REMARKS BY RUSSIAN PRESIDENT VLADIMIR PUTIN INTRODUCED BY: FORMER U.S. PRESIDENT GEORGE H.W. BUSH BAKER INSTITUTE, RICE UNIVERSITY, HOUSTON, TEXAS ,NOVEMBER 14, 2001

FORMER PRESIDENT BUSH :Great! Thank you. Thank you all very much. Well, it is indeed a great honor to welcome President Putin to Houston, Texas, and to this wonderful Baker Institute. And, of course, I'm very grateful to my dear friend Jim Baker for giving me the honor of presenting President Putin, which I'll do very briefly. He's on a very tight schedule, and you came to hear him.

So, Mr. President, welcome, and what a joy it is that you are here in our midst. President Putin and our president have a strong, wonderful personal relationship, and let me just say with confidence that relations between Russia and the United States of America are very good. And after the September 11th tragedy, President Putin was the first world leader to call President Bush, and I know firsthand how much this meant to our president and, indeed, how much that gesture of concern and support meant to the American people.

Under President Putin, Russia is making great advances on the economic front and on the international policy front. And lastly, I can tell you, Mr. President, that our president respects your vision, your broad vision, of where our two countries can go together in the future. It is this broad vision, this strategic framework, that offers the world a promise of a more peaceful future. Ladies and gentlemen, may I present President Vladimir Putin, president of Russia. (Applause.)

President Putin:Ladies and gentlemen, I am sincerely grateful for the invitation to visit your university, the oldest university in Texas, an establishment holding leading positions in science and education. I am happy to see all those present in this room, but I am particularly grateful, of course, to the leaders of this state of Texas and Houston, to President Bush the senior, and to Mr. James Baker for organizing this meeting.

I was surprised to find when we just met that Mr. Baker does remember our first meeting that took place way back in 1992 in the city of St. Petersburg. Then I was a modest city bureaucrat and Mr. Baker at that time was a big boss. (Laughter. ) But nevertheless, he remembered that meeting, and I am gratified to know this.

And the fact that even during those days the U.S. administration headed by Mr. Bush the senior took note of Russia and worked in our regions and was directly involved there. All this, as we see, was not in vain, and this is something I would like to thank the present-day and the former leadership of the United States.

Of course, from here, from Texas, I'd like to extend my greetings to all the citizens of the United States. To the citizens of Russia, Texas is not just a Lone Star State, the romantic magnetism of which captivates everyone who knows and loves America, and we have many people like that in Russia. And this is not just a symbol of independence, nobleness and the Americans' aspiration to fairness and justice. For Russia, the South of America is a well-settled and economically rich region, a region with which we don't have to start cooperating from scratch, because we already have a lot in common. This includes the oil and gas sector and our joint work in space exploration that is quickly gathering momentum.

Russian has been heard spoken for a long time now on the premises of the Johnson Space Center, and we even have a common holiday -- that is, the 12th of April, the day when our Russian compatriot Yuri Gagarin made history to become the first man to travel in space. We know that the legislative assembly of Texas declared that day to be a holiday. For us, it is a special symbol, and let me assure you that to us, this is something that makes us to view Texas in a special way.

I think that even these simple facts provide an affirmative answer that used to be topical a short time ago, and now this is a question that is twice relevant as it used to be. The question is whether Russia and the United States need each other. Today, we actually came to the awareness what it means to be together.

We have started to fill this notion with new contents. We started looking for a qualitatively new cooperation and, in this context, our relationship not be viewed only through the prism of the tragedy that happened on September the 11th; although, of course, those events gave us a chance to make our bilateral ties long-term and truly friendly.

The politicians of today have a special responsibility. They must not just to give an adequate response to the challenge of terror, but also to reassess the history and logic of our interrelationship, and to understand how we should build on those relations; what to look for and where to go to. In other words, we have to sense the pulse of history, and here I'm quite convinced that the problem of trust comes to the fore.

People in our two countries have not yet completely gotten rid of the Cold War stereotypes; at least not all of our people have gotten rid of those stereotypes, and those stereotypes have been compounded by the experience of the past decade that has not always been positive. And, therefore, people on both sides of the Atlantic expect from our talks with the current president of the United States, they expect one main thing: They expect for us to find a common language on the issues that millions of people in Russia, in the United States and throughout the world expect us to resolve.

