4 march 2011

Prime Minister Vladimir Putin arrives on a working visit to Bryansk for the United Russia Party Interregional Conference on the Development Strategy for Central Russia through 2020

Vladimir Putin

At the United Russia Party Interregional Conference on the Development Strategy for Central Russia through 2020

“We must find solutions that allow the country to develop steadily while also giving the majority of citizens the opportunity to experience the impact of this development in their own lives, to see for themselves how it has improved their lives and the lives of their children, to reap the benefits of this development – not in the remote future, but today.”


Vladimir Putin: Good afternoon, colleagues,

Bryansk has welcomed us with good weather, which instantly puts one in a positive, spring mood. We are holding our first interregional party conference in the new year of 2011 in this almost festive or at least pre-holiday atmosphere. We are to discuss projects concerning the development of the Central Federal District. First, I'd like to say a few words about what we have achieved, and then allow me to make a number of proposals.

We realise full well that if a political party claims the support of the people, it should know these people and their needs and put them at the top of its agenda. It is no accident that United Russia has undertaken to draft development projects for all regions of Russia – from the Far East to Kaliningrad. At our interregional forums, we discussed many important and urgent issues and, most importantly, we started implementing our initiatives.

Following the party's conferences, our government has made a number of decisions – for instance, to reduce the price of gas for Kamchatka. I will simply remind you of the decisions that have been made at preceding regional party conferences and what has been done. So, to repeat, we have decided to reduce the price of gas on Kamchatka and expand the programme of discount flights for the residents of Siberia and the Far East. We have allocated funds to restore the forests burnt by fires in the Central Region and launched the programme for modernising AvtoVAZ and improving municipal development in Togliatti and other single-industry cities. VEB is taking part in establishing a fund for direct investment in the projects in the Far East. We are also working on institutions of development for the North Caucasus.

We have supported these measures with more than 3 trillion roubles spread over 100 investment projects in the Volga, Siberian, and Far Eastern Regions. In the North Caucasian Federal District alone, 37 major projects worth 400 billion roubles will be started this year alone. This is quite a significant sum for this district. No doubt, we will accomplish all our plans despite attempts to hinder the normal development of the North Caucasus.

Last year, our GDP grew by 4% and the real incomes of the population increased by 4.1%. I would like to reiterate that I'm referring to real incomes, or incomes after accounting for inflation. Industrial production grew 8.2%, and the processing industry grew by 12%. The growth in individual economic sectors was even higher. For example, Russia's automotive industry doubled its output as compared to the crisis year of 2009. Car sales grew 30%, truck sales surged by 122%, and buses – by almost 30%. And it was Russian car makers that benefited the most from all this. For your reference, cars assembled in Russia now account for 70% of sales, and nine out of the ten most popular models are produced in Russia.

The automotive industry displayed the following performance in 2009: the manufacture of cars dropped by 60%, trucks by 65%, and buses by 47%. In 2010, the manufacture of cars grew by 101.4%, trucks by 74.5%, and buses by 23.6%.

Our financial institutions and banks are again expanding their investment in Russia's economy. The loan portfolio grew by more than 12% in 2010. Mortgage and consumer loan markets are recovering.

You know that during the crisis, the Central Bank and the government were providing the necessary resources and liquidity to our banking sector. This aid reached 5 trillion roubles in late 2008. This is an immense sum for Russia. The government is currently recovering these funds with surplus interest. The government has already earned 200 billion roubles. The funds we provided to banks were not a sop or a gift. All in all, there are positive trends in our economy.

At the same time, I would like to urge you not to rest on your laurels. This year will be very important for this country. We are transitioning to post-crisis development and recovery. This has been achieved in certain economic sectors, but not in all.

At the peak of the economic crisis, we had to focus on emergency measures and on helping our citizens, individual sectors, and enterprises. And as we see in the automotive industry, there are positive results. Naturally, we will continue our long-term programmes. It is also evident that several systemic problems have accumulated over this complicated period, and they need to be addressed. We need to draw conclusions and learn lessons from the crisis and recover as rapidly as possible, but we have to think in terms of qualitative development. We talk about this all the time. Whatever the situation in global markets, Russia needs to do away with its dependency on natural resources, and that is evident.

The current favourable conditions for our hydrocarbon, metallurgical, and chemical sectors should not put a damper on our ardour or be a pretext to let old problems drag on. This is why in maintaining the fundamental goals and principles of the development strategy through 2020, we need to find new flashpoints for growth, introduce new factors into the development of industry and business and identify reserves for boosting Russia's international competitiveness.

I would now like to say a very simple thing that we rarely say. United Russia played a very significant role in Russia's contemporary history, especially during the crisis, when decisions had to be made very promptly – I mean what I say. What has been and what is United Russia's value? It is the fact that the party is the cornerstone of Russia's political and economic stability. Thank you for your applause.

But I would like to tell you that this is not enough anymore because we need to move forward. We need a model based on highly qualified and professional people, on smart governance, and a clever investment policy, on dramatically improved efficiency, and on creating conducive conditions for the success of small and medium-sized businesses. We need to advance and look into the future. And the United Russia party needs to mobilise its resources. It must find and offer our society appropriate short-term and strategic long-term solutions to the problems Russia is facing.

Earlier this week I met with farmers in Tambov. The government has to continue supporting Russian agriculture. All the more so, since this issue involves the country's food independence and affordable, high-quality goods for our people. One of the most topical issues today is the growth of food prices.

I would like to request regional leaders and United Russia deputies to intensify price control, react flexibly to the situation, set up regional agricultural funds, and establish efficient interregional cooperation. We are using a mechanism like this in the grain market: to support cattle breeding, we are providing fodder grain to regions at prices lower than the market value.

We know that prices keep growing on the international market as well. And they are putting some pressure on the Russian market. Our farmers have gone through two lean years, compounded with the consequences of the global economic downturn, which had a negative impact on our economy and thus affected the social sphere and the country's standard of living. Russia, unlike some other countries, including those with stable and developed economy, did not cut wages of public sector employees, did not reduce pensions, or increase the pension age – all of you are well aware of this. We have been fulfilling all of our social obligations. But many Russian citizens are nonetheless facing unemployment and a drop in real wages and incomes. We didn't adjust wages of budget-dependent employees at all last year, and their wages are very low. But, in general, we implemented all our programmes of social development. For example, we increased pensions by almost 46%, as you know. We are getting additional opportunities today, and, of course, people want to see how we will use them and what we will make a priority.

The expert community offers various recipes, but there is one thing we know for sure: we can't neglect our social obligations. And, of course, we will not leave the people to fend for themselves, while promising them future prosperity, the way it was decades ago. This has happened many times over the course of our history, and we know how such stories end.

