TRANSCRIPT: [Putin at] Eastern Economic Forum (excepts)

Asia Map

( – September 3, 2016)

Vladimir Putin took part in the plenary session of the Eastern Economic Forum. This year, representatives of 35 countries applied to attend the forum. In total, delegations from 56 countries are taking part.

President of Russia Vladimir Putin: Ms Park Geun-hye, Mr Shinzo Abe, friends, ladies and gentlemen. Welcome to Vladivostok, to the second Eastern Economic Forum, which brings together over 3,000 participants from 35 countries this year.

For us this means a growing interest to Russia in the political and business circles of the Asia-Pacific and other regions; an interest in our Far Eastern agenda in general, our steps and initiatives that open up new possibilities for cooperation and the implementation of lucrative projects in the Far East.

We have set ourselves a big goal, ambitious in every sense, a huge-scale task: to make the Far East one of the centres of Russia’s social and economic development – a powerful, dynamic and advanced region. As I said, this is one of our most important national priorities.

We can already see real change here – only the first, but nevertheless significant and encouraging results. For example, industrial production in the Far East grows at a more than 5 percent rate; growth has been modest across Russia at 0.3 per cent, but in the Far East we had 5 percent.

Over the past year, the region has additionally attracted more than 1 trillion rubles of investments – about $15 billion, and more than 300 investment projects were launched here. This means that the business support policies we proposed enjoy demand.

Finally, there is the main consolidated and most valuable indicator of ongoing changes in the Far East – the emerging positive demographics. For the first time in a quarter century, Khabarovsk Territory, Sakhalin, Yakutia and Chukotka have seen an increase in population. For the third year in a row, the birth rate in the Far Eastern Federal District exceeds the death rate, and fewer people are leaving the Far East.

There is population outflow, regrettably. However, it went down 3.5-fold for the Far East Federal District as a whole over the first half of this year. It is true that the demographic results are still modest, but they do demonstrate an emerging trend and we must now build on this trend and make it irreversible.

Over the next three years, we must achieve a sustained growth of population in the Far East. I remind the Government and all ministries and agencies that our state programmes must also focus on this task, especially economic, social and demographic programmes, our housing policy, healthcare and education.

Ladies and gentlemen, the strategy for developing the Far East is based on openness to cooperation on a broad international level, all the more so as the Far East is literally at the epicentre of dynamic integration processes.

We are working consistently to develop the Eurasian Economic Union and expand its international ties. In October this year, Moscow will host the second round of talks on a trade and economic cooperation agreement between the EAEU and the People’s Republic of China. This will lay the foundations for a comprehensive Eurasian partnership in the 5 plus 1 format.

The trade and economic agenda within the Shanghai Cooperation Organisation is also becoming more substantial and promising all the time. The upcoming accession of India and Pakistan as full members of the organisation, and, I hope, Iran in the future as well, will add to these opportunities.

In short, several integration tracks are taking shape in the Eurasian region today. They flexibly complement each other and enable us to carry out projects on a mutually advantageous basis.

We believe that this integration network and the system of multilateral and bilateral agreements, including those on free trade zones, could become the foundation for developing a big Eurasian partnership. We discussed this very idea at the St Petersburg International Economic Forum this summer.

Now, together with our EAEU colleagues, we are drafting consolidated, practical proposals on developing broad Eurasian integration. These proposals concern such matters as regulation, unification of administrative procedures, removing trade barriers, supporting trade and investment, technological and production cooperation, intellectual property protection, and infrastructure construction.

We believe that effective integration is possible only on the basis of equal rights of all participants and respect and consideration for each other’s interests without any political or economic pressure or attempts to impose unilateral decisions. As we understand it, integration is about predictable, long-term rules and openness to cooperation with other countries both in the East and the West. We are ready to study counterproposals attentively and look for the best possible solutions with anyone who is interested in such cooperation.

We realise that these are big, ambitious, complex and long-term tasks. The project I refer to can be carried out only within the framework of a flexible multi-level model using innovative solutions and working in the interests of economic growth and greater prosperity for people throughout this vast region.

The driving force behind this integration will be business energy and initiative and its obvious and ever-growing demand to remove barriers and create big markets with a business-friendly environment.

This integration must also be based on serious joint projects, which will sew the seams of our economic space and create new development resources. I would like to mention a number of these projects and opportunities now.