They expect that politicians in Russia and in America leave behind double standards, unnecessary suspicions, and ulterior motives.

They expect that politicians launch an open-minded, forthright and productive dialogue. The Cold War must stop flushing us at the sleeves.

Today, a lot has been done already. A lot has been done to make sure that relations between Russia and the United States take into account each other's interests. We are learning to take a realistic view of our respective potentials without exaggerating or diminishing them.

The possibilities of our constructive cooperation are huge. Fortunately, they are not limited to interstate relations. Contacts among NGOs, cultural exchanges, friendly people-to-people ties, all this constitutes our common capital. And we have to build upon this capital and expand it in all the spheres of informal cooperation.

Particularly great here are the capabilities and potentialities of the scientific communities. After all, there are only two countries in the world that, from the very outset, chose to develop science across the board in all its spheres, and those countries are the United States and Russia.

Ambition to produce knowledge, including fundamental knowledge, is an inherent feature of both the American and Russian cultures. But the Russian (key?) of fundamental and technological knowledge has not yet been realized in full. Therefore, joint Russian-American R&D, we think, have great prospects, all the more so since we already have an example of such a successful cooperation, and the example is NASA activities.

Furthermore, of great importance is mutual penetration of our educational systems. They are structured differently, but each of them has proven its right to exist and each of them is effective in its own way, has its own traditions and its own educational taste. Therefore, contacts in that sphere will benefit children and their parents and, in general, our two countries.

Here, speaking before this audience, I'd like to stress this particularly. The creative contacts at grassroot level, as you like to say in America, are often much more fruitful than conferences held by bureaucrats, even at the top level. In forging a new relationship, we both expect that business will take an active part.

In recent years, we have seen the growth of interest on the part of American business circle, interest in the Russian market. This turn of events is absolutely justified. Today in our country we have all the necessary conditions for effective investments in various fields. And I have every reason to state this quite confidently.

First of all, Russia has been successfully maintaining a high rate of economic growth. At the end of last year, the GDP growth was 8.3 percent. This year we plan to have 4, but it is actually forecast to reach 5.7 percent by the end of this year. The dynamics of industrial output has also indicated sustainable growth.

By the end of the year, we expect to reach the level of 8 percent. And the reason for that is not just the favorable external economic -- foreign economic climate. Domestic incentives are now having full effect in Russia as well. Investment in industry has increased by more than 40 percent.

Secondly, there has been a substantial improvement in the legal framework, legal conditions for conducting business. The number of activities subject to license has been reduced down from 2000, something that we inherited from the plan-based economy. So the number of activities subject to license has been reduced from 2000 down to 104. Even that is too high a figure, but we intend to continue to liberalize our economy.

The registration of business enterprises in the very near-future will be conducted, according to the principle of single window, following the single system and following the same system of rules. The law to that effect will enter into force next July.

Of course, the business climate will be positively influenced by the introduction of new land -- (inaudible) -- the absence of which has, for many years, impeded the development of our economy. We have taken legislative measures to counter the laundering of illicit profits. We have opened an open struggle with the black business that has been eroding the economy of the country as rust. We have supported legal business and extended extra support and protection to it.

Thirdly, the corporate governance is changing for the better in Russia. A corporate governance code has been prepared based on international standards. And fourthly, something that is perhaps very important, even the most important thing: We have reduced the tax burden, something that has been for years discussed in Russia. Almost 10 years we have discussed that thing in our country, and almost nothing has been done til the latest times.

As of January 2002, profit tax rate will go down from 35 to 24 percent, and all types of preferential treatment will be revoked. In other words, we are strengthening the principle of transparency in our business activities. And I have no doubt that we will be able to maintain this principle in the future.

In the field of resource exploitation, we have introduced a single tax rate instead of three that used to exist before. Many people present here are aware of the fact that we are very proud of the fact that we have the lowest tax rate in Europe, personal income tax rate, 13 percent. And we have a flat rate, which is indeed the lowest in Europe; 13 percent, as I say.

