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Czech President Vaclav Klaus: Dear Mr President, dear ladies and gentlemen!

Please allow me to say some opening words. I am very glad that President Putin accepted my invitation and came to the Czech Republic. I highly value this visit. The last time that a Russian president came to the Czech Republic was in 1993. And thirteen years are a long time. I believe that this visit will give Russian-Czech relations a new stimulus and that it is taking place at a moment when such a visit was simply necessary.

We held wide ranging talks in the second half of the day and they will continue at the ceremonial supper. Our discussion was business-oriented, constructive and frank. We see issues concerning mutual relations in a very pragmatic, positive, constructive light.

President Putin and I both know that we must not forget about the past but at the same time we know that the past should not act as a burden on the present and the future.

We told each other about the respective situations in our countries and on our positions regarding a range of international problems. On many issues our opinions are very close and even identical, while on others they do not coincide. But we consider that a respectful attitude towards each other's positions is very important. We aspire to develop our relations in a range of areas. We are in favour of developing economic relations. And we devoted a considerable part of our discussion to this theme. Of course the Czech Republic is interested in the continuation of stable reliable deliveries of oil and gas. And we firmly believe that our countries will conclude further long-term agreements and contracts in these areas.

I would like to emphasize that we are both interested in friendly relations and are ready to do the maximum to achieve them.

Vladimir Putin: Dear Mr President, dear ladies and gentlemen!

First of all I would like to thank the President of the Czech Republic for the invitation to come to Prague on a visit. I would also like to sincerely thank our Czech colleagues for their hospitality and the truly friendly atmosphere that reigned during our talks today. The talks that took place here were not only detailed and constructive but, most importantly, they took place in an atmosphere of trust and mutual understanding.

We talked about strengthening the traditions of friendship and cooperation that for years link our countries and peoples. And we share the opinion that today we have no problems that cannot be overcome. We simply could not remember even one problem that would prevent us from developing our relations. Such problems simply do not exist.

Relations are developing based on pragmatism, mutual respect and in a spirit of a mature partnership. Both sides demonstrated such approaches during today's talks. We paid special attention to our trade and economic relations. The Czech Republic is an important economic partner for Russia. This is confirmed by the steady growth of trade, which has doubled over the past four years. This is a very important and good indicator. The volume of trade has reached 5,5 billion USD.

I shall emphasize that Russia and the Czech Republic consider cooperation in the energy sector strategically important. Today Mr President drew attention to the fact that it is necessary to renew long-term agreements and renew the long-term deliveries of Russian energy resources to the Czech Republic. There are no obstacles to this. We agreed that in the very near future our experts, both at the level of the government and from private companies, shall continue working along the lines of the ties they already have and I am confident that this will produce positive results.

In addition to this, Russia is interested in expanding cooperation in the field of nuclear energy. We are ready to assist in building new energy systems and in updating those that already exist.

I shall also point out that both Russian and Czech business plays a significant role in stimulating capital investments. Today Russian investments in the Czech Republic amount to more than half a billion dollars. Czech investments in Russia amount to 70 million. We consider that this is insufficient on both accounts. For that reason we are actively working to diversify our relations and to expand and deepen them in the future.

We also noted that the most promising are approximately 15–17 projects whose total cost amounts to more than two billion USD. I believe that this is just a first step. The overwhelming majority of these projects is not in the energy sector but in manufacturing. They include modernizing the metro system in Saint Petersburg, the tramway park in Volgograd and establishing a joint venture in Moscow that will produce trolley buses. All of this will take place with the participation of Czech experts and using technology that we consider fully appropriate for the Russian market.

I would like to emphasize that in both countries interest in cultural exchanges is growing from year to year. I am convinced that such contacts strengthen the common European cultural, scientific and educational spaces in a significant way. In particular, this idea is being promoted by the season of Russian culture that is now beginning in the Czech Republic. The citizens of your country can get to know the best examples of our theatrical and musical traditions and also Russian achievements in the field of modern culture. It is also symbolic that during our summit a painting by the great Russian painter Kramskii that went missing during the second world war and then hung in the Moravian Gallery in Brno will be returned to the Russian State Museum in Saint Petersburg. I already told Mr President that I was extremely surprised to find out about this. Normally it is us who transfer things, return or give them. This is the first time during my time in office that I come across a situation whereby someone returns something to us. But this is a very good sign, a very good sign that normal civilized relations between countries are taking root in Europe. And of course we will be ready to do the same at the very first opportunity and not only by returning lost treasures; I am referring to our relations in general: in the fields of culture, education, science and in economic cooperation.

