Heydar Aliyev: Distinguished Mr. President of the Russian Federation, Vladimir Vladimirovich, distinguished guests, ladies and gentlemen!

Today, the official visit of the President of the Russian Federation to Azerbaijan commenced. Vladimir Vladimirovich, I cordially welcome you. You accepted my invitation and the desire of many people, therefore I express my gratitude to you for the official visit to Azerbaijan.

It is not an exaggeration that this visit is of historical importance. Since the collapse of the Soviet Union and acquisition of independence by Azerbaijan the head of the Russian Federation has not made any visit to Azerbaijan. There could be likely some reasons for that, however, we were much interested in realizing this visit. Now, Vladimir Vladimirovich Putin realizes this visit. We have mutual understanding in all issues and have discussed our joint work within the CIS and in the Council of the Head of States of the CIS and in our bilateral meetings. We had more than two hours talk with Vladimir Vladimirovich. Indeed, many people, including the delegates are keen to know what we discussed. Above all, we discussed the bilateral relations and emphasized the need to improve them in all aspects. I note that we have reached consent in all issues. Surely, outcome of the visit of the President of the Russian Federation pleases me. We dealt with the situation in the Caucasus, removal of conflicts, and the need to strengthen fight against terrorism, extremism and separatism. Undoubtedly, the Upper Garabagh conflict between Armenia and Azerbaijan was in the focus of our discussion. Honestly, I am glad that we can talk about it now very openly, pay special attention to it, exchange views about it. Most likely, it is the first time that we have this opportunity. The Baku Declaration on bilateral relations between Russia and Azerbaijan and joint declaration on the status of the Caspian Sea have been drawn up. Some intergovernmental documents and documents of special significance have been drawn up as well. I think that the delegates discussed a number of issues and those related to the documents.

I think the Baku Declaration, that we are about to sign, is very significant and of historical importance. This declaration clearly reflects our position within the bilateral relations, within the present realities, within both international and regional issues, including conflicts. To my mind, the joint declaration on the status of the Caspian Sea is of special importance. The status of the Caspian Sea is being discussed for 7-8 years. Unfortunately, numerous discussions have not yielded any results. I appreciate highly the election of Vladimir Vladimirovich President of the Russian Federation eventually created a favorable environment for the settlement of many issues. Indeed, we can see the real and clear attitude of Vladimir Vladimirovich to many issues, including the status of the Caspian Sea. Many issues that had been dormant for many years are discussed now. For that, I emphasize Vladimir Vladimirovich's great contribution.

The first agreement signed with Kazakhstan marks the milestone. The document that we shall sign today will contribute to it. That is, we do not want this issue to be discussed in different international forums, and thus, we understand that its solution is real. What is essential is that we can use the Caspian Sea in favor of all the littoral countries. Therefore, I attach special emphasis on this issue in a sense that this declaration does not only attribute to the bilateral relations, but also, more importantly, it is of great significance for the pre-Caspian states.

I am glad that we had this talk, and I express my gratitude to you for your visit. I think Vladimir Vladimirovich will have a broad talk on this issue, and thus, the floor is yours.

Vladimir Putin: Heydar Aliyevich, many thanks. I want to express my appreciation to you for the invitation, to the Azerbaijani friends and colleagues for their warm welcome. Initially, we noticed not only environment for talks, but also enthusiasm for arrangement. Heydar Aliyevich, we have met regularly and had a chance to exchange views, however, it was not official. You mentioned that president of the Russian Federation made a visit for the first time in the last 10 years. I personally, on behalf of the Russian Federation, officially invite you to pay a return visit to the Russian Federation.

We pay special attention to the development of bilateral relations with Azerbaijan. I think we have all possibilities. I agree with the President of Azerbaijan that we can open a new page in our mutual relations. We commenced our negotiations with the settlement of the Garabagh problem, which is one of the crucial issues of the region.

Furthermore, we paid enough attention to economic issues. Last year the turnover of goods increased for 25 percent. This is appreciative, however, the level of mutual economic relations is not necessarily sufficient. Thus, there are a number of issues which need to be discussed.

