Official website of the President of Russia

Transcripts   /

President Vladimir Putin: Good afternoon, ladies and gentlemen,

Thank you for such a warm welcome. I am very glad to meet representatives of Russian and Turkish business.

During my meetings with my Turkish colleagues and friends, we repeatedly discussed this, and did so even in the car on the way here. That we are having a top-level meeting today, something that has not happened for decades, is not my and my colleagues’ achievement. It is, above all, your achievement. It is an achievement of business people. It is an achievement of citizens of this country who, driven by the facts of life, raised our coordinated efforts to a high level. They also pushed the political leaderships of our countries to forget past stereotypes, and everything that stood in the way of our relations and move forward to the development of interstate relations at the highest level.

By showing initiative, activity and talent you are enriching the scope of Russian-Turkish relations. And you know well that there are both extensive opportunities and serious prospects, and problems in our countries’ economic ties. Today, there is obviously a great common aspiration to make bilateral interaction both long-term and more substantial. I consider this meeting to be a certain watershed along this road. It was the rapid development of trade that laid the groundwork for diplomatic contacts between Russia and Turkey, which date back to the 15th century.

I think you know that in the past our country rendered Turkey extensive technical and economic assistance. Through joint efforts, major projects for Turkish industry were built – textile factories and iron and steel mills, an oil refinery and much more.

At present, the Russian and Turkish economies are developing dynamically. Their attraction for investors and domestic markets are growing. And this circumstance, multiplied by the long history of our joint efforts, is a good basis for promising and productive co-operation. As far as we know, our Turkish partners, who always react promptly and effectively to economic conditions, understand and sense this well.

I consider it important to describe to you today the state of the Russian economy. I am sure you are, of course, familiar with its general outlines. Even so, I cannot help repeating that sustained growth of gross domestic product over the last four and a half years has been our paramount achievement. In the first ten months of this year, industrial production went up by 6.2 per cent. I think we will reach the level of 6.7–6.8 per cent by the end of the year.

You know that over the past four years growth has been hovering around this mark – 7 per cent or so. Investments in fixed assets amounted to 11 per cent. The Central Bank's gold and hard currency reserves are also growing. In the first four months, they climbed ten-fold. They were valued at $12 billion in 1999, but by the end of the year I think we will approach something like $120 billion.

You know that we are maintaining other macroeconomic indicators as well. Inflation is still high, but I think a downward trend is discernible, which is a positive thing. Despite the pressure from petrodollars, the Central Bank and the Russian government are managing to keep within established parameters. At any rate, the trend is developing in the right direction.

These economic development indicators enable us to address and attain major national goals. Goals that are also actively pursued by Russian business.

Today, Russian businessmen have the necessary conditions both for their own growth and for confident planning of their work. The state’s measures to alleviate the tax burden and eliminate administrative barriers all contribute to this. Legislation is becoming precise and predictable. All this taken together creates favourable conditions for operating on the Russian market.

Of course, we also have problems. I may speak boldly and confidently about the stability of legislation and overcoming barriers, but we know that there are still many unsolved problems. Yet, knowing this, we are seeking to improve our work. In particular, the steps we are taking to develop the mortgage system are creating additional opportunities for the construction business, which must no doubt interest Turkish construction companies. And you also know that the work carried out by Turkish building companies on the Russian market is worth as much as $12–14 billion. Incidentally, Russian companies engaged in construction fall short even of a billion.

New possibilities for increased trade between our countries are also being opened up by reforms in the banking and insurance spheres, liberalisation of hard currency legislation, and the adoption of the norms and principles of the World Trade Organisation in our legislation and legal practice.

Today, Russia is Turkey's second biggest foreign trade partner. This is a fairly good indicator. And the volume of our bilateral trade is constantly growing. Since the early 1990s, when this volume was just a billion and a half dollars, it has grown to six-seven billion. I think this year we will be able to approach the ten billion mark. We expect this to happen by the end of the year. And this is without the so-called shuttle trade, whose volume is also very considerable.

