PRESIDENT VLADIMIR PUTIN:

Ladies and gentlemen, dear colleagues!

We are also pleased with the outcome of the 20th EU-Russia summit. It was conducted in a genuinely constructive environment and a friendly atmosphere. And, in my opinion, it was useful and productive. First I'd like to thank Mr Prime Minister and all our Portuguese friends for taking care of us so well. During the last two days a large number of officials of all sorts and world leaders have descended on Lisbon. We have prowled all over Lisbon, disrupting the normal life of a great city. Please forgive us for this. Now I can say that we haven't gathered in vain. Here in Lisbon we have extensively discussed what we managed to accomplish over the last while. We have also taken note of the immediate and long-term prospects for our relations.

First and foremost we noted that in the ten years since the signing of the basic agreement between Russia and the EU, we have really done a great deal. This is particularly true in the political, economic and cultural areas. The proof of this is the constant increase in the number of contacts between our civil societies. Mr Prime Minister referred to the development of economic ties. Despite all the disputes and the fact that we have different positions on some issues, I would draw your attention to the fact that between 2000 and 2007, the volume of our economic cooperation has increased, not by a few percentage points but almost by a factor of five! This is eloquent testimony to the value of the relations between Russia and the EU and the importance of Russia's partnership for the EU. As far as volume of economic relations is considered, Russia is the third most important trading partner for the EU, and the EU is the most important one for Russia. The volume of our trade is now 180 billion euros.

During the meeting, it was reaffirmed that the matter of the date of the start of negotiations for a new agreement is an internal EU affair, although we would like these negotiations to begin as soon as possible. We cannot interfere in that process. We only hope that we can break this deadlock as soon as possible, all the more so since a week ago at the informal summit in Lisbon the draft treaty on EU reform was approved. Incidentally, I want to congratulate Mr Prime Minister on this truly historic occasion, since it was during his presidency of the European Union that this decision was taken.

Of course there are problems between Russia and the EU. There couldn't not be; there were problems in the past and there will be problems in the future. Despite the existence of these, the main thing is that the immutability of the strategic partnership between the European Union and the Russian Federation could be reaffirmed.

Of fundamental importance to us is continuing the development of Russia's bilateral relations with the countries of the European Union and the implementation of 'road maps' for our four common spaces. We intend to encourage all the positive trends that characterise our relations, and we are counting on a similar approach from our partners.

We noted the positive dynamics of our sector dialogues, including those on transport, military affairs, visas and regional policy. It's not by chance that I mentioned military cooperation: it is developing through NATO and bilateral relations with many countries of the EU.

We had animated discussions about energy questions. During the meeting, the emphasis was on the future strengthening of Europe's energy security. To that end, we agreed to continue work on the establishment of a mechanism of early warnings for supply and demand of energy coming from Russia to the EU. It is based on exchange of information on potential problem situations and ways of solving them, including using the Russia-EU energy dialogue.

As agreed at the mid-October summit in Samara, we have begun to talk about investment. European companies have traditionally taken the lead when it comes to capital investment in the Russian economy. In their turn Russian entrepreneurs are now ready to invest in the European economy. I want to draw your attention to the fact that the total amount of European investment in Russia is about 30 billion euros, whereas Russian investment is only 3 billion euros. So rumours of our buying up all of Europe's assets with our petrodollars are greatly exaggerated. One of our companies alone in a single deal somewhere else in the world put more into a company than all Russia's investments in the European Union combined.

We have moved forward in terms of the implementation of cross-border cooperation programs. And here I must say that this is the first time cooperation is based on the principles of co-financing and equal status in the selection of priority projects. In the next five years, Russia is ready to allocate the necessary funds to these programmes. In the first stage we envision something like 122 million euros.

