29 august 2010

Prime Minister Vladimir Putin speaks with road workers at the Kamdorstroy Amur base (1,371th km of the Amur highway)

Transcript of the conversation:

Remark: Mr Putin, can I stand up to introduce myself? My name is Alexander Putintsev.

Vladimir Putin: Let's all stay seated, alright?

Remark: Thank you. I've been working as a DZ-98 motor grader driver for more than nine years for the company Trud.

Vladimir Putin: A grader is a big vehicle, right?

Remark: Yes, there's one over there in the corner.

Vladimir Putin: Ah, yes.

Remark: Our company Trud will finish work in two to three weeks - we will finish the asphalt on this stretch of road. I would like to know if you have any plans for such large-scale work in the future. For example, we have an organisation - it now employs almost a thousand good road specialists. I would like to know whether there will be the same scale of construction in the future. Is anything planned? Thank you.

Vladimir Putin: Mr Putintsev - and I want to address everybody here - it's too early for me to congratulate you for finishing the job, because the work is not finished yet, though I travelled more than half the motorway and looked at it. It is clear that it is almost done. Most likely, the route will be commissioned by the time that we agreed on with the minister - before October 1. I can see that there are small gaps. The biggest gap was probably 14 km long. But in general, the cushion has been prepared and everything has been done to fill it with the right asphalt mixture.

So I would like to thank you and everyone who worked on the road - I won't have another opportunity since I'm leaving and will not attend the opening. Currently, there are 2,000 people working, and I cannot meet with everyone, but to be honest I'd like to meet with everyone, to shake hands and say thank you.

The quality is good here where you've worked. I don't mean the first stage, the first section of road from Khabarovsk - this work was done in the mid-1990s, 1994 to 1995. If you were there - some of you were - you'd see as specialists that this section of road clearly needs to be re-built. This road was made using old techniques and materials.

Yes, I see that the road workers maintain it in good condition: they fill in all kinds of breaks, cracks and potholes in a timely manner. But the road passes through towns, is rather narrow and has no bump stops. Well, in general, this is a road of the past.

Now, to answer your question, I can say that first, we need to maintain this route and complete 100 km to Chita. As far as I know, there is an old segment to Chita, and it must be put in order. Then we will have to rebuild almost half of the road from Khabarovsk, somewhere out to Skovorodino. And this will also be a major undertaking.

But, of course, none of this is the main thing. Here we have finished almost 2,500 kilometres, but the traffic here, as you know, is less than in the Khabarovsk-Vladivostok area. But the road there is much, much worse than this.

I spoke with long-haul lorry drivers, and they claim there is a long segment of road there - I myself never went there, but I know it from the materials, and the drivers confirm it. There were plans to allocate budgetary funds amounting to more than 18 billion roubles for the years 2011-2013.

Then we need to sort out the Lena motorway, which goes to Yakutsk and from Yakutsk to Magadan. We are providing more than 5 billion roubles per year in three years for these segments. The first segment will get 5.2 billion roubles, and I think the second is getting 5.1 billion roubles. Three thousand kilometres - it works out to somewhere around 10.5 to 11 billion roubles. And we need to eliminate gaps in the hard surface of the road that connects the cities of Chita and Chelyabinsk.

All of this together means we need to fund this work for three years to the tune of approximately 40 billion roubles. This suggests that there will be work here for a long time to come and jobs will be guaranteed.

Remark: Mr Putin, they say that we will finish everything, but no one knows where we will go after. Will we have work?

Vladimir Putin: I just answered that question.

Remark: There is a larger question here - will we be the ones working or will someone else?

Remark: Everyone is worried, everyone is scared of being unemployed.

Vladimir Putin: No, as I said - don't worry, everything will be fine. There will be plenty of work. The only issue is that your company, which offers road-building services, is offering these services at the lowest prices. But this contract work is awarded through tenders. But in general, the work will go on, and there will be a lot of it.

Remark: Thank you, Mr Putin.

Remark: Mr Putin, the main thing for us is to execute large-scale projects, we have lots of equipment, technology, transport and people.

Vladimir Putin: I understand. This is always a problem - you have to get the people and equipment out of circulation and then back in again. It is naturally easier to use what is available on the site. However, tenders should be held for the companies' management to confirm their competitiveness.

Remark: We have built almost 107 kilometres in just four months.

Vladimir Putin: Well done. I have inspected some sections. I particularly liked the interchange somewhere at Never, I don't know what it's called bit I'm sure you do.

Remark: The village of Bolshoi Never. There's an interchange of roads running to the Lena River and Yakutsk.

Vladimir Putin: I stopped there on purpose and looked to the left and to the right.

Remark: The road has not been completed yet.

Vladimir Putin: But it looks just great. I can tell you frankly: it fills my heart with joy to see that roads like this are beginning to be built in such remote regions.

Sit down, please. There's no need for you to stand. Please, sit down.

Remark: Mr Putin, I'm an operator of a crushing and screening unit. We are very concerned about the sequestering. Prices on raw materials are on the rise, and prices change in sequestering. The work remains the same, the salary is lower but the scale of work is the same. Is any further sequestering planned?

Vladimir Putin: This wasn't sequestering; these were certain cuts. Sequestering means something different. This means major cuts in all budget spending without in-depth consideration, so to speak.

But I have to admit that unfortunately spending on road construction was significantly cut last and this year. We were forced to do so. I believe that you understand this. It was essential to implement the anti-crisis programme, which meant supporting jobs in those sectors that were virtually tumbling down.

