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Prime Minister Vladimir Putin meets with editors-in-chief of leading foreign media outlets

List of participants in the meeting of Prime Minister Vladimir Putin with the chief editors of leading foreign newspapers.
Yoshibumi Wakamiya, editor-in-chief of Asahi Shimbun, Japan
Sylvie Kauffmann, editor-in-chief of Le Monde, France
Ezio Mauro, editor-in-chief of La Repubblica, Italy
John Stackhouse, editor-in-chief of Globe and Mail, Canada
James Harding, editor of The Times, UK
Gabor Steingart, editor-in-chief of Handelsblatt, Germany.

Transcript of the meeting:

[Conclusion. First part in JRL #39 - click here for Part I]

Question: If you win the presidential election, will you call for an early parliamentary vote after a certain amount of time?

Vladimir Putin: The next parliamentary election will take place after the current State Duma serves its term, as laid out under the existing legislation.

Question: Are you saying you will absolutely not call for an early election?

Vladimir Putin: No.

Question: Regarding corruption. You said that when you were president the first time around, you "took care of" oligarchs. If you are elected president again, you will have to address issues of corruption. Many say that corruption has grown around you. How can voters be certain that you will take care of corruption, when they know that no senior government officials ever went to prison or were prosecuted?

Vladimir Putin: You are mistaken. Incidences of corruption are constantly being investigated, and some of them in fact involve senior officials. In some cases regional leaders were convicted and went to prison. Some top government members have been investigated. If you followed what was happening in Russia, you must have heard that a deputy finance minister was arrested and was confined for some time.

But we are not going to send people to prison without proper evidence, just to show "consistency." That deputy minister spent a year in prison, but the case against him collapsed, unfortunately. I say "unfortunately" because this discredited the effectiveness of our law enforcement agencies, which failed to prove in court that he had committed an offence. The dispute reached the Supreme Court, the Arbitration Court, experts, but eventually the case had to be closed. You see, if he had some sort of illegal "cover," he would have never been prosecuted, let alone arrested. But it was a fully fledged investigation, and government officials cooperated. Unfortunately, the charges against him were not proven.

Question: But would you admit that corruption is common among mid-level officials, if not senior officials?

Vladimir Putin: I would say that it is always a possibility. However, in a country governed by the rule of law, corruption charges have to be proven in the course of legitimate and unbiased proceedings and confirmed in court. The court is the topmost tier of justice. Anything else is a compromise. We have already been through a period during which people were sent to prisons and executed on mere suspicions, with sentences meted out by the so called "troika," not a court of law. We cannot agree to this again.

Question: Do you believe that people like Alexei Navalny, who posts evidence of corruption on his website, are doing the right thing? Do they support or hinder your anti-corruption effort?

Vladimir Putin: I have heard this name before. I know that there are many activists who help fight corruption and we will certainly welcome their assistance. However, the person you just named has served as an advisor to a governor in the past. As far as I understand, there were some problems linked with his professional activities, although I have never found out the details.

It seems that fighters against corruption tend to avoid serving with executive authorities ­ probably to avoid temptation. But in any case, any actions aimed at checking corruption will be welcomed. The government is interested in this kind of support. It is in the government's interests to maintain integrity and boost voter confidence. That is why anything anyone might do to help fight corruption, regardless of their job or position, will be valued and supported.

I would only add that I do not want these efforts to be politicised ­ to be used as a tool for political campaigning or pressure. But anything that is purely an anti-corruption effort will be supported.

Remark: But you agree that if a case involves government agencies, it amounts to political corruption?

Vladimir Putin: You keep pressing me about corruption as if your countries and governments are absolutely corruption-free. But they aren't...

Remark: There is an investigation going on in Germany. Our president is being investigated in fact. What do you think about this?

Vladimir Putin: This happens everywhere. There is no gauge to assess which country has more corruption. You can measure alcohol content, length and width and weight. But it is difficult to determine the level of corruption. This is a very subtle thing.

I do not wish to discuss what is happening in other countries now, in Germany, elsewhere in Europe or in the United States. Do you think these things never happen in the States? Do you remember a recent case in one state, where the governor was charged with corruption? And you're saying there is no corruption elsewhere n the world? But there is.

But let me repeat that, in any country ­ in the United States, Germany or Spain ­ every government is interested in cutting corruption. So anyone who does anything to reduce the level of corruption is valued and supported. At least in Russia this is so.

On the other hand, if someone tries to stick the "corruption" label on virtually anything just to boost their own political weight, this isn't good of course, because you lose aim this way. A fight with corruption turns into a political fight. That's where the problem is, you see?

But again, let me stress, we are interested in decreasing the level of corruption. Do you really think any government member is deliberately breeding corruption? What for?

Remark: I have been following the election campaign in the United States for the past two years. All candidates there must "take off their pants," as we say in Germany, in order to reveal their private wealth. This is also a preventive measure in the struggle against corruption, which makes it possible to see what this or that candidate has from the point of view ... And you agree that, in your country, all candidates who wish to become president, as well as private companies, should disclose everything about their property and shares.

Vladimir Putin: This is how it should be. But a person does not necessarily have to take off his pants. I don't know what they reveal in Germany. It is very hard to say whether this attracts the attention of voters, whether this provides any positive impulse during the voting process, and whether this is a plus or a minus. Don't worry. Everything is in order here in this respect.

At the same time, the public must have an objective insight into a candidate's property, incomes and shares. This is a must. To be honest, current Russian legislation also requires this. This is exactly what we are doing. Moreover, I get the impression that, in some cases, we are doing even more than our neighbours, including Europe.

Question: There is the problem of oligarchs. In one of your latest speeches, you admitted that the oligarchs had illegally made themselves rich throughout the 1990s, and you said that social justice must be restored without hindering economic development. How can this be accomplished?

Vladimir Putin: This is hard. Frankly speaking, I still don't know what to do about this.

I have referred to a proposal made by one of our politicians, Grigory Yavlinsky. He once told me that we should consider the following issue: Those who acquired tremendous property assets in the 1990s through various loans for shares and other schemes, which are not accepted by society and which are considered unfair, should pay out a one-time bonus. Then we could close this issue.

Well, we can think about this issue, but I don't know whether we can conceive of such a mechanism that would be accepted and approved by society.

Question: Here is another corruption-related question. After that, we will probably start discussing international affairs.

Do you think that corruption in Russia now is worse than it was ten years ago? If so, how can the situation be changed? What have you failed to accomplish in the past decade?

Vladimir Putin: I don't think that the situation has changed for the worse. You see, we aren't facing a situation in which new oligarchs are continuing to emerge. We don't sell multi-billion state property assets for next to nothing like in the mid-1990s. An oligarch is not just a wealthy person. I assume that a person can also get rich legally. An oligarch is a person who has taken advantage of his proximity to the corridors of power, unfair property evaluation systems and some unfair, non-market instruments, and who grabbed a huge amount of property from the state and the people. This person has made this property his own, and has grown rich only with the help of his connections. In my opinion, oligarchy implies closer ties between such people and the government. This situation does not exist here nowadays. Nothing of the kind is happening. We are not engaged in privatisation reminiscent of the 1990s. This is the first thing.

Second. To my mind, we are fighting white collar crime more consistently. But the problems do exist. This is a fact. Problems exist here just like anywhere else. It's quite possible that Russia faces more problems than other countries. In my opinion, this is primarily associated with the nature of our economy and failure to regulate some legal issues.

They have told me today that, under US legislation, failure to submit timely and authentic information already serves as legal grounds for opening a criminal case, and people can be sentenced for this. We have nothing of this kind. But I assure you that, as soon as we suggest this, the Russian opposition will start shouting about infringement of the rights of business people and violation of democratic principles. But we will have to go through this. We will have to discuss this with experts, no matter what, and assess this issue. I will certainly look into the matter. I will assess the relevant US experience and the experience of European countries. Of course, we will introduce this and other instruments, too.

Question: Do you think the worst of the euro crisis is over? And one more question: Do you support the policy of Mr Nicolas Sarkozy and Ms Angela Merkel, who are discussing whether the belt-tightening policy has been taken too far? Do you support the current European leaders' policy?

Vladimir Putin: I don't know whether the crisis has ended, because its root causes have not been addressed yet. I believe that the root causes include, first, overproduction and oversaturation of the market, and second, a change in priorities, whereby financial instruments are given more preference than real production. Consider derivatives, which are becoming increasingly valuable, a situation which leads to the development of economic bubbles ­ these fundamental reasons behind possible bubbles have not been addressed.

We also had to deal with these bubbles before the crisis, although to a lesser degree than in Europe. The biggest and most dangerous bubble was in our construction sector. Allocations in this sector, including loan resources, were considerable, whereas the demand turned out to be smaller than expected and declined further during the crisis. It was a dramatic situation.

Overall, the construction sector has survived thanks to powerful government support, but it was a touch-and-go situation, because we were implementing ­ and continue to implement ­ very large projects with government funding. They include preparations for the Sochi Olympics, the APEC forum in Vladivostok, the Kazan 2013 Universiade in Tatarstan, and several other very large projects. All of that provided a powerful impetus to the development of the construction sector.

We have continued to honour our commitments to military pensioners and veterans despite the crisis. We invested huge funds ­ 217 billion roubles ­ in constructing housing for them. We were implementing an unprecedented programme to provide housing to military personnel. Over the past few years, we have spent 270 billion roubles on housing construction for the military, plus 46 billion roubles on the construction of permanent housing and 46 billion on service housing. We have done this in the past few years, thereby supporting the Russian construction sector.

We will try to take this into account in our future projects. Have these threats to the global economy, in particular to the European economy, been eliminated? I don't think so. As long as we have financial derivatives and other instruments, it will look as if they are more important than the real economy, than real production.

Remark: Yes, they are in full bloom again.

Vladimir Putin: By the way, this opinion is also shared by my colleagues, my good acquaintances in German industry. During our meetings they tell me almost the same thing. You may assume that I have conveyed their opinion to you, or at least the opinion of many of them.

We should eliminate these root causes ­ in fact, there are many more of them, but these are the most important ones.

As for whether I support what the European leaders are doing...

Remark: But this means you do not agree with what Ben Bernanke and Angela Merkel are doing by investing millions into markets.

Vladimir Putin: I cannot say whether they are doing the right thing or not, it is up to them. But, if you want to hear my assessment, I will say that I wouldn't want to give any evaluation of what my colleagues do, so I will speak only in general terms.

As regards Europe, you know, it is impossible to jump over a ditch in two leaps. You have to do it in one jump, and then you may have success. So, I believe that certain decisions were made late. But it is easy to say this looking from the outside. When events are actually happening, it is much more complicated than when you are looking in from the outside.

So, I do not know what I would do in this situation. Maybe I would do what Western Europe's top economies are doing.

Remark: But you are not looking at it from the outside. You are one of the players, and you are returning to the game. You will again be attending G-20 summits and so on. Financial markets are heavily dependant on the G-20 decisions, while what is occurring on the financial markets is the main reason behind the crisis. The point of the matter is how the crisis will be solved. It is probably due to the fact that Russia is not part of Wall Street or those financial markets that all people are very interested in hearing your opinion.

