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Vladimir Putin: Ladies and gentlemen, an informal meeting of the CIS heads of state, members of the CIS leadership, has just ended. It was another opportunity to discuss the current problems and the future development of the CIS.

Economics was the dominant topic. As you know, the heads of state at their meeting in Chisinau last October decided to step up economic interaction within the CIS. We are convinced that this meets the national interests of all the Commonwealth states. Intensive work on concrete proposals and projects for economic cooperation has begun. The starting point for many of them was provided by some interesting proposals made by Leonid Kuchma in Chisinau. I am sure significant progress on multilateral economic cooperation can be achieved. Our countries have both the necessary resources and the political will.

We have touched upon some relevant international issues, issues of world politics. We have discussed the fight against terrorism. We have paid due attention to the problems in Iraq and North Korea. I would like to say that our views on these issues have much in common. I think it is a good basis for closer and more fruitful cooperation in promoting the political dialogue between the Commonwealth countries.

And finally, at the initiative of the Russian Federation backed by all the heads of delegations, the Ukrainian President Leonid Kuchma has been unanimously elected as Chairman of the Commonwealth of Independent States. I warmly congratulate him. And I would like to thank the Ukrainian leadership for organising our joint work in Kiev.

Leonid Kuchma: Ladies and gentlemen,

Vladimir Vladimirovich,

I confirm the assessment that you have made. It is true that the summit continued the discussion of the problems raised in Chisinau. Today, as you are aware, the main problem within the CIS is economics. We were united in recognising the need to complete all the work to create a free trade zone. By the time of the next summit due to be held in Yalta in September, we are to prepare an agreed decision and sign the corresponding documents. We have all supported the idea of creating transnational companies in priority economic sectors. We have agreed that the priorities in the work of the Commonwealth of Independent States are transport and the fuel and energy complex.

So the summit is noteworthy from all points of view.

We did not ignore the problems of the fight against terrorism and the problem of Iraq. We thank Vladimir Vladimirovich Putin for briefing us on the Russian position.

As you know, sticking your neck out is always punishable, and because the Ukrainian President came up with some major initiatives on reforming our economic work during the Chisinau summit the heads of CIS states took that decision [to elect Leonid Kuchma as Chairman of the Council of CIS heads of state]. For my part, I thanked them for their trust in me and I promise to diligently perform my duties as the head of the Commonwealth. Thank you.

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A question about granting Russian citizenship to the people of Abkhazia

Vladimir Putin: We did not plan to have questions and answers, but I understand that it is a pressing issue, especially for Georgia, and I am ready to answer it. I am not talking about Abkhazians, but about Georgians in general. In recent years, about a million Georgians have moved to Russia and of these 650,000 have obtained Russian citizenship. I stress, they are Georgians. Under current Russian laws, we have no right to forbid anyone to apply for Russian citizenship. As you know, Russia introduced a new citizenship law in July 2002 which makes acquiring Russian citizenship more complicated. Naturally, this caused some agitation in some CIS countries and among those who want Russian citizenship. Needless to say, this was the case in Abkhazia. I would like to get the record straight: we did not issue passports; we just accepted applications for Russian citizenship. We had no right to turn down the applications under the law.

As for the transport infrastructure, I think it is in the economic and political interests of Georgia to solve this problem and to extend this railway line to Armenia. Georgia would derive income and develop its own economy.

As regards political issues, we cannot solve them without the Georgian leadership. The Georgian President said it yesterday, and I agree that the development of infrastructure must proceed in parallel and coincide with the return of refugees to their permanent places of residence. It is a matter of negotiations. We intend to continue negotiations with the Georgian leadership. Thank you.

Question: What topics were discussed pertaining to the development of economic interaction within the CIS?

Vladimir Putin: We mainly discussed economics and the free trade zone. We presented our case. I drew attention to the fact that Russia was in favour of a free trade zone. We have practically signed bilateral agreements for this zone with all the countries with the exception of Ukraine, Belarus and, I think, Tajikistan.

As I said, and I will repeat it, the main problem is that most of our exports are energy and fuel, and the CIS countries so far have not been able to reciprocate. For us it means a transition to collecting indirect taxes in the country of destination, which means that large amounts of money will be removed from our budget and transferred to the budgets of our partners. If, for example, we adopt this scheme with Ukraine, we will lose $650 million and the Ukrainian budget will receive it. We can be happy for our Ukrainian colleagues, but you must understand that we must derive some benefits for ourselves. In principle, it is the right system, it is logical, and it improves trade. On the whole, we are ready to do this work, but to cushion the blow for the Russian budget we propose to make reservations and exceptions on these issues and we are working on a schedule of a soft transition to full-scale functioning of the free trade zone. That is, a smooth transition to collecting taxes in the country of destination, a transition that would take several years.

