Official website of the President of Russia

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Finnish Prime Minister Matti Vanhanen: Good evening Ladies and Gentlemen. We have just finished our dinner with very intensive discussions.

Let me first of all thank President Putin for accepting my invitation to join us for the dinner today. I think that this evening was very useful. I would describe the atmosphere over dinner as informal and to-the-point. We had very good open and frank discussions indeed.

Russia is a strategic partner for the EU. Our cooperation extends to a large number of areas.

As we will be holding an official EU-Russia Summit in just a few weeks’ time in Helsinki, this was not the place to make decisions, but rather to have an exchange of views on a broadspectrum of themes.

Let me quickly go through some of the main themes that were touched upon during our dinner.

Energy was one of the main topics. We were able to exchange views on our energy cooperation and we heard President Putin’s views on how Russia is developing its energy sector. The European Union is aiming at building a close and legally binding partnership with Russia with mutually balanced, long-term benefits. I think President Barroso could elaborate on these issues in his remarks.

We also briefly discussed some current international issues. We agreed that even though we cooperate a lot in international affairs – in questions such as Iran, North Korea and Middle East – we can still enhance our cooperation further.

The recent murder of Anna Politkovskaia was also raised during our talks. This terrible crime needs full investigation and those responsible for this crime must be brought to justice.

We touched extensively on relations between Georgia and the Russian Federation. Here, the EU expressed its concern at the escalation of tensions.

Our cooperation at regional level was also discussed. I expressed my great satisfaction at the fact that the Northern Dimension will be strengthened this autumn as it will become a joint policy between the EU, Russia, Norway and Iceland.

Now I think it is time for me to give the floor to President Putin, to hear his views on our talks at the dinner table. President Putin’s remarks will then be followed by remarks by President Barroso. So President Putin, please.

Russian President Vladimir Putin: First of all I would like to talk about my impressions of this city. They are very good impressions. Lahti is a small European city but has a remarkable, excellent situation with good possibilities to host large events. I’m very impressed. And I would like to thank the city’s inhabitants for their very warm welcome. This was visible right from the moment we arrived.

Our summit meeting has ended. The informal aspect of this summit allowed us to engage in a frank exchange of views in an atmosphere that was as free and natural as possible. I shall point out that all the heads of state and government of the EU participated in this summit, including those of the EU candidate countries Romania and Bulgaria, and the leadership of the European Commission. I do not mention Bulgaria and Romania by chance, nor because they are EU member candidates. I mention them because they are our traditional partners, Russia’s traditional partners. The issue of deepening the strategic partnership between Russia and the EU was the central theme of our discussion. A firm desire to construct long-term and mutually advantageous relations, based on common values and interests was obvious.

In the near future we must begin working on a new fundamental document to replace the partnership and cooperation agreement that is valid until the end of the next year. In view of the intensity of our relations and their prospects, we proposed calling the new document the Strategic Partnership Agreement. But of course both the document’s name and the content must be decided during talks.

The meeting also focused on the issue of cooperation between Russia and the EU in the energy sector. Undoubtedly Russia and the EU are natural partners in this area. Our interdependence only strengthens energy security on the European continent and thereby creates good conditions for drawing closer together on other issues as well.

By the way, I drew our colleagues’ attention to the fact that if, shall we say, 44 percent of the EU’s gas imports come from Russia, then 67 percent of Russia’s gas exports go to Europe. This means that in actual fact Russia today depends even more on European consumers than they depend on their suppliers.

The leaders of EU countries and Russia once again confirmed that energy cooperation must be based on principles such as the predictability and stability of energy markets, on the mutual responsibility of producers and consumers of energy resources, and on reliably ensuring the security of vital energy infrastructure.

In conclusion I would like to once again thank our hosts for their brilliant organization of today's event. Thank you very much.

President of The Eu Commission Jose Manuel Barroso: Thank you very much. We sat down tonight with President Putin as a major strategic European partner and also as a global player with global responsibilities. It was indeed an uncommon and common setting because we had all the leaders of the European Union inside and a guest, President Putin.

I think we can say clearly that Russia needs Europe just as Europe needs Russia. We need to acknowledge and benefit from this interdependency. And this concept appeared several times during our very open talks. Positive interdependency. We want our relationship with Russia to deepen. To achieve that we need to develop mutual trust. That requires transparency, rule of law, reciprocity and non-discrimination along with market opening and market access. This applies of course to energy and not just energy.

In fact, we have underlined that energy is a very important part of our relationship but it would be a mistake to reduce, or just to focus on energy when you can see that very broad field of our cooperation. But those principles that I just mentioned, and I mentioned during our dinner when I was introducing our topic energy on the European Union side.

