Speech by Minister of Foreign Affairs of the Russian Federation Igor Ivanov at Meeting with Representatives of Turkey's Business Circles, Istanbul, June 8, 2001
First of all I would like to convey to you and in your person to all the representatives of Turkish business the best wishes from Chairman of the Government of the Russian Federation Mikhail Kasyanov, who retains the warmest memories of the meeting with you during his official visit to Turkey last October.
Russia lays special emphasis on the comprehensive development of mutually beneficial ties with Turkey, be it in the political, trade-and-economic or cultural fields. This is conditioned by the very character of Russian-Turkish relations. We are not merely neighbor states. We are bound together by centuries of common history, and in recent years - by an unprecedented volume of trade and economic cooperation and contacts between people. We are united by an extensive field of common interests. The most important of them is the ensuring of reliable security and stability in the vast region which serves for us as a common home. Russia and Turkey are equally confronted with new global threats and challenges, including on the part of international terrorism. All of this objectively dictates the need for close Russian-Turkish cooperation in international, regional and bilateral affairs.
These were precisely the topics dealt with today during my meetings and talks in Ankara with President Ahmet Necdet Sezer, Prime Minister Bulent Ecevit and Minister of Foreign Affairs Ismail Cem. We agreed to work to take our relations to a qualitatively new level, to impart to them the character of genuine partnership. In this vein we intend to build our long-term work.
We discussed the state of and prospects for trade and economic cooperation between our countries, which is currently on the increase. The figures speak for themselves: the volume of bilateral trade in 2000 reached the level of 4 billion US dollars. Adding to this the "shuttle" trade, all this takes us to a sufficiently high level of trade turnover. As a result Russia now ranks second among the foreign trade partners of Turkey.
We attach fundamental significance to this. After all, hundreds of thousands, if not millions of our co-citizens are participants of Russian-Turkish ties in the areas of trade, the economy and tourism. This is precisely the real engine of our relations, which works for the strengthening of mutual trust, good-neighborliness and friendship between the peoples of Russia and Turkey!
The positive changes that have occurred in recent years in Russia serve as an important prerequisite for the further growth of our business cooperation. They include, first and foremost, the continuing stabilization of the Russian economy. In 2000 GDP grew by more than 8 percent with an increase in the volume of industrial production of 9 percent. For the first time since the launch of economic reforms 17.4 percent permanent-investment growth has been noted.
Substantial positive shifts have been achieved in the financial area. Federal budget revenue made up 16.2 percent of GDP last year, with a surplus of 2.5 percent of GDP. Annual inflation was reduced from 84 percent in 1998 to 21.5 percent in 2000. In the current year inflation is expected at a level of between 12 and 14 percent.
Favorable world market conditions have helped improve the indicators of Russian foreign trade. Last year our surplus constituted 61 billion dollars. This made it possible to stabilize the currency market and ensure the fulfillment of our foreign debt servicing obligations. In 2000 we succeeded in practically doubling the Central Bank reserves, which now exceed 30 billion dollars. The plans of Russia's Government aim at the further stable development of the national economy by pursuing deep-going structural reforms. One major direction is the stimulation of direct, including foreign, investment. To this end, provision is made for legislatively confirming the rights of owners, investors and creditors and improving the legal regime to ensure conditions for stable economic activity of foreign investors on the Russian market.
All this, from our point of view, creates a favorable climate for business cooperation by Russia with foreign partners, among whom Turkey holds one of key places.
I will cite but one figure - there have already been established in Russia more than 700 firms and companies with Turkish participation. Moreover, joint stock companies with 100 percent Turkish capital account for 60 percent of these companies and firms. In addition, over 200 representations of Turkish firms are registered in Russia.
There are quite a few specific examples of successful work of Turkish companies on the Russian market. One can name many such examples. I will cite just a couple of them. Anadolu Holding has built a brewery in Moscow, Efes Group has realized a number of projects for the creation of enterprises and organization of the sale of Coca-Cola products in Sochi and Rostov-on-Don. Joint ventures operate in the textile, wood-working and pharmaceutical industries. Widely known are the successes of the firms of your country in the Russian market of building services. In Moscow alone Koch Holding and Enka have erected seven Ramstore supermarkets and are now building another three such centers. But this should not stop others. At present your companies are putting to use a $350 million credit of the Eximbank of Turkey to finance the construction of a number of Russian projects.
I would like to especially dwell on such a strategically important area of ties as the energy field. A vast potential exists here. Judge for yourselves - just by the full-scale implementation of the already available intergovernmental agreements in this area we will be able to double the volume of mutual trade even in the next 5 to 7 years.
