Opening Remarks with Representatives of US Business Circles 2003-09-26 22:04:00 New York Stock Exchange President Vladimir Putin: Thank you very much for your very kind words. I must say that since our arrival, of all our delegation, we have been surrounded by a very kind and warm atmosphere almost everywhere we have been in New York. You can feel this, and it is very pleasant, it creates a mood for increasing cooperation, to improve the quality of our interaction in all directions. And business cooperation with the United States is one of the priority directions of our interaction. It is superfluous to repeat that meetings and discussions with business circles have also taken a firm position on the agenda of Russian-American summits. It is this direct contact that allows all of us – both politicians and entrepreneurs – to open new possibilities and spheres for wide cooperation. And for those who already work in Russia, I think today there will be the opportunity to receive answers from both me and my colleagues, if necessary, to the questions that interest you. It should be said that representatives of Russian business, and representatives of other countries, aspire to become established on the New York stock exchange, and to work here. And it is no coincidence that receiving a quotation on the New York stock exchange is a generally acknowledged estimation of commercial success, business reputation and competitiveness for any enterprise. This is how we in Russia regard work here on the stock exchange. Today there are 5 companies from Russia represented here. They are MTC, Vympelkom, Rostelekom, Vim-Bill-Dan, and Tatneft. And three of them work in the promising and fast-developing sphere of telecommunications and high technology. Since 1996, the volume and cost of Russian securities on the New York stock exchange has yearly grown by almost 40%. In absolute values these volumes are so far very small, but the growth rates are good, and this is an objective reflection of stable positive processes in the Russian economy and changes in its quality. I am certain that the absolute majority of colleagues present here know this, but nevertheless, in general terms, I would remind you that in the first half of this year, in comparison with the equivalent period last year, the volume of GDP increased by 7%, industrial production by 6.9%, and investment by almost 12%. On the whole, the figures of economic growth in Russia exceed the average world level. We are fully aware of what is happening, and how it is happening, and from which level we are beginning to move. We are not getting carried away by this success, but the tendencies are positive, this is an obvious fact. We are also managing to maintain macroeconomic stability. The level of inflation in Russia is quite high, but we are constantly reducing it. Even if the rate is low, it is still constantly dropping. And this year it will be even lower. We expect that in the course of five to seven years we should reach general world inflation figures. It must be noted that the results achieved are not just thanks to the favourable internal economic situation, but also growing entrepreneurial and investment activity. These figures can be attributed to the structural reforms taking place in Russia and the general improvement of the business climate in the country. In recent years, the tax burden level has significantly decreased, and the conditions for currency regulation have been simplified. We are trying to stop excessive state intervention in the economy. It must be acknowledged that this is very difficult for us to do because of the traditions of the planned economy, when the state controlled everything, and intervened in everything. Even several years are not enough to introduce a new culture of production. This is not even because of the laws or the rules created by parliament and the government – it is because of the culture of organizing production. It requires a certain amount of time, but there is an understanding that the state should stop excessive regulation, and we will continue to advance on this path. Legislation, including mechanisms of protecting property, has become more harmonious and generally already corresponds to the requirements of international practice. As you know, we have set ourselves a specific strategic task – to double GDP in a decade. And I am certain that the personnel, scientific-technical and rich natural potential of the country, combined with economic and civic freedoms, should give us the desired result. I am certain that we have every justification to also expect a breakthrough in Russian-American business partnership. In the first six months of 2003, the Russian-American trade turnover has increased by more than a third. This result was in many ways achieved thanks to the active development of energy cooperation. At the 2nd Russian-American energy summit that was just held in St. Petersburg, guidelines for cooperation were outlined. They are the development of production and transport infrastructure, assistance for investment, the development of electric energy, gas production and joint scientific developments. According to some assessments, Russian gas deliveries may make up over 10% of gas import to the U.S. in the next 5–7 years. We are thinking about this, thinking about transport infrastructure and logistics, in order to solve this task. And we believe that this is a fully achievable