Address by H.E.Mr.Gleb A.Ivashentsov,

Ambassador of the Russian Federation

at Korea Importers Association Forum

(Seoul, May 23, 2008)

Ladies and Gentlemen,

Dear friends,

I am glad to be with you today at the KOIMA Forum as a guest speaker. Your invitation testifies your interest in my country, Russia. This is encouraging. Russia and Korea are close neighbours and active partners. Geography and history predestined them to settle a lot of common problems by joint efforts.

This year is a special year for Russia. In December 2007 the elections to the State Duma – the Russian Parliament – took place, followed by the elections of the President of Russia on March 2^nd. On May 7^th D.Medvedev took the oath as the new President of Russia, and on May 8^th V.Putin headed the new Government.

The people of Russia once again reaffirmed its conviction to follow the course aimed at the modernization and strengthening of the country in political, administrative and economic spheres, as well as to social reforms serving the majority of the population, in other words, to all the values rightly connected in our people’s consciousness with V.Putin’s presidency.

Indeed, a lot has been done in Russia within last few years.

Russia has returned to the world arena as a strong state, a state capable of defending itself and worth to be regarded. We have accumulated a considerable foreign policy capital, now working for the country's development, protecting interests of our citizens and national businesses. Within last eight years the foreign investments have grown not by just a few percent, but 7-fold. While previously the net capital outflow from Russia totaled to US$ 10-15-20 or even 25 billion a year, in 2007 Russia has experienced an all-time peak total capital inflow of US$ 82,3 billion. Our trade volume with foreign countries grew more than five times. More than six million of our citizens travel abroad every year.

Last year we reached the 8,1% GNP growth which is the largest figure in seven years. According to the international experts' evaluations in 2007 Russia surpassed such G8 countries as Italy and France in GNP volume based on parity purchasing power thus entering the world's seven largest economies. Large-scale projects in energy, transport infrastructure, machinery production and housing have been launched, as well as structural reforms in aircraft and shipbuilding industries. Considerable investments are drawn into automobile and railway machinery production.

Some of those industries which used to be traditionally well developed in Russia have acquired a kind of new breath. For instance a few days back we witnessed the launching of a new medium-haul passenger aircraft “Sukhoi Super jet”. It is a first pioneer model fully developed in the post-Soviet period which surpasses all modern standards in efficiency and safety.

Our children will not have to pay for our obligations as our national foreign debt has come down to 3% of GNP, which is considered to be one of the lowest in the world.

Significant financial reserves have been accumulated which protect the country from external crisis threats and guarantee our social obligations in the future. Russia's financial position is being strengthened as our gold and currency reserves storm the mark of half a trillion US$. Macroeconomic stability and financial self-sufficiency of the country are generally ensured. As a result of that in last two years Russia has been witnessing a real investment and consumption boom.

Last year we have also broke a 25-year record in birth rate growth – the largest number of children in 15 years were born.

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With her internal consolidation Russia once again is turning into an influential and independent factor in the world politics and economics. Without Russia and despite Russia, not a single international problem of any significance can be solved.

Russia is a reliable partner for all of the international community in solving global problems. And we are interested in mutually beneficial cooperation in all fields such as security, science, energy, climate change prevention. It is relevant to the world as a whole. It is relevant as well to the region where the interests of Russia and the Republic of Korea meet.

The economic consolidation of Russia allows us today to take up the long-pending task of the integrated development of the Eastern Siberia and the Russian Far East the area of which is seven million square km or 41 percent of the territory of Russia.

I mean the more efficient integration of that vast area into Russia's economy as well as into international markets, its development intended to create favorable business environment and decent conditions for life and work of the people.

The needful programs have been approved by the Government of Russia.

For instance, the Federal Special Programme for the development of the Far East and trans-Baikal areas in the period up to 2013 adopted by the Government of Russia on August 2^nd, 2007 provides financial allocations equal to more than US$ 22 billion for development of infrastructure which includes reconstruction of 22 airports, 13 sea ports as well as bridges, highways and power plants. About US$ 4,0 billion of that sum will be allotted to the city of Vladivostok which will house the APEC summit of 2012.

