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Transcription from interpreter's text made by The Globe's Doug Saunders.

QUESTION: Russia doesn't seem to like the west very much any more. Our relationship has cooled down considerably. . . . Are we moving towards a cold war again?

Mr. Putin: In international affairs and in the relations between the states, one can hardly be using any terminology which would be appropriate in the relations between people — especially during the honeymoon or just before a man and a woman plan on going to church to register their marriage. So in the relations between the states, always throughout history, the key principle was the observance of interests, and the more civilized the relations have been, the more clear it was that the interests of the country should be correlated with the interests of other countries, and compromise is to be found when resolving even the most complex issues.

The largest complexity of today — I'm not going to say that this is impassable in complexity, but nevertheless this is a complex issue — is that some of the participants of the international dialogue believe that their ideas are the ultimate truth, their interests are the ultimate truth. This of course does not facilitate the creation of an atmosphere of trust and confidence, which I believe is the mandatory thing for the finding of acceptable and appropriate optimal decisions.

At the same time believe that we should not be dramatizing the situation — if we are expressing our position in an open way and a fair way, it does not mean we are looking for a confrontation. I am absolutely convinced that should we re-establish in the international arena the practice of not simply fair and honest discussion, but the skill of finding the compromise — this would be to the benefit of everyone. Some crises which the international community has had to face would not have been possible in such a case, and they would not have been as detrimental to the internal political situation of some countries, and they would have been that much of a headache to the United States. The events in Iraq, for instance, just as an example because that is one of the most vivid and acute issues.

I want you to understand me. You remember that we were opposing the military actions in Iraq. We are still convinced that the goals which were in front of us at the time, they could have been attained through different means. And the results in my view would have been better than the one we are seeing today. So we are not going for confrontation; we are for dialogue. But on the condition that there are level playing fields, taking into consideration the interests of each and every one.

Q: What are your responses to the U.S. efforts to establish a missile-defence system in Central Europe?

A: As you know, I believe that we can still talk about that. About the Conventional Forces in Europe Treaty, I would like to start with that.

We have not simply stated that we are prepared to fulfill this treaty — we have in reality brought it into life and implemented it. We have brought all our heavy weapons beyond the Urals and we have reduced our military forces by 300,000, and some other steps. But what do we have in return? We see that Eastern Europe is being filled with new equipment, with new military, in Romania and Bulgaria as well as radar in the Czech Republic and missile systems in Poland.

So we have a question there: what is happening? What is happening is that there is the unilateral disarmament of Russia. And we would expect that there should be preparedness of our partners in Europe to do the same . . . but instead of that there is a pumping-in of new weapons systems into eastern Europe. What should we be doing in such conditions? Of course, we should be nothing but concerned.

We have announced a moratorium on the CFE implementation. . . . Speaking about the missile defence system — of course this is not simply a missile defence system per se as it is — when it is created and installed, it is going to work in an automatic mode, in conjunction with all the nuclear potential of the united states, which will be an inviolate part of the whole nuclear system of the United States.

I would like to draw your attention and the attention of your readers that for the first time in the history in the European continent there are elements of the nuclear potential of the United States, which fully change the whole configuration of international security. That was second point.

Finally the third point: How it is motivated? There is a need to get protected against the Iranian missiles. But there are no such missiles. Iran does not have missiles with a range of 5,000 to 8,000 kilometres. We are told that the AMD system is installed for protection against something which doesn't exist. Don't you think this is sort of funny? And it would have been funny if it hadn't been so sad.

So we believe there are no reasons and no grounds for establishing the antimissile system in Eastern Europe — our military experts believe that this system will of course be touching on the territory of the Russian Federation as far as the Urals, and of course we will have to respond to that.

And now I would like to make the final answer to your question: What are we striving for? First of all, we want to be heard. We want our position to be understandable and understood. We do not exclude that our American partners might rethink their decision. We are not imposing anything on anyone, but we come from the point of common sense, of real logic, and we expect that everyone is possessing common sense. But if this does not happen, we cannot be responsible for our reciprocal steps. Because it is not us who have initiated an obvious-appearing arms race in Europe.

