Prime Minister Vladimir Putin and President of the European Commission José Manuel Barroso give a news conference following the meeting of the Russian government and the EU Commission
24 february 2011
Vladimir Putin: Ladies and gentlemen!
Our work today was very constructive and very comprehensive. We have discussed our cooperation in many areas, and I am confident that today’s meeting will make an important contribution to expanding our relations – in particular economically – and lend a fresh dynamism to our cooperation.
Mr Barroso has just made a very good point – or rather formulated a very wise idea. I even jotted it down. He said that Russian energy is a key to European prosperity.
In fact, this statement could draw the line under this news conference if we hadn’t discussed such a wide range of equally important issues.
This morning, Russian ministers and heads of government agencies met with their European counterparts and high commissioners. We all can note that, thanks to the well-coordinated anti-crisis policies pursued simultaneously by the Russian government, the European Commission, and the governments of European countries, economic growth accelerated in 2010.
We certainly see risks and threats now connected with the growing prices of energy resources. Today Brent crude oil traded at $118 per barrel at international exchanges. This certainly poses a threat to global economic growth. If prices continue rising at this pace, I must tell you that Russia’s economy will also suffer. We want fair prices. We realize that, if the global economy slows down, it will damage Russia’s economy. Therefore, we are determined to make every effort, together with our European partners, to prevent this negative development, although we cannot directly affect it.
At the same time, trade between Russia and Europe is gradually returning to its pre-crisis level. It grew 30% last year, to over $300 billion.
Speaking of trade, we could not avoid discussing one of the most pressing issues of the day: Russia’s potential accession to the World Trade Organisation. This move will benefit both Russia and the European Union. I must now remind you that the European Union accounts for over 50% of Russia’s foreign trade and for 68% of Russia’s exports. Russia, in turn, is Europe’s third largest trade partner after the United States and China. We understand how significant that is. Russia’s WTO accession will give an additional impetus to the negotiation of our basic agreement with the EU – something we see as a very important issue; we have discussed it today as well. We have had 12 rounds of talks; it is our shared goal to carry this work to its conclusion.
We have exchanged information today on the state of our national economies and their prospects for growth. When one of our partners was talking about it, I even went so far as to say that I had the impression that I was attending one of our own government meetings.
What he was saying was exactly what we discus at our government meetings in Moscow. This provides for a generally healthy atmosphere. It means that we are facing the same problems and seeking the best ways of their solution. And I should say that very often our approaches to dealing with these difficult problems coincide.
Shared economic challenges are another argument for supporting Russia’s ambition for a deeper integration with the EU. Today we have discussed how we could coordinate our work to draft long term plans for specific sectors – farming, the automobile industry, shipbuilding, healthcare, and pharmaceuticals. We talked about the possibility of setting up strategic alliances; in fact such alliances are already being established.
We have also discussed the importance of introducing visa-free travel to the EU. Let me repeat that during my meetings with various representatives of European business community, it is our European partners who have been raising this issue more and more often, pointing out that visa travel between Russia and the EU is becoming a serious hindrance to economic cooperation and development.
Another cooperation priority is energy. Russia is a major energy supplier to Europe, as my colleague just mentioned. It is a special kind of responsibility, and we are aware of it. We are interested in effective and fair working conditions for all market players.
Today we have again raised the issue of the “third energy package” of the EU, expressing our concern over several parameters of this initiative. I am not disclosing any secrets now – we have exchanged our information. I was pleased to hear that our partners are sincerely concerned over certain nuances pertaining to the realisation of this initiative and its corollary implications. We hope that we will find solutions acceptable to Russia and to our European partners – it is possible.
Incidentally, the Russian Ministry of Energy and the Energy Commission of the European Union have agreed on, and in fact, prepared four important agreements for signing. They will improve the system of early warning of possible problems in order to speedily rectify them. Most importantly, they will help us develop a roadmap for cooperation in the [energy] industry, which is of great importance to both Russia and our European partners. A roadmap for energy cooperation between Russia and the EU through 2050 is being developed.
We expect our partners to pay due attention to our proposals. I would like to sincerely thank the president of the European Commission, José Manuel Barroso, and the rest of our European partners for the very business-like and profound dialogue we had today.
