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President Vladimir Putin: Good afternoon, ladies and gentlemen. Allow us to briefly inform you on our work today. First of all, I would like to thank once again the President of Armenia and his colleagues for accepting our invitation and coming to Russia. We had a very good opportunity today to go over together all the main areas of our cooperation. We focused our discussion above all on our work together in the economic sphere. You might have noted, as I mentioned at the beginning of our meeting today, that there are some points of concern here, namely a small drop in trade turnover. But we count on this situation coming right again very soon, as this decrease in trade was due to the halt in work at one enterprise while it underwent reconstruction.

I spoke today with the Russian participants in this process. The total amount of investment – approximately $36 million – will be invested over a period of 12–14 months. The problem here, I was told, is not financial, but is about the technical decisions that were to have been made. These decisions have now been made and work has been going on for four months now and will be completed according to schedule.

We also discussed our military cooperation within the framework of the Collective Security Treaty Organisation (CSTO). I would like to inform you today that we have drafted a decision, to be discussed in the Duma, that will de facto put military-technical cooperation with the CSTO member countries on the same footing as military-technical deals within the Russian Federation. This means that all supplies will be made according to Russian standards and Russian prices.

We discussed developing the transport infrastructure and looked at cooperation in this vital area. There are certain problems in this area, as you know, given Armenia’s geopolitical situation. But there are good prospects ahead and we hope they will be developed.

Of course, a separate issue that is of immense importance for both countries is cooperation in the energy sector. This cooperation is developing well and we have every reason to hope that it will continue at this pace.

I would like to express my satisfaction with the talks that have just taken place and with the atmosphere that is very much a part of our meetings with the Armenian leadership, an atmosphere of openness and partnership in the broadest and most direct sense of the terms. Once again, I would like to thank my colleague, Robert Sedrakovich [Kocharian]. The President has invited me to visit Armenia at the beginning of next year. It will be my pleasure to make this visit. We will coordinate with the Foreign Ministry to agree on an exact date.

Thank you very much for your attention.

Question: My question is for both presidents. How do you see the situation in the South Caucasus overall?

Vladimir Putin: The situation is complicated. There is a heavy legacy of conflict situations in the South Caucasus. We know that in some places these conflicts are smouldering away, and in others, unfortunately, they are flaring up again with renewed strength. This is, of course, very worrying. But overall, it is my hope that common sense and the realisation of the need to establish better relations among all the peoples living in these most abundant lands will prevail over various ambitions, and that we will make a common effort to settle these problems through negotiations and through looking for compromise solutions.

We did discuss the Nagorny-Karabakh problem and we looked, of course, at additional possibilities for supporting dialogue and the search for a solution to this problem. No breakthroughs were made today, but I do think it is important to hear clearly that both sides want to find a solution to this problem. I think that this is the desire today of both presidents, the President of Armenia and the President of Azerbaijan. It is a very complex issue and here, as with any other question, there is probably a need to look for a compromise solution. But I want to repeat that in this case, as in other cases, Russia can play only one part, that of intermediary and guarantor, if our services are required, of course, and if this is what the negotiating parties want.

Question: Mr President, you said that the problem with our trade and economic relations is a lack of diversification. Could you both please say what goods and products could be used to broaden these ties and, if possible, explain specifically how the increasing recent instability in the region overall is affecting the economy?

Vladimir Putin: The link is very simple. I will begin, if you will allow, with the last part of the question. The situation in the Caucasus is worsening. This immediately leads to problems with the movement of goods and people. I mentioned before an enterprise that produces aluminium and said that I spoke today with the Russian participants in this project. So what is the problem here about? It is about the fact that there is no normal transport route between Armenia and the Russian Federation. They end up having to transport their goods across the Black Sea through the port of Poti, then go to Ukraine, from Ukraine bring the goods into Russia, then take the same route to take the semi-finished products back to Armenia and have them finished there, then bring the finished products back into Russia. This all adds to costs and makes this business not viable and not profitable. This is why the partners involved have decided to invest extra money into the plant to reconstruct it. Ultimately, Armenia will benefit from this and so will the plant, but overall, it is an illustration of how the unresolved conflicts in the South Caucasus are complicating economic cooperation throughout the region.

As for the second part of the question, what goods can be used to broaden economic ties, there are many possibilities. The Armenian President already mentioned agriculture, the processing industry and high-technology. As you know, we settled the complex problem of Armenia’s debts to Russia through having Russian participants buying controlling stakes in a number of Armenian companies. This road will also help us find the way to diversify our relations. But in this respect the decisions are up to the business community that has become involved in these companies, and also up to the state in part, in cases involving companies producing dual-purpose goods. The fact is that we have plans to work more actively, invest in and develop these production sectors. I also think that when the intergovernmental commission steps up its work this will give a boost to the prospects we have.

Vladimir Putin: You might know that Russia’s Vneshtorgbank acquired the Armenian Savings Bank. A Russian insurance company acquired the leading Armenian insurance company, and there are more such deals. In other words, the business infrastructure is developing well and this bodes well for business development in general.

Question: It has now been several years since four Armenian enterprises were transferred to Russian ownership. How do you assess the results of this deal? This is a question for both presidents.

Vladimir Putin: I already said that I see our cooperation in this area expanding and becoming more diverse. I also think that we could be more active in this work. But on the whole I am satisfied.

Question: Mr President, you discussed the conflict in Georgia the day before yesterday and mentioned the decisions that Georgia made in the beginning of the 1990s regarding autonomy. You called these decisions “foolish”. This caused a hysterical reaction in certain places. It was alleged that this was not true. We then specially looked into the question…

Vladimir Putin: Not true that the decisions were foolish or not true that they were taken?

Question: We looked into the issue and can confirm that they were indeed taken. Everything there is changing with every passing day. Could you comment on this situation, on the state of affairs now. Robert Sedrakovich, you have already commented on the situation. Do you have anything to add?

Vladimir Putin: The situation in South Ossetia is tense and is a cause of concern for us. I think it makes no sense to dispute the decisions that were taken with regard to South Ossetia because the documents exist and we have copies of the documents that abolish South Ossetia’s autonomous status. They were signed by [Zviad] Gamsakhurdia. We can make them available to the press. As for Abkhazia, the decisions were taken de facto, without any legal confirmation. But the latest statements by the leaders of Abkhazia will, I think, confirm what happened in reality. And do we even need statements? Life itself provides the confirmation. The fact that a war took place and caused numerous victims points to mistakes having been made. This also applies to Russia. There have been a number of conflicts within Russia itself, and this is also the result of our mistakes. As for the harsh way in which I characterised these decisions, I can tell you that my talks with Mikhail Saakashvili revealed that he also considers these decisions, taken at the beginning of the 1990s, to have been mistaken, at least with regard to South Ossetia, and so I did not say anything unexpected.

Now the question is how to get out of this situation. There can only be one way out and that is to sit down at the negotiating table. That’s the first thing to do. The second thing is to be able to come to an agreement and the third thing is to have the political will to implement the agreements reached. If things are going to continue as they have been of late with a commission including government officials reaching an agreement in the morning only to be then disavowed by other government officials come evening, it will be impossible to get any work done and there will be no results at all. We very much hope that all the participants in this process will show political maturity and responsibility, above all in the interests of their own peoples.