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President of Russia Vladimir Putin: Your Majesty,
Friends and colleagues,
Once more, I wish you a warm welcome to Moscow.
Before starting the business part of our lunch, I want to congratulate Your Majesty and all of our Spanish colleagues on your football team’s victory in the European Championship. This was an outstanding achievement not seen in a long time – winning the world cup and also winning the European championship twice in a row. We all enjoyed watching your team’s performance and we wish you success. As you know, Russia has the honour of hosting the World Cup in 2018, and we hope that our fans will have the chance to see Spain play here then.
As for our business relations, I said to His Majesty just before during the meeting in narrow format, that we are happy overall with the way our cooperation is advancing. We have been making progress in a broad range of areas.
To give you a brief outline of how the Russian economy looks today, I can repeat a few facts and figures that most of you are already familiar with.
”We have not postponed any of our policy measures in the social sector. We regularly adjust social benefits and pensions and have introduced several new and effective social support measures.“
We are satisfied overall with the state of Russia’s economy at this difficult time. Our GDP grew by 4.3 percent last year, and this was the biggest increase among the major European economies. Unemployment has dropped substantially, and at 5.4 percent is now lower than the pre-crisis level in 2008. Our inflation is still quite high by European standards, but is at its lowest level here in 20 years, with a figure of 6.1 percent last year. At the same time, the Central Bank and Government reserves continue to grow. The Central Bank’s gold and currency reserves now come to $514 billion, and we also have the two Government reserve funds with $60 billion and $85 billion. This makes for quite a stable situation in the economy and enables us to meet our social sector commitments.
We have not postponed any of our policy measures in the social sector. We regularly adjust social benefits and pensions and have introduced several new and quite effective social support measures. It is especially pleasing to see that slow but nonetheless visible change is taking place in our demographic situation. We had the biggest increase in population last year for the last 19 years. Unfortunately, we still face a population decline problem, but that we achieved the best result in the last 19 years nonetheless shows that families are starting to plan for the longer term and are feeling more confident now, even though the problems in the global and European economies affect us today in one way or another and obviously cause us concern.
Many of our economic sectors – the chemicals industry, metals sector, and the energy sector – most certainly feel the effects of what is happening in Europe, given that Europe is their main export market, and Russia is also a big market for European companies too.
Overall bilateral trade between Russia and the European Union came to the very decent amount of $394 billion last year. Trade grew even further over the first quarter of this year. In this situation, any problems in the European economy automatically cause ripples for us too, as traditional export markets for our goods contract and prices fall. We therefore hope very much that the European countries will overcome today’s problems, and we will do everything we can to help in this.
We hold a substantial portion of our gold and currency reserves in euros and cannot allow ourselves to take any unilateral steps that might undermine Europe’s currency. Indeed, we do everything we can to help maintain stability in this area.
We know that Spain is going through difficulties and that the Spanish government is having to take some tough but in our eyes unavoidable measures in order to stabilise the situation. We understand what you are doing and what difficulties you are having to overcome, and we think that you are taking absolutely the right course of action. The experts in Russia think that the measures the European Commission and the individual countries are taking to raise financial discipline and consolidate budget capability are definitely steps in the right direction.
”The biggest problem at the moment is that we still have not concluded a new basic agreement between Russia and the EU. We hope that we will settle on compromise solutions and parameters that make both sides happy.“
A Russia-European Commission summit took place in St Petersburg in June, at which we had the chance to exchange views on the shape of our relations today. Our EU colleagues told us about their plans, and I must say that we felt optimistic, seeing that the European Commission is determined to pursue tough and difficult but necessary measures to fix the problems.
The biggest problem in our relations at the moment is that we still have not concluded a new basic agreement between Russia and the EU. We hope that work on this agreement will go ahead without hiccups and that we will settle on compromise solutions and parameters that make both sides happy.
As we see it, the EU is still putting excessive demands on Russia at the moment, including with regards to full liberalisation of the energy sector. I think these demands are excessive because foreign participation in Russia’s energy sector is already more than 25 percent overall. To be honest, I know of only few countries that have such a high level of foreign participation in this sector. As for the other main energy suppliers, for the most part, their energy sectors are totally monopolised by state or quasi-state companies. Russia’s energy market has already been liberalised to a large extent and a quarter of it is in the hands of foreign investors.
Investment in Russia continued to grow last year. We hope to attract an even bigger flow of investment. In this respect, one of our priorities is to encourage private investment, including foreign investment. This is why creating a favourable investment climate in Russia is such a big priority for us.
We see cooperation with our Spanish partners as very important and of great interest in the general European context. Meeting before with His Majesty and the energy minister and other colleagues in narrow format, we talked about the possibilities for carrying out very promising big projects worth hundreds of millions and in some cases even billions of euros. This means new jobs, new technology, and also work together in other countries’ markets, in Latin America in the case of energy sector projects, and in markets in Europe and Asia. We believe we have already achieved some good results, including in machine-building, transport machine-building, and space exploration. There are many other interesting and promising areas for cooperation, and we take the view that these initiatives are all possible and will be carried out.
It is a great pleasure to welcome Spanish business leaders to Russia today. I hope that you will have the chance to communicate directly with your Russian partners present here, and make use of this opportunity to discuss what has been done so far and outline promising plans for the future.
Thank you for your attention.
King Juan Carlos I of Spain (retranslated): Mr President,
This is my third visit to Russia in the last five years, and I have received a very hospitable welcome each time.
”One of our priorities is to encourage private investment, including foreign investment. This is why creating a favourable investment climate in Russia is such a big priority for us.“
Spain faces serious challenges at the moment. We are determined to overcome them. We are working very seriously on the budget issues at the moment. We realise that spending cuts are necessary, but they are not enough alone to overcome the crisis. We also have to take measures to encourage growth. To this end we are undertaking deep-reaching structural reform of our economy in order to restore confidence in our markets and set ourselves once more on a trajectory of growth and new job creation.
Europe has reached the important point when it must show its firm commitment to keep the common European project alive and working. If we do not stabilise the debt situation and inject new vigour into the lending sector, we will not achieve overall development.
In this sense, the latest decisions by the European Council and the EU members are the first step in the right direction. The time has come for Europe to strengthen the measures it is undertaking by reinforcing its institutional structure. The time has come to give the European project a new boost and reaffirm our determination to work in this direction, as we have from the very beginning. Spain has come through past crises an even stronger country, and we are sure that we will emerge from today’s crisis stronger too, and that the measures we are taking will produce results.
Russia is our strategic partner, and although far away geographically, Russia is close to us. We have excellent bilateral relations, but we think there is great potential to develop them further, and big opportunities for further growth.
I stress the importance of our economic relations in this respect, Mr President. Representatives of some of our biggest companies have come with me on this visit. Almost all of these companies are currently bidding in tenders organised by Russia, are ready to sign or have already signed contracts with local partners. These are leading companies in energy, infrastructure, transport and engineering, all of them wanting to take part in the various projects that are part of your national modernisation programme. We hope to see Spain play a very active and initiative-taking role in the Partnership for Modernisation that Russia and the European Union have signed.
I also note the tourism sector. We expect to see the number of Russian tourists visiting Spain pass the 1-million mark for the first time in 2012. As you know, Spain has always consistently supported abolishing visas, because this would increase the number of tourists on both sides and in both directions.
I want to raise my glass to Russia now, to the friendship between us, and to fruitful cooperation between our countries.