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Question: Thank you, Your Excellency, for this meeting. I ask you please to be understanding about our many questions.

Your upcoming visit to Cairo is the first visit by a Russian leader to an Arab country for more than 40 years. Could you please tell us about Russia’s priorities in the Arab world?

President Vladimir Putin: You are quite right in pointing out that I have not as yet visited a single Arab country. My colleagues and I think that if we are to start establishing direct contacts in the Arab countries themselves, Egypt should be the first country we visit.

President Mubarak has visited the Russian Federation on a number of occasions. He and I have established very good personal and business contacts and he has repeatedly invited me to visit your country. Russia, like the Soviet Union before, has always had very good and close relations with the Arab world. We can’t say that these relations have always stayed at the same level, but they have always been relations based on genuine sympathy, friendship and mutually beneficial partnership.

The Middle East and North Africa have a total population of around 300 million people. It is very clear that we cannot effectively resolve major global political issues at this time of increasing globalisation if we do not take into account the views and interests of this part of the world and the people who live in it. I hope that my upcoming visit will serve to reinforce the bilateral ties between Russia and Egypt, give us the chance to exchange views with the leadership of your country on development problems in a region which is close to Russia, in geographical terms too, enable us to discuss our bilateral relations, exchange views on international issues, coordinate our positions and draw up plans for joint action in all these areas in the short and medium term.

Question: Could you please clarify Russia’s priorities in the Middle East?

Vladimir Putin: Above all, our priority is to help bring stability to the region, settle international and regional conflict situations and create the conditions for developing economic cooperation.

We have a great interest in Arab culture, Arab history, the history of the peoples of the Arab countries, and humanitarian cooperation has always been and remains an area of great interest for us.

Question: You firmly opposed the unilateral line taken by the United States administration in the war against Iraq, but last year you also expressed equally firm support for President Bush’s re-election to a second term in office. Could you please comment on the reasons behind such a sharp change in Russia’s position.

Vladimir Putin: There has been no change. Having different views on how to settle this or that international issue does not mean that we do not have close or even common positions on other, no less important, issues on the agenda today, both in international and in bilateral relations.

Like Russia, the United States is a major nuclear power and we are natural, perhaps the most natural, friends and partners when it comes to addressing international security issues and preventing the proliferation of nuclear weapons. We work together to fight international terrorism (we know that Egypt has also suffered from this scourge). We also have a broad range of economic ties. President Bush and I have established good personal relations. I think that he is a reliable person. He may take some decisions that I find debatable, but he is a consistent and predictable partner.

In any country when there is a change of leadership a process begins of reviewing, as it were, what was done by the previous leadership. In effect, play begins again from centre-field. We did not want to begin again from centre-field with as important a partner as the United States. Why do so if we had already reached a very high level of relations and cooperation between our two countries? This was what motivated my support for George W. Bush’s re-election as President of the United States.

In any case, I do not think that my position had any influence on the American people’s decision. Americans are not especially interested in what people abroad think of their domestic affairs. That is quite right and is the way it should be in any country, including in Russia, in my view.

Question: Thank you, Your Excellency.

What does Russia think of the idea of building a new world order, a multi-polar world? How would you define Russia’s geopolitical interests in the new world?

Vladimir Putin: Russia’s main geopolitical priority and chief interest is to create favourable external conditions for the development of the Russian economy and for raising the living standards of the Russian people. We take the view that these aims can only be achieved if we build an effective democratic system within Russia itself. We take the same approach to developing our interaction on the international stage with the different members of the international community. The international system should be based on democratic principles and should take into account the interests of all the different members of the international community.

Just as it is impossible within an individual country to ensure democracy without strictly abiding by democratically adopted laws, so it is impossible to build a fair world order without strictly observing international law.

For this reason, we will continue to support strengthening the system of international law and reinforcing the fundamental international organisations, the pillars of the system of international relations such as the United Nations.

Question: Mr President, how do you view reform and expansion of the United Nations?