Lately our political discourse has been intensive and productive. I want to emphasize the efficient activity of the Russian-Azerbaijani law enforcement agencies against terrorism and organized crime. Heydar Aliyevich, I want to express my gratitude to you and to the Azerbaijani government for the extradition of persons guilty in the explosion of houses in Daghestan. Terrorists have to be punished whatever they do in order to cover their activity. Now religion can not be a cover-up since the Daghestani Muslims were victims of the terror act. I want to assure you that, as I mentioned in our tete-a-tete talk, there will not be vengeance. Legal procedure is carried out in a democratic and open way in the democratic Russia; all have lawyers, all pro and contra evidences will be considered duly, only then will they be sentenced.

I want to mention, we are aware of it, after the handover of terrorists to Russia there was attempts of terror against you. You were not scared and showed great courage. I expressed my gratitude to the Azerbaijani government, however, you are the person who bears whole responsibility. For, I personally thank you.

Now I want to talk about trade and economic cooperation. Let me talk in a comprehensive way. We count on the activity of the Intergovernmental Commission on Mutual Trade-Economic Relations. Recently when we spoke over the phone I suggested to add business people to this Commission from the Azerbaijani and Russian sides. We are ready to present our proposals. I realized that you really appreciate them. Thus, we expect your proposal in this regard. It seems to me that the enlargement of the Commission by including business people will eventually give stimulus to the activity of the Commission. You talked about the necessity of changing the course of the Commission in our tete-a-tete talk.

Russia is much interested in close cooperation in the field of energy. This includes production of oil and its transportation. From our side, we are ready to set up favorable conditions, including material-technical bases, and we are confident that our cooperation in this field will be lasting. We hope that the Azerbaijani colleagues will take this stance as well. It concerns the volume of oil to be transported to Novorossiysk.

There are certain problems in the field of economic cooperation. For example, it is associated with the participation of the Russian companies and enterprises in the modernization and reconstruction of the Azerbaijani industrial complex, metallurgy, energetics and agriculture. We may cooperate in power-energy. Moreover, we can set up parallel work of the power energy systems of Azerbaijan and Russia. In the past, even in the Soviet period, relations were not bad. There are perspectives not only in the restoration of previous level, but also in the development of relations between Russia and Azerbaijan in the sphere of power-energy. Russia is a customary market of the Azerbaijani agricultural products. Apart from that, Azerbaijan imports numerous food products from Russia. I think that the export of fruit and early vegetables to Russia and import of the Russian food products to Azerbaijan is most likely to become, as before, the main course of mutual and productive cooperation.

Moreover, we consider that the participation of the Russian enterprises perspective in the reconstruction of Baku metro station, in changing of trains and some part of facilities very promising from economic point of view. I suppose we are likely to find an acceptable decision on financial issues. Indeed, this is of special importance in such projects. Experts say that we can make certain decision and eventually can work out on its realization once we embark on practical issues.

Our companies are interested in setting up joint enterprises on the implementation of programs in shipbuilding, in the restoration of poultry enterprises in Azerbaijan, in the development of pharmacology and light industry, in the production of agricultural products and electro-technical devices.

Russia is also ready to participate in the restoration and modernization of aluminum industrial enterprises. I know that there are certain decisions made in this field. But we do not lose hope that we shall be able to carry on the dialogue.

Recently, some positive stimuli emerged in another field. I mean the development of military cooperation. We highly appreciate the visit of the Minister of Defense of the Russian Federation, Marshal Igor Dmitriyevich Sergeyev to Azerbaijan and documents signed during his visit. We do also positively appreciate the Azerbaijani-Russian border cooperation. We hope that the Azerbaijani side will ratify the agreement on cooperation on border issues. As we both agreed, it is crucial to proceed the negotiations on the delimitation of the borders.

I think that the cooperation of Azerbaijan with the regions of the Russian Federation is the main field of mutual activity. I suppose that the more we cooperate in this sphere, the more productive and efficient our cooperation will be. Above all, the regional cooperation always meets the need of people of both countries.

We think that it is expedient to accelerate the process of the development of an agreement on border regions between Russia and Azerbaijan, including the efficient use of water and its protection. I think that it is worth thinking of it. This might be a multi-lateral agreement. If we have good intention, I know that both parties have it, then we can achieve positive results.