First is a reliable energy infrastructure. We support the initiative of Russian, Japanese, South Korean and Chinese companies to create a super energy ring linking our countries as one. We propose setting up an intergovernmental working group in order to move ahead more rapidly and dynamically on this project. Let me note that Russia is ready to offer its Asia-Pacific region partners competitive energy rates and long-term fixed price contracts.

Second is transport infrastructure and the formation of new, competitive trans-Eurasian and regional transport routes. Examples here are the Primorye 1 and Primorye 2 transport corridors, which lay the shortest route for moving goods from China’s northeast provinces to the ports in southern Primorye Territory, and the construction of the Russian section of the Europe-Western China route. I will be discussing the development of this and other transport infrastructure routes with my colleagues at an upcoming State Council Presidium meeting very soon.

Third. We are living in an age of information and rapid development of digital, telecom and Internet technologies. We have to seize the opportunities they offer to promote cooperation, so that our countries’ governments and companies could do business and interact in a convenient electronic form.

Therefore, we suggest creating a common digital economic space. We are talking about the creation of legal and technological conditions for electronic interaction. I would also like to ask the Russian Government to submit a detailed plan of this work.

In fact, some good things have already been done here. The Eurasian Economic Commission is supervising the development of an integrated information system – a system of cooperation in transport, trade, customs, veterinary, tax and other procedures.

Fourth. We need human resources and technological groundwork for the future. In this regard, we invite partners to join the project to build an international science, education and technology cluster on Russky Island.

We plan to put together a support system for start-ups here, including venture capital financing, to organise a network of laboratories for collaborative research, and to create a modern business infrastructure, including business and exhibition centres.

We would like professors and students from other countries to come to Russia, as well as research, creative and project teams from other countries. As far as I know, 2,500 international students are already studying at the Far Eastern Federal University, and dozens of faculty members from other countries teach here.

A few hours ago, my colleagues and I attended the opening ceremony of the Far Eastern Oceanarium. This is not just a commercial centre, but a science, education and information centre, and we hope it will also serve as a good base for the study of marine biology at the level of leading scientists in the region and around the world. And I ask the Government to speed up the development of a comprehensive development programme for Russky Island.

Ladies and gentlemen, the projects I have just mentioned reflect the full diversity of opportunities for joint work in the Far East. We are creating the best possible conditions to make this region a centre of investment appeal and a platform for cooperation.

Starting October 1, a one-step system will start operating in the Vladivostok free port for all border-crossing procedures. The checkpoints and electronic declaration of goods systems will be working round the clock.

I met yesterday with business representatives. I know that not everything here is working exactly as we want it, but we took in your comments and will make the necessary improvements to our work.

The Government is already at work on plans to simplify visa procedures for foreign citizens arriving at the free port. The plan is for people to complete all the formalities via the Russian Foreign Ministry’s internet service and obtain an electronic visa.

In addition to Vladivostok, we recently decided to extend the free port regime to another four Far East ports – Vanino in Khabarovsk Territory, Korsakov on Sakhalin, Petropavlovsk-Kamchatsky in Kamchatka Territory, and Pevek in Chukotka. We will add more if necessary.

At the meeting with business representatives I just mentioned, we heard that this is not enough and that some business representatives have not received the breaks they were expecting. We will certainly examine further all of these issues.

Yesterday we also discussed work in the priority development areas and raised a number of issues concerning procedures for obtaining profit tax breaks.

I do agree that we should take into account each project’s specific nature, scale, and implementation timetable. I think that the tax holidays should be extended for big long-term projects. I discussed this matter yesterday with the Finance Minister, and the Finance Ministry agrees in general to this idea. I ask them to draft the relevant amendments to the law as soon as possible.

We are sure that there will be many big and significant projects. The Far East offers an excellent location and natural resources with direct access to the most promising global markets. This offers inexhaustible opportunities for business initiative.

At the same time, we should give companies the opportunity to attract affordable financial resources. This is the task that the Far East Development Fund is currently addressing. The Fund issues loans at five percent annual interest in rubles. The demand is high, with businesses literally queuing up. To avoid holding back the launch of new projects and provide them with sources of financing, we have to constantly focus on the Fund’s capitalisation support.

Of course, we are facing the overall task of developing an extensive financial and investment infrastructure in the Far East. Such projects are already underway. At this forum, you can see the presentation of a new investment system, Voskhod. It opens direct access to Far Eastern companies’ shares and bonds for Russian and foreign investors.