Vladimir Putin: Reform of the United Nations should take into account the reality of the world today, but we should base ourselves on existing procedures for taking decisions. Experts are currently discussing the various scenarios for reform – reform based on the regional principle, the principle of a country’s significance in international life, a country’s economic significance. Russia is taking a very active part in all this joint work. It is hard to say at the moment what the decision will be but it should be based on a compromise. One thing we strongly believe, however, is that the most effective instruments the UN has today, namely the right of veto in the Security Council, should be preserved. Other functions and powers the UN has should also be preserved and in some cases even clarified, powers such as, for example, the use of force on the basis of current UN procedures.

If reforms take all the substance out of everything that has been built up over the last decades, we would risk turning the UN into a pitiful likeness of the League of Nations, which, as we know, ceased to exist when it came up against serious problems.

Question: Mr President, coming back to the subject of Iraq, what possible avenues do you see for restoring stability to the country?

Vladimir Putin: You were correct in noting that we took a firm and consistent stand against the military operation in Iraq, and we still think today that our position was right. At the same time, however, we do need to admit that a huge amount of work has been done in Iraq of late to stabilise the situation. We think that the elections, notwithstanding the problems that accompanied them, were a definite success. It seems clear that given the complicated situation in Iraq when the elections were held, the process was inevitably going to involve some difficulties.

In order to continue to stabilise the situation, in my view, there has to be coordination of the positions and interests of all the different religious and ethnic groups living in Iraq. The new Iraqi leadership has to find the courage and ability to reach agreements with all the religious groups, take into account their interests, agree on the principles for the future constitution and, on this foundation, strengthen internal security and reach an agreement on the deadlines and conditions for the withdrawal of foreign troops.

We intend to cooperate with Iraq, work with the new Iraqi leadership and help rebuild the country. We have longstanding and strong ties with Iraq and we intend developing them further.

Question: I propose now turning to the economic situation in Russia.

As we all know, under your leadership, Russia has shown strong economic growth over the last two years. What, in your view, explains this growth?

Vladimir Putin: Russia has had strong growth for the last five years. Over the last five years our GDP has grown at an annual rate of 6.5–7 percent. I see this as being due to several factors. First and most important is that we have a stable political situation within the country and the population supports the reforms undertaken by the President and the government. This makes it possible to follow a balanced, justified and carefully planned economic policy. Of course, the external economic situation is also a positive factor that has been supporting the Russian leadership’s efforts. There are other factors that I could also cite. To name one of them, I think it is important that we have been following a targeted and quite balanced social policy aimed at gradually but constantly increasing people’s incomes. Of course, it would be good to be able to move faster and give people more, but raising incomes should not outstrip increases in labour productivity and economic growth in general, or else the people themselves will ultimately end up losing out.

Over these last years we have had a double surplus, a budget surplus and a foreign trade surplus. The Central Bank’s gold and currency reserves have been increasing and now exceed the former Soviet Union’s gold and currency reserves. This in turn creates problems of its own such as the need to sterilise the money supply and maintain macroeconomic parameters. Overall, we are managing to do this, though we would, of course, like to achieve better results in reducing inflation and keeping it in check.

We have not let ourselves become dizzy with success. We still have a lot of problems to solve and we will continue to work hard, calmly and consistently.

Question: What are the biggest challenges and difficulties you have faced since 2000?

Vladimir Putin: The biggest problem was the degradation of state institutions and economic problems that in turn caused quite serious social tension. We have managed to do a lot of what needed to be done, but not as fast as we would have liked, and some things could have perhaps been done better. But, as we say here, “only he who does nothing makes no mistakes”. Overall, we have been moving in the right direction and the results are visible.

Question: Another interesting question, from our point of view: many Arab and Muslim leaders firmly condemned the brutal terrorist attack in Beslan. At the same time, Chechnya remains a stumbling block between Russia and public opinion in the Arab and Muslim world.