In addition, we attach great importance to the mutual relations in the field of culture. Heydar Aliyevich, I personally extend my appreciation to you for your attention to the development of cultural relations between Russia and Azerbaijan, support for and the development of the Russian language in Azerbaijan. I am aware that all schools in Baku remaining from the Soviet time operate today and the development of the Russian language is maintained. Attitude of the Azerbaijani government demonstrates that our cooperation targets at future.

Heydar Aliyev: Not only at schools, but also at higher schools there function Russian departments.

Vladimir Putin: That is, the Russian language is not restricted. It shows that we have a good basis for the further development of relations. We are confident that culture and art will further serve to our bilateral relations.

Russia and Azerbaijan are the Caucasian states. Therefore, we pay a special attention to the Caucasus to have there peace, friendly neighborhood and progress. We also highly appreciate the activity of Azerbaijan in the operation of the mechanism of the four Caucasian countries. We, the heads of the four Caucasian states, had several meetings together. I think that we can continue our discussions on regional issues.

We hope that we can have new and constructive relations with Azerbaijan. Moreover, we hope to have open discussions with the four countries of the Caucasus on the regional situation. We are confident that this forum will strengthen the security and develop the cooperation in the region.

We completely understand how serious and painful is the Garabagh problem for Azerbaijan. We closely observe the development of events and we are concerned that there is not a real progress in its settlement. It is not possible to be indifferent to the destiny of numerous refugees who live in critical conditions for about 10 years. I want to declare that Russia will proceed its efforts both independently and within the Minsk Group to find a solution to the Garabagh problem. Moreover, the long continuing situation of neither peace, nor war hinders our relations with Azerbaijan, Armenia and other countries of the Caucasus. In general, it impedes the regional cooperation. I think that we shall encounter many serious difficulties on the way to peace. Nevertheless, it is possible to achieve an agreement on the issue. Heydar Aliyevich, we attach our hope to the direct dialogue you had with Robert Kocharyan, president of Armenia. We trust your wisdom and constructive position of Armenia. I must note that once there is an agreement, Russia can be both a mediator and a guarantee of that agreement. Indeed, it will take into account the interests of the parties involved in the complicated conflict.

We are confident that the heads of the involved parties are able to solve the problem with the assistance of the world community. Only then the mediators can join and render necessary assistance by taking the agreements into account. I reiterate that as we talked, I do not conceal that we had a broad discussion with Heydar Aliyevich on this issue, we are ready even now to be actively engaged in this issue. Our prime target is to assist the achievement of peace. I believe that it is possible and it is worth making every effort to realize it.

As Heydar Aliyevich mentioned, we paid special attention to the positions of Russia and Azerbaijan in problem of true legal status of the Caspian Sea. Certainly, this problem has been discussed for a long time. It seems that it is not possible to solve it entirely now. I think that we must proceed the discussions and meetings with all the pre-Caspian states. If we have an opportunity to come to an arrangement on a bilateral level, once it is acceptable by both sides, we should achieve it.

Above all, we are thankful to the Azerbaijani government for its constructive position in maintaining its national interests. However, we think that the agreements, which we have reached, are acceptable. They are consistent with the Russian interests as well. If you do not object, I think you are not against, we can support the initiative of the president of Turkmenistan to hold a meeting of the pre-Caspian states in Turkmenistan by the end of February or at the beginning of March.

Heydar Aliyev: Yes, indeed.

Vladimir Putin: I suppose we must have meetings with our colleagues, find appropriate time and support the leader of Turkmenistan. Heydar Aliyevich, this is what I wanted to say. We can ask our colleagues if they want to say something.

Heydar Aliyev: Vladimir Vladimirovich, first of all, I want to thank you for officially inviting me to pay a visit to Russia. I highly appreciate it and I think that our personal contacts, and numerous meetings of different ministers and heads of departments of Azerbaijan and Russia enable us to realize this visit. I think that such visits will intensify the development of the Russian-Azerbaijani relations.

I do also thank you for your sensitive attitude to the earthquake in Azerbaijan and for the humanitarian aid. This is very crucial for those suffered from the earthquake. At the same time it is a signal friendship between our nations. I completely agree with the opinion expressed on the Russian-Azerbaijani relation. We talked about it in our tete-a-tete meeting, and I absolutely understand your interpretation. I realize that it this is both Russia's and Azerbaijan's position.

