Transcript of the beginning of the meeting:

Vladimir Putin: Mr Kudrin (referring to Deputy Prime Minister and Finance Minister Alexei Kudrin), would you describe the measures being taken to prepare for the implementation of the budget for 2011-2013? Please, go ahead.

Alexei Kudrin: Mr Putin, today the Federation Council finally passed the federal budget for 2011 to 2013. Now, this budget will be sent to the president for signing. Most importantly, it has been passed through the Federal Assembly, so we have brought this stage to a close.

Regarding the preparation of the budget, I would add the following: total expenditures next year are slightly higher than those for this year and will reach 10.658 trillion roubles. In order for the budget to be put into effect without delay, as of January 1, we still have to enact a number of bylaws in the form of government legislative acts. Typically, an amount of about 400-450 billion roubles was approved in the last two years – last year and this year – not automatically, but after relevant government resolutions were issued. In order for the budget to be fully functional under this plan, we need to issue 133 resolutions, including 117 resolutions this year. Out of this number, four legislative acts have already been submitted to the government for review and approval and 50 legislative acts have been approved by the ministries and will be sent to the cabinet in the coming days. Another 48 legislative acts are being coordinated in the ministries and agencies – they are ready and the ministry is reviewing them according to the established procedure. The ministries have not yet submitted 15 legislative acts for review. We have a month. This is enough time, and I would like to ask my colleagues to speed up this work so that they will be ready by the end of this month. So we are expecting, like last year, that by the first few days of the new year we will be prepared to distribute funds for budgetary obligations to finance about 98% of all expenditures.

I'd like to call to mind that in recent years, especially this year, we've made better progress than usual. As of January 1, along with the ministries, we had the right to utilize our funds accounting for up to 98% of the entire budget.

Now budgetary expenditures are determined not in the middle or in the end of the year, say in November. It happens only in the situations when such resolutions or regulations are issued later. And under the resolutions adopted during the year, we also have to adjust some expenditures given the changes to the budget, and so sometimes we have to issue such acts in the middle of the year.

However, I want to repeat that we expect about 98% of expenditures after January 1. They will be at the full disposal of the ministries and departments and everything will depend on the quality of activities and the time of invitation for tenders, and I think we have good circumstances to carry out next year's budget on schedule.

Vladimir Putin: Good. Thank you. I know that the ministry is actively defending the treasury in courts of different levels. Could you update us on the progress there?

Alexei Kudrin: Mr Putin, I would like to say that in course of our work, while we are developing legislation and our ministries and departments are performing state functions, it sometimes happens that individuals and legal entities initiate claims against the Russian Federation. Each ministry has had such an experience. The majority of such claims come to the treasury for the implementation of public obligations of the Russian Federation. I can say that 21,922 claims were lodged against the state treasury from January 1, 2009 to the middle of this year. All of them have been considered with the participation of representatives of the Finance Ministry. Branches of the treasury have also been greatly involved in this activity because the claims are considered all over the Russian Federation, in all its regions. The amount in claims against the Russian Federation is 338 billion roubles. Meanwhile, 9,878 claims have been settled in the amount of 7.45 billion roubles. That is 45% of the claims against the Russian Federation but only 2% of the amount of such liabilities. The reason is that the judges, proceeding from the rational standards of justice, reduce some of the amounts initially claimed by the plaintiffs. So we are working there and doing well in defending our positions. As I have already said on this, the courts decided to pay the plaintiffs only 7.45 billion roubles out of the 338 billion roubles claimed. This demonstrates that our legal staff is efficient enough. Besides, we have managed to work out certain practices or model decisions on some legal provisions, which are subsequently used as a rule everywhere in the Russian Federation.

I will also tell you that following the cases, we are cooperating with the ministries and departments to have those regulations improved. And this requires a clearer definition of liability on the part of the state, or functions of the state, so that both the officials and the claimant have no doubts. For example: most claims are related to the benefits granted to different categories of people, including children, and concerning travel to different areas. Sometimes we face claims that must be filed against regions of the Russian Federation under the regulations adopted by such regions. In view of this, certain adjustments to legislation have been introduced and adopted. And now, this year, the number of such claims has already gone down because the situation has become clearer. Therefore, based on the results of these efforts we are improving the legislation and are more clearly defining the liability of the state. Thank you.

Vladimir Putin: Good. Thank you. Today's agenda includes the issue of setting up a government commission on the socio-economic development of the North Caucasus Federal District. What is the status of the establishment of regional branches of the federal agencies?

Alexander Khloponin: Mr Putin, colleagues. Following the instructions you gave in May, we are now actively working toward creating regional branches in the North Caucasus Federal District. Obviously, there are three core objectives for creating them: first, to bring the regional branches of the federal authorities closer to the population and the needs of residents of the district. Second, it aims at the more effective utilization of federal resources sent to this territory. And third, this is aimed at improving the coordination between the relevant federal territorial authorities in the North Caucasus Federal District.

