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President of Russia Dmitry Medvedev: Good afternoon, ladies and gentlemen.

I want to begin by saying a few words.

I am very pleased to see the President of Azerbaijan here in Moscow once again. As we said today, we do indeed have relations of friendship and trust, and this without any doubt helps our countries to build a full-fledged strategic partnership. This is the case today, and I hope it will stay this way in the future.

We discussed the main aspects of our bilateral cooperation and our trade and economic ties. We have made progress over recent times and this is reflected in the figures: various estimates put the trade turnover between our countries at close to $3 billion, and this is a good result. At the same time, the structure of our trade is also important. We trade not just energy resources, which have seen their prices rise steadily over recent years, pushing up the trade turnover figures. But our trade results are based on other figures too, and on our work in a wide variety of sectors. This includes technological goods, the transport sector, and the pulp and paper industry. What is most important now of course is to maintain the pace. We have to try to at least prevent our bilateral trade from falling as a result of the economic problems that are of course having an impact on our economies’ performance.

But there are good prospects in the sectors I just mentioned, and in the energy sector too of course, in gas cooperation, and with regard to oil transits from Azerbaijan via the Baku-Novorossiysk pipeline. In general, prospects are good in all of the different sectors in which we are already working together and in which we can develop our cooperation. No less important of course are our humanitarian contacts, and in this area too we have accomplished much over these last years. I want to say quite frankly that much credit for this work goes to the President of Azerbaijan, and we place great value on what is being done, knowing that this is in the interests of both our countries.

The opening of two new centres – the information and cultural centre and a branch of Moscow State University in Baku — will help to reinforce mutual understanding between our peoples, and most importantly, it shows that we are committed to the common values that unite us and help us build up our contacts in all different areas. I think that these kinds of contacts are exceptionally important. We spoke about this just now, and my Azerbaijani colleague shares this view. This is not just routine contacts or diplomatic protocol. The cultural ties that we are developing really are a very important part of our cooperation. A few years ago, the Year of Russia in Azerbaijan and the Year of Azerbaijan in Russia took place. I was working in the Government at that time and took part in organising these events. I think they were a success, and we need to continue building up our humanitarian and cultural ties.

We also discussed the international situation and regional problems. We talked about settlement of Nagorno Karabakh problem, of course. We examined the approaches that have been the subject of earlier discussions, and the need to implement the ideas that arose out of our contacts and the Declaration on Nagorno Karabakh signed in Moscow on November 2 last year, and we looked at the current situation. We hope this work will continue, despite all the complexity of the issue.

We also spent some time discussing international issues and measures to counter the economic crisis. In other words, we went over the same problems that are on practically all countries’ agendas today. Once more, I would like to thank the President of Azerbaijan for a very substantive discussion. It took place in a genuinely very friendly spirit. It was easy for us to talk, and we share very close views on practically all issues. This is the guarantee that the strategic relations binding our countries will continue.

Thank you.

President of Azerbaijan Ilham Aliyev: First of all, I would like to thank you once again for this invitation to visit Moscow and for the chance to talk together and discuss the most important issues in our bilateral relations and the regional situation. As you just said, we had a very open and candid exchange of views on the issues of mutual interest.

Relations between leaders shape in many ways the relations between countries. It is very pleasing to see that the friendly relations between Russia and Azerbaijan are reflected in the relations between our two countries’ presidents. We make maximum use of each meeting to discuss all issues that need to be examined in an open and sincere spirit. And each time, we see that there are fewer and fewer issues that require our urgent intervention. There are no problems between our countries, and any issues that come up that require discussion and decision are swiftly dealt with.

The President of Russia outlined the items on the agenda we discussed today. We had quite a broad agenda. Russia and Azerbaijan share similar views on bilateral cooperation and regional affairs.

We are very pleased at the way relations between our countries are developing. They have a solid political and legal base, and the Declaration on Friendship and Strategic Partnership we signed last summer in Baku covers all the different areas of our work and cooperation.

Strategic partnership is exactly the term that best fits our relations. We have achieved good results in our economic relations too, despite the crisis. Our trade turnover has posted only a minimal drop. I hope that in the future, once we get through the crisis, our economic ties will continue their successful development.