On the positive side, I should say that our Ukrainian partners have been understanding. The President said he understood Russia’s concerns and agreed with the argument. He is ready to instruct his Government to finalise these bilateral agreements, with the exemptions proposed by the Russian side so that an agreement could be signed by the next summit in Yalta to pave the way for a final introduction of the free trade zone.

Question: Why did your conversation with Eduard Shevardnadze last so long?

Vladimir Putin: Because there are many problems, and they all have to be discussed. As you know, it is connected with the question of passports in Abkhazia. I have just answered this question which was put by your Georgian colleagues. I can merely repeat that beginning from 1993–1994, if I am not mistaken, a million Georgians moved to Russia and 650,000 of them obtained Russian citizenship and many applied for it. So, if we allow Georgians to acquire Russian citizenship why should we deny it to Abkhazians? In general, under domestic Russian laws we have no right to forbid anyone to file applications. As you know, in July last year we passed a law on the new procedure for granting Russian citizenship, which is more complex than before. Naturally, it triggered a flood of applications in all the CIS countries. Abkhazia is no exception, and indeed more applications were filed there because of the plight of the local population. We could not turn down these applications, but we did not issue passports on a large scale. So, our Georgian partners did not ask that question quite correctly. We are not talking about a mass issue of passports, but about a mass filing of applications. I repeat, we have no right to reject them.

Now about the commuter train. Indeed, the decision has been made by a commercial organisation. Let me tell you frankly that for us this measure has more to do with the fight against corruption because if you go to a market in Sochi you will see that the vendors there are mostly from Abkhazia. They do their trading there regardless of whether or not there is a commuter train service. The only difference is whether they bring their goods by cart, pay bribes to the people who man the checkpoints or, if they cannot afford it or don’t want to, they find their way by taking secret footpaths. There is no border, there are no spotlights or trained border dogs. These people get there anyway. It makes no sense to restrict their movement because there is no border and never has been.

Secondly, we believe it is meaningless to create any enclaves or ghettos and to put an economic stranglehold on anyone. No one has ever succeeded in doing so. I don’t think it can be done with regard to Abkhazia. At the same time, we think it would be wrong not to take into account the opinion of the Georgian leadership because Russia’s position regarding the territorial integrity of Georgia has not changed. We consider Georgia to be a single state. We will pursue this policy and support Georgia’s quest for territorial integrity, but we must tread warily following the well-known principle of “doing no harm,” taking into account the interests of all, including Abkhazia.

As for the economic aspects, I am sure that Georgia will only gain if the transport infrastructure problems are sorted out because it will become a transit country. It will contribute to the development of its own economy and it will enable it to derive profit from transit.

Question: Mr Putin, a question about the statement Georgian President Shevardnadze made about the status of peacekeepers yesterday. Does it mean that a system of passes is being introduced?

Vladimir Putin: We have agreed to finalise this issue over the next two weeks. It is not Russia’s aim to have its peacekeepers there at all costs. They are not our peacekeepers, they are CIS peacekeepers, but most of them are Russian. The issue cannot be resolved without the consent of the Georgian side. That is impossible. We will not insist on that. And if our Georgian colleagues do not agree to the presence of peacekeepers, we will pull our peacekeepers out. I don’t want anyone to entertain any illusions. We believe it would be dangerous, of course, but then it would not be our responsibility. We are ready to have them there if the CIS as an organisation decides so with the consent of the Georgian leadership. But if there are no peacekeepers, things will become more complicated, it will become more difficult to resolve the situation and there will be complications, something we would like to avoid. We believe that the current balance there should be preserved.

Question: Why did you promote Leonid Kuchma to the post of Chairman of the Council of CIS Heads of State? On what merits?

Vladimir Putin: The answer lies on the surface. Ukraine is the second largest CIS state after Russia, a country of nearly 50 million people, and the second largest economy in the CIS. It carries a great weight in the CIS. I think it is a natural choice. And I think it is right that leadership of the CIS should be held in rotation, as its Charter says. Up until now, that provision of the Charter has been ignored. And I think it was a major mistake on Russia’s part because if we want the CIS states to be really involved in the problems of the Commonwealth and to be engaged with the organisation, to develop it, support and strengthen it, not only the leaders of these countries, but their citizens must see that they have direct instruments to influence the policy of that organisation by being at the very top, by being members of the CIS leadership.

Question: There were some in Chisinau who did not agree with that idea. Yes?

Vladimir Putin: Not everyone agreed in Chisinau.

Question: And is there a consensus now?

Vladimir Putin: Yes, there is. First, it came as a surprise to many. I must admit that I made that proposal without preliminary consultations. Now we have held the consultations and we have convinced our partners that it is practical. Some of them indeed had fears that it could weaken the CIS; that was the main argument. They argued that because Russia is the largest CIS country it should permanently be in the driver’s seat. That is not my line of thinking. I have just told you what I think. And after we discussed it with our colleagues closely and in a calm atmosphere, they agreed with this logic.