President Vladimir Putin: Mrs Federal Chancellor,
Ladies and Gentlemen,
It has already become a fine tradition that along with our regular Russian-German intergovernmental consultations our business communities also hold meetings together. I am very happy to have the opportunity to speak at such a representative forum of businesspeople today.
I would like to note that the growing interest business circles are showing in the strategic plans discussed at intergovernmental level, and the ideas and proposals you put forward, are an important reference for our governments.
The results of our bilateral cooperation over these last years show that this practice is justified. In 2005 alone trade between our countries rose by almost 38 percent and came to almost $33 billion by our estimates, and to an even higher figure — 39 billion euros – by German estimates.
This increase in trade was not just due to energy prices. Exports and imports of industrial and agricultural goods, production and scientific and technical cooperation have been rising from year to year.
German investment in Russia increased last year by two thirds – to 3 billion.
We plan to approve a number of major investment projects over the course of this summit. The Joint High-Level Working Group on Strategic Economic and Financial Cooperation Issues is working on their preparation.
I note that Russia is successfully demonstrating its industrial potential at exhibition venues throughout Europe, including in Germany. At this very moment a major international fair is taking place in Hanover, where Russia is showcasing the opportunities it offers.
Our aviation companies are preparing now for the ILA-2006 international air show in Berlin, all the more so as Russia has been invited to be the principal partner country for this event.
Cooperation in the strategic energy sector is also reaching a new level. Russia is a reliable supplier of energy to many European countries, including Germany. You know that Russia is presiding over the G8 this year and has made energy one of its priorities. I hope that the ongoing energy dialogue will enable us to launch promising new joint projects in the interests of sustainable global progress and economic and social development in Europe and throughout the world.
Expanding long-term and equal cooperation with Germany and other international partners is one of the Russian Federation’s foreign policy priorities. It is pleasing to see that the stable and consistent improvement in our country’s economic situation creates ever new opportunities for this work.
The Russian economy has been showing high economic growth for the last five years. The economy grew by 6.4 percent in 2005 and per capita GDP has more than tripled since 1999.
Our gold and foreign currency reserves have reached a figure of $212 billion. This year our country will launch a new mechanism for providing state support to investment projects – the investment fund. Almost 1.7 trillion roubles (roughly $60 billion) have been accumulated in the government’s Stabilisation Fund. This makes it possible for Russia to repay its foreign debt ahead of schedule.
In August 2005 Russia repaid a significant portion of its debt to the Paris Club of creditors. The total sum came to $15 billion of which our German partners, you, ladies and gentlemen, received around $6 billion. I imagine that this has strengthened the German business community’s trust in its Russian partners. This year we plan to settle in full our debts to the Paris Club. I hope that Germany, along with other countries, will be able to make use of our proposals.
It is our aim to integrate the Russian economy into the world economy as fully as possible and take into account the global trends underway in the world today. We place particular focus on diversifying energy exports and building up our transport potential.
We are working consistently to improve legislation in the area of business. We have liberalised our currency regulations and reformed the legal base for land use.
I would like to mention the entry into force of the laws “On Special Economic Zones” and “On Concession Agreements”. These laws offer investors considerable tax and customs breaks and particularly favourable administrative and land use conditions.
The law “On Consolidated Financial Reporting” is currently going through the adoption process. Its provisions will make it compulsory for companies to use international financial reporting standards and this will make Russian companies more transparent for foreign investors.
Russia’s credit ratings are also on the rise. Russia’s stock market index increased by almost 84 percent last year, and in this our country was the absolute world leader. This is confirmation of a better investment climate in our country today. Gazprom, a company that has long been a partner now for many of you here today, took another step forward yesterday, becoming the second company in its sector after Exxon Mobil to reach a threshold of $260 billion, making it the fourth company in the world in terms of capitalisation.
We hope that our German partners will react well to these positive trends, to put it modestly, and will choose to be more visible on the Russian market.
I would like to emphasise that here in Russia we value highly the experience and entrepreneurial talent of German businesspeople. The Federal Chancellor and I spoke a lot about cooperation between our countries yesterday and I fully agree that while supporting our ‘national business champions’, we must also focus on developing small and medium-sized businesses and create the necessary conditions for this sector of the economy to grow and expand. Only this sector can provide a solid foundation for stable growth and we are all well aware of this. I hope that we will find ways to work together in this area.
