Sergei Brilyov: Many say the aggravation of relations with the West is automatically pushing Russia into China's embrace. Do you agree?

Vladimir Putin: We have no intention of moving into anyone's embrace. Russia is a self-sufficient country, it wants to work and cooperate with everyone. And I am sure it will. We are going to expand our possibilities, first of all in the economic field. And in general, the modern world is characterised by a sharp competitive struggle, which has long passed from a military to an economic sphere. Here we have a lot to do.

We are going to diversify the flows of hydrocarbons, which are the main part of our exports. This is why I am planning a visit to the Pacific, to which we are extending our pipelines. We will discuss an expansion of our cooperation in Asia, but we will not concern ourselves only with oil and gas. The main aim of the country's development programme until 2020 is to increase labour productivity and make our economy innovative.

Sergei Brilyov: My European colleagues this week have suggested that oil or gas pumped to Asia might make Russia limit their supplies to Europe. I am in fact quoting European newspapers. Is that true?

Vladimir Putin: We are not going to set limits on anything or anyone. We will strictly observe our contractual obligations as we expand and diversify our exports of such a sought-after product as hydrocarbons. We announced this programme long ago, and it is in no way connected with current political developments. The world economy, and especially the rapidly growing and developing Pacific region, are interested in this programme. We put it together several years ago, and it is making good headway. It did not spring up overnight; such projects are not conceived at a moment's notice. It is our development strategy.

Sergei Brilyov: When you and Deputy Prime Minister Igor Shuvalov discussed WTO issues and putting on hold some of the understandings reached with it at a recent Cabinet meeting, everybody had the impression the discussion was not spontaneous, if only because Mr Shuvalov had all the necessary documents at hand. Have you decided which of the WTO rules Russia is going not to observe from now on?

Vladimir Putin: You are right. We have long been discussing this subject with our partners. We have been negotiating our entry into the WTO for 15 years. We have never made or are going to make a political issue out of economic relations with our partners. But now it seems they are doing precisely that. And more often than not they set unwarranted requirements to the Russian side. We have raised this question many times and pointed to our partners that we are not going to join the World Trade Organisation at all costs. We will be guided exclusively by the interests and needs of the Russian economy.

True, there are certain advantages in entry, but our processing industry and its representatives have always voiced their fears - with customs borders to be opened, they say, many of Russian businessmen, public and private companies consider they are not ready for the competitive struggle and need a period of adaptation. Yet after weighing all the pros and cons, we have nevertheless decided that we should move in that direction. And move we will.

We are not abandoning the goal of joining the WTO, but not at any price or cost. Now, after 15 years of negotiations, and having assumed big enough obligations to respect certain rules, we have approached the watershed when we can say: We are observing every provision, but, being a non-member, we do not enjoy any advantages or preferences. How long can this go on? Such a state of things runs counter to the interests of some branches of the Russian economy, and particularly farming.

Agriculturists have long been complaining that imports stand in their way: in farming this concerns so-called red meat, poultry meat and some other products. In industry, it concerns industrial assembly. We pledged not to do any industrial assembly after we had completed a big enough car-building programme. I think we will have to rethink this attitude a bit, although our European partners have tried long and hard to persuade us not to do any more assembly. Since it was conditioned by WTO entry, we will wait. But being a non-member, we will put some of these programmes on the back burner, and go back to them as soon as we gain full membership.

Sergei Brilyov: Is the current chill with the West a lasting one?

Vladimir Putin: I see no chill as yet. There is a lot of talk, a lot of emotion, but we have not yet seen any practical steps being made which might speak of or testify to a chill. I hope that this won't happen, but in any case, whatever they say, the truth is on our side. We are behaving absolutely morally, within the framework of existing international law. Therefore, if someone from Europe wants to man the guns of someone else's foreign policy interests, please, we can't stop anyone. But I think that, as they say in these situations, charity begins at home.

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Vladimir Putin: Whatever people may say we have truth on our side. We are behaving in an absolutely moral way and within international law. If any European countries want to promote somebody else's foreign policy interests, they are free to do it, we cannot stop them. But as they say in such cases, self comes first. I think many of our partners, and above all European partners, will proceed in accordance with that crude but vivid formula. We have spoken about oil, gas and metals. I could mention some other traditional Russian exports, such as chemical fertilizer and timber.

Correspondent: Russia has a lot of trees.

Vladimir Putin: It has a lot of everything. For example, space services. The International Space Station cannot exist without our rocket carriers. We have a lot of things without which our partners simply cannot survive, or feel comfortable. Why should anyone renounce it? But if, against all the odds, somebody chooses to do so... well, the world is a large place. Demand for these services and goods is very great in the world. They are in short supply. Everything that we have is in short supply in the world economy. And what enters our market in fairly large quantities can be found elsewhere in the world. So I don't see any serious problems there. And anyway why should they arise?

I repeat. We are absolutely convinced that the truth is on our side. We did not invade anyone. Other people came to our doorstep and staged a bloody provocation there. We were simply defending the lives and health of the peacekeepers whowere fired on at pointblank by tanks. We were defending the civilians in South Ossetia, which is our peacekeeping mandate. We were obliged to do it. In this connection I recalled the tragedy in Srebrenica. In 1995 the European peacekeeping contingent was represented there by the Dutch who chose not to join the fray.

Correspondent: They retreated ignominiously.

Vladimir Putin: Yes. They retreated. They still remember it and are bringing apologies. But people in Srebrenica were killed. What did they expect from us? To behave in the same way and to fail to do our duty to the people whom we had to protect? So, we have no need to apologize to anyone. We are confident that we are right. We are not going to pick a fight or argue; we will work.