Transparency, rule of law, reciprocity, non-discrimination, market opening, market access. We have already agreed [on that] at the G8 Summit in St Petersburg hosted by President Putin. We recognized today that these principles are crucial to energy security.

Of course now the question is to put these principles into practice. The European Union wants Russia as a predictable and secure energy supplier. Of course Russia is also looking for predictability from the European Union. What is also important, as President Putin just said, are our investment relations. We are discussing a very important market for the European Union and we can attract a great deal of investments. But we are also talking about the important investments that the European Union can make in Russia’s energy sector, one that has a huge potential. Energy as a strategic issue, for both Russia and the European Union, and also a global strategic issue, should be a key element in a new European Union-Russia framework agreement.

As you know we are preparing that framework agreement because the current one is coming to an end. And very soon, here in Finland, we are going to have a formal European Union-Russia meeting, precisely to discuss those issues.

I think today the debate was very open, very frank, very interesting, it could be a very important contribution to the preparation of the next phase. The European Union, and of course the European Commission, are ready to contribute to this important strategic relationship. A relationship that was clearly presented today in order to be deepened needs to be based not only on common interests but also on common values.

Question (DPA, German Press Agency): Question to Mr Putin. Are you willing and ready to include the question of energy into the Partnership and Cooperation Agreement, or is this something that you would not want to have in the agreement that is to be discussed? Thank you.

Vladimir Putin: I thought that you were going to politicise the issue, but you have asked a serious question and one that is not so easy to answer. We have been engaged in an energy dialogue with the European Union for several years now. And within the framework of this dialogue we are trying to identify common approaches. We would very much like for cooperation in this field to be not only mutually beneficial, but also based on common approaches and principles, on uniform principles.

I shall talk at once about the Energy Charter and its Protocol and perhaps anticipate some of your colleagues’ questions. We are not against the principles contained in the Energy Charter, but we consider that some of the Charter’s provisions need to be further specified or else we should develop a new document based on the same principles contained in the Charter. And this is because no long-term and concrete prospects can exist without taking into account the interests of all partners involved in cooperation. Especially following today's summit, I am confident that we will find common approaches with our European partners. We will incorporate these principles into the future document, or perhaps this will be a separate document – it is still premature to discuss this because we have not yet started working on it. But we would not be against incorporating these principles there.

However, in addition to energy we also have high-tech, aviation, outer space, biology and so on. We cannot incorporate all of these sectoral issues into one basic document that regulates relations between Russia and the EU. But we are determined to develop common principles for our energy cooperation. We believe that we will be able to reach an agreement with Europe on all issues, even those that seem very thorny at first glance.

Question (Izvestiya): Good evening. Thanks very much. I have a question to all of the participants, which picks up from the previous question, and which I would like to put a little more concretely. I believe you must have discussed the Energy Charter today. That's one of the most important issues between Russia and the EU, because Europe wants us to be more liberal, to give foreign companies access to our gas and oil infrastructure and our pipelines. However, at the same time, Europe itself encounters certain problems. You remember when the Italian company, ENI, tried to buy Gaz de France. So these liberal principles are not always applied in practice in Europe itself. Could you tell us, have you made any progress on this issue today? Is Europe prepared to make concessions today? Or perhaps are you, Mr Putin, prepared to shift your position somewhat in order to be able to ratify the document? Thank you.

Matti Vanhanen: During the dinner we discussed these things in detail. And when I made the conclusions about the discussions, I said that I’m very confident that after this dinner, we can soon – in a few weeks, when we will have the official EU-Russia summit – start negotiations for a new PCA Agreement, or one that will have a new name. And during those negotiations, we will be able to go into the details. We all know that there are problems on both sides. That’s why, But we are good partners exactly because we can discuss all these issues and it can be done within the discussion of the new agreement.

Vladimir Putin: We did not speak today about ratifying or refusing to ratify the Energy Charter. We discussed common approaches and principles that we can agree on. And I think that Jacques Chirac, the President of France, was quite right when he said that we had common problems, and that we were in a position to identify common solutions. I couldn’t agree more.

Jose Manuel Barroso: Concretely, to answer your question, in fact we discussed this issue of market principles. And indeed our position – and I believe also the position of the Russian President – was that we should avoid the politicisation of the energy issue. At least that was the way I understood it. We believe that the best way to avoid over-politicisation, a dramatisation of the energy issues, is precisely to implement well established market principles: openness, transparency, non-discrimination. In the long run, that's precisely what can consolidate trust and avoid negative impressions that sometimes develop. So we believe on our side, on the European Union's side, that this is the best way to deal with a matter that can and should unite us, and not divide us.