As for further cuts, we are not planning any. We hope that the economy will begin developing and growing steadily. In these conditions, I believe, we will be able to gradually increase budget spending, including on road construction, starting in 2012 or 2013.

As for salaries in the entire construction sector, not only road construction, they were about 6% higher than the average in the period from 2004 to 2008, when the economy was on the rise. It must be said that during the downturn in 2009 the salaries in the construction sector fell slightly below the average for Russia, just a little. The average salary in this sector is currently 19,800 roubles, which is the country's average in the economy.

However, you are doing hard work in difficult weather conditions. I do understand this. This is all set by the collective agreement between the employer and the trade union. Trade unions have to consider all the constituent elements and economics of the production because if you set very high pay for certain jobs then production will stop automatically, just by itself. However, it is evident that the trend of increasing salaries must continue. Thank you.

Remark: Mr Putin, just look at how dusty it is here. We are working at the crushing machine and there's so much dust but we receive no extra pay for this. Nothing at all! We have to work in masks all the time. Look, I've been using this mask for just three minutes and it is already black. But we receive no extra money.

Vladimir Putin: Isn't this considered a hazardous job?

Remark: No, it isn't.

Remark: We aren't paid any additional money at all.

Vladimir Putin: We have to look into this issue.

Remark: Just look how dusty it is, it's nearly dark there.

Vladimir Putin: Yes, I can see that. We have to study this issue. These works may well be classified as...

Remark: There are currently no special rates...

Vladimir Putin: I see, we'll have to look into it. Thank you for bringing this to my attention.

Remark: Just go over there...

Vladimir Putin: I understand.

Remark: And then a bit to the left to see for yourself...

Vladimir Putin: I can guess.

Remark: Mr Putin, I am a section foreman.

Vladimir Putin: Please, come over here and take a seat. No need to stand. Please, somebody find a chair for him.

Remark: Our organisation builds not only roads but also airports. I worked on the construction of the airport in Mineralnye Vody and the Tolmachyovo airport in Novosibirsk. The situation is the same as in September are delivering the Tolmachyovo airport and putting the second runway into operation. What are Rosaviatsia's plans for airport construction?

Vladimir Putin: We have a federal programme for airport construction in all regions of the country: in the Far East, in Siberia and in European Russia. We have recently reviewed this and have allocated considerable funds. How much in all?

Igor Levitin: Twenty-five billion roubles for all aerodromes.

Vladimir Putin: Twenty-five billion roubles are being allocated for the next two to three years. More than a dozen airports will have to be rebuilt. There is a lot of work to do.

Remark: You thanked us for the motorway's quality, but still it was because of you that it is being built. People use it and say thank you. Only long haul drivers ask: "When will you continue the construction?" I answer: "We must build this road first, not everything at once."

Vladimir Putin: Right. I have just now discussed the prospects with the lorry drivers. I can repeat my words: we will go on extending the road - to Magadan through Yakutsk, to Chelyabinsk, and to Khabarovsk-Vladivostok.

Remark: We are ready to go farther.

Vladimir Putin: I understand. This is an important project for the Far East and Eastern Siberia. Construction of infrastructure is objective number one at all times.

Remark: Mr Putin, will you be announcing the candidacy in 2012?

Vladimir Putin: Yours?

Remark: No, yours. We will be wholly for you.

Vladimir Putin: Thank you very much.

Remark: We would like to know if the maintenance of the road will be financed in full.

Vladimir Putin: Of course, it will. You know this is an important issue. You hit the nail right on the head. As I was driving here I pondered that question too. To be honest, I do not know how many maintenance facilities are needed (experts will determine this) to produce asphalt and concrete and to maintain the road in proper condition. But one centre is needed per a certain number of kilometres.

Remark: ...a road building and maintenance centre.

Vladimir Putin: For it to manufacture all the necessary materials and have the staff to look after their stretches all the time.

Igor Levitin: We have proposed to the contractors (there are 10 of them) which are now building the road - we proposed that they maintain it afterwards as well. They have given us a guarantee of several years, but we want them to do the maintenance work themselves.

Vladimir Putin: The minister voiced one of the principles we are now trying to adopt. It is a so-called full cycle contract, that is to say, if a company decides to build a road, it must, from the very first signing of a contract with us, maintain it for 10, 15 or 20 years. What is our starting point?  It is that a company, once it builds a road and has to maintain it, will build it with high quality. Otherwise, it will cost it more money to maintain.

Remark: Mr Putin, may I?

Vladimir Putin: Of course.

Remark: Right now you said you will continue the construction into 2011. But our organisation has practically completed all the work here, many people are unoccupied and no large volumes of work are available. We will now, for example, have to lay off workers. With no work to do, where can they go?

Remark: Group 41 is leaving on the fourth.

Vladimir Putin: I have already told you about the amounts of work we are planning. Here we need ...

Remark: And from many other organisations ...

Vladimir Putin: ... here we need for managers of your companies jointly with the ministry to make arrangements and take part in tenders to decide whom to send away and whom to keep.

The contract volume is the same as before, it is not diminishing. How to manage equipment and workforce is for company managements to decide. We in the government cannot do this for them. But I am telling you that the financing is not being reduced, for this region at least. The construction will be financed in full. I have told you that in the next three years we are planning to allocate 40 billion roubles here. How much will the entire road cost?

