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Joint News Conference with President of Ukraine Viktor Yanukovych

April 21, 2010

Kharkov, Ukraine

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PRESIDENT OF UKRAINE VIKTOR YANUKOVYCH: Mr President, dear colleagues, ladies and gentlemen,

Today we have done what we promised to do and taken an important step or, we might say, turned a new page in relations between Ukraine and Russia. We have signed two agreements that are very important for our countries, our economies and the citizens of both Ukraine and Russia.

Todays meeting was extremely useful for making preparations for the official visit of the President of Russia to Ukraine, during which we plan to make further steps towards each other and deal with a number of longstanding issues that need to be resolved in relations between Ukraine and Russia. And of course there was a meeting today of the heads of the border regions of Russia and Ukraine.

It was decided that this autumn an economic forum will be held in Russia, in Krasnodar Territory, and then in Ukraine in 2011 in Donetsk Region.

The decisions made today and the documents that were signed were the result of a lot of blood, sweat and tears on both sides. First of all I want to say that these conditions were particularly complicated because of the difficult economic situation in both Ukraine and Russia.

I should add that I am grateful to President of Russia Dmitry Medvedev for his willingness to accept my proposal and consider these questions in the first place. I think we resolved them in record time. And the decision that was taken concerning gas transit and sales is I think unprecedented in the history of relations between Ukraine and Russia. The fact that the Russian side has now gone some way towards accommodating Ukraine and actually agreed with our proposals, with the exception of certain trade-offs ...

PRESIDENT OF RUSSIA DMITRY MEDVEDEV: As usual.

VIKTOR YANUKOVYCH: Yes, so these were the issues raised in our talks. These talks were very complex, very focussed, and we were forced to work with very tight deadlines. Given the importance of the issues at stake, we jointly decided to accelerate their consideration and come up with a solution by April. Well, today we came up with that solution.

Over the next 10 years Ukraine will receive real investment provided by Russia in the form of resource aid, specifically natural gas, and our experts have calculated that the value of this will amount to approximately $40 billion. It is very important to extend such aid during this crisis period. We understand that crises do not occur often but when they do, good neighbours, good, reliable partners always meet each other halfway.

On the other hand, we have decided to expedite a decision on the presence of the Black Sea Fleet on Ukrainian territory, because our Russian colleagues, our friends, had to know how this question was going to be resolved. The extension of the period for stationing the Black Sea Fleet at its Sevastopol base is also fundamentally important for Russia.

We are looking at this issue in the context of the formation of a European system of collective security, and we know that the Black Sea Fleet will be one of the guarantors of security among Black Sea countries. We support President Medvedevs initiative to reconsider the concept of the European collective security system, which by the way is also supported by French President Nicolas Sarkozy. As far as this issue is concerned Ukraine is ready to participate actively as a state which does not belong to any military bloc. Ukraine wants to find its place and obtain the appropriate guarantees for collective security, which, incidentally, were outlined in the agreement on nuclear disarmament signed by Ukraine in 1994. But now a new stage has begun and we believe that at this stage we must take a proactive and principled position. We believe that this issue concerns not only Ukraine as a non-bloc member country but also other European countries, countries that need to find answers to the challenges facing the European community today insofar as security issues are concerned.

In summing up then, Mr President, let me say that if all our meetings lead to similar results, I think we will very quickly make up for the period of cool relations between Russia and Ukraine. And this new stage, of course, will contribute to the development of our economies, the development of traditional relations between the Ukrainian and Russian peoples.

Please, you have the floor.

DMITRY MEDVEDEV: Mr President, dear Ukrainian friends and colleagues, ladies and gentlemen,

You know, Mr Yanukovych has outlined with great accuracy everything that we have accomplished. We have agreed to act quickly. And it gives me great pleasure to inform you that we really have taken a major step in restoring good political, social, economic and humanitarian relations between two countries that are linked in so many ways.

We really did meet today with a view to bringing our regions together and to synchronise our watches in anticipation of my visit, which will take place held in May. This will be a formal, full-fledged, important visit that I am pleased to be making: lets call it a long-awaited visit. But of course the main reason for meeting in such short order and producing some tangible results was the signing of the intergovernmental agreement, which has just been endorsed in your presence by the two presidents in question.