task. In their turn, American corporations are already participating in the development of Russian oil fields. I know that colleagues are present here who work in this sphere. There is benefit for both parties here. Russia gets access to a large market and receives investment. And the American energy balance becomes more stable and predictable. I think that in the not very stable world we live in today, stability of economy and delivery of energy resources means a great deal. I would also like to note that at the energy summit, the Russian company Stroitransgaz signed an agreement with Key Energy on sending Russian drilling specialists to work temporarily from six months to three years in the northern territories of the U.S. This is the first project of this kind when Russian employees in the oil and gas sphere are invited to provide professional technical services. Another important example of effective work at the summit is, of course, the agreement between the Russian company LUKOIL and the U.S. State agency to insure private investment. The sum of credit to finance the project to construct an oil terminal is not large, a medium sum, $225 million, but the project is itself necessary, useful and interesting. And if I am not mistaken, OPEC is financing a project with 100% Russian capital for the first time. We can see that American business has believed in the capabilities and advantages of the new Russian economy. General Motors and Ford are investing in Russian automobile construction. A new vector of our cooperation is also beginning in developing city infrastructure, the housing market, and mortgage lending. A new promising direction in financial-economic interaction of our countries is opened by a Memorandum between Vshenekonombank, Roseksimbank and Eximbank in the U.S.A. on cooperation of financing export to third-party countries, which will be signed here, on the stock market, immediately after our meeting. At any rate, I was told that this agreement is being prepared. Russia’s growing economy is capable of coming on to the American market not just with metals, oil and other materials, but also with investment and technology. These are just the first steps, but in my opinion, they are so far quite promising. At least, this is how we look at it. I mean the projects Norilsky Nikel, LUKOIL, Energiya, and other Russian companies. An increasing role in our business partnership is played by branches which determine the future of the world’s economy. In connection with this, I can single out the productive work of the collective Round Table on information technology. Here work is already underway not just on specific commercial projects, but also on opposing illegal use of new technology for terrorist goals. I would like to mention the small but concrete investment in the U.S.A. Here, the volume is not the important thing. The new quality is important. Colleagues from the U.S.A. have seen that excellent modern Russian professionals have arrived. Very good business and personal contact has been established between the owners of enterprises and investors, and those who take part in this. And enterprises have a new life and new capabilities, and this makes it possible to create a situation that is favourable for the development of cooperation. The “climate” in Russian-American business ties is now primarily established by major companies. But small and middle business has yet to make itself fully heard. I expect that this is also a fruitful topic for discussions in the framework of business dialogue. On the whole, joint work is much more profitable and promising than “trade war” and archaic discriminatory bans. We are already tired of talking about endless Jackson-Vanik amendments, they seem laughable to us today. This amendment was made against a country with a non-market economy, which hindered people from travelling abroad, above all the Jewish population. I have many personal ties with people who live in Russia and in Israel. One of them became a major political figure in Israel, and he says: “I didn’t go to jail for ten years because of chicken meat.” It means there is no sense in this. It is clear that this does damage, above all moral damage to our cooperation. * * * In conclusion, I would like to say the following. For over two centuries now, Wall Street has remained one the symbols of the energy and business initiative of the American people, a sign of its industrial and financial power. Today, it still remains an extremely important nerve in the single economic organism of the planet. I must stress: despite all the differences of the Russian and American economies, they are an integral part of this organism. And there is a whole series of tasks – from strengthening the international financial system to establishing possible sources of energy – in which we are, to be quite honest, equally interested. I stress once again, the political and economic capabilities of Russia and the U.S.A. can become vital, serious and constructive, and help to create a more stable global financial and economic structure. And joint projects are both beneficial to our countries and peoples, and stimulate business activity in other regions of the world. I am certain that a clear understanding of this objective reality, multiplied by political will and your business initiative will undoubtedly have a positive result. I would like to wish you all success, and thank you for your attention.