Let me say from the very outset that this liberal approach has resulted in a sharp increase in tax revenues coming to our budget, by a significant factor.

One of our priorities is Russian entry into the WTO. We deliberately synchronized this process with our domestic reforms, although we are fully aware that this step is associated not only with benefits but also with additional obligations. We understand that this has to be done within a short time frame, and we are purposely accelerating the negotiating process.

We are preparing a legislative package that will eliminate (blank spots?) from the point of view of international standards and the WTO regulations. And we will seek standardization -- standards to be applied to Russia in terms of its entry into WTO. It is a difficult process, but it has been developing successfully, thanks, among others, to the support of our American partners.

The fact that we have chosen the right direction of our activities is corroborated by the energetic start of Russian-American business dialogue. An important initiative has been taken by Boeing company. We are establishing a roundtable for Russian-American high- tech companies to be headed on the Russian side by academician Felikov (ph), a scientist of world renown. There are some other examples that you are, I'm sure, aware of here in Texas.

This year, ladies and gentlemen, the inflow of investments in Russia has increased by 40 percent. The absolute figure is not high, but the growth is quite evident. Unfortunately, the United States, in terms of direct investment, has fallen behind the Netherlands, Cyprus and Germany. But if the inflow from the two countries I mentioned -- that is, Cyprus and the Netherlands -- is nothing else but the perpetuation of our own domestic Russian capital, then the interest shown by the growth of Germany position indicates an interest in Europe in investing in Russia. And we hope that Americans will accept this as a challenge.

There are many sectors in Russia, stable sectors, that are becoming an element of sustaining the overall security system. And here I'm referring to our energy resources. Russia continues to be a reliable and predictable partner in the supply of oil and other natural resources.

In our bilateral cooperation, we already have first success stories, as you like to say here in America. The construction of oil pipeline is being completed by the Caspian pipeline consortium, the largest investment project in Russia involving American capital. A couple of days ago, the Exxon-Mobil company announced the initiation of the main phase of Sakhalin I project, which envisages investment amounting to 12 (billion) to 15 (billion) U.S. dollars, and the overall cost of the project could amount to almost $30 billion.

In the automobile industry, we're starting the production of a new all-terrain vehicle in cooperation with General Motors. And the Ford Company has also been active. The Pratt & Whitney company is outsourcing to Russia, to one of our plants, the production of some of its product. The same applies to some components produced by Boeing.

Business communities are working independently, of course, but we believe it's very important to assist them from the government of Russian Federation. And we know that the U.S. administration has the same intent, the administration headed by President Bush.

In this context, coming to the fore is the question of the barriers still remaining in trade and economic field. Those barriers should be removed definitively. It would be much easier to move ahead without the unnecessary dead-weight relics we have inherited from the Cold War period.

I do not need to elaborate on this. You are quite aware of the fact that I am referring to the Jackson-Vanik amendment, which, in practice, has not been applied because every year the administration has stopped it -- has deprived it of its force. So it has just become a symbol; no one knows symbol of what.

For our part, we have already taken steps to overcome the obstacles of the past, and now we expect the constructive steps to be taken not just by the U.S. administration but also by the American business community. I know that present here in this audience, we have many representatives of air-and-space industry and oil industry. We have long time been cooperating in space exploration field. And the creation, the establishment of the international space station is 85 percent bilateral Russian-American project.

We are making investment in oil industry even more profitable by improving the system of PSA. The scope for possible cooperation in the exploitation of Russian oil and gas could keep us busy for decades. And here we're not just talking of the investment of American companies in Russia, but also Russian companies' investment in America. And we do have examples of that.

Ladies and gentlemen, as we know, Texas cowboys have the heels of their high boots slanted inward to make sure that when they work at the ranch, they don't -- their backs don't get stained by mud. And the same applies to international relations. Cleanliness is a good symbol. People listen to what we're saying, but they will make their judgment later on, and they will judge not only by what we say, but also by what we do. Then, later on, it will be quite obvious to everyone how sincere our intentions and our plans were.

No one needs friendship and cooperation that exists only on paper. We will all have to work painstakingly and perseveringly.

Here in Texas, you have many professionals in their trade, people who appreciate the true value and promising prospects of cooperation with Russia.

