PRIME MINISTER VLADIMIR PUTIN AND TURKISH PRIME MINISTER RECEP TAYYIP ERDOGAN ADDRESS A NEWS CONFERENCE ON OUTCOME OF THEIR NEGOTIATIONS

States News Service
January 13, 2010 Wednesday

The following information was released by the government of the
Russian Federation:

Vladimir Putin: Mr Prime Minister, ladies and gentlemen,

Our talks today have been very productive and meaningful. We have held
nine such similar meetings, all of which were, like our talks today,
conducted in an atmosphere of friendly confidence and understanding.

We discussed key bilateral issues in detail, focussing on closer
Russian-Turkish trade and economic partnership in all its aspects.

Our bilateral trade has grown steadily over the years, and in 2008
Russia became Turkey’s main economic partner.

The global financial and economic crisis undoubtedly caused a slight
decline in our bilateral trade. But that is why we have come together
today, to see how we can overcome these hardships together, how we
can increase investment and return to steady growth in trade and in
our economic partnership.

As Mr Erdogan said today, our trade can hit the $100 billion mark
within five years. I think this goal is attainable.

We are determined to continue using tried and tested forms of
cooperation, but also to explore new areas of partnership.

With regard to existing areas and traditional forms of partnership,
I would draw your attention first and foremost to our cooperation in
the field of energy.

Russia has been, and remains Turkey’s largest, and highly reliable,
energy supplier. We provide approximately 70% of Turkey’s demand
in natural gas. We believe we can take this further, moving beyond
simply trading, to asset exchanges and cross- capitalisation.

Today we discussed our ambitious joint projects-in particular, the
South Stream gas pipeline and the Samsun-Ceyhan oil pipeline. The
fact that these two projects are crucial to Russia, Turkey and the
whose of Europe both in terms of finding a solution to environmental
problems, and in terms of ensuring reliable energy supplies to Europe
is, I think, indisputable.

We are ready to cooperate in the electric and nuclear power industry.

We signed an intergovernmental agreement on cooperation in the
civilian nuclear power industry last year. It provides a solid basis
for successful partnership in that field, too. We are determined to
build up the high tech part of our bilateral links. Investments will
be channelled to the high-tech sector.

Today, Turkish companies have $6 billion invested in Russia, and
Russian companies have $4 billion invested in Turkey. Lucrative
investment opportunities span a wide range of sectors: steel,
construction and light industry, telecommunications, transport and
many other fields. Russian companies are also ready to take part in
privatization programmes carried out by Turkish government.

We have talked about the prospects for expanding our cooperation on
agriculture, including supplying the Russian market with poultry and
other foods.

We have mentioned the tangible progress that has been made on difficult
issued we have discussed on many occasions before, for example:
customs regulations. Today we can state that they have been resolved.

Two Turkish banks have launched rouble transactions. We will extend
the use of national currencies in Russian-Turkish trade.

Last but not least, turning to cultural matters, we have agreed to
start work on an intergovernmental agreement on visa-free trips for
Russian citizens to Turkey and vice versa. I hope these preparations
will not take us long.

I thank Mr Erdogan for the constructive attitude he has displayed at
the negotiating table, and all our Turkish friends and partners for
their cooperation throughout 2009. I wish everyone success this year.

Thank you.

Recep Tayyip Erdogan (as translated): Thank you (in Russian).

Ladies and gentlemen,

I would like to begin by expressing my gratitude and sending my
best wishes to the friendly Russian people. I am glad to have this
opportunity to visit Russia now.

Thank you for the hospitality you have shown me and my delegation
from the moment we landed in Russia.

My talks with Russian President Dmitry Medvedev and Prime Minister
Vladimir Putin have been really very useful, fruitful and constructive.

We discussed our bilateral relations in detail; we talked about how
we should improve them and guarantee their further development.

In 2008 Russian-Turkish trade reached truly historic levels. Though
it shrank significantly last year due to the global financial crisis,
we intend, within the next five years, to boost it to $100 billion
per year.

