Prime Minister Vladimir Putin's opening speech:

Good afternoon, ladies and gentlemen,

I would like to start with the event that took place yesterday in Kharkov. As you all know, the Russian and Ukrainian presidents signed an important document there allowing the Russian Black Sea Fleet to remain in Sevastopol, in Crimea.

I believe this decision serves the fundamental interests of both the Russian and Ukrainian peoples. The Russian fleet will remain in Sevastopol for another 25 years after 2017.

I would like to emphasise that the Russian fleet in Crimea provides security for both Russia and Ukraine. Moreover, it plays an active role in international efforts to maintain peace and security: at present ships from the Black Sea Fleet are patrolling the Gulf of Aden to combat piracy, and in 2008 and 2009 they were involved in international counter-terrorist operations in the Mediterranean with the navies of other countries, such as the Black Sea Force.

And what is the economic component of our agreement? As is well known, the price of Russian gas exported to Ukraine will be cut by 100 dollars for 1,000 cubic metres. With this in mind, I would like to emphasise that, oddly enough, Gazprom has nothing to do with this. Neither Gazprom, nor its shareholders will be affected. The discount will come from eliminating export duties for Ukraine by 30%. In other words, the discount will come from the Russian state budget. We will achieve this through government mechanisms.

I would like to draw your attention to the fact that this is an exceptional case. We have many partners in the energy, gas and other sectors, but unlike some other countries, we do not need to build military bases around the world, especially in places where we have gas or other interests. As for Crimea, I would like to stress that this is an exceptional case, one with a long history behind it. And so therefore I ask our partners not to worry, and not to request similar arrangements.Naturally, business entities have reached certain agreements. However, these agreements amend the existing contract, which remains in effect, without addressing pricing. These changes include Gazprom's giving up the right to impose sanctions for any possible failure to meet monthly commitments for the purchase of natural gas. Strictly speaking, Gazprom never imposed these sanctions as it was.

We have also agreed to increase exports of Russian gas to Ukraine this year, which will help our Ukrainian partners save substantial funds they would otherwise have had to pay Russia. Ukraine will save almost $3 billion this year and approximately $4 billion next year, which is connected with gas export volumes.

Our partners will certainly be able to fill their underground storage facilities with natural gas, and thus easily be able to meet peak gas demand in autumn and winter and ensure the reliable transit of Russian gas to European consumers.

We understand that the money that Ukraine would save and that Russia would not receive will remain in Ukraine. And that money will accumulate each year.

We're talking about tens of billions of dollars. And these funds will be considered payment for permitting the Russian navy to remain in Sevastopol after 2017. In addition, after 2017 Russia is committed to paying cold hard cash, so to speak, for allowing the navy to be stationed in Sevastopol. We will also increase somewhat the amount we pay now and will pay until 2017.

This was a difficult decision for us since it will cost us quite a lot. Nevertheless, I will ask the representatives from our party in the Duma and all our deputies in parliament to ratify the agreement. And I ask the government of the Russian Federation to draft a resolution on customs duties immediately after ratification.

I would like to emphasize that this is a qualitative breakthrough in bilateral relations between Russia and Ukraine. The most important issue here is not the money that Ukraine will save or Russia will give up, nor is it natural gas or the navy, however important these issues may be for the two countries. The most important issue here is relations between the two nations, their mutual trust and understanding of common interests and historical purposes, as well as the feeling of fellowship.

And this is what will be the foundation for our future cooperation with Ukraine.

I am sure that with such a foundation, we will be able to achieve a great deal together, addressing many economic, social and political issues.

Now I would like to return to the government's report to the State Duma for 2009.

As you know, in the report we set forth a number of immediate and medium-term objectives in addition to summarising what we had accomplished.

What objectives in particular?

First, we need to submit bills to the State Duma that would continue monetary assistance to Russian citizens through maternity capital programme and allow citizens to use the maternity capital to build private houses. This would also include those people who are building the houses on their own.

Second, when drafting the budget for 2011, we need to provide the funds necessary for our housing initiatives, first of all to provide housing to veterans of the Great Patriotic War and retired service members.

The Ministry of Regional Development reported that 28,000 veterans and people with disabilities who had been put on the waiting list before May 1, 2005 have already received new flats. They just have to give out another 500 keys. And that's it. They give out the keys, and they're done. I call on the federal and regional authorities to follow this situation closely. May 1 is fast approaching, and we have to ensure that the issue is settled.

After that, we have to get down without delay to housing issues for veterans who got onto the waiting list only recently. We have already distributed 48.5 billion roubles to the regions for this purpose.

I would like to stress once again that these veterans should not just receive four walls and a door, but flats renovated at the expense of the municipality and, as I discussed with the Minister of Telecommunications and Mass Media [Igor Shchyogolev], free telephone connections. I demand that this requirement be met without exception.

We also need to cut Vnesheconombank interest rates for mortgages.

I charge all those involved in this issue to prepare and submit corresponding amendments to the State Duma as soon as possible.

We also need to carry out a series of systematic resolutions to help develop the construction industry, as well as eliminate a number of unnecessary administrative barriers in that industry. I ask that all those involved in these issues address them as soon as possible.

Third, we have announced that we have taken significant steps to modernise Russian healthcare. Therefore, I charge the Ministry of Healthcare and Social Development, along with the Ministry of Finance and the Mandatory Medical Insurance Fund, to draft a new version of the law on mandatory health insurance.

In addition to this issue, we need to adopt a new model for regional programmes to modernise healthcare, which will set up guidelines for governors.

Remember that we reached an agreement whereby we would only give money to those regions that will work to modernise healthcare and implement a modernisation programme. And if the modernisation programme is to be implemented, they [the regional governments] need to have copies of the programmes in front of them.

We need to provide all possible methodological assistance to allow governors to develop such programmes and start implementing them beginning in January 2011.

And, finally, we need to set forth a transparent, easily understandable and attractive mechanism for medical insurance co-payments by unemployed pensioners.

I discussed this issue in the State Duma during my address. Please develop an efficient mechanism with the Duma.

We will focus on the issue at the meeting of the Presidium of the Council for Priority National Projects, to be held tomorrow.

I also ask you to draft a number of additional measures to further reduce automobile accidents and deaths on the road.

We have already accomplished much in this area and are seeing results, but we need to make further progress.

Fifth, the government is currently developing a programme to make fiscal spending more efficient. Once again, let me stress this programme's importance in encouraging systematic reforms in social programmes and public administration.

Balancing the federal budget is essential.

I ask all those involved in the issue to examine this programme at the next government meeting.

Sixth, I ask the Ministry of Finance to submit a series of coordinated amendments to the taxation legislation to support innovation. The Ministry of Economic Development and the Federal Customs Service will be charged with submitting proposals to simplify customs regulations. These proposals should primarily deal with the import and export of high-tech products.

And finally, we need to move beyond the stalemate and draft a resolution regulating purchases from natural monopolies and government-owned companies.

In general, I ask government agencies to prepare additional proposals to improve the investment and business climate in this country.

Ladies and gentlemen, naturally I have only brought up the most important objectives. I would like to see a comprehensive list of commitments based on the report in the State Duma submitted for my approval in Monday.

I hope that we will work tirelessly to meet all our obligations. Now I'd like to turn to the agenda.