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President Vladimir Putin: Good evening, ladies and gentlemen,

Once again I would like to welcome President of Georgia Mikhail Saakashvili and thank him for accepting this invitation. Despite the late hour we have managed to meet and talk. I am very pleased that this meeting has taken place because it gave us the chance to analyse the complicated situation today in Russian-Georgian relations and to not only talk about possible ways to rebuild our relations but also to develop our ties. In my welcoming words today when Mikhail Nikolayevich and I met, I said that, despite all the difficulties, our bilateral trade and economic ties are developing and, strange though it may seem, are developing successfully. Trade is growing at an annual rate of around 50 percent or more. Direct investment in the Georgian economy is on the increase. Over the last five years direct investment in Georgia has grown five-fold. Overall, this investment is perhaps not so great in absolute figures, but the trend is clearly positive. Russian business is showing interest in developing cooperation with Georgia in sectors such as chemicals, mining and the food industry and our companies are already working in these sectors. I would also like to remind you that according to both Russian and Georgian independent estimates, Georgian citizens temporarily living and working in Russia send home from $1.5 million to $2 billion dollars a year. This is a lot more than any assistance from third countries.

Mikhail Nikolayevich and I said that Georgia and Russia must take steps to normalise our relations and put in place good conditions for developing bilateral ties. We agreed on the need to improve our cooperation mechanisms and we will do this in the nearest future. Of course, we also discussed the most acute problems facing us, the so-called frozen conflicts. Naturally, it is impossible to resolve all problems over the course of a brief talk such as we just had, but I want to stress that we both have the desire to work on these issues together. Thank you very much for your attention.

President of Georgia Mikhail Saakashvili: Thank you, Vladimir Vladimirovich. I really am very pleased to be here in St Petersburg, a changed, freshly painted and improved St Petersburg, a newly restored city that I have always admired and that now has taken on an entirely new look. I also must congratulate you once again with the fact that a historical process really is underway here under your leadership. It is very good that we have found the time to meet, that you have found the time to meet, because, unfortunately, many unresolved problems have accumulated over recent times in relations between our two countries.

What is it that concerns us in particular? Historically, problems in the Caucasus have always been resolved correctly and comparatively painlessly when Georgia has worked together with Russia to settle the most serious problems facing our region through our combined efforts and energy. Unfortunately, we are forced to admit that this kind of coordination between us is lacking today. We very much want to establish this coordination. There are serious unresolved problems in the Caucasus arising from conflicts.

The Caucasus faces the problem of aggressive separatism that is not in the interests of any party. Naturally, we very much count on the position of Russia, which supported the peace plan for South Ossetia, for example, at the meeting of the OSCE Council of Ministers in Ljubljana last December. And we hope that Russia will take subsequent positive steps and that you, Vladimir Vladimirovich, will take a personal part in settling all the problems that are preventing our relations from developing consistently and in the right direction more energetically. You noted that there are positive trends in our relations and I certainly do welcome this. There are also other bilateral issues that need to be addressed. But Georgia is set on constructive work and is open for open dialogue. I think that we have lost some time but that we can still reverse the situation. We can put our relations back onto the right track if we set out very clear positions. I think that we discussed these positions today in the very sincere, open, frank and direct manner that so characterises Vladimir Vladimirovich. I think that we should continue this conversation. Of course we must admit that most problems remain unresolved at the present moment, but that most certainly does not mean that we should not try to sort them out.

Question: It’s probably better to say good morning. I have a sensitive question. When Russia’s territorial integrity was under threat it found itself unable to hold back from taking the very toughest measures – conducting military operations against aggressive separatism and terrorism. Vladimir Vladimirovich, do you think that such action is the inalienable right of any state in the fight against separatism and aggression when it is linked to the issue of maintaining territorial integrity?

Vladimir Putin: We have discussed this subject a lot lately with our partners. Our position is that we remain committed to the basic principles of international law as fixed in the United Nations Charter. But we have often heard the argument of late that we should also be guided by various considerations of political expediency and historical specificity. This is an open discussion which we are engaged in, regrettably, I think, with many of our partners on the international stage.