Vladimir Putin: Now, let me make myself clear. I will say it again: probably, more decisive actions should have been taken in Europe, say, as regards solving the debt crisis in certain countries. Again, I am not the one to judge whether it could be done or not. There are political ideas about raising financial discipline in the eurozone, and this is simply obvious. But it is important not to overdo it while striving to put things right and enhance discipline, so that this idea of putting everything in order does not lead to collapse and stagnation in the real economy. This is what matters. If this fine line is observed and balance is found, then Europe will be successful. I hope it all is heading in this direction.

Now, as regards emissions ­ not only the Untied States, but also the United Kingdom is involved in money creation, but the latter has an increased level of inflation. As far as I know ­ although I may be mistaken ­ last year, an inflation rate of 4.5 percent was observed. Am I correct? This is a sufficiently high level for the United Kingdom and for such a developed market economy as a whole. We have an inflation rate of 6 percent, the minimum rate in the past 20 years ­ while theirs is the highest in the past several years, and this has occurred as result of issuing money as well.

Yet, the United Kingdom still secures a certain level of output growth, of gross domestic product, while, say, Greece cannot afford to do this, as the country does not issue drachmas, they do not exist. Germany does not have any influence on the European Central Bank money issuing policy. What the country has to do? It has to strictly cut expenditures, particularly social expenditures, and incur relevant domestic charges that stagger the situation in the European Union. And it is certainly right that the donor countries, such as France and Germany, are seeking to increase financial stability and financial discipline.

In this regard, I cannot but support our colleagues. Can the Central Bank be allowed to issue more money, just as the Bank of England or the federal reserve system do? Can the Central Bank be allowed to do the same to replenish the necessary fund and pay off the eurozone countries' debts? I can't say for sure, but our experts believe that the Central Bank could take more decisive actions in general, and they would not result in an inflation upsurge, as German and French financial economic officials fear. What does Germany fear in the eurozone if the European Central Bank increases money issuing? There will only be a small uptick in inflation, which will somewhat indirectly affect the situation in Germany.

Again, our experts believe that no serious negative consequences would occur. Yet, the decisions are being made, with the Central Bank recently allocating €500 billion, as we know. I cannot say how timely and adequate they are. It is obvious to me that certain restrictions imposed by Germany and France on the whole process are linked to their willingness to put everything in order and enhance discipline in macroeconomic and financial sectors. This is a noble task.

Question: To continue in the same vein as the question that has been just asked ­ how do you see the future of the European Union and the euro as a currency?

Vladimir Putin: You'd better ask someone else. I can only say that the European Union is Russia's major trade and economic partner, with half of our trading volume coming from trade with the EU. We are interested in the EU's prosperity, and in fact we are interested in Germany and France's success in straighten things out in the financial and macroeconomic sectors. As the EU's partner, Russia is interested in this and we wish them success.

As regards the euro, 40 percent of our foreign reserves are in euros, and we will make every effort to help the euro retain its positions. I hope it continues like this.

I also hope that the policy implemented by the European Union states and the European Commission, as well as by all authorities, particularly in the economic and financial sector, will stabilise the euro. We will certainly provide all possible support.

Question: Mr Prime Minister, the situation is Syria is an issue that raises concerns in Russia.

I know that you are not satisfied with the efforts the United States and Britain are making to resolve the Syrian problem. I think that when people follow international developments, they come to believe that Syria is Russia's problem since Damascus uses Russian arms. So the question is: do you think it is possible to put a stop to violence in Syria?

Vladimir Putin: You just said people are following the developments is Syria. But James, they see these events through your eyes. They perceive the events the way you describe them or show them on TV. I don't think many people have the opportunity to go to Syria and see what it's like for themselves.

Unlike the majority of people, we are trying to look at what is happening there in reality, rather than be guided by what you write and show.

So what is happening in Syria? There is an armed civil conflict. Our goal is not to support one of the sides, the Syrian government or the armed opposition, but to achieve a national settlement.

We don't want another Libya, do we? You've seen the medieval lynching of Gaddafi, haven't you? You have written hundreds of pages on the adverse events in Libya. There were many adverse events, I agree: the local regime was absolutely deranged and obsolete.

But do you also know what happened in Sirte when it was stormed by the insurgents? Do you know that they raped women and killed men and children? Did you write about that? Not much, to be perfectly honest. Most international media ignored these facts, or mentioned them in passing.

We do not want another Sirte. We want the parties to the Syrian conflict to reach an agreement, to find consensus and stop killing each other.

You mentioned Russian arms. I don't know how many arms we sell to Syria. Russia's economic interests in that country are not greater than those of Britain or any other European country. Moreover, when Assad took over as president, he first went to France, Britain and other countries. He visited Moscow after three years of presidency.

We do not have any special relations with Syria. But we have a position of principle as to the way such conflicts should be resolved. We are not supporting any of the sides.

Our conviction is that none of the parties to a conflict should be supported. They should be persuaded to sit down at a negotiations table to reach some mutually acceptable terms and stop augmenting human casualties, to resort to political procedures and political reforms, which, again, should be acceptable for all the parties to the conflict, instead of driving the conflict into an impasse and allowing one of the sides to raze the other. I am confident that if this is how we act, we will eventually bear the responsibility for the side being razed.

So why did Russia vote down the UN resolution that our partners proposed? Russia and China rejected it. Did you read that resolution? I bet you didn't. But I did. It says that all of the government troops had to be pulled out from the cities they hold. But, if the government has to pull out, then the opposition should have to pull out as well, right? Otherwise, do we want Assad to withdraw his forces to give way to the opposition? What kind of a weighted approach is that?

One could express emotions about this forever, put these emotions into words and present them to the public. But let us not be guided by emotions, but look at the reality instead.

Question: I agree, Mr Putin, but you asked for my opinion.

An excellent journalist who worked for Sunday Times was killed in Homs a week ago. We weren't able to bring her body back home so that her family could bury her.

I believe Russia has closer relations with Syria than you are willing to admit. We believe that you personally could make a bigger contribution, with all due repect to your objections at the UN Security Council. You could intervene in Assad's regime and secure a cease-fire so that we could evacuate bodies, and Syrians could stop killing each other. I'm afraid that this is a really emotional issue, and Russia's participation in addressing it is essential. Therefore, my question is: what can you do and what are you going to do?

Vladimir Putin: Like I said, we are for it, we want this reconciliation to happen, and we are asking you to support us in doing so.

In order for us to be able to resolve this problem, we can't side with one side to the armed conflict, pardon me for this tautology. We need to consider the interests of both sides, make them sit down at a negotiations table and cease fire.

Allow me to reiterate: go ahead and read the draft resolution. It demands that Assad's troops be pull out from the cities. What is that all about?

What if their next demand is for him to die? He will never agree to it.

Remark: That's exactly what I'm asking: what are Russia's proposals? Do you have any proposals?

Vladimir Putin: We propose that all sides of the armed conflict cease fire immediately, sit down at a negotiations table and begin a dialogue on political reforms. The opposition should also be part of the equation. If you keep encouraging it with weapons supplies and pressure against Assad, the opposition will never make it to the negotiations table. As far as I can tell, Bashar al-Assad is prepared to hold talks, but that is all I can say.

There's something else that I'd like to share with you. I'm not dealing with these issues on a daily basis, and my being on top of everything in this country ­ the way I'm portrayed in international and Russian media ­ is simply not true. President Medvedev and I have long since delineated our spheres of responsibility according to the law, and the president is in charge of all foreign policy issues. These issues are not part of my everyday work routine.

Question: I want to make sure I understand you correctly. Does this mean that Russia will pressure Syria and Assad's government to cease fire with the understanding that the opposition will do the same, and with a cease-fire in place you will insist that the Assad government proceeds to carrying out political reforms? Are you saying that President Assad will remain in office? Is my understanding correct?

Vladimir Putin: It all depends on the agreement between the sides. They should agree on the reforms and the outcome of these reforms. First, they need to stop killing each other. Allow me to reiterate: this cannot be done unless both sides are presented with equal demands. That is the gist of our proposal. I believe that if we do it this way, we will be able to achieve success along with our European partners, the United States and China.

Question: In other words, this approach will work in the case of Iran as well? The sides should be brought together at a negotiations table so that they could come up with a solution regarding nuclear weapons? Do you think it may work or are we already running out of time?

Vladimir Putin: Fortunately, the situation is different in Iran. There's no internal armed conflict there. We are talking about Syria now. However, it's clear that we should work on this issue together.

Question: Let's wrap it up with Syria. By the way, there are wounded journalists in the besieged Homs who are trying to get out of there.

Vladimir Putin: Two days ago, they sent a car and a helicopter to the area of disengagement of the government and opposition forces in order to rescue the journalist. We keep track of her fate and genuinely want to help her. This helicopter with Red Cross representatives aboard was ready to take her, but she didn't show up. She's being held by the armed opposition, not the Syrian Army. The Syrian government is prepared to do its best to move her to any part of the world at her request. The Russian Emergencies Ministry is ready to send out an airplane, and it will do so. However, we need the insurgents to release her. She is being kept in an area controlled by insurgents.

Remark: Yes, it looks like the level of trust is really low. However, getting back to...

Vladimir Putin: I don't understand what you mean by saying "low level of trust."

Remark: The sides don't trust each other.

Vladimir Putin: A helicopter came in. An announcement was made that the helicopter was ready to take her to Lebanon or France. She's being held by insurgents who control this area. Why didn't they let her go? She didn't show up. Or is it because they aren't letting her go? I don't know what's going on there. It's not the government troops that are holding her.

Frankly, it's hard to understand what's going on there.

Remark: You know, I'm not that well informed about this. I'm sure you have more complete information than I.

Vladimir Putin: She is in an area controlled by the insurgents.

Remark: I believe you.

Vladimir Putin: Listen, you can talk with French officials. Our intelligence service is reporting the same information. She's in an area controlled by insurgents. The official Syrian authorities are ready to take her. They said so and sent the transport with Red Cross representatives, but she didn't show up, they didn't bring her out. They said they were afraid to do so. I just don't understand what are they afraid of? Anyway, she's clearly in an area controlled by the insurgents.

I can repeat: if there's anything that we can do, we are prepared to talk with the armed opposition and the government forces in order to help her.

Question: Going back to your understanding of the current political situation, do you think that Bashar al-Assad's regime will be able to survive this crisis? Do you think it has any chances of surviving this at all?

Vladimir Putin: I have no way of knowing it, and I can't make any assumptions with respect to this situation.

It's absolutely clear that the issue is about serious internal problems. The currently proposed reforms are clearly overdue. I can't say if Syrian society, including government and opposition forces, will be able to agree and reach a consensus, but I believe that this would be the best solution, because shaky peace is much better than full-on war. The first thing we need to do is achieve a cease-fire and stop the bloodshed.

