Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon. I would like to welcome you all to the meeting of the Council of Ministers of the Union State in Moscow.

Esteemed prime minister. Esteemed members of the Council of Ministers. The Belarusian prime minister and I have exchanged opinions on practically all of the key issues of our interaction, and we will now continue our discussion in an enlarged format in the framework of the second meeting of the Council of Ministers of the Union State this year.

First of all, I would like to note some important things. Bilateral trade increased by 41% to almost $18 billion between January and June 2011.

This is a positive trend that we need of course to consolidate.

This is particularly important today considering the difficulties on global financial markets. We all know the cause of these problems, and that is the downgrading of the U.S. credit rating and the debt problems in the euro zone.

Serious uncertainties and great risks persist in the world economy. In this situation, we must do our utmost to coordinate our efforts and make effective use of the opportunities and advantages of integration and the instruments of mutual support, including the prompt reaction to the emergence of additional risks.

By the way, we have already put such mechanisms in place. You know that we have created a EurAsEC Fund equivalent to $10 billion. Part of the fund’s money was used to support the measures our Belarusian friends are taking to stabilise the economic situation in their country. I believe that the main thing today is to give an additional impulse to our economic cooperation. Favourable, comfortable conditions must be created for joint projects, and, of course, for encouraging business activities, the development of small- and medium-sized businesses.

We should pay particular attention to supporting entrepreneurship. We should see how to optimise the instruments of business partnership and open up new opportunities for implementing business initiatives.

I would like to stress that many ideas and integration plans that we have tried out in the process of building the Union State have proved to be effective and have been applied in other places, within the EurAsEC and in creating the Customs Union.

The common customs territory of Russia, Belarus and Kazakhstan became a reality on July 1, 2011. The customs and other agreed control measures have been transferred to the outer borders of the Customs Union and on Jan. 1, 2012, we will launch the Common Economic Space with the free movement of capital, goods, services and labour. This offers real opportunities for enhancing our partnership.

During this meeting, we will also hear a report on the implementation of the Union Budget in the first half of 2011 and introduce corrections to this main financial document of the Union State.

Our key task is to ensure high practical returns on the use of union budget money. I am referring above all to the implementation of joint programmes. I think that we should place more emphasis on projects involving innovation.

Mikhail Myasnikovich (Belarusian Prime Minister) and I were just discussing this today. Such programmes – the protection of information resources, the creation of advanced semiconductor structures and materials, the development of new technologies for agriculture – will be discussed today as well. Of course, in the final analysis, the joint work of research, engineering centres and industrial enterprises will enable us to form a common scientific and technological space in the Union State, and that, as you know, is the key aim that we set ourselves in our joint work.

Today’s agenda includes issues dealing with the development of sports and tourism. Our cooperation in these spheres is aimed primarily at the people, at building up human capital. One should not forget that the tourist industry means new jobs and gives an additional impetus to the growth of our national economies.

In conclusion, I would like to express my confidence that the meeting of the Council of Ministers will proceed in a businesslike and constructive atmosphere as usual.

It is my pleasure to give the floor to Mikhail Myasnikovich.

Mikhail Myasnikovich:  Thank you, Mr Putin. Esteemed members of the Council of Ministers of the Union State.

One should stress the intensity and the quality of the dialogue at the level of the prime ministers of our states, which enables us to reach mutually beneficial decisions on the whole range of the bilateral agenda.

I am grateful to you personally, Mr Putin, for this opportunity to discuss matters on our level, and to the experts for their significant and responsible work.

Regarding the agenda of the Union Council of Ministers meeting, it is important that innovative cooperation and the industrial policies of our states are priorities. The scientific-technical programmes of the Union State will be an effective tool in making business competitive. It should be built into the overall industrial policy of the two countries in the interests of our joint – and I stress the world “joint” – companies. All the prerequisites for that are there.

We recently had a serious discussion about this with Viktor Khristenko. For example, there is a real potential for industrial and scientific integration in microelectronics. In the near term it is the creation of a Belarusian-Russian corporation. The programme on advanced semi-conductor structures and instruments which is pending before the Union State Council of Ministers can generate the necessary innovation solutions that would make this joint business more competitive.

A bilateral working group for the auto industry is busy discussing integration issues between the two truck makers, Belarusian MAZ and Russian KamAz. The Russian company has put forward a few more interesting proposals. The same approach is being used for other engineering industries and companies, such as TV and other equipment making, IT, and petrochemicals.

The best illustration of the close bonds between our economies is the fact that cooperation with the Russian Federation is not a one-way street, and it benefits our Russian partners too. In the first half of 2011 alone, due to the rise of energy prices, the mutual trade balance tilted in favour of the Russian Federation and increased by nearly $1.5 billion to $5 billion. Over the past six years this has added up to $50 billion, which is equal to Belarus’ annual GDP. The reason I am stressing this point is that in order to get rid of this imbalance we only need to increase Belarus’ share in Russian imports by just 2%, and it would be great if this increase could be delivered by joint – and I stress again – joint Belarusian-Russian companies.  

Our businessmen and scientists, I think, should study this issue under the authority of the Standing Committee of the Union State. The Belarusian government has instructed the interested ministries to regularly review the progress of the Union’s programmes and projects. I think we should also hear the reports of the Standing Committee at the meetings of the Union State Council of Ministers. On the one hand, it would monitor the strengthening of our union, and on the other, reveal, and most importantly, quickly solve the problems that arise in the process of implementing our programmes.

The experience of Belarus and Russia’s integration must be taken into account in creating the legal framework for the common economic space and drafting the declaration of the Eurasian Economic Union. We should have the draft of this document before this year is out. I suggest, Mr.Putin, if you agree, to create a working group on the coordination of the foundations of the Union State and the Customs Union. If Igor Shuvalov brings his energy and professionalism to this process, I think success will be assured and a single industrial policy centre can be created.

A few words about some unpleasant things: the US sanctions. We consider this to be an act of aggression against the Belarusian people, a blow to our economy and those sectors that are closely related to the Russian Federation. To some extent it is a challenge to our Union State and the common economic space. This political decision made by the US harms business, provokes trade wars, which should on no account be allowed to happen, and lead to isolation instead of opening economies and working effectively in this global world. I believe that this has a lot to do with false premises and politics. It is bad when politicians start to influence business.

The Russian Federation has always supported the Republic of Belarus. Both the Union State and the Customs Union can find tools for the joint implementation of the necessary support measures. A common position will make our integration association still stronger and more reliable, and, as the saying goes, a friend in need is a friend indeed. Thank you for your attention.