An agreement has been signed on the forum sidelines between Russia’s Far East Agency for Investment Promotion and Export Support and one of the world’s largest banks, the Japan Bank for International Cooperation. A joint platform will be created to attract Japanese investors to the priority development areas and the Vladivostok Free Port.

The Russian-Chinese Fund for Agro-Industrial Development, which has started its work this year, is a good example of mutually beneficial investment cooperation. The fund supports export-oriented projects in agriculture and the food industry.

I am confident that the Russian Far East, with its land and marine resources, can become one of the major suppliers of quality and eco-friendly foods in the Asia-Pacific Region, an area that is home to almost 60 percent of the world’s population.

To our partners from Japan, the Republic of Korea and other countries, I propose establishing similar joint investment platforms. They could focus on financing projects not only in agriculture but also in industry, high technologies and natural recourses development – in short, in the sectors that have a vast potential.

At the same time, we must combine access to our natural resources with investment in their processing. I ask the Government to develop and implement such a mechanism for the Russian Far East. The approach should be simple: if a company wants to receive a priority right to the use of raw materials, aquaculture or forest plots, or to develop mineral deposits, it has to put effort into building plants, contribute technology, and create new jobs and higher added value.

Friends, the future of the Russian Far East is inseparable from the future of Russia. This is what our ancestors believed, and they explored Far Eastern lands and brought glory to the Fatherland. We have begun a new historic period of developing the eastern territories, and it is planned for decades ahead.

The tasks to be resolved in the Far East are unprecedented in scale and importance. We are fully aware of our tremendous responsibility to our citizens and future generations. I am absolutely certain that we will carry out the plans I have outlined here. I believe in the Far East’s success.

Thank you for your attention. Thank you…..
Vladimir Putin: First of all I would like to thank the President of the Republic of Korea and the Japanese Prime Minister for their emphatic and informative presentations. I enjoyed listening to you, and was both pleased and interested to hear your proposals. It is good that you have not only heard us, but also proposed your own versions of cooperation. Without a doubt, we will respond to them, we will make every effort to bring to life everything you and we speak about.

Now, regarding the potential of the Russian Far East and the problems that exist here. Indeed, one cannot disagree with the pioneers who discovered these places – these are truly amazing, beautiful, unique places. I would like to note that we are certainly grateful to our ancestors for the discovery and development of these areas.

However, I must say that for many decades, if not centuries, these areas have not been given enough attention. Attempts have been made in the past century, even during the development of the Western, partly Eastern Siberia; yet, we never got around to developing the Far East. Strange as it may sound, we hardly even had a good motorway linking the European and Far Eastern parts of our country. We never had one. A project was started in the 1960s, but was abandoned later. Only recently did we complete this project. For the first time these territories were linked to the European part of the Russian Federation by a motorway. This is my first point.

Second. Actually, the city of Vladivostok was founded and developed… if I may even use the world “developed.” I would rather say it merely existed here as a military base and a closed city. Hence all the problems that have been accumulating here for decades: an undeveloped infrastructure, a lack of primary energy sources and a lack of transport infrastructure in general.

All this, of course, is in stark contrast with this region’s potential. Huge mineral reserves are concentrated here. Well, for instance, it accounts for 20 percent of our oil reserves, about the same amount of natural gas; 70 percent of Russian fish is caught in these waters, and 75 percent of Russia’s forest resources are concentrated here as well. Eastern Siberia produces 75 percent of Russian diamonds and 30 percent of gold. This volume is hard to imagine.

I know that this is not enough. The region does need a new infrastructure, which I mentioned, it needs energy, finance, technology and a highly skilled workforce.

What are we doing to let this region truly breathe free, gain new vigour and make the most of its development prospects? We have taken a whole package of measures over these last years to implement our plans. What are these measures and what do they involve? First, we have introduced a whole system of preferences and exemptions for business in the region. This is particularly the case of what we have dubbed the priority development areas.

First, we analysed the experience of countries such as China, South Korea and Singapore, and we offer those who looking to work in the Far East a whole range of preferences, starting with tax holidays. For example, businesses are exempted from federal profit tax during the first five years of work. There are also regional tax breaks (on payments to the social funds, for example, accelerated return of value-added tax, and simplified administrative and customs procedures).

