Transcript of the beginning of the meeting:

Vladimir Putin: Mr Magomedov, we discussed interethnic relations during the State Council meeting just now. In this sense, all the problems discussed today are undoubtedly extremely relevant to Dagestan. In fact, Dagestan is like a microcosm of Russia, in the Caucasus, because there are about a hundred different ethnicities in Dagestan, if I am not mistaken.

Magomedsalam Magomedov: Yes.

Vladimir Putin: That's apart from the dominant and major ethnic groups.

Magomedsalam Magomedov: There are 14 dominant ethnic groups and 33 major ones.

Vladimir Putin: And there are much more than that in total, aren't there?

Magomedsalam Magomedov: More than a hundred, Mr Putin.You're quite right.

Vladimir Putin: More than a hundred. What a range of rare and interesting languages!

Magomedsalam Magomedov: Yes.

Vladimir Putin: What cultural diversity! Perhaps you noticed that I mentioned the Soviet era. Formulating the question in those terms is sure to arouse a certain degree of controversy and debate. However, I am convinced that the Soviet Union also knew ethnic unrest, interethnic clashes and crimes related to ethnic prejudice, all that happened, just as these things do often happen in large families. But they were not as violent or severe as what we see today. These outbreaks of interethnic hatred were not as frequent. I am convinced that this was because of the state's concerted efforts. Of course this was entirely permeated by ideology. Still, I think we can discern two fundamental trends.

First, there was a consistent struggle against any and all negative phenomena, especially crime motivated by interethnic or inter-racial prejudice.

Second, there was a significant educational drive. True, this was ideologically tinged. However, the state paid tremendous attention to it and funded it generously.

Regrettably, we have nothing of the kind today. We are neither tough nor consistent enough in tackling crime in the sphere of interethnic relations, and we are not consistent and efficient enough in public education, especially concerning our nation's young people.

I know that you face similar problems in Dagestan. Still, despite all these current problems, Dagestan on the whole (we know and understand that terrorist attacks are a different matter)...

Magomedsalam Magomedov: This is really quite different, Mr Putin.

Vladimir Putin: ...but you still manage to keep interethnic relations in check.

Magomedsalam Magomedov: Yes, Mr Putin, our republic is quite unparalleled in this respect. You rightly described it as multiethnic. We have ample experience of coexistence, built up over centuries, millennia even. To us, peace and accord between people of all faiths and denominations is not merely a goal we set ourselves in our day to day work but an essential condition of Dagestan's very existence.

Throughout our millennium-long history, we have never known ethnic strife between our peoples. What we see today stems less from interreligious tension per se than from confrontation within particular religious denominations. Friendship and unity reign elsewhere. These are our peoples' historic boons and values.

Mr Putin, I would like to mention that we held a congress of the peoples of Dagestan quite recently, on December 15. I have the resolution it passed here with me to show you, Mr Putin. The congress once again demonstrated the friendship and unity of the people of Dagestan, highlighted our historical path, this historic decision to live in peace together and as part of great Russia.

The Russian Federation is our homeland, our state. The peoples of Dagestan hold their homeland sacred. This is contained in the congress' resolution, and it forms the basis of our work today.

Mr Putin, as I see it, the problem, the outbreaks of nationalism and xenophobia in Moscow and several other cities stemmed from a significant development gap between regions. I think that the development seen in Moscow, St Petersburg and some other very successful regions is in too great a contrast to the situation apparent in other republics and regions. This gap inevitably leads to sizable migration flows.

Enhancing Dagestan's social and economic development (speaking now for Dagestan) could enable us to reverse this migration flow. It is primarily the young people who migrate (of course, Mr Putin, the migrants are very diverse) – and a majority of them go in search of employment or to further their education. If we can give them jobs and schooling at home, this immigration pressure on megalopolises will certainly subside. That is the main goal of our work. Mr Putin, the recent congress and preceding measures as a whole are leading to a degree of stabilisation in the socio-political condition of our republic.

Enhancing the efficiency and professionalism of our law enforcement agencies is of prime importance here. Over the past four months, we have done a great deal to boost security and promote law and order across our republic. Over 130 criminal outlaws were killed during those four months. They were implacable enemies who rejected dialogue of any kind. Their goals and ideology were completely alien to the people of Dagestan. As to the others, we are trying to establish a dialogue with them. We have established a special agency – a commission to help people who have laid down their arms and ceased terrorist or extremist activities to return to civilian life. Sixteen people have already been re-settled into civilian life, and more are willing to follow suit, so I think this is fruitful work. The public backs this dynamic action taken by the law enforcement agencies and these efforts to build social cohesion. So I hope that Dagestan will be regarded as a stable and trouble-free region in the near future.

Mr Putin, this trend is also backed up by key macroeconomic indicators. We have recently seen a reversal in the negative trends we saw in play for the first six months of this year. On the whole, we should soon see growth in industrial output and services in key economic sectors surpass 7%. Industrial and agricultural production is growing. The population's real incomes have risen 9.3% and wages are up 12.5%.

Certainly, comparative instability and security risks are proving constraints on investment growth. However, we have already drawn up a list of practical investment projects, the implementation of which will greatly improve people's lives. These projects envisage the creation of over 30,000 new jobs and the generation of 14 billion roubles in tax revenues.

We pin great hopes on the actions taken by the North Caucasus Federal District and the Government Commission you head, Mr Putin. All this makes us even more optimistic. I am certain that all these projects will be implemented, and that the measures you proposed in Kislovodsk, of state guarantees for these investment projects, will be effective as they will remove everything that is holding us back. We have projects, we have resources, and, in principle, we have people willing to invest in our republic, we lack guarantees.

The 70% guarantee made through the Finance Ministry will play a major part, and I would like to thank you for that.

Mr Putin, now let me just say something I had intended to mention at the beginning of our meeting. The people of Dagestan, especially those in the Tsibari area high up in the mountains, were very keen for me to pass on their words of gratitude to you for all the help you gave fire victims. I thank you, and I thank you on behalf of all the people of Dagestan. It was a massive blaze in a very hard-of- access mountain village. Nothing could be done about it. The village, which has a population of 345, was almost entirely razed to the ground. Now, with your help plus our own money and donations from some individual Dagestanis, we can afford to purchase a flat for every family left homeless. We will resettle them in town. Thank you, Mr Putin on behalf of all these people.

Vladimir Putin: Good. There can be no doubt that interfaith and interethnic peace and accord are also fundamental preconditions for Russia's very existence. That is quite true.

Now, let us discuss current developments in greater detail. As for the healthcare modernisation programme, we are rolling out, it allocates a sizeable sum, about 5 billion roubles, to Dagestan.

Magomedsalam Magomedov: Yes indeed, and for two years that sum will be roughly 9 billion roubles.