We must find solutions that allow the country to develop steadily while also giving the majority of citizens the opportunity to experience the impact of this development in their own lives, to see for themselves how it has improved their lives and the lives of their children, to reap the benefits of this development – not in the remote future, but today.

Despite all the difficulties and limited financial resources, we, as I have already said, significantly increased pension payments in 2010. Labour pensions have been again adjusted for inflation by 8.8% in Russia since February 1, 2011.

We are preparing to adjust social pensions, also by 8.8%, as of April 1. We still have some obligations to fulfill. We will consider what to do next in this field. We can't do otherwise: in most cases, pensions are the only or the primary means of subsistence for the elderly. We didn't let their incomes fall during the crisis, and we can't let it happen now.

Now I would like to speak about other things we have to do. This year we will have to make a decision on increasing the scholarship fund because we haven't been indexing it for two years. We need to support Russian students. We increased the wage fund of public sector employees by 30% in late 2008, and they lived through 2009 more or less successfully against a backdrop of falling wages in the country's economy in general. But in 2010, their wages again sagged, and scholarships hadn't been increased in two years. We examined the issue, and I can say, as I have already mentioned, that scholarships will be adjusted by no less than 9% as of September 1, 2011. We will do our best to make the figure higher.

In 2012, we will start introducing a new salary system for military officers and employees of law-enforcement agencies. The system allows for substantial increases in wages according to ranks and positions. The wages will depend on the level of the servicemen's professional qualifications and on the complexity and responsibility of the tasks they are charged with performing. We have already cited the figures. Lieutenants serving in the interior ministry agencies will get wages from 33,000 to 45,000 roubles, and lieutenants serving in the armed forces will have a wage of 50,000 roubles. The wages of those service members who risk their lives or work in extreme conditions will be higher. Novice officers may have a salary of 80,000 or even 90,000 roubles. Military pensions will be increased by no less than 50% since January 1, 2012.

I have already started speaking about public sector employees. I can only repeat that their situation is the most difficult. First, we haven't adjusted their wages in two years. I have already said that we increased their wage fund by 30% in 2008, and we lived well through 2009, but we had difficulties in 2010. Second, there is quite a big income gap in different regions of the country. The average wage of teachers and doctors working in the constituent entities of the Central Federal District, not counting Moscow and the Moscow Region, is about 10,000 roubles, and this leaves much to be desired. In reality, wages of employees working at regional clinics and hospitals are smaller, much smaller.

We will be adjusting public sector employees' wages by 6.5%, as stipulated by the law on budget, starting June 1, 2011. But, of course, we understand that this is not enough, and that's why we will continue thinking about taking a second step in autumn. Dmitry Medvedev shares my opinion; we spoke about this two days ago.

Let us be realistic and keep within the budget. We will certainly take the next step in September. I am sure that accumulated inflation will not exceed 6.5% by June – it will be around 6%, slightly above the current six-month inflation. We'll take the next step in autumn – and we'll see what that step will be.

I would like to emphasise to the regional governors present here, as well as the heads and members of regional legislatures, that regional policies make all the difference in the effort to increase the incomes of teachers, doctors, librarians, and social workers.

Let's see. In the Belgorod Region, the average salary of a teacher is 40% higher than in the Bryansk Region. In the Kaluga Region, it is 30% higher than in the Kostroma Region. There are more examples of this discrepancy, not only in the Central Federal District. These figures show how regional governments' priorities differ across the country. They show which regions are more determined to improve their social policy.

Colleagues, as I have said, this year is going to be a crucial one for any political party, including United Russia. You know why that's the case. The parliamentary vote is scheduled for December 2011. The party has been working hard to get fully prepared for this important event: it has initiated a law assuring each political party equal access to media resources and reducing the State Duma eligibility barrier. Why am I saying this now?

The strongest party is the one focused on its voters' needs, not the one supported by a group of high-ranking officials. Only a party that is sensitive to public sentiment and is capable of meeting their expectations wins in the end. What it wins is worth more than seats or some abstract proportion of the vote. Its prize is the mandate of public trust, which it can use effectively to pursue the policy that it deems right and appropriate for the benefit of the country. What I'm saying is, this should be our position of principle. This kind of attitude will lead us to effective decision-making.

We decided at our last congress to hold an intra-party vote on the candidates we nominate. I believe this approach has proved effective during regional election campaigns. This intra-party democracy helps our members get to know the candidates better. It puts the candidates to an important test. It also consolidates the party as regional branches learn to nominate their candidates with greater responsibility. There should be no outsiders or dark horse candidates. We need responsible and effective people, professionals who will represent United Russia in the parliament.

We have heard a lot of clever anti-corruption rhetoric. We all agree that anyone who goes into politics must be transparent and must disclose his or her income. Disclosing expenses is also a good idea; we need to discuss potential tools for this initiative.

We will finalise our list of candidates at our September congress and adopt our election programme. Incidentally, if we are to start working on a national development programme now and United Russia's programme for the period after 2012, then we must absolutely include an agenda for regional development, incorporating all the work that has been done at regional conferences. This will make our strategy clearer and easier to understand and will make the party better organised.

Colleagues, when drafting our regional plans, we try to build on the specific competitive advantages that I am sure all regions have. Central Russian regions have advanced industry and technology, a developed educational system, and intensive business activity, which therefore attracts investment. Central Russia has unique historical and cultural heritage, which is internationally recognised. In short, this region has vast potential and is bound to be a leader in the development of an advanced high-tech economy and strong industry.

Why is modern industry important for us? Because it stimulates the creation of engineering and research centres, the demand for a quality engineering education, for research and development, and is a powerful element of the national system of innovation. We will continue to stimulate industrial development programmes, will subsidise interest rates on loans for the modernisation of production, and will assist those who export high-tech products. This is for the first time that we have introduced such an instrument (we had no such instruments before). Last year, 13 billion roubles were allocated to enterprises in the Central Federal District for these purposes. The recipients included machine-building, chemical, aeronautical, automotive, radio-electronic, and engine-building enterprises.

The first sectors to be converted to new technologies will of course be those that pose environmental hazards. For example, major oil refineries – in Moscow, Ryazan, and Yaroslavl – are located practically within the city limits. Residents reasonably complain about the environmental hazards they present: chimney stacks spewing smoke, inefficient purification systems, etc. Over the next few years a drastic modernisation of all of these oil refineries will take place. Companies will invest about 118 billion roubles in modern equipment and conservation efforts, and harmful emissions will be cut almost by half. About 56 billion roubles will be invested in the Moscow refinery, 19.5 billion in Yaroslavl, and 42.9 billion in Ryazan.

In the energy sector over the next ten years, we will replace nearly 25% of the district's generating capacity and decommission all the outdated, so-called dirty and inefficient power units, which are 50-60 years old and older. By 2020, 11.5 gigawatts of generating capacity will be introduced in the Central Federal District.