Second, as you have already heard here, we established a free port regime, first in Vladivostok and then in five other Far East ports. The free ports also offer a big range of benefits similar to those in the priority development areas. They also offer more effective work with the customs service and border guards.

As I said, I met yesterday with my colleagues and with members of the business community. We heard their comments and concerns and will make the necessary adjustments. In any case, we are putting into place the conditions they need at the ports and improving the port facilities.

Finally, we established a fund specifically for Far East development. It provides quite long-term and relatively cheap financial resources at a 5-percent interest rate. Of course, we must add more and top up the fund’s capital, but we have taken the first steps and the work has begun.

Another of our substantial measures concerns infrastructure. We decided and have already begun to subsidise businesspeople who build infrastructure facilities independently. I think that this package of measures should make it possible to work effectively in the Far East for those wishing to do so.

I mentioned the free hectare of Far East land at the start of my speech. Under this programme, we make a hectare of land available for free (as you can see, the region is not at all lacking for land) for people wanting to start their own business or develop the site.

There are many areas for cooperation and there are projects to build on. It would be wrong to say that the region is starting from scratch. If you look, you see that back in the Soviet period, we already developed aircraft manufacturing in the city of Komsomolsk-on-Amur, for example. True, this is military aircraft manufacturing, but the general skills are there, and they produce the Su fighter planes known all around the world.

We are well aware that we should not and cannot limit ourselves to selling arms alone, and this is why we are working, chiefly with our Italian and French partners, on developing manufacturing of civil aviation aircraft. The promising medium-haul Superjet-100 is produced here, for example.

We had already started developing a shipbuilding cluster in the region. Two years ago, I was here for the start of operations and the inauguration of what is really an enormous shipbuilding enterprise that will produce civilian vessels in specialised areas in which we really do have the skills, skills that we must continue to develop, of course. These areas include civil vessels with icebreaking capability, and specialised vessels for serving offshore drilling platforms, and for working on the Northern Sea Route, which President Park spoke about. We will develop this most economic route for shipping goods between Asia and Europe.

We are also developing our space sector activity here. We recently inaugurated Russia’s new space launch centre, Vostochny, in Amur Region, one of the Far East regions. The first launch has taken place and we will expand it to handle light, medium and heavy rockets. This is also a platform for international joint activity to develop outer space and offers excellent prospects.

We are developing not just the space launch centre (the first part of which is already complete), but are building a whole cluster and a town with all the needed social infrastructure for those who wish to work here.

Of course, the region also offers the resources I already mentioned, hydrocarbons, oil and gas, and traditional resources such as timber and fish. These are all areas in which the region has longstanding experience and we just need to take them now to a higher level. We need to not just work on production and export, but also on adding value to our products – this is clear. It is for this reason that we are developing the priority development areas, the Vladivostok free port and other measures in order to attract Russian and foreign business.

But to make it all work efficiently, we definitely need highly-qualified personnel. Our event is taking place at Far Eastern Federal University, which was established only two years ago. We are working from this perspective – as I mentioned, 2,500 foreign students study at this university and dozens of foreign teachers work here. Last year, I was told that people from foreign countries are waiting to work here, and I’m very happy about this. Of course, constructing such beautiful university buildings was not enough; we have to provide highly-qualified personnel and talented young people to meet the demands of the growing labour market.

There is another side of this that we should remember. To do all of this and to make people want to live here, raise children and feel that their children have a future here, another goal has to be met – creating not only a modern living environment but also a cultural environment. There is a very good music theatre here. I’m grateful to the Mariinsky Theatre, which has opened a branch here. The first festival has recently debuted with great success, with a great number of people from Primorye and Vladivostok, as well as from foreign countries – primarily Japan, the Republic of Korea and the People’s Republic of China – that are interested in attending these concerts.

We intend to open branches here from St Petersburg’s Hermitage Museum, the State Russian Museum, and the State Tretyakov Gallery. I think that a local museum dedicated not only to Primorye but to the entire region, and the neighbouring countries, should also be considered.

Science and education should be developed. My colleagues and I have just visited the newly opened scientific centre for marine biology research. This has traditionally been developed since the Soviet era. I believe we have made a major step forward by creating a very good base and physical infrastructure. This will be a scientific and education centre. We will certainly succeed if we follow through on all these areas.

Thank you.