We want everyone to understand that we will not assume any responsibility for that. As, for instance, one is trying to do so for us from the point of view of improving our strategic nuclear weapons system — we were not the ones who initiated the antimissile defence treaty. When we were discussing that with our American partners we were saying that we do not have such resources and we have no desire to be creating this system.

But we, on the professional level, understand that this system of missile defence on the one side, and the absence of such a system on the other side, creates the illusion of being protected, and increases the possibility of unleashing a nuclear conflict.

I am theorizing here only — it is only a theoretical discussion; there is no practical application of that. So there is a violation, an imbalance of strategic equilibrium in the world, and in order to provide for the balance, without establishing our antimissile defence system, we will need to establish those systems which would be able to penetrate the missile defence systems.

We are telling our American partners that we are not enemies; we are hitting the puck back to them, telling them, ‘If you are acting in such a way, this is our response to that;' ‘if you are deploying a system of missile defence in Europe, we need to warn you that there will be reciprocal steps on our side.' And we do not want to un-balance this situation. And we do not want to have any illusion that we have fallen out of love with someone. But sometimes I have a thought: Why is this happening, why is this being done? Why are our American partners so persistently trying to bring the plans for an antimissile defence in Europe to life, if obviously those systems are not needed for the purposes of protection against the Iranians, to say nothing of the North Korean missiles. One can imagine from a geographical point of view at what range a North Korean missile would have to be in order to reach the United States.

It is obvious that Russia is not planning to offend, to assault. So why is this happening? Probably this is to push us to make reciprocal steps in order to avoid further closeness of Russia and Europe. I am not stipulating that, but I cannot exclude this possibility. But if it is so, then it is another mistake again. Because through this, we are not going to improve the situation for international stability going this way.

Q: Would you consider setting up systems in the American back yard — for example, in Cuba or Venezuela?

A: You know, I should have said that myself, but you have said it before me.

We are not going to do that. More than that: Recently we dismantled our own base in Cuba. And Americans are now trying to deploy their missile bases in Romania and Bulgaria in Europe. We dismantled that base because our post-Soviet policies changed their nature — because the nature of our society changed. We do not want a confrontation, we want co-operation. We do not need any bases in somebody's back yard. We are not planning to do anything of the kind.

Secondly: contemporary weapons systems do not require that. Those are purely political decisions.

Q: Is there any possibility of Russia extraditing Andrei Lugovoy for the murder of Alexander Litvinenko?

A: Are there possible circumstances under which Russia could extradite Lugovoy? Yes there are. And those would require amendments to the constitution of the Russian federation. Second, very important grounds are necessary, even if the constitution is amended. According to the information I received from the prosecutor-general's office, such justification has not been provided by the British side. There was a request to extradite Mr. Lugovoy, but there were no materials based upon which we were supposed to do that. There is no substance in that request. There are no materials or documents based on which British colleagues sent their request to extradite Lugovoy.

The third issue, as you know, a criminal case has been initiated in Russia with respect to the possible extradition of Lugovoy to Great Britain, and if our law-enforcement agencies find enough materials or evidence to prosecute anyone . . . if any citizen of the Russian Federation faces enough evidence for the case to be sent to court, then this will be done. And I really hope that we will receive effective assistance from our British colleagues. You should not just request that we extradite Lugovoy; you should give us enough materials to prosecute Mr Lugovoy . . . . We are going to bring to justice anyone who we believe is responsible for the death of Litvinenko.

Now, the request itself. The extradition request itself. I have mixed feeling about this particular request. If the people who sent this request to us did not now that the constitution of the Russian Federation prohibits extradition of Russian citizens to foreign states — if they had not known that, then certainly their level of competence is questionable. Heads of law-enforcement agencies on such a level should be aware of this fact, and if they do not know it, then law-enforcement agencies are the wrong place for them. Where should they work? They should be in parliament, they should work for newspapers. Because if they knew that and still did send that request, then it's only a political PR step. . . . If it is so, then it's also bad.

No matter from what angle you look at this problem, it's all stupid. Stupidity, nonsense. I do not see any single positive [view] of what's been done. If they do not know, then we can question their competence, if they knew then it's politics, so from whatever angle it's complete nonsense.