Topics we covered in our talks were not limited to bilateral cooperation, we also talked about topical international and European problems. I shall emphasize we are impressed by Prague's balanced approach towards them. I would especially like to mention that our positions fully coincide concerning issues to do with modern threats such as international terrorism and several other problems.

I would be glad to have the opportunity to welcome Mr President to Moscow. I am convinced that the agreements that were reached today will change the character of Russian-Czech relations and will noticeably affect our cooperation on the international stage.

Thank you for your attention.

Question: I have a question for the Russian and Czech presidents. In spring the consumption of energy always decreases. Nevertheless, the winter and other unpleasant events will happen again. In connection with this, what are your views on ensuring energy security in Russia and in Europe at large today and in the future? Thank you.

Vladimir Putin: You know, when people talk about energy security in Europe and in the world, for some reason they consider that it is Russia's responsibility to provide security for all. Everyone forgets that Russia must also ensure its own energy security. And Russia can only achieve this by cooperating in a fruitful way and on an equal footing in the energy sector.

Unfortunately, we are faced with certain limits, both with tentatives to limit our activity in the sphere of nuclear energy and in the electricity market in Europe. We are not dramatizing anything unduly. But we will achieve equal rights. That is the first thing.

The second. Russia has always behaved extremely responsibly in the energy sector, including in delivering hydrocarbons and other raw materials. We intend to continue to act in this way in the future.

I just talked about this today. We worked and will continue to work in a long-term perspective, using long-term contracts with our partners, including with the Czech Republic. As you know, we made this theme the most important one on the agenda of the G8 summit that will take place in St Petersburg in July. I hope that together with our colleagues we will be able to consider all aspects of this problem. I also hope that we will adopt agreements that will help all the participants in the world energy market feel confident that the market will develop in a stable way that also ensures the global economy's development.

Concerning our European partners I would like to draw your attention to yet one more thing. When I hear some countries express concern that they are too dependent on deliveries of Russian energy then I answer them with the similar concern: the more our partners depend on us, the more we depend on them. And we are also going to think about diversifying our deliveries. But regarding Europe we are going to act in an extremely responsible way, just as we will with all our other partners. We will diversify our transport possibilities and are going to work together with all of our partners, both in Europe and in the world. I am convinced that both European and global energy has a promising future.

Vaclav Klaus: If you will allow me, I shall speak in Czech. President Putin and I talked about these issues in great detail. What he just said is an accurate reflection of the discussion we had in our private meeting. I believe that energy issues should be depoliticized as much as possible so that, as they say in English, it will be business as usual, and that there will be normal economic relations. Of course we are interested in concluding long-term agreements with the Russian Federation on this topic. We received preliminary assurances about how work is proceeding on these arrangements and agreements. We just learned about this and it is good news for us all. First and foremost this must be mutually advantageous for economic relations.

As Mr President just said, on the one hand the importer depends on the exporter, but the reverse is also true. And these things must be looked at rationally without linking them to politics. Nevertheless, diversifying both deliveries and the types of energy resources is our task for the future. I repeat again and again that this cannot be the case while the opinion that claims that we will import less oil and gas but at the same time forbid nuclear energy holds sway in Europe. These two things cannot coexist. Thank you.

Question: President Putin I read your article which appeared yesterday in the world media. You call on all countries to adopt a coordinated and responsible approach towards ensuring global energy security. I would like to ask whether or not this contradicts your country's position during recent talks concerning gas prices for Ukraine? Can all of this simply be explained by market principles? Should an exporting country such as yours behave according to business rules or should it act in a selfless way? And I want to ask Mr Klaus, did you talk about the condition of democracy in Russia and the situation in Chechnya? Did you disagree on these topics?

Vladimir Putin: To please you I will answer both questions at once. Mr President will add to my answers. We had an in depth discussion about Chechnya and on problems concerning democracy. We talked about this. I informed Mr President about what is happening in the Russian Federation in these areas.

And now regarding our negotiating process with Ukraine and how we evaluate this process. There is a first thing that I would like to tell you and I think that it will be clear not only for you but for all the spectators and listeners who will want to see and hear it. The Russian Federation subsidized low energy prices in Ukraine at a price of three to five billion USD per year over fifteen years. And all these years we said that it is time to end this situation. That is the first thing.