Question: Let's go back to Iran. They don't have an internal conflict there. Do you think Iran is a serious threat to Israel?

Vladimir Putin: Unfortunately, the situation in this region is very volatile, and we are aware of their agressive statements.

I'm here to tell you that we have always been against any aggressive statements in this region. We have always denounced any and all anti-Israeli statements in our direct contacts with Iranian partners. We haven't changed our position in this area. At the same time, we believe that Iran should be given an opportunity to carry on its peaceful nuclear programmes overseen by IAEA. We hope that this cooperation will be restored in full.

Question: If Iran comes under attack, what will be Russia's military response?

Vladimir Putin: Russia has been uniquely positioned over the past 10 to 15 years. We have no troops stationed outside of Russia, except the ones that are engaged in peace-keeping operations in line with UN resolutions. Even so, there are not many Russian troops there. That is our principled position. I can say without any overstatement or pomp that we pursue a truly peaceful policy and would like to minimise the use of force in resolving complicated or even controversial international conflicts.

I've said so many times before and I can say it again: I believe that armed forces have been used excessively over the course of the past decade in addressing global issues. This is some kind of a military itch that adversely affects international relations and international law guarantees. Instead, it pushes certain countries to step up their armaments, including nuclear programmes, because nuclear arms are considered the most effective tool for defending national sovereignty and legal rights. So, it's a bad thing any way you look at it.

As far as conflicts go, I can say that we'll do our best to head off an armed conflict in Iran or anywhere near it. Such a conflict would directly affect us in a negative way. What I mean is that almost 20 million Iranians are ethnic Azerbaijani, and a conflict would result in a large flow of refugees heading for Azerbaijan. We have special relations with Azerbaijan as a former Soviet republic. Over one million Azerbaijani live in Russia. Most certainly, such a conflict will adversely affect us economically, socially and politically.

Iran is our Caspian neighbour as well. Any instability in Iran will unavoidably affect the entire region and the situation in the Middle East. I believe no one wants the situation to spiral out of control.

Question: Could we go back to something you talked about at the beginning? In one of your foreign policy articles, you used a particular tone of voice when speaking about the United States. Do you think that the reset policy didn't work out? Do you think it was just a tagline rather than a real policy?

Vladimir Putin: I don't think it was just a tagline. President Obama and I met in this very room two years ago. He sat in your seat. Seriously, he sat in this chair. I'm sure that Mr Obama is a very sincere man. He spoke very convincingly, let me reiterate, with a great deal of sincerity. More than that, I fully share many of his views about the international situation.

I'm not sure whether he manages to fully implement his ideas of justice in international affairs. He probably doesn't always succeed. However, it was comforting to know that he practices such a philosophy of international relations, because in many respects it coincided with my own ideas about global developments.

I believe that he was absolutely sincere when he proposed the reset policy. There wasn't much to reset, though. We had good relations, but they became slightly strained because of Iraq. We said right away that we would not support military intervention in Iraq. I believe we were right in doing so. Let's not go deep in the Iraqi issue.

We had an argument because the United States withdrew from the ABM Treaty. What has changed? We had this argument with George W. Bush when he was president. We discussed this issue with the previous US president. The Americans decided to withdraw from the treaty and that was that. However, this treaty was one of the keystones of international security.

We didn't dwell much on their decision to get out and started looking for other points of contact. They have made proposals to us, which we have in fact accepted and asked them to provide these proposals in writing. Condoleezza Rice and the defence secretary came to Russia, and I met with them in the Kremlin. They put forward this proposal during our talks. It was unexpected for us, but I agreed. The only thing I asked for was to put it on paper.

We waited for it for two months. Nothing. Subsequently, our US partners dropped their own proposals saying that they were impracticable.

I can share their proposals with you, there's no secret here. The issue was about having our specialists present at anti-missile and radar sites on a 24/7 basis and having these radars cemented in a way that they permanently face Iran and couldn't be turned in the direction of Russia. This is what they proposed to us.

This doesn't change the situation drastically, but we agreed to it. All we asked was that they put in on paper. They refused to do so. This gave rise to tensions, and then came this reset proposal. We welcomed it. Did it work out or not?

It didn't with respect to such issues as anti-missile defence. But still, was this proposal useful or not? It was, because this impulse of trust and desire to reach an agreement helped us reach agreement on the New START Treaty. We were able to sign an agreement for cooperation in peaceful use of nuclear energy and on Russia's accession to the WTO with the direct support of the United States. These are real steps, the real results of the reset policy.

Question: In other words, the anti-American rhetoric, at least that's how they see it in Washington, is only for the election campaign?

Vladimir Putin: Where's this rhetoric? You know, if you listen to what our US colleagues are saying about the election campaign in Russia... We believe what they're saying is anti-Russian. Have you seen or heard anything anti-American in our election campaign? I don't think we focus a lot on international issues and relations at all. However, we are criticising the position adopted in the area of anti-missile defence. But we haven't made any changes to this position since the beginning. This is clear, and I don't think we should elaborate on it now, since we all know what it's all about.

The point is that one side wants to be fully invincible, which upsets the global balance. We believe that this is extremely dangerous. The availability of a strategic balance allowed us to avoid major global conflicts for a long time since the end of WWII. As soon as one side gets an illusion that it's invincible to a retaliatory strike by the other side, the number of conflicts goes up. That is not because America is an aggressive country by nature but because it's just a fact of life. There's no way around it. We are concerned about it.

When we are being told that this is not directed against us, do you know what the talks are really about? They tell us that it's not directed against us. We say, all right, you don't want to give us any guarantees but let's put this statement ­ that it's not directed against us ­ on paper and develop a relationship based on this. Our American partners refuse to do even that; they don't want to put their name under this statement. What they are saying is that a verbal statement is enough.

You are smiling, but I find this rather sad than funny.

Question: I would like to ask you about Asia and the Asia-Pacific Region.

But first of all, I'd like to thank you for the warm reception and for Russia's support after the earthquake and tsunami in Japan last year. Russian rescuers were very quick to get to Japan. As for the Fukushima Nuclear Power Plant meltdown, Russia supplied 400 portable Geiger counters to us and advised us on ways to handle the disaster.

After that, the Russian government unveiled some initiatives and projects on Russian-Japanese energy cooperation. For example, on additional energy supply. I think this was your initiative, and we are grateful to you.

Remark: ...My personal initiative, that's true.

Question: Mr Prime Minister, your October article published in Izvestia unveiled a concept of the Eurasian Union as one of the centres of influence in the modern world that would become a bridge between Europe and the dynamically developing Asia-Pacific Region. It is clear that the Asia-Pacific Region will become the engine of global economy in the 21st century.

Vladivostok is hosting an APEC summit this year, and there is a good reason for this. I think that cooperation with Japan is very important for Russia because it can be useful in improving your contacts in the Asia-Pacific Region. But there is no mention of Japan in your article on the Russian foreign policy published in the Moskovskiye Novosti on Monday. You mentioned the importance of China and India several times. What about Japan? Did you forget about Japan?

Vladimir Putin: I could never forget about Japan because as you know I have been practicing judo since I was young. I have a sculpture at home and I look at it every day. It reminds me of Japan on a daily basis. However, if this year's Russian-Chinese trade amounts to $83.5 billion, our trade with Japanese is just over $40 billion.

We would like very much to see a substantial increase in our trade and economic ties with Japan. However recently we have made significant strides in energy, high technologies and the auto industry, which is especially gratifying. Several Japanese companies have launched production in Russia, and these are very modern, high technology facilities. I hope that our trade and economic ties will grow.

You have very courteously omitted to ask about the territorial dispute but it would not be courteous on my part to leave it without mention. We are committed to solving the territorial dispute with Japan once and for all and we want to do it in a way that will be acceptable for both our nations.

I think that in the end we will be able to find a solution as we increase our interaction. We should seek a state of affairs when the solution of territorial issues ceases to be essential and recedes into the background, when we perceive each other not only as neighbours but as sincere friends interested in development of our economies and contacts. And in this context, it will be easier for both sides to come to a compromise settlement.

That is why, I want to underscore again, I am glad that the levels of our [co-operation] have been growing, especially in the economic area. Yet currently they are insignificant and do not correspond to either Japan's or Russia's economic potential. However we will make every effort to develop them.

Question: I am very glad to hear that you still remember about Japan. I'd like to ask you a direct question. The key issue for the development of Russian-Japanese cooperation is the conclusion of a peace treaty settling territorial problems.

Mr Prime Minister, when you visited Japan in March 2009, you said this: "I want to take the negative heritage in our relations off the agenda." In Russia some people think that there is no need to address this issue, but I do not agree with them. All obstacles must be removed.

Unfortunately, after your last visit to Japan, the atmosphere for reaching an agreement seems to have deteriorated. Unless there is a change in your vision of the position I mentioned. That is what we would like to proceed from.

Vladimir Putin: No, there are not going to be any such changes in my position. I think we should smooth out some rough edges and go back to a positive and constructive dialogue. We have conducted talks with China on border settlement for 40 years. Forty years! And when the quality of interstate relations reached the current level, we arrived at a compromise settlement. I very much hope the same will happen with Japan. I very much hope so.

Question: Could I touch upon one more territorial issue? It's about the Arctic. You know the Canadian position on Arctic borders. How do you plan to solve the problem of defining the Russian continental shelf considering the current Harper government's position?

Vladimir Putin: We had similar problems with Norway. We negotiated delimitation of the water and seabed with Norway for 40 years. Forty years! Being aware of our interest ­ mutual interest ­ in seeing these issues resolved we eventually came to an agreement last year, drawing the line and signing an intergovernmental agreement. This enables us to start work in the areas that both Norway and Russia want to develop.

As regards our position, we intend to determine the boundaries of the continental shelf on the basis of the objective data provided by our scientists, and not independently or unilaterally but through the relevant United Nations commission. We very much hope that our Canadian partners will join this work on the basis of current international law of the sea.

The question of the straits crops up. I expect that there too we will proceed from our common interests, our mutual interests and will ensure freedom of navigation. We are ready for an open and constructive dialogue with our Canadian friends.

Question: What do you think is holding back the Canadian government on this issue at present?

Vladimir Putin: You should ask the Canadian government. I don't yet have the honour of being its member. Perhaps it doesn't have enough objective information, studies must be carried out. Perhaps we should conduct joint studies. We could set up joint groups and teams of scientists who could work together and then we could use objective data to make decisions at government level and work together at the United Nations commission.

Question: Could I ask you a question about your relationship with the Harper government? Many Canadians feel that it is not a very strong relationship. What do you think? And what would you do to improve it if you are elected president this weekend?

Vladimir Putin: We are ready to work. As a matter of fact, I don't quite understand why there is a sense that our relations are not very good. We have good, normal relations. Our trade and economic links with Canada are very weak; they are not sufficient, even less so than with Japan. This is the only reason why we do not have intensive contacts, no concrete practical projects. We have few joint initiatives. Our annual trade with Germany is $72 billion, an all-time high in the history of our relations. True, Germany has now been outstripped by China. Our trade with China stands at 83.5 billion and this year it will reach 100 billion.