I am confident that this meeting will strengthen our relationship and give it a fresh impetus for growth. Given the complicated processes taking place in North Africa today, we must further coordinate our efforts in foreign policy and the economy. That was the main goal of this meeting. And I should say that it was very fruitful. Thank you very much for your attention.
Question: I have a question for both speakers. Russia and the EU have been unable to extend their basic cooperation agreement. Could you tell us what the points of controversy are and whether one of them is the visa travel issue? Thank you.
Vladimir Putin: First of all, we proceed from the assumption that a major prerequisite for concluding a new basic agreement is Russia’s accession to the World Trade Organisation.
Second, we believe that this should be a framework agreement and that there should be separate agreements specifying the principles of our cooperation in particular industries.
On the whole, our positions are gradually converging. Given that the previous agreement remains in force, there is no instability in our relations. We do have a legal framework for cooperation. I agree with our European partners and President Barroso that if we have to conclude a new agreement, it should be worked through in full. I believe that by comparing our positions in various areas of cooperation today, we have taken a big step forward towards concluding such an agreement.
José Manuel Barroso (as translated from a previous Russian translation): I fully agree with what the prime minister has said. We really have made much progress, but that's where the real question comes in. We have created a good foundation for our relations, and it’s no big problem if we have to wait for another few months. But it is important to actually conclude a comprehensive agreement. There are certain disagreements over a range of issues that this agreement is to cover, which we have been negotiating. We have reached a compromise with our partners. The only thing I can say for sure is that we may approach things differently, but I think that both sides are aware of the importance of a strategic partnership.
I recently read a very interesting article by Prime Minister Putin, in which he discussed a single economic zone from Lisbon to Vladivostok. I like this expression. Indeed, it is sound from the perspective of economic space. It is also important that there is a certain vision, an opportunity to create a common economic space for the whole of Europe. And we believe that the agreement we are talking about could become an important part of this progress towards stronger economic – and not only economic – relations.
Thank you. David, please, in the middle.
Question (as translated from a previous Russian translation): Hello, I’m from Reuters. I have a question for Prime Minister Putin. You have expressed concern over oil prices. Do you worry that the unrest in the Arab world could influence the situation in the Caucasus? And in this sense, which factors do you think pose a threat?
And a question for Mr Barroso: What obstacles are there to your cooperation? How can Russia and the European Union cooperate in order to respond to the events in the Middle East?
Vladimir Putin: Could you raise your hand please? I just didn’t see you… So that I could better communicate… Thank you very much.
As far as the developments in North Africa and in Arab countries and their possible connection with processes taking place in Russia’s North Caucasus, are we concerned? Yes, we are. First of all, we are concerned over the number of casualties in North Africa. We are very concerned, despite palliative statements that it is unlikely that radical extremist groups can come to power in North Africa or become considerably stronger. If it occurs, it will certainly affect other regions, including the North Caucasus.
As you know, we are also concerned over what is happening in Libya. Note that the North African division of al-Qaeda has also expressed concern over the developments in Libya. You think it’s just a coincidence?
Let’s take a look back at history, if you don’t mind. Where did Khomeini, the mastermind of the Iranian revolution, live? He lived in Paris. And he was supported by most of Western society. And now the West is facing the Iranian nuclear programme. I remember our partners calling for fair democratic elections in the Palestinian territories. Excellent! Those elections were won by Hamas. They declared it a terrorist organisation and confronted it shortly thereafter.
Yes, it’s true that people should have an opportunity for self-determination and build their futures without any intrusion from the outside. Any society should move along a path towards democratic institutions, self-regulation, and the creation of its own system of government based on its own development.
We are now in Brussels… Belgium is a great country. Russians know a great deal about it and love it… But it’s been running without a central government for over 250 days. I remember that when we held elections, democratic elections in 1999, in one of the North Caucasian republics, voters cast their ballots for their clansmen. And the largest ethnicity won. On the next night – I want to emphasise that on that night people took arms in hand and started shooting, and there were victims. The conditions are absolutely different. It is impossible to extrapolate events to other parts of the world like a convenient replica. We must treat what is happening in other parts of the world, in other countries, with respect. Needless to say, we should carefully support that which should be given potential to develop, but we should not interfere in their affairs by any means.