What do you think can be done to change this situation?

Vladimir Putin: We can change the situation if our friends in the Arab and Muslim world become closer acquainted with what is really happening today in Chechnya and in Russia in general. Not many people know that dozens of mosques have opened here over recent years, and this would not have been possible without real and direct support from the Russian leadership. Not many people realise that we let everyone who seeks good, happiness and prosperity for the Chechen people, regardless of their political views, take part in rebuilding the republic, or that we have granted numerous amnesties and are involving representatives of all political forces in the republic’s life, except, of course, those who seek to achieve their aims through the use of arms or through such atrocities as that which you mentioned – the terrible terrorist act in Beslan.

We are engaged in a direct dialogue with the people, with the republic’s population. We helped to organise the referendum there on a constitution for Chechnya. The overwhelming majority, really the absolute majority of people in Chechnya, supported this constitution. One of the constitution’s main provisions is recognition of Chechnya as part of the Russian Federation. We think that the Chechen people have made their view clear on this issue.

We helped to organise presidential elections there. We are ready to sign an agreement with Chechnya on division of powers between the federal and the local authorities and on providing the republic with a large degree of autonomy. I think that we could very well see parliamentary elections held this year in Chechnya with all the different political forces taking part. And we see that our efforts meet with the understanding of the Muslim and Arab world. Both during the referendum on the constitution and during the presidential elections we invited representatives of the League of Arab States and the Organisation of the Islamic Conference to take part as international observers. The representatives of both organisations worked as observers practically everywhere throughout Chechnya. Neither organisation had any serious criticism of the referendum and the election. On the contrary, they said that both the election and the referendum were well organised, were democratic, and that the rights and interests of the people living in Chechnya were respected.

Question: What is your reaction to calls for greater democracy in Russia?

Vladimir Putin: The first point I want to make is that Russia has no future without democracy. This is my firm conviction. But democracy is not a product that can be brought in from outside through the help of whatever kind of revolution. Democracy is a product of a society’s internal development. All countries have problems with democracy, including those who like to talk about it more than anyone else. We will continue to develop democracy in Russia and we will react positively to critical but friendly analysis from outside. But we will most certainly always oppose attempts by anyone to use the slogans of democracy to pursue their foreign policy aims with regard to our country, or to use it as an instrument for intervening in our domestic affairs. In any case, we will take our decisions based on our history, our specificities, and we will take our decisions independently.

Question: Thank you.

Mr President, what is your view on the confrontation between the United States and Iran over Iran’s nuclear programme?

Vladimir Putin: Confrontation is always counter-productive. We think it is always best to look for a way to establish dialogue and cooperation. At the same time, I want to point out that we and the United States share very close views when it comes to non-proliferation of nuclear weapons. This also concerns our view that it would be unacceptable for our Iranian colleagues and partners to work on nuclear weapons programmes of any kind. We oppose the proliferation of weapons of mass destruction. But, as I said, Russia thinks that these problems should be resolved through dialogue and with the assistance of international organisations such as the IAEA. This is why we are continuing to fulfil our obligations with regard to Iran’s civilian nuclear programme, but on condition that the international organisations, and above all the IAEA, have access to all Iran’s nuclear programmes and that Iran renounce all forms of development and production that could lead to the creation of a nuclear weapon.

The latest agreement signed between Russia and Iran on returning to Russia spent nuclear fuel from the power plant at Bushehr is aimed precisely at ensuring these conditions are met.

Question: Mr President, I propose now turning to what will be one of the most important subjects that will be discussed during your visit to Egypt – the situation in the Middle East. Russia has traditionally supported the Palestinian people’s right to self determination and the creation of an independent Palestinian state. Do you think that Russia will begin to play a more active role in the Israeli-Palestinian issue in the near future?

Vladimir Putin: Russia’s role will be as active as the participants in this process, above all, the parties to the conflict themselves, want it to be. We cannot and will not substitute ourselves for the parties to the conflict, but as we take part in the international organisations and institutions seeking to settle this problem, including the international “Quartet”, we will make all necessary efforts to find a way to settle the conflict.