The aims are great but their achievement will bring an even greater output. We believe that potentially the outcome of the uplift of the Russian Asia’s vast territories and utilization of its natural and other resources could bring output which may be comparable or even greater than those of the development of the American West a hundred years back. The process will inevitably exert major influence on all civilizational processes in the Asia-Pacific region and beyond.

We would welcome investments from interested countries of the region on a balanced basis to work over the Siberian resources. But we consider that the set tasks should be accomplished first of all by our own efforts.

Inspite of all difficulties in uplifting of the Asian areas of our country we will neither part with the sovereignty over those resources nor share it with others. This is the main condition of our cooperation with foreign partners in developing of our resources on the basis of the Russian law.

In no other region are our internal and external interests so interconnected as in Northeast Asia. For it is necessary to guarantee external security for the economic development of Siberia and the Russian Far East. And by Russia’s view such guarantees could be best provided not by forming certain new "holy alliances" based on ideological solidarity or pushing forward ultimatums which herd anyone into an impasse but by developing positive relations with her neighbours in the region based on the “security through partnership and mutual development”.

In that we have already achieved a lot. Our strategic partnership with China has been considerably enhanced by the year of Russia in China held in 2006 and the year of China in Russia in 2007. Russia’s relations with Japan in recent years have been characterized by an intensive political dialogue at different levels. The April visit to Moscow by Prime Minister Fukuda has reconfirmed both countries’ willingness to bring closer their approaches to settlement of many international and regional issues. To the DPRK Russia is linked with the Treaty of Friendship, Goodneighbourliness and Cooperation.

The partnership with the Republic of Korea which is an integral component of the general strategy of Russia at the Asia Pacific direction bears an independent value to my country.

Both our states have common interest in eliminating the war threat in Northeast Asia. The main source of that threat is the more than half-century old military confrontation on the Korean Peninsula presently aggravated by the nuclear issue.

That issue is of a direct concern for Russia. We need neither nuclear and missile tests at our border, nor a saber rattling by anyone. Therefore my country actively participates in the Six-Party talks on the nuclear issue of the Korean Peninsula.

We believe that all work on settlement of the nuclear issue of the Korean Peninsula should be done in the context of providing security guarantees to all countries of the region viz. the DPRK, the Republic of Korea, Japan etc. It is very important to avoid any actions that could lead to new tensions around Korea and the situation coming out of control.

Russia is prepared to make her contribution to the inter-Korean normalization as well, for by our and not only our, understanding the settlement of the nuclear issue of the Korean Peninsula and the inter-Korean normalization are two wheels of the same cart which is the only vehicle that could deliver us to our common destination of the system of peace and security on Northeast Asia.

Therefore Russia has always been in favor of the moves by two Korean states aimed at peaceful unification through their own efforts.

By Russian view it is mutual trust and confidence which is the most needed for building bridges between Pyongyang and Seoul. And what if not common work on long-term mutually beneficial joint economic projects could be the best way to build that mutual trust and confidence?

We believe that settlement of the nuclear issue of Korea as well as the normalization of the DPRK’s relations with the key regional powers will be greatly facilitated by the practical implementation of the large-scale tripartite partnership projects of Russia and North and South Korea, such as the international railway corridor “Europe-Korea” and the programs of creating in Northeast Asia an integrated electric power grid as well as a net of pipelines connected with the regions of the Eastern Siberia and the Russian Far East.

Linking the Transkorean and Transsiberian railways is of special significance. The Russian side has been continuously initiating progress in that direction.

During the recent visit to Moscow by the DPRK railway minister an agreement on cooperation was signed between the DPRK Ministry of Railway and the Russian Railways on the pilot project of reconstruction of the Transkorean Railway on a 52 km long stretch from Hasan station on Russia-DPRK border to the post of Rajin and on building a container terminal at that port which will be opened to the ships of third countries including the Republic of Korea.

If is estimated that on the initial stage of the realization of Rajin-Hasan project from 55 to 80 thousand twenty-feet containers could be drawn to the Transsiberian railway which is equal to 10-15 percent of the existing container traffic between South Korea and Europe.