Are we concerned with the events in North Africa, and can they have adverse effects on the North Caucasus? Yes, we are concerned. But these events may have adverse effects not only on the North Caucasus but also on other regions of the world, including Europe. This is why we have devoted so much attention to this problem today, and our foreign ministers have signed a joint statement.
José Manuel Barroso (as translated): Indeed, Foreign Minister Sergei Lavrov and Ms Ashton (Catherine Ashton, the EU High Representative for Foreign Affairs and Security Policy) held a session to coordinate a common position on the recent events in Libya and other Arab countries. The European Union (EU) and Russia (as a member of the Middle East Quartet) are actively cooperating. I think that they have very constructive relations both on foreign policy and security, and we welcome cooperation with our Russian partners.
This is very important in the context of a common approach to the developments in the Middle East. I think the international community should adhere to a unified position as much as possible. Incidentally, the Security Council has expressed this position in a joint statement and presented its analysis of what is taking place in Libya. So, I’ll be straight with you – we have very good cooperation with Russia on these issues.
Question: You have mentioned this subject, but I would like to ask one more pertinent question in its regard. How will events in the Arab world affect the economy of Europe and the global economy? You have already spoken about high prices on oil. What global consequences may these events have? And, as part of this question, Mr Putin, what have you heard from the EU representatives on the 'third energy package'? You said it is possible to find solutions to this problem. Could you be more specific on this score? Thank you.
Vladimir Putin: Can the events in northern Africa produce negative consequences for the global economy? They already have – $118 per barrel of oil. Some analysts say it could reach $220. This is not my forecast – this is what analysts of the energy markets say. We will have to go through a very hard trial if the world economy starts contracting. We have metallurgical, coal, and chemical industries that are oriented from 40% to 60% to the foreign market, above all the markets of the United States, Europe and China. What will we gain if those figures start diminishing? This is exactly why we are saying quite seriously and sincerely that we are not interested in the limitless growth of prices on energy resources. As distinct from other oil- and gas-producing countries, Russian industries are interdependent. Our economy is more diversified, and we are laying an emphasis on the innovative sectors of the economy, such as technical engineering and so forth. How will they develop? They would have to fight an uphill battle. But we’d like to hope that this won’t occur.
Incidentally, in this context, all of our infrastructure projects for delivering hydrocarbons to Europe, to the European market – I have in mind both Nord Stream and South Stream – are becoming particularly topical. If these two projects had already been operational, there would have been much less risk and concern in Europe. I think that the prices would also have been a little lower despite existing problems. We have discussed this in detail, but not in this context – we have simply reviewed the problems that we associate with the adoption of this “third energy package”. I believe, and I tried to prove that to my partners, that it contradicts the current basic agreement, in particular, article 34, item 1, which spells the need to prevent the deterioration of our companies’ operation on the markets of our partners. Meanwhile, this “third energy package” is obviously detrimental to our energy companies. This is a fact if it comes to de facto confiscation of property. As you know, Russian and German partners have even taken the matter to court. But I wouldn’t wish to argue on this issue. Our partners have their views, and we have ours (which we put forth today once again). This is a discussion, and today it was very constructive. I have even taken the liberty of informing our European colleagues that we think that the complete and automatic implementation of this package may result in increased prices on energy resources
in the European market. None of the European industries except energy is interested in it. We had an extremely constructive and frank discussion, and we will continue it at the expert level. For instance, if I am not mistaken, the German moderator has not yet consented even to Russian natural gas pumping through the Nord Stream, and the delay is justified by referencing the 3rd Energy Package. I hope to see this technical problem settled soon. Our colleagues have heard us out. We see this, and we will cooperate. We will reach a mutually satisfactory solution.
Jose Manuel Barroso: I would like to add the following. We really do not think that our domestic market and the 3rd Energy Package are discriminatory, so we call on foreign companies to accept the rules we apply to our own companies.