Igor Levitin: The road has cost 74 billion roubles since 2000.

Vladimir Putin: Since 2000, or for ten years. We, on the other hand, are going to invest 40 billion roubles in three years. Your problems do not depend on us. Funds are available, they are not being cut back. So how to solve the problem depends on the company.

Remark: Are these funds being allocated for the country or the Far East only?

Vladimir Putin: No, for the region alone. I think I will reiterate. The money will be allocated for the following projects: first, an upgrade of the still unmodernised stretch from Khabarovsk to Skovorodino - bit by bit, with three billion roubles at a time so that the work can proceed at a steady pace. Then from Khabarovsk to Vladivostok, for 18 billion. From the interchanges here along the Lena motorway to Yakutsk - five billion roubles, and from Yakutsk to Magadan - another five billion roubles. Then there are gaps to fill on the road to the Urals ...

Igor Levitin: ... to Krasnoyarsk ...

Vladimir Putin: No, first to Chelyabinsk. To Krasnoyarsk and to Chelyabinsk - there is likely to be 5 to 7 billion roubles there.

Igor Levitin: A large-scale programme.

Vladimir Putin: We are to spend 40 billion roubles over three years. Yet this section of the road, where you are working, claimed 10 billion in 10 years. It appears we are investing more here than in the whole road. So the financing is there. The way the companies organise this work is the question. 

Remark: Mr Putin, I am 58 years old, but no one hires me. I am a good specialist, but nobody wants to speak with me: "58 years old? Go fly a kite."

Vladimir Putin: You know what? I am to have a meeting soon ...

Remark: We are of the same age, aren't we?

Vladimir Putin: Yes, in a way. I am to have a meeting soon with the trade unions. And I am sure to raise the issue with them. Employers have no right to deny an applicant for these reasons. If the person meets the requirements and fulfils the required quota they have no right to reject him. The trade unions should keep a close eye on this. As I am to have a meeting with the trade unions soon, I will certainly discuss the issue with them. We will discuss that, as we will discuss the problem you mentioned - hazardous work conditions.

Remark: Mr Putin, I am a road roller driver. My question is this: there is not a single road patrol station along the entire Chita-Khabarovsk motorway. Will this problem be solved somehow?

Vladimir Putin: Yes, we have already established road patrol units and they are starting work. The issue is also settled with the Interior Ministry. Local units will be set up. But it is necessary for them to start functioning right now. I hope this will happen in the near future. But the problem you have drawn attention to is really pressing. The greater the traffic flow, the more urgent the matter will be. This is a defence against criminals. That is obvious.

Remark: Mr Putin, how is your family?

Vladimir Putin: Fine, thank you.

Remark: That's the main thing.

Question: Mr Putin, we met at the opening ceremony for a bridge across the Amur River in 2003. I am a local resident of the town of Nerchinsk in the Chita Region. My question is: Will any industrial facilities develop near the federal motorway?

Vladimir Putin: Yes, of course.

Question: And will petrol prices go up once the federal motorway is open?

Vladimir Putin: There shouldn't be any price rises.

Question: And what about railway fares and ticket prices?

Vladimir Putin: Petrol prices should not increase. There are absolutely no objective factors that would prompt an increase in oil prices, which in my opinion are high enough.

I hope very much that business will start up along this route. We are starting work on all that depends on us directly, on the government (the government is responsible for facilitating major capital investment).

I don't know whether you saw the TV coverage of me taking part in the ground-breaking ceremony at the Nizhne-Bureiskaya hydropower plant or whether you have read media reports about it.

Remark: You threw in a watch.

Vladimir Putin: That's right. They gave a local watch for me to throw in. You know what, I am not going to chuck my watches away anymore. They said ‘we'll give you ours' and I answered ‘Yours? Fine, I'll do that with pleasure.'

Remark: We saw it on the news.

Vladimir Putin: The cornerstone of the Nizhne-Bureiskaya hydropower plant has been laid. The plant will contribute nicely to current electricity-generation volumes, will create a stable network between the Verkhnyaya (Upper) and Nizhnyaya (Lower) Bureya Rivers and will provide an additional source of electricity. The latter provides opportunities for industrial development.

Members of the business community who signed agreements and contracts for electricity transmission from the planned power plant were also present. Assessing future demand is very important for projects like this. Representatives of a company with foreign participation, due to build an iron and steel works there, also attended the ceremony.

As you have probably heard, we intend to build a space centre here. The project, which is among the largest, most important, interesting and ambitious of our national projects, will also consume a lot of electricity.

Today, we have opened a Russian-Chinese oil-pumping station. Although we built the station ourselves, it is part of a Russian-Chinese project.

Any new motorway creates opportunities for opening small and medium-sized businesses, including tourist centres, cafes, restaurants and so on. Without roads businesses like this would be inaccessible. Motorway access immediately opens up these opportunities. I don't doubt the fact that such local business activity will expand with the support of local and regional governments.

Much remains to be done to improve the road infrastructure. As your colleague correctly noted, police must be a visible presence deployed at intervals along the route, and should discharge their duties honourably. But that is not enough. Adequate healthcare, restaurant, leisure, recreation and other facilities must also be established along the motorway.

Remark: Communications.

Vladimir Putin: Yes, that's right, communications. As the motorway starts out from Khabarovsk, the situation there is more or less good. Various communities are located nearby. That is the first thing. Second, there is a good healthcare system across Khabarovsk and the Khabarovsk Territory. Agreements and contracts have already been signed there with service-sector organisations, including airlines, which will, and are already, servicing the initial section of the road.