Certain progress has been made regarding contacts in the cultural and educational spheres. As you know, yesterday we held the first meeting of the Permanent Partnership Council on Culture. And during the summit we discussed how to start up new projects and programmes in these areas. Today, I also introduced a new initiative to our partners, proposed by the Head of the Chamber of the Federal Assembly of Russia. Mr Prime Minister has already mentioned it: the idea is to create a Russian-European Institute for Freedom and Democracy. Its goal is to facilitate dialogue between members of the public, non-governmental structures and experts on issues such as organizing the electoral process, monitoring elections, the situation of national minorities and migrants in the territory of the EU and Russia as well, freedom of expression and other questions of interest for us. I think that such a dialogue will be very useful. The EU assists the development of similar institutes in Russia using grants. I think that it is high time, given our increasing economic and financial capacity, that the Russian Federation can do the same thing in the European Union, can do its bit, including financially, to contribute to the development of such dialogues. We are suggesting a new institute, either in Brussels or in one of the European capitals, and we are ready to supply funds for financing it, just as Europe covers the costs of projects in Russia. We are counting on the administrative and political support from our colleagues, and Mr President has spoken to the Portuguese government about this, for which we are very grateful.

An important theme of the summit was building Russia-EU cooperation in countering new challenges and threats. Russia is a country with deep European roots and traditions. For centuries it has made an invaluable contribution to the development of European spirituality, culture and simply to civilisation itself. And we are naturally fully aware of our responsibility for maintaining the well-being and stability of our European home.

One of the most pressing tasks is the joint struggle with drug crime and the drug menace more generally. For European countries and for Russia the spread of drugs is becoming a social disaster, if it isn't already. And today the leaders of Russia's Federal Drug Control Service and the European Monitoring Center for Drugs and Drug Addiction signed a memorandum of understanding. This document calls for the strengthening of Russia-EU cooperation in all aspects of anti-drug activities: from medical aid to drug addicts to working on preventative measures with the media and public organizations.

Another event at the summit was the signing of an agreement on trade in steel products. In recent years, mutual investment interest in this area has been growing. Russia has been very active in this regard. And this also bears witness to the qualitative changes in the economy of our country, and in the strategic thinking of Russian business community.

It is also important that Russia and the EU remain united in their basic approaches to security. We favour the primacy of international law, and the use of political means rather than force to resolve conflicts. We also believe that the general and equal security for all is impossible without strengthening the collective origins of world politics.

Russia is ready to continue coordinated work in the field of disarmament, strategic stability and the non-proliferation of weapons of mass destruction. We are ready to work together to find mutually acceptable resolutions for other sensitive issues: the Middle Eastern settlement, the normalisation of the situation in Kosovo and the situation involving the Iranian nuclear programme. We talked a lot about these things today.

In conclusion, I want to thank our Portuguese colleagues again for organizing our deliberations so well.

Once again I want to stress that our meeting in Lisbon has been constructive and useful. I expect that it will result in advancing our partnership on all major fronts. I am sure that the next summit will help stimulate this process. We are continuing our tradition of joint meeting with our European partners in different regions of Russia. This time we have suggested meeting in one of the most dynamic regions and cities in Russia, in Khanty-Mansiysk, Siberia. The exact date will be worked out: we suggested having it at the beginning of next June 2008.

Thank you very much for your attention.

QUESTION: I would like to ask you if Russia is ready to respond positively to President Bush's latest initiative for cooperation in missile defense in Europe?

VLADIMIR PUTIN: As I understand it, your question is about our reaction to our American partners' latest suggestion on missile defense. Let me remind you that we are not withdrawing from the ABM treaty. Our American partners took this step. And we asked them not to do so. After that they decided to deploy defense infrastructure right on our borders. Moreover, at first they reached agreement with individual European countries, and then in the context of the North Atlantic alliance they made agreements with other European members of NATO.

I recall how things went in a similar situation in the mid 1960s. Similar actions by the Soviet Union, when it put rockets in Cuba, precipitated the Cuban Missile Crisis. For us the technological aspects of the situation are very similar. We have removed the remnants of our bases from Vietnam and dismantled them in Cuba, yet such threats for our country are today being created on our own borders. Meanwhile, as we all know, thank God, there is no Cuban Missile Crisis. And this is primarily because relations between Russia and the United States, Russia and Europe, have changed dramatically. And I totally agree with President Bush when he says that Russia and the United States are no longer enemies but partners. Last but not least my personal relationship with President Bush, a relationship of trust, can help resolve problems of this kind.