As Prime Minister Putin said, there are certain differences over the 3rd Energy Package. However, we had a very frank discussion of this issue, and I dare say that the 3rd package offers even greater benefits to the domestic market than the 2nd. There is a certain amount of concern, however, because it calls for special tools to resolve the issues raised by Russia. We want Russia to remain our chief partner, especially for gas, and that is what matters most. Our industry runs on Russian natural gas. It heats our homes. But we have to pay for this gas, and we pay a good price. We are reliable customers to Russia, so having consistent approaches to such issues is in the best interests of both parties – Russia and the European Union. That is why our cooperation has been so fruitful.
As Prime Minister Putin also said, several agreements have been signed and are in effect. I hope that our partnership will develop and all our differences will be settled. We think that the 3rd Energy Package is quite compatible with WTO rules and our bilateral relations – it does not contravene them.
Vladimir Putin: I think we were right to make our position public. There is nothing complicated or secret about it. Look what’s going on. I raised these arguments in today’s discussion.
We are being told, “He who has gas must not also have the means to transport it.” Gazprom has laid a pipe on the bottom of the Baltic Sea together with its European partners – German and Dutch. But now it’s being said we should admit a third party there. Where? We produce gas in Russia together and pump it along the pipeline, which is our common property. Where should we admit a third partner? To the pipe? Should that partner drill a hole in the pipe, or what? Where will he take the gas? We are told to sell our gas at the entrance to the European Union, and a third partner will appear – the gas owner. But then, if the third partner purchases gas, he will need to make a profit. So the price will go up. Then, gas will go along low-pressure pipes or around to European countries…
Transporting energy does not yield much profit, 8% to 10%. So if all these pipes are acquired by small companies, they will raise transport charges just to stay afloat. So we will be in for another price hike. That’s perfectly clear.
Our partners hold this position because prices on long-term contracts went up more than spot market prices during the downturn. But now prices have changed, and spot prices exceed contract prices. I am confident that the real long-term interests of the European economy lie with our resources but that our partners are also interested in stable deliveries. Nothing matters more than stability. But, I repeat, the final decision regarding the form of regulation is up to the European Commission and our partners. We will try to show them the benefits of our approach while they will argue for theirs. I would like to emphasise once again that we will no doubt reach a mutually acceptable solution.
Jose Manuel Barroso: We will find one, I am sure. Now, I would like to say a few words about transparency. I want to explain that we adopted the 3rd Energy Package because we of the European Union – not only the Commission but also member countries – promote unbundling. There are several types of it. For instance, one can unbundle one of the three patterns the gas directive envisages, of a member country's choice. Some members have chosen the thorniest path – division, with production separated from distribution. I see that you expressed your concern rather aggressively. You were very explicit in expressing Russia’s concern. On the other hand, as I have noted, the legislation of the European Union is not discriminatory. It applies to Russian, Norwegian and any other businesses, including our own European Union companies.
We may have differences on how to apply the rules of competition but, as you said today, we have had a really frank and open discussion, and we have seen each other’s points. We understand Russia’s concern, and now the job is to settle the differences and disagreements that troubled our relations. Thank you very much.
Question: I have two questions for Prime Minister Putin. Russia had been eager in the past ten years to improve trade and economic contacts with Libya. It entered the Libyan gas market through Italy’s ENI. Do you still want to maintain economic contacts with Gaddafi’s regime, considering current developments in Libya? And the other question: what do you have to say about the way Gaddafi is treating his own people? The High Commissioner for Human Rights describes his actions as crimes against humanity.
Vladimir Putin: I thought my answer to the Russian journalist gave a rather detailed picture of what I think we can expect. But allow me to reiterate: today, our Ministry of Foreign Affairs and our foreign minister’s European colleague have coordinated and signed a statement on Libya. Read it carefully – it says everything. The statement expresses a balanced position and concern over attacks on civilians. As for economic cooperation, I think it should be largely free from politics and ideology.
But, as we all know, the present situation is not suitable for implementing joint plans which Russian and Italian partners developed for the Libyan market. Would anyone go there now? As you know, we are evacuating our citizens by air and sea.
We will wait and see the outcome of the dramatic developments in North Africa, particularly in Libya, and we will make decisions accordingly.
Let me reassure you that Russia and the European Union countries share an interest in extending the reach of our cooperation – in particular, to third-party markets. Libya is one of the largest energy exporters to Europe. We were willing to export our technology and make investments for cooperation, but now certainly isn’t the right time for it.