In June, we will celebrate the 90th anniversary of the establishment
of diplomatic relations between Soviet Russia and the new republican
Turkish government. The fact that our relations are so positive
now, developing dynamically in every sector, is a source of great
satisfaction.

We understand that Russian President Dmitry Medvedev will visit
Turkey in May or June this year. During this visit, we will see real
progress on a series of essential areas in the development of our
bilateral relations.

Turkey is proud to have Russia as its leading foreign economic partner,
and that it ranks 7th among Russia’s foreign economic partners.

An essential part of Russian-Turkish trade and economic relations
is our cooperation in the energy sector. This partnership plays a
unique role due to the direct impact it has on bilateral trade and
economic relations, and because of its strategic influence. We are
especially satisfied to see that developing cooperation in natural
gas has now spread to other fields of energy: in particular to oil
and nuclear power.

Our countries’ relevant agencies and experts will work to step up
partnership in the fields I have mentioned so as to obtain practical
results as soon as possible.

We are working together, as before, to establish an oil processing
joint venture, which we regard as yet another important step forward
in our energy partnership.

I want to lay special emphasis on the following. As we know, our
bilateral trade suffers from the fluctuations of foreign currency
exchange rates on the market.

Turkey has finished reforming its regulatory basis to allow us to
start using national currencies. Two Turkish banks have already
started carrying out foreign transactions in Russian roubles, as Mr
Putin has mentioned here.

Mr Putin has informed me that Russia is doing the same. As soon
as this work is complete, we will be ready to switch entirely to
the rouble and the lira for bilateral transactions. Business in
both countries will benefit, liberated from their dependence on the
speculative fluctuations on the currency markets. So it will become
more competitive. This change will also symbolically express both
countries’ independence.

I would like to express my appreciation to President Dmitry Medvedev
and Prime Minister Vladimir Putin, and through them, to the entire
Russian nation. Russia presently ranks second after Germany in terms of
the number of tourists who visit Turkey. Despite the global economic
crisis, foreign tourism saw only a token shrinkage last year against
2008 due to our work.

We not only expect Russian tourists to come to Turkey but a growing
number of Russian entrepreneurs and investors as well. I am convinced
that our partnership will continue to grow ever closer in every field,
and particularly in agriculture.

Mr Putin was ahead of me to announce that we had determined to start
preparations for visa-free bilateral arrangements. I think we will
soon conclude this work, thus extending our partnership. I hope the
corresponding decisions will have been taken by the time Mr Medvedev
visits Turkey.

May the year 2010 bring peace, wellbeing and prosperity to our nations
and the whole world! Thank you.

* * *

Question: This question is for Mr Putin. Though I represent the
Sabah daily newspaper, I am asking my question on behalf of eight
Turkish media correspondents covering the visit. Mr Prime Minister,
you have indeed discussed many regional problems at the negotiating
table today. My question concerns one of them, the situation in the
South Caucasus.

As we all know, major positive changes began with the signing, on
October 10, 2009, of protocols on the normalisation of Turkish-Armenian
relations. Both countries have now submitted protocols to parliament
for ratification. Armenia is making swifter progress.

Turkey, however, has said more than once that if this process is to be
expedited, progress should be made on resolving the Nagorno-Karabakh
situation, proceeding from relevant resolutions of the UN Security
Council and the principle of Azerbaijan’s territorial integrity.

Does Russia intend to do anything to expedite this process?

Vladimir Putin: First of all, I want to say that Russia, more than any
other country, is interested in the normalisation of relations between
all the countries it neighbours in the region. A vast array of ties
bind us with Azerbaijan and Armenia alike. There are millions, and
I stress that, millions, of Azeris and Armenians who live in Russia,
and who have friends and relations here.

Russia’s economic contact with those countries is developing. It is
known, for instance, that we have begun to import natural gas from
Azerbaijan. I repeat, we are interested in the prompt resolution of
all problems inherited from our Soviet past. The Karabakh problem
is no exception. We are certainly aware also of Turkey and Armenia’s
troubled past. In this sense, too, we want to see the normalisation
of Turkish-Armenian relations.

