Vladimir Putin, Mikhail Myasnikovich and Karim Massimov address the press

Mikhail Myasnikovich: Ladies and gentlemen,

This is a summary news conference. The other prime ministers have asked me to open it. I would like to say that the Union State and the Customs Union make a powerful, integrated alliance. The things we talked about and the decisions we made will have an impact on our relations and economic development. They will promote our countries' position among the centres of global economic power.

As for bilateral relations, suffice to say that Belarusian trade with Russia hit the 28 billion rouble mark last year, with a 20% increase compared to 2009, to show that our national economies are emerging from the world financial crisis. Some problems are still unsolved but, in principle, we see that we have embarked on the right road. We made decisions today on 27 items on the agenda concerning Belarusian-Russian relations. These decisions promise an impressive increase in bilateral trade, and will help us to attain a new level of integration in our innovation investment partnership.

During the meeting of the Council of Ministers of the Union State , the Belarusian party drew attention to the necessity for ambitious joint projects in energy, petrochemistry, pharmaceuticals, machine-engineering and other industries. We signed an agreement on space exploration including civilian space projects, which will result in the expansion of cooperation in this high-tech field. We also signed a landmark agreement concerning the energy industry. From now on, the Belarusian and Russian power grids will work as parallel systems, and we will construct an efficient and, even more importantly, a safe nuclear power plant. Make no mistake, its safety and reliability are our top priorities.

It is necessary to expand the structures of balances for the Customs Union countries, about which we spoke. The world is globalising, and we should support each other by extending cooperation. Balances are certainly a top priority for the emergent market of this Common Economic Space.

I am happy to report that trade between Kazakhstan and Belarus increased by 120% last year attaining a trade balance. The positive trend continues this year.

We determined our position on a unified immigration policy for third-party countries with consideration for the prospects for further integration. And we didn't forget the topical and sensitive issue of the Customs Union countries' accession into the World Trade Organisation.

We agreed to cancel transport control on the Belarusian-Russian border, as of April 1. I think we all agree that today's work was very constructive and principled, and has far-reaching implications. Thank you.

Vladimir Putin: I would like to thank our colleagues for their efficient work. During today's meeting, we discussed essential matters pertaining to the Customs Union and the Common Economic Space , and summarised last year's work. I would like to note that the unified customs tariffs and non-tariff regulation measures, introduced on January 1, 2010, allowed us to begin the implementation of a unified process for our trade with third-party countries. The Customs Code of the Customs Union entered into force on July 1, 2010. This code and the 16 international treaties drawn to develop it launched the integration of Russia, Kazakhstan and Belarus into a common customs zone.

During today's meeting, we discussed a number of issues for streamlining the regulatory framework and institutional structure of the Customs Union, including a Commission – the supranational agency of the Customs Union.

We also discussed financial organisation measures to establish a EurAsEC court of law, which will perform the pivotal function of dispute arbitration. We had a detailed discussion of the principles from which it will proceed, including such practical matters as judges' salaries.

We paid special attention to the formation of the Common Economic Space, which will begin operating on January 1, 2012. We also discussed the shifting of customs and other government control to the outer border of the Union by July 1, 2011.

We planned the initial steps in the sensitive area of unifying passport and visa control between our countries. I am convinced that, as we guarantee the free movement of commodities, that the next logical step is to spread this liberal approach to individuals.

The accession of Russia, Belarus and Kazakhstan into the WTO was a separate discussion, as my counterpart just said.

As you know, we discussed the issue at the end of February in Brussels at a meeting between the Russian government and the European Commission , and we set forth in clear terms to our European partners all the advantages Europe could have from this Customs Union and the Common Economic Space, since we are building our association strictly in line with the principles and standards of the World Trade Organisation.

The Council of Ministers of the Union State also met today. Traditionally, the council has focused on trade and economic cooperation. I have already given the figures: last year’s trade increased by 19% to reach $28 billion. Today we discussed how to improve this performance. We have every possibility for doing that. Russia and Belarus are adopting the standardised market principles of teamwork, step by step, including for the forecasting of socio-economic development parameters. We discussed energy, the regulatory regime of the Union State, transport, information science and communications, and many other areas, including humanitarian issues. I wish to thank my colleagues for their cooperation. Many thanks.

Karim Massimov: I would like to avail myself of the opportunity and thank my colleagues for the constructive discussion of issues connected with the Customs Union, its operation, and the upcoming establishment of the Common Economic Space. Separately, I would like to thank Belarus for the well organised meetings, both for the expert groups and for the meeting of the Interstate Council (Mezhgossovet).

Today’s discussion included a number of practical issues – the work of the Customs Union and the operation of the Common Economic Space. As earlier agreed, customs controls are to move from the Kazakhstan-Russia border to the outside frontiers of the Union, beginning July 1, 2011. On the Russian-Belarusian border, this has already taken place. I consider this a very important agreement, and today we passed a key decision on smoothing out some of the technical rough edges that have persisted. We can say with confidence that on July 1 the customs borders will shift to the union’s perimeters.

