PRESIDENT OF RUSSIA VLADIMIR PUTIN: Dear ladies and gentlemen! Madam the Federal Chancellor!

First and foremost I would like to sincerely welcome Madam Merkel who is visiting Moscow for the first time as Federal Chancellor of the Republic of Germany.

We had productive, frank and very open talks. They proved that we both aspire to see the Russian-German partnership continue to develop in a steady way. We intend to strengthen and expand both our bilateral cooperation and cooperation in a multilateral format in every possible way. This means foreign policy, the economy and relations in the cultural and educational spheres. We agreed that interstate consultations between our countries should continue and the next round of talks will take place this April in Tomsk.

We are satisfied with our trade and economic ties at the moment; trade amounted to thirty two billion dollars in 2005 and this is a good benchmark for our cooperation in the sphere of the economy.

We talked about the need to expand our cooperation in the economy, including in the high-tech sector, the energy sector and in major investment projects.

Undoubtedly, all this work will help form the common economic space in Europe on the basis of the appropriate Russia-EU Road Map.

Today’s talks confirmed the affinity of our positions on key international issues. We discussed our cooperation within the G8 in detail. I hope that the themes that we are putting forward for discussion at the G8 will be topical and allow us to solve many problems that face humanity. I am referring to energy security, education and the struggle against epidemics.

We also discussed a great deal of regional problems including European and Middle Eastern ones. Certainly, we discussed the Iranian nuclear programme in quite a bit of detail.

I wish to thank the whole German delegation and Madam Federal Chancellor for their openness and constructive approach to the issues we discussed.

We developed a whole programme for cooperation that includes possible visits to the Federal Republic of Germany. I want to thank Madam Federal Chancellor for the invitation.

FEDERAL CHANCELLOR OF GERMANY ANGELA MERKEL (back translation from German through Russian): Thank you very much. I also wish to thank you on behalf of my delegation for the warm reception during our first trip to Moscow, our first visit to Moscow and our first relations after my inauguration as Federal Chancellor.

We discussed a wide range of issues with the President of the Russian Federation and I am convinced that we have the possibility of expanding our strategic partnership, putting it on a wider base and using it more intensively.

Alongside the intergovernmental consultations that will take place in Tomsk in April 2006 and for which we shall carefully prepare, I invited the President to an international aerospace exhibition in Berlin and also to continue the St Petersburg dialogue which will take place this autumn in Dresden. I think the celebrations linked to Dresden’s 800 th anniversary will create a good context for the meeting.

We talked about how we have relations on many different levels and in a great deal of areas. We spoke about energy politics in a lot of detail, including the Northern European Gas Pipeline. It was once again very obvious that this project is not being carried out against anyone, but is a very important strategic project for Europe and also for Germany. And we are very interested in making sure that trade, which has developed very positively over the last few years, develops in the same way in the future. And I consider that in the future it is necessary that small German businesses participate in trade between our countries.

I consider that we can still expand our cooperation in areas such as youth exchanges and education, and this is also one of the Russian government’s priorities. I think that we will have the opportunity to discuss these issues in more detail in Tomsk.

We also discussed certain issues on which we do not share the same opinion from the outset. For example, we discussed the situation in Chechnya and in the northern Caucasus. I emphasized that I will make bigger efforts so that the programmes the European Union proposed lead to positive developments in this region, and I spoke about this very clearly. We discussed this very openly and in detail.

We also discussed a theme that Mr President has already spoken about, the question of Iran. We agreed that we shall closely coordinate our next steps.

I consider that we had a good and important first meeting. And this first meeting will be followed by many others in 2006, and I think that we are going to have an intensive dialogue which corresponds to the level of our strategic partnership.

QUESTION: A question for the Federal Chancellor: did you discuss the law on non-governmental organizations? If I am not mistaken, this draft bill was criticised by the public and is being looked at by the Russian president but has not yet been signed.

And a question to the Russian president: what degree of pressure are you willing to put on Iran?