Communities in the Amur Region are located about 100-150 km apart. This means that a medical aid post can be reached within 60-90 minutes. However, the situation in the Trans-Baikal Territory is more difficult because there local communities are at least 300 km apart. To the best of my knowledge, they have also signed agreements with several organisations, including aviation companies. Four helicopters are currently ready to service this section of the road.

Remark: Mr Putin, you have praised us for the road.

Vladimir Putin: And with good reason.

Remark: This is about the road itself. But did you pay attention how the turnoffs for the towns look like? Do they plan to finance this in any way?

Vladimir Putin: Under the law, the government is responsible for federal motorways, whereas regional or municipal governments assume responsibility for local and regional roads. Naturally, they lack funding. We can see this, and we understand it. Some time ago, we had something called a road fund. I will not inundate you with all the specific terminology, but a reverse tax made financing road construction possible. Still, this is considered a very primitive instrument and a burden on the entire economy. It impedes development because for example every stage of the process, from mineral deposit extraction all the way to when the car rolls off the assembly line, incurs surcharges. It stifles and impairs economic development overall. Consequently, we decided to abolish this tax, but road-construction allocations are not sufficient. We will now reinstate federal and regional road funds, without such tax, by slightly raising petrol excise taxes. We hope the funding will be spent on municipal and rural road construction, as stipulated. As I see it, there are plans to build paved roads in 2,500 communities soon.

The road fund will accumulate somewhere about 300 billion roubles in 2011, as well as over 400 billion roubles in 2013-2014. These substantial allocations are enough to expand this municipal network.

Remark: Mr Putin, I have another question. You say petrol excise taxes will be raised. But will motor-vehicle taxes be abolished or retained?

Vladimir Putin: That is a very complex question. It seems I'm talking to a group of analysts.

Remark: We are all motorists.

Vladimir Putin: I didn't expect this.

Remark: We are all drivers here.

Vladimir Putin: Honestly, I believed they should have been abolished right from the start. However, constituent entities insisted that this should not be done because tax proceeds were being collected retrospectively. We collect 2009 and 2010 proceeds in 2010 and 2011, respectively, to prevent shortfalls in revenue and because such tax proceeds are easily collected. They say that abolishing the tax would preclude them from receiving additional excise-tax revenue, that we would lose the tax and be unable to tackle the various objectives mentioned by your colleague, namely, municipal and regional road construction and repairs. We have raised excise taxes a little and reduced the tax itself somewhat.

Remark: All right, Mr Putin. Let's see how it goes in comparison.

Vladimir Putin: Let's see how this works. We must see how it works in real life.

Remark: So, transport tax will be retained. A Volga-3102 passenger car and a ZIL-130 truck have identical engine volumes covered by one and the same tax. But which of them exerts greater pressure on asphalt?

Vladimir Putin: The issue is not that they are too heavy. According to your logic, we should today ban the use of all large, foreign-made long-distance lorries. Ban them all from our roads right away. We cannot do that because thousands of people work in this sector.

Remark: But there can be some regulation of its pricing policy.

Vladimir Putin: Everything is possible in theory. But if one is concerned about the damage that heavy lorries do to the road surface, then they should simply be banned. This is a possible line of thought. But that would leave thousands of people out of work.

Remark: Mr Putin of course others have prepared their notes, but I am speaking off the cuff, independently, so to speak.

Vladimir Putin: I noticed that. I am a representative of independent public opinion (laughs).

Remark: Why have they cut our wages by 30% since May?

Vladimir Putin: I have said already that wages, unfortunately, fell across the board in the construction sector in 2009.

Remark: Is that because of the crisis?

Vladimir Putin: Yes, it was related to the crisis. We had to keep production costs down.

Remark: Mr Putin, I drive an excavator. I have 35 years of experience and for the past decade I have operated an imported machine, an excavator from Riga. Our excavators and imported ones are like chalk and cheese.

Vladimir Putin: We now produce a range of them.

Remark: When I drive an imported one I can execute any pattern, like an artist drawing.

Vladimir Putin: How about a demonstration?

Remark: You can't do that on ours.

Vladimir Putin: You know, there is a variety of construction machinery available now.

Remark: Uralvagon makes lousy excavators (referring to those made by the Uralvagonzavod plant).

Vladimir Putin: Maybe. But we have other enterprises besides Uralvagon, we have a tractor holding and it produces good machinery, including for the construction sector. You haven't operated those machines, have you?

Remark: You mean military technology?

Vladimir Putin: No, military technology is another matter. I am talking about the tractor holding company that produces, among other things, construction equipment. I think it meets international standards. They have some joint production ventures and indeed they are themselves the owners, the main shareholders in these foreign enterprises and are moving some production facilities to the Russian Federation. Their equipment complies with international standards. Perhaps they are not producing enough yet. And then they had their share of financial problems, especially during the crisis. They are a little over-leveraged, but we will help them.

Remark: Mr Putin, we won't be left without jobs?

Vladimir Putin: No. I don't think road workers in Russia will ever be without work. It may be a problem in other sectors but in road building - never.

Remark: That's the main thing.

Vladimir Putin: Of course.

Remark: Most of our machinery is to German standards because the asphalt laying machines are German and the loader is American. We are able to design our own, we have a very strong scientific and technical base in Russia. Experts from our research and technical centres actually teach abroad. Why can't we make the asphalt layers and the loaders here? 