In conclusion, I'd like to say that in the Russian market, your risks are much lower than a couple of years ago. I think that these things are absolutely obvious. Indeed, we have many things in common, and in many ways we are similar. And when Secretary Baker made literary similes here and he referred to President Bush senior and President Bush junior, he spoke of acorns and oaks.

We also have a proverb which sounds very much the same, and it has the same meaning. We say an apple does not fall far from the apple tree. And I'm quite confident that the baton that the current president has taken from his father, that baton, racing baton is in reliable hands. And together I think we can do a lot of good to our peoples and to the world at large.

Thank you very much. (Applause.)

MODERATOR :Many questions, Mr. President, more than we have time to ask. A series of questions on Afghanistan and your assessment, Mr. President, on how you see the situation evolving in Afghanistan, especially in terms of how a coalition government may be put in place in that country in which Russia has such deep experience.

President Putin:Of course, the situation in Afghanistan is one of the topics, main topics, that has been the focus of our discussions with the U.S. president at our previous meetings, including in Shanghai, and, of course, now -- (brief audio break) -- over in the capital of Tajikistan, the city of Dushanbe, and there had a working meeting with the leadership of the Northern Alliance.

At that meeting, I outlined, in effect, our common position, the position that we share with the United States, the position on the situation in Afghanistan at that point in time, and I outlined our common position on Afghanistan's future. And the position is as follows: The organization that has been involved with international terrorism -- that is, the Taliban organization -- must not be represented in the future leadership in Afghanistan.

At the same time, the future leadership of Afghanistan should build on broad-based support of all ethnic groups living in that country and on the support of neighboring countries and the support of the United Nations. In principle, this position was found quite suitable by the Northern Alliance leadership, and they expressed their willingness to work with international community, including Russia and the United States to work together. (Audio break.)

The events that we are witnessing now have been no surprise to us. Actually, what we're seeing today is the attainment of the goals that we have set ourselves: The initial stage of our joint work, joint efforts, the liberation of the northern parts of Afghanistan and then the liberation of Kabul. Three goals have been achieved.

And now, coming to the fore is the problem of political settlement, on the one hand, the determination of Afghanistan's political future, but at the same time, I believe President Bush's position to be -- (audio break) -- persons who are suspected of having committed terrorist acts and to continue our struggle with all those who help them and give them refuge, no matter where they are hiding. All those who have retreated from Kabul who have taken refuge in mountains, they are being pursued. They are prosecuted. And I have no doubt that, in the final analysis, they will be brought to justice.

So at this point -- and I'd like to stress this once again -- on the whole, the situation is kept under control. And the indications are that we are reaching the objectives, achieving the objectives we have set ourselves. And we are coordinating our efforts and we will continue to work in that way in the future.

MODERATOR : Thank you very much, Mr. President. (Applause.) Mr. President, there is a great deal of speculation on the future role of NATO in Russia. How do you see the relationship between NATO and Russia evolving? And can we see Russia as a part of NATO?

You know, NATO was established in a certain historical period and for certain historical reasons. It was created with the objective of countering the Soviet Union. And I have mentioned this before during my meeting with President Bush in Ljubljana.

Way back in 1956 or '57 -- I don't remember exactly -- the Russian government approached the leading western countries with the suggestion that the Soviet Union be admitted into NATO. At that time, that suggestion was refused. And I've read the papers, the documents, and the reasons were listed there. And I will enumerate them as I remember them, as I recollect them; namely, the totalitarian nature of the Soviet system, the problem of Austria and of Eastern Europe.

To us, as you see, in historical terms, there is nothing new in pooling our efforts together with NATO. This is my first point. And secondly, there is no reason whatsoever why we shouldn't pool our efforts together, the Russian Federation and NATO, why we shouldn't do it today. NATO has become a reality of today, and this organization bears serious responsibility for maintaining stability in the world.

Today we are working with NATO in the framework of a council which is called PJC -- Permanent Joint Council -- and we are prepared to expand our cooperation.

Today, coming to the fore are threats that yesterday seemed to be quite insignificant. And we know that not just from the events that took place on September 11th, but we also know that from the concern we feel -- the concern about the possible proliferation of proliferation, not just nuclear proliferation, but also chemical and biological proliferation. There are some other risks, as well, that are coming to the fore now.