We cannot afford to forget the lessons of this winter. We should do everything in our power to prevent the recurrence of the massive power failures we saw to residential and strategic facilities, towns, and villages.

More than 60,000 kilometres of power grids, half of the existing lines, will be repaired or built this year in the Central Federal District. That is a large number that calls for a lot of work. The implementation of such a massive programme will require a lot of funding: over 100 billion roubles this year and 0.5 trillion roubles until 2015. I would like you to note that we have decided to limit the growth of prices in the energy market to an average 15% nationwide. And, of course, I think it is inadmissible when an investment programme (important as it is for maintaining the networks in proper order) that is intended for five years is crammed into a one-year period. It pushes electricity prices up 30-50% and in some regions by 70%. But why do it? Why? Frankly, all sorts of suspicions arise that somebody just wants to load some crony companies with money: hurry, hurry, don't miss the train. The network infrastructure should of course be supported, and investment programmes should be carried out, but all this should be done at an even pace and at the right time.

Our basic position is that neither the economy nor the individual consumer should be made to pay for infrastructure modernisation. Otherwise, by solving some problems, we will simply create others. Let me remind you that the Central Federal District is the epicentre of our light industry and textile industry, and some factories are several hundred years old. After the breakup of the Soviet Union, all our sources of raw materials were lost, the equipment has since become obsolete, and it is hard to compete with imports, many of which are often illegal or only semi-legal.

But in spite of this, we managed to build up competitive production. It needs our help. It would open up prospects for many towns and settlements, for tens of thousands of people. We propose taking action in several areas. First, we need to put the domestic market in order, sustaining the fight against fraudulent goods and adopting modern technological rules and quality standards. Second, we need to develop the production base and search for niches in which Russian products are in demand, not only in the domestic but also in the global market. For instance, there is growing global demand – in construction, biotechnology, medicine, and chemistry – for natural, environmentally clean textiles and fabrics. They can be produced at textile clusters being created in the Ivanovo, Yaroslavl, and Kostroma regions. These and other light industry projects can be assured of our support.

Another key industry for the country as a whole and for the Central Federal District, in particular, is aircraft building. All the main aviation design offices, research institutes, and the legendary Central Aerohydrodynamics Institute (TsAGI) are located in the district. This is an intellectual and technological resource that must be used effectively for the benefit of our entire economy. We are creating a National Aircraft Building Centre. It will be located, as we have agreed, in Zhukovsky outside Moscow. It is a convenient location that has traditionally facilitated such plans. It will comprise the Gromov Test Flight Institute, and the Sukhoi, Ilyushin, Yakovlev, Tupolev and MIG plants and design offices. We are planning to turn it into a powerful, high-tech research and production cluster, effectively an innovative zone for the country's aviation industry. Even during the difficult crisis years, we continued to shore up the aviation industry.

About 200 billion roubles were allocated to support the aviation industry in 2009 – 2010. As a result, we were able to continue projects that are critical for the future of both our civil and military aviation. Just a month ago, the Sukhoi Superjet 100 was certified. I might add that 150 such planes have already been ordered. The Saturn plant in Rybinsk will produce 30 Superjet engines this year, and about 70 next year.

The Voronezh aviation plant is deploying serial production of the passenger version of the Russian-Ukrainian AN-148 and a special version for the Russian Emergencies Ministry. These will be unique flying hospitals delivering emergency medical assistance. The Mil and Kamov design offices are working on modern high-speed Mi-38 and Ka-62 helicopters. Tests continue of the fifth-generation fighter plane. As you know, the second such plane took off from Komsomolsk-on-Amur yesterday.

Defence industry output in Russia increased by 13% in 2010. The average pay in the sector increased by more than 16%.

More than 0.5 trillion roubles worth of orders were placed with the defence industry plants in the Central Federal District in 2009 – 2011.

True, the situation varies in different parts of the Central Federal District, and certain regions are experiencing difficulties. For instance, there are certain issues in Bryansk that the governor has reported to me, but this is a special case, and we will look into it.

Still, it is pleasing that young people are choosing to work in the defence industry. For instance, Rosatom enterprises based in the Central Federal District offer jobs to some 500 university and vocational school graduates annually. The government has adopted a decision to pay monthly grants to the best young workers, engineers, and designers at defence enterprises. I am speaking of a special monthly scholarship of 20,000 roubles granted to over 1,000 people and paid for up to three years. Starting with 2009, the district-based defence enterprises have received orders worth over 0.5 trillion roubles, as I have already mentioned.

As you know, the government has developed a new state armaments programme that aims at the overall re-equipment of the armed forces. This is a budget-consuming programme and is very difficult to handle – but it will certainly serve as a new start for the defence industry because along with the armaments programme, we will have to adopt a programme for re-equipping the defence industry itself, which can only produce new armaments if provided with up-to-date equipment. In addition to the armed forces' re-equipment programme, the government has drawn up plans for the large-scale modernisation of the military-industrial complex, with substantial financing directed at research and development.

I believe that we have to break bureaucratic stereotypes and practices. I suggest that we put an active effort into attracting the resources of our civil innovative and industrial clusters for the benefit of scientific work in the defence industry. This approach would make for dual-purpose advanced technologies. In this regard, I consider the greater volume of defence orders one of the major instruments for modernising both the military-industrial complex and the country's economy.

You know that it is always gratifying to see joint work and the efforts of thousands of people, despite all difficulties, produce real and tangible results. At the beginning of my address, I mentioned the success achieved by Russia's car industry, with more of the world's top auto concerns and carmakers entering the Russian market. Currently, we are setting new requirements on the industrial assembly process aimed at increasing industrial localisation – that is, raising the volume of spare parts and components manufactured at Russia-based enterprises. They are delivered here for further large scale assembly in order to establish a network of small and medium-sized enterprises, allied suppliers, and car components suppliers, such as the automotive paint manufacturing plant based in the Tver Region.

But the prime example would be the Kaluga Region, whose car industry was developed from scratch and has become one of Russia's auto industrial centres. I am sometimes amazed at how they managed to accomplish it. The governor will probably give the details. They started the industry from next to nothing, and now they have Volvo, Volkswagen, Peugeot, Citroën and Mitsubishi operating there, with some 10,000 people now employed at well-paid jobs and additional investments going to the local social sector and education.

In 2010, the Kaluga Region attracted almost 8% of all direct investments into Russia's economy. But the region is small, indeed, without any gas or coal reserves – just people ready and willing to work. By 2012, the region will be fully self-sufficient.

The experience gained in Kaluga, Belgorod, Ryazan, Voronezh, Lipetsk, and Yaroslavl reveals that the reasonable choice of investors, the abolishment of bureaucratic practices, and investments in infrastructure and personnel training can bring impressive results. I believe that the assessment of the regional governors' and officials' work to attract investment and support businesses should be as open as possible, hence our proposal to make an annual public rating of Russian regions' favourability for investment.