Moderator of discussion at the plenary session of the Eastern Economic Forum, former Australian Prime Minister Kevin Rudd: Thank you, Mr President. In fact, I had the opportunity yesterday to walk around this campus. It is pretty impressive. I think a lot of university presidents around the world will be envious of the infrastructure that’s been put here very recently. And to confirm, the teachers here told me that you are getting faculty from around the world, you’ve got a couple of Australians arriving I think next year. They will be interested in the beer supply as well.

I am also interested, Mr President, in the other aspects of what you have talked about. You have mentioned the fact that you received expressions of concern from a number of businesspeople about the difficulty in getting visas, and visa access etc. And I certainly recall the experience of a friend of mine from Hong Kong. We were all APEC members here but the use of the APEC business card has not been as effectively recognised at Russian border posts as it could be. And I think that would be a huge thing to help for the future as well.

On the plan that you have outlined – it’s an impressive plan. The study that has gone into, for example, the Chinese special economic zone experience. It is solid study. Free ports? The Chinese experimented with those successfully. Special economic regions you were talking about, the areas, all thirteen of them. And having lived in China when they first did those things back in the 80s, it really was a twenty year period before you saw the product of the initial investment. And then – history speaks for itself.

Let me put you another observation, Mr President, for your further reflection, and something which comes from a number of the businessmen here. They’ve looked at the plans, they’ve looked at the tax concessions being offered in the free ports and in the special economic areas, but they also ask this question about long-term investor confidence, i.e. that the rules won’t change here in Russia for the future, they ask questions about the consistency of the implementation of regulations, and about bureaucracy. So, given these concerns raised by businesspeople from around the region, around the world, again if I could invite your comments specifically on this question, of if you’re speaking to a group of investors, and their baseline concern is confidence and long-term policy and regulatory consistency, here in the Russian Far East, what would your response be?

Vladimir Putin: This is precisely what we discussed yesterday. We discussed these plans, which have been thought through carefully and are long-term. I think you can all rest assured that we fully intend to make every effort to carry out these plans.

We realise there are some things that are quite fundamental for business development. Tax breaks, of course, which we have introduced. Of course we would like for the entire Russian Federation to offer equal conditions for all economic actors and become a most attractive place for business development, but we realise that this region has some particular circumstances that require special attention from the authorities, and this is why we have decided to offer such big preferences here.

We also see that this is far from enough. The authorities must make an effort to resolve fundamental issues such as infrastructure and energy supply, communications and human resources. We have long-term plans for each of these areas.

Our company heads are sitting just over there. There is the head of Gazprom, for example. If need be, he can tell our partners about Gazprom’s plans and our other oil and gas companies’ plans to develop the energy infrastructure.

Yesterday, the businesspeople talked about how tariff differences can be fatal for business and stifle their development here. It is not good for ordinary people and it is not good for business either, and this is why we have come up with these long-term plans for the years ahead, not just in gas production on Sakhalin, for example, but also in developing pipeline routes in the Far East regions and distributing energy resources among the economic actors and the region’s households. Gazprom’s subsidiary company has already sent a plan for connecting people to the gas network to the Primorye Territory authorities and will do the same in the other Far East regions. We will certainly carry out these plans.

We will carry out projects for developing communications infrastructure in several areas, given the region’s vast size. The first area is satellite communications. Khabarovsk, which is the Far East’s official administrative centre, already has the satellite communications centre offering access to broadband internet and so on.

The second area is fibre optic communications. We have already carried out a project to link Sakhalin, Magadan and Primorye Territory with fibre optic cables. I don’t recall exactly if the cable has been laid to Magadan yet or not, but I think it has. In any case, the work on the coastal facilities is already complete, the stations and coastal infrastructure are in place and a cable reaching 1,800 kilometres has been laid. This will all start operation and will give people the basic conditions they need not just for daily life but also for business development. These are long-term undertakings that have been calculated in our plans and our budget planning……
Kevin Rudd: Thank you very much, Prime Minister. President Putin, you’ve heard Prime Minister Abe speak about his passion for developing the Russia-Japan economic relationship. Seeing from Moscow, seeing from the Russian national perspective – give me a sense of its strategic importance. I saw your interview just in last 48 hours where you’ve said on geopolitical questions Russia does not trade territory for economic cooperation. I’ve seen you said it very plainly in terms of the ongoing discussions between the two countries on the southern Kurils and northern territories. If you had a crystal ball and you were looking ahead five years, what is the shape of the Japan-Russia relationship that you would like to see in reality, in practice?

