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President Vladimir Putin: Mr Chairman, Mr Barroso, Ladies and Gentlemen,

I would like to start by thanking our Portuguese colleagues for the opportunity to meet here in Mafra. This a wonderful place, very beautiful. My colleagues and I are all very impressed by what we see here, this small town with such powerful and monumental architecture. It is really a pleasure to be in such a place.

Today we are holding the twentieth Russia-EU summit. Twenty is not such a huge number by historical measures, but we have nonetheless reached this important milestone with good results in many key areas.

I note first of all the unprecedented growth in our trade. Although there have been a few differences over tactical matters or differences that we could say are of a political nature, trade has been growing very fast, growing not even in percentage terms but posting an almost five-fold increase since 2000. The volume in absolute figures is also very respectable – 180 billion euros. Russia has become the European Union’s third-biggest partner by volume of economic contacts, and the European Union is Russia’s biggest partner in this respect.

Total investment by EU countries in Russia’s economy comes to 30 billion euros. I do not know if this is a big figure or not, but in my opinion it is not a very big figure. Russia has also invested in EU countries, but the figures here are much smaller, ten times lower, only 3 billion. When we hear fearful talk in some EU countries about how the Russians are coming laden with money to buy everything up it all sounds a bit ridiculous to say the least. As I said, Russian investment in the EU countries is ten times lower than EU investment in the Russian economy. But we are not complaining; on the contrary, we welcome this investment. I propose that we discuss today the steps we need to take to increase these figures further and make them more balanced.

I want to emphasise that Russian investment comes from the private sector. We often hear from our American and European friends that Russia has accumulated enormous state reserves and that it now plans to invest them and buy up the entire European economy.

Russia does indeed have very large gold and currency reserves. According to yesterday’s data, they have reached a new record of $445.1 billion. This makes them the third-biggest in the world after China and Japan, and we are now drawing very close to Japan. But our gold and currency reserves and the Government Stabilisation Fund are macroeconomic policy instruments. We invest this money in various financial instruments on the Western markets, reliable instruments, and we do not use this money for investment, all the more so for investment abroad. We do indeed plan to use part of our oil and gas revenue for specific purposes such as developing the pension system and establishing development institutes within the country, though we are careful in this respect not to have any adverse impact on our macroeconomic indicators. But these funds are not intended (and there are no plans to change this) for investment abroad. Practically all of our investment abroad comes from the private sector. Even when it is Gazprom doing the investment, let us not forget that private investors hold 49 percent of Gazprom’s shares, and at least 25 percent of these, according to our data, are in the hands of foreign investors.

The dialogue system we have established for work in the different sectors is developing rapidly. The ‘roadmaps’ for the four common spaces adopted two-and-a-half years ago also considerably strengthen the foundation for our relations. Their implementation involves carrying out numerous joint business, cultural and humanitarian projects and programmes that will benefit millions of our citizens. But the partnership between Russia and the European Union has even greater potential and it is in our common interest to look for new and more effective forms and models of cooperation.

Consistent work to eliminate the obstacles to developing our partnership remains an important task. One of the most pressing problems today is the conclusion of a new Russia-EU Partnership and Cooperation Agreement. Talks on this agreement have not yet begun. We hope therefore that the existing agreement will be automatically extended for a year as from December 1 this year, as provided for in the current agreement’s provisions.

I hope that very soon we will not only launch the negotiations on a new basic agreement but will soon have an approved draft of this document. In this context, we welcome the unofficial European Union summit’s approval in Lisbon of the draft treaty on reform of the European Union. We see this as an important step towards overcoming the EU’s internal difficulties and a step that will help us to understand each other better. I would like to congratulate all of our European colleagues who worked so hard on this document over many years.

Our agenda also includes important matters such as guaranteeing the rights of Russian-speaking citizens in the Baltic states and settling international conflicts. I hope that discussion of these issues will be, as always, substantial and frank. Our common desire for constructive dialogue will help us to reach mutually acceptable solutions.