I would like to particularly emphasise the investment component. Turkish businessmen are rather active on the Russian market. At the same time, far from all of them dare to make direct investments. Their proportion, in my mind, is still low.

Like in all countries, the logic of the Russian market’s development shows that in the longer term, serious investors, rather than those looking for short-term profit will assume the most confident positions. So I would like to praise those Turkish companies that have boldly invested in our market. And I would like to recommend businessmen who are just putting together their business plans to show more commercial daring, foresight, and determination.

I will be frank: we are worried by the existing misbalance in the structure of trade and economic relations, and their inadequate diversification. Raw materials are the lion’s share of Russian exports, whereas consumer goods and services, including tourist services, dominate Turkey’s exports.

We are interested in Russian companies playing a greater role in the construction of Turkish power facilities, transport infrastructure, and the development of its oil and gas sector. And we already have experience of successful joint co-operation in these areas. We are building hydroelectric power plants together, and our plans envisage bidding in tenders to build hydro- and thermal power plants, power transmission lines, and the modernisation of iron and steel works and the aluminium sector.

We are also prepared to invest in construction, including the construction of our gas distribution infrastructure, which is directly linked to the major Blue Stream project.

An example of successful bilateral co-operation could be the acquisition by a Russian and a Turkish company of a major oil refining company, Tupras. We know how the difficulties involved in such matters in Turkey. We do not want to make waves, and we proceed from the assumption that it is an internal matter for Turkey to determine its economic policy. But we expect that the understandings reached and the tenders held will be honoured.

A while ago the prime minister visited Moscow and told us that a Russian company and its Turkish partners had won a tender. He was the first person to inform me about this. I must tell you I knew nothing about it. This shows that things like that are no longer controlled by the state in our country. The company performed well both inside the country and abroad, and the fact that it had entered the Turkish market only pleased me.

And the first person to inform me was the prime minister. But we were very disappointed to learn that the judicial authorities had annulled the tender results. Yet, I repeat, it is not for us to define your economic policy, we only express the hope that this inspire us all, including our Turkish partners, who share our views on economic development and joint economic efforts.

We also hope that the interests of our companies that operate in the military-technical sphere will likewise be taken into consideration, and the companies will be afforded equal conditions with all members of this process on the Turkish market.

We have already discussed these matters. Our products are absolutely competitive both in terms of price and quality. We made such forward steps, I am referring to the well-known tender on helicopter gunships. Just now we discussed with our colleagues in parliament what partners do not normally contract to do – but we agreed to base part of the production set-up on Turkish territory, agreed to what partners do not usually agree to – the re-export of these products. What is more, even before the incumbent prime minister assumed his post, we called these craft Erdogans.

I am convinced that expanding hi-tech co-operation offers considerable benefits to both countries and, as I have said, in the military-technical area, too. There may be increased deliveries to Turkey of machines and equipment, including for power plants and mining. And there are obvious opportunities to eradicate the misbalance in the construction industry.

Over the past 15 years, Turkish companies have concluded contracts in Russia worth $12–13 billion, as I said, whereas Russian companies in Turkey have only signed contracts worth $300 million. Russia is ready to work here, and so bolster our business co-operation.

As regards the regulation of so-called shuttle trade, it is necessary to create conditions for civilised and mutually advantageous business in this sphere. Certainly, we would not like to infringe on the interests of those doing this business, but it must be ”civilised“.

Ladies and gentlemen, it is obvious that Russia and Turkey are interested in the broadest possible dialogue. And our business communities must play a positive and unifying role here. As I said at the beginning, they are already doing that. I think inter-regional ties, particularly through the Russian-Turkish Business Council, should play a more proactive and bold role in supporting bilateral relations.

The Council already includes companies from 36 of Russia's regions and more than 150 Turkish companies. It is my firm belief that many joint undertakings and projects lie ahead. I would like to express my sincere gratitude for such an unusually warm welcome and wish you all the best.

Thank you very much for your attention.