I am also certain that we have to provide greater freedom for leading regions. The stimulating role of federal budget support should be strengthened and financial autonomy extended for those entities that succeed in developing the local economy and modernising the social sector.

Currently, the government is developing relevant proposals, and soon we will adopt a decision on ways to stimulate regions' efforts. I can say with absolute certainty that the 2012 federal budget will be prepared using new approaches.

There are plans to establish an incentive fund, and I can tell you about it in more detail. The fund will have 10 billion roubles in its first stage, and constituent entities will be able to use this money to pay back loans on infrastructure, high-technology, and other development programmes.

It is worth noting that the Kaluga Region’s economy is not limited to the auto industry: it is developing the pharmaceutical sector as well. The region is using a high-technology park in the science centre of Obninsk as its platform.

Modern pharmaceutical enterprises are being opened in the Orel and Yaroslavl regions in partnership with leading foreign manufacturers.

There are also plans to produce medical equipment in the Dubna special economic zone in partnership with RusNano. RusNano invested a total of 186 billion roubles in the high-technology sector of the Central Federal District.

Realising the importance of cheap, high-quality drugs for the population, we are going to invest over 120 billion roubles from the federal budget to improve the pharmaceutical and medical industries in the coming years.

This money will be spent on new equipment for over 160 medical enterprises. We plan to establish 17 science and research centres to develop drugs and medical equipment and involve Russia’s leading universities and science organisations in this work. We will also extend our partnership with foreign partners.

Moscow State University has now organised a biomedical innovation think tank that integrates research and educational platforms, a technological transfer centre, and pilot production programmes.

I am convinced that, stage by stage, we must form a powerful, knowledge-based intellectual service and high-technology business sector in the Central Federal District. Over 120 local companies are already operating in the three special economic zones of the Central Federal District: Zelenograd, Dubna, and the Lipetsk Region. The volume of declared investments in nuclear technology, bio-technology, electronics, chemistry, and the production of advanced building materials is at over 160 billion roubles. 

Conversely, many regions of the Central Federal District have accumulated positive experience in developing industrial parks, technological parks, and business think tanks. For instance, four industrial parks engaged in different industries were established in the Belgorod Region. The same can be said about the Bryansk Region, which has included a business think tank and training centre in the Morozov Project national initiative. The Rodniki technology park, established through private investment, is successfully operating in the Ivanovo Region. I would like the regional authorities and our party organisations to study their neighbours’ experience and help use it in other areas. You have all the necessary resources, including highly skilled specialists. Russia’s central region has historically been the core of the country’s leading universities and science centres. Half of all Russian scientists work there.

In 2011, federal spending on civil science will equal 228 billion roubles, which is twice as much as in the pre-crisis year of 2007. This money must be used effectively. Eleven out of fourteen of the country’s science cities are located in the Central Federal District, and this is, of course, a source of pride and national wealth. We provide federal support for science cities to improve their social, engineering, and innovative infrastructure. In 2010 – 2013, the eleven science cities of the Central Federal Districts will receive 1.6 billion roubles from the federal budget.

We will soon study these issues in detail. The contributions being made toward technology and innovation in the Central Federal District are great, and I would like to emphasise that. We plan to increase investment in this area and better distribute resources, in particular through the organisation of contests and grants.

Science cities, that achieve the best results in the sphere of innovation, complete ambitious science and technology projects, successfully commercialise these intellectual products, and integrate science and production, will be the first to receive money from the federal budget. In modern times, rapidly changing global tendencies require sharp competitive growth in Russian education and science. It is necessary to attract the best Russian and foreign specialists in Russian institutions of higher education. To that end, we are launching a grant support programme. The first forty grant winners have already been chosen. They include Nobel Prize and Fields Medal winners. The grant winners, including our compatriots working abroad and foreign scientists and teachers, are ready to work with Russian universities and laboratories. The grant amount is 150 million roubles over a three-year period. So, we are giving these grants not to institutions or teams but to specific scientists to develop their ideas. Starting in 2006, 24 leading higher educational institutions of the Central Federal District received support under the national programme for education.

The next step we made was adopting a special development programme for Moscow State University and developing a network of 12 national research universities in the Central Federal District. These institutions of higher education will be given around 30 billion roubles to update their research platforms and implement scientific projects.

In 2009 – 2010, the national research universities of the Central Federal District received 5 billion roubles from the federal budget. In 2010 – 2011, they will receive another 5 billion roubles towards improvements.

We allocated another 19 billion roubles to help higher educational institutions and private businesses implement jointly developed high-technology projects. Russian companies will be able to benefit from R&D and introduce new products and technology on the market. As for the universities, they will get the opportunity to update their research platforms and provide ambitious and promising work for their employees. We must pay special attention to the following: it is particularly important to attract students and post-graduate students to this work, giving our young people the opportunity to experience professional fulfillment and find their place in the sphere of science and high technology.

The procedure is as follows, as you remember: money must go through industrial enterprises that work with institutions of higher education by contributing money, concluding contracts, and providing the institution with access to the sector in which they are engaged. We hope this tool will prove effective.

In 2009, the United Russia faction of the State Duma ensured the speedy adoption of necessary amendments to laws. Our science and educational centres were encouraged to found small and medium-sized companies in order to make use of their intellectual discoveries.  Over 700 such enterprises were established across the country, including 200 enterprises in the Central Federal District.

I already mentioned the great potential for entrepreneurship in the Central Federal District. Last year, over 20,000 small and medium-sized companies were founded and private entrepreneurs started business there. Still, we have to guarantee faster improvement, help new enterprises emerge on the market, and give people a clear and attractive picture of independent entrepreneurship.

Despite the budget deficit and post-crisis challenges, we provided benefits to small businesses engaged in the real economy, high technology, and the agricultural sector; residents of technological development zones; small enterprises operating under scientific centres and universities; and private entrepreneurs providing social services.

We understand clearly how important it is to develop entrepreneurship. This is why we consistently work to bring down administrative barriers and get rid of various unnecessary and imposed inspections. I would like to seize this opportunity to request our deputies to boost the adoption of the new law On Licensing. This law envisages indefinite licenses and will almost halve the list of activities requiring licenses.

Naturally, we need efficient regional programmes to support small businesses, including the expansion of loan guarantee funds. The total capitalisation of all guarantee funds in the Central Federal District is a little over 8 billion roubles. But it has already helped small businesses to take out loans totalling more than 33 billion roubles. Can you sense the difference? Some 8 billion roubles from the guarantee funds and 33 billion roubles in loans. If regions increase their funds – and this can be done – they will create better conditions for taking out loans. It is especially important to help young entrepreneurs through financial grants, microloans and creating a consulting and legal advice system.

