Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues.

We are gathered today, here in Murmansk, in order to talk about problems in the fishing industry.

In recent years, the state has seriously concentrated on the problems of fishermen, marketers and processors in the fishing industry as a whole. We strive to facilitate the restoration of Russia's fishing industry both on the domestic and foreign markets. And I have to say, there have been positive developments.

So, following the results of 2009, in the crisis, when many economic sectors have obviously suffered, nevertheless, the volume of extraction of bioresources was 3.72 million metric tonnes. Whether it is a lot or a little is another matter. But growth of more than 11 percent - 11.6 percent - is obvious in comparison with the rather successful year of 2008. In general, that's not bad.

At the same time, these specific successes create new serious problems; first of all, in the development of infrastructure for processing and storage of fish products, and their subsequent sale.

The existing coastal capacities are worn out - that's not any news - and for a long time, enquiries from fishermen have gone unheeded. Besides, there is still no clear, integrated chain from catching the fish to processing and final sales.

As a result, despite a record catch last year, imports still dominate the Russian retail chains. Owners, let's come right out and say it, are still in no hurry to modernise infrastructure, citing excessive expenses and current economic difficulties. However, I was at one of the companies in Murmansk today, and its owners have found an opportunity to invest in restructuring production and hardware, and they have bought new production lines. And there is a result.

Considering the difficulties of the crisis period, the Government resolved last year to support the sector. And in 2009, we reserved more than one billion roubles for subsidising interest rates for loans for construction and modernisation of vessels, fish processing infrastructure and storage for fish products. Strangely enough, this money remained claimed. Some people ask the government for money and criticise us, saying that we do not disburse in full those resources that are needed in such and such sectors or companies, especially during the crisis period - and here we have given, and you have not taken. I would ask the head of the sector to explain the reasons. I hope that that won't happen this year.

This year, we have still allocated 600 million roubles for support of the fishing sector, including in the new lines of business; one of these is establishment of specialised fish markets in the Russian regions. I hope that this time, state resources will be used effectively.

All market participants - fishermen, processors, and sellers - need to meet with each other and find compromises, including compromises on pricing. On its part, the Russian government is ready to consider increasing subsidies for interest rates on loans for organisations in the fishing industry and increasing the amount of so-called preferential lending and short-term loans. We have similar practices in agriculture, in areas such as plant-growing. We are ready to consider these practices with regard to the fishing sector, to extend them to the fishing sector. Certainly, if this is called for and used. Let's get down to work, please. Mr Zubkov, you have the floor.

Viktor Zubkov: Mr Putin! The session of the Presidium of the State Council that you held in Astrakhan in August 2007 served as an impetus to resolve the accumulated problems in the fishing industry. In two years, a system of both legal and economic measures was implemented to execute the Presidium's resolutions.

Two basic laws and dozens of resolutions and executive orders enabled issuing 10-year bioresources quotas for economic agents. Catches made in our economic zone are obligated to be declared in domestic ports. We established regulations for the procedure of registering vessels and products in ports. The government has allowed the transition to payment of a unified agriculture tax to subsidise interest rates on loans for shipbuilding. There are also a number of other legislative and standards innovations.

Simultaneously, a federal target programme was adopted, with total funding of 62 billion roubles, including 32 billion roubles from the federal budget.

The rates of payment for using bioresources were lowered 84.6%.

As a result, total funding of the sector in 2009 (the crisis year) has increased 150% and was 15.5 billion roubles.

In 2010, this figure will decrease slightly - to 14 billion roubles.

We have left from the cruel and corrupt practice of funding of a science of the fish-farming industry by allocation of so-called scientific quotas and we increased funding of scientific research fourfold.

Consequently, the Government has accurately established clear, transparent game rules and has given business a signal - develop, invest, enter the sector.

Certainly, time is necessary to achieve notable results; however, there have already been certain successes.

So, revenue from the fish-farming industry in 2009 grew almost 20% and has reached 101.5 billion roubles.

The sector's net profit has increased 540% - it has reached almost 11 billion roubles. So there is money that can be allocated for development.

The average monthly salary in the sector's companies has increased 20% over a year, and is now more than 23,000 roubles.

Proceeds from customs duties and collections have increased 600% and reached 3 billion roubles.

The sector is operating in a stable manner.

