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President of Finland Tarja Halonen: Good evening, ladies and gentlemen,

President Putin noted during our talks today that this is our fourth meeting already this year. I don’t know why, perhaps because we always have so many issues to discuss, or perhaps because we discuss all these issues at quite some length, but we never have enough time. Nonetheless, it is always useful and productive to discuss the questions of interest to both countries.

We concentrated mainly on bilateral issues this evening. As you know, our two countries have excellent relations and this is not news. Our trade and economic ties are growing fast and our bilateral trade is now in the double figures. We also have close and active cooperation in other areas.

We also discussed practical matters today. We spoke about transport, border and customs cooperation and about how we can make our common border operate more efficiently in order to handle the growing amount of traffic. I am very pleased that our respective ministers and the heads and officials from our border and customs services have made good progress on these issues.

I am not saying that there is any simple solution to these problems, but we noted that both sides share similar views on how we can go about resolving these issues, including through organising road traffic flows and improving cooperation between the different agencies.

As has already been said, we will continue our talks this evening, and so we have not yet discussed all the issues on our agenda. It will be a pleasure for us to continue this dialogue.

President Vladimir Putin: First of all, I would like to thank my Finnish colleagues for this invitation. In terms of the people taking part, our meeting today was more like intergovernmental consultations.

Finland remains one of Russia’s most important partners within the European Union.

Over these last six years, our bilateral trade has grown steadily and this year will see it increase by around 15–17 percent.

We did indeed pay considerable attention to the question of developing the border infrastructure between our two countries and to trade in general. The fact of the matter is that trade volumes and traffic flows are growing at such a pace that the existing infrastructure can no longer keep up. Resolving this issue requires a comprehensive approach that includes re-channelling freight traffic through different border crossing points and making more active use of rail and sea links. It also calls for us to simplify and automate customs procedures and exchange information on freight traffic flows. Our respective prime ministers will hold a meeting in Moscow at the end of November and will examine all of these issues in detail. But we are already taking measures now to respond rapidly and improve the situation on the border.

We greatly appreciate Finland’s role, as the country currently holding the EU presidency, in developing relations between Russia and the European Union. We have worked consistently on implementing the roadmaps for the four common spaces.

Finland has also played an important part in developing cooperation within the framework of the Northern Dimension.

We will have the chance during the second part of our meeting today to discuss other bilateral matters and talk about issues on the international agenda.

I would like to thank Mrs Halonen for the very friendly spirit of today’s meeting and for the results our talks have produced. Thank you.

Question: This is a question for both presidents. You spoke about the prospects for developing cooperation but said practically nothing about the energy sector. What bilateral plans are there in this sector? And how do you assess the overall mood and spirit of Russian-Finnish relations?

Vladimir Putin: Finland is also one of our main partners in the area of energy cooperation. Approximately 90 percent of Finland’s gas comes from Russia. Supplies of crude oil and oil products are also increasing. We are interested in working with our Finnish partners in a number of other areas in the energy sector, above all in high technology. I must say that Russia and Finland have proven themselves to be reliable partners in their relations. We have plans to develop these relations and increase volumes in practically all areas, and at state level we will do everything necessary to support this cooperation.

Tarja Halonen: I would just like to say briefly that energy issues are of interest not only in terms of our bilateral relations. They will most likely also come up for discussion at the Russia-EU summit tomorrow. They are of interest to the entire European Union in the sense that Russia supplies more than a quarter of all the energy consumed in the European Union.

Energy issues were on the agenda at the G8 summit in St Petersburg last July, and at the informal Russia-EU summit in Lahti in November. The discussions were positive in the sense that both sides share a common view on the main development principles and vectors.

During its presidency of the European Union, Finland has sought to step up the energy dialogue between the European Union and the Russian Federation. I think that everyone is happy that this issue is receiving such attention.

