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Vladimir Putin:

Economics has been and remains the focus of our dialogue with the German leaders. Both sides feel a desire and a need to move forward beyond the recent period of inadequate trade and economic relations and to work with an eye to the future. We have agreed that politicians should be in constant and close contact with the business elite and heed its ideas and judgments.

German business is a traditional and reliable partner for Russia. We highly appreciate the active support of the German businessmen for stronger bilateral cooperation.

I became convinced after my meetings with the German business elite that they have a better feel of the situation in Russia than others. They understand the value of successful development of the Russian economy not only for us, but for the prosperity and stability of Europe as a whole.

Today our partners, including in Germany, face new opportunities for developing business and investment activities in the Russian market.

These opportunities should not be underestimated. A new stage in the development of our society began after the parliamentary and presidential elections.

Consistent protection of property rights is the basic and irreversible principle of our policy. There will be no redistribution of property in Russia. It is a condition of economic dynamism and social stability. It is the basis for a favourable investment climate.

A new economic system is in place in Russia. Market mechanisms have been launched. It is largely due to them that the aftermath of the August 1998 crisis was fairly quickly eliminated. We are consistently removing the still existing administrative barriers to economic development.

The process of economic recovery is gaining momentum in the country.

First, the ruble is getting stronger. The IMF advises us to go on strengthening it, but we will tread warily.

Second, taxes are being collected much better.

Third, the budget is fully implemented. According to forecasts, the gross domestic product is to increase by 4.5% this year. Last year it grew by 3.2%.

There is greater buoyancy in many sectors. Some sectors – metallurgy, chemistry, food, light and woodworking industries – have reported an almost 20% growth. Although many challenges lie ahead, we believe that the country has left the worst period behind.

We set the task of making our economic policy transparent and coherent.

The medium-term strategy of Russia’s social and economic development until 2010 is being developed. Mr. German Gref, one of the architects of this policy, is present here. It is not by chance that he has become the Economics Minister. The main thrust of this formula is creating a comprehensive system of government regulation of the economic and social spheres and determining optimal goals of social development and mechanisms for their achievement. The underlying principle is constant and fair rules of the game for everyone, including foreign market participants. Plus low taxes, unremitting fight against corruption and bureaucratic arbitrariness, and a massive effort to strengthen the judiciary system.

In the budget sphere we intend to adopt and implement balanced budgets. In this context I would like to stress that we do not renounce our obligations and will seek actively to solve the debt problems. But it should also be clear that Russia cannot afford to see a slowdown of the fundamental reforms in its economy. The sooner we ensure sustainable economic growth, the more regular will be our payments to defray our debts. Mutually acceptable settlement of the foreign debt problems will help us to better service these debts.

Russia is not begging or haggling. We simply want normal and fair terms that would enable us to meet our obligations and ensure economic growth.

We propose to put the main stake on internal growth factors. At the same time we see foreign trade as a key factor of development and Russia’s integration into the world economy. We count on understanding and support of Germany which is by far our biggest trade and economic partner, a major investor in the Russian economy and, indeed, our main creditor.

During the current round of enlarged consultations, both sides have clearly signaled that our cooperation in this area should become more stable and dynamic.

These signals include the resumption of the operation of the Hermes insurance company in Russia, the establishment of a bilateral high-level working group to discuss strategic issues of cooperation in the economic and financial spheres. That was the Chancellor’s proposal. I think it is a very good idea. We are talking about a lean and effective mechanism that would permit to promptly address the problems that arise and build cooperation on projects that both sides find most attractive and promising. I urge you to actively join this work.

Capital investment opens up a particularly broad field of activity. Among the areas where German investments are particularly important are aerospace cooperation, infrastructure improvement, cooperation in the field of nuclear energy, gas, the building of pipelines and restoration of the banking system in Russia.

The President and the Government of Russia will do all they can to support these key areas.

During the meeting with the leadership of the Eastern Committee of the German Economy and other German business leaders in Moscow on March 13 this year my interlocutors suggested that 2–3 promising Russian-German cooperation projects should be launched. It is undoubtedly a useful idea. One project that immediately suggests itself is joint building of a medium-sized European military transport plane on the basis of AN-70. The economic and political advantages of the project are obvious to specialists.

German business, which is good at calculating the returns on capital investments in advance, could have a big say in the matter and influence the decision of the German leaders on AN-70, which, we are told, is expected to be made soon.

We will exert efforts to strengthen and, where necessary, restore investor confidence in Russia. To this end we are improving economic legislation, preparing decisions to streamline the custom clearing procedure, company registration and vetting of investment projects. We will consistently and resolutely eliminate other barriers and bureaucratic hurdles in the way of business development in Russia.

Our actions aimed at ensuring stability and order in Russia have nothing to do with an alleged “iron hand” approach sometimes imputed to us.

One should not be afraid of a strong Russia. Germany and the West as a whole would have headaches if Russia were weak and unstable and barely able to play the role of a reliable and efficient partner in the economic, political and security fields.

We want Germany to remain a leader in the strategic partnership between the West and Russia. We would like Germany to remain the key supporter of our country and our course.

We are pleased to note that the German leadership is committed to building relations with Russia in this way. For our part, we are ready to energetically move to meet it halfway. I am urging you to support this process which creates the necessary conditions for increasing the scale and efficiency of our cooperation.