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Vladimir Putin:

Mr Chairman,

Ladies and gentlemen,

First of all, allow me to thank you for your kind words about Russia, and of course for everything that has been done to ensure that this meeting is successful and opens up new opportunities for business contacts.

As you know, Russia is quite a “young” member of the forum. It joined this authoritative international organisation five years ago. But despite our relatively short work term in APEC, we do not feel like novices here. The forum has accepted us, and we constantly feel its support and respect for our interests and approaches to solving common problems. We attach particular importance to business summits.

APEC intentionally emphasises its attention to collaboration with business representatives. And I should say that our participation in this business section of the forum is already bringing the Russian economy noticeable dividends, and palpable benefit. We also believe that our partners will see Russia as a reliable and promising partner. A partner that actively develops its trade and economic ties with all countries in the region.

The topic of the present forum is strengthening the system of stable development of APEC. Stable development is the key condition for the predictability of the world economy. It is a prerequisite for the favourable, comfortable development of our ties in the future.

However, stable development is impossible without removing numerous barriers and threats, which continue to make themselves felt. So we support the contribution that APEC makes towards fighting the most dangerous threats of the present day, among which, of course, it is vital to single out terrorism and its accompanying forms of crime, such as the drug trade, illegal immigration and weapons smuggling. We are certain that this will affect the development of the world economy on a growing scale if we do not correctly and adequately react to these threats at the right time.

Russia strictly fulfils the articles of the anti-terrorist statement passed last year in Mexico by the leaders of the forum member countries. There were a number of our initiatives in preparing APEC measures to prevent the spread of SARS, and for creating conditions for trade activity in the Asian and Pacific region.

Our actions follow one goal – to create favourable living conditions for all people in this region of the world. The imbalance of economic development is particularly alarming. And not just between developed and developing economies, but within these groups and even within individual countries. Shutting ourselves off from these problems only increases general instability.

The entire activity of APEC is designed to smooth out this imbalance, and a special role here is played by the business component of the organisation. I suspect that one of the ways to improve the situation is by liberalising trade and investment systems; of course, on the basis of a sensible balance of the interests of all countries. The rates of our common progress in this direction should be acceptable to all economies, and the advantages of each of them should be used to the maximum.

We expect that achieving these goals will also help Russia join the World Trade Organisation. I must particularly stress that we are grateful to the forum for supporting Russia on this issue.

Ladies and gentlemen,

Russia’s policy for the further development of multi-lateral cooperation with Asian and Pacific region countries is our own conscious choice. It was made because of the growing inter-dependency in the world, which we cannot ignore. And also because this region has today become one of the most dynamically developing. Accordingly, our opportunities with APEC grow as the economic situation of the Russian Federation improves, and as democracy develops and a legal base is consolidated.

You undoubtedly know that in the next decade we have determined a complex, but in our opinion, an attainable task – to double our GDP. Without goals that unite people and give them hope and open up new possibilities, it is impossible to move forward. And it is extremely important for our country and society to develop effectively.

For the fifth year in a row in Russia, there remains a high dynamic of economic growth. This year we also expect a 6% growth in GDP. In recent years, the federal budget has had a surplus, and in 2004 we will set ourselves the task of creating a fund which in some countries is called the fund for future generations. And Russia is not just efficiently and consistently paying off its foreign debt, it also writes off foreign debts of the least developed economies in the world.

I should say that by the level of absolute debt write-off, we are third after Japan and France. This is an enormous amount of money.

Since the beginning of this year, the gold and currency reserves of our country have increased by more than 30%, by 30% in nine months. Financial and economic stabilisation can be clearly seen, which among other things has increased Russia’s credit rating and caused the active growth of the Russian fund market.

One of the main spheres of our economic activity in the Asia and Pacific region is transport and energy. At previous meetings within the framework of the Business Summit, I have already talked about several infrastructure projects, including possibilities for the Trans-Siberian Railway and its attractiveness for investors. So far, Russia has invested over $1 billion in modernising and developing this system. I won’t repeat myself today, I only want to point out that even Spain, at the very west of the European continent, already actively uses this route to deliver cargo to countries in Asia. We expect that our partners in other countries will actively use these possibilities.

Russia is also prepared to make its contribution to creating a new energy configuration in the Asia-Pacific region. This will allow consumers of energy resources, which are widely represented in APEC, also bearing in mind the prospects of economic growth of these countries, to diverse deliveries of energy resources, and, which is especially important, to ensure their safety. For example, there are plans to build a factory for liquefying natural gas on Sakhalin in 2007 – one of the largest factories in the world. Work is also planned for the long-term to explore and develop oil and gas fields in Eastern Siberia.