FEDERAL CHANCELLOR OF GERMANY ANGELA MERKEL (back translation from German through Russian): We discussed the law on non-governmental organizations, the fact that there were many objections to it, and the fact that some of these issues were incorporated into the law. I drew attention to the fact that we are going to follow its application very attentively so that non-governmental organizations have the opportunity to carry out their activities in the future. After this meeting I shall discuss this question at the Ambassador’s residence with representatives from non-governmental organizations and it will then be clear whether or not we shall discuss this theme again in the future.

PRESIDENT VLADIMIR PUTIN: Before answering the second question, I will just say two words on the first. We are very pleased that our partners pay such close attention to our internal legislation. And we have a great deal of respect for this.

Before passing this law, I sent a delegation headed by the Russian Justice Minister to the Council of Europe in Strasbourg. Our colleagues in Strasbourg addressed this question very seriously—not only did they familiarize themselves with the draft bill, but they gathered together a group of international experts who sent us a written report. All of their remarks were considered by the State Duma within the framework of the amendments that I included.

One of the main tasks that lies ahead of us is eliminating the non-transparent financing of political activities inside Russia. With Madam Federal Chancellor we discussed this issue from the perspective how international and foreign non-governmental organizations function. We will try to do everything possible so that as this law comes into effect it will not damage in any way the work of organizations presently active in Russia and whose activities correspond to the declared goals and issues. On the contrary, we are interested in their work and will support them in every possible way.

As regards Iran, today we talked about this problem in great detail. And the positions of Russia, the Federal Republic of Germany, our European partners and the United States on the Iranian problem are very close.

As you know, one of the main problems is enriching uranium. We offered our Iranian partners the possibility of creating a joint venture for enriching uranium on the territory of the Russian Federation.

We hear different opinions from our Iranian partners on this problem. For example, the Ministry of Foreign Affairs said recently that Iran does not exclude implementing our proposal.

In any case it is necessary to work very carefully concerning Iranian nuclear power and not make any hasty, erroneous steps. You know that today our colleagues, the deputy ministers of foreign affairs, are discussing this theme. In any case the Russian Federation will continue cooperating with European and American partners in the future to find the solution to this problem.

QUESTION: As the Federal Chancellor knows, Russia is taking over the presidency of the G8 and next year it shall be Germany. Russia has already declared that one of the most important themes of its presidency will be providing energy security. But recently we are seeing instability in exactly this area. This is linked with American activities in Iraq and the instability surrounding Iran that you discussed today. As is well-known, Iran has the second largest gas reserves in the world. In addition, the issue of the stability of the delivery of Russian oil and gas through Ukraine recently arose. In connection with this and as future president of the G8, did you discuss the question of energy security today?

And I have a separate question for the Federal Chancellor. In your opinion, can starting the construction of the Northern European Gas Pipeline be an additional means to guarantee the Germany’s energy security and that of Europe as a whole?

ANGELA MERKEL (back translation from German through Russian): I want to begin with the second question. The Northern European Gas Pipeline is certainly a capital investment that will ensure secure energy deliveries. As I have already said here in reference to the Baltic states and Poland, it is important that Europe show that this project is not directed against anybody. We discussed this in detail and at length, not only with respect to the G8 and the fact that this year is Russia’s presidency and that next year it will be Germany’s, but in a more general way. We also discussed how to determine prices, energy security and trust. And I think that this constitutes a part of our strategic partnership that has developed in the past and that shall continue to do so in the future. It was a very open and constructive opportunity to discuss this theme.

VLADIMIR PUTIN: Regarding the Northern European Gas Pipeline my colleague just answered comprehensively. I have nothing more to add.

As to energy security, of course we discussed this issue in a lot of detail and devoted a lot of time to it. Of course many of our European partners are not exactly frightened but many of them, especially ordinary citizens, have questions about the discussion between Russia and Ukraine and relations in the gas sector. I think that our mistake here was to not explain the essential of what happened clearly, precisely and in due time. And if people understood the essential problems and what the agreements that Russia and Ukraine reached represent, then they would sigh with relief and thank both Russia and Ukraine. Because theUkrainian leadership made very responsible, correct and important decisions when signing the agreements.

