Discusses Free Market Economy with Russian President Putin
St. Petersburg University
St. Petersburg, Russia
May 25, 2002
3:17 P.M. (Local)
PRESIDENT PUTIN: Thank you very much for having me here. It's a great pleasure,
as always, to be with young people, but especially here since I graduated from
this university, it's a double pleasure for me to be here. But this university
played a dual role in my career. The first time, when they basically gave me
a present -- they just gave me the degree that I earned -- that was the one
important part. (Laughter.) The second very important facet in my life was when
I worked here for the rector of the university as an assistant, helping him
in the area of international contacts between and among various universities.
And what I was doing was doing the same thing the rector was just talking about
-- I was setting up the initial contacts between our university and various
other universities around the world. So what we did was we invited the president
of a mid-size college from St. Petersburg, Florida, to come here and pay us
a visit, since they had the same name. So then, what I did is I talked the former
mayor, Mr. Subchek (phonetic) to receive this president of this college. So
he, in turn, invited him to come to the United States. And this Mr. Carter,
who was the head of this college in St. Pete, arranged a visit with one of the
Presidents of the United States at the time, and I think his name was Bush.
(Laughter.) After that, he invited me to come to work for him, and the rest
of my career is history, as they say. (Laughter.)
Well, to be very, very serious now, it's really a great pleasure to have business
and dealings with students because students are very direct, as you know. And
they also feel the rhythm of civilization as it's changing.
When we were guests of the Bushes in Crawford, Texas, we also were given an
opportunity to meet with young people. I think this will become a very fine
PRESIDENT BUSH: That's right.
PRESIDENT PUTIN: And I think Mr. Bush also was waiting for this opportunity,
because he asked me several times about this possibility. Well, George Bush
and I don't know each other for that long; I think it's a little bit less than
two years. But what we're trying to do is establish the environment which would
be very conducive to having people in both of our countries meet, have opportunities
to make contacts and get along better.
I don't want this to sound like a major report here, but I just want to inform
you that we have just signed two major agreements between our two countries.
One of them is having to do with the reduction in strategic arms of the two
countries, and the other one is called an agreement on a new strategic relationship
between the two countries.
As we all know, people are divided into two groups, optimists and pessimists.
And the pessimists will always find something wrong. Optimists, however, will
find in these two documents that we signed a lot of things that are very useful
But it's wonderful to deal with young people because, by their very nature,
they're optimists and they look into the future. And that's why we're here,
among other things. So today, when we were coming to the conclusion of our visit
to the Hermitage, and we were running late so we were in a hurry, Mr. Peotrovskiy,
who really had very little time, said, "By the way, before we leave I want
to show you a portrait," which was a portrait of our great Tsaritsa Catherine
the Great. And Mr. Bush, without missing a beat, said, "Oh, and by the
way, where is the portrait of Potemkin." (Laughter.)
So when you asked questions, I ask you to give me the easy questions and give
Mr. Bush the tough questions. (Laughter.) And with pleasure, I give the word
to George Bush. (Applause.)
PRESIDENT BUSH: Thank you very much. (Applause.) Madam President, thank you
for your hospitality. Laura and I are honored to be here at this famous university.
I'm particularly pleased to be coming to this university because it is the alma
mater of your President and my friend, Vladimir Putin. But even more importantly,
it is Mrs. Putin's alma mater.
The President was talking about a seminar on international relations. I guess
this is the most sophisticated seminar on international relations that you could
possibly have. So I'll give you a quick insight as to what it's like to be involved
with international relations.
There we were, as guests of the Putins in their private home last night. We
talked about our families, we talked about our passions, we talked about matters
of life that friends would talk about. The best international relations start
when people care about the other person, when they try to figure out how the
other person thinks and what makes the other person's life go forward.
We've had a lot of negotiations, of course. But the thing that impressed me
the most about the President and his wife was how much they loved their daughters.
That's a universal value. It's an impressive value.
When I got out of college in 1968, America and the Soviet Union were enemies
-- bitter enemies. Today, America and Russia are friends. It's important for
you to know that that era is long gone, as far as I'm concerned. The treaty
we signed says a lot about nuclear arms; it speaks about the need for peace;
but it also says the Cold War is over, and America and Russia need to be, and
will be, friends, for the good of the world.