And there’s another important issue. We have given regional authorities the right to cut the rate for simplified taxation from 15% to 5% – we did this during the crisis. But only few regions used this measure to support small businesses. The Central Federal District, the Kostroma, Voronezh and Vladimir regions have not made a decision on the tax rate. Other regions set it at between 7% and 10%. I’d like to request that our colleagues in regional governments consider their budget capabilities once again and cut the tax rate as much as possible. Clearly, there is the temptation to dramatically increase tax revenues during a period of economic recovery and growth. But regional and municipal authorities pursue a flexible policy that shows foresight and supports businesses today so that they will benefit much more tomorrow.

Naturally, we need to help those cultivating land to become owners of the land, as agreed. This too was one of the key issues discussed at my meeting with farmers two days ago.

I would like to point out that we want all forms of farming to develop successfully, including farm holdings, individual farms and major companies. For example, a meat production project employing advanced technology is being carried out with the support of Vnesheconombank in the Bryansk Region. Is the region’s governor here? How much investment does the project require? $250 million?

Remark: About 200 billion roubles.

Vladimir Putin: Yes. So, between $230 and $250 million [about 7 billion roubles] will be spent on this good project, a good company is carrying it out.

And the number of such breakthrough and high-tech ideas and business initiatives in Russian agriculture is on the rise. Almost all regions of the Central Federal District have projects like this. The Smolensk Region, for example, intends to set up a network of hothouses. Money is being invested in poultry farms and raw material processing in the Belgorod, Orel and Moscow regions. I remember visiting the Belgorod Region last year… You know, when we were investing in the development of livestock breeding and were providing large subsidies, there were serious concerns about how these funds would be used. It is a pity that everyone cannot take a helicopter over the Belgorod Region. It cheers the heart to see all the new roofs shining in the sun and the brand-new high-tech livestock breeding facilities. I was astonished to see all that. It is a very good example to follow.

We naturally need to think about providing our farmers with new equipment. You have possibly heard that a decision has been made to set aside an additional 4 billion roubles for the agro-industrial leasing company Rosagroleasing to sell the new equipment it has to farming companies at  half  the price. And by selling these machines, even at half the price, the leasing company will be able to place new orders at Russian machine engineering plants. How many pieces of equipment do you have – 5,000 or 6,000 units?

Ladies and gentlemen, the Central Federal District is the most populated federal district in Russia. It is rightfully considered the most favourable one to work and live in. Yet, it is also evident that the region’s infrastructure, including the transport, social, and housing infrastructures and public utilities, is being strained. It is often pushed to its limits and fails to meet the growing demand of the economy and the people.

New major projects, such as the establishment of an international financial centre in Moscow, of the logistics of the North-South and West-East routes, the formation of tourist clusters, immediately come up against the wall of infrastructural limits. Our goal is to reverse these negative trends and remedy the emerging imbalances to make people’s lives more comfortable, provide them with high-quality social services, give them the opportunity to solve their housing issues and have access to the most modern infrastructure.

A total of 61 billion roubles will be allocated in the next three years to rebuild all key federal highways running across the federal district, including the M10 Russia, M4 Don, M6 Caspian, M5 Urals, M8 Kholmogory, M9 Baltic and M7 Volga highways as well as the A108 Big Ring and A107 Small Ring of the Moscow Region.

The United Russia party has initiated a project to renovate town roads and courtyards in administrative centres of the Central Federal District. In total, over 22 billion roubles will be set aside for this purpose, and 11.5 billion of that money in the Central Federal District. I would like to point out that all necessary underlying regulations for this have been adopted. This is why I am asking those in charge to sign the corresponding agreements with the Ministry of Regional Development by the end of March so that work can begin in April.

We need to optimise traffic flows in the Central Federal District and consider setting up modern logistics centres, e.g. in Smolensk, Bryansk and Belgorod. We need to use their favourable locations and the advantages of border towns and cities above all to strengthen trade and economic ties with Ukraine and Belarus, our closest neighbours and partners.

I would also like to mention that the modernisation programme will include Moscow’s Sheremetyevo, Vnukovo and Domodedovo airports.

Dobrynskoye airport in Vladimir is to open in 2014 after renovation. Moreover, up-to-date equipment will be installed at airports in Voronezh, Smolensk, Kursk, Belgorod, Tver, Bryansk, Kostroma, Lipetsk, Tambov and Orel. This new equipment will help increase flight safety, cut the time needed to process flights and improve the quality of services for passengers. All in all, almost 50 billion roubles will be invested from the federal budget in the development of the Central Federal District’s airports.

I also believe that the regions of the Central Federal District do have the necessary resources to catch up with leading countries in mobile and landline communications, internet, digital television, and e-government. This goal must be set today. The federal government does everything in its power to assist the regions and hopes to further strengthen its cooperation with them in order to promote the adoption of new technology across the country.

We must increase the rate of housing construction in the Central Federal District and in Russia in general, reversing the current negative trend in the industry. In 2011, housing construction is expected to increase by two million square metres in this federal district and by five million square metres across the country. So these regions will account for almost a half of the total growth. On the whole, in 2011 we plan to build 63 million square metres of housing. We have everything we need to meet this target. The demand is rising, and the state is continuing its large-scale housing programmes.

By May 2010, we provided housing to all veterans of the Great Patriotic War in the Central Federal District that had been put on the waiting list before March 1, 2005. A total of 5,222 veterans benefited from this programme. After that, an additional 34,000 veterans registered for new housing. I’d like to underscore the fact that we received 34,000 applications after providing housing to 5,222 veterans. I’m sure you understand the scale of this challenge. Last year, 25,000 people took advantage of this programme, and I expect that in the next few months, we will fulfill this commitment to the letter. I’d like to reiterate that we will not set any excessive requirements for such applications.

I would like to say a few words about one important and, to put it bluntly, very painful problem – the so-called defrauded real estate investors. There are over 74,000 such people in Russia, including 6,000 in Moscow alone and almost 18,000 across the Central Federal District. Their rights and interests have been wantonly violated. Many lost their money and savings and found themselves in debt, but didn’t receive new flats. Of course, it’s understood that one must be very careful on the housing market and not enter into dodgy agreements. But clearly, the state also bears responsibility for this problem. It failed to protect people from crooks and scammers, overlooking flaws in legislation.

As a follow-up to a government resolution, federal authorities are taking an inventory of abandoned and frozen construction sites and developing proposals on financing construction projects in the final stage and attracting investors to the industry. This issue was raised at a recent government meeting. I would like the regions to join us in our efforts. We understand where and how the responsibility is to be met, so that by July 1, 2012, we will have resolved the problems of the majority of defrauded investors, completely settling them by the end of next year. The issue is complex and requires substantial funds, but the Ministry of Regional Development says that we have the necessary resources, so we need to move forward with it.