Regarding the situation you referred to in the Republic of Chechnya, I would like to remind you how that ended. It ended with the holding of a republic-wide referendum on a constitution for the Republic of Chechnya, in which the vast majority of the republic’s people supported the constitution and recognised that Chechnya is part of the Russian Federation’s territorial and legal jurisdiction. No matter what we begin with, if we want to resolve issues like this through democratic means, we must ask the opinion of the people themselves.

Question: I would like to clarify the situation with Russian-Georgian relations. We have often heard accusations of fascism and other awful things coming from officials on the Georgian side. Russia, for its part, is actively checking and inspecting Georgia’s main export goods. What can we expect next? Also, is it true, Vladimir Vladimirovich, that Russia is planning to stop or to hinder the transfer of money to Georgia, both by private individuals and by legal entities?

Vladimir Putin: This goes back to what we said right at the beginning. We said that both Mikhail Nikolayevich and I think that our political relations cannot be called normal at the moment. Our meeting today was about looking for ways to settle the problems in our bilateral relations. I think, and I agree here with my Georgian colleague, that our conversation was very frank and useful and that it looked precisely at finding ways to turn the current situation around.

Regarding reciprocal offence and reproaches, I think these problems arise because of a lack of contact at the right level and a lack of understanding of each other’s actions. I don’t think we should focus too narrowly on these issues and I would rather focus instead on our common desire to change this situation.

As for plans to prevent the transfer of money from the Russian Federation to Georgia, I have not given any such instructions.

Mikhail Saakashvili: I would just like to answer your question. Firstly, I agree with Vladimir Vladimirovich that anything can happen when we have such a background to our relations. Passions can rise and people make all sorts of statements and cause offence. But emotions are one matter and the reality of the situation in our world, the reality of concrete issues, is another. We discussed, of course, economic issues and other matters regarding our relations that we have discussed in the past and that I hope we will continue to discuss in a positive spirit, but the main issue at the moment is the conflicts. Unfortunately, the reality in the conflict zones is such that even the emotions that are expressed do not fully reflect the tragic and dramatic nature of the situation that has arisen there. We have 300,000 refugees from Abkhazia who were forced to flee their homes at the beginning of the 1990s. We have a complicated situation on our border with South Ossetia. I discussed this today with Vladimir Vladimirovich. There are very concrete issues in this regard.

Georgia is set on pursuing a peaceful and progressive dialogue, above all with Russian participation. We understand full well that our main partner in these negotiations is the Russian Federation and no one in Georgia has any illusions on this count. At the same time, what we are seeing in reality is the annexation of our territory. Property is being simply taken from living people, from private individuals and legal entities. People are having their homes taken from them and are not allowed back. Their property is seized from them.

In South Ossetia officials are appointed – I can name dozens of names, though I think that they are well known to the Russian side at the level where they are appointed – and they are simply taking over the running of these territories. How can this be called anything but annexation under international law? Unfortunately this is what is going on.

We must find a way out of this situation and rebuild a constructive dialogue. Of course Georgia will react within an adequate framework, for various insults and offensive declarations are completely unacceptable to us and I personally find them unpleasant. We will, naturally, use all the legal instruments we have at our disposal, and chief among them is our dialogue, above all our dialogue with the Russian Federation on specific issues that really do arise.

Yes, we do need to ask the opinion of the people themselves. But today, when someone goes to Abkhazia to ask the people he comes back and says that he didn’t find anyone who said they wanted to be a part of Georgia. Of course he didn’t find anyone because everyone who wanted to be part of Georgia was forced to leave their homes. They have all been chased out of Abkhazia’s towns and villages. Of course you won’t find anyone, they are all gone. And those who remain, of course they may not want to be together with Georgia. The situation is the same in South Ossetia. We need, therefore, to find a way out of this dead-end situation. Unfortunately, we still have more questions than we have answers.

We very much hope – and today’s conversation supports us in this – for more constructive dialogue and for a more constructive way out of the situation. But the situation is very, very complex today. I do not hide this and I will not hide it from you and from the public either here or in my country. We will do everything we can to intensify our dialogue and look for a way out of this situation.

