announcer: from our studios in new york city, this is "charlie rose." charlie: mr. president, it is a pleasure to be in your city, where you started your political career. to be here in russia which is a great country with a historic past and the important role it plays in its future, military, and the possibility of giving a big role. there are problems that only can solve differential participates and you will play a role in that. help us understand, as you see it, where are we? how do we get there and where do we go from here?

president putin: first of all, i want to thank you for agreeing to work with us today. to be the moderator of this meeting. the forum is good. the st. petersburg forum is on economic issues. it would be better to focus on economic issues, but i agree with you. without finding a solution for acute international crises, hardly any advances can be achieved. we understand that with ukraine, there is no evading the question. but you know we always talk about ukraine, something related to ukraine. several years ago we talked about the crisis in iraq, crises in different countries, with about whatever transpired, but we never talk about why it has happened.

but if you want to talk about it, which is evidently quite important, i should like to start with this issue. why is the crisis in ukraine? i was quite confident after the bipolar system went into oblivion after the collapse of the soviet union, certain partners of hours, particularly the united states, were in a kind of euphoria and instead of trying to create a new situation, new partner relationships, they started to explore new, free geopolitical spaces -- free in their view -- and that is why we are where we arrive.

i was always wondering why that was happening. i felt some of our partners were under the illusion that before the second world war, there used to be one world order, and now that the ussr was gone, there was a vacancy that had to be filled. i think that is not the right approach to finding a solution to these issues. that is why iraq happened. we know, and our partners agree, that there were errors committed in iraq. it happened again in libya and ukraine. we are not the cause of those crisis phenomena that happened in ukraine.

they should not have supposed that the illegal coup d'etat the constitutional coup d'etat as was the forcible seizure resulted in a serious confrontation in ukraine and a civil war, as it were. what has to be done now, today no doubt, the agreements in the capital of belarus should be observed. let me emphasize that if we were not content with something, we would not have put our signature there. we have put our signature onto those documents and we will seek their full implementation. i will make that clear to you and your partners. i will repeat that over and over again.

they say that russia has influence on the situation in ukraine but that is not enough. we cannot do that. this is the avenue which has to be pursued by our western partners. the united states. let's work together. [applause] charlie: what do you want to get government to do? president putin: we don't want anything to do. it is the people that have to want something from the government, either to do or not to do. we believe that to achieve a settlement, agreements have to be implemented and the key issue here, as no doubt the political component, and there are several

elements to the political settlements. first, the constitutional reforms and the means to the agreement say that quite clearly whether providing an autonomous status or -- everyone understands what that is. our european partners, germans and the french have explained what it stands for and authorities are ok with that. secondly, the law on the special stages of these territories, the luhansk and donetsk there is needs to be enforced. it has been written but not implemented. the ukrainian parliament had to be adopted. that is what the minsk agreement stipulated for.

formally, our friends have done it. but once this decree was adopted by the ukrainian parliament, they introduced amendments to the law, bringing it to naught. in many places they have to start mentoring work. there has to be amnesty. we cannot be in negotiations with people while involved in criminal prosecution. illegal elections have been performed in the territory. all of that has to be done in concert and coordination with the workers of the ukraine. unfortunately, too much time has passed since the signing of these agreements.

dialogue is required between luhansk, donetsk, and kiev. the excuse of having no money does not work here. the current kiev leadership believe that this is the territory of ukraine, that ukrainian citizens who reside there who are retired or safety disability allowance, then they have to do something. they cannot refuse to pay these allowances otherwise they are violating their own constitution, not just in words, but in practice. [applause] charlie: as you know, the united states believes you are arming the separatists and encouraging them and using russian armed services and that adds to the

conflict, that heightens the emergency, and many people worry that it is tending towards some new cold war. president putin: you know, cold war is caused not by local conflicts but global issues like the withdrawal of the usa from the treaty. that pushes us to a new spiral of confrontation as it shifts the security system as the original conflict, wherever they happen, curiously warring parties find arms somewhere. the same goes for the eastern part of ukraine. what i want to say is it today's situation is resolved by

political means, no arms will be required. to achieve that, there has to be goodwill as well as the willingness to be engaged in direct dialogue. we want to facilitate that, but we will never agree if anyone somewhere will try to speak from the position of force, either with the police or militia or special forces or armed forces. until the armed unit and the so-called nationalist battalion arrived in the territories, no arms have been risen there and there would have been no arms in those territories had they from the outside tried to resolve the issue through political means. arms arrived after armed forces had to be used against those rebels.