I would also like to thank you, Mr Putin, for settling the VAT issue in rail transportation (I consider this a technical matter). Now that you have issued instructions to Alexei Kudrin, we hope the matter will be settled shortly, because this has raised many questions in the business community in Kazakhstan. In principle, this question was settled today.

We also discussed another sensitive issue – World Trade Organisation accession – and we have agreed on a decision, that is to say we discussed all the fundamental points. I do not think there are anymore obstacles to further progress.

My colleagues mentioned that some other important questions concerning passport and visa issues and further efforts to promote the Common Economic Space, including codification of some areas, were also discussed. We likewise discussed basic approaches to the institutional establishment of a Customs Union Commission and its responsibilities after July 1, 2011.

Overall, I would like to say that the Customs Union is now a reality and has demonstrated very positive indicators in trade between our countries. With Belarus, for example, we are already approaching $1 billion, that is a level of trade that has almost doubled. Trade with the Russian Federation rose almost 30% in 2010. All this is very encouraging and offers good prospects for the future. Thank you.

Vladimir Putin replies to journalists’ questions

Question: Mr Putin, you chaired two events today: a meeting of the Council of Ministers of the Union State and a meeting of the Interstate Council of EurAsEC. Which of the two events was the more significant and meaningful for you?

Vladimir Putin: There can only be one answer: both. Integration is currently taking place on the post-Soviet space at various rates. And this is good, because it means we are not going down some blind alley, but are moving in directions that offer the most proficient speed.

What we have done together with Belarus within the Union State can be applied in, say, the Customs Union. One example is individual travel. Incidentally, we discussed this today. There has also been considerable progress on social guarantees for citizens within the Union State,  more than were able to achieve with our other partners.

As regards coordinated moves by customs authorities on the external borders of the Union State, this practice can be applied to the perimeters of the Customs Union. One does not interfere with the other, and both supplement each other.

Question: Mr Putin, an agreement on the construction of a nuclear power plant in Belarus was signed today against the background of rather dramatic developments in Japan. What conclusions do you think can and must be drawn from this situation? Some experts are saying it is necessary to review the overall approach to nuclear power,  for example,  from Taiwan experts.

A second question concerns the nuclear plant in Belarus. You said today that the most advanced methods of protection will be adopted in its construction. When can a loan agreement be signed (as far as I understand, construction will proceed with loans) and in what amount? Is there an understanding with Belarus on this point? Thank you.

Vladimir Putin: First, concerning the tragedy in Japan. We have spoken about this and now is the time to help our Japanese friends to reduce the effects of the accident.

Now regarding the development of global nuclear power. I do not believe it is possible today to speak of a world energy balance without nuclear energy. In some countries, including Europe, nuclear power (say, in France) accounts for 80% of its energy balance. Can you imagine? In Russia, nuclear power accounts for only 16% of the overall balance. Yes, we set ourselves the objective to increase nuclear generation to at least 25%. As you know, today I instructed the Energy Ministry , Rosatom, the Ministry of Natural Resources and the Academy of Sciences’ institutes to analyse once again the development parameters of the Russian nuclear power industry and to present a report to the government within a month.

What happened in Japan is a tragedy. And it was due to a combination of factors: an earthquake, a tsunami and so on. But nuclear energy will continue to be developed, all the same. The Japanese nuclear power plant, its generating units were built forty years ago. These units date from the 1970s. Today the world has far more advanced units, and nuclear power can develop only, I wish to emphasise this, only if it is absolutely safe. Is that possible? In modern circumstances, it is. Current systems, current reactors, modern nuclear power plants are built with protection parameters that preclude the events according to Japan’s  scenario of today. This is because such modern protection systems, which are called passive protection systems, are capable of operating even when external sources of electric power are lost. Yet this was what caused things to go wrong at the Japanese nuclear plant. First, electricity was cut off, then, following the tsunami, the back-up power sources were knocked out. The storage batteries didn’t last long enough after that. That was it. Modern systems, including passive protection systems, make it possible to do without any external source of electricity and even without human intervention in relief efforts. It is this technology that we are using in the Russian Federation today, and it is this kind of station that we are going to build in Belarus.

Now concerning loans and the agreement. As you know, we build nuclear plants abroad based on loans we provide for this work. We have established a loan facility of $2.5 billion for the People’s Republic of China. It is an open line. There is a $2.6 billion line of credit for India. Another loan of $4 billion is now being discussed and lined up for India. Typically, the amount of a loan depends on the amount of equipment  the ordering country does not produce itself. In the case of Belarus, the loan will be roughly $6 billion. Such an agreement can be concluded within a month. A separate item is financing the infrastructure. Usually, an ordering country itself finances the construction of the infrastructure surrounding the station. We are now discussing Russian participation in this part of the loan with our Belarusian partners, but I wish to emphasise again that this is subject to negotiation. On the whole, we are ready to conclude this loan agreement within a month.

Question: The Customs Union has been operational for over a year. What is happening now on the Russian-Kazakh border, in particular regarding transport and passport control and the movement of goods? Thank you.

