres. Not in production, but in these spheres. And this inspires optimism. We believe that we will manage to modernise our economy. We think that we will be able to build up a certain rate of economic growth and preserve our defense potential. All this gives us grounds for thinking that Russia will occupy its due place.

As for the bipolar world, I don’t think it is our goal, and I will tell you why. We have been there before. If we deal with a bipolar world various forces begin to rally around these two poles and dividing lines reappear. That is bad. I think when we talk about a multipolar world, when we draw no distinctions and do not build new “Berlin walls” between countries and do not seek to form blocs, we are bringing humanity back to normal existence.

Andrew Higgins (The Wall Street Journal): Two questions on energy and gas.

You have recently appointed your long-time colleague as the head of Gazprom. What objectives did you set for him? What is he supposed to achieve? Will he change the situation and the climate in Gazprom? Will he look into the claims of corruption and misuse of money and abuse of assets? Will he seek to reclaim these assets for Gazprom and for the state?

And the next question is also about energy. Foreign gas companies and oil companies always say they are ready to invest tens of billions of dollars in Russia, but only if they get coherent and credible terms under production sharing agreements. Efforts to secure the passage of that law were taken, most recently last September, but these efforts were bogged down in bureaucratic procedures. Are these efforts going to be resumed in order to follow the matter through?

Vladimir Putin: Right off, the question connected with corruption and with the money that disappeared. Let me start with that.

We know that huge amounts of money have been misappropriated. One such case is well known to you: Mr Gusinsky got nearly a billion and has not given it back and is not going to. He shuttles between Israel and Washington and feels just fine, he buys interest groups in the United States in order to organise a campaign against us. Let him give back the money. And there are many other similar examples.

But of course this is not Mr Miller’s task: this is the task for the law enforcement bodies. He should not perform police functions. But he faces a challenge. The first challenge is to secure the interests of the government in that company, to collect all that by rights belongs to the state, to make the company’s activity, in the first place its financial activity, absolutely transparent for all the shareholders, including minority shareholders. We should sort out the company’s financial obligations.

Of course we should take care to meet our obligations to our foreign partners inside the country. We should understand that the gas industry should function in normal market conditions because it is a commodity and it must have a real price. And the price must not differ from the foreign price by an order. But of course we cannot do it overnight; it needs to match the growth of the economy and the purchasing power of the population. We should ensure the development of new fields and provide access to the pipeline system for all those who want to work in this sphere.

Now about PSA, production sharing agreements. I regularly meet with the heads of the Russian business community. Of course they are worried about some plans of the Russian government in this sphere and I think it would be wrong not to heed these worries. Their argument is simple. They say: “If you offer preferential treatment to foreign investors, in terms of taxes, for example, don’t we deserve the same? In that case we won’t invest as Russian legal entities, we will come as foreign ones.”

What is the moral for us? There is only one moral: to develop oil and gas fields in a normal tax regime. The regime must be as favourable and liberal as possible. And now we have planned a series of steps in that direction. The companies which have to make major outlays and major investments in conditions of commercial risk must enjoy some preferences.

Let me explain. We have proven reserves and fields about which everything is known: the amount, how much needs to be invested and what the returns will be. In such cases universal standards must apply. And if a company comes to poorly explored areas, investments must be large and the returns on them are uncertain, they are exposed to risks. Then of course we should offer preferential terms. And of course we cannot put our national market participants in conditions that are less advantageous than those of foreigners. The terms of production sharing must be universal, they must be accessible for Russian businessmen too.

Would that be enough?

Christian Caryl: Mr President, we have asked many tricky technical questions, and perhaps you could answer a more personal question. You have said many times that you were proud of working for the state security agency of the USSR. And, as you know, it is hard for the Western public to understand.

Vladimir Putin: What?

Christian Caryl: Well, I assume you know that we Western journalists constantly say: “Mr Putin worked for the KGB. How awful.”

Vladimir Putin: When I talked with Henry Kissinger and told him where I had worked, he thought for a while and then said: “All decent people started with the intelligence. I did too.” So I do not quite understand why you are so concerned about it. Especially since the 41st President of the United States had not worked in a laundry shop before he became President. He was the head of the Central Intelligence Agency.

Christian Caryl: It’s without any disapproval. What about your background and professional training, and experience that influences you today and helps you to lead the country in a very unstable situation?

Vladimir Putin: One could talk about it at length and go into details but the main thing is experience of working with people. People from various walks of life: journalists, scientists, politicians, ordinary people that may be interesting for a professional for certain reasons.

In order to work with people effectively you have to be able to establish a dialogue and bring out the best in your partner. If you want to achieve the result you have to respect your partner. And to respect means to recognise that he is in some way better than you are. You should make that person an ally, make him feel that there is something that unites you, that you have some common goals. That skill I think is the most important skill and not so much in international affairs, but above all in work inside the country.

You will know what happened at the Duma when the first reading of the Land Code was passed. It came to a fist fight, and one deputy, I was told, broke the nose of another deputy. So, passions ran high. And this despite the fact that I had met with the leaders of factions on the issue and we discussed it at the State Council. Overall, for all the differences of approaches, we came to an agreement and yet it involved a serious test, a serious clash. The degree of tension in Russian politics is very high.

Many say that Russia is consolidating, and that is true. But, as seen from the recent developments at the Duma, this does not come easily, it requires a huge effort. I think that is the main thing. To be more specific, it is about knowledge of the country, the habit of handling a large amount of information, a habit that is cultivated in the analytical services and special services, the habit of picking out the key elements from a huge flood of information, of processing them and using them.

And finally what I think is the main thing. It may have varied over time, but at the time I worked in the Soviet foreign intelligence, which was already on the eve of perestroika, and I did not encounter anything that was reminiscent of reprisals, nothing remotely similar. In the foreign intelligence community there was already a free-thinking spirit because these people spent all their professional lives abroad, saw everything with their own eyes and when they returned back to the country (and the procedure was to spend from 3 to 5 years abroad and then return home for some brainwashing in the Soviet Union, and then back again) they could compare what was happening in normal life abroad and what was happening in the Soviet Union.

And this brings me to the main point. In spite of all this, the security bodies and the intelligence community cultivated patriotism and love for the country. That is the main thing.

Christian Caryl: Thank you.

Vladimir Putin: Thank you.