And another thing. After the British authorities allowed for so many thieves and terrorists to get together in their own territory, in the territory of the United Kingdom, they have created a situation which is dangerous for the nationals of Great Britain itself. And the British side is fully responsible for this development.

Q: Are Shell and BP having to give up part of their petroleum-extraction licences?

A: As far as Shell is concerned: Did you see the initial agreement? Have you read it? Do you like it? Do you like what you saw, do you like what was written in this agreement? It was a colonial agreement. A colonial agreement that had nothing to do with the interests of the Russian Federation. I can only regret that in the early nineties, Russian officials did something like this — something they should have been sent to jail for. The implementation of that agreement resulted in the fact that the it allowed others to exploit its natural resources without getting anything back for it. A real zero.

And if our partners had honoured their commitments, then we would have had no chance of remedying this situation. But it was their fault that they violated our environmental legislation. This was a fact that has been confirmed by objective data. And I have to tell you that our partners did not even deny it. Those were facts that had been confirmed by environmental organizations . . . . And another circumstance. Gazprom did not just get on board and deprive somebody of something. Gazprom brought in a lot of money: $8 billion dollars. This is a market price. And as far as I'm concerned, the partners operating in this project were quite happy with this development…

Q: Relations with West are developing at a catastrophic pace. . . . Energy dialogue is suspended; The energy charter beyond any discussion at all; the arms race is under way, in your language has appeared a word that has not before: Imperialism . . . from the Soviet era. . . .Why can't you consider some compromise, taking in account public opinion in Europe . . .don't you agree that the position you're taking now is the route to nowhere?

A: This is a strange question to me, and very unexpected — however strange it might sound, it is very unexpected to me.

Really, the arms race is unfolding, but was it us who quit the ABM treaty? We have been trying to convince them for two years not to do so, we have been asking our partners not to do so, because we have been saying that the structure of international security is being ruined through that — we would be forced to make reciprocal steps, but they were saying, ‘That's ok, why don't you reciprocate?' So I was saying that Russia has to respond to something. We were warning but nobody listened to us.

Then we heard about the low-intensity, low-power nuclear charges. We have been warning against that, but that is being developed still. They are saying that this is needed in order to counter bin Laden's hiding somewhere in the cliffs and the rocks. Of course it could be that way, but why not look for some other ways of resolving the problem? Why create such low-intensity nuclear charges? Why should one be reducing the threshold for the use of nuclear weapons? But nobody's listening to us. Why should one be placing and deploying nuclear weapons in outer space? But the attitude of our counterparts is, ‘Who is not with us is against us.' Is that any way of conducting a dialogue? Who is not with us is against us, is not our friend is our foe. So again, our CFE Treaty situation — we have fulfilled our obligations according to the treaty— the observers from the West come and see we have everything in our place. But in return what we get is the AMD system in Europe.

You are speaking of public opinion. Public opinion in Russia is interested in strengthening our security. Where have you found that public opinion that we should get fully disarmed and then follow the ideas of [Zbigniew] Brzezinski that we should splinter our territory into four parts? I am the president of the Russian Federation not to bring our country to the brink of catastrophe; on the contrary. This catastrophe can appear if anything can be done without limitations if one wants. . . . It is precisely such an attitude which aggravates the international situation. It is exactly that approach which causes this arms race which you are mentioning. We were not the ones to initiate it — we did not want to project our resources for this purpose. We do not want an arms race, we are not aggravating relations with anyone, but we need to respond. . . we want to have Russia in good condition.

With regard to energy dialogue: We have been talking about it for many years, for 15 years. We have been subsidizing the former Soviet republics with cheap energy. Why should we be doing so? Where is the logic? What are the grounds? Ukraine has been subsidized for 15 years for 3 to 5 billion dollars per annum. Can you imagine that? . . .

Q: What actions might you take to reciprocate against the U.S. missile shield?

A: In my view, the public opinion in Russia would be absolutely against a new arms race. The previous arms race in Russia was lost by the Soviet Union. Well, listen to me, I am against any kind of arms race. But I want to draw your attention to what I said in the address to the nation last year. We have taken into account the experience of the Soviet Union and we are not going to get entangled into the arms race.