The Russian-South Korean relationship provides today a good example of active partnership in different spheres. There is practically no such field of human activities in which our two countries do not interact. In addition to cooperation on land and sea cooperation in space has now started. In April the first Korean cosmonaut Yi Soe-young trained in the Russia Star City has made a successful space flight by a Russian spaceship and in coming December the Russian-Korean boost rocket KSLV-1, capable of taking up to 100 kg cargo to the orbit will be launched.

The Russian-Korean trade volume has been increasing steadily. In 2007 it approached the mark of USD 15 billion thus growing 1,5 times in a single year. This is surely much less than Korean trade with some other countries, but it is the growth tendency not the nominal figures themselves that counts.

There is however a trend in the development of Russian-Korean trade which is not fully to our satisfaction. While four-five years back the balance of trade was in favour of Russia it is presently US$ 2 billion in favour of the Republic of Korea. Therefore I have a special appeal to the members of KOIMA. Please buy more from Russia so that our trade is really well balanced.

We believe that realization of joint investment projects particularly in energy, as well as in petrochemical and automobile industries will lead to a much bigger growth in bilateral trade.

There are examples of large scale investments by Korean companies in Russia.

In the heart of Moscow one can see a brand new Lotte department store. One and a half year ago LG Electronics opened a factory in the Ruza district of the Moscow oblast. Not only has LG electronics already started production, but Sumsung Electronics started building a factory in the Kaluga Oblast last September.

And the Lotte confectionary will soon be starting building a factory in Kaluga. The Shin-chang construction company is actively building apartment houses in the Kuluga Oblast.

Hyundai Motors has decided to start building a car plant of theirs in St.-Peterburg. About 15 Kroean auto-parts companies plan to build their plants not far from the Hyundai Motors site.

There are good opportunities for Korean companies in the Russian Far East like the Primarski Krai, the Khabarovski Krai, the Amurskaya Oblast, Kamchatka and Magadan.

I would like especially dwell on the potential of the Sakha-Yakutia Republic which is rich in coal, oil, natural gas, diamonds, ferrous and uranium ores etc.

The President of the Republic Mr.v.Shtyrov made an impressive presentation of Sakha-Yakutia at COEX last September which opened way for many agreements on cooperation. I strongly recommend KOIMA to send a special delegation to study the business opportunities in that Republic of Eastern Siberia.

A special attention in the Russian-Korean economic ties is given to joint work in the energy sector South Korean companies have received contracts worth billions dollars for production of equipment needed for energy projects in Russia and modern oil and liquefied gas tankers. “Sakhalin Energy” company developing the natural gas deposits on Sakhalin and the “Kogas” concluded an agreement on supply to the ROK of 1,5 million tons of liquefied natural gas from Sakhalin for the period of 20 years starting from 2008.

In accordance with the Inter-Governmental Agreement on cooperation in gas industry a feasibility report is under preparation on laying a gas pipeline from the Russian Far East to the Republic of Korea. A Russian-Korean consortium with the participation of the leading Russian company, “Rosneft”, has started its work for gas and oil exploration on the Kamchatka continental shelf.

It is however unreasonable to view Russia only as a supplier of raw materials to the Korean market. Russia does export to Korea a good list of high-tech goods as well. For example about forty percent of civilian helicopters now being used in the Republic of Korea were made in Russia. Russian companies provide an important share of the ROK’s needs in fuel for nuclear power houses.

There is a weighty number of commercial agreements already concluded or under negotiation on joint science-research and experimental projects, including those for space exploration or aimed at production of high-tech goods in the Republic of Korea under Russian licenses.

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The goals of the Russian foreign policy are clear and simple. These are to create favorable external conditions for safe and comfortable life of the people of Russia. The absolute majority of other states wish exactly the same for their peoples.

We have no intention to use force to take anything from anyone. We do not put our eyes on other’s properties. We are a self-sufficient country. But we are not going to isolate ourselves from the outside world either.

Russia is following an independent, pragmatic and responsible policy. She is a reliable and faithful partner in international affairs.