Mir: Mr Prime Minister, thank you very much for agreeing to do this interview after a long and hard day. As I understand, when you made your statement to the press just before, you said that, unfortunately, Russia, Belarus and Kazakhstan had failed to reach an agreement on the Customs Union after many hours of negotiating. Will you please tell us which problems you could not agree upon?
Vladimir Putin: We haven't reached an agreement yet. That's the first thing. Second, the disagreements do not concern the Customs Union, only certain aspects of our economic relations. They are purely practical problems and their resolution depends, in one way or another, on the situation in entire sectors of our respective economies.
What specifically? For instance, according to Kazakhstan's laws, individuals can import up to two tonnes of goods from another country under a reduced customs duty of 0.6 euros. Two tonnes is not a small amount. Every individual has this right, and there are no limits of the number of times an individual can bring in this amount. This would harm our light industry, because a considerable portion of these goods are made in China.
Mir: Does it affect Belarusian light industry, too?
Vladimir Putin: Yes, it certainly does. Or take Russia's plans to develop its automotive industry, which call for support for existing companies and incentives for the creation of new ones. When we were formulating these plans, we reached specific agreements with investors who have come to our customs territory to set up production, create new jobs and introduce new technologies. We, in turn, have promised them a certain amount of trade protection against imported new and used cars. This is especially important given the current economic crisis, because, if we yield on this issue, the future of some of our companies will be in jeopardy. This is an important issue for us. This is our second main concern.
Yet another concern regards the future of special economic zones, particularly the ones with trade preferences. It's one thing when we bring commodities or parts to these zones for processing, which increases their value by 50 percent or more. It's another thing when only minimal assembly is done in these zones, which adds very little value. It's one thing when we levy customs duties on our manufactured goods in our own customs territory, be they parts or finished products, and another thing when there are no customs duties on them at all. This puts the very existence of many Russian industries in jeopardy, because not imposing duties on goods imported in Russia has lasting consequences.
Or take aircraft imports. Some countries suggest abolishing import duties for almost all aviation equipment, which is unacceptable to Russia. Otherwise, we will never be able to revive our aircraft manufacturers, which we have just barely started restructuring in the hope that they will recover and become competitive both domestically and internationally. We don't want to put an obstacle right in the beginning of their road to recovery.
It is very important to Belarus to settle the export duty issue for a wide range of commodities, mainly oil and petrochemical products. These are all economically sensitive issues. Historically, all efforts to integrate have been extremely complicated. No one has ever settled these problems in one fell swoop. All have travelled down the tortuous road of coordinating their positions. We know how to make compromises, and I think we will successfully navigate this road.
Mir: The Customs Union is scheduled to be fully functional by July 1, but am I correct in assuming that this deadline will not be met?
Vladimir Putin: Right. It will not be fully functional.
Mir: Belarus previously demanded greater discounts on Russian energy products. Considering the outcome of today's talks, how relevant are these demands today?
Vladimir Putin: Belarus has not demanded new energy prices. We have two problems here. One concerns crude oil export duties. Based on our special relationship with Belarus and our desire to support its people and economy, we have granted Belarus a discount for its entire domestic demand by supplying 6.3 million tonnes of crude oil for its domestic consumption. Again, this was duty-free. However, our partners want greater discounts. That is a different matter, however.
Mir: As far as I understand, Belarus also wants a discount on gas prices comparable to what Russia and Ukraine agreed on.
Vladimir Putin: Belarus is already receiving discounted gas. In fact, the discount is greater than Ukraine will be receiving following the agreements on Sevastopol and the Black Sea Fleet. Now that the agreement has been signed, prices for Ukraine have been cut by 30%.Ukraine now pays $234 for a thousand cubic metres, while Belarus pays $180. These are the lowest prices in the CIS. You won't get natural gas cheaper anywhere else. As you can see, Ukraine is paying more even with the discount. The problem is that we agreed with our Belarusian friends several years ago (two or three years ago, to be more specific) to transition gradually to standard European gas pricing. We agreed that we would provide a discount to make the transition smooth and avoid any sudden blows to the Belarusian economy.
In the first year, it will be 75% of the estimated standard European price, then 80%, if I'm not mistaken, then 90%, and finally 100%. We expected to transition completely to the full price in 2011. Our Belarusian friends requested last year and the year before that we keep the prices and discounts at the 2008 level. When we agreed to do this last year, they said they would take two price increases next year. I warned them that that it would be very hard to do, but they insisted, and so we met them halfway. Now they have unilaterally decided to pay 2008 prices for Russian gas. Considerable arrears have accumulated. However, this problem concerns individual commercial entities, and I hope it will be settled at that level.
Mir: The Customs Union is considered a first step toward the Common Economic Space (CES). The date on which the CES will come into effect has already been announced as January 1, 2012. Might it be postponed in light of the outcome of today's negotiations?