I have already said that higher education standards are rising. This is also the case in kindergarten and secondary education. Over the past three years, more than 1,000 kindergartens for 131,000 children were built and opened in the Central Federal District. Meanwhile, the number of children on the kindergartens’ waiting list increased from 113,000 to 320,000. We are failing to keep up with demographic trends, in particular growing birth rates. It is very good that they are on the rise, but it’s bad that there are not enough kindergartens. Regions and municipalities must pay special attention to this problem. We must support early education, including corporate and private kindergartens and preschool education centres. Kindergartens should reclaim the facilities that were transferred to firms, companies, and municipal authorities and currently serve as office buildings. It is difficult to do so in case ownership rights were transferred irretrievably to a scrupulous acquirer. But many such buildings house the offices of municipal agencies. There are quite a few such buildings. And this property must be reclaimed. The federal government will certainly support the regions that address this socially important issue.

Through the national project 'Education,' we have provided new equipment to schools and introduced advanced educational programmes and new forms of long-distance learning for children with disabilities. All schools of the Central Federal District have been connected to the internet. The share of students taking advantage of modern education benefits has increased to 70%. This work must certainly be continued.

In moving towards new education standards, however, we must avoid making rash decisions behind closed doors or inside government agencies. And we will not allow this to occur because we understand that this issue affects the interests of all Russian society. There is no room for mistakes. We must work in close contact with the public and parents, and primarily with students and teachers. This work must be absolutely transparent.

Next, as we agreed, governors and branches of federal parties must place particular emphasis and control on regional programmes in healthcare modernisation. The regions of the Central Federal District will receive 114 billion roubles through these programmes. I’d like to stress that one of the main priorities of regional programmes should be better salaries in the industry. We have reviewed most proposals submitted by the regions of the Central Federal District. I am asking federal authorities to expedite the adoption of these programmes and the signing of agreements with the regions. Their coordination must be finished as soon as possible so that we can embark on their execution and provide the funds. I’d like to add that one of the main priorities for this federal district must be healthcare in rural areas, where death rates are higher than in urban areas.

We will carry on with the national project 'Healthcare,' allocating 488 billion roubles towards it between 2011 and 2013. The Central Federal District will receive about 110 billion roubles. This is in addition to funds to be provided through the healthcare modernisation programme. In 2011, the Lipetsk, Belgorod, Tula, Yaroslavl, and Moscow regions will join the 'Blood Service' programme, for which they will receive 900 million roubles this year. Last year, high-tech services were provided to 100,000 people in this federal district, which is 15% more than in 2009. By 2013 this rate must be increased to 86%. Currently, it stands at 76%.

We must meet the demand for such services to the letter, and they should of course be provided free of charge. I’m sure we all understand that behind these seemingly dry figures are the lives and health of ordinary people. If we have met the demand by only 76%, then obviously there is someone who still can’t afford an operation. Some such patients have to borrow money, but not everyone has even this opportunity. This is why our project for healthcare modernisation is critically important for the country – for the nation’s health.

In 2011, we also plan to open the Federal Centre of High Medical Technology in Smolensk (it will specialise in orthopedics and traumatology), and we will build five perinatal centres. The centres in Tver, Kursk and Ryazan have already become operational, and the centres in the Voronezh and Yaroslavl regions will open their doors for patients in the coming months.

We have allocated substantial funds for these projects and created the necessary infrastructure. Regions must provide all necessary support and assistance to these centres. First of all, it is necessary to create strong professional teams and attract good specialists, providing them with housing and organising their training in leading clinics, both here and abroad. As you know, this programme is well underway. I have toured several clinics in remote regions, and I can tell you that strong teams have been created even there. But this is possible only when regional authorities address this issue with full responsibility and rationality. Doctors themselves are usually so dedicated to their profession that they can go to any place where they have an opportunity to work effectively and take advantage of modern technology. And we do provide the most advanced equipment to our new centres. However, we need to create the necessary conditions for a high-class specialist to come and work in a remote region. And first and foremost, he or she needs a flat.

We must also continue to develop the infrastructure for public athletics in cooperation with regions and municipalities. We should focus on the construction and modernisation of sports facilities and create the necessary conditions for playing sports in schools, universities, and public areas. Over the past four years, 242 sporting facilities were built or reconstructed in the Central Federal District using federal allocations alone. United Russia helped equip 60 fitness and recreation complexes. Local stadiums received 25 new turf fields through our project to promote football. Thirteen more fields have been planned for 2011.

We must take advantage of our preparations for the Olympics and the FIFA World Cup in order to promote the values of athletics and a healthy lifestyle. This can foster the construction of new training centres, stadiums, and, significantly, hotels, tourist centres, and other service infrastructure. The facilities that will be used during these major competitions, including the FIFA World Cup, should be made available to ordinary people after the events are over.

As a major international event, the World Cup gives us an excellent opportunity to promote our country to tourists. And we must take full advantage of this chance and use it in the most effective manner.

Currently, about 10 million tourists visit the central regions of European Russia each year. Taken at face value, this number is quite high. But still, it does not really match the region’s capacity. We have unique potential, but we fall behind in quality and promotion. If we tackle this issue in earnest, we will certainly create a strong tourism industry and increase the number of tourists in the coming years.

There are a great deal of places in this region that are familiar and dear to each of us and to every Russian. Borodino, Prokhorovka Field, Suzdal, Vladimir, the Moscow and Smolensk Kremlins – these sites are part of our common legacy, our roots, which make us a truly united nation.

I suggest that United Russia should propose and execute a special, socially important project to support Russian museums and contribute to restoring sites of historical or cultural interest. War memorials should receive special attention. While moving forward, we must always remember that we are building our future on a strong foundation – the 1,000-year history of Russia, its accomplishments, the courage and patience of our fathers. They succeeded in creating a mighty state. Today its future depends on us.

I am confident, in considering our responsibility and our power, that we are capable and obligated to succeed.  Thank you very much for your attention.

* * *

Vladimir Putin: Ladies and gentlemen, let’s see what the experts have to say about how work in their respective fields is organised in regions across the Central Federal District.

Let’s hear first from Vladimr Kononov, director general of the investment and construction company Konkor, specializing in high-tech medicine and plasma filtration. Please go ahead, Mr Kononov.

Vladimir Kononov: Ladies and gentlemen, I’d like to tell you about a unique project in high-tech medicine. It’s about the production of equipment for plasma filtration or, in a layman’s terms, for the purification of blood.

Our enterprise is fairly young by European standards, but not so young by Russia’s. The group traces its history back to 1991. In 1998, with a financial crisis in full swing, we began to build our research and production compound Alpha in Dubna, outside Moscow. But we went ahead with our investment, and we’re happy we took the risk.