Vladimir Putin: I can answer the question on transport and VAT collection. Before the Customs Union was established, cargo transportation from Russia to Kazakhstan and back was considered an export-import transaction from which the 18% VAT is not collected. But when we established the Customs Union, these deliveries became internal transactions from which VAT is collected.

Of course, this is not fair, as it makes things more difficult for the hauling companies, but we will resolve this problem.

Question: Do you think our economic modernisation will benefit more from  the Customs Union, the Common Economic Space or WTO accession? There are practical questions that worry people, especially in Belarus, because Belarusian duties on cars will be increased on July 1, while at the same time Russia is negotiating accession to the WTO who stipulates lower import duties. What should and what will be done in these circumstances? Thank you.

Vladimir Putin: No one should worry about this question, and this is why:

First, we agreed from the start that the Customs Union and the Common Economic Space would be based on WTO standards and principles. We have not and will not invent anything new in this respect.

Initially, we proceeded from the assumption that we will rely on the standards and principles of the World Trade Organisation. This means that if any member state joins the WTO ahead of the other member states, it will not affect the other states that have not yet joined the WTO because we rely on WTO principles in our plan anyway. In a manner of speaking, this is an advantage for the member states of the Customs Union, because no one can say, in for example Belarus, that its economic operation and partnerships are based on grey market schemes. Customs Union membership will guarantee that Belarus has accepted and is applying WTO principles in full measure. This is a major advantage in our relations with our trade partners outside the Customs Union and the Common Economic Space.

As for customs duties, they are a separate issue because they are not part of these principles. But I’d like to tell you that the standards for customs protection stipulated in the common customs rates are practically identical to the standards of customs protection, say, Russia is negotiating for itself  and hence will have little if any influence on the domestic market.

As for agreements between the three member states, all these questions should be resolved, one way or another, in the interests of the negotiating partners. If Russia develops the automobile industry, it will negotiate with its partners – in fact, we have almost agreed on this question – that we will protect our common market when importing foreign-made vehicles. This question is in no way connected to WTO entry, as that’s something everyone should see.

As for vehicles, Belarus is interested in keeping a certain rate for trucks because it produces them, and we met this halfway. At the same time, Russia is interested in keeping a certain rate for cars, believing that we should be met halfway on this issue. Acting at the request of Belarus, we are delivering 21.6 million tons of duty-free oil to them. Do you know how much this is costing us? I can tell you: it amounts to $4.3 billion in subsidies to the Belarusian economy.

Question: Mr Putin, the Customs Union is developing rapidly and the interaction is proceeding confidently. But is it possible that we could lose momentum on the way to the next stage of integration, the Common Economic Space? Can we expand integration by accepting new members, for example Ukraine?

Vladimir Putin: It is true that the process has gathered momentum. I would like to say again that we are grateful to our Belarusian partners, who ratified the package of documents related to the Common Economic Space before Russia or Kazakhstan. There are no grounds to assume that Russia will try to prolong this process. We plan to ratify these documents during the spring session. As far as I know, Kazakhstan plans to act likewise.

We are confident that this will happen soon. The Common Economic Space should become fully operational on January 1, 2012. I want to say once again that I don’t see any problems or obstacles to this objective.

Now, for Ukraine. Joining or not joining an integration association is the sovereign affair of Ukraine. It should be the decision of the Ukrainian people, parliament, president and government. Of course, we think that Ukraine’s involvement would benefit integration, in particular the Customs Union and the Common Economic Space, from the viewpoint of our common market.

I’d like to say the following: We know that Ukraine is holding talks on a free trade zone with the European Union. The standards of customs protection, which Ukraine has assured itself during the WTO accession talks (I will not cite any figures here), are more than 50% lower than our common customs rate. Even if Russia joins the WTO on the terms it is upholding at its talks with WTO member states, the common customs rate will remain nearly twice as high as Ukrainian rates.

What does this mean in practical terms? It means that if Ukraine establishes a free trade zone with the EU and cedes positions on many vital economic questions, it will do so in the hope that these goods can be delivered to the Russian market. But we cannot do this, and so we will have to close the border or else we will be swamped with these goods.

My Belarusian and Kazakh colleagues and I are fully aware of this danger. I am confident that should this happen, both Kazakhstan and Belarus will immediately demand that Russia closes its customs border. You don’t have to be an expert to see that consequences will be grave. It is rather difficult to enter the European market with traditional goods, and it will be impossible to redirect goods to our market. This is a bad development scenario, including for interstate relations.

However, negotiating with the EU on behalf of the Common Economic Space or the Customs Union would be quite another matter, and our standing will also be different, it will be much better.

I repeat that this is the sovereign decision of Ukraine. We would be glad to negotiate the question with Ukraine and we will try to do so, to discuss these issues with our partners.

Question: I have a question to all prime ministers regarding the work of supranational bodies of the Customs Union. Can both national and integration interests be balanced? How can this be done? Thank you.

Vladimir Putin: The volume of work at the national level keeps growing, which means we should not slacken our attention to it and attract top-level experts to it. We have agreed today that we should consider ways to improve this mechanism.