I believe that it is worth making a note of this information when forming investment portfolios.

Recently, several measures conducted by APEC took place on our territory, including in the east. This year we came up with the initiative of starting APEC dialogue on creating favourable conditions for the non-ferrous metals market. Recently, the first international test seminar on this issue was held in Bratsk. And as we understand, the idea of putting this mechanism into action has been met with approval.

I would also like to state our readiness to work in the spirit of another of the so-called prior initiatives. This involves gradual progress towards implementing proposals in the updated Kyoto convention on simplifying and harmonising customs procedures.

This convention is undoubtedly designed to play an important role in increasing the volume of world trade. This is our assessment, and it is also conditional on the passing of the new Russian Federation Customs Code.

In conclusion, I would like once again to stress: we aspire to build our economic policies in the Asia and Pacific region primarily through APEC. We will continue to pay attention to cooperation within the framework of this organisation. This path opens up new opportunities for us, excellent opportunities, including for the development of the regions of Siberia and the Far East of the Russian Federation.

In our view, the field for joint work for entrepreneurs in Russia and our partners within the framework of APEC is virtually limitless. And of course, I cordially invite you all to work with us, including on a multi-lateral basis.

Thank you for your attention.

* * *

Question: Mr President, you just recently attended a session of the Organisation of the Islamic Conference at which the Malaysian Prime Minister made statements that were considered anti-Semitic. What are your thoughts on this?

Vladimir Putin: Russia attended the OIC summit as a guest. We think it would only be right for the Russian Federation, where 25 million Muslims live, to strengthen its ties with the Muslim world and with authoritative Muslim organisations, of which the Organisation of the Islamic Conference is definitely one.

Russia is a country of many religions and ethnicities, and we have developed traditions of cooperation between our different faiths and peoples. I can say with full assurance that over thousands of years, Russia has been a unique example of how different religions, peoples and cultures can co-exist. In this sense, we want people of all ethnicities to be able to feel accepted and at ease, in every corner of the planet. This is our basic position.

Question: What are your views on Russian-Chinese relations?

Vladimir Putin: The People’s Republic of China is a great country and our great neighbour. We share a border stretching for thousands of kilometres, and centuries of history. Today China is one of our largest trade and economic partners. I’m afraid I might get some of the details not quite right, but last year the trade turnover between Russia and China came to around $12 billion. This year we are probably looking at a figure of $14 billion. That is not a bad result at all for us as things stand today. I would point out that our trade turnover with the United States comes to somewhere around $10 billion. So the prospects are obviously good. We can complement each other from an economic point of view, in areas such as technology, energy and transport, and this is what we are doing. We have an agreement with China on friendship and strategic cooperation. This is a long-term agreement and we greatly value these relations and fundamental agreements that we have, and we will make every effort to fulfil our commitments.

Question: You have said that you want to double the GDP in 10 years. Which sectors of the economy and which regions do you expect to show particular growth?

Vladimir Putin: We have set ourselves this goal and I very much want us to attain it. What’s more, I have no doubt that this is entirely within our power given that many countries have achieved results just as good or even better over an even shorter period. I don’t see why Russia should not be able to do the same. We have everything we need to achieve this goal. We now have a situation of political and economic stability in the country. We have highly qualified specialists, well-developed science and education, material and natural resources. Essentially, what we need to do is make effective use of what God has given us and properly organise our political and economic life.

We don’t need a revolution, we just need to organise our work properly. The tools and mechanisms needed to do this are well known throughout the world. We need to create conditions for attracting capital, using information and attracting highly qualified specialists, both our own and from abroad. I think that if we are able to do all this we will reach our objective.

As for regions, we will base ourselves above all on what makes economic sense. But there are, of course, certain regions in the country that are of strategic importance for us, and the state will have to focus particular attention on these regions. One of these regions is the Far East.

Question: Mr President, would you say that from Russia’s point of view, the situation on the Korean Peninsula is stable?

Vladimir Putin: I don’t think I would be very original if I said that the overwhelming majority of countries, or better yet, all countries, have an interest in ensuring that the weapons of mass destruction non-proliferation regime is not violated. We strongly oppose any steps that would lead to a violation of this regime. We are in favour of a nuclear-free Korean Peninsula and will do all we can to keep the Korean Peninsula nuclear-free for as long as possible.

But at the same time, it is my firm conviction that we can regulate this situation only if we take into consideration the interests of all sides involved, including the security interests of the Democratic People’s Republic of Korea.