Vladimir Putin: The magic crystal comes under our national interests. Shinzo [Abe], with whom I established excellent and trusting relations, said that we have our vision and Japan has its vision, and each of us looks at the issue from the perspective of our own national interests. But we do all agree on one thing, namely, that we need to resolve this issue.

The search for a solution is certainly not easy. It was not us who created this problem. In 1956, the Soviet Union and Japan signed an agreement that completely settled the problem. The agreement was signed and was ratified by the USSR Supreme Soviet and the Japanese parliament. But our Japanese partners later decided not to implement this agreement and then the Soviet Union froze its decision too.

Not so long ago, at our Japanese friends’ request, we returned to this issue and are ready to examine it. Of course, settling this issue requires a high level of trust. As I said in the interview I gave to Bloomberg, we need to find a formula that would enable both sides to feel they have not lost out in any way. This is not easy, but we can find such a solution.

The Japanese Prime Minister proposed eight areas for cooperation between Russia and Japan, and I think that this is the only right road to take. Russia and Japan are natural partners in developing trade and economic ties and resolving regional security issues, and we are both very much aware of this. But as I said, we need to find solutions that would not undermine our relations but would create a solid base for building up our ties over the long-term perspective. As I said, this requires finding a solution that would ensure neither side feels it has lost out.

History shows us plenty of successful examples of this kind of approach, and I hope very much that we too will provide just such an example. We want this, Japan wants this, and our foreign ministers are working hard on this. We will support them at the political level, and of course, as Mr Abe said, we are ready to take decisive steps. But all decisive steps must be thoroughly prepared.

It is already clear today that we cannot let slip the opportunities we have today. Two big projects are underway on Sakhalin, for example, Sakhalin-1 and Sakhalin-2. Seventy percent of the energy resources produced there go to Japan. We are studying the possibilities for building an energy bridge now. Of course the Japanese economy has an interest in this project, and so do we. The Japanese have already decided to produce car engines in Vladivostok. A Japanese company would not take this step to its own detriment. We have an interest in developing our automotive industry too. Our Japanese friends and colleagues are willing to accept a high degree of localisation. This has benefits for them and for us and fits completely with our plans.

We visited the new marine biology research centre today. Japanese scientists took part in the discussions there, and from South Korea, and more people will come, scientists, students, people from research centres and universities.

Of course this is in our interests. Our past should not stop us from moving forward. But we do need to reflect on how to settle the problems that are preventing us from moving forward as fast as we would like. I hope that we will settle these problems……
Vladimir Putin: Of course, from the human values point of view, and from the business point of view, security issues have always and will always be key issues. As for the region we are located in, it is no exception, and for this region which was severely affected by global military disasters over decades. This is very important and relevant.

We are also deeply concerned about what Madame President talked about. Russia has a principled position regarding the matter. We are completely against the distribution of weapons of mass destruction all over the planet and we urge North Korea to comply with the decisions taken by the international community and the United Nations. At the same time, we believe that one should act very carefully to not provoke North Korean leaders to any action to protect their national security.

We need to return the situation back to talks and we will be doing what we can to convince our North Korean partners of this approach. Madame President knows that we have preserved some communication channels with North Korea (DPRK) and we will be using them to reverse the situation from the state of confrontation that it’s in right now. I believe that any action that provokes any further escalation is counterproductive.

But definitely, I would like to end this part of my answer with what I started: we are categorically against any expansion of nuclear weapon activity and distribution of nuclear weapons. In this regard, we share a common position with the United States, the People’s Republic of China, Japan and the Republic of Korea. We must understand that the demand for peaceful coexistence, the demand from people who live in this region for a peaceful life and expanding horizons of cooperation is strong. This is an issue for us, like the problems of the past.

You have spoken about the problem of the islands, about the peace treaty with Japan, but we’ve had this request to restore relations, friendship, trust, cooperation in the past. You know, I remembered one thing. I was saying that, we, recently, several years ago, resumed talks with Japan on the peace treaty. The resumption of these talks was initiated by former Japanese Prime Minister Mori.

There is an interesting story here. His father was fighting in World War II and eventually he was captured by Russians, and after coming back from captivity he became the mayor of a small city and headed the society of Japanese-Soviet friendship. And before his death he wrote in his will that he wanted to be buried in Russia. And we, along with Japanese Prime Minister Mori, when he was in office, went to the cemetery his father was buried in, in a Siberian Region of the Russian Federation.

