President Vladimir Putin: Dear Mr Federal Chancellor, ladies and gentlemen.
I am very glad to welcome the participants and guests of the Hannover trade fair and would like to wish it successful and effective work.
The Hannover fair is truly known as one of the centres of business activity not just in Germany, but all over Europe. I would say all over the world as well. The leading companies of the world are represented here every year. A wide range of modern technological achievements are represented here. Achievements which will determine the future of the global economy, and basic tendencies of the development of industry and world science.
And we are grateful to our German colleagues for inviting Russia to be a partner country at such an authoritative forum with its rich traditions. Russia’s special status comes logically from the spirit of Russian-German strategic partnership and mutually beneficial cooperation. I see in this a sign of acknowledgement of the weight of the intellectual and technological potential of our country. And of course, this is a sign of growing interest by entrepreneurs from various countries in the Russian market, and in productive cooperation with Russian partners.
Indeed, the large-scale economic changes in our country create good opportunities today for bold business activity, for realising truly strategic projects.
For over five years, Russia has reliably been among the group of world leaders in economic growth rights. The main guidelines of our economy are macroeconomic stability, increasing the competitiveness of Russian goods and services, responsible social policies, and ultimately to join the leading economic powers.
Last year, Russian GDP grew by more than 7%, more precisely 7.1%, while people’s real disposable income grew by 8%. Investment activity grew by 10%.
We well understand that prospects of growth and diversification of responsible economy directly depends on the level of economic freedom in the country, on the state’s ability to provide favourable, transparent and predictable conditions for conducting business.
This is why our plans for the near future include further measures to reduce the tax burden on companies, and to regulate and simplify tax procedures. This should all seriously increase the quality of tax administration, and make it easy for market participants.
We are continuing work on reducing superfluous administrative and permission tools of the state in the economy. Here we believe it is important to increase the effectiveness of public functions of the state which entrepreneurs really need. This includes anti-monopoly policy and legal defence, and reliable guarantees of property rights, including intellectual property.
At the same time, I stress, any conjecture about a possible re-examination or revision of the results of privatisation in Russia are without foundation. On the contrary, to stabilise ownership relations and to stop any return to discussions of revision, we are prepared to reduce the period of limitation on privatisation deals from 10 to 3 years.
We link our plans to diversifying the structure of the economy and developing the investment sector in many ways with the activity of small and middle businesses. For these companies, we intend to create conditions as comfortable as possible both for beginning our activity and for subsequent work. I can’t say that we have achieved all the goals that we have set, but we have made the strategic choice, and we will continue to move in this direction.
The private sector will also expand by the creation of a competitive environment in education, the social sphere and the housing. Privatisation will affect structures which do not directly implement functions of the state and state administration. I can say that this concerns the privatisation of around 3,500 joint stock companies and 8,000 state enterprises.
Restructuring of natural monopolies will continue, along with the banking sector, with an emphasis on strengthening the competitiveness of national credit organisations. By 2007 Russia will be ready for full currency liberalisation – all restrictions will be removed for carrying out capital operations. These decisions have already been passed, and already, everything that has been planned has been launched and is functioning. We will move to full liberalisation by 2007. I repeat, the appropriate laws have already come into effect.
The stable state of our finances makes it possible to pay back creditors ahead of schedule, among which the Federal Republic of Germany is a major creditor, on debts that were inherited from the Soviet Union. Appropriate proposals are on the discussion table at the Paris Club.
Other measures are also on the agenda for improving the framework conditions of investment and commercial activity. It remains to regulate systems of land and natural resources utilisation, to modernise the customs system with an emphasis on reducing rates for technical equipment, and to fundamentally improve the quality of administration. Taking these plans into account, I think that there will also be additional work for German entrepreneurs. I mean that machines and equipment make up almost 90% as a whole in the structure of Russian import from Germany.
