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President Vladimir Putin:

Good day, ladies and gentlemen,

Today is the second day of talks with Italian Prime Minister Silvio Berlusconi. First of all, I would like to thank him for accepting our invitation to come to Russia and for his constructive approach in discussing all the different matters we have raised during this visit.

Bilateral cooperation has been at the centre of our attention. We have made considerable progress in the economic sphere. Our annual trade turnover has reached a figure of almost $11 billion and Italy is now solidly in second place among our Western partners.

Industrial cooperation marks a new stage in our work together. A good example is what is happening here in Lipetsk at the Merloni plants. This is the best illustration of how the agreements Mr Prime Minister and I reached two years ago are being implemented. The fact that a new enterprise with good production capacity has been built in 11 months is pleasing news and a sign that we are heading in the right direction.

Cultural ties have always played a traditionally important part in relations between Russia and Italy. In this area, as in the economic sphere, we must remove the administrative barriers in our way. We are grateful in this respect to the Italian leadership and to the Italian Prime Minister for their position on simplifying the visa regime between Russia and Italy.

I would also like to point out that our countries held respectively a Russian language week and an Italian language week from March 15–21, and these events were very successful. The governor has just informed me that two or three schools teaching Italian have opened here recently. A new exhibition, “Russia and Italy through the centuries” is ready and will open in Moscow in October and then will open in Rome in February 2005.

We discussed in detail relations between Russia and the European Union and relations between Russia and NATO. Of course, we also discussed complex international problems such as terrorist attacks.

In conclusion, I would like to once more thank the Prime Minister for his constructive work with us and to say that meetings like this one today, with the sound of industry at work in the background, are especially pleasing because they signal development and solutions to economic and social problems both in Russia and in Italy.

Thank you.

Question: Does Russia still need foreign investment today?

Vladimir Putin: This is a difficult question you have raised and economics specialists themselves give various answers. Our aim is not simply to attract investment but to create a modern, competitive and effective economy.

What we are seeing today is a situation where the Russian economy is under a certain pressure from petrodollars and a flow of credit resources linked to the Russian economy’s increased credit rating and also increased investment. In essence, the second and third points are almost one and the same thing.

In this situation, the government and the Central Bank face the task of maintaining Russia’s macroeconomic indicators in order to ensure that the country remains attractive to investors. We need not just money, however, but also new technology, new ideas and highly qualified production specialists.

As for overall results, what I can say is that Russia received $29.7 billion in foreign investment last year. Investment has been rising by an average 1.5 times (last year it rose 1.5-fold, and it rose 1.4-fold in 2002). Direct investment came to $6.8 billion. But we will continue to create the economic and cultural conditions for investors to feel at home here.

The Prime Minister spoke about the good environment that has been created at this enterprise, but I must say that the main specialist on creating a favourable environment for Russian-Italian ties is he himself. We know his views on Russia and we know the criticism he has received for these views in the European Union. But I can say that he has neither more nor fewer political opponents in Europe as a result, but, judging by what we see here today, he has won himself a great many new friends in Russia.

Question: You are both in such sporting form and you like the team spirit in general. Following on in this spirit, did you talk about the people who would like to finance sports teams in Italy?

Vladimir Putin: No, we did not discuss this. In any case, this is not my area. But we know that the Prime Minister has an interest in sports and actively supports sports in Italy. When I was his guest in Sardinia, I had a chance to see for myself how he supports his team, Milan. He is a real Italian “tiffosi”.

Question: You mentioned NATO and European Union enlargement. How would you characterise EU enlargement and the integration processes underway there? To what extent does this process affect Russia’s participation in the fight against terrorism in Europe, and what do you fear most of all in connection with EU enlargement and the fact that Russia is not a part of this process?

Vladimir Putin: Concerning the European Union’s enlargement, we have always viewed this process in a positive light. Questions that fall within the European Union’s internal competence are, of course, not our affair. We are concentrating on how to develop and build our relations with the European Union as it expands. We are engaged in talks on these matters, we do have our concerns but we are discussing them through dialogue and overall, this dialogue has been progressing quite well, especially of late.

We intend to build our relations and develop our contacts in four main areas: in the economy, social, educational and cultural ties, law enforcement, and the fight against terrorism.

Regarding the fight against terrorism, this is a particular question and you are right. There was a point a little while back when we received a lot of criticism over the situation in Chechnya. We listen to such criticism attentively, analyse it and react in a constructive fashion. But we do not consider all the criticism levelled at us constructive. For example, we are always being urged to enter into dialogue with the people who we consider terrorists, and not only we, but also our partners in other countries, even in Muslim countries. The “number one terrorist” recently appealed to Europe with an offer of talks, but we know that this offer was rejected.

Overall, though, our dialogue is developing constructively and a representative delegation from the European Union, headed by the chairman of the European Commission, is expected in Moscow soon. This will give us the opportunity to discuss all the matters I have mentioned with our European colleagues.