Vladimir Putin: Good evening, ladies and gentlemen. Ms Tymoshenko and I have just completed our talks. I would like to thank all our Ukrainian colleagues for constructive work. In the three months since our last meeting with the Ukrainian Prime Minister, we have made headway in several important avenues of cooperation. It is our intention to expand multi-faceted Russian-Ukrainian relations, including political, trade and economic, humanitarian and security spheres.

I am convinced that our joint efforts must facilitate the sustained development of Russian-Ukrainian ties based on pragmatism and mutual trust and regardless of time-serving political considerations. Moscow is prepared for precisely such cooperation with our Ukrainian partners.

Another important factor, namely, the acute crisis on global financial markets, should also be taken into account. In this situation, close Russian-Ukrainian cooperation, as well as that between other CIS states, could become a major stabilising factor because our economies are closely inter-linked, and mutual trade and economic relations are developing actively. As I have already said at the beginning of our talks, the bilateral trade turnover has soared by over 50% on 2007 to reach $25.1 billion.

Ms Tymoshenko and I are heading the Russian-Ukrainian Bilateral Commission's Economic Cooperation Committee. We have also discussed possible deadlines of its next meeting at our talks.

We have also discussed such important issues as long-term fuel and energy cooperation, including Russian gas supplies to Ukraine and uninterrupted energy carrier transits to European clients. We have signed a memorandum on this issue.

At the same time, our trade and economic and investment cooperation could develop much more successfully and benefit our nations to a far greater extent. We do not want Russian-Ukrainian business partnership to become hostage to politics.

I regret to say this, but our bilateral relations are going through a difficult period; we are concerned about many aspects of the Ukrainian leadership's policy. This concerns Kiev's stand on the Georgian aggression against South Ossetia, attempts to distort our common history and to exonerate Nazi collaborators. Problems are being artificially created around the Russian Black Sea Fleet. I am convinced that all issues concerning the deployment of our fleet in the Crimea must be settled at the negotiating table in an atmosphere of mutual understanding, trust and on the basis of existing bilateral agreements.

The Ukrainian political situation plays a certain role in this context. Naturally, Russia is interested in a stable and prosperous Ukraine and is ready to establish a close and friendly partnership with Kiev. Only this approach matches the main strategic interests of our fraternal nations.

Thank you very much.

Yulia Tymoshenko: Today, I would like to thank the Russian Prime Minister and the entire delegation for an opportunity to discuss the entire range of issues linked with 11 high-priority aspects of our economic cooperation, set forth during previous meetings of our joint Committee. I am convinced that we have scored very good results on all aspects.

Today, we have discussed issues linked with our expanded cooperation, analysed in detail the situation in our trade relations and on our commercial markets in the context of Ukraine's accession to the World Trade Organisation.

We have agreed to set up an ad hoc working group of the economic sub-commission. Russia and Ukraine will jointly decide how to protect their domestic markets and to ensure absolutely legal imports and exports. I think that the creation of this working group will make our economic relations reliable, particularly after Ukraine's accession to the WTO.

Moreover, Ukraine has reaffirmed its commitment to facilitate the Russian Federation's WTO accession to the greatest possible extent.

We have also analysed the details of our joint cooperation in the aircraft-building industry. I think our moves imply that we can jointly enter Antonov aircraft markets, ensure this joint project's implementation and obtain a sizeable economic effect.

Although Kiev and Moscow are divided on some international political and economic issues, I am convinced that such differences should not prevent our countries and nations from obtaining maximum possible benefits from close bilateral cooperation at state, corporate and private level.

I think that Mr Putin's statement that our trade turnover has soared by a record-breaking 54% since early 2008 highlights an impressive result. This proves that, contrary to the existing differences, we can build sound economic relations.

During our talks, we have discussed the initial implementation of all our agreements as regards natural gas deliveries to Ukraine and Russian gas transits to the European Union via Ukraine. The settling of this highly important issue will convince our two countries and Europe that we can enter the year 2009 in a stable, comfortable and well-balanced atmosphere.

