Vladimir Putin: Good afternoon, ladies and gentlemen, Ms Halonen.

I am happy to welcome you in St Petersburg. Our meetings with Finnish business leaders have already become a regular event. Finland is not only our neighbour, but also a good partner in many ways.

Before we start, I would like to give you some good news. At our last meeting in Helsinki, Ms Halonen asked me to open the Torfyanovka customs crossing point for cars. We considered her request and today I signed a government resolution to that effect. So you can use the crossing for this business.

Tarja Halonen (speaking in Russian): Thank you, it is a very nice present.

Vladimir Putin: My pleasure. I am very glad. Now I would like to move to the gist of our meeting today. As I said, it is gratifying that the direct dialogue with Finnish businessmen has become a regular feature. The meeting in Helsinki last June was also very productive. I am happy to continue our contacts. They no doubt contribute to trade and economic ties between Russia and Finland and help to address problems as they appear and find new and promising solutions.

Finnish business has ample experience of working on our market. We value the level and quality of our business ties and are interested in developing them further.
This is particularly important now that we are recovering from the crisis. Our national economies will unquestionably benefit from our close cooperation and from joint commercial projects.

This is why we are paying such serious attention to key priority projects. This applies specifically to a high-speed passenger rail service between Helsinki and St Petersburg. It is scheduled to start running at the end of this year.

We are also interested in the experience of our Finnish partners in innovation and advanced technologies, including those based on the principles of private-public partnership.

Unfortunately, in 2009 bilateral trade was almost half of what it was in the record year 2008. Still, Russia retained the status of Finland's main trading partner.

Our common objective now is to overcome the effects of the crisis as quickly as possible. I would like to hear your proposals on this score and also to discuss ways of boosting mutual investments. I am confident that we have huge reserves for encouraging mutual capital flows. I will not mention any examples here, but there are many positive examples, such as Fortum's investment in the Russian energy industry.

There is no doubt that we need to improve the entire structure and substance of economic ties. For us it is of principled significance to increase the export of high-tech and high-conversion products to Finland. The potential for that exists. Take, for example, Russian companies supplying up-to-date and competitive energy equipment to Finland.

It is this kind of objectives and aims that we set before the Russian-Finnish Intergovernmental Commission for Economic Cooperation. I agree that its work should be more focused on the demands of the business communities of our countries and help promptly deal with problems as they crop up.

I also suggest that thought should be given to the establishment of a Russian-Finnish Business Council. It could represent the big business of our countries. And among its basic tasks I see that of laying down strategic guidelines for business cooperation and the deepening of direct ties between interested companies.

Now I would like to briefly go over key aspects of our economic joint efforts. I will begin with the timber complex and say straightaway that our understandings remain in force. We have prolonged the standing rates charged on individual and basic types of timber until January 1, 2011.

You all know that we advocate an effective use of natural resources and creation in Russia of plants for the deep conversion of timber. It is our strategy and it is going to stay that way. We propose that our Finnish partners once more weigh the long-term prospects of their work on the Russian market and take advantage of the existing opportunities to develop business and strengthen their positions on the Russian market.

Thus, you can join our programme of priority investment projects for forest development. Company Koskisilva, for one, has taken advantage of its favourable terms and is currently establishing logging and wood-processing production units in the Vologda Region. So far, there are only nine such projects involving Finnish companies. I think a sizeable increase in their number will benefit both sides.

We also invite you to cooperate in the agro-industrial sector and food production, especially since there is common experience and a good future to look forward to. You know these companies: they include Finland's Atria, Fazer, Hartwall Group and some others. Things are going well with them. If you have any questions to ask, please go ahead, we can discuss all these issues today.

All advantages offered by co-production could also be used in shipbuilding. I am referring to the joint building of vessels and the provision of services. Early in the day my colleague, Danish Prime Minister Lars Lokke Rasmussen, and I inaugurated a new Trans-Atlantic shipping line between St Petersburg and Latin America. Although the company is Danish, the new ship was built in South Korea. I know many factors need to be taken into consideration here: shipyard capacity and the ability to produce a competitive product on such a scale. But there is something here to think about. There is certainly room for teamwork.

Ice-class ships and other special equipment to develop the Arctic are good candidates. These are products we can use ourselves and supply to third countries.

