OREANDA-NEWS. June 06, 2011. Vladimir Putin's opening address: Friends, colleagues, good afternoon, I'm very happy to see you and welcome you to Sochi.

You have chosen an appropriate venue for your professional meeting, not because Sochi will play host to the Olympic Games, but because probably Russia's largest infrastructure project is being implemented here. We are building motor roads, constructing bridges and tunnels and, of course, extending the railway. Suffice it to say that Sochi will receive an additional 200 km of new railway and dozens of related modern infrastructure facilities. Sochi residents and guests will be able to reach any destination quickly and in comfort.

Moscow and Sochi, the home of the 2014 Olympic Games, will also be linked by high speed rail service. The travel time from Moscow to Sochi will be cut in half. We have truly ambitious plans for developing infrastructure, and we want to create the terms that would make it profitable for both domestic business people and our foreign partners to invest into Russian railways and projects linked with their development.

We are consistently implementing our strategy for the development of railway transportation until 2030. This year we adopted a federal targeted programme on developing transportation infrastructure in general, and the programme also devotes serious attention to railways. This is a medium-term programme that runs to 2015.

The government has given the industry continuous and solid financial support. The federal budget alone allocated more than 330 billion roubles for this purpose in the last three years. We are open to the broadest possible international cooperation and are interested in the flow of investment and modern technology. We have broad opportunities for joint work in using knowledge, capital and technology. Russian infrastructure, engineering and construction companies also have something to offer their colleagues and we hope that our cooperation with foreign partners will be a two-way street.

I'd like to emphasise once again that the Russian government and the business community are planning to carry out a fundamental modernisation of national railways. We will tailor our development plans to growing demand for shipment and create the foundation for economic growth. We will have to fulfil a number of objectives. First, we must seriously modernise the domestic railway network and eliminate bottlenecks in key railways, primarily in east-bound mainlines, such as the Baikal-Amur Railway and the well-known Trans-Siberian Railway. We must expand railway access to our major ports in the Far East, the north-west and here, in the south of the country. Needless to say, we are going to make full use of Russia's transportation potential. We all realise that it is simply enormous. We will try to make routes passing through our territory convenient and commercially attractive. I do understand, and I'm sure you know too, how much we will have to do to achieve this.

Second, we will develop high-speed railway service. Now high-speed trains are running along three routes – Moscow-St Petersburg, Moscow-Nizhny Novgorod and St Petersburg-Helsinki. We are thinking of speeding up the commissioning of new facilities and providing for additional routes. True, our high-speed service (and you are all experts and know that) is not the fastest in the world, but these trains are still much faster than the standard ones in use. Today we are going to not only expand the existing facilities but also to create an entirely new infrastructure for the new generation of rolling stock and locomotives. Of course, we'll figure out how to do that. This will be expensive, but we are already working on that in the context of our preparations for the 2018 FIFA World Cup – we want passengers to be able to comfortably travel between venues.

Third, we will have to seriously modernise the technical basis of our industry. We will encourage the introduction of innovations and modern cargo, passenger and commuter railway carriages through technical regulations and legislation. There is a guaranteed long-term demand for equipment in Russia. Our strategic goal is to meet this demand, and we will work on this, all the more so since the railway yards require renovation, as the specialists know. I'm confident that foreign partners will duly appreciate these prospects and an opportunity to gain a foothold in the Russian market. It is in our common interests to switch from simple purchases of imported technology to the development of modern production lines, the exchange of technology and the organisation of engineering centres. We can already cite some good examples. Russian companies are developing cooperation with the world's leaders in railway equipment, such as Alstom, Siemens and Bombardier.

Fourth, we have decided to extend the structural reform of domestic railways to 2015 in order to make them more effective, encourage competition and create attractive terms for private investment. We intend to make active use of different forms of private-public partnership. Among other things, we are considering the possibility of applying a so-called network contract that provides for mutual commitments between the state and the infrastructure owners. The state bears part of the expenses involved in developing and upgrading the infrastructure, while the owner commits itself to guarantee its smooth and safe operation.

And here we come across one more issue that is important for investors and all other participants in the market. I'm referring to tariffs. In this respect we'll be guided by a reasonable balance. We understand that the industry requires resources for infrastructure development, repairs, technical maintenance and the purchase of new equipment. But raising tariffs to an excessive degree is also dangerous for the economy in general and for other freight carriers.

And, finally, the last point. We intend to closely link our efforts to upgrade railway infrastructure with our integration processes, such as the Customs Union and the Common Economic Space. This primarily concerns three states – Russia, Kazakhstan and Belarus. On the whole, our railways must become a powerful integrator of the entire Eurasian market, and we are ready for partnership and cooperation in this respect.

I think that many will agree that after the Soviet Union's disintegration the railways of CIS countries played a major role in preserving integration in other industries, separate segments of which sometimes cannot exist without each other because of their close cooperation in the once unified state. Common power grids and railways made an enormous contribution to overcoming the economic and later on social difficulties in post-Soviet times, and still continue to play a very positive role now. Mr Yakunin, please take the floor now. I'll then invite you to take part in the discussion. Let's exchange views on how to build cooperation and on what principles to develop it. I'll be pleased to answer your questions, if any. Many thanks to all of you for your attention.

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Vladimir Putin's closing remarks:

I would like to thank you for gathering here in Sochi, in Russia, to discuss important issues such as transportation, production and the development of infrastructure. I am pleased to note that the investment project to develop the infrastructure and the work connected with the production of rolling stock is gathering momentum. In general, I am very satisfied with the progress made in our cooperation. 

I would like to assure you that the government of the Russian Federation will certainly support similar projects. A representative of JP Morgan said that misunderstandings and misconceptions about Russia often arise. But I believe that we will clear these up through the course of our practical work. But sometimes it’s difficult for us to promote some projects, for instance, extending the 1520 mm gauge railway line to Vienna and establishing a logistics centre, as we wanted. Everybody seems to be interested in this, but some complications arise all the time – either on the corporate or on the government level. There is nothing connected with politics here, all the problems are purely economic.

Take the brewing scandal over vegetables produced in Europe that certainly has nothing to do with railway transport. All European countries hurl accusations at each other in connection with cucumber scare, and now they are trying to get us involved. Yes, Russian health services have closed the import of vegetables from the European Union. We are not pleased about this since it is not autumn, when we have enough of our own products, but only the beginning of summer, and we are in principle interested in receiving these products. But representatives of the European Commission say that Russia's decision is contrary to the spirit of the WTO. Frankly, I don’t know what spirit this decision contradicts, but cucumbers that lead to people’s deaths after being eaten do indeed have a “bad smell.” We are waiting for our partners at least to name the source of the infection. But they themselves cannot understand and figure out what is going on there. We cannot poison our people for the sake of some spirit – people die after eating these products! I will, of course, examine the validity of this decision by our health protection services, but still we are looking forward to the relevant information from our colleagues at the European Commission.

This is a very serious issue. Thank God, no similar issues have come up in the field of transport, though road, rail and air transport is a very sensitive sphere. It deals with a wide range of economic sectors – those involving large groups of people and major enterprises. We would like to be in contact with you through the work organised by Russian Railways in order to be able to foresee and prevent possible difficulties. And, we would really like to work as a team, for the benefit of each side, to make the necessary decisions together in a timely manner. I would like to assure you that this is what the government of the Russian Federation wants to do. We will be glad to see you at the meetings and during our joint work.

Thank you for your attention.