Once again I would like, in this respect, to express our gratitude for the help that Germany has provided and continues to provide in training young Russian managers. Many of our specialists who have done internships in Germany as part of the Presidential Programme are now working in companies focused on cooperation with German partners. The continuation of this programme and training for young people to work in joint ventures and multinational corporations in general is a significant resource that can fuel the growth of bilateral business ties.
Along with support for education, we in Russia have also begun work on major national projects in the areas of medicine, housing and agriculture. This does not mean that we were not working on these areas earlier, rather, it means that we have now decided to give them priority attention and significance. We have simply decided to focus on a certain number of areas to show where the state’s priorities lie. We know that our German partners have shown an interest in working with us in these areas and cooperation is already going ahead. I am sure that this work will bring mutual benefits.
Developing contacts between the regions is also of great importance. We can see how important this is through the numerous examples of projects between the Siberian Federal District and partners in Germany. We hope that the district’s presentation in Germany in 2007 will give a new impulse to these relations.
But the Siberian regions have immeasurably greater potential. Their proximity to natural resources, developed scientific base and innovative environment and their highly qualified workforce are all factors making them attractive for investment.
I would like to cite a few facts about Tomsk to support my words. Tomsk has the highest share of workers with higher and middle education in the general workforce in all of Russia – 110 people for every 10,000 residents, I think. Only Japan has a higher figure. The Tomsk Region is home to 270 companies working on innovative technology. This creates good conditions for developing cooperation and introducing new and effective ways of working together in science and education.
The region produces 15 million tons of oil and 21 billion cubic metres of gas. It has more than a billion tons in known reserves. This all represents entirely realistic projects that can be carried out.
In conclusion I would like to stress once more that we welcome new partners from Germany to the Russian market. At state level we are ready to provide support for promising initiatives. In particular, Mrs Angela Merkel and I have already agreed that this year we will set up a new mechanism in our bilateral relations – the German-Russian Foreign Trade Chamber. I know that this initiative exists and I for one would support it.
I wish the forum’s participants interesting discussions and success in your business.
Thank you for your attention.
Angela Merkel: Good afternoon Mr President, Ladies and Gentlemen,
I am happy that we are all here today. The German-Russian Economic Forum is continuing its fine tradition. Economic consultations have always been at the centre of attention in our intergovernmental consultations. The presence here of most of our Cabinet of Ministers shows just what importance we give this matter.
As has been said, economic relations between our countries are developing very well. Our bilateral trade increased by 24 percent and has now reached 39 billion euros. Germany thus remains Russia’s main foreign economic partner.
Innovative technology-based equipment is enjoying particularly high demand. This is a sign not only that German goods are very competitive but also that the Russian economy is engaged in a process of consistent modernisation. We all have an interest in seeing this process continue.
Regarding imports from Russia, energy resources continue to have the priority here. We spoke about our relations in the energy sector during our bilateral talks yesterday. These relations have been good and reliable for more than 50 years now and we expect this to remain the case. We will continue to expand this partnership.
Regarding energy production, production distribution and its effectiveness are issues of increasing importance all around the world. This autumn we would like to hold a joint German-Russian forum on energy issues. This issue is also very important in the G8’s work.
Our cooperation goes far beyond the energy sector. The business community representatives here today represent all the areas in which we work together. I must say that we should try to expand our cooperation to an increasing number of different areas. This could include such sectors as logistics, infrastructure, the aviation industry, medical technology and the banking sector – these are all key sectors.
I am grateful to the President for also raising the issue of small and medium-sized business, because the development of our partnership depends a lot on this sector, which provides 70 percent of the jobs in Germany. Small and medium-sized business needs a reliable base and infrastructure to support it and I think that in this respect the plan to create the joint foreign trade chamber is a very important step that will help businesses in this sector to find their way forward and find partners to work with.
We have come to Siberia to show our people back home that Russia is more than just Moscow. I am pleased that Siberia will be at the centre of our attention and our cooperation next year and that we will have the opportunity to learn more about its economy.
The German Economy Eastern Commission and the relevant partners on your side have agreed to give particular attention to this region.
I would like to conclude these few words by saying thank you to everyone who is involved in our economic partnership and who speaks out about both the positive aspects and the problems. I am looking forward to hearing what the business representatives have to say.