Very frankly, I think we should not allow energy to divide Europe and Russia as communism once did.

Question (YLE, Finnish Broadcasting Company): My question is to President Putin. EU countries and EU leaders have expressed their concern about the current situation between Russia and Georgia here at the meeting. And you also talked about it with our President Halonen on your way here. What was your answer to these concerns? And how do you see the situation can be solved, without it getting worse?

Vladimir Putin: Yes indeed, we really paid a great deal of attention to this. And my colleagues asked me to comment on what is happening in relations between Russia and Georgia. And my answer to them and the media is very simple. The problem does not lie in the relations between Georgia and Russia. The problem lies in relations between Georgia and South Ossetia, between Georgia and Abkhazia.

And we very much regret and are very concerned with the fact that the situation is developing in the direction of bloodshed. And today the Georgian leadership is aspiring to restore its territorial integrity by military means and they are almost acknowledging this openly. So let’s pay attention to just what and who we are discussing here. We are discussing very small nations in the Caucasus. The Ossetian people live in Ossetia, and about 70,000 people live in Southern Ossetia. But already 40,000 are refugees. And about 150,000 people live in Abkhazia. These are state formations, peoples that are much smaller than Georgia itself. And here lies the trouble and the tragedy. And this is what you need to be afraid of, and this is what we, together with you, need to avoid, namely bloodshed in the region.

This has nothing to do with Russia’s so-called evil machinations. Let us remember that just between 1917 and 1920 there were three military operations that Ossetians refer to as ethnic cleansing, and these campaigns resulted in very difficult relations between these peoples. And patience is needed, one needs to carefully restore trust in one another and to build a common state. We are calling for this and desire this. And we hope that this is understood and that bloodshed will be avoided.

This is the root of all the problems. I have the impression that we are purposely being waylaid by other aspects of the discussion. And this is what I wanted to emphasise first and foremost. As soon as different relations between Georgia, Abkhazia and South Ossetia are established, then Russian-Georgian relations will normalise. You should not blame us for not doing what we are not called upon to do. In the territory of the former Soviet Union we have quite a few frozen conflicts. And everyone I talk to says that if Russia were to desire it, then tomorrow this could be resolved. Russia will not take this responsibility upon herself. First and foremost it is the responsibility of the peoples and their representatives to reach an agreement between themselves and to find a compromise.

Question (Izvestiya): My first question is addressed to Mr Barroso. Over the past six months, the European Union has not been able, I believe, to take any unified measures to either normalise the situation in Lebanon, immigration in Spain, or the common energy policy. You haven’t been able to agree on that. Don’t you think that the enlargement of the EU is counter-productive in terms of its efficiency?

And another specific question addressed to Mr Putin: Mr Saakashvili claims that he is ready for dialogue. Do you intend to take any measures whatsoever vis-а-vis Georgia?

Jose Manuel Barroso: I’m afraid I did not understand your question very well. You relate Lebanon to the enlargement of the European Union. Lebanon is a real problem for the international community, and in fact, the European Union member states are by far those who are most committed to a solution. The international stabilisation force to Lebanon is led by two member states of the European Union, by France and Italy. No one is giving more support to the Lebanese people than the European Union. So in fact the European Union is very active in Lebanon. But let’s be frank: until now nobody was able to solve the Middle East problem – not the European Union, nor the United States, nor Russia, nor the parties themselves. So I don’t understand the link between Lebanon and the enlargement of the European Union.

About the enlargement and the way we work in the European Union, let me tell you the following. The European Union considers this last enlargement one of the greatest achievements ever in the history of Europe. For the first time now, we have peacefully united 27 countries that are democracies, that are pluralist democracies, and that are united by their idea of freedom. It’s a great, major achievement. Europe is no longer divided by walls, artificial walls, and we are working together.

So I really believe that the enlargement of the European Union, apart from being an historic achievement, is not reducing our capacity to act. On the contrary, it is giving the European Union more strength in the world. The European Union now is about 500 million people, the largest trade partner in the world, the best and the most important donor of development aid. So I want to make this point clear because maybe it's not sufficiently understood, that the enlargement of the European Union did not reduce the commitment of Europe to the outside world, for instance to Africa. On the contrary, it has reinforced the European Union’s capacity to act.

Vladimir Putin: I think that I have already answered the question about relations between Russia and Georgia. If that was not sufficient, I will try to explain some more. First of all, I believe that the initiative to worsen relations did not originate from the Russian side. In my view, that was done to create a favourable political background for possibly resolving the problems of Abkhazia and South Ossetia by using force and through bloodshed. We are urging all of you to pay attention to this and to do everything so that this does not happen. That is the first thing.

