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MR. GREF [Interpreted from Russian]: I ask you to forgive me for speaking in Russian. I know it inconvenient for you, but, unfortunately, my English is not good enough. But I'll improve, I hope. When investments in Russia will exceed a few tens of billions of dollars, I promise you that I will speak pure English here.

Ladies and gentlemen, your excellencies, I am very grateful for having this opportunity and this honor to speak here today, and perhaps this is one of the few opportunities that I will have to speak before such a high audience.

I would like to start by expressing my gratitude to Ex-Im Bank and personally Mr. Harmon for what they have done in Russia over the past few years. We value very highly what Ex-Im Bank has been doing in Russia, all its activities there, and when the subject came up of our getting an invitation to come here and participate in the annual council meeting of the Export-Import Bank, obviously there was no question that we accepted with gratitude. And taking this opportunity, I would like to say a few words about the vision of Russia, of what we have accomplished to date, and our vision of the future of Russia and how we view the future of Russian-American relations.

The year 2000 was a successful year for Russia, the most successful year in the economic sense, for the past decade. The GDP has grown 7.7 percent, and the growth of investment was 17.4 percent. The production has been increasing in all sectors of the economy. The best rate of the growth of production was light industry and machine building.

Thus, together with the growth in the production—in the increase of GDP, the structure of GDP has also improved. The share of those sectors that have the highest added value has increased. The investment potential, the investment demand has also grown in the past year. I would say right now that one of the cliches in the media of how to evaluate the growth is the high prices of energy resources in present-day markets.

But I would say that this is not quite the right explanation for the growth. As a matter of fact, the energy sector did not grow as fast, at such a high rate as some of the other sectors of the economy, such as light industry, machine building, and even agriculture. In fact, the agricultural sector has become profitable for the first time in many years, and the number of agricultural enterprises that suffered losses is now less than 40 percent. Against this background of economic growth last year, we have also had very significant changes in our social structure, the structure of consumption has changed. The pensions have grown by 38 percent in real money, and the earnings, salaries have grown by about 15 percent. The positive balance is about $61 billion, and the central bank reserve is over $28 billion. Forty percentage points to 14 percent was the lowering of the unemployment rate, and we have every reason to believe that the growth that has started last year will continue.

This trend can be discerned this year as well if you analyze the first three months of 2001. We are planning to reduce the economic growth because of various investments that are being planned for various sectors of the industry, and this, of course, will bring about a lowering of the growth rate.

We feel that for two or three years the rate of growth will be slowing down. We have planned for this year a growth of 4 percent, and then if everything goes according to the plan that we have elaborated, then gradually by 2010 this growth rate will increase to about 5 percent.

I would like to talk to you about a few key areas, key points that also are perceived as a certain type of cliche among the business community as an indication of especially if you look at the media without really analyzing what is happening. One of them is the results of what the government has been doing over the past year.

Last year, we were able to implement various tax innovations that we had planned, most of them. Four categories of taxes have been changed, and they constitute about 60 percent of all the taxes that the government takes in. The general lowering of taxes is about 2 percent, and a number of very radical steps have been taken.

First of all, we have lowered the income tax rate to 13 percent, from 30 percent highest to 13 percent—in other words, by a factor more than 2.

We have also lowered the tax rates for taxes that the labor fund has been taxed with by 3 percent, and also the scale of taxes for the labor—the salary fund. Depending on the threshold, the regression was 35 to 2 percent, depending on the income tax bracket.

And in conjunction with this reform, we have also changed our policy as far as customs duties are concerned, which will be conducive to Russia joining the WTO eventually, and we have revised our customs duty policy in that connection.

From thirteen and a half thousand tariffs, among those we have lowered and unified nine and a half thousand categories. Such a high volume reform for customs duties has never been undertaken in Russia previously, and, of course, we hoped by implementing this reform, two main purposes: one is to lay the foundation of opening of markets in anticipation of joining WTO, and instead of five categories of tariffs, we now have three rates. And the important thing is that we unified the customs tariffs. This was a controversial reform. Also, the unification of tariffs was also a controversial measure, and what I mean by unification is that certain items, customs items, which are very difficult to distinguish at border crossing points, we have unified them and conglomerated them into one item for customs purposes.

For example, fowl and meat constituted six different items. In other words, we distinguished between chicken, turkey, et cetera. And they might have differed as much as a factor of four. Turkey meat, for example, was 5 percent customs duty and others were 2 percent. And, of course, customs statistics indicated that Russia had no imports of chicken, for example, into the country, and 97 percent of imports were actually—was turkey meat, although the whole country was eating bush legs, as we call them. This is a cliche that we have had ever since the beginning of the 1990s, the early 1990s, when there were lots of chicken parts that came into Russia at that time, and for some reason they got called, once and for all, bush legs. And they continue to be called that ever since then. And this constituted quite a high volume of imports. So we still get a lot of chicken imported, but according to statistics, it's turkey.

So this is just an example of how the unification of tariffs or various items under one tariff rate has led in the case of meat and fowl. All meat is subject to the same customs duty. And this is only an example. There are dozens of examples of that kind.

The results of these innovations are interesting, and they are interesting as well for the American administration representatives, and we talked about it yesterday. I know that President Bush has already come out with an initiative of lowering virtually most items. And we know that the officials in the United States are worried about how this is going to influence the budget, so as far as we're concerned, when we lowered income tax from 30 to 13 percent, it has brought about the fact that over the first three months of 2001, compared to the three months of the previous year, the increase of income along this item was 70 percent.

The regressive scale of income tax that I have mentioned has meant that the income has grown by 30 percent over the first three months of this year. The income from customs duties collected has increased by more than 20 percent. In other words, we have definitely an indication that there is a social compact coming into existence between the administration and the consumers, the society, so that it means that people are declaring all their income, are beginning to faithfully pay their taxes. And that is a very important indication, a very important symptom of society in general and Russian society in particular.

As a result of the measures that we have