Vladimir Putin: I said they are making them.

Remark: When will they be ready?

Remark: What about the price?

Vladimir Putin: They are being produced as we speak. Why wouldn't they be? They are competitively priced. They are still not being produced in sufficient quantities, perhaps, but as somebody here rightly said: the Soviet Union was geared to military hardware production and paid little attention to civilian production. This is not only true of road-building machinery. It is also true of other sectors such as shipbuilding and the aviation industry. We have excellent fighter planes, the best in the world, but our civil aircraft still guzzle too much kerosene, they are not economical and so on. This is something that we neglected in the past. We don't have the necessary equipment or the necessary skills. It requires a lot of time and massive capital investment. But we are moving forward. I have seen this equipment myself. I visited the businesses and took a look around. I repeat, perhaps you are right in that we still do not make enough of them.

Remark: There has been great progress on road construction in recent years. Will the GOST standards, the building standards and rules and requirements, be changed?  

Vladimir Putin: Yes, of course they have to change. They are very outdated and the rules and regulations and the standards themselves must change. But we can and must change them as new technology is introduced.

Remark: A follow-up to this question. This is a problem we face every week or even on a daily basis. A research institute designs a certain section of the road. Sometimes it is impossible to make it happen or perhaps it simply makes no sense, the fact is that there is no feedback to the institute and if there is, it takes too long... Sometimes we have to do the same job several times, first according to a faulty design, then everything is revised, what has just been built is then removed and we start all over again.

Vladimir Putin: You're giving me a concrete example aren't you?

Remark: Yes. In other words things are delayed.

Vladimir Putin: I hope the Minister will hear this, this is a purely technical subject. The Ministry should be paying attention to this.

Remark: Mr Putin, I work as a foreman at Kamdorstroy. I make foundations for asphalt surfaces. Last year we bought two 3D positioning systems which we are now using. In other words...

Vladimir Putin: Just listen to him...

Remark: The foundations are made much faster, they are of higher quality and it takes less effort. We bought these expensive machines in Switzerland for 4.5 million. The grader costs just 3 million. Why don't we produce systems like this in Russia? Are there plans to produce such systems domestically?

Vladimir Putin: I have already said that we are launching production of various types of equipment, including for agriculture. Even so, we are not producing enough agricultural and construction equipment. It is a time consuming and costly business. Hundreds of millions of dollars need to be invested. It costs hundreds of millions, perhaps even billions, to launch new production lines. And the people who make these investments need to be sure that there will be a market here, that is, in the Russian Federation. It is a complicated and time-consuming process. But I think machinery and equipment like this can and must be produced here.

By the way, it is worth noting that many experts believe that import replacement is not the be-all and end-all. We need to produce competitive goods. We should work in those sectors where we can be competitive. But of course the future of the Russian economy and in general the future of our country and of our children rests on the developing innovations and the new economy. So we will move in that direction. We should not fetishise it, but this is our overall approach. I hope that such equipment...

Remark: The main thing is that the price is more affordable compared to foreign manufacturers.

Vladimir Putin: Unfortunately, and those present will confirm this, our products are not always cheaper.

Remark: They are more expensive.

Vladimir Putin: Yes. And if we produce something that can also compete on the external markets, then well... the producer doesn't mind where they sell as long as they get this world price. The laws of economics are tough.

Remark: Buying such a system also requires considerable capital investment. We need to know what future the company has, whether there will be enough work, and not buy indiscriminately.

Vladimir Putin: Well, yes. It is true this is directly linked to government, and state, policy. It depends on how much we currently invest and how much we intend to invest in road building. If potential road building equipment producers know that, over a certain period, Russia will invest a certain sum in road building then they can be confident that they have a market, that is true. But we have no secrets here: all the figures are publically known.

However, there are other ways of encouraging them to produce on our soil. This applies to all kinds of hi-tech goods. We will gradually introduce import customs duties. And we will tell everyone in advance that this is what we are planning, if you want to sell machinery on our territory then launch production here.

This is what we did by and large in the car-making industry and on the whole, it has worked. Only, it should not be done abruptly so as to avoid putting businesses like yours in a difficult position. Suppose we raise import duties to a prohibitive level. Then you wouldn't be able to purchase from abroad and we would still not be producing the item in question here. What would your enterprise do? Basically, we have gone down this road in some sectors. We haven't reached your sector yet, but we will get there. Certain plans can be made to make sure those who use or consume this technology do not suffer and so that the potential producer knows that the time will come when he will have to limit his production to in-country production sites and plan accordingly, he will bring his innovations, new technologies, production culture here and will deploy his assets here. 

Remark: One more question, if I may?

Vladimir Putin: Yes of course. 

Remark: I would like to return to the issue of financing.

Vladimir Putin: Go ahead.

Remark: You are planning major investments in this sector next year, yes?

Vladimir Putin: Yes, over three years. 

Remark: Over three years. But preparation for the season begins in advance, in other words, that funding reaches the enterprise too late, when the season has already begun and it is time to start work.

Vladimir Putin: That is indeed a problem, I admit. That is a problem for government to resolve. An unfortunate practice has been established when funds are disbursed in the second and sometimes even in the third quarter.

Remark: And sometimes money does not even start flowing until the autumn.

Vladimir Putin: That's what I am saying: in the 2nd and 3rd quarters. 

Remark: When the building season is drawing to a close.