And let me be frank :NATO was not created to counter those threats in the first place. And today, all the leaders of Western countries or leading nations in NATO recognize that if there is a country that can contribute largely to these efforts, if there is such a country, it is Russia. For our part, we are prepared to expand our cooperation with NATO. And we are prepared to go as far as the Northern Alliance itself is prepared -- taking into account, of course, the national interest of the Russian Federation. Of course we're now discussing various options for expanding our cooperation, and there are some very good proposals that have been made.

I think that anyone sitting in this room would agree that if we want someone in the international community to effectively and consistently comply with a decision that has been taken, that participant should have an opportunity to take part in the deliberation of the decision and be responsible and feel responsible for its implementation. And if we succeed in finding a mechanism that will enable to involve Russia in the decision-making, then I think we would be able to believe that we have achieved a qualitative change in the relationship between Russia and the Northern Alliance. We are willing to do that. We are prepared for that work, and now we are engaged in very intensive and positive consultations including with President Bush. (Applause.)

MODERATOR :Thank you, Mr. President

Question :Mr. President, you are in the midst of very important discussions with President George W. Bush on the nuclear armaments our both countries possess, and changes in the ABM treaty. Can you comment on whether or not we are really at the threshold of a new strategic relationship in this field?

President Putin:I think that the statement made yesterday by President Bush, and my statement I made speaking at the Russian Embassy in Washington, indicate that in this context, we have prepared very serious qualitative changes that correspond to the realities of today. We have accumulated so much of weaponry, and this has been referred to many times. Some reductions have been made, but they are, of course, absolutely insufficient.

Let us come back to this horrible tragedy of September 11th, the terrible result. In the modern, super-technological world, attacks of this kind, even of this kind, are very painful, let alone the strikes or attacks committed using mass-destruction weapons. But we have thousands of warheads, and we have -- we can destroy any major power many times over.

The United States, just like Russia, is capable of being engaged in a warfare using weapons of mass destruction simultaneously with all nuclear powers, other nuclear powers. Both Russia and the United States are capable of doing that. Even a madman would not think of such a scenario.

Of course, to reduce the risk of unauthorized launches and to reduce other man-made risks that are not related to nuclear materials, to achieve that, of course we have to seek a reduction in the threshold of strategic offensive arms. Yesterday the president, the U.S. president stated -- made a declaration concerning the level down to which the United States would be ready to go. The Russian Federation has long ago stated that it has determined such a threshold for itself. And if we work together, if we act together, we could make the world a much safer place to live than the world we have now. (Applause.)

MODERATOR :The last question, Mr. President. You know, Mr. President, land in Texas, as land in Russia, is very important. We both have a lot of it. So this is a question from a Rice student. How effective has the land-reform law passed this summer in Russia been? And how do you see the future of land reform?

President Putin:You know, the land question in Russia is not just a legal and not just an economic issue.

It is a very complex, complicated -- emotionally complicated issue, emotionally complicated factor in the life of our country, and this has traditionally been so for centuries. The lack of normal trade in land is a serious impediment to the development of the economy.

Now we have passed a law on free trade in land, free trade in land for cities and minor townships, and this law concerns a minor percentage of the entire land in the country. And outside the brackets of that law, we left the arable lands, the agriculture lands. The reason is that we have a very complicated system of leasing arrangements, and some mistakes have been made that resulted in the emergence of a large group of people who have the right, the ownership of major plots of land, but have no real possibility to make use of those plots of land -- to make use of them, so they have not become owners in real terms. But the paper stipulating that this man is the owner does exist.

So this created -- this resulted in a very complicated situation, and we have to proceed very carefully to make sure that persons that have such papers confirming their ownership rights do not feel deceived. Experts are now suggesting various options, various scenarios, to come out of this situation. But in the final analysis, there is only one correct way; that is the way toward market-oriented reform. And we will pursue this road, but taking into account historical conditions, we will have to proceed very carefully. (Applause.)

MODERATOR : Mr. President, thank you very much for honoring us with your presence.

by Federal News Service, Inc., 620 National Press Building, Washington, DC 20045, USA.