Question: Good evening, you mentioned these ‘frozen’ conflicts. The President spoke about willingness to move forward and about open relations. It would be good to believe this. In this respect, do you view maintaining territorial integrity as the cornerstone of the international security system and of international law? In this context, why does Russia not want to work together with Georgia to settle the conflicts with Abkhazia and South Ossetia within the framework of internationally-recognised borders?

Vladimir Putin: Not only do we want to do this, we are doing it within the framework of existing procedures and with the support of international organisations, including the OSCE. We intend to continue this cooperation and we agreed to think together about ways to improve these procedures and make them more effective.

Question: This question is above all for Mr Saakashvili. Mikhail Nikolayevich, there has been quite a lot of information lately about a build-up of military force in the region of the South Ossetian conflict. There are reports of non-planned troop rotations and the purchase of large lots of arms. What is the aim of this action? And secondly, Georgia recently made an official request to Interpol to arrest and extradite Abashidze. Could you please comment? And Vladimir Vladimirovich, could you also say a few words on these issues?

Mikhail Saakashvili: I’ll start with the last question. This request concerns not just the person you mentioned but a whole list of people who are not in any way connected to politics but are directly linked to criminal activity. According to our information, which, incidentally, has been confirmed by official Russian sources in most cases, they are on the territory of the Russian Federation. In my view, a bandit is a bandit anywhere in the world, and a thief is a thief no matter where he is. If it comes to this, we will certainly discuss it… Incidentally, Vladimir Vladimirovich mentioned before how Georgians are sending money from Russia to Georgia, and we are very pleased that so many Georgians have reached a high position in Russian society. Some of them did not end up here of their own free will, however. Talking about the issue of people’s rights, it would be good, for example, if, say, Leo Bokeria were able to have his house in Abkhazia returned to him, the house that is his no longer because he was not from the right ethnic group. And the same goes for other Georgian businesspeople and cultural and scientific figures who were obliged to leave Georgia not of their own free will.

We would be happy to take them back. But if Russian organisations, whether official or unofficial, want to take in our criminal elements, we will be happy to export them to Russia, for we don’t need them. At the same time, we will be happy to cooperate and I have said this on a number of occasions to Vladimir Vladimirovich. I think that he fully agrees, too. We need to work together on all these issues in order to avoid misunderstandings. The borders are transparent today. We did used to have cooperation on the extradition of people suspected of terrorism. We did everything we could to put this cooperation in place and today we are still willing to do everything we can to ensure cooperation with regard to certain of these persons.

Regarding the situation in Georgia itself in the conflict zone, the situation is very concrete today. The situation has become more acute and we face the threat, the daily threat of provocation and illegal activity aimed not only at undermining Georgia’s territorial integrity. We are talking about terrorist groups, about people who have blown up police stations, electricity transmission lines and railways. We are talking about groups who are involved in counterfeiting money, including various foreign currencies, and Russian currency among them, I am sure. I hope that we will be able to work together to neutralise these people.

What we are dealing with is specific criminal activity that is punishable under both Russian and Georgian law. Georgia is firmly committed to the principles of peaceful conflict resolution. We know very well which part of the world we are in. We know very well that any conflict in our region is fraught with severe consequences not only for us in Georgia but for the whole of the North Caucasus, for Russia and for the entire world.

We have already seen how our conflicts can be exported to various regions, to conflict-ridden parts of the world. Vladimir Vladimirovich has also spoken publicly about this on more than one occasion. No one has any interest, therefore, in fanning the flames of conflict. We are all interdependent. Georgia’s territorial integrity is the guarantee of Russia’s territorial integrity too. And likewise, a strong Russia that controls all its regions and can ensure that law rules in its regions can play a constructive role in resolving our conflicts.

I want to repeat, of course, that we are ready to continue work on our peace plan and on all of our initiatives. But we must move forward. We cannot remain constantly in this frozen state. There are conflicts that are a daily source of concern for public opinion and for concrete individuals. People are losing their lives and seeing their destinies ruined. There is a daily threat emerging and we need to start moving forward. Of course, we will never agree to anyone grabbing our territory, snatching it from us. Vladimir Vladimirovich did not mention this I think. Russia has no such intentions — Russia is a great country and has such a lot of territory of her own, as I saw from the plane window today. Georgia is a small and beautiful country and it is better to leave her be. We do not have anything left to give away – no one will get a single metre of Abkhaz or South-Ossetian territory as long as there is any fairness in this world. No aggressive separatist nor anyone else will get these territories.