Vladimir Putin: This is the second year in a row that I have been trying to improve things, and I have made some progress. We now approve the budget on time without any delays. The ministry, including the Transport Ministry, should organise tenders on time and sign contracts with the building firms. This should be done in advance, preferably at the end of the current year so that financing is available from the beginning of the following year.

Remark: Yes, yes.

Remark: That is just what we wanted to hear from you. That changes will be made.

Vladimir Putin: I admit this is a problem. I am trying to rectify the situation. I am pushing the Ministry in the direction I have just indicated. But it is so huge and cumbersome an entity, it is hard to get it to change course. I hope we will gradually set this situation right. This concerns not only your sector. It is the same in the defence industry and in other sectors.  

Question: How's the car you have been driving?

Vladimir Putin: It's good.

Question: And the price?

Vladimir Putin: I don't know about the price.

Question: Was it mass-produced?

Vladimir Putin: Yes. Take one for a spin. I enjoyed it...

Question: And is the engine Russian-made?

Vladimir Putin: I am told it is one of ours. All its main parts are Russian-made.

Honestly, I wasn't expecting it. When I visited VAZ, I test-drove some of their cars on their test track and they rattle and shake, at least, that's what it felt like to me. This one runs smoothly and it's got good grip. It is quiet and you feel comfortable inside.

Question: Was it custom-made?

Vladimir Putin: No, I was told it was mass-produced.

Question: Assembled by hand?

Vladimir Putin: Come off it. No, no.

Question: Mr Putin, did you notice the petrol prices as you were driving down the motorway? Our region has some of the highest petrol prices.

Vladimir Putin: Petrol is expensive, as I said.

Question: Alliance (the oil company) charges 26.60- 26.40 roubles per litre. That's for Ai92 petrol [92 RON]. Ai95 [95 RON] is even more expensive. Is there a move to cut prices compared with the Western regions? The price is much lower there.

Vladimir Putin: The price is lower there, but they argue that it is harder to deliver petrol here, it costs more and so on. Anything can be explained away, but I don't think that argument holds water.

I have just visited Kamchatka and the local press there complains about a sharp rise in August. The local authorities say: "No. There has been no sharp rise." But it's there in the paperwork. We double checked this and indeed the wholesale price has increased by 500 roubles since August 12. The antimonopoly service stepped in and the prices are now back to their pre-August 12 position. So the law enforcement bodies, above all the Prosecutor's Office, as part of overall supervision, and the antimonopoly agency must keep an eye on this. This is not always the case, but it should be.

I think our petrol prices are too high, in Russia as a whole, both in the Western and Eastern parts of the country.

I don't know whether this is something you have noticed, but we are trying to do something about our main companies, as especially during the autumn harvesting all the prices go up. And the same happens during the sowing season. But in recent years we have managed at least to contain these prices. In general, I think prices should be kept down. The calculations all seem to add up, but I still think that the prices are too high. We will review all these calculations.

Remark: We don't have very high quality petrol in our region, and they manage to adjust the price, sometimes giving discounts. But Alliance and Rosneft keep their prices high all the time.

Vladimir Putin: They use their monopoly position because there is no one here, or almost no one, except large wholesale suppliers such as Vostoknefteprodukt. The Federal Antimonopoly Service (FAS) ought to take a closer look at it. I have already noted this and told the head of the FAS about it.

Remark: I have a massive favour to ask you. I am from the Amur Region. You laid the foundations for the construction of a third hydro-electric power station.

Vladimir Putin: The second.

Remark: We already have three hydropower stations in our region. The rates are going through the roof, and people are grumbling. How come? Three power stations and the tariffs are so high?

Vladimir Putin: Well yes, I agree. Building work on the second unit of the Bureiskaya power station is only just starting, but it is already invoked to explain away these tariffs. You have heard about it, I am sure, and if you haven't, I can go over it again. I am constantly asking the question: why are the prices so high? They have to bring in diesel fuel and materials, and all this is very costly, there is hardly any local production to speak of, the logistical costs are high, that is their response.

Incidentally, I very much hope that once we launch the Nizhne-Bureiskaya station at full capacity, it will have an effect on the prices, of course it will influence the prices. Because this is one of the problems that prompts people to move away from the eastern parts of Russia to the European part, the exorbitant rates.

Remark: Mr Putin, are you planning to take a drive all the way from Moscow?

Vladimir Putin: You think I haven't done enough driving?

Remark: Some time in the future when we've built more.

Vladimir Putin: Perhaps if you keep me company, but driving alone would be rather dull. To be quite frank with you, I have had enough for the time being. Why did I drive here? First, I wanted to see how it worked out. These are symbolic projects, it is a symbolic road not only for you, but for Russia because as you know Russia has never been entirely connected, one end to the other, by road. Never before have roads linked every part of the Russian Federation.

Remark: From Moscow to Vladivostok.

Vladimir Putin: Yes, indeed. That's the first thing, and secondly, I wanted to see where all the money has been going.

Remark: Where the money is?

Vladimir Putin: Yes, where it is and in what form. And thirdly, I think somebody here just mentioned how life will develop all along this road. These key points depend crucially on the interference and participation of the Russian government, I would certainly like to visit them: the future space launching site, the Nizhne-Bureiskaya hydro-electric power station, the oil pipeline we have built here and that we continue to build. That was the purpose of my trip. But driving such long distances of course takes too long. I did it once. My route was: Leningrad-Moscow-Kiev-Mukachevo...