We should develop above all our trade and economic links and work in other areas. Arctic cooperation would be very productive, and I think it would raise the level of trust. Do not think that we are planning any unilateral actions. Yes, we are exploring the continental shelf and its boundaries. What's wrong with that? How else can we tackle this issue? There are rules formulated by the UN whereby the shelf is determined as a result of objective studies. These studies are to be submitted to the UN commission, which is to consider and duly approve them. That is what we will do. What's so unusual about it? Let us work together. We are not against it.

I repeat, here is an idea that occurred to me just now during the course of our conversation: let us set up joint groups of our specialists and scientists who could then submit their findings at government level.

Question: One more question about Canada.

Vladimir Putin: About hockey?

Response: Exactly. You can read people's minds.

Vladimir Putin: Yes, I can. You'd better be careful.

Question: They say that you and Prime Minister Harper will hold a summit to mark the 40th anniversary of the 1972 series. Do you know anything about it? Do you support the idea?

Vladimir Putin: We have recently played host to Canadian hockey veterans, we organised...

Remark: Phil Esposito, for example.

Vladimir Putin: Actually I was among the authors of that idea.

I received Canadian hockey legends in this room, I met with them, we had tea and coffee together and reminisced. They recalled that game back in 1972, that series in Canada and then in the Soviet Union. They gave a master class in Red Square and then there was a veterans' match. It was all very beautiful and dignified. Although I watched the veterans' match on television, I enjoyed it all the same.

So, if the Canadian government decides to do something like this in Canada we would be very glad and we would welcome it. I think our...

Question: Would you come?

Vladimir Putin: As far as I remember, Stephen Harper did not come here, but I do not rule it out, I might think about it.

Question: In 2001 the then President Putin and Yoshiro Mori, the then Prime Minister of Japan, signed the Irkutsk Statement, which reaffirms the Soviet-Japanese Declaration of 1956 as the starting point for further negotiations and the Tokyo Declaration as the basis for a final solution.

Japan has always argued that the two islands promised in 1956 were not enough to solve the issue. Under the general declaration, we must address the issue of four islands. I believe that if the two parties wish to close these issues they must try to meet each other half way.

When you return to your office as president, will you be able and willing to make a bold step forward to achieve a breakthrough on this matter?

Vladimir Putin: We both practice judo and we must make bold steps, but we must do so in order to win and not to lose. In this situation, oddly enough, we should not seek a victory. In this situation we must seek an acceptable compromise. It's something like Hiki-waki. Something like that. My colleague knows what Hiki-waki is. You don't know but he and I know.

Question: What is it?

Vladimir Putin: A tie.

Well, if you recalled our Irkutsk Statement, I will permit myself to recall something else. After conducting prolonged discussions with Japan, the Soviet Union signed the Declaration in 1956. The Declaration said that two islands will be handed over to Japan after (listen carefully) a peace treaty is signed. That's Article 9 of the 1956 Declaration. Look up the 1956 Declaration and read Article 9. I repeat: it reads that the Soviet Union is handing over two islands to Japan after the signing of the peace treaty. The peace treaty means that there are no other territorial claims between Japan and the Soviet Union. It did not say on what terms the islands would be handed over and under whose sovereignty they would be.

Mr Gorbachev when he was president of the Soviet Union, guided by some considerations at the time ­ oh, forgive me: after the Declaration was signed it was ratified by the Japanese Parliament and by the Supreme Soviet of the Soviet Union. Essentially, the document came into legal force. You see what happened?

Afterwards the Japanese side declared unilaterally that it would not abide by the Declaration. In other words, the governments signed it, the parliaments ratified it, and then Japan refused to comply with the Declaration. And later Mr Gorbachev as president of the Soviet Union said, after a prolonged pause, that the Soviet Union would not abide by the Declaration either.

During the Irkutsk meeting that you mentioned the Japanese Prime Minister, Yoshiro Mori, asked me whether Russia was ready to go back to the 1956 Declaration in spite of the fact that Mr Gorbachev had renounced it in his time. I said I had to consult with the Foreign Ministry but on the whole we would be ready to go back to the 1956 Declaration. The Japanese side, after a pause, said all right, let it be the 1956 Declaration, but it envisages two islands and a peace treaty, but we want four islands and then a peace treaty. But that is not in the 1956 Declaration. So we were back to square one.

I want you to be objective and to understand how the events developed chronologically. That was how our dialogue was shaping up. But I hope we will find common ground that will enable us to move forward in solving this problem.

Did I make myself clear?

Response: Yes, you did. But if we want Hiki-waki, two islands are not enough.

Vladimir Putin: You do not work at the Foreign Ministry and I am not president yet. When I become president we will put our Foreign Ministry on one side and the Japanese Ministry on the other side and I'll give the command: "Hajime."

Question: Prime Minister, may I ask a brief question since our interview is drifting towards sports?

Will you go to London for the Olympic Games this summer?

Vladimir Putin: We'll see. We will be in the midst of forming a new government. I would be glad to go to the Olympic Games. One of us will definitely go, either me or Dmitry Medvedev. We would of course be interested to see how London will organise the Olympic Games. It is of practical importance for us because we will host the Winter Olympic Games in Sochi in 2014.

Question: I understand. Indeed, the reason I am asking this question is that concern has been expressed that you have a negative attitude towards Great Britain. Is that why you are not prepared to go to London or am I wrong? Are you on good terms with London?

Vladimir Putin: This is sheer nonsense. Why should I be on bad terms with London? I like London, it's a good city and Great Britain is a good country.

The level of our economic relations is very low, just $16 billion. That is no good at all. Our trade with Germany is $72 billion and with Great Britain it is just $16 billion. What is that? It's almost zero.

True, we have started negotiations about ...

Remark: You simply have nothing to sell.

Vladimir Putin: We have started negotiations on Britain joining Nord Stream, for example, because Great Britain is gradually becoming a gas importer.

We have some other projects, very serious ones. I very much hope that the volume of our trade and economic relations, and then other aspects of our cooperation will increase. First, we did not yet discuss which of us will go, but either me or Mr Medvedev will certainly go.

I enjoyed attending the G8 summits; I regularly met with Tony Blair at the time and he visited me at my home here. I visited him at Chequers, and we even spent a night at Chequers.

Remark: Prime Minister, you were a close friend of Silvio Berlusconi.

Vladimir Putin: Why "was"? I still am.

Question: Yes, of course. But he had to resign because of a confidence crisis. You know very well what the situation in Italy is like today and what problems there are. How would you assess the record of the new Italian prime minister during his early months in office?

Vladimir Putin: He faces a daunting task. I think he is doing everything right. His policy is absolutely correct. But it is a difficult job, in fact your prime minister is something of a kamikaze. The problems the current governments in Greece or in Italy are facing ­ things are a little better in Italy than in Greece, but there are a lot of problems there too. This can be done only by people who have no personal political ambitions for the future, but they have to be people with a sense of responsibility, people who love their country and are good professionals.

I think the current Italian government meets that description. I'll tell you more. When I talked and talk with Silvio, and we talked over the phone just yesterday, he too thinks highly of the current Italian government and speaks about it with respect.

I don't know what is happening in the political sphere on a day-to-day basis, I do not keep track of these things. I am sure they have debates in parliament and there are complaints about the government, all that is happening, I am sure, but Mr Berlusconi himself in a conversation with me referred to the current government and its prime minister with great respect. He said in so many words, they face a formidable challenge. We will help. I do not know what is actually happening there. Our time is nearly up because I have to attend to hockey matters, I want to drop by. They've been waiting for me for an hour and a half.

Question: What hockey match are you going to watch?

Vladimir Putin: I'm going to play myself.

Question: Where will you play?

Vladimir Putin: Not far from here. I can take you along with me if you like.

Remark: I would love to go.

Vladimir Putin: They've been waiting for me for an hour and a half. Let us finish and go there.

Question: All right, but we have a good question for you. Speaking about the kind of person you are, shall we perhaps start with your family?

Vladimir Putin: I have answered questions about who I am so often. A lot of questions have been asked as people studied my humble self. Are there still things that you do not know?

Question: I would like to ask a question about your wife, not about you personally. We understand that she has been out of public life for some time. The question suggests itself, is she ready to play the part of the first lady if you are elected president again, or will she live her life in a different way?

Vladimir Putin: I can't say that she finds all this easy. She is not a public person and she does not want publicity. Moreover, modern media are ruthless and not every person wants to be exposed to it. You see that members of my family are not engaged in politics or business, they are not pushy. I would like everyone to leave them alone. It has to do with their personal well-being and their safety.

I have said it once, and I would like to repeat it: citizens elect a concrete person in order that he does a certain job and achieves certain results. I think this is what makes the modern world tick. Other than that, my daughters are studying, they are fine, they are about to graduate, and they are already starting research work.

Question: Looking back over the past 12 years do you feel that you have made some mistakes? Perhaps you should have done something differently, or perhaps you would have liked to change something if it were possible?

Vladimir Putin: You know, of course I think about it all the time, analysing what is being done. To say that at the end of the day I made some blunder and if I had my time over again I would have acted differently ­ no, there haven't been anything so serious.

For instance, during the economic crisis some concrete measures could have been taken more efficiently and more firmly and consistently and perhaps we could have pulled through the crisis at lesser cost. For instance, we worked out a system of guarantees in issuing loans to our enterprises in the real sector. Just like in Great Britain ­ and I have watched a debate of this kind in the British parliament ­ these measures were not particularly effective.

I heard your MPs saying that the British banking system was not working, the banks were not extending credits and something had to be done about them to make them change their ways, etc.

We saw something similar happening here. We worked out a system of guarantees and at first it did not work well. Eventually we did issue a fair amount of guarantees, but we should have done it a little differently.

One could name some other similar issues, but these are not, in my opinion, matters that are of primary importance. In general, our main problem today is the economic and wealth stratification in society and there are still too many people who live below the poverty line. Even so, over these years we have reduced the number of people below the poverty line by half. I think on the whole this is not a bad result.

People's real incomes have grown substantially. They've been growing faster than other indicators, and some liberal economists blame us for that. Objectively speaking, they are right because people's incomes have been growing faster than labour productivity. By and large this is economically wrong, but considering the generally low level of incomes in Russia, I thought that it was justified, given our oil and gas revenues.

This is a tightrope walking act, a political and economic tightrope walking act, but it is prompted by the reality in Russia. Between 1999 and 2011 the country's GDP increased by 83%, i.e., almost doubled. But for the crisis we would certainly have doubled our GDP in 2010, but anyway, these are real indicators of our results.

For example, some of our colleagues, our opponents say that if we had been tougher the results would have been better. Yes, perhaps, but nobody except myself realises what the social consequences would have been. I know that the social consequences would have been dire. It would have constrained us even in the reforms that we have implemented.

So, I think that on the whole we conducted a balanced policy.

That's all, I'm off to play hockey, OK? Otherwise it will be too late. I wish you all well.