I think our relevant bodies and ministries should realize the issues on which we have already reached an agreement. I want to stress the importance of our efforts in the Caucasus. Thus, it is of special significance to have a meeting of the presidents of the four Caucasian states, Russia, Armenia, Georgia and Azerbaijan, the foundation of which was laid by you. Naturally, to achieve concrete results it is vitally important to deal with the Armenian-Azerbaijani Upper Garabagh conflict and other conflicts in the Caucasian region.

Unfortunately, the Caucasus is now a region with huge and small conflicts. Therefore, we, the heads of states of the Caucasus, bear responsibility for the future of the region. I think we should proceed our efforts.

We also attach great importance to your proposals to develop economic relations. Well, the turnover of goods increased for 25 percent as you mentioned. However, the overall level is not sufficient for Russia and Azerbaijan. I want to stress that the Russian import forms the main part of this turnover, while the Azerbaijani import is minor. What does it say? First of all, it shows that Russia does this job better. Apparently, we do not use this opportunity sufficiently. Along with this, you are quite right that there are great opportunities. If we use them, we may achieve a good increase in the turnover. From this point of view your proposals will be considered. I personally consider that they will be productive for Russia and Azerbaijan.

Additionally, I appreciate your view on the cooperation of regions. I want to remind you the history. Desire for the economic cooperation between the regions of the Russian Federation and Azerbaijan emerged some years ago. I should note that the Federal government objected once there was a willing for cooperation between Azerbaijan and adjacent regions of the Russian Federation.

Vladimir Putin: Heydar Aliyevich, what can we do?! They are infected with this disease…

Heydar Aliyev: I emphasize it because you offer it now. Gujvin is here, he might recall, we invited him and he came. We drew up an agreement but suddenly Moscow sent its objection indicating that there is not an agreement on the discussed issues. Nevertheless, we cooperate with Dagestan and other regions of the Russian Federation. Your view coincides with ours, because Russia is a huge country. Regions and even adjacent regions of the Federation have enormous potentials and sometimes equal to the Azerbaijani economic potential.

Vladimir Putin: Heydar Aliyevich, pardon me for the interruption. Economic relations are not on a sufficient level. The overall trade constitutes 300 million USD, whereas, the Russian trade with Cuba has reached roughly 1 billion and 200 million USD.

The turnover of goods with Belarus is 9,4 billion USD, while with our neighbor and traditional partner it is 300 million USD. This is even strange.

Heydar Aliyev: This is strange, however, Russia holds the first place in our foreign trade. Other countries are jealous. It is natural that Russia holds the first place. I reiterate that Russia is a huge country and has great economic potentials. Unfortunately, it goes through trade. We want the arrival of investments. For example, you are aware of our policy on development strategy of oil industry. We have involved many companies for joint development of oil and gas fields in the Azerbaijani Sector of the Caspian Sea. I want to stress that "Lukoil" of Russia holds the third place after the U.S. and British companies.

Vladimir Putin: But the Russian entrepreneur Vagit Alekberov could hold the second and the first place.

Heydar Aliyev: Frankly speaking, sometimes the Russian press and other agencies ask why Azerbaijan is heading toward the West, and why the western countries invest in Azerbaijan. We have said it many times that we welcome investment from anywhere. Vagit Alekberov, "Lukoil" was able to do that from the very beginning. 11 companies participate in the first agreement of 1994, and "Lukoil" takes 10 percent of it. Now "Lukoil" benefits from this agreement. Apart from that "Lukoil" takes part in other four agreements. By the way, "Lukoil" possesses 10 percent in "Shahdeniz", which has enormous gas resources. To be sincere, it does not mean that Alekberov has connections with Azerbaijan. We invite all the companies. One of the companies, I do not know to whom it belonged, but Shafrannik was heading it, was interested in one of the richest fields. They united with a Scottish oil company and signed an agreement. Then they sold it to "Shell" of Netherlands. We do not assume any responsibility for that. Now it is possible to invest in Azerbaijan due to your efforts and due to developing economy of Russia. For this end, we shall try to increase the turnover. At the same time, we expect Russia with in great potential to invest in Azerbaijan.

I reiterate that what we have said is our common view. I support it completely and we shall do everything possible to realize those reflected in the Baku Declaration. I want to emphasize that we attach special importance to the development of mutual relations in all the spheres. There are all possibilities to advance in all the fields.