Remark: You were at the wheel?

Vladimir Putin: Yes, I was at the wheel myself of course. Mukachevo-Vinogradov (a town in Western Ukraine), and on to Kishinev, from Kishinev to Odessa, from Odessa to Moscow and St Petersburg (Leningrad). That was the route I drove. So I have done my fair amount of driving in my time, but overall I see no reason why I shouldn't drive a bit more. We will see.

Remark: Is the quality of the road you drove on up to European standards?

Vladimir Putin: Some stretches are up to European standards.

Remark: Only some stretches?

Vladimir Putin: Yes. You know, when we set off it was not at all good. But you did not build that, so you are not responsible for it. But you are responsible for what you have built. The only thing is that it should be a bit wider of course. But the minister says there is not yet enough traffic to warrant it, and I have to agree with him. The width and quality of the road of course depend directly on how it is used, on the traffic, and there is nothing like the traffic they have in the European part. But I think that in the east of the country we should build with an eye to the future....

Remark: After all, this road will link China to Europe. Goods will be freely transported down this road.

Vladimir Putin: I am not sure...

Remark: Japan is right here. Surely there will be some road haulage here.

Vladimir Putin: This road is more intended for local transportation because it is still cheaper to transport goods from the Asia-Pacific Region over long distances by sea or by rail.

Remark: In other words, road haulage will not be involved in this, right?

Vladimir Putin: That would kill the road at once. Our main traffic from Asia and Europe goes through St Petersburg, and along the St Petersburg-Moscow route. Even goods from Asia accumulate there and ships from China come to Finnish ports and unload their cargo, which is then transported via the St Petersburg-Moscow road. That road is in a really wretched state because of the heavy traffic. You must have heard about the arguments over the town of Khimki in the Moscow Region. 150,000 vehicles move through that bottleneck every day, and its capacity is 40,000.

Remark: Serious congestion.

Vladimir Putin: Yes, massive congestion. Every year 270 people are killed and more than 1,000 injured on the Moscow-Petersburg Highway.

Remark: You visited Uglegorsk, Governor Kozhemyako there says that when the construction begins on the spaceport they will only hire people from the Amur Region, not outsiders. Is that true or not?

Vladimir Putin: No, he was exaggerating.

Remark: Unemployment here is...

Vladimir Putin: Unemployment in the Amur Region is at 4%.

Remark: When will construction on that project start?

Vladimir Putin: Unemployment in the Amur Region is 4%. It is less than last year, but still higher than the national average.

Remark: These are VTSIOM figures and they...

Vladimir Putin: The real figure may be higher. A spaceport is of course a high-tech centre, that is obvious. It is a place where skills and innovation are concentrated, and it calls for world-class specialists, we need specialists from all over the country. But of course residents in the Amur Region, especially those who live and work in Uglegorsk, are skilled workers too, and they too will find employment. A Strategic Missile Forces Division used to be based there. They are people directly involved with rocket and space science. They are no strangers to this sector. And the civilian sector... fundamentally it is not all that different. Of course, local people will be hired.

I have just attended the inauguration of the Russian section of the pipeline that leads to China. There are 7,000 people working on it, 5,000 of whom are locals. I went over to a group of men, just by chance, and I asked them, "Where are you from?" They said: "We are from here, from Skovorodino."

Remark: Mr Putin, can we take pictures with you before you go?

Vladimir Putin: You want to get rid of me?

Remark: No, we are asking your permission.

Vladimir Putin: I thought the trick was to be, as the saying goes, closer to the kitchen and as far away as possible from the bosses. It's a well known strategy, and a very sound one at that.

Remark: What about Japanese cars? Mostly here, east of the Urals, we drive second-hand right hand drive Japanese cars. What will happen to these cars?

Vladimir Putin: I don't think it will be necessary to introduce draconian measures and create conditions under which people won't be able to use them. But we should gradually switch over...

Remark: ... to the European standard.

Vladimir Putin: Why should it necessarily be "the European standard?" And it is when everyone here is talking about Japanese cars. You can keep buying Japanese cars. They have already launched production here: Nissan is working here and so is Toyota, they produce their cars here. And we have introduced a downward adjustment rate for transporting these cars from the European part of the country to the Far East. The cost of transportation is not included in the end price of the car. But I don't think it would be right to introduce draconian measures and put people in a position where they would not be able to use cars they have already bought.

Remark: What about quality?

Vladimir Putin: It is up to the consumer to choose the quality. If they want to drive a rickety little can with a fancy label it is up to them. But even that tin can has to meet the technical requirements set by the traffic police.

Remark: Can I ask another question? It is not about the motorway. I live in the city of Tynda, and I am interested in the Baikal-Amur Railway. Will it be modernised?

Vladimir Putin: It is constantly being modernised.

Remark: I mean perhaps a branch line or something else will be built there?

Vladimir Putin: We need to guarantee rail freight transports. If we see that there is a steady flow of freight, then of course work will be launched pro-actively. In general, Russian Railways has such plans.

Remark: They are seriously cutting back on staff employed at stations.

Vladimir Putin: There is constant talk of the need to expand the workforce. Do you know why that happened? The Baikal-Amur Railway was built when relations with China were deteriorating. Its main aim was not economic or commercial but strategic and military. So, when relations began to improve the expected freight did not materialise.

Remark: But there are a lot of mineral deposits along the route of the railway.