And I have every right to call him my personal friend, just as he does me. But technological problems in the area of security are extremely important for us. And that is why we suggested to our American partners an entire system of joint steps -- not only with them, but also with Europeans -- to identify common threats, to define the parameters of the planned system, and to determine democratic access to the management of the system.

Unfortunately, we still haven't received any answers to our proposals, including, by the way, a proposal to open a mutual information centre in Brussels concerning missile launches, and making our European partners full participants in the process.

So far no answer, but more positively I can say that we know that the Americans have registered our concerns about possible threats to Russia. I heard this from Ms Rice and the Secretary of Defense [Robert Gates] on their recent visit to Moscow. We realized that our concerns had been listened to, and that our American partners are thinking about how to neutralise those threats that this system poses for us. The work continues....

VLADMIR PUTIN: I subscribe to what has been said by my colleagues. We really will investigate any crime against a person, and that much more rigorously when representatives of the media are involved. Sweden itself has suffered from terrorism. We know that even major political figures have fallen victim to terrorists. This makes Sweden's refusal to allow us to extradite a man suspected of murdering a journalist that much more regrettable. At the request of the Prosecutor General's Office in Russia this person was detained and then released. It is unfortunate.

Now, as regards accession to the WTO: the negotiations have not been easy but they have been constructive. Our efforts in recent years to restructure the Russian economy really have had tangible results. Many insist that the entire growth of Russia's economy is due to energy. That is not the case. First, in terms of economic volume Russia is now larger than one of the Group of Eight countries: we have overtaken Italy in this regard. This is based on the objective data of international economic organisations. If we maintain the same growth rate in 2009, we will overtake France in terms of economic volume. And, of course, the accession of Russia to the WTO is a natural process. But despite this impressive growth in the economy of the Russian Federation, despite that two-thirds of the growth we are now enjoying is related, not to energy, but rather to the processing sectors of the economy, the products of these industries are still not competitive enough. And as soon the real incomes of the population go up, so will imports, including, and perhaps above all, those from European countries. Joining the WTO and opening up our markets are not easy decisions for us, and we expect these circumstances will be taken into account by those who are negotiating our accession to the WTO. On the whole the talks have been positive, and we hope they will have a positive result. Of course, we will choose to join only if the conditions for accession meet our national interests.

QUESTION: Two questions from the agency France Presse. First, on the elections in Russia. Everyone has emphasised that this is the last time Vladimir Putin has taken part in the summit as President of the Russian Federation. But the Kremlin's press secretary has repeatedly said that Mr Putin will continue to play a very significant role in Russian politics. Could you speak to this?

And as for the observers from the OSCE [Organisation for Security and Cooperation in Europe]: what will their mandate be? When will they be coming to Russia and for how long?

VLADMIR PUTIN: Regarding the forthcoming elections in the Russian Federation: in December the elections to the State Duma, Russia's parliament, will take place, and in March of next year the presidential election. As I have said repeatedly, I am not going to change the Constitution to fit me personally, and in accordance with the basic law of the country I will not run for a third term. I will not change that fundamental law. As for my activities in the future, I haven't yet identified where and in what capacity I will be working. But in any event, I do not think that we need to change the balance of power in the Russian executive branch. And if anyone believes that I intend to take over, say, the government of the Russian Federation and move the major powers there, they are mistaken. There will be no infringement of the powers of the President of the Russian Federation, at least while it depends on me.

So, I repeat once again, I have not yet decided where and how will I work. My colleagues here have also repeatedly said that this is my last summit as President of the Russian Federation. I am not exactly sure if this was said with joy, hope, or regret. But for my part, I want to say that during these years we - my colleagues who are here in the hall, those who are not here today, and other European leaders -- really have done a lot to promote cooperation between Russia and the EU. And for that I am very grateful to them.