The tasks for this year are upgrading shoreline infrastructure and fleet; setting up modern processing lines; improving logistics - what the prime minister had mentioned.

Certainly, the first two tasks demand time and money, but we should find these. Already, there is a positive trend.

In 2009, as per the federal target programme, projects to renovate berthing lines in 11 seaports serving fishing vessels have been completed. In 2010, other construction projects have started.

Delivery of fish to consumers demands optimisation of transport logistics and development of retail infrastructure.

Absence of a developed wholesale link is also a tremendous disadvantage, and we should resolve this issue together with business.

By the way, the law "On Trade" could yield a notable result - accelerated - 10 maximum - refunds for perishable products, which fish are.

What is lacking?

Business suggests adding functions and powers to the Federal Agency for Fishery (Rosrybolovstvo) with provisions on development and implementation of a state policy in field of maintaining the population of quality fish products, as well as issues of forming balances and transport and industrial logistics.

In a word, the agency should begin responsible in full for the entire "chain" - from catch to delivery to the shop counter.

As for customs-tariff policy, the situation here is the following.

On one hand, there is the competitive advantage of cheap, occasionally low-grade fish products from China and other Asian countries; on the other hand, there is the high competitive advantage of Norwegian fish production as a result of its highly efficient fisheries, processing and logistics.

Certainly, we should reduce expenses and improve quality of our production.

We need a flexible system of import and export duties. But everything should be carefully calculated so as not to allow a rise in prices.

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Vladimir Putin's concluding remarks:

Colleagues,

I want to reiterate what I just said. We debated this issue especially actively in the second part of our meeting today, and our discussion was very open and constructive.

Here's what I want to draw your attention to: we have mentioned today practically all of the sector's problems, including its superfluous administrative regulations, partly also the veterinary monitoring conducted by the Federal Service for Veterinary and Phytosanitary Supervision, as well as excessive bureaucracy in the work of the customs services. I think it is quite possible to start work on reducing these mountains of paperwork.

Moreover, if we talk about transition to e-government, what prevents us from doing it all in electronic form? Take the company charter - why do customs services demand it 10 times from the same ships? I'm sure that there's a great deal we can do.

Another subject entirely is balanced distribution of refrigeration capacities across the country. This is a separate subject, and we need to consider it on its own. Perhaps we need to create an entire programme? Yes, containers, certainly. But on the whole, if we look at the big picture, it is all part of the same issue.

Our colleague brought up the issue of how much we should produce using our own resources, and how much from imported goods. It is clear what we need to do. Formulate these proposals, and let's implement them.

As for inspections, we go on struggling with these inspections, but there are no good results so far. We will certainly review this issue with the Commission on Administrative Reform. And I am grateful to you that you have broached this subject today.

Nevertheless, we can see positive trends in some areas, especially with small and mid-sized business. If nothing is happening in this sector, let's pay special attention to it from the point of view of eliminating unnecessary administrative barriers. I absolutely agree with this; we will return to this and analyse it once again.

A very important issue is, of course, the customs code, in connection with establishing the Customs Union. We've been trying to uncover various problems today in different sectors - thank you for bringing this up. We have already mentioned it. Mr Zubkov will handle it, and the government will certainly discuss it.

It is especially important for us, because the other members of the Customs Union - Kazakhstan and Belarus - are landlocked countries. It is relevant for us but not for them. But I should tell you that, on the whole, we always find compromises with our colleagues from Belarus and Kazakhstan, on practically all issues.

The process is not easy, but it is constructive. I hope that we will also agree on acceptable outcomes in this endeavour as well.

It's the same regarding technical regulations. Certainly, we need to expedite the adoption of relevant decisions.
Concerning production overload, possible shelters and so on - all of these decisions are connected, clearly, with the fact that, unfortunately, and all of you present here know this well, all of these overloads, in the recent past anyway, have been connected with theft of products from our customs territory. Without calling at any port, all of the products are "siphoned off" to foreign ports. Let's think about this. Therefore, I would like to ask a question: Has GLONASS been installed on our ships?

Andrei Krainy: We have a system of satellite monitoring, but unfortunately it's not GLONASS.

Vladimir Putin: And why not?

Andrei Krainy: It was devised earlier, for starters.