Vladimir Putin: How much have you put in?

Vladimir Kononov: 2.7 billion roubles so far. We’ve built one plant already, and are in the process of building a second one. You can see the operational enterprise in the screenshots.

Vladimir Putin: Those responsible for the display have a fear of blood. Do we have such people here? There’s nothing to be afraid of, is there?

You’re accustomed [to seeing blood], and have no fear, whereas we may find the sight of it somewhat frightening …

Vladimir Kononov: In 1998, when we were launching this project, the word “blood” made me shiver, but it’s not a problem for me any longer, as I perform plasmapheresis on myself once a year.

Vladimir Putin: Why do you do that? Because it’s free for you or because there’s a need? Why don’t we, too, take up the practice if it’s so good for you?

Vladimir Kononov: Well, it’s normal for an engineer to go under a bridge he or she has designed when a train crosses it.  And if you’ve built a plant producing blood filtration devices, you should be the first to test them. 

Vladimir Putin: People with infectious diseases can benefit from this device, right?

Vladimir Kononov:  Yes, but not only people with diseases. It can be used preventively, as well. In fact, each and every one of us in Russia should undergo the procedure of plasmapheresis at least once a year – people will become healthier; they’ll live longer; and they won’t lose money by taking time off work.

Vladimir Putin: They’ll be paying you instead?

Vladimir Kononov: We share our revenues with the state. 

Vladimir Putin: Mr Kononov, what’s the price of the procedure?

Vladimir Kononov: The cost of the expendables – around 1,000-1,200 roubles – plus a doctor’s salary, which adds up to 1,500-2,500 roubles. At the moment, there are about 700 such devices in use in Russia. 

Vladimir Putin: Okay, but how much will an ordinary person have to pay for the full procedure?

Vladimir Kononov: We’re manufacturers, you see; we produce equipment and supply it to healthcare institutions. I’m not responsible for these institutions, nor for the prices they set. But as far as we know, clinics charge between 2,000 and 5,000 roubles. I admit that it’s not very cheap.

Vladimir Putin: Is this the price of the full procedure?

Vladimir Kononov: Yes.

Vladimir Putin: But one will be able to save money on medication later on, right?

Vladimir Kononov: Of course. And the person’s life expectancy will be higher. As I said, our enterprise is pretty young by European standards whereas by Russian standards, it’s already seen as a seasoned enterprise.

We began to build our Alpha compound in 1998, with a financial crisis in full swing. In those days, Dubna wasn’t a research centre yet, and there was no special economic zone there. Yet it offered qualified personnel and favourable conditions for doing business. From day one, we felt the support of the region and the town. The world’s first industrial accelerator was designed and built for us here, in Dubna. You can see it in this screenshot – something of a miniature collider. All over the world, cyclotrons are used for scientific research, whereas our accelerator operates for the benefit of the public.  It now operates as an industrial facility, a factory of some sort.

What is Alpha like today? It’s a modern plant turning out products up to European quality standards. Our enterprise, employing 250 people, produces high-precision medical devices for blood filtration. The production is based on nanotechnology, which has been talked about so much these days. The particular technology that we use saves human lives on a daily basis.

In our case, it is nanotechnology. It works every day to save human lives. We have not rested on our laurels after building the Alpha centre and developing the business. On the contrary, we will soon establish another research and production centre, the Beta, to employ 450 people, with a manufacturing capacity of 1.6 million modified plasma filtration devices and 1,500 HemoPhoenix units. So we have two plants now – one operating and the other under construction, and we intend to invest 2.7 billion roubles in both. So much on the matter you inquired about.

You see the Beta construction site in this photo. We drove the first pile into the ground five months ago, and the work is progressing at a good pace. The project has government support, and the Rosnano state corporation, our strategic partner, has purchased 48% of our shares to fund the project.

Our products are highly in demand in Russia and other countries, and compete with foreign brands such as Baxter and Haemonetics. As you see in the graph, we charge a mere 20% of their prices and use cheaper materials, so treatment costs less. One session of plasma filtration, which entirely purifies the blood, costs a staggering 60,000 roubles with foreign equipment, compared to the 6,000 roubles we charge, which makes the treatment accessible to a greater number of patients.  This technology promises to save at least 12 to 15 billion roubles for the federal budget within three years.

This slide shows the new unit, exhibited at the Russian pavilion of the Shanghai Expo in September 2010.

Our technology is indispensable in all kinds of emergencies, even the gravest, whether it’s an industrial or natural disaster – or any other situation endangering human lives.

It is significant that our devices can be used not only in hospitals but also in field conditions away from power sources, and even at the epicentre of a disaster. More than that, there are no foreign analogues that can  be used on babies. This slide shows Dr Valery Voinov of St Petersburg filtering an eight-month-old girl’s blood.

We think this project, launched in the late 1990s, is of tremendous social significance. There are about four million cardiovascular patients in Russia now, and more than a million of them die every year. In other words, this country is annually losing 1% of its population, which is shrinking as it is. These are startling, unsettling statistics.

Our devices and plasma filters cannot save millions of lives, but they can rescue tens and even hundreds of thousands, as practice has proved.

There is another unique project we intend to launch quite soon – the manufacture of dialysis units and kidney machines. We will build another research and production centre for it. We have a remarkable partner for the endeavour – Fresenius Medical Care, one of the world’s leading companies. The name of our joint venture is Frerus, abbreviated from “Fresenius for Russia.” It extends our team’s noble social mission, with many people suffering from kidney disease in Russia.

I would like to say in conclusion that it might appear from what I said that everything is just fine and that we have no problems at all. That would be the wrong impression. There are always problems involved in high-tech industries. You know this better than I do. Now, what assistance do we need from the state and the government?

Mr Putin, we are certainly doing business (you noticed this, or you wouldn’t have said that we will be making more money now). So, naturally, we want to step up production and make greater profits. Though we are active exporters, we are also domestic manufacturers. The benefits that our work brings Russians matter most to me, so I cherish the hope that ordinary Russian clinics and hospitals will possess our equipment. Thank you for your attention. I look forward to your support in this.

Vladimir Putin: Mr Kononov, I would like to clear up just one point. I have seen your slides. Is your equipment for people with blood diseases?

Vladimir Kononov: Yes, blood and its circulation.

Vladimir Putin: What are these diseases?

Vladimir Kononov: There are about 70 nosological forms – for example, atherosclerosis.

Vladimir Putin: But good old leeches are cheaper.

Vladimir Kononov: Using leeches for medicinal purposes is sheer shamanism…

Vladimir Putin: Now you are talking nonsense! A leech is a leech, and a shaman is a shaman… Using leeches costs much less.

Vladimir Kononov: No! No! That’s a completely archaic method.