It is precisely such prospects that the unique Blue Stream trans-Black Sea gas pipeline now being built, along which for the next twenty-five years 365 billion cubic meters of natural gas will flow to Turkey, is opening up.
Russia intends to strictly fulfill its obligations under this project. We attach to its implementation priority importance, and believe that the importance of this project for the entire range of bilateral relations is by no means measured just by mutual commercial benefit for the Russian and Turkish companies participating in it.
Its implementation will help your country satisfy the rapidly growing demand for energy carriers. Russia and Turkey will be bound by a common energy infrastructure. Simultaneously a valuable experience of cooperation will be amassed which may prove handy in the future when implementing other projects of such dimensions. In the final analysis both Russia and Turkey, as well as economic cooperation in the Caspian-Black Sea region as a whole stand to gain by this.
There will substantially increase the reliability of transit supplies of Russian gas. This must help remove some fears of the countries of Europe about their energy security. For this is not merely gas consumption. It is also the creation of a favorable climate of cooperation, a climate of trust. It is precisely here that political foundations will be laid for our long-term collaboration. This also intrinsically fits into the context of our mutual relations with the European Union.
We associate the future of our cooperation also with the implementation of a number of other projects, in particular the gas-burning thermal station Denizli operating on Russian gas, underground gas storage reservoirs, hydropower plants of small and middle capacity, the construction of power transmission lines, and deliveries of Russian electricity to Turkey.
Many more such examples could be enumerated. And this indicates that the potential of Russian business is in demand in Turkey, and the potential of Turkish business is in demand in Russia. We have something to offer each other on a mutually profitable basis. I am confident that such cooperation fully meets the long-term strategic interests of our two countries and peoples.
At the same time it is also abundantly clear that for the expansion of bilateral trade and economic ties we still have considerable reserves. This concerns, above all, investment partnerships and the further development of cooperation in the banking sphere. Thus, the accumulated volume of Turkish investment in Russia's economy as of now is just approximately 250 million dollars - that is, less than 1 percent of the aggregate volume of foreign capital investments in the Russian Federation.
A considerable potential also exists with respect to military-technological cooperation. Of this we also spoke today with the President and the Prime Minister of Turkey. I think it makes sense to have a closer look at the opportunities opening up here - particularly since the Russian proposals carry with them the prospect of the creation in Turkey of new branches of industry.
Our two countries could reap higher benefits from cooperation in the field of advanced technologies. I would like to call on the representatives of Russian and Turkish business to consider workable practical steps in this very promising direction.
The tragic earthquakes in Turkey induce me to especially draw your attention to the Russian experience in the speeded-up construction of low-cost, having-few-floors and heat-insulated earthquake-proof housing. Russian agencies could make a contribution to building such housing units in your country.
We can also offer the latest technologies and equipment in the field of earthquake prediction and monitoring and clean-up operations. Russia has considerable achievements in microseismic zoning, and we are willing to cooperate with Turkish partners in this field.
Cooperation in the field of inducement of artificial rains in Turkey, which is particularly important in the conditions of a dry summer, can be very useful. Such work, as far as I know, is already being conducted with participation by Russian specialists.
In a word, it is time to broaden the scope of Russian-Turkish interaction. Russian companies and firms, for example, show real interest in mutually beneficial cooperation with Turkish partners in third countries markets, primarily in the CIS countries. I am confident that Russian and Turkish business stand only to gain if on these markets they guide themselves by the interests of partnership, foster cooperation and implement joint projects.
We also attach great importance to the use of the opportunities for the development of Russian-Turkish trade and economic ties that are opening up before our countries in regional organizations. I mean, above all, the Black Sea Economic Cooperation (BSEC) Organization, where Russia, as is known, recently handed over to Turkey the chairman's post.
Active work has now been launched in this organization in such priority areas as energy, transport and telecommunications. Our countries could make a joint weighty contribution to establishing a Black Sea "electric-energy ring," as well as to implementing various specific projects at the level of small and medium-sized business.
Finally, in order to develop and realize the potential for trade and economic cooperation between Russia and Turkey, it is necessary to improve the interaction of the state structures and business of our two countries. The Mixed Intergovernmental Russian-Turkish Commission on Trade and Economic Cooperation is conducting useful work in this direction. A great role in fostering bilateral business contacts and ties belongs to Russian-Turkish exhibitions and seminars which are being conducted in our countries. I hope that your Council will continue to extend support to this very important and useful activity.
In closing I would like to thank the leadership of the Russian-Turkish Business Council for this meeting and to wish you all robust health, well-being and successes.
June 9, 2001