Second. Since we did not initiate this turn for the worse in our interstate relations, we are pleased to receive signals that testify that the Georgian leadership wants to come back around and improve our relations.

Matti Vanhanen: During the Lebanese crisis, the European Union had a common position, we acted together and we also achieved results. And it is easy to see when we look at what happened during July and August.

And before this summit quite a few of you were expecting that the Union will be divided on the question of energy policy. Actually I could ask: raise your hands whoever was expecting that. Yes, there were quite a few but we were actually very united. Our method for this summit was such that we first had a long debate between the EU Member States to find a common approach for our meeting with President Putin. And we succeeded in doing that. And that was one reason why we had such a flourishing discussion and debate with President Putin.

Question (Financial Times Deutschland): I’ve a question for President Putin. There were three developments in Russia recently. The first is the difficulties that Shell encountered in the Sakhalin II project. The second one is that no foreign company will be exploiting the Shtokman fields, together with Russian companies. And the third is defining certain sectors in the Russian economy in which foreign companies cannot invest without the approval of the Russian state. So that has created the impression among western companies that they are unwelcome in Russia and that the legal surroundings are changing in an unpredictable way. What would you reply to that? Thank you.

Vladimir Putin: Our legislation really is developing quickly, but it is developing in such a way so as to improve the investment climate rather than make it worse. Our legislation, both the latest changes and the planned changes – incidentally I answered German Chancellor Ms. Merkel’s question on this issue today in our discussion – the draft bills before the State Duma are all designed to guarantee foreign or other investments in the Russian economy, ensure ownership rights, and diminish the number of sectors where foreign capital cannot invest as much as possible. These sectors will mainly be off-limits to foreign capital for security reasons. Incidentally, we intend to radically limit the number of sectors not accessible to foreign capital. And the largest, unique, energy deposits in the world and in Russia that are off-limits can be counted on one’s fingers. All the rest will be accessible.

I will repeat once again that these decisions have been made with a view to ensuring investors’ rights. With respect to Shtokman, this has no relation to changing the rules in Russia. Nothing changed here. Gazprom declared that it wanted to involve foreign partners. Foreign partners made proposals. Gazprom analysed their proposals and took the decision that these proposals were not suitable, because they involved exchanging assets. And the Shtokman deposit is so large, and so unique in the world, that no one was able to offer adequate assets in exchange.

For that reason Gazprom declared that it would be the sole developer. But this does not mean that Russia refuses to work with foreign partners. In this case foreign companies could be involved as co-executors, in resolving management issues, and in the project’s technical implementation.

Now a few words about Sakhalin II. First of all the issue consists in ensuring environmental security. We are aware of certain very well known and recent examples in Alaska. Congress took the decision to prevent the company BP from operating there because of environmental concerns. We have not banned anybody yet. Russian and foreign investments in the Russian economy and in the energy sector keep on growing and can be measured in the tens of billions of dollars. But despite the need to ensure that the environmental requirements are met, there are other problems with respect to Sakhalin II. Our partners want to double their costs.

What does this mean for Russia? According to the production sharing agreements we are not going to receive income before all the expenses are recovered. We are not receiving anything now, despite the fact that oil has been produced for several years now, and if they increase their expenses we are not going to receive anything for the next ten years. Look at the additional expenses. The legal costs have almost doubled, expenses for foreign personnel have slightly more than doubled, and the same applies to expenses for business trips. According to the agreements Russian labour, materials and equipment would make up 70 percent the total. Today the figure is not even at 50 percent.

All of these problems that remain on the sidelines of the scandals are being covered over by those who are intent on defending their commercial interests. We are not creating a big problem here. We believe that we need to sit down at the table and come to an agreement. And I am sure that we’ll find solutions.

Question (Argumenty i fakty): Apart from the serious issues such as energy security, have you had time today to discuss a matter which perhaps does not seem as pressing but is still an interesting issue, namely visa-free travel between the EU and Russia? Are there any developments? This is a question addressed to all of the participants.

Vladimir Putin: Today we discussed our cultural and educational exchanges and we certainly talked about the fact that people should have a feeling of freedom in Europe. And as my colleagues have already said, we are going to work towards making sure that after the collapse of communism there are going to be no new dividing lines that appear in Europe. But we did not discuss the issue of the visa regime today.

Jose Manuel Barroso: I have nothing to add to what President Putin said on that matter. In fact that was not the main topic today but it was referred to. But I’m sure that during the next formal meeting between Russia and the European Union we can go more into detail on that issue. Commitments were taken on both sides and I’m sure that the commitments concerning simplifying the visa regime and the readmission agreement are going to be respected.