Vladimir Putin: In order to develop those deposits, one needs to attract investment, especially private investment. That is a process that takes time. But precisely because of what you have just said, plans are afoot to expand work on the Baikal-Amur Railway. These plans indeed exist.

Remark: I would like to ask a question about agriculture. You are going to be driving west and you will see fields that used to be cultivated. Today they only mow the grass there and farming has been abandoned and neglected.

Vladimir Putin: I should say that the amount of arable land has diminished compared to the Soviet times. But the productivity of these areas has increased dramatically. You may remember that the Soviet Union always imported grain even though we had a larger area under cultivation. Now we have built up a powerful export potential.

Yes, given the unusual heat wave and the drought this year I had to announce a temporary export ban. But even despite the crisis in agriculture brought on by this weather we still have export potential. That does not mean that we should not bring farmland back into cultivation. Of course, that must happen. But that is something the producer does, depending on the extent of his capacity and his needs. I repeat, even the area currently under cultivation is sufficient to provide the country with grain. And we even produce grain for export. But this land should be reclaimed, otherwise the soil quality will degrade. We should seek to increase production not even principally for export but so we have more grain for use domestically, inside the country, especially in developing livestock breeding, a second agricultural revolution, so to speak. And this then carries over to the processing industry. Of course, this is one of the challenges facing agricultural enterprises.

But I would like to draw your attention to the fact that in recent years we have injected huge sums of money into agriculture. And this is yielding results. People in the countryside, the people who till the land, have proved that they are well organised, talented, hard-working and efficient. Livestock breeding has also advanced in leaps and bounds, we increased the volume of loans, and six or seven years ago we decided to issue loans for a minimum of eight years. And it worked.

I have been to some regions and honestly, it's deeply gratifying. I had not expected to see new farms all over the place. I took a helicopter ride and saw all those new roofs, gleaming. And there are many similar regions.

We decreased imports dramatically, for example, poultry meat imports. Four years ago we imported about 1.4 million metric tons from the United States of America and elsewhere and we ate their produce. We then cut the quota for our American friends to 600 tons and from this year, I think, to 450 tons. We will continue to scale down imports because our domestic production is growing. But abandoned land must of course be brought back into cultivation. Thank you.

Remark: If production is growing why are prices also growing, prices for meat, bread and flour?

Vladimir Putin: You want me to go back to the current problems we face? OK, that's fine. You know what happened to agriculture this year: an immense drought. Twenty-eight regions in the Russian Federation imposed a state of emergency. Twenty-eight. Most of them are agricultural regions.

At the same time - and this is related to the prices for farm produce - Russia consumes 77-78 million tons of grain a year. This year we will produce far less than last year. Last year we produced more than we needed for internal domestic consumption: about 20 million tons were available for export. This year we will produce approximately 60 million, although it is too early to speak about the final figures. We are expected to consume 78-77 million tons and to produce 60 million. But we have a grain buffer stock of 9.5 million tons, of which 3.5 tons is fodder grain to feed livestock.

But, we also have the carry-over, that is grain which is at the disposal of and which is stored in the elevators owned by agricultural enterprises, that's 21 million tons. So, 60 plus 9.5 makes almost 70, plus 21 makes 90-odd million, and we need 78 million for internal consumption. That leaves us with our export potential.

Even so, we decided to suspend exports. Why? Because we do not know what next year's harvest will be like and we cannot sow all the winter crops this year because the soil is not humid enough. We cannot just let the land perish and use more fuel in order to just drive our machines over the fields. It is unclear what the balance next year will be. Given this situation we had to take a step back from those foreign markets we worked so long and hard to break into, this is an undesirable measure that circumstances compelled us to adopt. That is not good, but we were actually facing an emergency situation. It is an extraordinary situation and a measure we were forced to reach for. I hope that our partners will understand that. But I would like to stress that there is more than enough grain in the country for internal consumption. There are factors, the so-called growing inflation factor, that stem from the character and quality of our economy, an economy in transition, when we have alternate price rises for transport, energy, metals, coal and so on.

In a transition economy, when market mechanisms have not fully kicked in, such things happen anywhere in the world. We are trying to address social problems for the people who are not very well off (pensioners, disabled people, handicapped people), we realise that they are hit hardest by inflation and we are trying to dampen the blow. But that is a more or less natural process.

In this context, fighting inflation is a government priority. By the way, it is now lower than ever before in the entire history of new Russia. The last time we had such a low level of inflation was in the early 1990s. We can claim to have scored some successes.

Of course we are only on the road to success, we have not yet attained the level of inflation that we see in developed market economies, but we are moving steadily in that direction.

So, on the whole, objectively, there are certain reasons for prices to rise, but when someone invokes the argument that we had a poor harvest this year and prices for bread and other foodstuffs must be hiked, it simply means that there are people who want to take advantage of this situation. That is unconnected with the economy's natural inflation rate, it is due to speculative deals and all sorts of shenanigans.

Remark: The price for buckwheat has doubled.

Vladimir Putin: Yes, and also bread and flour, in addition to buckwheat. In this case, as in the previous case I mentioned, the Prosecutor General's Office, as part of its role in overall supervision, and the Federal Antimonopoly Service must keep a close watch on what is happening.

Question: So there shouldn't be any price rises?

Vladimir Putin: In any case, they should not be linked to speculation and excuses that it is because of the poor harvest this year.

All: Thank you.

Vladimir Putin: Thank you.

Remark: Can we take some pictures with you?

Vladimir Putin: Sure.