they are trying to resist, and once they try to resolve it by political means, no arms will be required. [applause] charlie: wood borders are acceptable to you? -- what borders are acceptable to you? president putin: there is nothing new about that despite all the difficulties of today. i'll assad that ukrainians and russians are one people create

one ethnic group. certainly they are -- they have common culture foundations common history. in the end, russia and ukraine are destined to a common security. from the very beginning, we have thought that ukraine has the right to make a choice. it was russia that initiated the reintegration of the ussr. we initiated and nothing happens. russia and ukraine apart from being bound by those sides i

told you about, they are bound by the reality of today. the common engineer is -- infrastructure, the common transportation. uniform regulation framework. ♪

[applause]

charlie: let's talk about the relationship that russia has with a number of countries, including the united states and china and others. characterize the relationship with the united states. what's wrong with it, what is right with it, what does it need? president putin: in other words what are the positive sides and what are the problems? let's start with the problems. problems consist, and they are changing. there are decisions and there are standards. they are thinking about how we understand our own interests. they are trying to say that they know better what we need. let us decide ourselves our interests and needs are based on our history, our culture. [applause] charlie: [laughter]

how are they doing that? how is the united states trying to decide what you need? president putin: theory in the international political processes, including by financing nongovernmental sector, imposing decisions on international security. i mentioned the problems which we face for the first time which will cool down our relations. i am referring to iraq. it is not a dialogue, it is an ultimatum. we are not to be talked to in the language of ultimatum. [applause] now, things that bring us together. there are some. we are united by our desire to

work against common threats, which include terrorism, drug trafficking, and a very dangerous trend of the possibility of weapons of mass destruction. now, action against difficult issues in conferencing various regions. they are global economy issues. first of all, i'm referring to the area where we can have our influence on energy. there are a lot of areas in which we have decent interaction and are hopeful that will form the groundwork for relations and

taking them further. now, about china. the nature, the level of trust in our relations have reached an unprecedented level and is important in our history. for 40 years we have been negotiating on the border issue. we have found acceptable compromises and this issue is no longer there. they have settled it for 40 years. with other countries, we develop economic conflicts. we are actively cooperating with international organizations within the framework of the united nations. we are developing new integration processes which are quite efficient and attractive for other countries.

the shanghai corporation organization was established to settle border issues between us. it did not stop there. now this organization is attractive for many other countries. a decision might be made to receive pakistan and india as full-fledged members of the organization. we cooperate with the framework of other organizations. in my speech, i mentioned the need to undertake concerted effort and to bring together the efforts of the economic union and the focus of the silk road. we're establishing relations in this area as well. china is our largest trade and

economic partner. and our relations are very efficient. [applause] charlie: some say is a natural relationship because china has cash and russia has natural resources. there is a natural affinity there. president putin: that is true of the americans. i am sure you know about that. the american analytical scientists and experts talk about the united states turning towards china. china is a growing economy. if anyone is concerned with the declining growth rate, china has the highest growth in the world. it is not only russia. the whole world is turning towards asia.

europe is interested as well and we are destined to do that because we are neighbors. it is a natural movement and development. there are many values which are common for us. it gives us equal access to addressing international issues. [applause] charlie: is it a more natural affinity than europe and united states? is china more in the future a place that russia feels more comfortable than with europe and the united states, and could that lead to some anti-western alliance? anti-western, anti-american. president putin: well, china including us, are not forging

relations against someone. we are building -- we are not building alliances against anyone. we are building alliances for implementing and building our own natural interest. [applause] you are expanding the nato. there is no opportunity anymore, but nato was created to pave the way towards the -- they expand but we do not create any military alliances with china. we do not tend to adopt or block this approach. what they are trying to do is adopt a global approach. they are trying to contribute the responsibilities. they are trying to find an acceptible compromise.

they are trying to find new frameworks within the network of negotiations. [applause] charlie: to have read much about you and your country, there are three things that i constantly see. one is your sense of wanting to be respected. another is you want to have an equal conversation. a third is a sense of perhaps in your history, a great concern about borders and having a buffer zone for russia. am i accurate in that? a buffer zone would be ukraine. president putin: well, i keep hearing that russia wants to be respected. don't you want to be respected? is there anyone who wants to be disrespected and humiliated?