We took a detailed look at our energy sector cooperation. As producers and suppliers of oil and gas, Russia and Azerbaijan seek to guarantee insofar as possible their own energy security and energy interests, of course, and in this area, as producer countries, we share common objectives.

We also discussed in detail the issue of settlement in Nagorno Karabakh. We hope that continued talks between Armenia and Azerbaijan will lead to peace in our region, and that the conflict will be settled based on the principles and provisions of international law, and in accordance with the OSCE decisions and the resolutions of the United Nations Security Council.

Humanitarian cooperation is a very important part of our relations, and we are very pleased to see it expanding. Most important of all is that all of the decisions we make are implemented in practice. The President of Russia noted that the opening of the branch of Moscow State University and the Russian cultural centre in Baku are important events for our country, for Russia too, I am sure, and for promoting greater understanding between our peoples in general.

I want to add that a little earlier the Russian Drama Theatre in Baku was practically entirely rebuilt. This theatre has longstanding traditions and many devoted admirers in our country. Overall, the best indicator of the level of our humanitarian and cultural cooperation is probably the number of schools teaching in Russian. There are several hundred such schools in Azerbaijan. The attitude towards Russian language and culture in Azerbaijan has always been very positive and sincere, and we are pleased that our ties continue today. The relations between our peoples are an integral part of the relations between our countries.

Summing up, I want to say that I am very happy with today’s exchange of views, and I am sure that this meeting will contribute to further developing our ties and bringing us closer together. The presidents of Russia and Azerbaijan meet regularly, and this helps to ensure that our relations maintain their dynamic development.

Once again, I thank you, Mr President, for your hospitality and warm reception, and for the invitation. I hope we will meet again, both in Azerbaijan, and here in Russia.

Question: Russia is an active participant in the negotiating process [on settlement in Nagorno Karabakh] and initiated the meeting between the Azerbaijani and Armenian presidents that led to the signing of the Moscow Declaration. What further steps does Russia plan to take? Can we expect any new initiatives from Russia? Thank you.

Dmitry Medvedev: We do indeed hope for maximum progress in the negotiations on settlement in Nagorno Karabakh. The meeting that took place here last November, in this very building to be precise, and the Moscow Declaration that was signed, show at the very least that we can make progress, that the parties are listening to each other, and that there is hope. As the President of Azerbaijan just said, we need to base ourselves on the provisions of international law and on the resolutions passed by the United Nations and the OSCE. I think that progress is being made. The main thing is that this process not be affected by secondary but sometimes very complex factors, and that the parties exercise restraint and keep their sights on the prospects ahead.

Another thing I think is very important is that there be regular meetings between the presidents of Azerbaijan and Armenia. Russia is ready to carry out its own mandate in this respect. We have always tried to facilitate this process. If these contacts continue – and there is no alternative solution – I am sure that this problem can be resolved in the interests of both peoples, taking into consideration earlier proposals, and perhaps also some new ideas. Work should continue in this direction, but at the same time, we should not close our eyes to new approaches that could inject new notes into the situation and give us something around which we can consolidate the different positions. I think that this is all possible. At any rate, the Russian Federation will do everything within its power to help bring about a settlement for this very complex but nonetheless resolvable problem.

Ilham Aliyev: I want to say that Russia, as one of the countries co-chairing the Minsk Group in the OSCE, which is working on settlement of this conflict, plays a very positive part, and we are grateful for Russia’s efforts to bring the parties’ positions closer together. The OSCE Minsk Group has been around for many years now, and of late, its co-chairs have started working more actively. Of course we are not happy with the lack of results, but nonetheless, we have to admit that some progress has been made in the negotiations, and this progress gives us hope that this conflict will be settled relatively soon.

Of late, the parties’ positions have undergone a degree of rapprochement, and agreement has been reached on some issues that earlier seemed difficult to resolve. I think this is a good basis for continuing the talks. But there are also issues on which the parties have not been able to reach agreement. Our attempts are always based on a constructive approach, on international law, and on restoring historical justice. It is no secret that for almost twenty years, Azerbaijani territory has been under occupation, and this fact has been recognised by the entire international community, including the main international organisations. We hope that over these coming months we will be able to make further progress towards settlement and arrive at a solution that would be in the interests of all countries, and that would guarantee the restoration of Azerbaijan’s territorial integrity and the provisions of international law in our region. Everyone would benefit from this. If this were to be achieved, we could then talk about full-scale regional cooperation in the South Caucasus region.