We have signed an important memorandum that will become the basis of strategic long-term gas-delivery contracts and contracts for Russian gas transits to the European Union via Ukraine.

Right now, I would like to focus on several important agreements reached on the basis of this memorandum.

First, we have agreed that the sides will welcome direct long-term relations between energy giant Gazprom and the National Joint Stock Company Naftogaz of Ukraine as regards gas deliveries to Ukraine that would meet nationwide demand. Such relations will be established starting January 1, 2009.

This means that direct relations, repeatedly mentioned by us, will form the basis of our long-term contracts after the signing of this memorandum.

Second, both sides have reaffirmed their wish to facilitate a stage-by-stage switch-over to market, economically substantiated and mutually beneficial prices for imported natural gas, as regards Ukrainian customers, and tariffs for Russian gas transits via Ukraine, in the next three years.

Through mutual compromises we came to the conclusion that our two countries do not need any shock price therapy, and that we will formulate specific approaches and attain normal market prices gradually, in three years.

It is very important that we agreed that both sides support Naftogaz of Ukraine and want it to import all natural gas volumes for Ukrainian customers. In effect, the Naftogaz market is virtually the entire domestic market.

The sides support the intention of Gazprom and Naftogaz of Ukraine to jointly export additional natural gas, including that stored inside underground Ukrainian reservoirs and not needed on the domestic market. That is we agreed to jointly export the additional volumes of natural gas.

Naturally, Ukraine undertakes to facilitate long-term and uninterrupted gas transits via its territory. I think we have formalised these important aspects that will become the basis of a new long-term contract. I also want to thank Mr Putin for facilitating this agreement and for accomplishing our planned objectives.

Question: Sonya Koshkina from the Obozrevatel online paper.

Ms Tymoshenko, President Viktor Yushchenko has finally reached Lvov aboard our plane today and said he would sign a decree on dissolving the Parliament, if no coalition is established by 12 a.m. today. You have promised that your faction will do everything possible to override the veto on bills passed by you and the Party of Regions. However, this has not been done. How will you react, if the President fulfils his threat?

And my next question is to Mr Putin. You have reacted very positively to your cooperation with Ms Tymoshenko. The issues mentioned by you highlight your negative opinion of President Yushchenko's policies. Ukraine will soon elect its next president and will probably hold early parliamentary elections, as well. Do your words imply that you support Ms Tymoshenko, and that you are not pleased with some of Mr Yushchenko's actions?

The Ukrainian public believes that the factor of foreign-policy sympathies or support is very important during elections. Thank you.

Yulia Tymoshenko: First of all, I think that today we will introduce some aspects of the rather tumultuous democracy of Ukrainian political life to Russia. This also concerns your questions. But it is my opinion that we must do our best to prevent chaos linked with another round of early elections in Ukraine.

I am convinced that we will be able to reach mutual understanding and to sign a coalition agreement. And I am almost sure that, judging by the Ukrainian Constitution, our national legislation, tomorrow is not the final day. We still have at least ten days to accomplish this objective.

Vladimir Putin: Did you say that someone borrowed your plane?

Remark: Yes, that's right.

Vladimir Putin: Was it really your plane?

Remark: That was the plane reserved for Ms Tymoshenko and journalists.

Vladimir Putin: Oh, it appears that someone else borrowed the plane... Well, seriously speaking, Russia will support the Ukrainian nation and respect its choice, no matter what that choice will be.

Naturally, we will build symmetrical relations with any state, including Ukraine. This implies the principle of reciprocity. In short, you shall reap what you sow.

In my opinion, there could be no greater crime against the Russian and Ukrainian nations than arms shipments to the conflict zone. Nobody has any misgivings about commercial arms shipments. But when specific weapons systems are used to kill Russian soldiers, then we consider this a rather alarming development.

Several years ago, nobody could even imagine that Russians and Ukrainians would be killing each other. However, this has happened, and this is a crime. This is number one.

Second, we realize our responsibility before the Russian state, our nation, the Ukrainian nation and our neighbours. We will build pragmatic relations, will deal with our partners and will adopt mutually acceptable decisions, just like we did today.