Keywords: Russia, Government, Politics - Russia, Foreign Policy, Security - Russia News - Russia

 

Prime Minister Vladimir Putin meets with editors-in-chief of leading foreign media outlets

List of participants in the meeting of Prime Minister Vladimir Putin with the chief editors of leading foreign newspapers.
Yoshibumi Wakamiya, editor-in-chief of Asahi Shimbun, Japan
Sylvie Kauffmann, editor-in-chief of Le Monde, France
Ezio Mauro, editor-in-chief of La Repubblica, Italy
John Stackhouse, editor-in-chief of Globe and Mail, Canada
James Harding, editor of The Times, UK
Gabor Steingart, editor-in-chief of Handelsblatt, Germany.

Transcript of the meeting:

[Conclusion. First part in JRL #39 - click here for Part I]

Question: If you win the presidential election, will you call for an early parliamentary vote after a certain amount of time?

Vladimir Putin: The next parliamentary election will take place after the current State Duma serves its term, as laid out under the existing legislation.

Question: Are you saying you will absolutely not call for an early election?

Vladimir Putin: No.

Question: Regarding corruption. You said that when you were president the first time around, you "took care of" oligarchs. If you are elected president again, you will have to address issues of corruption. Many say that corruption has grown around you. How can voters be certain that you will take care of corruption, when they know that no senior government officials ever went to prison or were prosecuted?

Vladimir Putin: You are mistaken. Incidences of corruption are constantly being investigated, and some of them in fact involve senior officials. In some cases regional leaders were convicted and went to prison. Some top government members have been investigated. If you followed what was happening in Russia, you must have heard that a deputy finance minister was arrested and was confined for some time.

But we are not going to send people to prison without proper evidence, just to show "consistency." That deputy minister spent a year in prison, but the case against him collapsed, unfortunately. I say "unfortunately" because this discredited the effectiveness of our law enforcement agencies, which failed to prove in court that he had committed an offence. The dispute reached the Supreme Court, the Arbitration Court, experts, but eventually the case had to be closed. You see, if he had some sort of illegal "cover," he would have never been prosecuted, let alone arrested. But it was a fully fledged investigation, and government officials cooperated. Unfortunately, the charges against him were not proven.

Question: But would you admit that corruption is common among mid-level officials, if not senior officials?

Vladimir Putin: I would say that it is always a possibility. However, in a country governed by the rule of law, corruption charges have to be proven in the course of legitimate and unbiased proceedings and confirmed in court. The court is the topmost tier of justice. Anything else is a compromise. We have already been through a period during which people were sent to prisons and executed on mere suspicions, with sentences meted out by the so called "troika," not a court of law. We cannot agree to this again.

Question: Do you believe that people like Alexei Navalny, who posts evidence of corruption on his website, are doing the right thing? Do they support or hinder your anti-corruption effort?

Vladimir Putin: I have heard this name before. I know that there are many activists who help fight corruption and we will certainly welcome their assistance. However, the person you just named has served as an advisor to a governor in the past. As far as I understand, there were some problems linked with his professional activities, although I have never found out the details.

It seems that fighters against corruption tend to avoid serving with executive authorities ­ probably to avoid temptation. But in any case, any actions aimed at checking corruption will be welcomed. The government is interested in this kind of support. It is in the government's interests to maintain integrity and boost voter confidence. That is why anything anyone might do to help fight corruption, regardless of their job or position, will be valued and supported.

I would only add that I do not want these efforts to be politicised ­ to be used as a tool for political campaigning or pressure. But anything that is purely an anti-corruption effort will be supported.

Remark: But you agree that if a case involves government agencies, it amounts to political corruption?

Vladimir Putin: You keep pressing me about corruption as if your countries and governments are absolutely corruption-free. But they aren't...

Remark: There is an investigation going on in Germany. Our president is being investigated in fact. What do you think about this?

Vladimir Putin: This happens everywhere. There is no gauge to assess which country has more corruption. You can measure alcohol content, length and width and weight. But it is difficult to determine the level of corruption. This is a very subtle thing.

I do not wish to discuss what is happening in other countries now, in Germany, elsewhere in Europe or in the United States. Do you think these things never happen in the States? Do you remember a recent case in one state, where the governor was charged with corruption? And you're saying there is no corruption elsewhere n the world? But there is.

But let me repeat that, in any country ­ in the United States, Germany or Spain ­ every government is interested in cutting corruption. So anyone who does anything to reduce the level of corruption is valued and supported. At least in Russia this is so.

On the other hand, if someone tries to stick the "corruption" label on virtually anything just to boost their own political weight, this isn't good of course, because you lose aim this way. A fight with corruption turns into a political fight. That's where the problem is, you see?

But again, let me stress, we are interested in decreasing the level of corruption. Do you really think any government member is deliberately breeding corruption? What for?

Remark: I have been following the election campaign in the United States for the past two years. All candidates there must "take off their pants," as we say in Germany, in order to reveal their private wealth. This is also a preventive measure in the struggle against corruption, which makes it possible to see what this or that candidate has from the point of view ... And you agree that, in your country, all candidates who wish to become president, as well as private companies, should disclose everything about their property and shares.

Vladimir Putin: This is how it should be. But a person does not necessarily have to take off his pants. I don't know what they reveal in Germany. It is very hard to say whether this attracts the attention of voters, whether this provides any positive impulse during the voting process, and whether this is a plus or a minus. Don't worry. Everything is in order here in this respect.

At the same time, the public must have an objective insight into a candidate's property, incomes and shares. This is a must. To be honest, current Russian legislation also requires this. This is exactly what we are doing. Moreover, I get the impression that, in some cases, we are doing even more than our neighbours, including Europe.

Question: There is the problem of oligarchs. In one of your latest speeches, you admitted that the oligarchs had illegally made themselves rich throughout the 1990s, and you said that social justice must be restored without hindering economic development. How can this be accomplished?

Vladimir Putin: This is hard. Frankly speaking, I still don't know what to do about this.

I have referred to a proposal made by one of our politicians, Grigory Yavlinsky. He once told me that we should consider the following issue: Those who acquired tremendous property assets in the 1990s through various loans for shares and other schemes, which are not accepted by society and which are considered unfair, should pay out a one-time bonus. Then we could close this issue.

Well, we can think about this issue, but I don't know whether we can conceive of such a mechanism that would be accepted and approved by society.

Question: Here is another corruption-related question. After that, we will probably start discussing international affairs.

Do you think that corruption in Russia now is worse than it was ten years ago? If so, how can the situation be changed? What have you failed to accomplish in the past decade?

Vladimir Putin: I don't think that the situation has changed for the worse. You see, we aren't facing a situation in which new oligarchs are continuing to emerge. We don't sell multi-billion state property assets for next to nothing like in the mid-1990s. An oligarch is not just a wealthy person. I assume that a person can also get rich legally. An oligarch is a person who has taken advantage of his proximity to the corridors of power, unfair property evaluation systems and some unfair, non-market instruments, and who grabbed a huge amount of property from the state and the people. This person has made this property his own, and has grown rich only with the help of his connections. In my opinion, oligarchy implies closer ties between such people and the government. This situation does not exist here nowadays. Nothing of the kind is happening. We are not engaged in privatisation reminiscent of the 1990s. This is the first thing.

Second. To my mind, we are fighting white collar crime more consistently. But the problems do exist. This is a fact. Problems exist here just like anywhere else. It's quite possible that Russia faces more problems than other countries. In my opinion, this is primarily associated with the nature of our economy and failure to regulate some legal issues.

They have told me today that, under US legislation, failure to submit timely and authentic information already serves as legal grounds for opening a criminal case, and people can be sentenced for this. We have nothing of this kind. But I assure you that, as soon as we suggest this, the Russian opposition will start shouting about infringement of the rights of business people and violation of democratic principles. But we will have to go through this. We will have to discuss this with experts, no matter what, and assess this issue. I will certainly look into the matter. I will assess the relevant US experience and the experience of European countries. Of course, we will introduce this and other instruments, too.

Question: Do you think the worst of the euro crisis is over? And one more question: Do you support the policy of Mr Nicolas Sarkozy and Ms Angela Merkel, who are discussing whether the belt-tightening policy has been taken too far? Do you support the current European leaders' policy?

Vladimir Putin: I don't know whether the crisis has ended, because its root causes have not been addressed yet. I believe that the root causes include, first, overproduction and oversaturation of the market, and second, a change in priorities, whereby financial instruments are given more preference than real production. Consider derivatives, which are becoming increasingly valuable, a situation which leads to the development of economic bubbles ­ these fundamental reasons behind possible bubbles have not been addressed.

We also had to deal with these bubbles before the crisis, although to a lesser degree than in Europe. The biggest and most dangerous bubble was in our construction sector. Allocations in this sector, including loan resources, were considerable, whereas the demand turned out to be smaller than expected and declined further during the crisis. It was a dramatic situation.

Overall, the construction sector has survived thanks to powerful government support, but it was a touch-and-go situation, because we were implementing ­ and continue to implement ­ very large projects with government funding. They include preparations for the Sochi Olympics, the APEC forum in Vladivostok, the Kazan 2013 Universiade in Tatarstan, and several other very large projects. All of that provided a powerful impetus to the development of the construction sector.

We have continued to honour our commitments to military pensioners and veterans despite the crisis. We invested huge funds ­ 217 billion roubles ­ in constructing housing for them. We were implementing an unprecedented programme to provide housing to military personnel. Over the past few years, we have spent 270 billion roubles on housing construction for the military, plus 46 billion roubles on the construction of permanent housing and 46 billion on service housing. We have done this in the past few years, thereby supporting the Russian construction sector.

We will try to take this into account in our future projects. Have these threats to the global economy, in particular to the European economy, been eliminated? I don't think so. As long as we have financial derivatives and other instruments, it will look as if they are more important than the real economy, than real production.

Remark: Yes, they are in full bloom again.

Vladimir Putin: By the way, this opinion is also shared by my colleagues, my good acquaintances in German industry. During our meetings they tell me almost the same thing. You may assume that I have conveyed their opinion to you, or at least the opinion of many of them.

We should eliminate these root causes ­ in fact, there are many more of them, but these are the most important ones.

As for whether I support what the European leaders are doing...

Remark: But this means you do not agree with what Ben Bernanke and Angela Merkel are doing by investing millions into markets.

Vladimir Putin: I cannot say whether they are doing the right thing or not, it is up to them. But, if you want to hear my assessment, I will say that I wouldn't want to give any evaluation of what my colleagues do, so I will speak only in general terms.

As regards Europe, you know, it is impossible to jump over a ditch in two leaps. You have to do it in one jump, and then you may have success. So, I believe that certain decisions were made late. But it is easy to say this looking from the outside. When events are actually happening, it is much more complicated than when you are looking in from the outside.

So, I do not know what I would do in this situation. Maybe I would do what Western Europe's top economies are doing.