Mr Yanukovych has spoken about the significance of this agreement which aims to accomplish two goals. These are useful in and of themselves and are in principle of great significance for both sides.

The economic crisis, the situation in the financial sector, in our countries economies all these factors have created serious difficulties for us. This crisis has very seriously affected Ukraine. When we initially met with Mr Yanukovych immediately after his inauguration as President, he said frankly that for him this question, the issue of gas prices and then that of additional financial and investment resources these were the key to making the economy work, and to accomplishing the tasks that the Government is dealing with today and that Mr Yanukovych set for himself as President of Ukraine. I said that we were ready to discuss this issue. As a result, we really did come to an unprecedented agreement on providing additional financial resources for our Ukrainian partners in the long term. These resources consist in providing gas price discounts. And these discounts are set forth in the agreement that we have just signed and look like this: our Ukrainian partners will receive a $100 discount on gas price if it exceeds $330 per 1,000 cubic metres, or a 30% discount of the contract price if it is less than $330.

Accordingly this discount represents a real resource that our Ukrainian partners will have at their disposal. It really does create an opportunity to make savings in the long run, which will be spent on internal affairs, economic and social objectives.

On the other hand, as the President of Ukraine has rightly said, Russia needed certainty on the issue of its naval base lease. This certainty has been achieved: we have signed an agreement that extends the Russian naval presence on Ukrainian territory for 25 more years, with an option of an additional five-year extension if neither party decides to terminate the agreement. This creates the necessary confidence and, as Mr Yanukovych rightly pointed out, it provides more guarantees, better guarantee for European security in the Black Sea basin. As we all know, every region has its particular problems, and we have our own problems as well. The presence of Russian naval forces creates the necessary balance of interests for all countries in the Black Sea region and of course first and foremost for Russia and Ukraine. In fact, this measure should be considered in the context of the pan-European security initiative, which I put forward in 2008. I am very pleased that as President of Ukraine Mr Yanukovych supports this initiative, along with some of his European counterparts.

In this way we have resolved two very important problems and fulfilled the promises that were made to voters, promises that are important for our peoples and that will create a genuine foundation for establishing strategic relations between Russia and Ukraine. These are relations that go back centuries and are based on proximity, brotherhood and friendship, relations that now have a specific pragmatic dimension and that aim to ensure that people in our countries lead better lives, and that our economies develop in the right direction. Therefore, I would like to sincerely thank Mr Yanukovych for making these decisions as President so quickly. I would like to thank the Ukrainian team for its hard work, which went on non-stop for a number of days, right up to the eleventh hour, as I have already said. We are also grateful that here today in Kharkov we have signed this important document, which symbolises our friendship.

QUESTION: Let me put the first question to the President of Ukraine. Mr Yanukovych, it's been made clear, in simple, absolute terms that ordinary people can understand, that the price of gas is going to be reduced by 30 percent. In this regard, based on today's gas prices, how much will that be in US dollars? Two hundred and something, how much? And these investments, these $40 billion that is going to be freed up, that will be saved: what does the Ukrainian leadership plan to spend this money on?

And if you'll allow a second question for the President of the Russian Federation: Mr Medvedev, you now have an international legal guarantee giving Russia a significant extension for the presence of its Black Sea Fleet on Ukrainian territory. In this regard, is there a chance that you will be investing on a similar financial scale in the development of both the city of Sevastopol and in the Black Sea Fleet, its modernisation and development? What plans does the Russian side have in this regard?

VIKTOR YANUKOVYCH: As of April 2010, we can say that Ukraine will be receiving a concrete investment resource. For us this is very important because, as you know, we are currently working on the budget, and hope that it will be reviewed next week and approved by the Verkhovna Rada [Ukrainian parliament].

Of course the question of how to dispose of these assets is a question for the government. Naturally we need a programme that will work on energy-saving technologies. Of course as a result of this work we need to create the appropriate conditions so that Ukraine can pay market prices. During this time we will be trying to reduce our dependency as quickly as possible, but this particular resource will be spent on social purposes, on investment projects and on the development of Ukraines Armed Forces. This is a very specific resource that is very important for Ukraine at this point in time.

