9 june 2010

Prime Minister Vladimir Putin meets with Dagestan President Magomedsalam Magomedov


Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon. Let us discuss social, economic and political conditions in the Republic of Dagestan. You have been the president here for only a short time. There are many problems in the republic but there is also much potential.

The average wages in Dagestan are slightly more than a half the national average though earnings are rising, albeit slowly. The present national average monthly wage is 19,000 roubles compared to ten thousand in Dagestan, as far as I know.

There are some alarming trends along with some improvements. I mean there is nationwide recovery from the slump, but in Dagestan the growth is slight.

I want to get to the heart of the matter. There are positive trends, yes - in particular, housing construction progress all over the North Caucasus, including Dagestan, where construction rates are double the national rate. This is good, and this trend must be maintained. However, let us take stock of the problems, one by one.

Magomedsalam Magomedov: Thank you, Mr Prime Minister. I have only become president recently, and I thank you for confirming my nomination. The United Russia party, which you lead, also had confidence in me, and I had support from President Dmitry Medvedev. This is a huge responsibility, something I am acutely aware of.

Dagestan really does have problems. However, it is a very interesting and promising republic. Mr Prime Minister, you have been quite right to highlight the dynamism of our basic socio-economic indices during the last ten years.

Dagestan has produced steady growth in these basic indices since 2000. I am referring to the gross regional product - a cumulative index, as well as industrial and agricultural production, and construction. All this growth, however, does not thoroughly improve the situation. Our development is not enough, as are our own sources of progress.

Federal funds are the source of our principal investments and the main vehicle for growth in the republic. Perhaps this is why Dagestan is still at the bottom of the list of constituent entities of the Russian Federation for basic per capita social and economic indices.

Our gross regional product per capita is presently 99,000 roubles, 2.7 times less than the national average. You mentioned this. Industrial indices have the worst imbalance.

Per capita industrial output is only 13,000 roubles compared to a national average exceeding 150,000, which is almost 12 times more. Dagestan accounts for a mere 8% of the gross regional product, which reveals the backward nature of our economy.

Regrettably, Dagestan remains one of the most depressed regions and one that continues to rely on government subsidies. Our economy can be described as agrarian-industrial. Our agri-industrial complex owes its development mainly to quantitative factors. The sector's development is based on small commodity production and on manual labour. The entire system demands an over hall and modernisation.

Our approach to the economy and our various industrial sectors needs to be changed. No doubt, we should shift to new, innovation methods of development. In this connection, we have determined critical developmental priorities and coordinated them with the priorities of the newly established North Caucasian Federal District. We pin great hopes on this comprehensive strategy for development, which is currently being drawn up. We have suggested over 200 projects: business, infrastructural and social projects. This draft proposal is now at the office of the presidential envoy to the North Caucasian Federal District. We hope the strategy will take our crucial priority projects into account.

Vladimir Putin: We will be reviewing the strategy and discussing it soon.

Magomedsalam Magomedov: Mr Prime Minister, we have given priority to such sectors as the agri-industrial complex, for which we have every advantage; and the tourist and recreation industry, which certainly has geopolitical importance (we possess a natural potential with the shore and mountains, and we want to develop tourism). Our republic's location lends itself to transport and logistics possibilities. We are at the junction of every kind of transport: maritime, air, rail, motorway and pipeline, so we see promise in transportation.

The construction sector is good, as is the construction materials industry. You have praised our housing construction. We owe this success mainly to private investors. Private houses are built on a grand scale, and their construction accounts for a greater part of our positive indices. Housing starts did not fall off the pace but increased even during the downturn last year.

As for the industrial slump, this is due to a drop in the processing industry. Industrial production is on a small scale in Dagestan, so even one plant doing badly drags down the entire sector.

We also have 11 companies oriented toward government defence contracts. Regrettably, the number of such contracts has dropped this year which is reflected in the overall industrial indices.

Vladimir Putin: Unemployment is one of the gravest problems of the entire Caucasus. In Dagestan, too, it is over 20% of the able-bodied population.

Magomedsalam Magomedov: Our republic has always been known for redundant workforce. A high birth rate is common here which is good but steady natural population growth also creates problems because more than 50,000 young people reach the active working age every year. It is hard for our republic to provide permanent jobs for them.

There are 47,000 officially registered unemployed today, though statistical reviews suggest the actual number is closer to 170,000 unemployed.

Mr Prime Minister, this is one of our main social problems. We cannot cope with it unless business development is promoted and investments are increased. We are doing what we can. We are establishing investment sites. In other words, we want to create an infrastructure that would attract business. However, the complicated social and political situation is the most formidable obstacle of all.

Vladimir Putin: This situation might be so complicated just because small and medium businesses don't have the right conditions for development. I know there are problems with allotting land, for instance.

Magomedsalam Magomedov: Mr Prime Minister, there might be some cases.

Vladimir Putin: There are cases...

Magomedsalam Magomedov: There may well be, if I had any facts to proceed from...

Vladimir Putin: The crux of the matter lies not in specific instances but in the general situation. People need proper conditions in which to work. They need help when they want to start their own businesses. This is especially true of Dagestan, with its industrious and efficient people. You should take a look at how land use and distribution issues are settled.

Magomedsalam Magomedov: I will.