Remark: But you are not looking at it from the outside. You are one of the players, and you are returning to the game. You will again be attending G-20 summits and so on. Financial markets are heavily dependant on the G-20 decisions, while what is occurring on the financial markets is the main reason behind the crisis. The point of the matter is how the crisis will be solved. It is probably due to the fact that Russia is not part of Wall Street or those financial markets that all people are very interested in hearing your opinion.

Vladimir Putin: Now, let me make myself clear. I will say it again: probably, more decisive actions should have been taken in Europe, say, as regards solving the debt crisis in certain countries. Again, I am not the one to judge whether it could be done or not. There are political ideas about raising financial discipline in the eurozone, and this is simply obvious. But it is important not to overdo it while striving to put things right and enhance discipline, so that this idea of putting everything in order does not lead to collapse and stagnation in the real economy. This is what matters. If this fine line is observed and balance is found, then Europe will be successful. I hope it all is heading in this direction.

Now, as regards emissions ­ not only the Untied States, but also the United Kingdom is involved in money creation, but the latter has an increased level of inflation. As far as I know ­ although I may be mistaken ­ last year, an inflation rate of 4.5 percent was observed. Am I correct? This is a sufficiently high level for the United Kingdom and for such a developed market economy as a whole. We have an inflation rate of 6 percent, the minimum rate in the past 20 years ­ while theirs is the highest in the past several years, and this has occurred as result of issuing money as well.

Yet, the United Kingdom still secures a certain level of output growth, of gross domestic product, while, say, Greece cannot afford to do this, as the country does not issue drachmas, they do not exist. Germany does not have any influence on the European Central Bank money issuing policy. What the country has to do? It has to strictly cut expenditures, particularly social expenditures, and incur relevant domestic charges that stagger the situation in the European Union. And it is certainly right that the donor countries, such as France and Germany, are seeking to increase financial stability and financial discipline.

In this regard, I cannot but support our colleagues. Can the Central Bank be allowed to issue more money, just as the Bank of England or the federal reserve system do? Can the Central Bank be allowed to do the same to replenish the necessary fund and pay off the eurozone countries' debts? I can't say for sure, but our experts believe that the Central Bank could take more decisive actions in general, and they would not result in an inflation upsurge, as German and French financial economic officials fear. What does Germany fear in the eurozone if the European Central Bank increases money issuing? There will only be a small uptick in inflation, which will somewhat indirectly affect the situation in Germany.

Again, our experts believe that no serious negative consequences would occur. Yet, the decisions are being made, with the Central Bank recently allocating €500 billion, as we know. I cannot say how timely and adequate they are. It is obvious to me that certain restrictions imposed by Germany and France on the whole process are linked to their willingness to put everything in order and enhance discipline in macroeconomic and financial sectors. This is a noble task.

Question: To continue in the same vein as the question that has been just asked ­ how do you see the future of the European Union and the euro as a currency?

Vladimir Putin: You'd better ask someone else. I can only say that the European Union is Russia's major trade and economic partner, with half of our trading volume coming from trade with the EU. We are interested in the EU's prosperity, and in fact we are interested in Germany and France's success in straighten things out in the financial and macroeconomic sectors. As the EU's partner, Russia is interested in this and we wish them success.

As regards the euro, 40 percent of our foreign reserves are in euros, and we will make every effort to help the euro retain its positions. I hope it continues like this.

I also hope that the policy implemented by the European Union states and the European Commission, as well as by all authorities, particularly in the economic and financial sector, will stabilise the euro. We will certainly provide all possible support.

Question: Mr Prime Minister, the situation is Syria is an issue that raises concerns in Russia.

I know that you are not satisfied with the efforts the United States and Britain are making to resolve the Syrian problem. I think that when people follow international developments, they come to believe that Syria is Russia's problem since Damascus uses Russian arms. So the question is: do you think it is possible to put a stop to violence in Syria?

Vladimir Putin: You just said people are following the developments is Syria. But James, they see these events through your eyes. They perceive the events the way you describe them or show them on TV. I don't think many people have the opportunity to go to Syria and see what it's like for themselves.

Unlike the majority of people, we are trying to look at what is happening there in reality, rather than be guided by what you write and show.

So what is happening in Syria? There is an armed civil conflict. Our goal is not to support one of the sides, the Syrian government or the armed opposition, but to achieve a national settlement.

We don't want another Libya, do we? You've seen the medieval lynching of Gaddafi, haven't you? You have written hundreds of pages on the adverse events in Libya. There were many adverse events, I agree: the local regime was absolutely deranged and obsolete.

But do you also know what happened in Sirte when it was stormed by the insurgents? Do you know that they raped women and killed men and children? Did you write about that? Not much, to be perfectly honest. Most international media ignored these facts, or mentioned them in passing.

We do not want another Sirte. We want the parties to the Syrian conflict to reach an agreement, to find consensus and stop killing each other.

You mentioned Russian arms. I don't know how many arms we sell to Syria. Russia's economic interests in that country are not greater than those of Britain or any other European country. Moreover, when Assad took over as president, he first went to France, Britain and other countries. He visited Moscow after three years of presidency.

We do not have any special relations with Syria. But we have a position of principle as to the way such conflicts should be resolved. We are not supporting any of the sides.

Our conviction is that none of the parties to a conflict should be supported. They should be persuaded to sit down at a negotiations table to reach some mutually acceptable terms and stop augmenting human casualties, to resort to political procedures and political reforms, which, again, should be acceptable for all the parties to the conflict, instead of driving the conflict into an impasse and allowing one of the sides to raze the other. I am confident that if this is how we act, we will eventually bear the responsibility for the side being razed.

So why did Russia vote down the UN resolution that our partners proposed? Russia and China rejected it. Did you read that resolution? I bet you didn't. But I did. It says that all of the government troops had to be pulled out from the cities they hold. But, if the government has to pull out, then the opposition should have to pull out as well, right? Otherwise, do we want Assad to withdraw his forces to give way to the opposition? What kind of a weighted approach is that?

One could express emotions about this forever, put these emotions into words and present them to the public. But let us not be guided by emotions, but look at the reality instead.

Question: I agree, Mr Putin, but you asked for my opinion.

An excellent journalist who worked for Sunday Times was killed in Homs a week ago. We weren't able to bring her body back home so that her family could bury her.

I believe Russia has closer relations with Syria than you are willing to admit. We believe that you personally could make a bigger contribution, with all due repect to your objections at the UN Security Council. You could intervene in Assad's regime and secure a cease-fire so that we could evacuate bodies, and Syrians could stop killing each other. I'm afraid that this is a really emotional issue, and Russia's participation in addressing it is essential. Therefore, my question is: what can you do and what are you going to do?

Vladimir Putin: Like I said, we are for it, we want this reconciliation to happen, and we are asking you to support us in doing so.

In order for us to be able to resolve this problem, we can't side with one side to the armed conflict, pardon me for this tautology. We need to consider the interests of both sides, make them sit down at a negotiations table and cease fire.

Allow me to reiterate: go ahead and read the draft resolution. It demands that Assad's troops be pull out from the cities. What is that all about?

What if their next demand is for him to die? He will never agree to it.

Remark: That's exactly what I'm asking: what are Russia's proposals? Do you have any proposals?

Vladimir Putin: We propose that all sides of the armed conflict cease fire immediately, sit down at a negotiations table and begin a dialogue on political reforms. The opposition should also be part of the equation. If you keep encouraging it with weapons supplies and pressure against Assad, the opposition will never make it to the negotiations table. As far as I can tell, Bashar al-Assad is prepared to hold talks, but that is all I can say.

There's something else that I'd like to share with you. I'm not dealing with these issues on a daily basis, and my being on top of everything in this country ­ the way I'm portrayed in international and Russian media ­ is simply not true. President Medvedev and I have long since delineated our spheres of responsibility according to the law, and the president is in charge of all foreign policy issues. These issues are not part of my everyday work routine.

Question: I want to make sure I understand you correctly. Does this mean that Russia will pressure Syria and Assad's government to cease fire with the understanding that the opposition will do the same, and with a cease-fire in place you will insist that the Assad government proceeds to carrying out political reforms? Are you saying that President Assad will remain in office? Is my understanding correct?

Vladimir Putin: It all depends on the agreement between the sides. They should agree on the reforms and the outcome of these reforms. First, they need to stop killing each other. Allow me to reiterate: this cannot be done unless both sides are presented with equal demands. That is the gist of our proposal. I believe that if we do it this way, we will be able to achieve success along with our European partners, the United States and China.

Question: In other words, this approach will work in the case of Iran as well? The sides should be brought together at a negotiations table so that they could come up with a solution regarding nuclear weapons? Do you think it may work or are we already running out of time?

Vladimir Putin: Fortunately, the situation is different in Iran. There's no internal armed conflict there. We are talking about Syria now. However, it's clear that we should work on this issue together.

Question: Let's wrap it up with Syria. By the way, there are wounded journalists in the besieged Homs who are trying to get out of there.

Vladimir Putin: Two days ago, they sent a car and a helicopter to the area of disengagement of the government and opposition forces in order to rescue the journalist. We keep track of her fate and genuinely want to help her. This helicopter with Red Cross representatives aboard was ready to take her, but she didn't show up. She's being held by the armed opposition, not the Syrian Army. The Syrian government is prepared to do its best to move her to any part of the world at her request. The Russian Emergencies Ministry is ready to send out an airplane, and it will do so. However, we need the insurgents to release her. She is being kept in an area controlled by insurgents.

Remark: Yes, it looks like the level of trust is really low. However, getting back to...

Vladimir Putin: I don't understand what you mean by saying "low level of trust."

Remark: The sides don't trust each other.

Vladimir Putin: A helicopter came in. An announcement was made that the helicopter was ready to take her to Lebanon or France. She's being held by insurgents who control this area. Why didn't they let her go? She didn't show up. Or is it because they aren't letting her go? I don't know what's going on there. It's not the government troops that are holding her.

Frankly, it's hard to understand what's going on there.

Remark: You know, I'm not that well informed about this. I'm sure you have more complete information than I.

Vladimir Putin: She is in an area controlled by the insurgents.

Remark: I believe you.

Vladimir Putin: Listen, you can talk with French officials. Our intelligence service is reporting the same information. She's in an area controlled by insurgents. The official Syrian authorities are ready to take her. They said so and sent the transport with Red Cross representatives, but she didn't show up, they didn't bring her out. They said they were afraid to do so. I just don't understand what are they afraid of? Anyway, she's clearly in an area controlled by the insurgents.

I can repeat: if there's anything that we can do, we are prepared to talk with the armed opposition and the government forces in order to help her.

Question: Going back to your understanding of the current political situation, do you think that Bashar al-Assad's regime will be able to survive this crisis? Do you think it has any chances of surviving this at all?

Vladimir Putin: I have no way of knowing it, and I can't make any assumptions with respect to this situation.

It's absolutely clear that the issue is about serious internal problems. The currently proposed reforms are clearly overdue. I can't say if Syrian society, including government and opposition forces, will be able to agree and reach a consensus, but I believe that this would be the best solution, because shaky peace is much better than full-on war. The first thing we need to do is achieve a cease-fire and stop the bloodshed.