What does this show? It shows that people who have been through the severe tests of war, bequeathed friendship to us, cooperation and openness with each other. In this, as they suffered during severe military challenges, they saw prerequisites to success in the future, both for their children and for their grandchildren, for future generations. Of course we cannot ignore what we know about the past, but we cannot ignore that positive message, the lessons given to us by our fathers, grandfathers who went through severest tests of war.

As for the Korean peninsula – it’s the same. The Korean people have been through extremely difficult tests. We certainly do not need an inter-Korean crisis that could end in a global disaster. We must do everything we can to prevent such a scenario.

But we need to undertake efforts to develop cooperation where it is possible as well. Madame President spoke about our trilateral plans; they are quite large for this region. It includes the development of transport (railway) infrastructure, and the development of joint projects in energy engineering. I believe we must do everything we can to get back to these cooperative projects.

Kevin Rudd: Thank you very much, Mr President. You have reminded us all of the lessons of the last world war, and the impact that it had on the families who have direct connection experience of that devastation. And certainly here in Russia we are conscious of the scale of the human loss which is the largest in the world, the people of China, the largest in the world, huge, huge human cost.

But again, turning to the future, as Russia is a global power and we look to how the future global relations of Russia will proceed, of course, we come to the question of the United States as well. The US was a strong Soviet ally during the war, and we have been through a rollercoaster relation ever since between the Soviet Union and the Russian Federation, and the United States.

Turning to the future, we look at this thing, the US presidential election year, and I now live in New York and I watch this thing happen every day in all of its colour and movement: candidate Trump, candidate Clinton. And by Australian political standards, it’s even fairly wild by those standards.

But when we look at the outcome of the election, let me take out that crystal ball again. Let’s just assume for a moment, if Hillary Clinton becomes the next President of the United States. We have our crystal ball here based on the robust principles of national interests, which you reminded me of before, how do you believe, what do you believe can be the future strategic relationship between the two countries if Hillary was to become the President? And what do you think is achievable?

Mr President, I would appreciate your thoughts.

Vladimir Putin: Unfortunately, our relations are in a rather frozen state, and I believe, through no fault of ours. I have spoken many times on this, and I don’t want to bore our large and dignified audience with all the details and the background. But anyway, after the well-known events of the early 1990s, after the emergence of a modern, future-oriented Russia seeking to build a democratic society and market economy… Mr Chubais is here today, he was one of the people behind the events at the time, and they received a lot of criticism, on the one hand.

On the other hand, everyone has to admit that during that period, the foundation was laid for developing democracy and a market economy. I think that even with all the difficulties, problems and drawbacks, that generation of politicians still solved the task they set for themselves. Of course, we expected that such openness would be met with a similar response from our partners. But this never happened. Instead, they looked through the prism of their national interests and interpreted it their own way.

And how exactly did they interpret it?

The Soviet Union collapsed, so it was time to put the squeeze on Russia. Providing humanitarian aid was fine, but supporting separatists in North Caucasus was also okay because it made Russia’s leadership more amenable to solving other issues – the global ones that probably were more important for our partners. Solving the Yugoslavia crisis without the involvement of Boris Yeltsin, then president of Russia, whom everyone considered their close partner, was fine with them because it met their interests, and they couldn’t care less about the interests of the Russian Federation. And so on.

They can expand NATO eastwards in several waves, despite Russia’s clear objection, under the well-known populist slogan that each country has the right to determine its own security system. That’s true. But security has to be global. Only then can it be reliable.

A country can withdraw from the anti-ballistic missile treaty unilaterally and develop this system under the pretence of addressing the Iranian nuclear threat; and when the Iranian nuclear threat ceased to exist, it was okay to pretend we forgot about everything and continue developing this system. If this kind of thinking persists, I do not think any thaw in relations is possible.

If our partners come around to a different way of thinking, based on mutual consideration of interests, respect for one another’s interests, then our attitude will change completely. We did not initiate the chill in relations, and we are ready at a moment’s notice to fully restore cooperation. But this doesn’t depend solely on us; it depends on how the future leaders of the US administration want to build relations with Russia.

Kevin Rudd Thank you, Mr President. We have from the organisers about ten or fifteen minutes to go, so let me just follow on quickly to the point you have just made. I heard you speak at length at the St. Petersburg Forum earlier this year on a range of subjects, and one of which of course touched on the question of continued American and western sanctions.