I want to repeat that the progress in the negotiations does give us some grounds for optimism, but we are disappointed by the lack of results so far.

Question: Did you reach any new agreements during your talks on gas, gas transit, and cooperation in gas sector?

And a question for the Russian President: It was announced yesterday that NATO has decided to hold military exercises in the Caucasus, in Georgia in particular. Given the situation in this region, what is your view of this news?

Ilham Aliyev: We discussed gas cooperation of course. Overall, I must say that the cooperation between our countries in the energy sector is very positive.

The Baku-Novorossiysk oil pipeline has been in operation for many years now, and we hope in the future to increase the volumes we pump through it. We also have effective cooperation underway in the electricity sector. We are working hard on expanding this cooperation because it is advantageous for both sides. Our cooperation in the gas sector is more recent and began not such a long time ago. But I think that, given that it is relatively recent, we can see that sufficient progress has been made. Talks are underway on an agreement between Gazprom and the Azerbaijan State Oil Company. As you know, a memorandum on this subject was signed quite recently, confirming our mutual interest. There are no restrictions from our side on gas cooperation. Azerbaijan sees cooperation in this area as part of its work to diversify gas supplies. At the moment, Azerbaijan’s gas is transported westwards, and in this context, the possibility of diversifying supply routes and entering new markets, as for any country, interests us greatly.

I hope that these talks underway between our companies will be successfully concluded. The agreements reached should of course be in line with international practice and be of mutual benefit. I think that by acting in a spirit of good-neighbourliness and partnership we can make effective progress in this area, all the more so as Russia and Azerbaijan are neighbours. There are no transit countries between us, and this means that quite an effective transport infrastructure is already in place. There is no need for additional investment in building a gas pipeline. All the conditions therefore look very advantageous. The companies need to come to an agreement in a spirit of goodwill, and I think that in this case, gas cooperation between Russia and Azerbaijan will fit very organically into the overall cooperation between our countries.

Dmitry Medvedev: First of all, I can only add that I agree with the assessment just given of the energy cooperation between Russia and Azerbaijan. We have developed our cooperation in this area over recent years. There are areas in which we have worked for longer together, such as oil transit, and then there are newer areas, such as the gas sector, the subject of this question. This is an attractive sector for both countries. Our companies are in direct talks that have been going on for a while now. Here too, I agree fully with the President of Azerbaijan, and I think that we have excellent prospects for reaching a full-fledged agreement that takes into account our countries’ interests and the companies’ commercial interests. This could open a new chapter in our energy cooperation. If agreements of this kind are drafted (and as I said, the chances of this happening are very good indeed), then we could move on to their signing. This would in itself be a very significant event in the relations between our countries, and at the same time it would contribute to diversification in the energy sector and help to resolve the energy security issue, which has become a concern for the world in general today.

Even though we currently face this economic crisis, we still have to think about future energy security guarantees. We have said on many occasions that we support the conclusion of full-fledged conventions in this area and the establishment of the right kind of international rules and comprehensive mutually advantageous relations between countries and their companies. Gas cooperation between Russia and Azerbaijan could become an example of precisely this kind of cooperation.

To answer your second question on NATO military exercises in Georgia, I think that this is a mistaken and dangerous decision. When a military bloc holds exercises close to areas that were only not long before the scene of extreme tension, and where even today the situation is far from simple, this creates the danger of all sorts of complications arising. You can imagine the situation if these sorts of exercises took place in the Middle East, near North Korea, or in other areas where the situation is very tense. Of course this creates problems for those watching developments with concern. I am sure that this news has not aroused any positive feelings in people in South Ossetia or Abkhazia, because these sorts of actions are clearly about flexing muscles and military build-up, and with the situation in the Caucasus as tense as it is, this decision looks short-sighted, and in terms of the relations between Russia and NATO, can hardly be said to be in the spirit of partnership.

Decisions of this sort are disappointing and do not contribute to renewing full-fledged contacts between Russia and NATO. We will follow developments closely and make decisions if necessary.