Official website of the President of Russia

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Vladimir Putin: I am glad to meet you again this time in Moscow. I think it is our third meeting. We have also met in London. And I think this reflects the character of the relations that your company has forged with Russia over more than a hundred years. I understand that the company was created for the purpose of buying kerosene from our Transcaucasia.

And now Shell is a major investor in Russia. Of course the main project is Sakhalin-2. In my opinion it is moving forward quite well. My colleagues and I are ready to discuss with you everything that interests you. I know that there are other projects as well. And we will discuss them too.

On the whole, the situation in the Russian market has been improving recently. I would like to hear your opinion on that score. Anyway, objective data, objective figures attest to that. Direct investments in the Russian economy grew markedly in the first six months of this year. Of course, they are not yet astronomical, $12.7 billion, but it is 1.5 times more than in the same period of last year.

It is especially heartening that for the first time in Russia’s recent history we see an absolute net influx of private capital into the Russian Federation over the same period to the amount of $2.6 billion.

Of course it would be wrong to attribute it only to the favourable market situation. The credit must go to the consistent economic policy pursued by the Russian Government. Above all, to the macroeconomic stability that has recently been achieved.

To be sure, inflation is still higher than in the developed economies, in Europe or North America. At the same time, we manage to meet the inflation reduction targets year in and year out. It is a steady decline of inflation and a predictable exchange rate of the national currency.

We pay off all our external debts regularly and in full, and without external refinancing. All that attests to the positive changes in the Russian economy and to its stability.

We have still a lot to do. We are aware of it. The reform programme adopted three years ago will move forward steadily, without leaps and bounds, without creating any social problems. But we will go ahead with the tax reform. We plan to further cut the VAT by 2% as of January 1, 2004. We will have to adjust some other taxes slightly. In 2005 we will cut the single social tax. We will carry out a complex of measures, including in the social sphere and in the pension system.

Many questions have been raised in connection with the excessive administrative pressure on business. We must strengthen the court system. Some important decisions have been taken in this field. We should make it all work in practice. In any case we are determined to create and consolidate normal and good conditions for your work.

I know that you are interested not only in the oil projects in the Far East, but also in gas projects. We may have large-scale joint cooperation with China.

In short, there is much to discuss. We are glad to see you in Moscow. We have mutual interests and hardly any disputed issues. I am referring above all to competition. We have common interests. I hear that you are interested in the northern route for a possible gas pipeline. There are many problems. They call for very close examination. We do not just have to discuss your interests and those of your Russian partners, but to find solutions that suit all the sides. I hope we will succeed, just as in the case of the Sakhalin-2 project.

I have just talked with the Japanese Prime Minister, and I understand that Japan is not only satisfied with the Sakhalin-2 project, but is thinking of taking part in other projects.