Secondly, with GLONASS there are still blind spots where we do not see the ship for several hours at a time. But with this system we can pinpoint the position of each vessel in real time.

Vladimir Putin: We are going to launch three more satellites by the end of the year.

Andrei Krainy: We've been waiting for that. The system we have now works as it is.

Vladimir Putin: Don't wait.

Andrei Krainy: The system works. Another matter is that this system is Argos, not GLONASS. As soon as GLONASS begins working we will change over to GLONASS. We have everything ready to do this.

Vladimir Putin: Submit proposals to me on making the transition to GLONASS.

Andrei Krainy: All right, Mr Putin. But today the satellite monitoring system works in real time.

Vladimir Putin: Change over to GLONASS.

Now let's talk about protecting our interests in the competitive environment in areas of our traditional industries. This is certainly very important. I completely agree with you.

I should tell you that the Ministry of Foreign Affairs is working on this. I know that the Ministry of Foreign Affairs is always focused on this. It is one of the constants that are present in all our negotiations with our partners. Especially here, in this region. But not only here. Also, for example, in Korea and Japan. Always.

But if you consider that we need to strengthen something here, we will certainly give the Ministry of Foreign Affairs such a signal. You can be sure of that.

Now, the issue of allocating rolling stock. Yes, it's possible. There are certain rules for allocating, say, the aviation equipment. Certainly, rolling stock is a little bit different, but, nevertheless, we still need to think about it. And replacing the rolling stock will only be to our advantage both in terms of the quality of the transported products, and, certainly, additional orders will be very important for our railcar-manufacturing companies.

Well, and finally, the most sensitive, most acute and most complicated issue. It concerns relations between fishermen and shipbuilders. You know, there is nothing new in this area if we compare it with relations between consumers and customers in other sectors, say, in air transportation. Russian transportation companies bring up the same issues all the time: open up the customs, give us a chance to buy modern planes that consume less fuel, that are less noisy and have many other advantages, because it is becoming impossible to compete with other carriers that have such airplanes. Here too, fishermen tell us: give us a chance to buy everything abroad.

I want to address you and say: all of us are the children of the same country; we are citizens of Russia, the Russian Federation. And apart from fishing, which is very important, there is also shipbuilding. Apart from air carriers, there are also aviation manufacturers. Apart from motorists, there is also the car industry, which employs millions of people, and their families depend on it. And these kinds of decisions should be the result of a compromise. The compromise is subtle, and it requires a high degree of management skill. This is the essence of our teamwork.

Is it possible for everybody to have their way? In this case, strangely enough, there is a solution, difficult as it is. To do this, we need to create sound economic conditions for customers of different kinds of equipment. Certainly, where we need to, we will have to use administrative measures. But it would be too harsh to grant the right to quotas, for example, only to those companies that place orders in Russia. That may be going to far, I don't know, we need to think about it.

We need to create economic stimuli for fishermen to place orders with Russian shipyards. And therefore, the Transport Ministry, Economic Development Ministry and Industry Ministry, working jointly with the Federal Agency for Fishery, should propose a systematic solution. And show potential customers a development trend in our shipbuilding industry.

We need to see a development trend, so that it should be clear that gradually we are going to tighten domestic regulations. And in the end it will become unprofitable to order these products abroad.

But this means that, as this development trend grows more tangible, our manufacturers will become more competitive with each passing year.

There are such opportunities. Technologies should be bought. These will gladly be sold. Everybody sells everything these days. Everybody and everything. Any technologies. It is possible, only we need to do it in due course.

We also need for this to be a common joint plan with the common understanding of what growth rates and goals we're pursuing together.

I would like to ask you to prepare the minutes of this meeting within a week, even though this was not a planned meeting. So that all the problems we considered today will be accounted for, including the directive to draft a plan for cooperation between potential customers and shipbuilders, with specific deadlines, goals and tools. This should follow the same format as our measures in the automotive manufacturing sector. Yes, some of our decisions were painful, but we have rescued the sector. And we have provided for millions of jobs and technological development.

We will do the same in aircraft engineering. And the same in shipbuilding; our national interests dictate that we do so. Certainly, we should not infringe on the interests of those who place the orders, in this case fishermen. It is to provide for their interests today that we have convened and are discussing all of these problems as a system.

Please draft a summary of today's resolutions.

Thank you very much.