The state, I emphasise – with the use of modern market tools – intends to provide support to promising high-technology sectors of the economy, to fundamental and applied science. We expect that these measures will be accompanied by private investments, including foreign investments, for which the necessary conditions will be created. Preferences will also be examined in legislation that is being prepared on special economic zones of technical development and industrial manufacture. I recommend for everyone who is interested in work on the Russian market to familiarise themselves with these project documents.
I expect that our German partners will value the prospects that open up here to invest capital, and also to create joint high-technology products, including products that are directed towards the markets of third-party countries.
I do not think that the fourth place that Germany occupies in the volume of foreign investment in Russia is a level which could suit both sides. And here we expect major results from the activity of the “strategic” work group, and from direct contacts of business communities.
We see active participation in international and regional integration processes as one of the most important tools for modernising the national economy.
Russia expects standard conditions for joining the World Trade Organisation, and to start talks for our country to join the OECD. We are waiting for decisions from our partners for Russia to move to the third category of risk according to the classification of this organisation, uniting our country with the liberal market economy.
Building a common economic space between Russia and the European Union has moved to a practical level. I would note here that giving this area specific substance, and general stimulating business activity in Europe as a whole, depends to a large extent on cooperation between Russia and Germany. Germany, as was stated earlier, is Russia’s main trade and economic partner. It accounts for 10% of Russian foreign trade turnover. In 2004, a record level of trade turnover was reached, according to our experts’ estimations it was $23 billion – almost one third more than in 2003. And if we calculate this by European methods, then our trade turnover has exceeded 31 million Euros.
Germany makes up more than 30% of consumption of energy resources supplied from Russia. And it is important that energy dialogue is deepened both on a bilateral basis and in the format of the European Union. I hope that there will be an interested exchange of opinions on this topic at the Russian-German Energy forum which is planned for autumn this year. Strategic decisions remain to be taken on German companies taking part in planning and building a North European gas pipeline, and in developing promising gas fields in the Russian Federation with the participation of German partners. In the framework of a multilateral consortium, our companies will work in modernising the gas transport system in Ukraine, as long as our Ukrainian partners do not change their initial plans in this project.
The Federal Chancellor and I intend to give priority attention to encouraging contacts in science-intensive industries, in science, education, research, training personnel for economics and management, and introducing and using innovative developments. To create a coordination mechanism in these spheres, a Joint statement on strategic partnership in the area of education, scientific research and innovations has been created.
In this sense, we see our presentation at the Hannover market not just as an exhibition of achievement, a window display of Russian industry. It is also a specific proposal for joint work with German and other partners.
Over 130 Russian manufacturers and scientific research associations are taking part in the fair. Priority has been given to the most attractive and promising areas of cooperation – energy, resource-saving and nanotechnologies, telecommunications and IT, space and aircraft construction.
An important part of the Russian presentation “Russian-German Economy Day” will be a meeting of representatives from Russian and German business circles. Thus the fine tradition will be continued of direct dialogue of business elites at important bilateral events at a high level.
We also attach great importance to the fact that the Russian regions are widely represented at the fair. Practice shows that regional cooperation is the most effective and efficient mechanism of development of ties with Germany. This fully concerns Niedersachsen and its capital Hannover. We are very grateful to the leadership of this city for their friendly approach to our joint work and for giving us the chance to be here among you today.
As one of the creators of the German model of the social market economy, Ludwig Erhard, correctly noted, “Half of the economy consists of human psychology”. In the era of globalisation and swiftly developing international contacts, this statement sounds more relevant than ever before.
Today it is the trusting relations of partners and the ability to receive information at first hand that directly determine the success of business projects. I am certain that in this sense, the Hannover fair will fulfil its purpose.
I would like to wish promising contracts to the participants of the exhibition, and I also expect that visitors to the Russian exhibition will not only see our technological capabilities and achievements, but they will generally have their ideas of Russia today enriched – a dynamically developing country which is prepared for the widest and most sincere partnership.
Thank you very much for your attention.