Mr. Chairman, Ministers, distinguished delegates and guests.

I thank Mr. E. Yasin, Minister of Economy of the Russian Federation, for his invitation to this meeting. It gives me pleasure to participate in this meeting of the Barents Euro-Arctic Council.

I would like to make some general remarks before addressing some of the specific issues of this meeting.

"The Value of regional cooperation."

Firstly, our experience shows that regional cooperation can contribute effectively to economic development, including direct foreign investments. The Nordic financial institutions, in particular the Nordic Investment Bank, have been important facilitators of cross border investments in the Nordic region and have enhanced cooperation between nordic enterprises. The Nordic Development Fund and the Nordic Project Export Fund have proven important partners for Icelandic companies that are engaged in investment projects outside the Nordic region. These institutions have with their valuable working knowledge of Nordic business community and a flexible approach. been able to supplement in an effective manner the activities of multilateral financial institutions.

Secondly, deeper involvement of regional authorities within the Russian Federation to promote foreign cooperation, including facilitation of foreign investment, is welcomed and must continue. The regional authorities with their local knowledge and sectoral expertise can be very efficient partners in promoting cross border trade and investment, thus complementing the efforts of the central government. This holds true in most larger countries. One needs only to observe in that regard the prominent role played by various States within the USA in promoting direct inward investment into their regions.

Thirdly, regional cooperation has often been the driving force for wider economic integration. The European experience clearly demonstrates this. The role that the Benelux countries through their regional cooperation have played in the overall European integration process is one example, but the same holds true in the nordic context.

"Regional cooperation in a wider context."

With reference to the above, we support the work of the Barents Euro-Arctic Council and the strengthening of the regional cooperation within the Council. We believe that the Council can contribute to:

Stronger regional cooperation in economic affairs;

Wider economic integration through its role as a forum to discuss transboundary economic and trade issues and to review of bilateral trade and investment issues;

Furthermore, we believe that the Council can foster the:

Promotion of trade and in particular investments through support of specific projects and financial instruments.

Stronger relations between regional authorities and the International Financial Institutions.

"Improved framework for investment and trade."

Mr. Chairman, investor confidence in any country is first and foremost influenced by the overall stability and general conditions for investments and trade. This applies both to the economic situation as well as the regulatory and tax framework. Measures to upgrade tax and custom legislation undertaken by the Russian Federation are therefore of great importance. The intensification of national efforts in this regard will be the single most important factor to encourage trade and investment in the Barents-Euro-Arctic Region.

"Strengthening international cooperation".

We welcome the interest expressed on the part of the Russian Federation to strengthen international cooperation in the field of trade and investment. This has been evidenced through Russias accession to the WTO and the recent application for membership of the OECD. With regard to the OECD's current activities we are supporting strongly the early conclusion of the Multilateral Agreement on Investment. We expect the agreement to be a high quality instrument open to accession by other countries, including Russia. If signed by all members of this Council it would be an important instrument to promote investment in the Region. Early consultations on this agreement between the OECD and the Russian Federation should take place to ensure that.

"Cooperation with International Financial Institutions."

Given the particular expertise of the Nordic institutions in the Region and their competence in important sectors in the Region, we believe that they can play an increasing role in promoting cross border investments. We welcome the work underway on a framework agreement between the Ministry of Finance of Russia and the Nordic Investment Bank. We would hope that improvements in the overall regulatory framework in Russia, together with the conclusion of a satisfactory framework agreement, would allow the NIB to gradually resume its operations in the Russian part of the Barents Region.

The long term benefits of the cooperation within the Council will be, primarily, through its efforts in investment promotion. In order to further foster the growth of the local private sector it is important to support cross border investments between smaller companies in the Region. We trust that the preparatory work undertaken by the Council will facilitate and encourage the EBRD and the World Bank to increase their efforts in this Region.

With increased emphasis on the financial sector and work through equity instruments, such as the North West Regional Venture Fund, we are confident that the EBRD in particular can intensify its activities. That, however, is dependent on the ability of the privat sector-partners to develop high quality projects.

Increased growth in our countries has shown that small and medium sized companies are willing to explore partnerships in other countries. The International Financial Institutions could be well advised to market their financing facilities better vis a vis SME's in the Nordic countries. Better access to the various local financing instruments would be an important catalyst for partnerships between smaller companies in the Barents Region.

"Regional cooperation within the Russian Federation."

When it comes to investment in the Russian part of the Barents Region, we believe that guaranties offered by the local authorities could play an important role to ensure the financing of private sector projects. The local authorities can add stability to the fundamental operating conditions of the enterprises. The use of performance guaranties or assurances for important elements in a project can be of great value. This can apply to long term raw material supply agreements or utility services. Longer term assurance with regard to quota rights for fishing enterprises is a point of interest to Joint Ventures with Icelandic partners.

In order to encourage private sector investment in the Region, we stress the use of information networks and other ways to establish company to company contracts. Pragmatic and cost effective ways should be emphasized.

"Improvement of the environment."

The environmental situation in the Barents Region is a matter of continuing concern for all our Governments.

Increased energy efficiency would contribute very rapidly to improve the environment in many countries and I wish to place emphasis on energy efficiency measure. I am pleased to note that certain projects being prepared in the Region have as their main objectives to increase energy efficiency. And it is a matter of particular satisfaction for me that an Icelandic firm with vast experience in the energy field is among those who have put forward such proposals.

The most serious environmental issues can only be solved in the medium or long term and with strong involvement from the international community. We welcome the activities of the EBRD Nuclear Safety Account in the region and would strongly recommend that its mandate be widened to include treatment of nuclear waste to deal with a well known problem that could affect the Barent Sea and its important food resources.

"Cooperation between Icelandic and Russian companies."

The Icelandic Government wishes to achieve stronger economic cooperation between the private sector in the Barents Region and Icelandic companies. Our country is a relatively big and scarcely populated island and the economy is primarily based on renewable natural resources such as coastal fishing and hydro- and geothermal power.

There is considerable potential for cooperation with the coastal regions of the Russian Federation, namely here in the Barent Region and further east on the Pacific coast, were Icelandic companies in many fields have been participating in mutually beneficial projects.

The Icelandic private sector is well placed to establish joint ventures in the Region. The Government of Iceland is putting in place an improved package of complementary tools providing information, technology and financial instruments to those companies that wish to invest and permanently establish themselves abroad. There are in particular two financial instruments of relevance, both of which are open to projects in the Barents Arctic Region as a whole:

Firstly, the Export Credit Guaranties Scheme administered by the Icelandic Industrial Fund is available to cover financing of up to 70% of the value of Icelandic equipment or services exported in a project.

Secondly, the Icelandic Industrial Development Fund has recently been authorized to take equity positions or provide loan financing in Investment Projects with Icelandic participation. The Fund can only take minority positions in projects. Therefore cofinancing with other financial institutions or Funds, such as the Regional Venture Fund, would always be required in such projects.

Mr. Chairman, the Bilateral Investment Agreement between Russia and Iceland to be confirmed today will further strengthen the potential for private sector cooperation. We are convinced such an Agreement will be for the benefit of both our countries and the Barent Region as a whole. Allow, me, in conclusion to stress again our support for the regional cooperation within the Barents Euro-Arctic Council and the Council's role in the promotion of wider economic intergration. We believe that success will come to countries that succeed in linking their businesses with the global economy.