As you know, to some extent this measure is the result of the ravages suffered by our economy. Those prices that were agreed to by the Tymoshenko government for 10 years drove the Ukrainian economy into the ground, as they say. What is the price of gas in the end? It's the tariffs on housing and communal services. It's the price of bread. It's the competitiveness of our businesses. It's the price of chemical fertilizers our agriculture industry uses, and so on. I don't think there's any need to explain the importance of this issue or the urgency of addressing it.

I am grateful to President Medvedev that we have come up with a solution for this problem as of April 2010, not in 2017 when the contract with Russia or the agreement on the Black Sea Fleet would have come to an end, but in 2010, because this is very important for us now. And, as they say, a spoon is dear when lunch time is near. So we came up with a mechanism that enabled us to resolve these two problems at a stroke.

DMITRY MEDVEDEV: You know, for Russia Sevastopol is a very special city, and of course our naval base, which is located in Sevastopol, and the extension of its presence there, which has just been sealed with our signatures, is of particular importance for us. So of course we are keen to make sure that the Russian military base not only provides security in the region, helps resolve border issues, or creates a genuinely secure environment, but also helps Sevastopol to resolve a variety of social and economic problems. I think that this is the sort of full-fledged, normal partnership that should always exist between countries and between specific structures, including military structures that can be deployed on the territory of another nation. Therefore, we are keen that the base will be seen in a positive light, in the way that it has been up till now and I'm sure will continue to be. And so I've given instructions to the Minister of Defence [Anatoly Serdyukov] and the Commander of the Black Sea Fleet [Vice Admiral Alexander Kletskov] to prepare a draft agreement on the participation of our base in the social and economic development of Sevastopol.

QUESTION: Two questions. The first one is for Mr Yanukovych: will the discount on gas that Russia is offering be linked somehow to the rent that Russia's Black Sea Fleet pays to be stationed in the Crimea? If so, in what way and how much will this rent be from now on?

And the second question is for you, Mr Medvedev. Do today's gas agreements with Ukraine mean that Russia's other partners in post-Soviet territory, such as Belarus, can soon expect similar relief on gas issues?

VIKTOR YANUKOVYCH: Yes, naturally in signing this agreement we calculated that over the next 10 years the investment resources that will be coming to Ukraine will amount to approximately $4 billion a year, or a billion dollars every three months. It's a huge plus that we will be receiving this particular investment in the form of price discounts as of April this year. So this year, given the volume of Russian gas supplies to Ukraine (30 billion cubic metres), it will be $3 billion. And next year we already have a contract for 40 billion cubic metres of gas, and that means $4 billion.

DMITRY MEDVEDEV: I will simply add two words. In effect these things are connected with each other, but only in a technical sense, because the relevant discount will be taken into account as part of the rent paid by the Russian Federation for stationing our Black Sea Fleet in the Crimea, for our base in Sevastopol. There is no political link, but simply a technical one, because this is money, and the rent will be increased by the amount corresponding to this discount. These issues are directly and unambiguously linked in the contract, but again I want to emphasise that this link is not so much substantive as it is bound up with accounting matters.

Now, with regard to our other partners: what Mr Yanukovych and I have accomplished today really is a genuine, reciprocal advance on the part of both Russia and Ukraine. This is a step that is long overdue. This sort of measure is an indication of the real intentions of neighbours, friends, relatives, countries that are close to us, and today Ukraine has taken this step, as has the Russian Federation.

If we are to talk about other countries, we need to see how their actions compare with the results that have been achieved, how their intentions correspond with what they've actually done. Any time we talk about any sort of discount or assistance, the question arises: in the name of what and for what? We have to have a partnership. A real partnership and a declaration of intent are two very different things. It is one thing to agree to work very hard to accommodate each other, help each other, and another thing to agree to provide permanent residence for people who have lost their jobs. These are two different things. You can draw your own conclusions.

Thank you.


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