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Excerpts from Transcript of a Talk with Journalists Before a Meeting with Mikhail Kasyanov, First Deputy Prime Minister and Finance Minister

February 15, 2000, The Kremlin, Moscow

Question: Opinions vary as to Mikhail Kasyanov’s negotiations with the London Club. What is the net result? How successful were they for Russia?

Vladimir Putin: That will be one of the topics of our conversation today. It is a very serious issue. It is not an ordinary debt. The total debt of the former Soviet Union amounts to $32 billion; it is not 30 roubles or something. It is a very important issue for the country because Vneshekonombank was directly responsible for it. Not the state, but Vneshekonombank. Theoretically, we could have acted as if the state had nothing to do with the matter. But because Russia has been saying all along that Vneshekonombank is a state bank, the Russian government will not pretend that it does not concern the state.

And I’d like to make something clear. We will never allow anyone to interfere in our affairs, but we are not going to be indebted to anyone. And this is not just because of our special Russian pride. Having said that, I think that any actions of the authorities, both inside the country and in relations with our partners, must be based on high moral and ethical principles. If we cheat, everything will come tumbling down. It is really very important, it is the foundation of everything.

But we should solve such issues on terms that are acceptable to us. In essence, Kasyanov managed to get the creditors to agree to our terms. Well, if we declare that we are ready to pay on these terms, then our Western partners – and these are very influential companies and organisations in the Western financial world – automatically become interested parties. Interested in a prosperous and competitive Russian economy. Otherwise they won’t be able to get anything from us. But we are ready to pay back, and they should help us to build up our economy so that we are able to pay.

And lastly, the actual terms. I think the terms are very good. I have already said it and I want to repeat it. We’ve had 36% of the debt written off at once, we are not paying that sum. If you reckon what that percentage of $32 billion comes up to, that’s quite a lot. And payments will be spread over a period of 30 years, of which 7 years is a period of grace. What does that mean? It means that the interest rate we will be paying during that period will be below market rate. All that taken together, we believe, shows that the write-off will actually be at around 52%, the West thinks it is 57% (according to their calculations). But we think it is 52%.

And you know about the recent developments in the securities markets. Immediately after the signing of the agreement Russian prices went up significantly. That speaks volumes. It is a good sign.

That’s my view of what has happened with the debt.

February 15, 2000, The Kremlin, Moscow