We have longstanding traditions in energy cooperation. They can serve as an example of constructive contacts between supplier and consumer. We prize the fact that Finland considers Russia a reliable partner in energy dialogue. I have already mentioned Fortum. It has become a major share-holder of one of our largest power-generating firms. At the same time, Russia supplies energy equipment for Finland. We have a good dialogue established here.

We appreciate Finland's positive attitude to the laying of the undersea section of the Nord Stream gas pipeline. This is Finland's major contribution to the energy security of the entire European continent. I wish to stress once again that our project meets the strictest environmental criteria. The work on the undersea section is starting in early April.

I have already mentioned the supply of Russian equipment for energy facilities in Finland. Russia is also willing to help develop Finland's nuclear power industry if your government makes such plans. We look to a fair and non-discriminatory attitude in possible tenders to construct new units. The International Atomic Energy Agency finds Russian reactors among the most dependable. In addition, our partner in such projects, Siemens, also has proved its worth as a leader in this area.

Of course, we are prepared to attract Finnish companies, above all to sectors where they are particularly strong, such as radiation security technology. We always try to place a larger part of contracts in a local market, in countries where we are helping to build nuclear stations. As a rule, at least 30% of construction is done by local firms.

Another lucrative area is up-to-date energy-saving technology and alternative sources of energy. The legal and organisational framework is provided there.

We link our plans to develop the Russian economy with a favourable investment climate and expansion of state-to-state business partnership. Our anti-crisis programmes likewise stimulate qualitative changes in banking and the real economy.

Despite persisting problems there are positive general trends in the Russian economy. Russia's GDP in 2009 dropped by a considerable figure, 7.9%. That is common knowledge. But the third and fourth quarters saw some growth. In 2010, we are expecting a 3% economic growth in Russia.

In January-February, the country's industrial production increased by 5.8%. I consider it of fundamental importance that during the crisis we managed to maintain macro-economic stability, and keep the budget stable and the financial system functioning effectively.

Russia has a solid foreign trade balance. In 2009 it had an export surplus of $112 billion, while the inflation rate reached an all-time low since 1991. It is still high at 8.8%. But, I repeat, it is the lowest since 1991. This year, we are forecasting 6.5% to 7%.

Russia's gold and hard currency reserves are also on the increase and have already reached $440 billion. Another positive indicator of the Russian economy and its capabilities is an inflow of capital. In 2009, against all odds, despite the global crisis, foreign direct investment reached $45 billion. As you know, there have been inflows and outflows, especially of speculative capital, speculative not in the wrong sense but in the sense that it came into the economy for a short time and then went to a quieter haven. Yet despite all these movements, inflows and outflows, we had such an impressive figure in foreign direct investment. We are open to cooperation and welcome our partners' wishes to develop business ties with Russia. We expect that Finnish companies will by tradition be among the leaders.

Thank you very much. This is all I wanted to say for now.

By tradition, we will later proceed to a direct and informal exchange of opinions, ideas and proposals. Tarja, you have the floor (addressing Finnish President Tarja Halonen).

Tarja Halonen (as translated): Mr Prime Minister, members of government, diplomats and the media. I have spent this day in St Petersburg in animated conversation with Ms Valentina Matviyenko and her assistants.

I am happy for the Prime Minister, Mr Matti Vanhanen, that the people and organisations tackling the problems of the Baltic Sea have mobilised and started acting in order to strengthen security of the sea.

The Baltic Action Sea summit held on February 10 is a good example of practical cooperation between the state and the private sector. (Addressing Vladimir Putin) I would like to thank you once again for attending that forum.

Cooperation within this format offers many opportunities, but I also think that the St Petersburg region, which borders on Finland, has a special status. We are paying special attention to cooperation between Finland and Russia. It is a good sign that border cooperation is proceeding most naturally.

I'd like to thank you for a practical gift in the sphere of logistics; it will serve the cause of our economic cooperation. We will continue to spotlight this aspect. I have promised - or threatened, if you like - that I will buy a ticket for the high-speed train as soon as they start running between our countries.

I am confident that the spirit of our previous meeting in Helsinki will also mark our meeting this morning. It is the spirit of cooperation in the search for solutions to practical problems that will benefit our people.

Of course, the global crisis has affected our economies because we are active participants in international trade. Since we also trade in investment products, we are influenced by the economic situation of our clients.

