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Vladimir Putin: I am very happy to be here today, to have a chance to meet with you at this representative Forum and to spend some time working together with you.

I would like to say that this event is very important both for Russia and Kazakhstan. It is important in its own right and not only because it is taking place in the Year of Kazakhstan in Russia. We are neighbours, and not simply neighbours, but close neighbours. The interaction between our two countries, especially in the border areas, is something absolutely unique. Our land border is 7,500 km long. And that does not include the Caspian, where we also share a border and have a lot of common interests. It is in fact of key importance for the economies of both countries.

Last year border regions accounted for about 60% of all trade between Russia and Kazakhstan. And it is extremely important that joint ventures are spearheading trade. I believe it is a very good sign not only for our economic but also political relations.

At the same time there is a somewhat alarming indicator, and that is the 11% downturn in border trade in 2002 compared with 2001. I assume that you have discussed it at the Forum and in private meetings. In identifying that problem I would say that it is important to take into account the opinion not only of the representatives of government agencies, but also of the people who are directly involved in trade and economic cooperation.

I would like to stress that our border ties have become real engines of the integration processes. And I am not talking only about bilateral integration. The interests of the regions prompt the national governments in the CIS countries to take measures to accelerate and deepen integration in the framework of EurAsEC and other regional organisations. We have paid considerable attention to the issue today.

But not only border regions now have strong trade and economic links with Kazakhstan. Seventy two Russian regions are engaged in such cooperation, most notably the Moscow, Chelyabinsk, Sverdlovsk, Orenburg and Tyumen regions. Each of them has annual trade with Kazakhstan in excess of $200 million. It is in our common interests to broaden the spectrum of interregional ties and develop areas of production cooperation between Russian and Kazakh companies.

The number of such companies is growing, and we hope that this growth will be accompanied by their improved performance and greater financial returns.

I am sure that such a commitment meets our interests. As you know, they are concentrated on key sectors in the economies of both countries, above all the fuel and energy complex and innovation and hi-tech sectors. They ivolve space research, where we have a powerful basis to work from, including the Baikonur infrastructure and the historical traditions of cooperation in space-related technologies. The President and I discussed it in some detail today.

One pressing task is to restore the technological links in machine-building and the petrochemical industry, including through the creation of financial and industrial groups. I believe it will make our manufacturers more competitive in the world markets and increase export opportunities both for Russia and Kazakhstan.

The President of Kazakhstan and I have agreed to do our utmost to support the process of integration. We believe it is particularly important today to remove the obstacles that hold back the growth of trade between our countries, especially through more effective financial mechanisms. That alone will make the economic basis of business truly stable, and diminish the risks involved in business activities as a whole. Kazakhstan is a good partner for us in that sense because it has excellent macroeconomic indicators and in some ways can serve as a model for Russia.

Important international transport and energy corridors pass through the territories of Russia and Kazakhstan. Our countries, our border regions can make a difference to the creation of the necessary infrastructure, mainly for the east-west and north-south transit flows.

In this connection interaction on the borders and the creation of an effective modern infrastructure there take on added significance.

A meeting of the heads of our border agencies has just taken place. I would like to stress that the regime of the Russia-Kazakhstan border should unite and not separate our peoples. This is the case when the border can actively contribute to the economic prosperity of both countries.

We have agreed, and the heads of our border services promise to do everything to speed up the adoption of decisions that would make it easier for people in the border areas to communicate, by the end of May. They will prepare corresponding decisions regarding joint protection of the Russia-Kazakhstan border and the deepening of interaction between the border guards throughout the territory, including the inner border of Kazakhstan. Russia for its part is ready to do everything to help its colleagues.

Finally, we can make our joint struggle against drug trafficking, terrorism, transnational crime, illegal migration, epidemiological and other threats much more effective.

However, I must point out that while the overall picture is favourable, some issues have been neglected in recent years and have not been addressed in a timely manner. So, we have a lot of work to do together. First of all, we must streamline the regulatory and legal basis of border cooperation to give our regions greater opportunities for direct trans-border ties, as I have just said. At the same time, we must bear in mind the interests and the needs of those who will have to apply these rules on a day-to-day basis.

The position of the border regions on these issues is not just extremely important, it is decisive. Their economies are to a large extent oriented towards cooperation with their neighbours. They are particularly sensitive to changes of the tax and customs regimes, any changes in our laws and in the relations between our countries as a whole.

I hope that the proposals and recommendations of this Forum will help to better coordinate the work of the central and regional authorities in the two countries on these and other issues. For our part the President of Kazakhstan and I will do everything necessary for these decisions to be translated into life.

Viktor Khristenko has told me that Russia is represented by practically all the leading agencies here, from public health to the financial and transport agencies. I very much hope that the expert opinions of the heads of regions will be heeded and translated into practical decisions.

Thank you for your attention.

I now yield the floor to the President of Kazakhstan Nursultan Nazarbayev.