Replies to media questions following APEC Economic Leaders’ Meeting

President of Russia Vladimir Putin: Good afternoon. Or good evening. Or good night already in Moscow. Let us get straight to your questions, without any introductory remarks. Please.

Question: There was fear on the meeting’s sidelines over the consequences of Brexit and Trump’s election. Many people believe that these two events could have a negative impact on the APEC trade development plans. Do you share these fears?

Vladimir Putin: No, and I cannot say I saw any particular fear. I do not know which sidelines you mean. Of course, the matters exist, and my colleagues are obviously asking themselves these questions. However, there should be no fear. Things will settle down one way or another.

Regarding Brexit much will depend on the form of exit Britain chooses and its speed. There are certain challenges, but I believe all of us have enough common sense, including our colleagues in the EU experts. Britain has very good professionals.

Therefore, I am absolutely sure that the situation will develop calmly, and there is no need to whip up tensions. I do not believe that anyone in Britain or Europe will act contrary to their interests. Of course, there are certain challenges, but I do not doubt that we will overcome them.

Regarding the US President-elect. We all understand, and everyone knows, that there is a difference between election rhetoric and real policies in practically all countries.

Speaking about Mr Trump’s promise to bring manufacturing jobs back to the United States — what is bad about that?

The United States is a leading global economy, and global economic health largely depends on its development and the resolution of problems it is facing, including the problem of a huge sovereign debt.

I believe that other important conditions include what the FRS does, how it changes the interest rate, whether the dollar becomes stronger and, if it does, how quickly this happens. A lot depends on this in emerging economies and markets. The national currencies and financial resources of APEC member economies depend on this. We discussed all these issues in a calm and business-like atmosphere.

Question: Mr Putin, this is not the first year that much has been said, and certain actions have been taken within APEC to create completely closed economic blocs, despite criticism and opposition. As far as we know, a meeting was held here in Lima to discuss the Trans-Pacific Partnership. You have spoken on this issue repeatedly. Has your opinion changed? Can the Eurasian Economic Union (EAEU) somehow rival these closed blocs? Thank you.

Vladimir Putin: No, my opinion has not changed. Moreover, I have said yet again that we believe, Russia believes – and not just Russia, but also many other countries and the IMF believe, as Christine Lagarde has said today – that the development of international trade is a factor of global economic revival. I firmly believe that international trade cannot develop effectively without the free movement of goods, capital and the most skilled workforce. Unfortunately, there are many obstacles to this.

Our position is that regional associations are important and that we need them. This is a natural process. However, these associations should be created and developed based on universal standards accepted by the World Trade Organisation.

This is how the Eurasian Economic Union, the EAEU, was created, and this is how it is operating. Its goal was never to rival other regional organisations. Besides, considering the economic volume of the EAEU countries and the partnership that is being created in the Pacific region – they are incomparable, and we do not intend to compete with anyone in this sense.

However, you know that we are discussing the possibility of aligning the EAEU and China’s Silk Road Economic Belt initiative based on the ideas of the Chinese leadership and President Xi Jinping. This could be the first step.

A second step could be the development of cooperation within the Shanghai Cooperation Organisation and other Asian associations. By acting in this manner, we can create a broad Eurasian cooperation association.

If we opt for this path, our organisation will be comparable to what is being created within the framework or in the zone of Pacific partnership.

However, I believe that if we want to effectively influence global economic processes there should be no closed associations. If such associations are created, they will not boost the development of international trade or the global economy as a whole.

Question: As far as we know, you proposed economic cooperation on the Kuril Islands during a meeting with Prime Minister Abe of Japan. What kind of economic cooperation did you have in mind? This is my first question.

Second, Mr Abe has been highlighting the importance of a new approach to the issue of a peace treaty. What approach would you regard as new? And what is the old approach? Thank you.

Vladimir Putin: I do not want to get too far ahead of the main issue on our agenda, which is a peace treaty. I believe it is obvious to Japan and Russia that the absence of a peace treaty between us is an anachronism that is preventing us from moving on and from developing. Moreover, Russia and Japan are natural partners in the region, where they complement or could complement each other, if their relations were based on a peace treaty, which is, unfortunately, not the case.

Both Russia and Japan want to sign a peace treaty. The path towards it is not simple, but we have been working on it for a long time. I do not wish to go too far back into the history of the matter, but you know our position.

The ownership of the Kuril Islands was decided as a result of World War II, and we believe that now they are part of Russia’s sovereign territory, which was sealed in international documents following WWII.

However, we are ready for a dialogue on this issue with our Japanese partners. We said that there could be different options. I would like to remind you that the Soviet Union and Japan signed a document to this effect in 1956, under which two islands were to be returned to Japan. The framework for this was not stipulated; it was not decided which country would have sovereignty over these two islands, and the conditions for the transfer were not outlined. We know the position of our Japanese partners, who want all four islands. All of this is on our agenda.

I would like to stress yet again that both Russia and Japan sincerely wish to sign a peace treaty and are looking for ways to do this. As for which approach is new and which is old, this I do not know. I only know that this striving must be supported.

What can the basis for an agreement be? It can be greater mutual trust, and trust can be strengthened through broader cooperation. This is why Prime Minister Abe has proposed a programme for promoting business and economic ties. I believe it consists of eight points and includes the implementation of large projects, not only on the islands, but also between Russia and Japan in general.

At our latest meeting, we also discussed what we could do together on these islands. There are both economic and cultural issues. However, it would be premature to speak about this now, because we have not yet coordinated an agreement.

We will continue our contacts at the level of foreign ministers. The dialogue has been resumed at Japan’s initiative. We have agreed that the entire package of these issues will be also at the top of my agenda if I visit Japan.

Question: The affair with Mr Ulyukayev came as a surprise to many. Can you comment on this story? What impact could it have on the transfer of the state-owned Bashneft stock to Rosneft? When will a new minister be appointed, and who might it be?

Vladimir Putin: There is nothing to say here. Ultimately, comments should come from law enforcement agencies and the court. Only after that will we be able to express our opinion on the essence of the matter. However, the fact itself is very sad. Nevertheless, I would like to say that our intolerance to events such as this would not abate.

In my opinion, I firmly believe that such actions by law enforcement agencies not only do not damage the business environment, but that they are only improving the business environment in Russia. Everyone must know – including our partners and people in the country – everyone must understand and know that absolutely everyone is equal before the law irrespective of one’s official position.

As for the Bashneft deal, this sad event cannot have any impact on Rosneft’s action to buy into Bashneft. Moreover, we expect a big synergetic effect from this transaction. When we expressed our doubts regarding the expediency of Rosneft buying a Bashneft package, we said that the state holds a controlling stake in Rosneft, which is not a state-owned company. A foreign partner, British Petroleum, holds a large package in Rosneft, 19.5 percent, if memory serves. The next step – the privatisation of Rosneft – will involve the privatisation of the state-owned package. Therefore, we have not abandoned our privatisation plans in this respect. Of course, the Government and Rosneft management will be working to implement the second part of this plan, which is to sell the state-owned stake in Rosneft.

Remark: When will a new minister be appointed?

Vladimir Putin: Soon, I hope. There are candidates, of course, several candidates. I have been discussing this with the Prime Minister and several other members of the Government. There are at least three or even four candidates. We will settle the matter as soon as I return to Russia.

To be continued.

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