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The Government of the Republic of Serbia

In the service of citizens

Economic and political cooperation between Serbia and Russia at a very high level

Belgrade/Moscow, 20 December 2006

Serbian Prime Minister Vojislav Kostunica announced that a Memorandum of Understanding on the construction of the gas pipeline through Serbia was signed today in Moscow between Russia's GazpromExport and the Serbian government, under which a 400 kilometre gas pipe line running through Serbia will be built.

Vojislav Kostunica, 2nd left, addresses the media during the press conference

In a press conference Kostunica said that this investment is worth $1 billion and pointed out that it will create new jobs and provide a reliable source of gas for Serbia.

The Prime Minister stated that the Memorandum of Understanding was signed by Serbian Minister of Energy and Mining Radomir Naumov, General Director of Serbian gas company Srbijagas Milos Milankovic and General Director of Russia's GazpromExport Aleksander Medvedev.

Kostunica said that with the construction of this gas pipeline, Serbia will attain the position of a key state in the region when it comes to the transport of natural gas and will not be only a user and last user, but a country of transit, which significantly changes its position.

He also recalled the agreement on the clearing debt between Serbia and Russia adding that it will be signed in a few days.

He explained that the agreement regulates the issue of debt in a manner which allows new developmental investments, and stressed that the debt issue is in the past, and at the same time investments can be made in Djerdap and Vinca.

The Serbian Prime Minister said that in the first quarter of the upcoming year the Russian Duma will ratify the agreement on free trade between Russia and Serbia, and recalled that this agreement has remained at the implementation stage for years.

According to Kostunica, the ratification will increase the importance of that document and become an added incentive for all those who are interested in widening cooperation between Serbia and Russia.

Kostunica recalled that Serbia signed the Central European Free Trade Agreement (CEFTA) yesterday, and pointed to the fact that Serbia is the only country which, besides the New Independent States, has a free trade agreement with Russia.

He stressed that besides economic cooperation, excellent political cooperation exists between Russia and Serbia in all areas, especially regarding the issue of Kosovo-Metohija.

When it comes to this issue, Russia and Serbia have expressed the same commitment to consistent respect of international law, above all the UN Charter, concerning territorial integrity and sovereignty of existing states, the Serbian Prime Minister affirmed.

He said that more and more countries are taking a similar stand on the matter, which is respect of international law, and this is an encouraging fact.

Kostunica expressed satisfaction with the fact that economic and political cooperation between Serbia and Russia are equally developed, and that equal progress is being made in both areas.

According to Kostunica, it is beyond doubt, as Russian President Vladimir Putin has said, that Kosovo-Metohija can not serve as a unique example because every country presents a unique case, but precisely due to that there are rules which must be consistently applied in all cases.

Russia has given support to the clear position that international law must be respected, that a compromise must be found, and that this will be easy if it is sought in the framework of international law and the UN Charter, stressed Kostunica and concluded that compromise can not be achieved if a solution is sought outside the boundaries of the fundamental principles of the Charter.

Alexander Alekseev

Russian Ambassador in Belgrade Alexander Alekseev expressed satisfaction at the signing of the Memorandum, due to improvement of cooperation between the two countries, and due to the fact that mutual relations between Serbia and Russia have entered a new and improved level.

Alekseev recalled that political dialogue on all questions of common interest is being developed between Russia and Serbia, and Russia’s stand is that the issue of the future status of Kosovo-Metohija should be resolved in the spirit of safeguarding stability and security in the region and entire Europe.

He recalled that Serbia is one of the most important trade partners of Russia, and added that it is expected that trade between the two countries in 2006 will be worth more than $2 billion.

Predrag Bubalo

Serbian Minister of Economy Predrag Bubalo said that signing the Memorandum on constructing a gas pipeline through Serbia will be of great advantage to Serbia, and added that the route of the pipeline will follow the route of the highway to the Bulgarian border.

Bubalo said that the construction of the gas pipeline through Serbia requires nearly two years. He added that the joint Serbian-Russian working group will prepare the details of the Memorandum, in which the next step will be concluding the agreement and drafting the project documentation.

He outlined that this project is the biggest Greenfield investment in the recent period and is a huge incentive for the National Strategy of Serbia’s economic development, keeping in mind the fact that the Serbian government planned that GDP growth should be 7%, and that this projection is based on a minimum of annual investments worth $2 billion.

According to Bubalo, the upcoming ratification of the agreement on free trade with Russia will increase the confidence of foreign investors, and have a positive effect on liberalisation of trade between Serbia and Russia.