[applause] that is a strange way to see things. it is inclusion which -- that russia demands to be respected. does anyone want to be humiliated? it is respect, or lack of respect. we want to do this without detriment to our partners, but construct a potential dialogue when there is none, or unwillingness to talk to us, then there is a concentrated response on our part. i will tell you an interesting story. it has to do with the so-called -- promoted by our colleagues and friends in europe.

by the way, is promoted by the united states as well. our first response to the eastern partnership initiative was very positive. what issues that russia and other countries are linked by their common regulations, common is infrastructure, common ties and we believe that working with them, inevitably a constructive dialogue would be launched on interaction with russia. we will continue working. there is some conversion and divergence in which you expect

solutions to be created in a common economic event. if that happens, how did the crisis in ukraine emerge? as everybody knows, ukraine is a member within the area of the cif and it is insisting on establishing independence. for 17 years we have been negotiating with you on conditions. it is my goal to work on negotiations. isn't that the way people do things? when we are asked on the issue we answer it is not any of your business. isn't that the way that things are settled, especially with russia?

[indiscernible] charlie: let me talk about a couple of areas where there is dramatic need of cooperation between the united states and russia. one is iran. you think there will be an agreement, and what kind of agreement you want to see? president putin: the first thing which i would like to highlight in which i think is the principal matter, we have a common understanding with all participants of the countries, including the u.s., and there is a hope that all of us are against the w.m.d.'s spreading to our territory. this is our principal position.

this is what helps us constructively with the united states in this direction. we are very glad that the iranian position changed a lot which allowed us to achieve the level of agreement which we have today. we will support these agreements, of course, and these arrangements. the only counterproductive thing, i think, would be to undermine these agreements by demanding iran to do something which it can't do and which is not quite important to solve the main nonproliferation problem. i really hope it will not come to this. mr. lavrov know better. when do we have to sign it? when it is ready, he said. diplomats are always like that. when it is ready.

i believe that in some time yesterday we met the declaration of the ifea, and afterwards there will be implementation of the arrangements which will take about six months. there is another important thing. it is important that your country, the u.s., would support such initiative. for the congress to support it it is important. we know discussions are ongoing with the u.s. now that the president has derived to sign agreements that do not need ratification by the congress. that is not our problem. we cannot solve it. we cannot solve problems for the washington authorities, either. i believe that the ball is on your side now and we expect,

among other difficulties, the presence of that state will produce the foreign policy. charlie: you do believe there will be an agreement, based on prime minister lavrov tells you? president putin: yes, we believe it. of the same importance is that countries in the region must not feel that there is a moment coming for them that they can expect the situation. they cannot expect this to happen. russia is aimed at developing good neighborly relations with iran and other countries in the region. charlie: one other issue before we turn it to the economy and

global considerations raised by a number of speakers here. this afternoon, it is syria. you see a way out of this? russia has been supporting the assad government. iran has been supporting the assad government. president putin: the sooner, the better. i think the opposition is based on the concern that syria may submerge into the institution of lebanon.

i'm sorry, libya. that was a slip of the tongue. syria could become like libya. or like iraq. before iraq, there were no terrorists there. who created the conditions and the conditions created for terrorists to take the area? saddam was destroyed, government was gone, and isis came there, and what happened? nothing at all. even the united states has had losses.

we know about the tragic case in libya and we do not want the similar scenario to be implemented in syria. that is the main line of our decision to support president assad and his government at the moment we believe that position is correct. i think that many people agree with that position. i have mentioned for several times iraq. we know the situation there. we know what is happening. the u.s. are supporting iraq now. they are arming the army. they train the soldiers. with a single swoop, isis captures equipment.