We're not going to reciprocate actions, we're not going to mirror such actions. We are going to find other ways. This will be an asymmetric answer.

For instance, the US is creating a huge AMD system which will cost billions and billions of dollars. We said, we are not going to go this way, we will build much cheaper but very effective systems of overriding such a missile-defence system. Through this, we will maintain the balance of forces.

More than that, I would like to draw your attention to the fact that despite our finding such responses… the volume of our defence spending in terms of GDP is not going up. It used to be at 2.7 per cent and now it's at the same level. [Average or lower than NATO countries].

Q: Does the INF [Intermediate Nuclear Forces] treaty stand in some danger of being abandoned? And are we returning to the time of the Cold War, when missiles were aimed at European cities?

A: Of course we are returning to that time. And it is obvious that if part of the strategic nuclear potential of the United States is located in Europe, and according to our military experts will be threatening us, we will have to respond.

What kind of steps are we going to take in response? Of course, we are going to get new targets in Europe.

What kind of means will be used to hit the targets that our military believe are potential threats to the Russian Federation? This is a purely technical issue, be it ballistic missiles or cruise missiles, or some kinds of new, novel weapons systems — this is a purely technical issue.

As far as the INF treaty is concerned, this is a broader issue and it does not relate directly to missile defence systems of the United States. The thing is that only the United States and the Russian Federation bear the burden of not developing intermediate-range missiles, and the other countries are involved in this – Israel, Pakistan, Iran, Korea, South Korea even, as far as I'm concerned. . . . If everyone complied with it, then it would be clear, but when other countries in the world are fighting to pursue such efforts, then I do not understand why the U.S. and Russia should place such restrictions on themselves.

We are considering what we should do in order to ensure our security . . . a lot of countries are involved in these efforts, including our neighbours.

I repeat that this does not have anything to do with the U.S. plans to deploy missile defences in Europe. We are going to find responses to both threats, though.

Q: How do you see relationship between Russia and France under Nicolas Sarkozy? He has said that he is a friend of the United States and has criticized your human-rights record.

A: I am pleased when somebody focuses on human rights. I have just read the report of Amnesty International, and there were a lot of questions in that report, not only for Russia but also for our G-8 partners. The criticism is very harsh. . . . We can read about violations of rights of the mass media, torture, violent treatment under detention of the police, immigration detention.

As far as whether somebody is a friend of the United States, we can only be happy about it. I can only be happy about it. We consider ourselves to be friends of the United States — this is not an exaggeration.

. . . This may seem unconvincing, but this is true. We have a completely different nature of relations with the U.S. than we did 10, 15, 20 years ago. When the President of the United States claims that we are not enemies, I believe him, this is my own opinion as well.

The question is not whether somebody is somebody else's friend, and who is a better friend of whom. The question is how we can strengthen the system of national security, what we can do to this end, and what are the obstacles on this path.

We have one point of view, our US partners have another opinion; as far as I can remember, when Mr. Sarkozy made one of his first public statements he said he was a friend of the U.S., but he had to mention that he did not agree with everything the United States does. . . . This is precisely my own approach. . . .

Q: There continue to be voices suggesting that Russia should no longer be a member of the G-8 — the idea in inviting Russia to join in 1998 was that it was becoming a liberal democracy on par with the other members. Now Russia has failed to improve its standing on indices of political freedom or transparency, and large parts of its economy are moving out of market hands and into state control. How do you respond?

A: I could say that this is another piece of nonsense. This is probably somebody's desire to attract attention to him or herself. This is probably some kind of pursuit of political goals. This is a desire to exaggerate certain problems or attract attention to those problems.

We did not make anybody receive us in the ranks of these counties. We were invited to join the G-8. As you are aware, Russia is evolving, it is changing very dynamically. We now rank the ninth largest economy in the world, and on some indicators we have outstripped some of the G-8 countries. If we calculate the volumes of the economies, we can say that we are ahead of some other G-8 countries. Russia has huge foreign-currency reserves; Russia ranks third in the world. . . . sound macroeconomic policy . . . influencing world financial markets . . . one of key players in international energy policies . . . first in terms of oil production volumes last year; ahead of everyone else in gas for some time.