And so it's my honor to come. I look forward to answering your questions. Since
Vladimir went here to St. Petersburg, it only seems fair that the hard ones
go to him. (Laughter.) We'll be glad to handle your questions. (Applause.)
QUESTION: From the Sociology Department, and the question is, everyone knows
what the brain drain problem is, and it is an open secret that the traffic of
brain drain is most oriented to the United States. I wonder what the Presidents
of these two countries think about this problem.
PRESIDENT PUTIN: I'll tell you right away, he'll say it's good, I'll say it's
bad. (Laughter.) But if you look at it a little more deeply, I'll get a little
more serious and give you some more detail. There are two methods for stopping
this occurrence. First of all, close the country down once again, and create
such regulatory conditions where people will lose the right to move freely.
Second is, in a fee economy, to create economic conditions, conditions of prosperity
for all those people so that they wish to stay here and work. And I think we
have to take the second path.
PRESIDENT BUSH: I first of all, there's a lot of brains in this room. And you
get to decide whether there's a brain drain in Russia. I tell Vladimir all the
time I mean, Mr. President all the time -- that Russia's most precious resource
is the brain power of this country. And you've got a lot of it. It's going to
take a lot of brains in Russia to create a drain. There are plenty of bright
and smart people in Russia. Your history says that. I'm absolutely convinced
that the future of this country is incredibly bright. First, because of the
great imagination and intellect of the Russian people. And second, because you've
got a leader who understands that freedom is going to enhance the future of
You need to know that my view of foreign relations is not only to promote peace,
but it's also to work with our friends, the Russians, so that the quality of
life in both our countries improves.
And so, finally, your question had a little bit of a slightly pessimistic tone
to it. Only slightly. I'm optimistic about Russia. And a strong and prosperous
and peaceful Russia is good for America. (Applause.)
QUESTION: -- from the Department of Economics. And I would like to ask this
question: We are involved in high technology exports. And my question, in fact,
is when will the time come when the bulk of the exports from Russia would be
high technology and high technology products, and not the primary products like
oil and wood, as the situation is now?
PRESIDENT BUSH: Good question.
PRESIDENT PUTIN: It's a very professional question. And you, as an economist,
understand very well that this situation did not just happen yesterday. The
world market demands those products that are competitive. And the things that
you mentioned, the high-tech kinds of things that you mentioned are in great
demand in the world marketplace. And it's a no-brainer to understand that there
were the kinds of talent and the kinds of products in the old Soviet Union that,
in fact, had been in demand, because the best brains were directed precisely
in that direction in those days.
One of these areas, for instance, is missile technology. And our cooperation
with the United States in this area can be measured in the billions of U.S.
dollar equivalents. And during this summit, we dedicated a substantial portion
of our discussion time precisely to this issue, which I consider very important
if we are to remove many of the things that are obstacles in allowing high-tech
to come into Russia. And these obstacles and limitations were placed upon us
back in the days of the Soviet Union, and by their very inertia continue on
Therefore, many of the products come into Russia from third countries -- from
Europe, from Asia, and not from the United States. We think that it's not good
for our bilateral relations with the United States. We have to do better. And
that's why a great amount of time was spent by President Bush and myself in
trying to find ways to remove these obstacles. We also spent a lot of time thinking
about what we, ourselves, have to do internally in Russia to help get rid of
But since we have the high-level esteemed guest in our midst, let me just direct
our question to our bilateral affairs, and that is what we need above all for
Russia is an absolutely nondiscriminatory access to world markets and to U.S.
markets. And we don't need preferences, we don't need subsidies, we don't need
special favors. We just want normal, simple, ordinary, fair trade relations.
PRESIDENT BUSH: The role of government is not to create wealth. The role of
government is to create an environment in which the entrepreneur or small business
or dreamer can flourish. And that starts with rule of law, respect of private
property, less regulatory burdens on the entrepreneur, open banking laws so
that all people have access to capital, and good tax policy.
Private ownership in Russia is a little more than 70 percent. That's a significant
change. More and more people are owning small business. That's incredibly important,
because that phenomenon makes sure that the elites don't control the economy.