The conditions in previous years were unstable. This was because the issue of transporting Russian energy to Europe always depended on one agreement on transport, and one on deliveries, in other words they depended on our agreements with Ukraine on energy deliveries to Ukraine itself. We have now divided this into two separate issues and signed two documents. One is on deliveries to Ukraine and the other is an agreement to transport gas to western Europe over the next five years. And now delivering gas to Europe is not connected in anyway with our agreements with our Ukrainian partners regarding delivering gas to Ukraine itself, and this is very important for European consumers.

Regarding prices, this is not simply increasing prices, rather it is a transition to a different way of calculating prices, one that we apply to Germany, France, Poland and almost all western European countries. And this is also very important for creating unified rules both in the energy market and in the European economy as a whole since the market for metal products, chemicals, petrochemicals and so on depends on the initial energy products. I am very pleased that we were able to talk about the prospects for our cooperation today with our colleague, cooperation that can become much greater and more important than it is today.

QUESTION: I would like to return to the question that was asked about the law on non-governmental organizations. My question is to both Madam Federal Chancellor and to you, Mr President. This law is also an indicator of the general level of democratic development. Did you discuss this aspect and if so in what way? Mr President, what is your reaction to this?

And a second question: if negotiations on the Iranian nuclear programme should fail, and today the head of the IAEA said that his patience will soon run out, can you imagine any variants involving the use of force?

ANGELA MERKEL (back translation from German through Russian): We discussed the law only within a narrow context. Because of time constraints we did not discuss other aspects such as, for example, creating political parties or political activities at the local level. Incidentally, we have already talked about this during other meetings. Today, the way we discussed it shows that we, probably, devoted more time to discussing this topic than it needed. I would like to mention the atmosphere in which these discussions took place and the fact that they were very open. We tried to answer all the questions that were raised including in areas where answers were unconvincing and where questions remain. For example, I asked a question concerning the Chechen Republic and we shall continue our dialogue on this topic. I think that the main thing is that we should preserve our partnership relations.

VLADIMIR PUTIN: Judging from what you asked I can make two conclusions and one of them is good. My answer concerning the law probably satisfied you. Regarding the philosophical discussion with respect to increasing democracy in the world, including in our country, I must say that the Federal Chancellor and I are not meeting for the first time and have already had many opportunities to discuss this and various other themes both in Moscow and in Germany.

Of course we paid attention to the interview that my colleague gave not long ago to the magazine Der Spiegel. In the interview she commented on the situation in Russia in a very warm and friendly way. You know that the biggest supporters of the development of democracy in Russian are Russians themselves. Our country is in a transition period—both our political and economic systems reflect this. And if one looks carefully at this situation and thinks about it, than progress becomes obvious. But there are a great many questions that still remain open and we are interested in a constructive, friendly discussion between partners on any of these questions. We are open to this discussion and will listen to the opinions of our partners on any aspects of our country’s development. And in the event that a proposal we discuss corresponds to our national interests, than we shall be ready to put it into practice.

I think that you would agree with me that the situation concerning democracy and human rights is far from perfect in countries and societies that we traditionally refer to as western. My colleague just recently drew attention to some of these problems in public.

Finally, regarding Iran. I already said that we must tread very carefully on this issue and for this reason I shall not permit myself to make any premature statements and I will not allow the Ministry of Foreign Affairs to take any careless steps. We shall work further with our European and American partners.

QUESTION: Madam Merkel we know your position on the secret prisons where a German citizen was also detained. Is Europe capable of doing something about this situation which is evidently illegal? And what is your opinion on this issue Mr Putin? Thank you.

VLADIMIR PUTIN: What is my opinion on this issue?

QUESTION: Yes, on this issue.

ANGELA MERKEL (back translation from German through Russian): During my visit to the United States I talked about Guantanamo and the American President said that steps had already been taken in this direction. However, our opinions on this issue do not yet concur.

VLADIMIR PUTIN: Of course this is a very difficult question. I think that the most important thing is that the struggle, even if at first glance it seems hard-edged, must be open,. We are also working with the same categories of people who are being detained in these places. And work by our special services shows that after dealing with these people, making agreements with them, convincing them, then the question of what they will do in the future comes up. And they answer that upon return they will once again take up arms. This is also a reality.

We already talked about how there are a lot of gaps in international legislation regarding the struggle against terrorism. This is also one of the issues that we shall work on together.

Thank you.