Official website of the President of Russia

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President Vladimir Putin: I would like to do some summing up of what we discussed today and the agreements we reached.

But first of all, I would like to once again sincerely thank the Belarusian President for having agreed to come here today to Sochi. We had the chance to spend almost the entire day discussing a number of international issues of mutual interest to our countries. Of course, primary among these was how the situation is developing in the CIS. We talked about the plans to create a common economic area. We hope that we will all be able to sign the relevant documents that have been drafted by a group of our high-level specialists. Incidentally, I just discussed this subject with the President of Kazakhstan, who called me, and I am also set soon to have a brief meeting with the Ukrainian President. The Belarusian President and I both support this process and hope that it will be seen through to a successful conclusion. That is the first thing I wanted to say.

Second, we also spent a lot of time discussing our bilateral relations. We discussed our political cooperation and the building up of our Union. We talked about the union agreement and the Constitutional Act. We also discussed our economic cooperation, above all in the energy sector, and our plans to introduce a single currency. As you know, the first stage of this project foresees the possibility of introducing the Russian rouble as the single currency to be used in Russia and Belarus. We examined all of these issues. Regarding the gas issue, we reached the conclusion that it is quite complicated to work out exactly who owes what to whom. The economic players hold talks among themselves, reach various agreements and then end up arguing with each other. Each of them says that one is offering the other preferential terms, and this all makes it a difficult task to work out ultimately exactly who owes what to whom. This is why we have concluded that we need to move over to market relations in this sector, while still continuing our talks on establishing a joint enterprise to manage a unified pipeline system. We are also keeping in mind that Russia can definitely examine the possibility of having Belarusian companies participate in gas production operations on Russian territory.

As for the single currency – the Russian rouble – we think that the document drawn up by the specialists from the Russian and Belarusian Finance Ministries and Central Banks is a very high-quality, competent piece of work. It corresponds with our objectives and meets the interests of both Russia and Belarus.

Alexander Grigoryevich [Lukashenko] thinks that it should be subject to a preliminary discussion in the Union State’s Council of Ministers, followed by an examination by the State Council. I think that our specialists and we ourselves see the document as a good piece of work. Alexander Grigoryevich had the chance today to hear the opinions of the Chairman of the Russian Central Bank and the Finance Minister, and I spoke with them on the phone. We discussed all these subjects in quite some detail. Our Belarusian colleagues do have some concerns about introducing the single currency, but we think that the documents that have been drawn up address all these concerns. Our specialists have given thought to all these matters, and these concerns can be sorted out through the agreements that our Central Bank and the National Bank of Belarus have reached.

That is the general summary. If you have any questions, I will be happy to answer them.

Question: Vladimir Vladimirovich, how will Russia guarantee the preservation of Belarusian sovereignty in connection to the introduction of the Russian rouble as the currency in Belarus?

Vladimir Putin: The introduction of the rouble as the single currency in Belarus does not require us to provide any guarantees because this is not an issue related to sovereignty. As you know, the euro zone uses a single currency, but this has not in any way undermined the sovereignty of France, Germany or the other countries involved. On the contrary, it has strengthened their sovereignty because the economies of these countries have benefited from the introduction of a single currency.

But you could argue that those countries have particular conditions and that everything balances out there. There are other examples from recent history. If you look at the Benelux countries, for example, Luxemburg used the Belgian currency, if I recall correctly, and its sovereignty did not suffer in any way. Luxemburg was an economically stable country, a small but respected nation in Europe and the world.

We believe that introducing the Russian rouble will have a similar result for the Belarusian economy. Our economies and our peoples only stand to benefit.

There is a problem here that experts would be better placed to explain, but I can say in general terms that when we talk of sovereignty with regard to these single currency plans, what we have in mind is the question of who gets to make the decisions, where and how. I can tell you how the decision-making process will take place in this area.

The plan is that a representative of the Belarusian National Bank will have a seat on the Russian Central Bank’s banking council. The banks and governments will sign an agreement in which the Belarusian side sets its own limits based on the needs of the Belarusian economy. It will reach an agreement on this with the Russian side, the two sides will sign the document and it will be clear just what money supply the Belarusian economy requires. If the limit proves too low, especially during the transition period, Russia will guarantee that Belarus will receive all the resources it needs.

According to the specialists, this limit could be around five billion roubles. Our specialists have reached an agreement that if necessary, Russia will provide not five but 20 billion roubles a year. We think that this might not be required.

There are other safety mechanisms that we can use during the transition period until the Belarusian economy begins to function in the same rhythm as the Russian economy. I repeat, we all only stand to benefit from these plans.

Question: Vladimir Vladimirovich, you have often said that it is time to reach a final decision once and for all on the single currency and the deadline for its introduction. Have I understood correctly that this question is still being postponed and drawn out?

Vladimir Putin: Alexander Grigoryevich and I have just tried to explain, but this was obviously not enough. I will try to add to what was said.

Russia thinks that the agreement is ready, and we are ready to sign it now. At the same time, we understand the Belarusian side’s concerns. If our colleagues think that some points need additional work, then we operate on the premise that this should be done. We should not in any circumstance force this process through or hurry it. Haste should be reserved for other circumstances. We think that if there are concerns, they should be dealt with first, and we are ready to undertake this work, although, as I already said, for our part, we think we could sign the agreement already today. But if there are still questions, they first need to be worked through and resolved. Alexander Grigoryevich said that the single currency is set to be introduced as from January 1, 2005. This, of course, is quite soon, but we still do have time.

Question: Vladimir Vladimirovich, how will Russia and Belarus hold a referendum on the Constitutional Act at the same time?

Vladimir Putin: If the Constitutional Act is approved in its final draft and a referendum is required, we will hold it. In any case, we will do everything required of us by Russia’s internal legislation. This is a technical question. The main thing is for us to decide exactly what this Constitutional Act should be. I don’t doubt for a second that the overwhelming majority of Russian citizens support this process and, should we hold a referendum, would vote in favour of union between Russia and Belarus.

I discussed this question with Alexander Grigoryevich and can repeat only what I said to him and what I have already said publicly on this matter. Russia is a federation, it is organised as a federation and its constitution has been written accordingly. Belarus is a unitary state and has the constitution of a unitary state. The task is easier for us, because there is no need for us to make changes to our constitution.

This matter is of more pertinence to Belarus in view of its being a unitary state with the corresponding constitution.

We will be able to give a definite answer to your question once we have seen the final draft of the Constitutional Act. Then we will know whether a referendum is necessary or not and what exactly we will need to do to bring our internal legislation into line with this Constitutional act.

Question: Until now Gazprom has sold gas to Belarus at a preferential price, but domestic consumers in Belarus receive this gas at a higher price. Where does this price difference come from, and was it for this that these quotas were allocated? What is going on?

Vladimir Putin: This is precisely why Alexander Grigoryevich and I agreed today that our energy experts would not cause all these headaches with these various preferences. In accordance with our previous agreements, we will move over to market relations as from January 1, 2004. The Belarusian President is absolutely right in saying that if we supply gas to Belarus at the market price, Belarus will charge us the market price for pumping the gas onward through to Europe. Our revenues and expenses will work out at roughly the level we have today.

Of course, Russia will not put Belarus in a disadvantaged position compared to our other partners in this region – the neighbouring countries with whom we have very good relations. I hope that we will continue developing our relations with these countries and with Belarus.