There's one piece of good news about Russian taxation, and one that I learned
about yesterday, which Vladimir and I haven't had much time to talk about, that's
troubling. The good news is that the flat tax in Russia is a good, fair tax
-- much more fair, by the way, than many Western countries, I might add.
I am worried when I heard that some Russian goods -- there is an export tax
on Russian goods. And the trouble with that, of course, is that no matter how
good your goods are, if you price yourself out of the market, no one is going
to buy. So that's a barrier. There's also barriers coming from Western countries
that we've got to eliminate. Export controls on high-tech goods are problematic,
that we're now reviewing in the United States.
And, very briefly, it is very important for the infrastructure to be modernized
as quickly as possible, so that information from around the world moves quickly,
freely throughout Russia, so that an entrepreneur such as yourself are able
to learn from other entrepreneurs being connected through the Internet, which
is going to be a great source of ideas and potential wealth for Russia.
QUESTION: -- from the Foreign Affairs Department. And the question is addressed
to President Bush: What is the image of Russia that exists in the United States
set-up, and how this image of Russia influences the image of Russians
PRESIDENT BUSH: Image of Russia in the United States?
QUESTION: -- of Russia exists in the American political set-up, and how this
image of the Russians influences the making of decisions in the area of American
PRESIDENT PUTIN: This guy is very tricky, he's a very tricky young fellow. (Applause.)
Mr. President, he's going to listen to your answer, write a dissertation and
get a degree. (Applause.)
PRESIDENT BUSH: Most Americans, -- by far, the vast majority of Americans are
very pleased by the fact that the United States and Russia is entering into
a new era. We've got a new war to fight together. We're joined to fight against
blood-thirsty killers. These people hate freedom. They hate multiethnic societies.
They can't stand religion. And it's a threat to America, and this is a threat
to Russia, as you all so well know. In this country you've been hit by terrorist
acts like we have been hit by terrorist acts.
The American people truly appreciate the cooperative spirit of the Russian government,
and truly appreciate the sympathies of the Russian people for what took place
on September the 11th.
It's an interesting question about leadership. Does a leader lead, or does a
leader follow? Does a leader lead opinion, or does a leader try to chase public
opinion? My view is the leader leads. And my administration, along with Secretary
of State Powell and National Security Advisor Rice, are going to do everything
we possibly can do to make relations with Russia strong and friendly and cooperative
and productive for both people.
Good foreign policy -- good foreign policy sets a foundation that is so firm
that it won't crack if one -- one nation or the other gets weak in the commitment
to friendship. And we're laying a strong foundation.
PRESIDENT PUTIN: I have to say that we have political leaders, we have public
leaders, we have journalists. Our journalists and people who are specialized
in the ministry, for instance, of international relations and foreign affairs,
and other specialists in many other departments and agencies confirm what President
Bush has just said.
PRESIDENT BUSH: Yes, ma'am. Sorry.
QUESTION: A student of the Management Department, and the question is addressed
to President Putin: Our countries have lived through quite different relations.
While in the second world war we had one type of relations, relations very close
and friendly; and then the Cold War came. And my question is, as a result of
this evolution of relationships, what is the state of our relationship between
these two countries now?
PRESIDENT PUTIN: You're studying management, right? Are there any people from
the History Department? And I think the people from the History Department will
probably support me in saying -- in my saying the following -- the World War
II period and the Cold War period were but two of the most contrasting and sharpest
examples of the evolution of our relations. But we can talk about a lot of different
episodes in our cooperation.
But it really began in the times of the Revolutionary War in the United States.
At that time, the Crown of England appealed to Catherine the Great and asked
for support in quelling the rebellion in the United States, and the Russian
sovereign turned and said, that's not what we're all about, and declared a military
neutrality vis-a-vis the war. And this neutrality played a significant role
in allowing the United States to gain its independence and gain its foundation.
And today I'm going to present to President George Bush two very interesting
documents, two original documents having to do with the earliest days of our
diplomatic correspondence between our two countries.
The world was changing over time, our relations were changing over time. Today,
for instance, the United States is our number one trading partner for Russia,
both in terms of the number of goods that are traded, and also in terms of the
accumulated investments that we have from the United States in Russia. The United
States is a great and powerful power, and has an economy that is powerful enough
to a great extent to determine world economics.