Development figures in Finland and Russia are comparable. As for 2009, the decline in trade between Finland and Russia was indeed dramatic.

It is interesting, at least to me, that cooperation at the level of people remained active despite the global downturn. In particular, the number of visas has reached a record figure, 740,000. It is a record-large number but we think we will beat it this year.

A good example for the economy is continued cooperation in the business sector and at the public level even in times of trouble. Finnish companies invested 6 billion euros in different sectors, and it is a positive thing that they have not withdrawn their investment despite the crisis, but are working to implement their long-term objectives spearheaded into the future.

We in Finland hope that nascent economic recovery will help us to increase employment, because it is employment that we are concerned about in this case.

I'd like to say openly that Mr Putin has made a breathtaking number of proposals, which we'd like to consider in the order of precedence. We have business leaders here; you know many of them personally. There are also representatives of other companies. All of them are interested in cooperation.

The intergovernmental commission will meet on April 4; the situation will be even better then, and we will be able to discuss it.

I'd like to add that Mr Prime Minister is welcome in Lappeenranta on May 27.

Our meetings held at the state level in different formats have always been and will continue to be very active. As far as I know, several documents will be signed tomorrow with the Ministry of the Environment. So, more guests will come, which is a good sign.

However, since we are pressed for time, I believe that we should start our informal meeting in a narrow circle. Thank you very much for this meeting. I am also grateful to our colleagues from St Petersburg and Moscow for making this a very fruitful day, and I think it will continue to be successful. Thank you.

Vladimir Putin: Since you mentioned St Petersburg, I'd like to give the floor to Ms Matviyenko. She has run this city for a long time, and St Petersburg has long-standing and well developed relations with Finland.

Valentina Matviyenko: Mr Putin, I'd like to say first of all that you initiated these relations when you were deputy mayor of St Petersburg. Since then, our relations with our Finnish partners have been growing at a fast pace. We create favourable conditions for the Finnish business, and see its interest grow with every passing year.

Finland is one of St Petersburg's largest partners in foreign trade and investment, and the sphere of our cooperation is growing every year. We are always happy to welcome Finnish businesspeople in St Petersburg. I hope that Fortum will make one more proposal today, which we have discussed before submitting it to you.

I'd like to use this opportunity to thank President Tarja Halonen for her assistance to the solution of St Petersburg's environmental problems in the past few years. Using the support of Finland and its President, we have implemented the city's largest environmental project, the South-West Wastewater Treatment Plant. We are now completing the construction of the trunk sewer with the assistance of Finland and your assistance, Mr Putin.

I also want to thank Economics Minister Elvira Nabiullina for allocating funds from the federal budget, as well as our European partners who have provided grants for this project.

When the project is complete, sewage water treatment in St Petersburg will reach 98%, and the city will stop polluting the Baltic Sea. It will be the only large city in Europe to reach such a high level of sewage treatment. We are grateful to the Finnish President for accepting our invitation.

We held a very interesting conference within the framework of the Baltic Sea Forum this morning to discuss ways to compile a productive action plan for St Petersburg at the regional level.

President Halonen contributed several interesting ideas, which we will take into account when improving our action plan and preparing a conference on this issue, to be held in Moscow in May.

I hope that representatives of the Finnish business will tell you that they feel at home in St Petersburg, and that we always find solutions to arising problems.

* * *

List of Finnish businessmen attending the meeting:

Rene NYBERG - CEO at East Office of Finnish Industries

Kim GRAN - President and CEO of Nokian Tyres

Kari JORDAN - Chairman of the Finnish Forest Industries Federation, President and CEO of Metsaliitto Group

Tapio KUULA - President and CEO of Fortum Corporation

Hannu PENTTILA - CEO of the Stockmann Group, Chairman of the Board of the Central Chamber of Commerce of Finland, Vice President of the Federation of Finnish Commerce

Sakari TAMMINEN - Chairman of the Board of the Central Union of Finnish Business, President and CEO of Rautaruukki

Henrik EHRNROOTH - Chairman of the Board of YIT Corporation, Chairman of the Board of Directors of Poyry PLC

Ole JOHANSSON - President and CEO of Wartsila Corporation

Anders BLOM - Head of AO Eurofacts, Standing Coordinator of the Group of Finnish Advisors at the Government of St Petersburg