After all, Russia is one of the largest nuclear powers as well. Let us not forget that Russia was one of the founders of the United Nations and one of the five founding members of the Security Council.

But if somebody wants to turn the G-8 in to an elite club of a small number of nations who are trying to address the great problems of humanity, nothing will come of it. . . . Let us not be hypocrites. As far as democratic freedoms and human rights, I have just read the report of Amnesty International. I've read the chapter about the United States. I should not repeat this, I do not want to offend anyone. But I could quote that: . . . Amnesty International believe that the United States is the greatest violator of human rights and freedoms on a global scale. I have an exact quote, if you will. And there is a justification for this view; similar criticism of the UK, of France, of Germany; there are certain complaints about Russia as well.

But let us not forget that other G-8 members did not go through such dramatic transformations as Russia experienced. We actually had a civil war in the Caucuses; none of the other G-8 countries had to go through this. And still, many of the so-called shared values are protected better here . . . we will never give up on our moratorium on the death penalty. As you know, in some of the G-8 countries, the death penalty is practised, it is practised consistently, and harshly.

I am convinced that there are no serious reasons for such discussions . . . .

Q: You have talked about problems of a uni-polar world, need for other poles. Have you considered an alliance between nations that could be considered an alternative pole of power?

A: No. I believe that this would be an impasse. This would not be the right way for our development. We are in favour of a multi-polar world. We believe it should be diverse, and it should take into account the interests of an overwhelming majority of international actors. These are the rules that we need to develop, and we need to respect those rules.

Q: A former chancellor, Gerhard Schroeder, called you a ‘pure democrat.' Do you agree?

A: Of course, I am a pure and absolute democrat. But you know what the problem is? Not the problem, a tragedy, a real tragedy. The tragedy is that I am alone. I am the only such pure democrat. There are no such other democrats in the world. Let us see what is happening in North America: just horrible torture. The homeless. Guantanamo. Detentions without normal court proceedings. Let us look at what is happening in Europe. Violence against demonstrators. The use of gas to disperse rallies. Killings of demonstrators . . . .We had hope with these guys from the Ukraine. But even those guys have completely disgraced themselves – they are moving towards a tyranny. They are violating the constitution, all the laws.

After the death of Mahatma Ghandi, I have nobody to talk to.

Q: Are you moving toward an authoritarian regime?

A: These are complete lies, please do not believe anyone who believes that?

Q: Tony Blair managed to decide, eventually, that he would back Gordon Brown for his next prime minister. What sort of person would you like to be the next president of Russia?

A: First of all, it has to be an honest man, a man of honour. A person of integrity, with a high level of personal merits, with good experience of work, who has demonstrated his good merits and achievements either at the regional level in Russia or at the federal level. It has to be a person who the majority of people would be prepared to trust in the course of the electoral campaign . . . .

Q: Could it be that it could be a person who has been the president already?

A: Who did we have as president? Unfortunately, we had only one president of Russia before, who is Boris Yeltsin. Actually we are having the day of memory of president Yeltsin and we are honouring 40 days since his death . . . .

Q: What have been your key achievements in your presidency from a historic perspective?

A: The reestablishment of the territorial integrity of the Russian Federation, strengthening the statehood and the state as it is; the movement towards creating a multi-party system in Russia; strengthening parliamentarism in Russia; the re-establishment and rehabilitation of the potential of the military defence forces; and of course the development of the economy. We have been growing these years by approximately 6.9 per cent per annum . . . .When I started my job, 30 per cent of the population lived below the poverty line . . . now it is only 15 per cent; we expect by 2009-2010 we will have reached 10 per cent, which is the average for Europe. We have paid all our debts, despite the fact that the volume of the debts was catastrophic. We have not only managed to pay back our debts, but we have the best ratio of debt to GDP in Europe . . . today we have the third largest petroleum reserve deposits in the world . . . in 2000-2001 we had a continuous outflow of capital from Russia in huge amounts — 15, 20, 25-billion. Last year for the first time we had the influx of capital, which totalled $41-billion. . . . over the first 4 months this year this has already totalled 40 billion… [market capitalization strong] . . . Our economy has managed to move . . . to the ninth position from the position of volume . . . in real terms we had the growth of profits and income per capita of 12 per cent . . . If we are speaking of unresolved matters, than one of the biggest would be the disparity of incomes in the population . . . countering poverty would be one of the key goals in the future. Much has to be done by us in improving the pensions system . . . the disparity between the poor and the rich is about 15.6 per cent. It is lower than in the United States where it is about 15.9 per cent. . . . Another key task is demography. Everything possible must be done to change the situation in the demographic field. . . .We keep hearing criticism about the centralization of power in this country. But few people realize that we have adopted a lot of decentralization decisions . . . .