For decades, we voluntarily, on our own, created walls and barriers around ourselves
and decided to live alone within these walls. And at a time when high technology
is absolutely mandatory to the beneficial development of any country, this circumstance
today is just unforgivable. And today, in the realms of national security, international
security, economics, trade, we now are beginning to blend in together with the
world economy at large.
You can call our relations today a multi-component kind of a relationship depending
on many, many different aspects. But I want to name the one and most important
aspect. Over the last year and a half or two years, what we've experienced is
a huge growth in confidence and trust manifested between our two countries.
And it is precisely this distinguishing characteristic which colors our relationship.
If you're sitting next to the First Lady of the United States, I can't say you
can't have a question. (Laughter.)
QUESTION: The lady is from the Management Department, and she addresses her
question to both of you gentlemen: To make up a manager, manufacturers are involved.
What were those factors that shaped you as leaders, as managers?
PRESIDENT BUSH: I understand a leader can't do everything. And so, therefore,
a leader must be willing to surround himself, in my case, with smart, capable,
honorable people. A leader must be willing to listen. And then a leader must
be decisive enough to make a decision and stick by it.
In politics, in order to lead, you've got to know what you believe. You have
to stand on principle; you have to believe in certain values. And you must defend
them at all costs. A politician who takes a poll to figure out what to believe
is a politician who is constantly going to be trying to lead through -- it's
like a dog chasing its tail.
And, finally, any leader must -- in order to lead, must understand -- must have
a vision about where you're going. You must set clear goals, and convince people
of those goals and constantly lead toward those goals.
And, finally, you've got to treat people with respect on your team. And by respecting
people, they become -- they become better members of the team and, therefore,
give better advice and work toward the same goal.
PRESIDENT PUTIN: To be successful in any kind of business, in any kind of enterprise,
you have to have two qualities: you have to have a sense of responsibility and
you have to have a sense of love.
Unfortunately, we have to come to an end here. Somebody is going to start crying
back there if they don't get a question.
QUESTION: (Asked in Russian.)
PRESIDENT PUTIN: I did the right thing by giving the question to her, she's
asking President Bush instead. (Laughter.)
QUESTION: (Asked in Russian.)
PRESIDENT PUTIN: Great question, WTO. (Applause.)
QUESTION: The question is for President Bush from -- from the Department of
International Relations. What specific and concrete steps can we expect from
the United States in order to support our accession to the World Trade Organization?
PRESIDENT BUSH: Starting with having a President who thinks you ought to be
in the WTO and I think you ought to be. And I think the accession to the WTO
ought to be based upon the rules that every other nation has had to live up
to. Nothing harsher, nothing less harsh.
And I've told Vladimir in private and I've told the American people, I'm for
Russia going into the WTO. Just like I asked just like I asked Congress yesterday
once in a press conference in Russia to get rid of Jackson-Vanik.
So, to answer your questions, I vote aye, assuming that the President the Russian
government continues to reform her economy, open it up, make market-based economy
work. And that's exactly what the intentions of this President -- that's the
intention of this President.
PRESIDENT PUTIN: George said it very well. The President of Russia has to want
to be a member of the WTO. And he said that he's for it. (Laughter and applause.)
If that's sufficient, I'm in. (Applause.) But on conditions acceptable to Russia.
Dear friends, I want to thank you. I would like to thank you for the warm and
friendly atmosphere in which we were. And it is of great importance for me personally.
Because indeed, I want very much our dear guests to enjoy my native city. And
although, of course, our movements create some hurdles for the movement of other
people in the streets of Moscow, that, as George pointed out, the people are
not very cross with us, since they wave their hands at us and smile at us. (Laughter.)
And today, we had a friendly and kind atmosphere here, and the questions were
in that spirit. And I am grateful to you for that.
And, as I promised, I would like to hand over to President Bush the copies of
the first diplomatic documents. And these documents actually initiated, they
started the diplomatic letters exchanged between our two countries, and they
date back to 1780. (Applause.)
PRESIDENT BUSH: Thank you all very much. (Applause.)