Now we are two and a half years down that track. Do you see the possibility of political or diplomatic breakthrough with the US and the European Union on this question? Your thoughts also on the implementation of the Minsk Agreement. We would appreciate your thoughts on that because you are in the hot seat on that, and Russia as a global power is highly relevant to the future of those two questions.

Vladimir Putin: I presumed we would be discussing economic problems of the Asia-Pacific region, but it seems there’s no avoiding this. So let’s say a few words about it. We are not responsible for the Ukraine’s crisis. We did not support the unconstitutional coup in Ukraine, and we did not provoke the reaction of part of the country’s population to these actions.

And this is what led to Crimea’s desire to be part of the Russian Federation, and Donbass – that is, Donetsk and Luhansk – started resisting the regime, which, right after the coup, wanted to establish its authority in these areas. The situation gradually deteriorated. I can tell you only one thing: as for Crimea, the Crimean people made a decision, voted. The question is closed as a matter of history, there is no going back to the previous system, absolutely not.

As for the settlement in south-eastern Ukraine, I am in total agreement with the participants of the process, first of all the participants of the Normandy process, and with the position of the United States: there is no alternative to implementing the Minsk agreements. Everything is written in black and white. By late 2015 amendments were to be made to the Ukrainian constitution. They were not. A law on the special administrative status of these areas was to be enacted. It has not been. A law on amnesty was to be passed and signed by the president. It has been passed by the Rada, but not signed by the president. A law on municipal elections has to be passed. It has not been.

I don’t intend to dwell on this and aggravate things, but I would like to say one thing: we believe that the Minsk agreements have to be executed in full without any restrictions, limitations or reinterpretation. We are not capable of doing it on our own, the Normandy format’s participants have to do this with us, as well as the United States, because only they have real influence with the current government in Kiev. But, of course, without the political will of the Ukrainian leadership it is impossible, and ultimately everything depends on them.

Kevin Rudd This will draw our discussion to a close, Mr President and Madam President and Prime Minister Abe. You have quickly reminded us, President Putin, that in this gathering of international business we are fundamentally about the economy and business and trade and investment, and geopolitics is always there playing some role.

But all three of you are now heading off to Hangzhou in China; you are about to go to the G20 meeting. And the G20 meeting occurs at a time when we have had nearly a decade of low economic growth globally. A very slow recovery from the events of the financial crisis of ’08 and ’09.

The Chinese have put forward their agenda for the conference: they talk about four I-s, they talk about innovation, invigoration of the global economy through productivity, they talk about a new generation of interconnectedness, the physicality of connectedness through transport hubs and also telecommunications. And they speak also of inclusion, the fourth I, which is how you bring about the inclusive pro-poor agenda which matches Agenda 2030 of the United Nations to lift the remaining billion plus people around the world out of poverty. But if you are looking at this conference and the need to kick start again global growth, Mr President, can I conclude with a question to yourself: So what are your aspirations for Hangzhou? What views would you wish to see expressed around the table with your colleagues from the G20, and what outcomes would you like to see in order to kick the global economy into a more rapid speed? Mr President.

Vladimir Putin: I would like to draw your attention to two points that are of interest to us and perfectly complement Russia’s agenda (and, incidentally, the agenda for the Far East). They were, in fact, formulated appropriately by our Chinese friends.

The first point is innovative development. We talk about it all the time, we discussed it at the G20 Summit held in Russia, and we still believe it is extremely important. We are in a region that is extremely rich in mineral resources, but the future of our economy in general and this region in particular depends on high technology. A modern digital economy is our future. I made a point of bringing up the work that has been done already in the aircraft industry, the shipbuilding industry; the achievements we are building on now in aviation, space, science and innovation. This is the first thing we are interested in.

The second is the international financial architecture. True, we recently saw IMF quota increases for emerging markets, but this is not enough, considering the growing weight of the emerging economies, so additional steps will be needed. We will certainly discuss what the Prime Minister and Madame President of the Republic of Korea have said – the lifting of barriers to trade.

In recent years, trade barriers in developed economies have increased by 10 percent – that is a fact, while these barriers actually need to be reduced. We discuss this constantly in APEC, and we are taking steps to change the situation. I fully agree with Madame President: we must certainly seek to expand the space where there is economic freedom, to consider free economic zones, and other forms of cooperation. All this is certainly of great interest to us.