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President Vladimir Putin: Good afternoon, ladies and gentlemen.

Allow me first of all to thank the Prime Minister once more for accepting our invitation to come to Moscow. We had a very interesting and thorough talk on the entire range of issues of cooperation between Spain and the Russian Federation.

We spoke in detail about the prospects for development of economic ties. Here we see serious opportunities. We have certain hopes that the intergovernmental commission will work more actively. In the practical aspect, we think that there are excellent possibilities in a whole range of sectors: in construction, in infrastructure and in energy.

We would very much like for specialists to complete work soon on the revised agreement on protecting capital investments. The Russian side expects that after talks are completed and the memorandum on the Russian Federation joining the World Trade Organisation is signed, there will be no obstacles for bilateral agreements on protecting investment and capital investments.

We talked in considerable detail about cooperation between Russia and the European Union in general. We covered almost the entire international agenda.

I am happy to note that on one key issue of today’s agenda, the joint war on terrorism, my Spanish colleague and I have absolutely the same opinion.

Of course, we also discussed the possibility of uniting our efforts to regulate complex situations in other regions of the world.

I would like to thank the Prime Minister for an interesting and open talk.

Thank you.

Jose Zapatero: First of all, I would like to stress the importance and interest of today’s meeting with President Putin. It really was a detailed meeting. And because of this there was a delay in our meeting with you (journalists).

This is our first meeting since I was elected Prime Minister and President of Government of Spain. And I once again confirmed to President Putin that the Spanish Government intends to have very intensive and profound relations with Russia. As President Putin just said, the discussion of bilateral relations took up a very large part of today’s meeting, especially in the economic dimension of our bilateral relations. There is a mutual and growing interest in the development of trade and economic relations between our countries in such areas as energy, construction, the development of infrastructure and tourism. And soon we will make appropriate steps and measures to ensuring that our joint mixed commission on cooperation in the economy and industry will carry out work to make a new agreement on mutual protection of capital investments, in order to deepen our economic relations.

We will hope that this process that gives a new stimulus to our trade and economic ties will result in concrete documents during President Putin’s visit to Spain next year.

One of the most important issues that we also discussed during our meeting today was mutual relations between Russia and the European Union.

I told President Putin our position on mutual relations between Russia and the European Union, which is that our Government looks favourable at a more active development in relations between Russia and the European Union in future, in the economy and politics, and in other areas. Relations between Russia and the European Union must be open.

These relations between Russia and Spain are an added factor of stability in international life.

Naturally, one of the main questions we discussed today during our meeting was cooperation in the struggle against terrorism. I once again expressed my feeling of most sincere solidarity with President Putin over the tragic events in Beslan. The Spanish people felt great sympathy with Russia as we followed these events and we feel solidarity with those who have suffered so much because of the terrorism. We are also grateful for the solidarity shown by President Putin and the Russian people when we were the victims of terrorism.

The only way to vanquish terrorism is through the united and coordinated efforts of the entire international community. The special services and law enforcement agencies of different countries must work together and all this should happen under the aegis of the United Nations. We also need to take political action to defeat terrorism, action that includes preventing the further spread of violence, fanaticism and terrorism, and we need to combat poverty in the world’s poorest countries.

I would like to express my gratitude to President Putin for this meeting today. I think that this, our first meeting, has been very positive, substantial and very useful for further developing relations between Russia and Spain.

Question: My question is for the Russian President and the Spanish Prime Minister. How do you evaluate the situation in Iraq today?

Jose Zapatero: I believe that Iraq needs to have its full sovereignty restored in order to be able to pursue democratic processes, and, of course, it also needs full support for its political and economic rebuilding. The world needs a stable Iraq and the world needs a democratically elected government in Iraq. Iraq also needs to be able to ensure the safety of its citizens. Ultimately, at least a little hope must emerge in Iraq for a better life for all the Iraqi people.

Vladimir Putin: Russia is doing everything it can to help rebuild Iraq. You know that Russian companies were working in Iraq right until the moment when the lives of their employees were put in danger. Our companies are ready to return to Iraq as soon as the necessary security conditions are in place. Judging by the current situation, these conditions are still not yet in place. Along with the other members of the Paris Club we decided to write off a considerable amount of Iraq’s debts to Russia. The decision we have taken means that we are writing off more than 90 percent of Iraq’s debt to Russia, which overall represents more than the amount of debts written off by the other members of the Paris Club. The Iraqi Prime Minister, Iyad Allawi, was here in Moscow recently and we drew up a whole system of measures aimed at developing our cooperation. But I agree with Mr Zapatero in that the main problem is to create the conditions for a rapid transfer of full power to the Iraqi people and authority to control their own country and natural resources.

The main thing, in my view, is to ensure the conditions for the Iraqi people to be able to express their will freely, so that they can use democratic procedures to decide their own country’s future. Today, violence continues on all sides, the number the victims is rising, and this is a cause for concern.

Question: Do you admit the possibility that the European Union could enlarge further and take in Ukraine? Would this be politically expedient and, going on the historic situation, could you clarify whether you have come to an agreement on the struggle against Islamic terrorism at today’s meeting? Did you discuss the question of possible cooperation with regard to Chechnya?

Jose Zapatero: Regarding the first question it is well known that enlargement to take in Ukraine is not currently on the European Union’s agenda. The European Union is currently undergoing a process of consolidation following the latest enlargement and the process of adopting the new constitution is still going on. The European Union has a very clear and precise policy regarding its neighbours both to the east and to the south. Relations with these countries must be built on the basis of good-neighbourliness.

Regarding the second question, cooperation in the fight against terrorism, the fight against terrorism is taking place on different fronts. There is cooperation between the special services and cooperation on exchanging information. We could also pursue cooperation in introducing new legislation within the framework of the international organisations and the United Nations. Of course, there is also a need for political cooperation in the various world forums.