isis is now better armed than the iraq army supported by the u.s. ok, they withdraw. special services show that thousands of american troops are still in iraq. what is the result? a tragic one. we would not like the same thing to be repeated in syria. we are urging all of our partners, including the u.s. the europeans, but primarily the u.s., to take additional efforts, to make additional efforts to fight this absolute evil of fundamentalism and the so-called islamic state. and some other groups of the same kind which in their essence are just branches of the notorious terrorist organization, global terrorist organization which actually

struck a bond among themselves. we are urging to find a political settlement, which would provide for transformation of the political regime and we are ready to discuss that with president assad as well. by the way, just recently, in the u.n. there was an opportunity to cooperate to struggle against isis and other terrorist groups and we are ready to work with the president for the sake of providing political transformation. for all of the people living in syria feeling the acts of the power, it is preferred to be avoiding military consecrate it cannot be done from the outside with force. [applause] charlie: are you prepared to urge assad to step down if it

would turn to a political solution that would be a bulwark against isis going into damascus? president putin: a real american, i say. i say without outside assistance and he says ready to urge. only the syrian people can urge him to step down. that is elementary. i said we are ready to have a dialogue with president assad in the direction of him meeting and making the political reforms of the representatives of the so-called healthy resistance. i believe that implementable. thank you. [applause] charlie: let me turn back to the economy. with respect to what you have

heard about china today, what other possibilities you believe for a relationship, an increasingly beneficial relationship of significance between russia and china? president putin: russia and chinese relations in the economy must be filled with practical content and work. not only at the level of the largest companies, but at the level of the leaders as well. for it to become a real, live issue of joint work in many areas of joint production. at the same time, china is our first trade partner. we have $85 billion per year turnover and yesterday i spoke about that the deputy president of the state council and i also discussed that with president jinping.

you voiced the right idea. we must be careful about creating conditions to cooperate. that concerns us and our chinese partners. i mentioned in my speech that we are not limiting the flow of capital. even during the extreme conditions of the crisis of 2008-2009. even last year did not see us slow the flow of capital. we are sure that our partners would act in a similar way because yuan is becoming stronger and stronger. regional reserve currency. that is a fact and the experts understand there is a lack of capital flow freedom, capital movement freedom. if that happened it would be another serious step to

liberalize our relation and we understand quite well that our chinese alleys must be careful in implementing that and they know better when they should implement these measures. an important step to deepen and expand our relations would be a decision to take our trade operations in national currencies, yuan and rubles. there have been trading in these currencies, rubles and yuan. we hope this opportunity will develop for the yuan and create new opportunities for working in real economic areas. on the whole, i agree completely. we must develop and move forward and not be fixated on the governmental arrangements taken.

it also opens the way for further cooperation. we are working on that and move forward. charlie: i listen to you say the impact of sanctions may have been exaggerated elsewhere. how do you see the opportunities and necessities of the full exploitation of the full advancement of the russian economy? president putin: speaking about the sanction, the situation is not that bad. there are pluses and minuses. this is a period where we are implementing structural changes and when we can take steps that will be opening new long-term prospects and will allow us to bring results in the future.

you have mentioned sanctions and asked what we are planning to do in order to overcome the current difficulties. i have characterized the situation that we are facing today and it is very far from a catastrophe. there are several goals. they are not as ambitious as the goals we set several years ago but i hope they will allow us to achieve a better level of quality than before. what we are trying to achieve is first to assure their economy for the coming years. the growth has to be about 3.5%, which is the average economic growth in the world. we also have to prepare for the inflation rate. it has to be decreased to 4%.

this is what we would like to achieve. we have to carry out a balanced policy. all of the trends in our economy allow us to believe that the goals are achievable and we will be able to reach them in the near future. we would not like to respond to and destructive action that our partners are imposing on us, even to the detriment of their own economy. based on the calculations, including our european partners, some of them are measuring losses of $40 billion or $50 billion. based on recent things they've heard from europe, experts

believe that it may produce losses of up to $100 billion. our turnover in europe has decreased almost by 1/4. with your country, with the added states, the turnover growth -- with the united states, the turnover growth is 5.6%. speaking about the flow of goods into the russian situation their volume has decreased a little. import has decreased by two times. now it is just $15 billion. the structure of the turnover when it demonstrates growth -- the russia-u.s. turnover, the import has increased by about 11%. it does not make up for losses european manufacturers are

bearing, but speaking about the decrease in our country, in europe they are talking about stagnation and what we have to do in order to ensure unconditional growth of the global economy, and to assure growth in europe, in russia, and other countries of the world. we definitely have to stop imposing sanctions for i would like to emphasize that the sanctions imposed by the united nations are legitimate. if you are going to have economic freedoms to ensure economic trading. ♪

charlie: the relationship with germany, a strong economic power, and you have had a good relationship with chancellor merkel. where do you see the future of russia's relationship with germany? president putin: the future between russia and any partner country depends not just on russia. we cannot achieve positive results with negative actions.