To date, we have established a regional branch of the Ministry of Regional Development, which is the head agency for the coordination of regional branches in the North Caucasus Federal District. The deputy minister of regional development for the North Caucasus has been appointed. Also, territorial body for the Ministry of the Interior have been established. Yesterday's board meeting of the Ministry of Emergencies established its branch in the district. The regional branches of the Federal Customs Service, the Federal Service for Financial Monitoring, the Federal Service for Supervision of Transport, the Federal Service for Alcohol Market Regulation and the Federal Service for Fiscal and Budgetary Supervision have been formed.

Everything is proceeding according to the approved plan and schedule. I think that we will finish establishing regional branches soon.

Vladimir Putin: Good. I have signed a government resolution on the procedure for connection to public utilities. Mr Kozak (addressing Deputy Prime Minister Dmitry Kozak), please expand on this.

Dmitry Kozak: Mr Putin, ladies and gentlemen. This is a very important area of government activity that will work toward improving the investment climate, encouraging investment in Russia and lifting administrative barriers in the construction sector. This past summer, two corresponding documents were approved by the government and a resolution was adopted pursuant to them. This is one of the three major issues that businesses face when carrying out investment projects related to connecting rebuilt or newly constructed real estate projects to public utilities. The connection regulation currently in place treats providers of these services (owners of public utility facilities) just as the consumers, which is actually unfair because these providers usually have monopolies and so set the rules. The government resolution stipulates a corresponding settlement and establishes requirements for connection contracts. For example, it provides for a clear division of responsibilities for the construction of infrastructure facilities between the customer and the service provider. The customer, i.e. the investor, is responsible for infrastructure facilities on his plot of land while the service provider, i.e. the owner of the facilities, is in charge of the facilities outside of this plot of land. The resolution also stipulates a term of connection not more than 18 months unless the customer himself extends this term. This means that the customer is given the advantage, and it also addresses the connection issues because the providers used to set unlimited terms. The parties’ responsibility for a breach of the terms of the contract was also set. Another important issue is the system for calculating costs. While before all public utility companies could demand the connection to be 100% prepaid, since they were all on equal terms, the government resolution entails that the full payment due may be made only after the real estate project is connected to public utilities. This is a very important measure and will significantly improve the situation in the capital construction market.

I would also like to stress that a law on the service providers’ administrative liability for breaching these and other regulations will be adopted in the near future.

It is worth mentioning that last year we adopted a government resolution regulating the connection of small and medium-sized businesses to electric power networks and in this September – a government resolution on power generating facilities’ connection to power networks. We will conclude this work by passing a law that will introduce administrative liability for the public utility companies’ officials for the execution of the regulations set by the government.

Vladimir Putin: Good, thank you. Ms Skrynnik (addressing Minister of Agriculture Yelena Skrynnik), together with the Ministry of Transport you are completing the arrangements for building roads in rural areas. We set aside an additional 18 billion roubles in the federal budget for 2011 and subsequent years for this. How are you going to arrange this work with the Ministry of Transport? Mr Levitin (addressing Minister of Transport Igor Levitin), I will ask you to say a few words about this later on. Please.

Yelena Skrynnik: Mr Putin, the Ministry of Agriculture signed an agreement with the Ministry of Transport on the development of roads in rural areas. In accordance with the resolutions you adopted, this is for 18 billion roubles for three years and five billion in 2011. The main criteria for choosing road construction projects will be job creation for rural residents, an increase in agricultural production and, of course, improvement in the quality of life of the people.

Also, the selection of a site is carried out on the basis of proposals from the regions and is approved by the Agriculture Ministry and Transport Ministry within the already established inter-agency working group that will conduct all this work.

One of the most important issues to be taken up with the construction of roads is the federal targeted programme the Social Development of Rural Areas. And the primary goal, as I have noted, is to increase the volume of agricultural production through new investment projects (one of the criteria) and then create new jobs and opportunities for rural residents to improve their quality of life.

Vladimir Putin: All right. Mr Levitin (addressing Igor Levitin).

Igor Levitin: Mr Putin, I would like to inform you that this money will be allocated to the federal road fund in 2011, that is, it will be a quota for rural roads. We will provide the specifications for the quality and price of these roads. And I would ask for your support by issuing and adopting a government executive order, which will state that the redemption of the land and site preparation be a responsibility of the  local authorities, so that the money will only be spent on the construction of roads. That will ensure that the money is properly and effectively used.  Thank you.

