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Question: What steps can Russia and Belarus take towards further integration? There are many opinions on this topic, but could you be more concrete?

Vladimir Putin: (adding to Lukashenko’s answer): My answer will be perhaps more brief because Mr Lukashenko gave you an extended answer. I think we should work in a focused manner to harmonise legislation and to eliminate the red tape.

I am convinced that in the last few years very much has been done to move towards a Union State. Much has been done in Russia and Belarus to improve the lives of ordinary citizens. That process was in fact initiated by the President of Belarus, who is present here, and the first President of the Russian Federation Boris Yeltsin.

We have discussed this theme in considerable detail today. Mr Lukashenko has already said that different options are possible. For example, I think we could take some concrete steps today since “the moment is right”, as a character in the well-known film says. The moment is right because the overwhelming majority of the population in Belarus and Russia want unification. And secondly, there is a certain national consensus on the issue among the political elites. Both the executive and legislative branches think it is the right thing to do. So we are able to launch concrete actions.

What could our actions be? There are several options. The first is the most straightforward and concrete and it is the creation of a single state in the full sense of the word. For example, a referendum on the final unification could be held in May of next year, elections of a single parliament in December 2003 and elections for the single head of state in March 2004. That would signify movement towards the creation of a single country in the full sense of the word. Naturally, the issue arises of what question can be put on a referendum for the citizens of Russia and Belarus.

Mr Lukashenko and I have also discussed this aspect. Of course more work is required on the part of experts and members of the Parliaments. But I could imagine the question being phrased in the following way – and I think it should be the same question for both Belarus and Russia – do you agree to merging Russia and Belarus into a single state on the basis of the following principles: first, equal rights and freedoms for the citizens of the Union State? Something Mr Lukashenko spoke about today at the airport.

Second, equality of the regions of Russia and Belarus as the constituent entities of the single state.

Third, the creation of common bodies of power in accordance with the Constitution of the Russian Federation. I would like to stress that and I will explain why. It is not that I like the Constitution of Belarus less; it can serve as a model and an example for many countries. It is a constitution of a democratic state. But Belarus, unlike Russia, is a unitary state. The future state should be federal, like Russia. So of course I have a different idea. That is the first option. It is concrete, clear and understandable.

If for some reason it is difficult to accomplish, especially within the specific timeframe, one can follow a different path, and we also discussed that today. It is something similar to the unification processes within the European Union. The Union Parliament passes decisions which in turn must be confirmed by national procedures. That fully guarantees the interests of both states; it guarantees the sovereignty, independence and everything. These are the two main paths.

We believe that as of today not all the potential offered by the current set-up has been exhausted. And here I absolutely agree with Mr Lukashenko when he says that we should reinvigorate the current processes and make the existing structures more effective. This is our overall approach. But there are some other proposals, also substantial, and I think they belong to the political and economic sphere. We envisage the introduction of a single currency in 2005–2008, with the Russian rouble as the proposed legal tender. A single currency for the future was planned to be fully introduced in 2008. I propose that we introduce the Russian rouble as the common legal tender not beginning in 2005, but starting on January 1, 2004. That would require amending the laws of the Russian Federation and the Republic of Belarus. The Russian Government and the Central Bank have formulated proposals to this effect. They are not simple and they need to be considered seriously before taking a decision. I have conveyed them to Mr Lukashenko. They are not secret. You can ask my staff or the Government staff to look at them.

Question: You discussed economic matters today. Beginning from June, Russia has extended internal railway tariffs to Belarus. But the Belarusian side has not yet applied similar terms to the shipments of Russian goods to the port of Kaliningrad. Mr Lukashenko, can you use your powers to rectify this situation? And could you, Mr Putin, comment on it?

Vladimir Putin: (adding to Mr Lukashenko’s answer): I have nothing to add. We have discussed this question, and I can merely say that cooperation and interaction between our Foreign Ministries is highly satisfactory and we are pleased with their joint work.

I have nothing to add on this topic. It is true that we have touched upon it, but we have no more than touched upon it. As I have just said, the problem exists. My Belarusian counterpart has reacted instantly stressing that if such a problem exists it will be solved quickly. As regards interaction in general, I have already spoken about it at our meeting. Our trade has indeed declined somewhat. At the same time, I want to draw your attention to the fact that we have managed to cut the volume of barter trade by about 20%. In other words, our trade has become more transparent, more monetary and more modern. And these factors may account for the overall decline. On the whole I assess our cooperation as being highly effective. Of course economic issues are always solved with a touch of pragmatism. We always argue, and our governments argue, but it is an argument between friends and colleagues. Yes, we each seek to promote our national interests, but up until now we have always been able to reach a consensus. I am sure we will reach it on this and other issues.

For example, I have mentioned the proposal that has been formulated, at my request, by the Government of the Russian Federation and the Central Bank on the introduction of the single currency, the Russian rouble, as the only legal tender in Belarus and Russia, not from 2005, but beginning from January 1, 2004. We understand that this would require a certain effort on behalf of our Belarusian colleagues. I must note that practically all our agreements are complied with.

But we for our part also assume major obligations. It is a challenge to us, to our economy. It has already been mentioned that we have introduced common transport tariffs with Belarus. Belarus is the only country for which we have introduced internal Russian gas prices, and as you know for Gazprom these prices mean losses because they are below production costs. Nevertheless we have done it and we will have to support Gazprom with budget money. We have granted Belarus a $100 million credit, $60 million has already been paid and $40 million will be paid this year. I see no reason for not doing it. It will be done and it is already in the budget. The Central Bank will provide 4.5 billion roubles, 3.5 billion have already been disbursed and 1.5 billion is to be disbursed this year. I met with the head of the Central Bank of the Russian Federation yesterday and he confirmed that the Russian Central Bank is ready to meet its commitments.

Thank you.