Vladimir Putin's remarks:

Ladies and gentlemen,

This has been a very full, eventful day for myself and my Belarusian and Kazakh counterparts. There was a meeting of the Council of Ministers of the Union State, as well as a meeting of the heads of government of the Customs Union. Both events were business-like and constructive. We examined issues of economic and cultural cooperation. The focus was on our main integration project - forming a common economic space.

I would like to start with the meeting of the Council of Ministers of the Union State. We have agreed upon the main parameters of the budget for 2011 and to continue closely coordinating our anti-crisis efforts. We will support business projects and encourage ties between businesses. Cultural cooperation, involving our scientific, artistic and cultural communities, has always been a priority in the work of the Union State.

A number of interesting initiatives are being carried out in this field. For example, I would like to highlight the first joint film venture of the Union State, which I mentioned in my introductory remarks at the first meeting today. I am referring to a joint Russian-Belarusian production, the film entitled "The Brest Fortress", which depicts the events of our common history and an immortal act of courage performed by the defenders of the fatherland. The movie premiered on June, 22, in Brest, and will be released in cinemas on November 4. We hope that this film will resonate with viewers of all generations throughout the post-Soviet space, including Kazakhstan.

The Eurasian Economic Community recently marked its 10^th anniversary, on October 10, to be exact. Russia, Belarus and Kazakhstan, which form the Eurasian Economic Community's integration core, have started working within the framework of a single customs area. Our next task is to reach a higher level of integration, which will form the legal foundation for the common economic space.

I would like to add that many other EurAsEC partners will join when they are ready. Tajikistan and Kyrgyzstan have already expressed interest. Some aspects seem quite attractive to our Ukrainian partners, with whom we will also discuss this process.

The problems facing our countries today are largely similar: they deal with modernisation and innovative economic development and diversification, and increasing the well-being of our peoples. We are going to act in close cooperation, uniting our natural, technological and human resources, developing industrial cooperation and transport corridors, and establishing a common market.

The recent global economic disturbances show that this is the right approach to take. By coordinating our responses to the crisis and our strategy for overcoming it we managed to minimise damages and spending, restore trade, and strengthen our positions on regional and international markets. Creating the common economic space is a step towards a modern, open economy that is more resistant to fluctuations on the global market. Together with our Belarusian and Kazakh partners, we have decided to speed up preparations for creating this space by forming the necessary regulatory foundation by January 1, 2011, rather than in two stages, as we had initially planned.

There are some 17 agreements on the negotiating table, the majority of which have already been coordinated, or are nearly complete. The rest of the documents are being thoroughly discussed with the assistance of leading experts and specialists.

We certainly have some obstacles in our way, but it is important that we have a final goal we are working towards together. And we are moving there rapidly, much faster than we could have imagined.

We methodically seek out mutually acceptable solutions, and we reach concrete agreements in the shortest possible timeframe. I am confident that this spirit of partnership will yield tangible results.

I can tell you that today, during our complicated discussions, we managed to reach acceptable, coordinated solutions on the most difficult issues. This gives me hope that it will be much easier to make progress than it has been.

Thank you very much.

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Question: I have a question for everyone involved in the Common Economic Space project. You have said that a great deal has been accomplished, but at the same time, as many experts note, certain problems are apparent, for example in relations between Russia and Belarus. To what extent are they having an effect on the formation of the Common Economic Space? Or don't these problems have much of an impact?

Vladimir Putin: What problems?

Journalist: For example, it's no secret that there has been a harsh exchange of rhetoric between Moscow and Minsk recently.

Vladimir Putin: The political atmosphere certainly affects all areas of a state's activity, including its international relations, both bilateral and multilateral relations. But we proceed from the assumption that the fundamental interests of our nations will always prevail, and we will continue to be guided by this assumption in our future work. We hope the problems you mention will not affect ongoing integration processes or our commercial and economic relations. Thank God, they have had no adverse effect on them yet, and hopefully will not do so in the future.

Question: I have a question for the Russian prime minister. Mr Putin, a year and a half ago in this very hall, in the presence of these same people, it was announced that our three countries would apply for WTO membership together. Later Russia backtracked on its position for a number of reasons. Russia and Belarus have reached an agreement to waive the duties on oil supplies to Belarus once Minsk has ratified all the agreements on the future Common Economic Space. However, today Russian Deputy Minister of Finance Sergei Shatalin stated that these duties will not be cancelled until 2012 when the Common Economic Space will be fully functional and some compensatory measures have been developed. Won't this agreement between Russia and Belarus suffer the same fate as the WTO agreement? Thank you.

Vladimir Putin: You haven't been attentive enough in following the progress on our negotiations. When we discussed moving to join the WTO, we spoke of two scenarios: either joining it as a bloc or coordinating principles we will all stick to once we become WTO members. In the end, we agreed that we would coordinate the key parameters that are crucial for our economies, and use them as a common base from which to proceed in negotiating our WTO bids. That is what we are doing. We have been in close contact with our Belarusian and Kazakh partners. We will not take any action that contradicts our agreements. That is my first point.

As for duties, the gas we export to Belarus is not subject to any duties at all. It's Russia's gift to Belarusian economy. As for export duties on oil, yes, such duties exist but they are not levied on all oil supplied to Belarus. Minsk receives the amount it needs to meet domestic demand, 6.3 million metric tonnes of crude oil, free from any duties. It is the additional oil supplies, which Minsk can export, that are subject to duties.

At the same time, in accordance with my agreement with Mr Sidorsky, Russia is committed to lifting all export duties on crude oil as soon as Minsk signs and ratifies the whole package of agreements that form the basis of this future Common Economic Space. Today we have reasserted this position - it shall be done.

