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President Vladimir Putin:

Good afternoon, colleagues, gentlemen,

I am very glad to welcome you to the Kremlin, to Moscow, the capital of Russia – delegations of two influential and representative associations of European business circles. I would also like to thank the heads of the Russian Chamber of Trade and Industry, and the co-chairmen of the Round Table of Industrialists of Russia and the EU for their contribution to organizing our dialogue. With one of them, Mr. Primakov, I had a meeting immediately after our talk.

This direct contact is another sign of the high quality of relations between the EU and Russia. Relations which are no longer limited by the level of bureaucratic structures and which are increasingly developing thanks to the initiatives of businessmen themselves. Initiatives at the basis of which lie business interest and understanding of the benefits of economic interaction between the EU and the Russian Federation.

I know that the heads of major European companies are actively working towards these goals – with both their own governments, and with European structures. They work based on the clear understanding that bureaucratic barriers to integration restrict their own abilities in developing business. Currently, bureaucratic obstacles even call into question the successful realization of business projects that have already been started.

In their turn, Russian business circles directly discuss key issues of continental integration. They present us with specific questions and make serious proposals on developing cooperation, including harmonizing legislation, simplifying administrative procedures, and improving existing international and legal regimes.

And this aggressive, constructive lobbying of joint projects can only be welcomed and given support, along with the increasingly active dialogue of our business unions and associations.

For us, it is clear that the interested participation of entrepreneurs is a determining factor in deciding many strategic tasks. Above all, such tasks as the mutual opening of markets, support of investment, and the creation of joint corporative structures. That is, on all the positions which in fact make up our common sphere of cooperation in Greater Europe.

The first thing that I consider it important to discuss is developing a new model of economic relations between Russia and the European Union. In essence, a model of a common European space with the participation of Russia. As you know, this is a topic of constant discussion recently with our colleagues from the Commission of European structures, and with the leaders of European nations. And it is indeed very pleasant for me to meet you here, to discuss this issue with you.

Here, we consider the main guideline is to create a zone of free trade with increased cooperation in individual priority sectors. This primarily concerns energy and transport, science and education, ecology and telecommunications.

I do not doubt that success in these areas is capable of seriously strengthening international competitiveness in Russia and the European Union. At the same time, in our opinion, the formation of a common economic space in Europe should not restrict the abilities of parties to take part in different regional integration processes. Furthermore, European business may receive new significant advantages if Russia’s capabilities are used as an integration bridge in both Central Asia and the Asian Pacific region. And Russia, as you know, has these geopolitical abilities.

I want to make separate mention of the discussion that we are having with our European partners on the issue of Russia joining the World Trade Organisation. We constantly hear the assurances of the European Union about support of this process. But in practice, I must note with regret, time and again we encounter what we consider to be completely unjustifiably tough demands which virtually block Russia’s entry into the World Trade Organisation.

I think that the Commission of European Communities takes the position that it protects, above all, the interests of European business. I would very much like to hear our opinions on this issue today.

We do not have fundamental disagreements with the EU – and I would like to make this particularly clear – on the issue of introducing market principles to the Russian fuel and energy complex. As for the interests of power-consuming industries in EU countries, we firmly believe that protecting them does not require such radical measures as a sudden increase in internal Russian prices on energy resources. Especially as the European Union already has standard and effectively-operating mechanisms for this protection, if it is required. I mean, for example, the EU regulations on dumping and subsidised import.

Furthermore, the lower prices on energy resources in Russia objectively reflect our natural competitive advantages, just like the good weather in EU countries where agriculture is developed. And we do not consider it necessary to give up these natural advantages. So instead of dead-end trade disputes, we propose to look for pragmatic, mutually profitable models, which expand the field for joint use of our economic advantages. For example, the development of power-consuming industries in the EU can quite possibly be strengthened with long-term strategic agreements, alliances and Russian energy exporters. And in the long-term, we need to move towards a mutual integration of our energy markets.

We are ready for this. And we are ready to discuss all these topics. It is clear that issues of deepening development of cooperation between Russia and the EU are directly linked with the expansion of the European Union. And this is another topic which I would like to discuss today. According to our assessments, this process will have varied results for traditional trade and economic interests of Russia in Central and Eastern Europe.

As you know, at the last Russia-EU summit in Rome, we also raised this problem, and our colleagues from the Commission of European Communities said that according to their assessments, there would not be negative consequences. We agreed to sit down, and with pencil in hand to calculate all the real consequences of this expansion. I mean – and you will probably understand me – the existing restrictions that exist in EU countries, which at the moment do not apply to countries of Eastern and Central Europe. As soon as they become full members of the EU, these restrictions are automatically applied to them.

Several Central European and Eastern European countries have already sent information on the necessity of annulling a series of preliminary agreements. This concerns dozens of such documents with all countries of Central and Eastern Europe.

Finally, with the expansion of the EU, visa problems also become very urgent. Unfortunately, our attempts to solve these problems and develop mutually acceptable rules of a transit period through a joint consultative mechanism have so far been unsuccessful. Here, we would like to count on a pragmatic approach from European business, on its business interest in creating normal work conditions in all areas of European integration.

I am absolutely convinced that this is both in our and your interests.

Thank you for your attention.