Question: Good evening. I am from Kommersant. I have a question for both prime ministers. How would you comment on the recent deterioration of the domestic political situation in Ukraine? It has been taking some unusual forms lately, such as your travel here today. It might be funny, but it is affecting the course of relations, including today's talks. So again, I ask for a comment on recent events in Ukraine.

And the second question, if you allow. You said that you discussed oil and gas a great deal. In Russia, and for that matter in Ukraine, many experts write that Ukraine's oil and gas system is in a dismal state. Deutsche Bank, if I am not mistaken, has allocated $2 billion to put it in order. But, as I understand, the attempt has failed. Russia meanwhile is building alternative routes and laying a new gas pipeline. Tell me please if there is any hope left for Ukraine's oil and gas system to see a positive change. Thank you.

Yulia Tymoshenko: To begin with, the domestic political situation in Ukraine is due, first of all, to the turbulent development of the democratic processes, and this, of course, leads to a less than ideal political rivalry. I believe that until democracy in Ukraine matures, this rocky process will continue.

On the other hand, the increasing tensions are also connected with the fact that in 2010 Ukraine, as its constitution states, will hold a presidential election. It is this, less than honest struggle for the next presidential ballot in 2010, or rather for a second term in this election that leads to such far from pleasant results. This is why parliaments are dissolved, governments are sent packing, and a lot more is done which should not be done in a country, especially during a very dangerous financial crisis which is now under way in the world.

I would like to see Ukraine enjoy a stable political life and to see this stability give Ukraine steady economic achievements. I think it will happen eventually, but perhaps the agitated development of democracy in Ukraine will continue for some time yet.

Now concerning Ukraine's gas transit system. I would like to make some positive comments about it. The system has caused the failure of none of its contracts. It has the capacity to transport to Europe amounts of gas even greater than those contracted for. There has not been a single occurrence that called into question the system's ability to exercise this function.

All the money loaned to us for its re-engineering and upgrading has been invested in full. This is why it is functioning so reliably now. I hope it will continue to do so. We are a dependable partner and will perform our part competently.

Vladimir Putin: If you permit me, I will add something. We also hope that the Government of Ukraine, the national joint stock company Naftogaz of Ukraine, and the specialists that keep the system running will react in a timely manner to maintain it in proper condition, although some European experts and us as well have concerns. As far as I know, although I cannot claim to be 100% right, Ukraine has received adequate credit, including that from Europe. It is not us who decide how to use these funds. Nor do we know how they are used. Not knowing who decides what can raise questions. Just now I spoke quite emotionally about arms supplies. But we do not know who decided this either or where and how.

Gas transport is a serious issue. We very much hope that the understandings reached today will underlie decisions to maintain the system in proper working order.

As for our plans, construction of new transport facilities will proceed regardless of the technical state of the pipeline system crossing Ukrainian territory. This development will proceed because additional capacities will be able to carry additional supplies for European consumers.

Question: This is Olga Koshelenko, from Channel Five. Mr Putin, the Ukrainian security service is most serious about its allegations that Ms Tymoshenko has committed a state crime by reaching collusion with Russia. And the Ukrainian President's secretariat, commenting on the Cabinet's moves, practically always speaks of the "hand of Moscow" or the "hand of the Kremlin" present in all her actions. Would you comment and tell us if there was any collusion, and whether or not you finance the election campaign?

Vladimir Putin: I was once connected with security bodies, but in the Soviet Union, not Ukraine, and therefore I am not in a position to comment. To my mind, it all looks very funny. When I first heard the mass media say that our guest was incriminated with poisoning President Yushchenko, I thought it was a ludicrous spectacle, an amusing sideshow. It would be funny if it were not so sad. We really do feel sorry that our neighbour, a large European country with 45 million people, is beset with ongoing domestic political squabbles that stand in the way of long-term economic relations. Today, as we discussed one thing and another, we felt one issue pressing on the agenda the whole time: what will be the next? What will happen in a month's time, in a couple of months? That is a disturbing feeling. We are therefore interested in putting an early end to this, so that we can have a reliable and stable partner for a long time. We are vitally interested in this, and will do our best to see this come true. I believe all our partners will remember that the understandings reached today are the best evidence of our desire to have stable relations.