Q: I understand next president will be elected by the Russians. But can you tell us a bit more about what Vladimir Putin is going to do?

A: I know I will be working. Where and in what capacity I cannot say at this point. I do have certain ideas on this count, but it is too early to speak about this at this point. Even according to Russian legislation, I have not reached my retirement age. And it would be silly just to sit at home without doing anything, but exactly what I am going to do, I would not want to speak about it at this point.

A lot will depend on how the political process evolves in Russia toward the end of this year and in early 2008. There are different options that may be considered.

Q: Are you willing to adopt a more flexible position on Kosovo?

A: . . . If we are willing to pursue the principle of self-determination of nations —and that was precisely the Soviet approach in fighting colonialism . . .if we are to put ethnic self-determination ahead of national integrity, then this approach needs to be universal in its application — it needs to be applied in other regions of the world, at least in other regions of Europe. Our partners' claims that Kosovo is a unique case are not convincing to us. There are no reasons to believe that the Kosovo case is different in any way from the situation in south Ossetia, in Abkhazia, or in Trans-Dniester. . . . I do not see why we need today to humiliate a whole European nation [Serbia]. Why should we bring it down to its knees, only to see an entire nation perceiving those who did it as enemies? Such issue can only be settled through compromise and agreement, and I believe that opportunities to this effect have not been exhausted. Why do we need to rush? What is happening that should make us think that we need to rush?

Q: Do you agree with President Bush that it is unacceptable or intolerable for Iran to have a nuclear weapon?

A: I absolutely agree with him.

Q: Kosovo: what would be this compromise?

A: If I knew, I would have come up with a proposal long ago . . . [he cites compromise between Montenegro and Serbia before Montenegro's separation last year].

If will be difficult for us to explain to the small ethnicities of the northern Caucuses that such a right was granted to a nation in Europe but it is denied to the people of the Caucuses — how can we explain this to them? . . . Why are Albanians allowed to act this way and Ossetians not?

This will provoke separatist movements in Europe itself . . . in Scotland . . . in Catalonia. . . . In the Basque country. . . in the Balkans, Republica Srbska…

Q: Is there discrimination against Russian companies for political reasons?

A: You have said that there is a state capitalism developing. This is not true. Yes, we are mobilizing some resources, be it in shipbuilding, where we decided to create a state corporation, or in aviation construction. But look at what is happening in other countries, what decisions were taken by South Korea in the 1960s in the shipbuilding industry. . . so there have been experiences which have taken place in history before. The same is true for the aviation sector. We are not increasing the share of the state in the stocks of those companies when we create those companies. We are bringing the assets which are possessed by the state under one company, which means we are not creating anything, we are pulling together assets of the state… so we do not exclude the possibility that in the future, when the company would be acting efficiently, some stake now belonging to the state might go public and might be sold to the markets.

Unlike OPEC countries, the oil energy is fully privatized. There is only one company with state participation, which is Gazprom, which has 49 per cent in the markets, and about 20 per cent of that is owned by foreign investors.

Q: You say this is the day of memory of Boris Yeltsin. Everyone knows the phrase he told you when leaving: “Protect Russia.” Now, you when leaving will have to say some phrase to the person after you. What will you say?

A: No, I didn't think about what I'm going to say. It's a little bit too early to do so. I haven't finished my desert yet.

