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Vladimir Putin: It gives me great pleasure to welcome the participants in today’s meeting. I believe that the ideas of the federal chancellor, Mr Gerhard Schroeder, to gather German and Russian businessmen are exclusively productive. Those people whose business is developing owing to our countries’ economic partnership. The strengthening of bilateral ties, the creation of favourable conditions for business is the traditional core of all our meetings with the federal chancellor.

The economic dialogue between Russia and Germany is evidently becoming more substantial. In the first quarter of 2004, reciprocal trade increased by 14% in comparison with the same period last year. Germany leads the world in foreign investment in Russia. At present, they account for almost a fifth of all foreign financial investments in the Russian economy.

Moreover, we have solved a number of chronic problems through joint efforts. I mean, above all, the payment of the former Soviet Union’s debts in transfer roubles and the write-off of the debt to the Hermes group. However, even these results cannot, of course, satisfy us. Russia accounts for less than one per cent of Germany’s direct overseas investment. Germany itself is only in fourth place in terms of the direct foreign investment made by Russia’s partners. Obviously, the way to strengthening business ties is through bringing our national economic systems closer together and an ability to compensate each other’s risks.

I would like to point out that the next round of inter-state consultations will be held in Hamburg at the start of September, but tomorrow members of a bilateral group will begin work on drawing up the economic agenda of these consultations in Hamburg. Therefore, our meeting today is even more topical. Its results will become a real contribution to preparations for the September summit.

Moreover, there are plans to organise two major business forums on high technologies and energy.

My respected colleagues, pragmatic and, in the good sense, careful people have gathered here today. So, the macroeconomic situation in Russia today will serve as the most convincing investment signal for such an audience. Therefore, according to preliminary estimates, Russia’s GDP growth rates were 7.3% in the first five months of 2004. The volume of industrial production rose by 7% and investment in main capital increased by 12.4%. This economic activity has been accompanied by an expansion of the internal market, as well as an increase in real household incomes – I would like to stress real incomes – of 9.9%. The tax burden on Russian enterprises and in the economy in general is being eased. The procedure for presenting taxation accounts and calculating tax payments has been simplified.

We attach fundamental significance to a policy of rejecting individual tax breaks and privileges. The course to remove administrative barriers in the economy remains unchanged. Russian enterprises’ internal corporative regulations are becoming more transparent for foreign investors. Russian firms are adopting international accounting standards. I should point out that this has not been done in every European country. All this creates favourable conditions for work on the Russian market, and many foreign businessmen are already making active use of these new opportunities.

I would like to point out, my respected colleagues, that we are intending to continue this policy in the economy next year. And next year we have serious steps to ease the tax burden on the Russian economy. I would like to stress: there are more than twice the number foreign businessmen investing in Russia today than there were two years ago, for example, Moreover, the most conservative of them, insurance companies and private pension funds, it would seem, are coming to the Russian market more frequently.

Germany companies should progress on the market just as positively, because Russia and Germany are old and trusted partners. Our common assets include many large-scale projects implemented by such famous corporations as Wintershall, Ruhrgas, Metro, Knauf, Hochland, Alfred Reiger, DaimlerChrysler and others. These are all real examples of how gains can be made from the natural mutually supplementary nature of our markets.

Major transport and infrastructure projects, as well as the energy sphere, are highly promising. Our old partners Ruhrgas and Wintershall are planning to increase their activity in this sphere. We believe that the joint statement we adopted today on expanding bilateral business ties in the energy sphere will provide this co-operation with an important impulse. I would like to draw your attention, my respected colleagues, to the fact that this is far more than just a political statement. For Russian and German partners, this could mean a new quality in their co-operation.

The strategic dimension of partnership is increasing production co-operation in the high technology and science-intensive sectors. Above all, this means co-operation in aviation and space, machine building for the energy sector, shipbuilding and optical electronics. Tesat-Spacecom is a good example of a company here, as it recently signed an agreement to take part in setting up a joint enterprise to design and produce modern hi-tech space equipment. Russia has a considerable scientific basis and serious technological achievements. And we can and must use these Russian competitive advantages when jointly entering third countries.

In conclusion, I would like to stress once more that the potential of Russo-German economic co-operation is very great. We need to make decisive steps towards one another to receive tangible benefits from the global integration of the Russian and German economies. I hope that out meeting today will help solve precisely this objective.

Thank you.