Putin is in Kiev on a one-day working visit to discuss a number of sensitive issues that have overshadowed bilateral relations since the "orange revolution" of 2004 saw a Western-leaning government installed in Ukraine, a Putin aide said earlier today.
Following their one-on-one talks, the presidents led their countries' delegations at a meeting of the Russia-Ukraine Interstate Commission.
"There is a desire, both on the Russian and Ukrainian sides, to look for compromise solutions in areas where they have not yet been found," Putin told a news conference in Kiev.
He said his meeting with Ukrainian President Viktor Yushchenko has been cordial.
Yushchenko said the two presidents discussed a broad range of economic, trade, and other matters.
"The main breakthrough at today's meeting was the mutual understanding displayed by both sides. There was no confrontation when we discussed specific positions," he said, adding that Russia and Ukraine have demonstrated their readiness to intensify political dialogue.
He singled out the following problem areas in Ukrainian-Russian relations: the demarcation and delimitation of state borders, the Russian naval presence in Ukraine, including the use of radio frequencies, navigation and property, and economic cooperation, especially in the energy sector.
Speaking at a session of the Interstate Commission, President Putin said the economic integration of Russian and Ukrainian enterprises is crucial to economic development and competition on international markets, highlighting the need for a common economic space.
"Disintegration seriously damages our producers, whose operations are closely interconnected," he said.
He said cooperation in aircraft building, space communication, transportation and agriculture has an especially good potential.
"Trade turnover in the first 10 month of the current year has grown about 20%, reaching $20 billion," he said.
Yushchenko said he hopes that at the next session of the Ukrainian-Russian Interstate Commission, scheduled for May-June 2007, the sides will sign a memorandum of strategic cooperation.
He said Ukraine and Russia "should act as reliable partners and friends."
Putin said there is no reason to review the current agreement on natural gas deliveries to Ukraine, but that if there is a need, Russia is ready to consider the possibility of shipping additional amounts of gas to Ukraine.
Ukraine is an important transit country for Russia's energy resources - 15% of Russian oil and more than 80% of its natural gas is pumped to Europe through Ukraine's pipelines.
In the realm of military and technological cooperation, Russia and Ukraine reached an agreement Monday to jointly manufacture two An-124 Condor heavy transport aircraft.
The An-124 was designed by the Soviet Antonov aircraft design bureau in 1982. Its modified versions, the An-124-100 and An-124-100M-150, were manufactured by Russia's Ulyanovsk-based Aviastar-SP, and Antonov in Ukraine, until the mid-1990s. Currently no An-124s are being produced.
The deployment of the Russian Black Sea Fleet in Ukraine's Crimean autonomy has proved a source of contention between the ex-Soviet neighbors.
Since Western-leaning Yushchenko came to power on the back of the "orange revolution" in 2004, his government has sought to expel Russia's military from Ukrainian territory, which it sees as an obstacle to the country's ambition to join NATO and the European Union.
Russia, which pays Ukraine $98 million a year in rent for the naval base, has cited bilateral agreements signed in the 1990s that entitle its fleet to stay in Ukraine until 2017.
After Viktor Yanukovych, who enjoyed Russia's support in the presidential race he lost to Yushchenko, was appointed premier in August, the two countries brokered a deal, and the Ukrainian president confirmed in late November that his country would adhere to bilateral agreements on Russia's Black Sea Fleet.