As far as trade and economic relations between Finland and Russia are concerned, everyone knows that Russia is our biggest energy supplier. But I want to add that cooperation in the high-technology sector is set to be one of the main areas for our work together in the future. I also want to note that although Russia has vast energy resources of its own, it is pleasing to see that both Russia and Finland have signed the Kyoto Protocol and place great importance on energy conservation.

Question: Poland is obstructing the start of talks on a new Russia-EU partnership agreement because of disputes over meat supplies. Now there is talk that Russia plans to introduce a ban on agricultural goods, including meat, from the entire European Union. If this is indeed the case, why are the current disputes with Poland now being extended to the entire European Union?

Vladimir Putin: The disputes with Poland are not being extended to the entire European Union. What’s more, we have no problems with the quality of Polish products, including agricultural produce. We are perfectly satisfied with the quality of Poland’s goods.

The problem is that the Polish authorities are not properly controlling the meat products from other countries, including countries whose meat imports have been banned in EU countries and in Russia, and these meat products are finding their way onto the Russian market.

This negligence on the part of the Polish authorities is dealing a blow to Poland’s own producers. It is this situation that explains why we have had to impose this ban on meat products. But we do not see any insurmountable problems here. Many countries unfortunately encounter customs regulations violations, including Russia itself. We have a good number of similar problems. The way to settle issues of this kind is to sit down at the negotiating table, come to an agreement and look for acceptable solutions. In this situation it’s important to protect not the swindlers and schemers involved in smuggling, but the interests of one’s own producers.

As for the question of meat from the rest of the European Union, this is a separate issue and is linked to the accession of two new countries, Romania and Bulgaria. Unfortunately, during these countries’ accession process, our colleagues from the European Union did not hold preliminary consultations with us on a number of problems of mutual interest. To be more precise, I am referring to officials from the European Commission and not to the European Union member states.

The problem is that we have food safety issues with these countries and this creates a dilemma for us because meat products from these countries will benefit from the same rules as goods from all the other EU countries and will end up on our market, but we have certain issues regarding these products that must first be resolved.

So, there is no political motive behind this issue. It is a matter for practical negotiations. I think that we will all have the chance to discuss these questions tomorrow and we will certainly examine these matters. This is why I have come here.

Question: I would like to come back to Russian-Finnish relations and put two questions to both presidents. Why is Finnish investment in the Russian economy growing so slowly? This is more an exceptional situation today than the rule.

And second, the Finnish media write a lot about the situation of the Finno-Ugric peoples in Russia. Do Russia and Finland have any plans to do something to improve the situation of the Finno-Ugric peoples?

Tarja Halonen: I will answer this question in Finnish since it is about our bilateral relations. Regarding Finnish investment in Russia, our investment is growing quite fast but probably not as fast as Russia would like. There are several reasons for this. One is that the goods we export to Russia can be produced here in Finland, and so there is no need to build production facilities in Russia itself.

I already congratulated President Putin on the good progress made in negotiations for Russia’s accession to the World Trade Organisation. I think that once this process is complete and settled, Finnish businesses and companies will invest more in the Russian economy. I am not given to boasting, but I would like to point out nevertheless that even as things stand today, Finnish companies provide employment for around 30,000 Russians. Furthermore, Finnish companies are showing an ever increasing interest in investing in the Russian economy, and I am happy to see that our discussions also touched on the issue of making greater use of our common scientific and technological potential. We also discussed logging industry issues.

Overall, I am sure that Finnish investment in Russia will grow at a faster pace in the future, and we have already achieved some good results today.

Vladimir Putin: I agree. There could be more investment. Investment in 2004 came to around $600 million, and now it is a bit more than $700 million – around $740 million.

There are two important factors here. The first is Finnish companies’ possibilities for investment, and the second is the conditions that we in Russia create for investment. I can talk only about the second factor. I do not think that investment conditions in Russia have always been optimal, although they have improved from year to year. We have now passed a whole series of laws that protect property rights, including intellectual property rights and rights on the securities market. Ms Halonen just mentioned our cooperation in the logging industry. As you know, we are in the process of passing the new Forest Code. This will give businesses working in this sector the opportunity to take out long-term rent of large tracts of forest for rational use. This is also a means of creating good conditions for encouraging bigger investment flows. We have taken a good number of decisions of this kind in Russia recently. You know, too, that we are creating zones with special administrative and customs rules, above all, zones for working in high technology and developing the tourism industry. We have also passed a law on concessions.