The "hand of Moscow" is a well-known cliché. But the actual hand of Moscow is covered in working callouses, because it is the hand of the Russian people known for their industriousness and whose centuries of existence have confirmed that Russia is a reliable partner. It is a country that aligns relations with its neighbours on a long-term basis.

As for Ukraine, its hand is the hand of a friend.

Question: (Olga Koshelenko from Channel Five). If possible, a question for you, Ms Tymoshenko. I will not be asking who took the aircraft from whom. But what do you think of this morning's episode? Can it be considered an attempt at foiling inter-state negotiations?

Vladimir Putin: An aircraft ... toys taken away ... Why are you bothering her? Why indeed! (laughing)

Yulia Tymoshenko: You know, my response to this is that politicians, regardless of the country they live in, must learn honest and dignified competition in pre-election campaigning, without mud flinging. Once a politician has mastered the basics of dignified behaviour in a campaign, it means the politician has matured and is ready to serve his people.

Unfortunately, dirty and mala fide campaigning leads to, among other things, chaos, libel, reprisals and dirty media tricks. I believe this kind of lack of integrity can be harmful to countries saddled with such politicians. I wish Ukrainian politicians had a maturity to avoid mala fide practices.

I would like to set an example for higher standards in politics. As you may know, I have refused to respond to certain indecent attacks for months. I am determined to maintain this stance. When the time comes, we'll enter the election campaign with dignity. We will do what is necessary to fight a fair battle and win. But neither my team nor I will ever be a part of the dirty shows while vying for power.

Question: Natalia Antipova, Izvestia paper. Ms Tymoshenko, this issue has already been discussed here, but could we have your comment as well? Izvestia has acquired documents confirming that Ukraine was selling weapons and arms to Georgia upon President Viktor Yushchenko's instruction. Could you please comment on that?

I would also like to ask Mr Putin: although you have already commented on the situation, do you think Russia will react in some way if the allegations are proven true and Mr Yushchenko made this decision?

Yulia Tymoshenko: First of all I would like to clarify something: the delineation of power between the branches of the Ukrainian Government places responsibility for arms trade under control of the President and the National Security Council. The Cabinet is not authorised to exercise any control here.

Second, I think we should discuss such issues only when and if the facts are confirmed and there is solid proof.

A special investigation committee has been appointed in Ukraine's parliament to find out the truth in this matter. We can only evaluate certain actions once we have the facts.

Vladimir Putin: I have already said that supplying weapons to a conflict area is an unscrupulous and dangerous business. We certainly condemn such action. It could be seen as commerce, but a special kind of commerce nevertheless. We do not know who made the decision to supply military machinery and equipment during the conflict. Whoever did this, made a big mistake.

But we are more worried about other things - that the equipment was shipped to Georgia after the fighting began and that it was driven by Ukrainians. If there is proof of that, I would call it a crime, because it would qualify as direct involvement in an armed conflict, thus forcing deliberate animosity between the Russian and Ukrainian peoples. It is completely unacceptable. If, I repeat, if there's proof of that, we'll take the appropriate action concerning the specific people who pursued this approach.

Yulia Tymoshenko: I think that until these allegations are proven, we should go on building constructive, friendly and harmonious relations. If facts are exposed that violate a country's law, then specific law-enforcement agencies must act. But I doubt they will be confirmed, and I hope that Russia and Ukraine will continue as friends and will pursue mutually beneficial cooperation.

Vladimir Putin: This was our approach today. I hope we'll continue along these lines. But, think about it! If it really were true, whose interests were they protecting in the Caucasus? What was the motivation? How did it help the Ukrainian people? What interest could the Ukrainian people have had to interfere in the conflict? Ukrainian people have no interests there. It was politics, an irresponsible and harmful action perpetrating criminal damage. Thank you.