Question: Let's go back to Iran. They don't have an internal conflict there. Do you think Iran is a serious threat to Israel?

Vladimir Putin: Unfortunately, the situation in this region is very volatile, and we are aware of their agressive statements.

I'm here to tell you that we have always been against any aggressive statements in this region. We have always denounced any and all anti-Israeli statements in our direct contacts with Iranian partners. We haven't changed our position in this area. At the same time, we believe that Iran should be given an opportunity to carry on its peaceful nuclear programmes overseen by IAEA. We hope that this cooperation will be restored in full.

Question: If Iran comes under attack, what will be Russia's military response?

Vladimir Putin: Russia has been uniquely positioned over the past 10 to 15 years. We have no troops stationed outside of Russia, except the ones that are engaged in peace-keeping operations in line with UN resolutions. Even so, there are not many Russian troops there. That is our principled position. I can say without any overstatement or pomp that we pursue a truly peaceful policy and would like to minimise the use of force in resolving complicated or even controversial international conflicts.

I've said so many times before and I can say it again: I believe that armed forces have been used excessively over the course of the past decade in addressing global issues. This is some kind of a military itch that adversely affects international relations and international law guarantees. Instead, it pushes certain countries to step up their armaments, including nuclear programmes, because nuclear arms are considered the most effective tool for defending national sovereignty and legal rights. So, it's a bad thing any way you look at it.

As far as conflicts go, I can say that we'll do our best to head off an armed conflict in Iran or anywhere near it. Such a conflict would directly affect us in a negative way. What I mean is that almost 20 million Iranians are ethnic Azerbaijani, and a conflict would result in a large flow of refugees heading for Azerbaijan. We have special relations with Azerbaijan as a former Soviet republic. Over one million Azerbaijani live in Russia. Most certainly, such a conflict will adversely affect us economically, socially and politically.

Iran is our Caspian neighbour as well. Any instability in Iran will unavoidably affect the entire region and the situation in the Middle East. I believe no one wants the situation to spiral out of control.

Question: Could we go back to something you talked about at the beginning? In one of your foreign policy articles, you used a particular tone of voice when speaking about the United States. Do you think that the reset policy didn't work out? Do you think it was just a tagline rather than a real policy?

Vladimir Putin: I don't think it was just a tagline. President Obama and I met in this very room two years ago. He sat in your seat. Seriously, he sat in this chair. I'm sure that Mr Obama is a very sincere man. He spoke very convincingly, let me reiterate, with a great deal of sincerity. More than that, I fully share many of his views about the international situation.

I'm not sure whether he manages to fully implement his ideas of justice in international affairs. He probably doesn't always succeed. However, it was comforting to know that he practices such a philosophy of international relations, because in many respects it coincided with my own ideas about global developments.

I believe that he was absolutely sincere when he proposed the reset policy. There wasn't much to reset, though. We had good relations, but they became slightly strained because of Iraq. We said right away that we would not support military intervention in Iraq. I believe we were right in doing so. Let's not go deep in the Iraqi issue.

We had an argument because the United States withdrew from the ABM Treaty. What has changed? We had this argument with George W. Bush when he was president. We discussed this issue with the previous US president. The Americans decided to withdraw from the treaty and that was that. However, this treaty was one of the keystones of international security.

We didn't dwell much on their decision to get out and started looking for other points of contact. They have made proposals to us, which we have in fact accepted and asked them to provide these proposals in writing. Condoleezza Rice and the defence secretary came to Russia, and I met with them in the Kremlin. They put forward this proposal during our talks. It was unexpected for us, but I agreed. The only thing I asked for was to put it on paper.

We waited for it for two months. Nothing. Subsequently, our US partners dropped their own proposals saying that they were impracticable.

I can share their proposals with you, there's no secret here. The issue was about having our specialists present at anti-missile and radar sites on a 24/7 basis and having these radars cemented in a way that they permanently face Iran and couldn't be turned in the direction of Russia. This is what they proposed to us.

This doesn't change the situation drastically, but we agreed to it. All we asked was that they put in on paper. They refused to do so. This gave rise to tensions, and then came this reset proposal. We welcomed it. Did it work out or not?

It didn't with respect to such issues as anti-missile defence. But still, was this proposal useful or not? It was, because this impulse of trust and desire to reach an agreement helped us reach agreement on the New START Treaty. We were able to sign an agreement for cooperation in peaceful use of nuclear energy and on Russia's accession to the WTO with the direct support of the United States. These are real steps, the real results of the reset policy.

Question: In other words, the anti-American rhetoric, at least that's how they see it in Washington, is only for the election campaign?

Vladimir Putin: Where's this rhetoric? You know, if you listen to what our US colleagues are saying about the election campaign in Russia... We believe what they're saying is anti-Russian. Have you seen or heard anything anti-American in our election campaign? I don't think we focus a lot on international issues and relations at all. However, we are criticising the position adopted in the area of anti-missile defence. But we haven't made any changes to this position since the beginning. This is clear, and I don't think we should elaborate on it now, since we all know what it's all about.

The point is that one side wants to be fully invincible, which upsets the global balance. We believe that this is extremely dangerous. The availability of a strategic balance allowed us to avoid major global conflicts for a long time since the end of WWII. As soon as one side gets an illusion that it's invincible to a retaliatory strike by the other side, the number of conflicts goes up. That is not because America is an aggressive country by nature but because it's just a fact of life. There's no way around it. We are concerned about it.

When we are being told that this is not directed against us, do you know what the talks are really about? They tell us that it's not directed against us. We say, all right, you don't want to give us any guarantees but let's put this statement ­ that it's not directed against us ­ on paper and develop a relationship based on this. Our American partners refuse to do even that; they don't want to put their name under this statement. What they are saying is that a verbal statement is enough.

You are smiling, but I find this rather sad than funny.

Question: I would like to ask you about Asia and the Asia-Pacific Region.

But first of all, I'd like to thank you for the warm reception and for Russia's support after the earthquake and tsunami in Japan last year. Russian rescuers were very quick to get to Japan. As for the Fukushima Nuclear Power Plant meltdown, Russia supplied 400 portable Geiger counters to us and advised us on ways to handle the disaster.

After that, the Russian government unveiled some initiatives and projects on Russian-Japanese energy cooperation. For example, on additional energy supply. I think this was your initiative, and we are grateful to you.

Remark: ...My personal initiative, that's true.

Question: Mr Prime Minister, your October article published in Izvestia unveiled a concept of the Eurasian Union as one of the centres of influence in the modern world that would become a bridge between Europe and the dynamically developing Asia-Pacific Region. It is clear that the Asia-Pacific Region will become the engine of global economy in the 21st century.

Vladivostok is hosting an APEC summit this year, and there is a good reason for this. I think that cooperation with Japan is very important for Russia because it can be useful in improving your contacts in the Asia-Pacific Region. But there is no mention of Japan in your article on the Russian foreign policy published in the Moskovskiye Novosti on Monday. You mentioned the importance of China and India several times. What about Japan? Did you forget about Japan?

Vladimir Putin: I could never forget about Japan because as you know I have been practicing judo since I was young. I have a sculpture at home and I look at it every day. It reminds me of Japan on a daily basis. However, if this year's Russian-Chinese trade amounts to $83.5 billion, our trade with Japanese is just over $40 billion.

We would like very much to see a substantial increase in our trade and economic ties with Japan. However recently we have made significant strides in energy, high technologies and the auto industry, which is especially gratifying. Several Japanese companies have launched production in Russia, and these are very modern, high technology facilities. I hope that our trade and economic ties will grow.

You have very courteously omitted to ask about the territorial dispute but it would not be courteous on my part to leave it without mention. We are committed to solving the territorial dispute with Japan once and for all and we want to do it in a way that will be acceptable for both our nations.

I think that in the end we will be able to find a solution as we increase our interaction. We should seek a state of affairs when the solution of territorial issues ceases to be essential and recedes into the background, when we perceive each other not only as neighbours but as sincere friends interested in development of our economies and contacts. And in this context, it will be easier for both sides to come to a compromise settlement.

That is why, I want to underscore again, I am glad that the levels of our [co-operation] have been growing, especially in the economic area. Yet currently they are insignificant and do not correspond to either Japan's or Russia's economic potential. However we will make every effort to develop them.

Question: I am very glad to hear that you still remember about Japan. I'd like to ask you a direct question. The key issue for the development of Russian-Japanese cooperation is the conclusion of a peace treaty settling territorial problems.

Mr Prime Minister, when you visited Japan in March 2009, you said this: "I want to take the negative heritage in our relations off the agenda." In Russia some people think that there is no need to address this issue, but I do not agree with them. All obstacles must be removed.

Unfortunately, after your last visit to Japan, the atmosphere for reaching an agreement seems to have deteriorated. Unless there is a change in your vision of the position I mentioned. That is what we would like to proceed from.

Vladimir Putin: No, there are not going to be any such changes in my position. I think we should smooth out some rough edges and go back to a positive and constructive dialogue. We have conducted talks with China on border settlement for 40 years. Forty years! And when the quality of interstate relations reached the current level, we arrived at a compromise settlement. I very much hope the same will happen with Japan. I very much hope so.

Question: Could I touch upon one more territorial issue? It's about the Arctic. You know the Canadian position on Arctic borders. How do you plan to solve the problem of defining the Russian continental shelf considering the current Harper government's position?

Vladimir Putin: We had similar problems with Norway. We negotiated delimitation of the water and seabed with Norway for 40 years. Forty years! Being aware of our interest ­ mutual interest ­ in seeing these issues resolved we eventually came to an agreement last year, drawing the line and signing an intergovernmental agreement. This enables us to start work in the areas that both Norway and Russia want to develop.

As regards our position, we intend to determine the boundaries of the continental shelf on the basis of the objective data provided by our scientists, and not independently or unilaterally but through the relevant United Nations commission. We very much hope that our Canadian partners will join this work on the basis of current international law of the sea.

The question of the straits crops up. I expect that there too we will proceed from our common interests, our mutual interests and will ensure freedom of navigation. We are ready for an open and constructive dialogue with our Canadian friends.

Question: What do you think is holding back the Canadian government on this issue at present?

Vladimir Putin: You should ask the Canadian government. I don't yet have the honour of being its member. Perhaps it doesn't have enough objective information, studies must be carried out. Perhaps we should conduct joint studies. We could set up joint groups and teams of scientists who could work together and then we could use objective data to make decisions at government level and work together at the United Nations commission.

Question: Could I ask you a question about your relationship with the Harper government? Many Canadians feel that it is not a very strong relationship. What do you think? And what would you do to improve it if you are elected president this weekend?

Vladimir Putin: We are ready to work. As a matter of fact, I don't quite understand why there is a sense that our relations are not very good. We have good, normal relations. Our trade and economic links with Canada are very weak; they are not sufficient, even less so than with Japan. This is the only reason why we do not have intensive contacts, no concrete practical projects. We have few joint initiatives. Our annual trade with Germany is $72 billion, an all-time high in the history of our relations. True, Germany has now been outstripped by China. Our trade with China stands at 83.5 billion and this year it will reach 100 billion.