I think that Russia could indeed play a part as a mediator.

Over recent years, we have established quite a trusting dialogue with Israel, where, as we all know, a large number of people from the former Soviet Union are now living. And I must say quite frankly to you that we are not indifferent to the fate of these people. We would like for them to be able to live in security. At the same time, we have longstanding, strong and traditionally trusting relations with the Arab world in general and the Palestinians in particular. We have always followed a consistent policy on this issue and have never wavered or made any turnabouts. We have always said and say today that the Palestinian people has the right to create an independent state. Of course, in order for this to actually happen and not just be declared, in order for such a state to emerge and be viable, the two sides need to be able to agree and be able to compromise.

I think that the parties in this long-running conflict do have such an opportunity. I am absolutely convinced that Mr Abbas does want peace. We should all make every necessary effort to support him and convince all the different Palestinian political forces to work with him and consolidate for the good of the Palestinian people.

Question: In this respect I would like to remind you that Egypt did make an effort to bring the different Palestinian groups together with the head of the Palestinian National Authority, Abu Mazen, and reach a mutual understanding. But I would say there was then a certain retreat from this understanding reached at Sharm al Sheikh. What can the “Quartet” of international mediators do to launch the Roadmap in the aim of settling the problem of the final status and creation of a Palestinian state?

Vladimir Putin: I think that Egypt has not only made the efforts that you mentioned, but that it follows in general what I think is a far-sighted and very balanced policy on Middle East peace settlement. We hope that Egypt, as one of the biggest Arab countries and perhaps the most authoritative country in the region, will continue to have a positive influence on the peace process. As for the “Quartet”, it should do much the same – help look for a common platform, find acceptable solutions to complicated problems and act as guarantor, if needed, for the agreements that could be reached. This is not an easy task, the conflict is complex, but without a certain amount of patience and, I repeat, an ability to compromise, there is unlikely to be any success.

The international community should also not forget about the other issues in the region – Lebanon and Syria – for the problem as a whole can only be settled if overall solutions are found.

The question, of course, is one of deadlines and tactics, but overall, we cannot allow ourselves to act as if there is no problem there.

Question: Your Excellency, I will ask one last question, if I may.

Egypt and Russia have preserved very close ties over the course of decades, despite the serious changes that have taken place both in the domestic and international situation. What do you think our two countries should do to expand these relations not only at political and diplomatic level but also in trade and the economy?

Vladimir Putin: We should make this one of the priorities for our relations. Trade between Russia and Egypt doubled last year compared to the previous year, but this still represents only a small volume. Russian machine tools, energy sector machinery, is gradually making a return to the Egyptian market. But these are just the first steps. We need to encourage direct contacts between our business communities. The intergovernmental commission on trade and economic cooperation should work a lot more actively. If this happens, the potential that we have here in Russia and the traditional ties that we have cultivated all these years will bring positive results in high-tech sectors, in outer space, in advanced technology and in the energy sector. We already have some agreements between our big energy companies on working in the Egyptian market, working together with Egyptian partners. There is a desire to work together, and that is the main thing. We have a great interest in Egypt and its culture.

Egypt is one of the cradles of modern civilisation. The Egyptian people have made an invaluable contribution to the development of modern civilisation and this mutual interest we feel is also a live nerve that will support our interest for each other in other sectors, including in the economy. I am sure that our relations have good prospects and I am sure that this will benefit both the people of Egypt and the people of Russia.

I would like to wish the Egyptian people abundance and prosperity.

Reply: Thank you, Mr President, for your detailed answers to all the questions I had.

Vladimir Putin: It’s my pleasure. I will be happy if I have satisfied your interest in Russia. I am looking forward to seeing Cairo, to seeing Egypt, and, of course, to meeting with President Mubarak.

Thank you very much.