Vladimir Putin: All right. Mr Fursenko (referring to Andrei Fursenko, Education and Science Minister), under the federal targeted programme Research and Teaching Staff, 13,000 young scientists and researchers will receive federal grants totalling up to four billion roubles. How is the work on this going?

Andrei Fursenko: Mr Putin, the programme was launched in 2009 and ends in 2013. We are now taking stock of this year's results. This year, three main areas received a total of 5,500 grants:  research conducted by teams from scientific and educational centres (temporary groups that are working on a specific problem), research under the guidance of doctors and PhDs and research by young scientists in these centres. The main condition for these grants was the participation of young scientists. Nearly 13,000 scientists participated. The total funding allocated this year for their research and salaries is four billion roubles. Most of these are three-year projects, meaning that they will also continue in 2011 and 2012. We will also implement some new projects. But I want to say that almost all of organisations – leading universities and academic institutions – are involved and quite active in these projects.

Vladimir Putin: Good. Mr Basargin (referring to Regional Development Minister Viktor Basargin), the time has come to account for the reconstruction of homes that were destroyed during the wildfires. How are things in the Volgograd Region and the Altai Territory?

Viktor Basargin: Mr Putin, colleagues. Yesterday, on November 30, in Volgograd our joint commission accepted the last 106 buildings for those who lost their homes during the wildfires in the autumn. These were the last houses built. The day before, on Saturday and Sunday, we accepted houses in the Altai Territory, that is, overall, 222 houses were completed in the Altai Territory and 275 houses in the Volgograd Region. Today in the Volgograd Region, we are handing over keys to the victims, repopulation is underway. These were the last of our obligations with the wildfires.

In general, Mr Putin, let me remind you that all construction was carried out on schedule. We built over 2,100 homes for 2,200 families, including apartment buildings. Additionally, more than 9,000 construction workers and 620 units of equipment were involved in this construction work.  In addition to housing, we rebuilt 300 km of roads, 320 km of water supply networks and sewers, 210 km of gas supply networks, 640 km of telecommunications networks, and 19 residential areas were newly connected to the gas grid. Generally we rebuilt more than 80 communities in 19 regions of the Russian Federation. A number of social facilities have already been introduced, that is, three obstetric centres, a kindergarten for 120 children, five athletic fields and four playgrounds, two stores and a post office. In other words, we can say that this programme has been completed, but nevertheless we will continue to keep the situation under control. Following your instructions, clean-up crews continue working, so we must let the residents adjust to the new conditions and see how appliances will function under these conditions. In addition, Mr Putin, I would like to note that the construction of social infrastructure is still in progress, and by the end of 2011, we have to complete 16 medical centres in these communities, two sports complexes, 15 athletic fields, three cultural centres, 12 stores, six post offices, and we have to renovate and build seven new schools and 13 kindergartens. Already in December, we will commission a school for 132 students in the Ryazan Region, a kindergarten for 75 and five obstetric centres. Now we are keeping the situation under control and after all of these programmes are completed, we will provide a full account.

I would like to take the opportunity today to thank the charities that provided aid. In fact, the entire country helped the fire victims. In one way or another, 300 companies assisted the affected areas. A total of 32 organisations alone donated more than 15 million roubles, which is now specifically being used to renovate social facilities, with the total amount of aid standing at more than three billion roubles.

Vladimir Putin: I have two questions. The first relates to the Volgograd Region. One of the region’s villages was affected by the wildfires, and buildings there have been renovated, new infrastructure has been built – electricity, gas, water and so on. Another part of the village was not affected by the fires – as before, there is nothing there. The governor of the Volgograd Region has promised me that he will continue this work and that the whole village will be provided with infrastructure. I’m asking you to confirm this.

Viktor Basargin: Mr Putin, I was in this village, and Mr Brovko (Anatoly Brovko, governor of the Volgograd region) and I went there and met with the residents of this village. And we indeed promised that in early spring we would begin all the work on road construction and connecting the village to the gas grid. We are keeping it under control. I think that we will finish this work in the summer.

Vladimir Putin: Good. And the second question is naturally about Dagestan. What happened there and what is the situation now?

Viktor Basargin: Mr Putin, a commission led by the Emergencies Ministry is now operating there. The republic’s leader has driven out there. We are investigating, i.e. conducting a final verification of the numbers. We have preliminary data that states that more than 85 houses have been affected. We have maintained social services, i.e. a kindergarten, school, obstetric centre, and we salvaged 10 residential buildings. Now the Emergencies Ministry is assisting the public and performing all the necessary work. Today we looked into the cause of the fire. Unfortunately, this was a household accident, household negligence, and therefore we cannot now relate it to the enforcement of the federal law on emergency situations of natural and man-made causes. Today, in conjunction with the republic, we have decided that it appears as if they should take care of the victims in this region – about 120 families, about 400 people – and allocate funds for the construction and renovation of housing.