We have welcomed Turkish initiatives to normalise these relations, and
view them with great optimism. We hope that this negotiation process
will be devoid of any trace of extremism or fundamentalist positions
rooted in the problems of the past. The Armenian leadership is also
heading in the right direction, and we welcome this. I understand
that both the Karabakh and Turkish-Armenian problems are extremely
complicated in their own right, and I don’t think they should be
joined together in a package. Each problem is hard to resolve even
taken on its own, and if we lump them together, any hope of their
resolution automatically recedes into the distant future. So I don’t
think that either strategically or tactically there is any benefit
from drawing these problems together. We will do everything within
our power to help resolve each of these problems.

Doubtless, the solution depends on Armenia and Azerbaijan in the
former instance, and on Turkey and Armenia in the latter. We will
treat the stances of all our partners with the utmost respect, as we
have always done.

Russia’s mission is to support whatever positive initiatives are
needed to settle these two complex problems.

Question: Good afternoon. Mayak and Vesti FM Radio. I want to ask
Mr Erdogan about the construction of a nuclear plant in Turkey. The
situation is rather vague. As we know, Russia won the tender in
September 2002, and the proposals made by the Russian companies were
approved. However, recently, in November, the Supreme Administrative
Court found certain irregularities in how the tender was held,
and it was officially declared to be invalid. Will Russia build the
plant, after all, or not? And is Turkey able to remove those tender
violations?

My question to Mr Putin develops this topic. How are the related
negotiations with Turkey proceeding? What competitive advantages,
do you think, do Russian companies have against other participants
in the tender?

And if you allow me, I feel I must ask another question, about South
Stream, one of the largest joint ventures. Its construction will
begin quite soon. Are the partners ready to start work in Turkey
on schedule? Please, Mr Erdogan, does Turkey confirm its agreement,
made last August, for work on this to start as soon as November 2010?

Vladimir Putin: So your Turkish colleague asked only one question on
behalf of eight journalists, while you are asking a whole range of
questions on your own behalf.

Recep Tayyip Erdogan: As for the nuclear plant tender, a decision was
made following the court verdict that further work will be based on
direct inter-governmental agreements. The relevant ministries and
agencies in both countries are working on this, and negotiations
are underway. We hope they will soon conclude, and that we will have
made some real headway. I do not think it will take long. In fact,
they are in their final stages.

Vladimir Putin: And South Stream?

Recep Tayyip Erdogan: That question was addressed to you, Mr Putin.

Vladimir Putin: As for the nuclear plant, we are sure of our major
competitive advantages. And in terms of technology, it is at about
the same level throughout Europe. Where European companies have had
particular successes, we invite them to join in partnership. When
we implement our projects abroad, we give 15-20% of the work to our
European partners. Currently this is mainly Siemens. Unlike many of our
competitors, we can provide the full service. We grant credits, supply
equipment, and offer major construction works to local builders. This
accounts for 20-25 or even 30% of the whole contract.

We supply nuclear fuel and are willing to take and process nuclear
waste. This range of services allows us to charge reasonable rates,
well below what our competitors demand. We have agreed today to go
ahead with this and we are confident of its success.

As for the works on South Stream, they are going to schedule. I thank
Mr Erdogan and the Turkish government once again for authorising a
Russian company to carry out exploration work on the sea bed of the
Black Sea. Environmental assessments have been 100% completed and
85-90% of the geological and seismic studies have been carried out.

The data obtained will be compiled and submitted to the Turkish
government for their evaluation quite soon.

The Turkish government has pledged, in an agreement, to consider these
documents and authorise construction before November 10 this year. The
Prime Minister confirmed this during today’s talks. I am sure that
this will go according to plan. Incidentally, we have also agreed to
step up work on another joint project, Samsun-Ceyhan, and I have even
suggested a tripartite inter-governmental agreement between Turkey,
Russia and Italy because all three countries are involved in both
projects. Mr Erdogan has agreed, and we will now discuss this idea
with our Italian partners.