We should develop above all our trade and economic links and work in other areas. Arctic cooperation would be very productive, and I think it would raise the level of trust. Do not think that we are planning any unilateral actions. Yes, we are exploring the continental shelf and its boundaries. What's wrong with that? How else can we tackle this issue? There are rules formulated by the UN whereby the shelf is determined as a result of objective studies. These studies are to be submitted to the UN commission, which is to consider and duly approve them. That is what we will do. What's so unusual about it? Let us work together. We are not against it.

I repeat, here is an idea that occurred to me just now during the course of our conversation: let us set up joint groups of our specialists and scientists who could then submit their findings at government level.

Question: One more question about Canada.

Vladimir Putin: About hockey?

Response: Exactly. You can read people's minds.

Vladimir Putin: Yes, I can. You'd better be careful.

Question: They say that you and Prime Minister Harper will hold a summit to mark the 40th anniversary of the 1972 series. Do you know anything about it? Do you support the idea?

Vladimir Putin: We have recently played host to Canadian hockey veterans, we organised...

Remark: Phil Esposito, for example.

Vladimir Putin: Actually I was among the authors of that idea.

I received Canadian hockey legends in this room, I met with them, we had tea and coffee together and reminisced. They recalled that game back in 1972, that series in Canada and then in the Soviet Union. They gave a master class in Red Square and then there was a veterans' match. It was all very beautiful and dignified. Although I watched the veterans' match on television, I enjoyed it all the same.

So, if the Canadian government decides to do something like this in Canada we would be very glad and we would welcome it. I think our...

Question: Would you come?

Vladimir Putin: As far as I remember, Stephen Harper did not come here, but I do not rule it out, I might think about it.

Question: In 2001 the then President Putin and Yoshiro Mori, the then Prime Minister of Japan, signed the Irkutsk Statement, which reaffirms the Soviet-Japanese Declaration of 1956 as the starting point for further negotiations and the Tokyo Declaration as the basis for a final solution.

Japan has always argued that the two islands promised in 1956 were not enough to solve the issue. Under the general declaration, we must address the issue of four islands. I believe that if the two parties wish to close these issues they must try to meet each other half way.

When you return to your office as president, will you be able and willing to make a bold step forward to achieve a breakthrough on this matter?

Vladimir Putin: We both practice judo and we must make bold steps, but we must do so in order to win and not to lose. In this situation, oddly enough, we should not seek a victory. In this situation we must seek an acceptable compromise. It's something like Hiki-waki. Something like that. My colleague knows what Hiki-waki is. You don't know but he and I know.

Question: What is it?

Vladimir Putin: A tie.

Well, if you recalled our Irkutsk Statement, I will permit myself to recall something else. After conducting prolonged discussions with Japan, the Soviet Union signed the Declaration in 1956. The Declaration said that two islands will be handed over to Japan after (listen carefully) a peace treaty is signed. That's Article 9 of the 1956 Declaration. Look up the 1956 Declaration and read Article 9. I repeat: it reads that the Soviet Union is handing over two islands to Japan after the signing of the peace treaty. The peace treaty means that there are no other territorial claims between Japan and the Soviet Union. It did not say on what terms the islands would be handed over and under whose sovereignty they would be.

Mr Gorbachev when he was president of the Soviet Union, guided by some considerations at the time ­ oh, forgive me: after the Declaration was signed it was ratified by the Japanese Parliament and by the Supreme Soviet of the Soviet Union. Essentially, the document came into legal force. You see what happened?

Afterwards the Japanese side declared unilaterally that it would not abide by the Declaration. In other words, the governments signed it, the parliaments ratified it, and then Japan refused to comply with the Declaration. And later Mr Gorbachev as president of the Soviet Union said, after a prolonged pause, that the Soviet Union would not abide by the Declaration either.

During the Irkutsk meeting that you mentioned the Japanese Prime Minister, Yoshiro Mori, asked me whether Russia was ready to go back to the 1956 Declaration in spite of the fact that Mr Gorbachev had renounced it in his time. I said I had to consult with the Foreign Ministry but on the whole we would be ready to go back to the 1956 Declaration. The Japanese side, after a pause, said all right, let it be the 1956 Declaration, but it envisages two islands and a peace treaty, but we want four islands and then a peace treaty. But that is not in the 1956 Declaration. So we were back to square one.

I want you to be objective and to understand how the events developed chronologically. That was how our dialogue was shaping up. But I hope we will find common ground that will enable us to move forward in solving this problem.

Did I make myself clear?

Response: Yes, you did. But if we want Hiki-waki, two islands are not enough.

Vladimir Putin: You do not work at the Foreign Ministry and I am not president yet. When I become president we will put our Foreign Ministry on one side and the Japanese Ministry on the other side and I'll give the command: "Hajime."

Question: Prime Minister, may I ask a brief question since our interview is drifting towards sports?

Will you go to London for the Olympic Games this summer?

Vladimir Putin: We'll see. We will be in the midst of forming a new government. I would be glad to go to the Olympic Games. One of us will definitely go, either me or Dmitry Medvedev. We would of course be interested to see how London will organise the Olympic Games. It is of practical importance for us because we will host the Winter Olympic Games in Sochi in 2014.

Question: I understand. Indeed, the reason I am asking this question is that concern has been expressed that you have a negative attitude towards Great Britain. Is that why you are not prepared to go to London or am I wrong? Are you on good terms with London?

Vladimir Putin: This is sheer nonsense. Why should I be on bad terms with London? I like London, it's a good city and Great Britain is a good country.

The level of our economic relations is very low, just $16 billion. That is no good at all. Our trade with Germany is $72 billion and with Great Britain it is just $16 billion. What is that? It's almost zero.

True, we have started negotiations about ...

Remark: You simply have nothing to sell.

Vladimir Putin: We have started negotiations on Britain joining Nord Stream, for example, because Great Britain is gradually becoming a gas importer.

We have some other projects, very serious ones. I very much hope that the volume of our trade and economic relations, and then other aspects of our cooperation will increase. First, we did not yet discuss which of us will go, but either me or Mr Medvedev will certainly go.

I enjoyed attending the G8 summits; I regularly met with Tony Blair at the time and he visited me at my home here. I visited him at Chequers, and we even spent a night at Chequers.

Remark: Prime Minister, you were a close friend of Silvio Berlusconi.

Vladimir Putin: Why "was"? I still am.

Question: Yes, of course. But he had to resign because of a confidence crisis. You know very well what the situation in Italy is like today and what problems there are. How would you assess the record of the new Italian prime minister during his early months in office?

Vladimir Putin: He faces a daunting task. I think he is doing everything right. His policy is absolutely correct. But it is a difficult job, in fact your prime minister is something of a kamikaze. The problems the current governments in Greece or in Italy are facing ­ things are a little better in Italy than in Greece, but there are a lot of problems there too. This can be done only by people who have no personal political ambitions for the future, but they have to be people with a sense of responsibility, people who love their country and are good professionals.

I think the current Italian government meets that description. I'll tell you more. When I talked and talk with Silvio, and we talked over the phone just yesterday, he too thinks highly of the current Italian government and speaks about it with respect.

I don't know what is happening in the political sphere on a day-to-day basis, I do not keep track of these things. I am sure they have debates in parliament and there are complaints about the government, all that is happening, I am sure, but Mr Berlusconi himself in a conversation with me referred to the current government and its prime minister with great respect. He said in so many words, they face a formidable challenge. We will help. I do not know what is actually happening there. Our time is nearly up because I have to attend to hockey matters, I want to drop by. They've been waiting for me for an hour and a half.

Question: What hockey match are you going to watch?

Vladimir Putin: I'm going to play myself.

Question: Where will you play?

Vladimir Putin: Not far from here. I can take you along with me if you like.

Remark: I would love to go.

Vladimir Putin: They've been waiting for me for an hour and a half. Let us finish and go there.

Question: All right, but we have a good question for you. Speaking about the kind of person you are, shall we perhaps start with your family?

Vladimir Putin: I have answered questions about who I am so often. A lot of questions have been asked as people studied my humble self. Are there still things that you do not know?

Question: I would like to ask a question about your wife, not about you personally. We understand that she has been out of public life for some time. The question suggests itself, is she ready to play the part of the first lady if you are elected president again, or will she live her life in a different way?

Vladimir Putin: I can't say that she finds all this easy. She is not a public person and she does not want publicity. Moreover, modern media are ruthless and not every person wants to be exposed to it. You see that members of my family are not engaged in politics or business, they are not pushy. I would like everyone to leave them alone. It has to do with their personal well-being and their safety.

I have said it once, and I would like to repeat it: citizens elect a concrete person in order that he does a certain job and achieves certain results. I think this is what makes the modern world tick. Other than that, my daughters are studying, they are fine, they are about to graduate, and they are already starting research work.

Question: Looking back over the past 12 years do you feel that you have made some mistakes? Perhaps you should have done something differently, or perhaps you would have liked to change something if it were possible?

Vladimir Putin: You know, of course I think about it all the time, analysing what is being done. To say that at the end of the day I made some blunder and if I had my time over again I would have acted differently ­ no, there haven't been anything so serious.

For instance, during the economic crisis some concrete measures could have been taken more efficiently and more firmly and consistently and perhaps we could have pulled through the crisis at lesser cost. For instance, we worked out a system of guarantees in issuing loans to our enterprises in the real sector. Just like in Great Britain ­ and I have watched a debate of this kind in the British parliament ­ these measures were not particularly effective.

I heard your MPs saying that the British banking system was not working, the banks were not extending credits and something had to be done about them to make them change their ways, etc.

We saw something similar happening here. We worked out a system of guarantees and at first it did not work well. Eventually we did issue a fair amount of guarantees, but we should have done it a little differently.

One could name some other similar issues, but these are not, in my opinion, matters that are of primary importance. In general, our main problem today is the economic and wealth stratification in society and there are still too many people who live below the poverty line. Even so, over these years we have reduced the number of people below the poverty line by half. I think on the whole this is not a bad result.

People's real incomes have grown substantially. They've been growing faster than other indicators, and some liberal economists blame us for that. Objectively speaking, they are right because people's incomes have been growing faster than labour productivity. By and large this is economically wrong, but considering the generally low level of incomes in Russia, I thought that it was justified, given our oil and gas revenues.

This is a tightrope walking act, a political and economic tightrope walking act, but it is prompted by the reality in Russia. Between 1999 and 2011 the country's GDP increased by 83%, i.e., almost doubled. But for the crisis we would certainly have doubled our GDP in 2010, but anyway, these are real indicators of our results.

For example, some of our colleagues, our opponents say that if we had been tougher the results would have been better. Yes, perhaps, but nobody except myself realises what the social consequences would have been. I know that the social consequences would have been dire. It would have constrained us even in the reforms that we have implemented.

So, I think that on the whole we conducted a balanced policy.

That's all, I'm off to play hockey, OK? Otherwise it will be too late. I wish you all well.