Q: About your wife and family . . . has your wife felt under pressure in your presidency to appear in public, has she enjoyed it, and is she looking forward to your stepping down?

A: I . . . think that she is really looking forward to my ceasing to be the president. Because of course, presidency is a burden on the family — if for me I have the compensation as a result of my activities, then my family does not get this compensation. However, the limitations are significant. That is why my spouse had never expected that I would become president, and without any regret that my term in office was expiring. There are no problems about that situation, and I don't expect any problems to appear.

My wife has her own interests, she has her own job, she is a linguist, she has her own work, and everything is fine with that.

Q: Gerhard Schroeder came to regret that there is a two-term limit in his country, after supporting he idea at first. Do you agree with the early Schroeder that there should be a two-term limit on the presidency?

A: You know, at different stages of development in different countries, there can be different solutions. For instance, the United States there were no limitations on the number of terms of office . . . in France they had one term of seven years; after the war, the country was in difficult situation, and was in need to have a more stable and sustainable political base, and more predictable for a longer period of time, so in France there are no limitations on the number of terms of office, the president can be elected as many time as he wants, as many times as the people want him or her.

But in my view, there should be some limitations. . . . I believe that limitation in the number of terms is a correct, a proper solution. Four years for Russia, which is a copy from the American practice, could have been not necessarily the most ideal solution when the new constitution was adopted. . . the head of our upper chamber of parliament said that the term of the presidential office could be five or even seven years. I am not speaking of whether it is appropriate or not, but I still believe that four years are not too many.

. . . I believe that for Russia, five, six or seven years could be quite an appropriate solution. But still the number of terms of office should be limited still.

Q: is Russia in a transitional phase, and where do you see its economy and politics headed?

A: Even in the energy sector, for instance, we have the presence of private capital which is far higher than other countries. For instance, Mexico is a market economy but all oil is monopolized by the state. So if we are speaking of crating large-scale corporations with large participation of the state. . . as in shipbuilding or aviation . . .we are not speaking of the return of some privatized companies to state ownership. On the contrary, we are pulling together the spread-out assets of the state under one roof.

As for the scandalous case of Yukos: this company is being sold out due to its debts. In particular debts to the foreign shareholders. . . . we are not doing anything to concentrate the volume of property in the hands of the state . . . what we want to have is viable solutions and competitive enterprises that would be able to work at the European level. We want to be developing companies with private-sector participation as well. . . . A lot needs to be done. We are going to proceed towards promoting liberal market values. But at the same time we would like to maintain the industries per se. We know of examples from European countries where countries purchased for one deutschemark a viable enterprise and then simply closed it down in order to eliminate competition….

We are going to develop towards liberal market values . . . . It is clear that we have made certain errors — for example, fighting corruption, that's one of the sore spots that is troubling everyone.

Q: Could you see the missile shield being acceptable if it were, say, operated by NATO?

. . . NATO is just an additional irritant element in relations with Russia . . . . We know how decisions are made in NATO, the same way they were taken in the Warsaw pact. — [joke about East Germany and Warsaw Pact] . . . NATO's the same, but the phone is connected not to Moscow but to Washington.

Q: Are the harsh police crackdowns on opposition marches in Russia backfiring and creating more support for Kremlin critics?

A: Look at how the police in Europe work — with truncheons, tear gas and electric stun guns. In Germany, 70 people have died after being subjected to electric stun guns. Rubber bullets. . . . Everyone needs to know that you have to live according to the law. Permission to hold such demonstrations is the prerogative of the local authorities. Without a doubt, people who want to express their opinion have that right and the government is obliged to ensure that anyone who wants to express an opinion has the right whether these people agree with the government's politics or not.

But in exercising that right they should not bother other citizens, they should not disrupt transport, they should not prevent people getting to work or create dangerous situations for the health or lives of other citizens. But when people deliberately provoke law enforcement organs and deliberately gather in places where they are clearly disrupting normal everyday life or the city's organism, then the authorities have to take corresponding steps and bring order. Thank God we haven't yet seen any extreme methods that are used in West European countries. Everyone who wants to hold a demonstration has the right to do so, but in locations stipulated by the authorities.