Vladimir Putin: Well, of course, this was not an anthropogenic disaster and it was not a wildfire. I understand the limitations of the law. However, a lot of people have suffered. And the people are now in a difficult situation and the republic is not very strong financially, so please, together with the Emergencies Ministry, draft proposals about what we can do at the federal level to support the republic and the people in this difficult situation.

Viktor Basargin: Yes, such proposals are being drafted.

Vladimir Putin: Let us proceed directly to today's agenda. Yesterday, the president made his address to the Federal Assembly. Many of the problems that were described there are well known to us and fall directly within the competence of the Russian government. We are talking about new initiatives to create a comprehensive system of child protection, including the development of education, resolving problems with schools and kindergartens, improving health care and supporting children in difficult living situations. We will have to draft a bill for new tax benefits for families with children and measures to encourage the birth of third and subsequent children and create additional incentives for charitable activities.

As quickly as possible, the government should submit draft documents to the State Duma related to decreases in insurance premiums for small and medium-sized companies operating in the industrial and social spheres. It's no secret, and actually it’s something that we are all very familiar with, that there were disputes within the government for a long time about how we were to act and what we were to do. The president's instructions were outlined in his speech, and we need to follow them. I ask you to draft the relevant documents and submit them to parliament. I also want to highlight activities such as the development of environmental protection and the establishment of a modern system of environmental standards and requirements. I ask the government staff to organise the drafting of a list of instructions for the implementation of the tasks set in the president's speech. This must be completed in one week.

Colleagues,

Today we also have to take stock of the interim results of the implementation of the Guidelines of the Government of Russia. This document is our medium-term programme, which includes specific targets in key areas such as demographics, education, health, innovation, national security, regional development, and the improvement of the efficiency of public administration.

Of course, the global economic crisis forced us to adjust our plans, but we did not abandon our stated agenda. It was specifically in times of economic difficulties that we were able to implement a project to improve the pension system, boost pensions and provide housing for veterans and servicemen to an extent that the government had not done before. And we launched the e-Government project and conducted an inventory of administrative procedures.

Now we are starting a programme to modernise health care and medical insurance. The law has been enacted and will go into effect on January 1, 2011. The idea behind these changes is to put the interests of the individual at the centre of the entire health care system and improve the quality and accessibility of medical care.

Also, as of next year, road funds will be activated, and we will seriously increase the volume of highway construction.

Already in 2012 we will handle budgetary allocations on a programme  basis. So now it is essential to remove all existing shortcomings and inconsistencies and start developing these state programmes.

In conclusion, I would like to focus on two more decisions that we need to consider. First of all, you know that in September the Strategy for Socio-Economic Development of the North Caucasus Federal District to 2025 was approved; I have already mentioned this. We have determined a list of priority investment projects and we have made large-scale plans for the development of the social sector of the North Caucasus and the creation of new jobs in the North Caucasus. The region will receive significant budgetary resources, money from private investors, large corporations and development institutions. Of course, it is necessary to ensure close coordination and consistency between federal and regional authorities. Therefore, we have decided to establish a government commission on the socio-economic development of the North Caucasus Federal District. Today, Mr Khloponin (Alexander Khloponin, Deputy Prime Minister and the president's plenipotentiary in the North Caucasus Federal District), will report to us about it.

And secondly, on Monday we held a conference call on assistance to farms affected by drought. Remember that out of 35 billion roubles of financial support, 20 billion has already been transferred to the regions.

Today, we will make a decision on the allocation of the second tranche of grants in the amount of five billion roubles for 43 of the affected regions of Russia. Among the largest beneficiaries are the Voronezh Region (706 million roubles), the Orenburg Region (420 million roubles), Bashkortostan (406 million roubles), the Saratov Region (337 million roubles) and the Samara Region (226 million roubles).

As we agreed, relief to specific manufacturers should be expedited. The government will also keep this issue under control in the future.

Mr Zubkov, (Viktor Zubkov, First Deputy Prime Minister) I ask you, as we agreed, to analyze the regional leaders’ reports on organising assistance to the affected farms. Please, report on the results of the analysis later.

Also, please monitor the results of our decisions to allocate five billion roubles to support livestock, which we have repeatedly stated and mentioned at our last meeting, and two billion roubles for the purchase of seeds and fertilisers for spring sowing. At the same time, as agreed, please examine the situation with the prices of fertilisers.

Mr Sechin (addressing Deputy Prime Minister Igor Sechin), I ask you to once again address the prices of petroleum products and resolve this issue with Mr Zubkov before the spring sowing.

In addition, we need to accelerate the introduction of a government act on the extension of preferential tariffs on rail transportation of grain and flour until July 1, 2011.