my colleague just spoke about companies that are present on the market. talking about 6200 companies and they all stayed. about 150 reduced by volume somewhat, but they remain present and they remain active. moreover, i mentioned things opening up. one was launched today. german companies, among others were involved. we are not planning to disrupt or even limit this. this is not something that determines business negotiations. we have good, reliable long-standing relations and we

will do our utmost to preserve and develop them on the european continent in general and global economy alike. we talked about the current state of the global economy. we are aware that in general experts highlighted two big issues. low growth rate, something about stagnation. we know that. experts think that the situation is likely to remain the same for some time. the second problem is impeded growth. country wise talking about europe, with this happening, germany is showing moderate growth. 1% last year. look at france. 0.7%. italy has mentioned.

for years, they have been at zero growth. in japan, it is 1.4%. that said, it is obvious that we all need additional points of growth and incentive for development. mr. tsipras said the problem is not just for greek, but all of europe. i took note of that. [applause] it is not just the problem of theirs, is the problem of your landlord as well. look at what happened. integration of markets have been -- you cannot regulate that with currency because there is no longer an international currency and you are very tightly linked.

you cannot match your policies and agriculture, tourism. they have to be very balanced. we are following what happens in europe because it is a significant trading partner. europe remains a leading trading partner. germany is number one out of all european countries. i hope we will continue to develop relationships further. we are prepared. [applause] charlie: you have been generous with your time, mr. president, here in st. petersburg and this forum. one more question from me. the role that russia wants to play in the world in 2015.

i listed a number of hot issues, whether it is your border, baltic states, or whether it is ukraine. in the middle east, there is isis and there is syria. the relationship with united states. some people have said you have had more unrestrained power than any russian leader for some time. my question is, how do you play your role in these big problems and how will you take the initiative because of how you and your leadership has changed russia? clearly you are stronger militarily. clearly you seem to be more aggressive, even though you do not like me to use that word, i suspect. how do you make russia a serious part of the solution as the great power it is?

president putin: i did not like you using the term aggressive, correct. we are not being aggressive. [applause] we are persistent. we are more consistent in pursuing our interests than before. for a long time, for decades, we were silent. we were pushed farther away and we got to the red line. we cannot cross. i want to make that very clear about russia. russia is not trying to change the global landscape. russia would rather look for global dominance. we are not trying to impose our

morals on anyone. we are just trying to be part of the international community, the united states, european union, and asia alike. we base cooperation on principles of mutual respect and equality and this is what is guiding it. when it comes to international cooperation, we remain committed. we adhere to the principles of international law. fundamental instruments like the u.n. charter and when it comes to the economy, the economic forum will try to seek greater economic liberty, they will try to make the economy more efficient, try to diversify it

try to make sure that through this substitution, and by the way, we are planning to allocate over 2.5 trillion rubles shortly to rebuild high-tech production where we can be more competitive, and not just to make sure that -- but develop our economy to open new profits, to raise living standards and prosperity levels for our people. [applause] charlie: we live in a complex world. thank you so much for being here in your hometown to talk about these issues. [applause] president putin: thank you very much. i thank all the participants and all the panelists.

thank you for being so friendly. seriously. [applause] no, i mean it. it was a friendly discussion. ♪

>> good morning, i am in bond and this is trending business. -- i am yvonne. yvonne: we will be live inside singapore and jakarta this hour but first we are watching signs of stability, the latest snapshot of china's economy comes in better than expected. hsbc's junes reading indicates the policy easing is having an effect. greece is confident a deal will be reached at other key players including angela merkel worn a

lot more must be done. an explosive issue -- knowing about airbag flaws in 2001. the u.s. senator talks about the troubling picture of the manufacturer. to let us know what you think about today's stories, please follow us on twitter. more evidence that china's economic slowdown is turning the corner. the hsbc numbers for june came in better than forecasted. steve, better but still contracting. steve: the preliminary number ahead of the final number coming in at 49.6. 49.4. it does beat may, 49.2 and it has been showing signs of improvement ever since that 50.7