We will make every effort to convince our partners, including our partners in the Group of Six, to be careful in their actions and not jeopardise the negotiation process that has begun, but rather, strengthen it. I think that if we let these principles guide us, we will be able to achieve positive results.

Question: As you know, the United States has withdrawn from the Kyoto Protocol, and the world’s only hope now is that Russia will ratify it. Can we expect this to happen?

Vladimir Putin: The United States has withdrawn from the Kyoto Protocol but we have not, and that is already not a bad result.

We understand that environmental protection and climate change are among the fundamental issues of today and the future. And of course we will work responsibly with our partners throughout the world to resolve these complex tasks and problems.

But the commitments we take on must be fair in the legal sense. There is a whole list of countries that have ratified the Kyoto Protocol but have not introduced restrictions on their own atmospheric emissions. These are countries with powerful economies and a high level of emissions.

We hope that this negotiation process will not end in Russia being turned into a milch cow that can be used to solve the world’s problems. We do want to solve these problems, but we want a fair approach. Of course, it won’t be easy to convince the State Duma deputies to ratify this agreement. I say this outright because many think that the Kyoto Protocol will impose certain restrictions on economic growth and the country’s development. But I emphasise that we do want to move in this direction and will do so.

Question: There is a certain instability in the world today as a result of military and economic imbalances. As a country that works with many other countries, what does Russia think should be done to restore balance to a world dominated by the United States?

Vladimir Putin: We need to strengthen the basic principles of international law.

I agree with you that the situation has become worrying and unpredictable following the collapse of the bipolar world. You have raised a very complicated and very important problem in the modern world. We all now face the challenge of building a new global security framework. Today we see that old alliances and commitments are breaking apart, and this is because they were put together within a different system of coordinates.

I can tell you about the so-called Eastern Bloc from the inside. We lived in a situation of strict discipline within the bloc, because the view was that a step to the left or a step to the right was an attempt to pull free, and to jump in place was a form of provocation that brought a tough response from partners in the bloc. It was essentially the same in the Western Bloc, despite the nicer packaging and more civilised phraseology. Today there is no Eastern Bloc. The threat that perhaps came from the Soviet Union is gone because the Soviet Union itself is gone. Now there is only one bloc remaining with its internal machinery still in place, and I can say this in all responsibility because I see it almost from the inside. This internal machinery, it still runs according to the old rules, but of course, it no longer works.

I won’t start giving examples from recent history or from today, because you are aware of them yourselves. I am not happy about this situation, and like you, I am more concerned than anything. The world has become less predictable, and it depends a lot now on how we go about building the future international security system.

We firmly believe that the world will be stable only if it is a multi-polar world. A multi-polar world is one that takes into consideration the interests of all countries, peoples and groups of states. We do not see rivalry or hostility as being part of a multi-polar world. To us, a multi-polar world means something else. It must be based on the cultural, ethnic and religious multi-polarity that in reality already exists in the world. We think that if we take into account this situation that already exists in the world, then we will be able to create a system of checks and balances and achieve a balanced world. I think that some of the outlines of this world are already emerging. If all of the international community takes this approach, then we will achieve positive results. But without doubt the main condition for this common work is that we strengthen the principles of international law and its main institution – the United Nations.

Question: We have seen serious progress in the oil and gas sector in Russia. I’m referring to the creation of joint ventures between Russian and foreign companies, which could have a big impact on energy supplies, especially gas supplies to Asia. Could you comment on this?

Vladimir Putin: I already spoke in my address about our plans to build a liquefied gas plant on Sakhalin. These kinds of projects cost a lot of money; they are expensive undertakings. But since the shareholders have decided to go ahead with this project, it means they calculated the market and think that demand is very high. I must say that it is not just Asia that is showing a lot of interest in our energy potential. Many of our other partners, including the United States, are also showing interest. Preliminary calculations show that liquefied gas supplies to the United States would be an absolutely profitable and very promising business. It is not by chance that I mentioned our plans to focus more on exploring deposits in Eastern Siberia, and I think it would be right for corporations to show more interest in this. For our part, I can promise you that you will immediately find partners with whom you can enter a dialogue on this subject. We have an interest in developing these regions of Russia. We hope that investment in this sector will bring in its wake the development of infrastructure, transport, communications and construction. That is what we are seeing now on Sakhalin, and we will do what we can to encourage it. Of course these are promising areas of activity.

We will work towards diversifying the Russian economy. We are going to focus more on the modern sectors of the economy, the new economy based on information technology. But we will also continue to do everything within our power to make effective use of our natural advantages, one of which is without doubt the large energy resources that Russia possesses.