Question: I have a question for Mr Putin. Will Russia continue removing administrative barriers to improve access for Kazakh and Belarusian businesses to the Russian market? Thank you.

Vladimir Putin: It is exactly the mission of the Common Economic Space to introduce common rules and regulations for businesses, organisations and government bodies involved in trade throughout the Common Economic Space. As you know, Russia has been working steadily to eliminate administrative barriers on the domestic market, and will extend these policies to our relations with Belarus and Kazakhstan.

Question: I have a question for the Russian prime minister. The closer we get to New Year, the more often Belarusians claim that Minsk will be unable to pay higher prices for Russian natural gas. Belarus has been urging Russia to sell it gas at Russian domestic prices for quite a while. This was one of the problems discussed today and opinions are divided on the issue of cancelling customs duties on Russian oil and oil products. You have repeatedly called on your Belarusian partners to be patient and wait until 2012 when the Common Economic Space is launched and Belarusian requests have been taken into account. Here, at this news conference, you have reiterated the Russian government's position. But don't you think that it would be better to address the issue of oil and gas supplies separately, outside the framework of the Customs Union?

Vladimir Putin: It would probably be preferable for us to address these issues separately, but we understand that they are vital to the future of the Belarusian economy and that they are highly sensitive issues for Kazakhstan even though Kazakhstan itself produces both oil and gas. If we are to form a common economic space, then, as the Belarusian representatives said repeatedly, all economic agents should operate on equal terms. We agree on this point.

We differ in our understanding of what "equal terms" means, but regarding concrete... Speaking of which, we reached compromises today on almost all disputed issues.

As for oil export duties, I have said that after ratification, as we agreed when we met in St Petersburg - Mr Sidorsky (to Belarusian Prime Minister Sergei Sidorsky), when was it? About two months ago, right? - after Belarus ratifies this package of agreements, we will rescind crude oil export duties, too.

As for gas...

Sergei Sidorsky: Mr Prime Minister, we should make it clear for the press. We three prime ministers have agreed to sign the package, and Belarus will ratify it once it is signed...

Vladimir Putin: Even if it is not yet ratified by Russia, based on the existing agreement with our Belarusian partners, we will fulfill our obligations after Belarus ratifies it.

Regarding gas prices, we agreed today that we have a contract that will be valid throughout next year, and gas pricing for 2011 will be based on this contract. In fact, there was never any other way of looking at it.

Russia plans to introduce domestic price parity on January 1, 2015. What will we do about our Belarusian partners from January 1, 2012, to January 1, 2015? We have agreed that price formation is an issue for economic agents, above all. At the same time, I have ordered Gazprom to start drawing up a contract for 2012 through 2015 that reflects our common strategic targets based on our obligations under the Union State and our desire to create a common economic space, and the prospect of introducing price parity on January 1, 2015.

Question: Mr Prime Minister, I want to ask you about bilateral relations under the Union State. The Union Programme for the period until 2015 will be signed today among other documents, so are we to understand that the Union State will exist at least for another five years. Do you have strategic vision for its future beyond that? Might the Union State be absorbed by the Common Economic Space and the integration processes it entails? How will these integration processes relate to one another? How will they look in ten or more years? Thank you.

Vladimir Putin: The Union State will be absorbed by the Common Economic Space unless we make more rapid progress in other sensitive areas. In particular, we have discussed for many years the possibility of introducing a single currency in the Union State. In this case, the degree and depth of integration in the Union State would be much greater. Integration on this front would be deeper than in the entire Common Economic Space.

Today, however, we have agreed in principle on fundamental issues regarding economic integration in the Common Economic Space, and these agreements are more significant that those for the Union State. At the same time, the prerequisites have been met for developing relations within the Union State, and I hope we will develop them. This is only one instance. We have been discussing this matter for a long time.

I think the odds are on the Belarusian side. All critical issues have been discussed in sufficient detail by the central banks and the ministries of finance. All that is left is to make the political decision. But, for example, the Union State cannot have two issuing centres - in Minsk and Moscow. That would be impossible! Two centres would ruin the Belarusian and Russian economy alike. So Belarus has withdrawn this demand. It has another demand now: to form the united Central Bank on the fifty-fifty principle. But then, the Russian and Belarusian economic volumes are different. The Belarusian volume is equivalent to 3% of the Russian, if I am not mistaken. We think the fifty-fifty principle is unfair. So, if we proceed from reality, and if we really want this, we will pursue this. Russia is prepared to do this.

Question: What are the prospects of an agreement on railway supply monopolies, particularly transit, and what are the related prospects and new opportunities for Kazakh grain and other commodity supplies and transit through the partner countries of the Customs Union?

Karim Massimov: Non-discriminatory access to railway transit was the subject of one of the crucial documents at today's negotiations on the establishment of the Common Economic Space.

I think that an essential decision was made today, mainly by Russia and Belarus. Deadlines have been set and I think the matter will be settled by January 1, 2013. I am sure that Kazakh exporters will have an opportunity to transport their freight throughout the Common Economic Space on equal terms, just as Russian and Belarusian manufacturers will do in Kazakhstan. The Kazakh president has raised the issue more than once in a variety of formats. The agreement in principle made today is the first of its kind. I think it is critically important, and I hope these agreements will be put on paper and signed with the entire package.

Vladimir Putin: Today, Kazakh consignors pay fares according to the so-called transit tariff for freight shipments across Russia, for example. As Mr Massimov said, we have agreed today to unify domestic and export-import tariffs by January 1, 2013, and this unified tariff will be lower than the present-day transit tariff.

And another matter: beginning January 1, 2015, Kazakh and certainly Belarusian transport companies will be able to ship freight using their own trains on Russian railways.