I hope that all of these measures and decisions will create better conditions for investment in Russia. I have no doubt that we will soon begin to see the results. We will also encourage Russian companies wanting to invest in the Finnish economy, and I hope that Finland will also create the necessary conditions for Russian investment.

Tarja Halonen: President Putin and I have discussed the situation of the Finno-Ugric peoples on many occasions. I think he is clearly aware of the situation of these peoples in Russia today. I am interested by the life and the situation of all the people in Russia, but I can be frank in saying that the life of the Finno-Ugric peoples, of course, interests me most of all. President Putin has already invited me to come to Russia and see for myself how these peoples live today, and I think that a visit of this sort will be organised.

Vladimir Putin: Finland has traditionally shown particular interest in cooperating with the neighbouring regions in Russia. This is understandable, because contacts are most intensive precisely in these regions.

As for Finland’s interest in the Finno-Ugric peoples in Russia, this is also completely understandable. We fully support this interest and see it as another of the threads that bind our two countries together. I thank the President for accepting my invitation to come to Russia next summer and visit some of the areas where Finno-Ugric peoples live.

Question: I would like to ask my question in Finnish. When will urgent measures be taken to remove the barriers and obstacles in the way of trade and investment and resolve the problems we have in crossing the border?

Vladimir Putin: I already outlined our views of these problems in my opening remarks. It is hard to ignore these problems when we see the huge queues building up at the border. This is linked to the fact that large amounts of freight traffic, including from outside Europe, come through Finnish ports and then enter our territory. Our trade with Asian countries is increasing all the time and the Russian-Finnish customs infrastructure is simply not able to keep up with this increasing volume.

This situation is also due to the fact that some of our neighbours have introduced additional rules for freight crossing their territory, and this also redirects freight flows to the Finnish border. And then trade between Russia and Finland and between Russia and the European Union in general is also growing. Last year, six million people, two million cars and 700,000 buses crossed the Russian-Finnish border. Of course, neither the road network nor the border crossing point customs infrastructure can handle this kind of increase in volume.

What then is the solution? Of course, we need to redistribute the flows between different types of transport and different crossing points. We in Russia need to better organise our customs procedures along the entire length of our border so that the people sending the freight wouldn’t need to haul their goods across the entire world to Finland and from there into Russian territory. We need to simplify our customs and border procedures, remove from the crossing points the various organisations that have nothing to do with customs clearance of freight, and introduce an automated freight inventory system. We need to sign intergovernmental agreements on exchange of electronic data on freight crossing the border and work together on combating smuggling. These measures have all been planned and will all be implemented. Some of them are already being implemented. We discussed some of them today and will discuss others tomorrow together with the European Union. And, of course, we need to put money into this work. We need to build new crossing points, new roads and passes.

Of course, this cannot all be accomplished overnight, but we won’t be able to resolve this problem without serious investment in infrastructure development. We will carry out this work.

Tarja Halonen: I would like to sum up what has been said today. During our talks today we discussed many measures that can improve the situation. We discussed the working hours of the border crossing points and agreed that they ought to work around the clock. We also discussed the need to increase the number of personnel working at the border, the need to improve traffic management and cooperation between the different agencies. These are all measures that we can start implementing in the short term.

We also discussed the measures we can implement in the long term. Whether these measures are implemented on a bilateral basis or within the framework of the European Union is not so important. What is most important is that both the Russian and Finnish authorities share similar views on how to settle these issues. We spent a considerable amount of time today discussing precisely these matters. I can assure you therefore, that these issues will get all the attention they require, including during contacts between our prime ministers.

I would just like to add that the ministers responsible for the issues in both countries are present here today. I hope that they will be available to answer your questions following this press conference. Thank you.