Everyone needs to understand this and we all need to work together in this direction. Unfortunately, the situation we are in today is a complicated and unhappy one, but I hope that it is not too late and that we will succeed in resolving all these problems. I hope that we will do so peacefully, constructively, through dialogue together with Russia, absolutely together with Russia. I have no intention of moving Georgia 3,000 kilometres to the west, south or north. We have no choice but to live together with Russia as good neighbours. We are part of a single whole, part of a common space. We are part of a common culture, a common human world, and it would be a tragic mistake indeed to tear these threads apart, for it would be like cutting into our own flesh. But, as I said, we don’t have any territory to give up. We have a small country, and everyone should remember that. There are norms and principles and there is our principled position. Let us remain committed to a constructive position and we will resolve all these problems.

Vladimir Putin: Regarding the criminal elements mentioned, we will of course work very cooperatively with our partners from all countries, including Georgia. Firstly, concerning Georgia, if we are talking about electricity transmission lines and other communications infrastructure such as my colleague referred to, I would just like to remind you that around 30 percent of Georgia’s electricity generation infrastructure is owned by RAO UES [Unified Energy Systems] and 30 percent of the electricity distribution network is also owned by RAO UES, so we certainly do have an interest in ensuring that all of this functions normally. Secondly, regarding Mr Abashidze, I am not aware of him being put on the wanted list. It sounds strange because when certain events took place in Adzharia Georgia addressed us a request not to prevent his entry to Russia. I remember our conversations on this point. At that time I said that I was concerned that our Georgian partners might later demand his extradition and that Russia would not extradite him and so we would end up in a false position. But we were told then not to worry because no one would demand his extradition. If this is what is happening now it is news to me, but if this is the case, we will hold separate consultations on this issue.

Question: Mr Putin, could you say whether you are now any closer to deciding to visit Georgia? And how long will it be before Russia’s citizens have the chance to drink good and authentic Georgian wine?

Vladimir Putin: Regarding wine, the issue is not just one of wine but of any product. When I said that Russian investors were showing interest in the Georgian foodstuffs industry, I had in mind, in case you didn’t know – which agency are you from? Reuters? Then you probably didn’t know that Russian investors are showing interest above all in the wine and spirits industry, in spirits production in Georgia, and they are interested in a specific enterprise. So we are interested in importing quality products.

We did not discuss this today, but I am grateful to the Georgian President for being quite open in taking energetic measures to bring order to this sector. We must also do the same here in Russia. There are a lot of falsified products – 60 percent. If we resolve this problem there will be no other issues in the way of access for products to the Russian market. You know what a big problem we have with people drinking all kinds of fake alcohol and becoming alcoholic, and what a high number of deaths these fake alcohol products are causing. This is a big problem in our country. I think this answers that part of your question. As for coming closer to a visit, I was in Sochi just recently and from there you can walk to Georgia. This is not a problem at all. Thank you.

Mikhail Saakashvili: Firstly, I think that Vladimir Vladimirovich has absolutely correctly just confirmed once more Georgia’s territorial integrity because if you walk from Sochi you end up in Abkhazia, and Abkhazia is Georgia, just in case anyone had any doubts about the geography of the matter. Secondly, I would like to say that we have instructed the Georgian Prime Minister to discuss these issues. There are a whole range of economic and political issues involved. Of course, I hope that the wine issue will be resolved because we might run out of wine. We have started sending all our wine to the West and to other countries now. I would not like for Russia to end up going without wine. Incidentally, Vladimir Vladimirovich, Russian companies are not only showing interest but, immediately following the ban on our wine, Russian alcoholic beverage producers bought one of Georgia’s big plants just a week later.

Vladimir Putin: To bring some order to things, probably.

Mikhail Saakashvili: But they’ll have to hurry because all our wine will be gone and there will be nothing left. So, let’s work together to sort out these problems.

Vladimir Putin: You are lucky that you will get good Georgian wine.

Response: … produced by Russians.

Vladimir Putin: No, Georgian wine produced by Georgians but at companies with Russian capital. My warmest greetings.