Vladimir Putin: On the contrary, today I proposed that we redouble our efforts to solve the problems regarding the establishment of the Common Economic Space. We need to prepare two sets of documents to get it up and running. One must be ready by July 2011, and the other by the end of 2011. I have proposed that we prepare all the documents by the end of this year. Moreover, we should sign and ratify it if possible, with the deadline for implementation pushed back to July 1, 2012, as agreed, or perhaps even earlier if we sign and ratify it. We are willing to do it even earlier. I believe that we could do more to meet each other halfway on certain issues related to duties and tariffs, for example. The job would be easier if we could reach a general agreement on macroeconomic policy and other problems that are much bigger than customs policy. If we were to discuss more fundamental problems, it would be easier to agree upon customs issues.
Mir: Mr Prime Minister, Russia is presiding in the CIS this year, and we cannot but note the positive trends that have become visible in the Commonwealth integration processes. Russian-Ukrainian relations are a striking example. As the head of the government that is currently presiding, what do you think of the Commonwealth's future?
Vladimir Putin: We know how much criticism the CIS receives, but I assure you, we would not have settled many economic and social problems if not for the Commonwealth. We don't even see that these problems have been settled. We take if for granted. The situation would be much worse without the CIS. Even Georgia retained 75 agreements after it announced that it was withdrawing from the CIS, because they were vitally important to the country. We see Georgia's point. More than that, we welcome it. So, I believe that the CIS is a necessary venue for coordinating economic, political and cultural issues, and will continue to be relevant.
Mir: You mentioned Georgia. Recently, you have been meeting with representatives of the Georgian opposition - Nino Burjanadze and Zurab Nogaideli - rather often. Do you expect a thaw in Russian-Georgian relations in the near future?
Vladimir Putin: First, we believe that Georgians, as a people, have a friendly attitude to Russia and its people. Our special relationship has taken shape over centuries. Georgians are Orthodox Christians close to us historically and culturally. What has happened in these past few years results from the mistaken, to put it mildly, if not downright criminal policy of the present Georgian leadership. We have no intention of interfering in Georgia's domestic affairs. The meetings with members of the current Georgian opposition are not a sign that we want to interfere in Georgia's domestic affairs. Rather they are a sign that the Georgian people understand that it is necessary to at least normalise relations between our countries. We welcome this understanding. We want to normalise relations, and we are pursuing a dialogue with people with whom it was difficult to speak quite recently. You mentioned Nino Burjanadze, who used to be politically close to the incumbent Georgian president. Our current dialogue with diverse Georgian political forces is a good step toward normal bilateral relations.
Mir: Mr Prime Minister, many have noticed the conspicuous absence of leaders of the Kyrgyz provisional government at today's meetings. What are your views on the situation in Kyrgyzstan?
Vladimir Putin: The situation is complex and murky. It is impossible to evaluate it with any degree of certainty, because we still do not understand the internal developments in Kyrgyzstan very well. That being said, we are eager to see this period of uncertainty come to an end as soon as possible because of our special connection with the Kyrgyz people. The ties between our countries are centuries old. As you know, we have decided to provide Kyrgyzstan assistance in the form of money, oil and grain. Now we are considering extending our assistance and increasing it. We certainly want to see the legitimacy of the present leadership confirmed by the standard, universally recognised process - elections. I know that the present Kyrgyz leadership is preparing for elections. We welcome this completely, and we are maintaining a dialogue. However, there are problems involving procedure and protocol. This is the only reason why the Kyrgyz leadership was not present at today's meetings. However, at the technical level, the integration process is perfectly clear, and we are providing complete information about the situation to the Kyrgyz side.
Mir: Mr Prime Minister, you held bilateral meetings with the Moldovan and Tajik prime ministers today. What did you take away from these meetings?
Vladimir Putin: We discussed concrete matters, which might appear primitively practical, but which are extremely important to all people. They concern healthcare and contagious diseases. There are dangerous epidemics in some countries, and we discussed how we can help fight them. We discussed economic assistance and cooperation on energy and healthcare, and we coordinated our positions on many other matters. As for Moldova, we know that its political situation is also unclear right now - not as dramatic as in Kyrgyzstan, but at one time it was not much different. We would like to see calm and a positive political and economic situation along the Russian borders, as the situation on our borders affects us. We will help our neighbours, including Moldova, in every possible way.
Mir: During today's EurAsEC meeting, Armenian Prime Minister Tigran Sargsyan announced the Armenian initiative for the construction of a Russian-Iranian railway. Will Russia participate in this project?
Vladimir Putin: It is not about linking Russia with Iran, but about giving Armenians rail access to Iran. Though this is an economically complex project, Armenia has applied for a loan exceeding a billion dollars from a common fund established in the EurAsEC. Its application is being considered.
Mir: Mr Prime Minister, did you watch Russia and Canada play in the world hockey championships? What do you think of our team?
Vladimir Putin: I watched the game, and I thought it was very good. Our team played hard. They played like professionals, with a lot of drive, and with good results to show for it. It was a pleasure to watch our boys, and I‘d like to thank them.