Vladimir Putin: The first question regarding the possibility of Ukraine joining the European Union does not concern us directly, although we do, of course, have our views on this matter. We always took a negative view of NATO expansion because we do not believe that this expansion can help neutralise the modern threats we face. As for enlargement of the EU, we have always seen this as a positive process. Certainly, enlargement gives rise to various issues that have to be resolved, and sometimes they are easy to resolve, sometimes not, but both sides have always shown a desire to find mutually acceptable solutions and we do find them. If Ukraine wants to join the EU and if the EU accepts Ukraine as a member, Russia, I think, would welcome this because we have a special relationship with Ukraine. Our economies are closely linked, including in specific areas of the manufacturing sector where we have a very high level of cooperation, and having this part of indeed our economy become essentially part of the EU would, I hope, have a positive impact on Russia’s economy. Since we were aware of the European Union’s position that Ukraine’s accession would be unlikely any time over the next decade, we began taking steps in two directions, On the one hand, we are creating the Common Economic Space in a large part of the former Soviet Union, including Russia, Ukraine, Belarus and Kazakhstan. On the other hand, we are building a common economic space with the European Union, and we believe this is in the interests of both Russia and the European Union countries and will harmonise our economic ties with Europe. But these projects are not in contradiction with the possibility of any country joining the European Union, including Ukraine. On the contrary, the possibility of new members joining the EU makes our projects only more realistic. But I repeat that other countries’ plans to join the EU are not our direct affair.

Regarding the second question, We spoke a lot about terrorism but we did not discuss this issues specifically in relation to Chechnya. I took the initiative of saying a few words to the Prime Minister regarding some asessments of what is happening in Chechnya and how the situation is developing in the republic. But we did discuss the fight against terrorism in depth. We discussed the principles for organising our work together and how to go about this work at a practical level. Thank you.

Question: You spoke a lot about the economy. Were you able to set the main directions for developing trade and economic ties? My second question is for the Spanish Prime Minister. Your government just took the decision to return to Russia the cross from the main dome of the Cathedral of Saint Sophia in Novgorod. Mr Zapatero, why was this decision taken now, and President Putin, could you comment on this decision?

Vladimir Putin: Regarding the economy, I already said a few words on this subject. Promising areas for developing our cooperation include construction, infrastructure, rail and road transport, energy, both electricity and oil and gas, and, of course, the development of investment cooperation.

Jose Zapatero: Yes, I can confirm that the Spanish government and a number of Spanish companies are interested in increasing their investments in Russia, in the energy and construction sectors, in railroad infrastructure and in tourism. These are all sectors in which Spain has an interest and has investment plans. Russia also has an interest in these plans.

As for your second question on the return of the cross to the Cathedral of Saint Sophia in Novgorod, the Spanish Defence Minister brought this cross with him. We agreed that the cross should be there where it was always located before the events that lead to its being taken out of the country.

Vladimir Putin: If you want my opinion, I would say that this decision really is a sign of the maturity of our bilateral relations and of the general situation in Europe. I am grateful to the Prime Minister for accepting our invitation to come to Russia next May to join in the celebrations of the 60th anniversary of the end of World War II. I think these celebrations could serve as an event that brings us all together by drawing a definitive line between the past and the present, reminding us of the tragic events in the past and uniting us in our desire and aspiration to build our future together. We also intend to invite many of our other partners to come to these celebrations. I have already instructed the Foreign Ministry to work on finding ways of settling all our border issues with the Baltic states. We are ready to welcome the leaders of these countries to Moscow to take part in celebrating the 60th anniversary of the end of World War II and I hope that our specialists will be able to conclude the corresponding agreements. I already informed the Prime Minister of this during our talks today.

Question: Mr Putin, seeing as you are fighting terrorism, I would like to know, after the March 2004 terrorist attacks in Spain, the change of government and the withdrawal of Spanish troops from Iraq, how do you view the Spanish government’s decision to withdraw our country’s troops from Iraq? I also have a question for the Spanish Prime Minister: during the debates going now in the Spanish parliament regarding the work of the commission investigating the March 11 terrorist attacks, the opposition leader said he is prepared to publish a list of members of the Socialist Party of various ranks and office, who participated in the demonstrations against the government that took place immediately following March 11. What do you think of this statement?

Vladimir Putin: The question seems to me a little strange, But thank you anyway for raising it. There is obviously some kind of misunderstanding here. I am happy to have the chance to clarify things if there has been any misunderstanding. We never recommended to anyone, including to the Spanish government, to send troops to Iraq. So, obviously, we did not object when the current government took its decision to withdraw its contingent from Iraq. Russia’s position regarding the military operation in Iraq is well known. It was and remains negative, and so there is nothing to comment on in this regard. As for the March 11 terrorist attacks and their impact on the domestic political situation in Spain, what I can say is that we had a good working relationship with the Aznar government and I have no doubt that we will have just as good a working relationship with the current Prime Minister and his government. Indeed, now that I have met with Mr Zapatero today I can say this with complete confidence. But I was and still am concerned about attempts by terrorist organisations to influence the domestic political situation in this or that country through the use of terrorist attacks, and it was this I was referring to when I spoke some time ago about the situation in Spain. It was also this same issue I was referring to when I spoke about the election campaign in the United States and my position in this regard has not changed.

As for the question of using this as a factor in the ongoing domestic political debates within your country, I would ask not to have to comment on this issue.

Jose Zapatero: Regarding this question that was put to me, I will make an address in parliament next Monday regarding the work of the commission investigating the March 11 terrorist attacks and I will definitely say everything I should say during this speech. The main focus of my speech will be on how to make life in our country safer.