The second. We began discussing 2006's prices with Ukraine already at the beginning of 2005. Third. We have not determined a price, and I would like to draw your attention to this. We only agreed to change to a European formula for determining prices. As such prices are not determined according to Russia's will, but according to world oil prices. We agreed on this with our Ukrainian partners. This means that prices for Ukraine shall not depend on the will of the Russian Federation. They shall depend on the price for oil and oil products on the world market. Even if we wanted to change them within the existing formula then we could not do so because they depend on the oil price. And I consider that this is the very best form of regulation. Not through administration but through the market. This is the first thing.

The second. A very important fact both for us as energy suppliers and for European consumers of gas. In each of the last fifteen years European consumers of Russian gas were dependent on the agreement we would reach with Ukraine concerning deliveries of our gas to Ukraine. This was because we had one contract for the amount of gas that would be delivered to Europe and Ukraine; one part of the contract concerned gas deliveries to Ukraine and the other concerned gas deliveries to Europe. Now we have agreed with our Ukrainian partners to separate these two questions and have concluded a separate agreement with them—an agreement on delivering Russian gas to Europe over the next five years that does not depend on the deliveries of Russian gas to Ukraine. And this is the best condition to ensure the stability of Russian deliveries.

So I congratulate you on this. And I also congratulate our Ukrainian partners because they have shown a great deal of maturity and understanding of their responsibility in European energy affairs.

Vaclav Klaus: Right at the beginning of our conversation we discussed the situation in Chechnya in great detail. The thing is that we are concerned about the situation in this region but I think that I can also say that it is just as heavy a burden for President Putin. It is in both his interests and those of the Russian Federation that the Chechen problem be resolved. We talked in detail about how events developed in the past and about alternatives to the present situation. I share the opinion that no trivial solution, no magic wand exists that could solve this problem.

I am confident that the steps that have been taken towards finding a settlement are approaching their goal and that a settlement shall be found. This concerns not only Chechnya but also neighbouring regions of the Russian Federation in the northern Caucasus. I think that we both fully realize that a problem exists.

Question: This is a question for both presidents. Please say whether you are really adopting a pragmatic approach towards developing relations or if there is something else uniting your positions, your points of view, and maybe even the two of you? Thank you.

Vaclav Klaus (speaking Russian): I do not know whether to answer in Russian or in Czech. (continuing in Czech) I think better in Czech. I shall say this. Mr President and I emphasized the word partnership several times earlier on. We emphasized that the word normal applies to this partnership. I think that both as presidents and as countries we should not aspire to a situation in which we will have exclusive, above standard relations. But there is not the slightest reason to have relations that are less than standard. I think that today we have normal relations and this is just as it should be. We must achieve mutually advantageous relations. And I am not only referring to their economic implications. We have the occasion to find a common approach to international issues that affect all of us. I hope that this is the correct basis for our fruitful cooperation.

Vladimir Putin: Certainly, first and foremost pragmatism is the basis for our relations. But there is something else that is very important. It is our love for the Czech Republic, the Czech people, Czech culture and the Czech Republic's place in European history. I think that today this is no less important than pragmatism.

Question: I have a question for the Russian President. In his time President Yeltsin called the intrusion by the armies of the Warsaw Pact into Czechoslovakian territory an aggression. I would like to know your opinion on this event and do you think that Russia, the successor state of the USSR, bears a certain responsibility for this act? Thank you.

Vladimir Putin: When President Yeltsin was in the Czech Republic in 1993 he spoke not only on his own behalf, but on behalf of the Russian Federation and the Russian people. And today we are not only observing the agreements that we reached in the past but we share the same opinions that were expressed at the beginning of the 1990s.

The only concern we have when talking about the tragic events of the past is that certain political forces use these events today to provoke anti-Russian feelings and tentatives to give the impression that Russia is a somewhat incapacitated country. This makes us uneasy. But I must tell you absolutely frankly that while of course there is no legal responsibility here and indeed, there cannot be any, of course a moral responsibility exists. It could not be any other way.

Vaclav Klaus: I would like to thank Mr President for his words that I think are absolutely clear and comprehensible, words that we hear and, I think, appreciate. And I will be happy to hear them in the media. And that the citizens of the Czech Republic could also hear them in the media. I am glad that he said those words. However, I must say in absolute sincerity that I see no reason why now, on 1 March 2006 and with President Putin, we must resolve what Brezhnev's Soviet Union did in August 1968. Both of us know this and realize it. For us it was an exceedingly tragic moment. But I am for a positive approach towards the present and the future.