Vladimir Putin: They say leeches excrete some substance into the blood, and so thin it.

Vladimir Kononov: I know that they suck blood. But then, possibly they also

excrete something as they suck…

Vladimir Putin: Yes, they first excrete, and suck only after that. That’s how they thin the blood. Mind you, leeches cost much less than…

Vladimir Kononov: Possibly. But when mushrooms are cultivated they need huge cellars to grow in. So now we’ll need also huge marshes to breed leeches…

Vladimir Putin: Why, I was just kidding! But, Mr Kononov, speaking seriously now – though I really mean it about leeches… We are talking a lot about the modernisation of healthcare. As I said in my address, 460 billion roubles are earmarked for it nationwide, and the Central Federal District is entitled to a great share of this money.

Almost all the regional governors are here. They have submitted their programmes for modernising healthcare to the Ministry of Healthcare and Social Development. We will call on them now to take notice of your research and specify the need of healthcare institutions in the Central Federal District and the whole country for what you are offering. Of course I will explain it to Health Minister Tatyana Golikova.

I think Rosnano has good reason to acquire a 48% share and credit the project. I am sure the project has been seriously appraised. You are doing a big job if Rosnano is involved. Your equipment must be in demand. I will surely say so to Ms Golikova, and I would like the regional governors also to pay close attention and consult with your experts in the Central Federal District. Moscow, the region around it and all of Central Russia employ the best professionals – or at least some of the best. Let us put it like that before anyone is offended. At any rate, there are people to get competent advice from. We should look into the matter.

Vladimir Kononov: Good, thank you.

Vladimir Putin: It is I who should thank you, Mr Kononov. I must say that we need more such research and development. It is our duty at least to guarantee you opportunities in the domestic market. We will work on this.

Vladimir Kononov: We really like Philips, Siemens and other foreign machinery – but enough is enough! We should buy Russian! Can’t we make good things, after all?

Vladimir Putin: I think you are right. We must team up with foreign companies, we must attract them and offer them favourable terms if we want them to cooperate – provide us with technology, above all. But then, we have our own R&D. Believe me, I saw our new medical and pharmaceutical equipment with my own eyes. You know, I travel a lot, and see a lot of people. So I can recognize when something is unique. To ensure that there is a place on the Russian market for your products is the least we can do. We’ll work on it.

Vladimir Kononov: Thank you for your support.

Igor Zorya: My name is Igor Zorya, I am a paediatrician and head physician of the Kursk regional children’s hospital.

Mr Putin, the Kursk Region received considerable grants for healthcare modernisation. Most of those funds were spent to upgrade equipment and renovate regional and specialised medical institutions. But the money should not have gone exclusively to central hospitals but also to ordinary clinics, which cater for a majority of patients. It is especially important for patients who come back to the primary healthcare network after treatment in federal and special hospitals. Not all of them can offer the treatments required. We should never forget ordinary outpatient clinics and district hospitals, which you have just spoken about.

We know that you monitor many issues that concern millions of Russians. Could you please tell us what should be done for funding to reach primary healthcare services, where the majority of patients receive treatment. Thank you.

Vladimir Putin: Mr Zorya, this programme is intended for the modernisation of primary healthcare institutions. That is why we have ceded decision-making on it to regional authorities, the governors and their advisors (they should also consult such experts as you) to draft a regional system and modernisation programme and submit it to the Ministry of Healthcare for approval. The Bryansk Region has received for two years… Exactly how much?

Remark: 3.27 billion [roubles].

Vladimir Putin: Yes, 3.27 billion for two years. It’s a large amount for the Bryansk Region, believe me. It should be spent carefully, which means that expenses should be prioritised correctly. When I met with colleagues working in agriculture, insistent requests were made to pay attention to healthcare in rural areas, particularly village health centres, clinics, etc. I asked the governors and the Ministry of Healthcare to bear this in mind. I can say it outright that I received a positive response. Rural healthcare grants have increased substantially.

However, decision-making in this field should be the responsibility of experts such as yourself and regional authorities. We are willing to support you when necessary. It is evident that this very level of healthcare is the best field for improvement. That’s why our grants are so generous – they aim to provide a smooth shift to medical insurance because there is no room for insurers in an utterly neglected, decaying industry. That is my first point.

Second, the regional healthcare system needs a new basis. That’s our goal.

Yekaterina Melyukova: Good afternoon, Mr Putin. My name is Yekaterina Melyukova. I am the head nurse at a first aid hospital in Vladimir. Our nurses’ salary is 4,300 roubles a month, with the subsistence level at 5,700 roubles. How can we make ends meet with such low salaries? Doctors work is very demanding but make no mistake, nurses work just as hard. They attend to patients daily needs, which requires more than medical care but also compassion and kindness. The psychological stress is tremendous. How can they do their jobs well with their miserable earnings? And now we can see that nurses are voting with their feet. They are leaving their jobs en masse. Our profession is in a crisis. The situation is this bad not only in healthcare but also in education and culture. What can be done about our salaries now? Thank you.

Vladimir Putin: Ms Melyukova, I can repeat what I said in my address. Just now, as I was discussing healthcare development with my colleagues, I said that we were planning to modernise healthcare. That is the first step in our drive to raise the salaries of healthcare personnel. The system will get new standards. I think medical professionals understand what I mean.

For the people not working in healthcare, I would like to explain that changing standards implies, for example, an increase in allocations for drugs. Prescriptions are made for every health problem. For instance, the flu is treated with such and such drugs. Their price certainly hikes up when they become a standard set for obligatory use. Some other diseases might require blood purification. It, too, will have a set price. The standards will also include healthcare workers’ remuneration. That’s the first way to increase their incomes, which the modernisation programme explicitly stipulates.

Second, as I said in my address, we will adjust the salaries of all public sector employees, with a 6.5% rise on June 1, and another rise in early autumn. That’s a promise.

And, finally, there is a third approach connected with changes in the operating principles of budget organisations. In this case, the heads of organisations would have the opportunity to optimise work and increase salaries.

But the focus remains on social healthcare modernisation programmes. Shall we continue?

Alexander Nikitin, Tambov Region, on the project “The Modern Agricultural University: from Science to Production.” Please, go ahead.

Alexander Nikitin: Mr Putin, conference members, I would like to tell you about cooperation between university science and agricultural production in the science city of Michurinsk, Tambov Region.

The goal of this project – and the goal of these relations in general – is to make healthy products and introduce them on the domestic market. I have in mind berries, vegetables, fruits, and the products we make from them, as well as healthy dietary products and baby food. The situation on these product markets is, to put it mildly, rather bad. For example, I can tell you that the apples we eat are Polish, Chinese, American… And you know quite well that they grow in gardens with such a high concentration of pesticides that even flies stay away.

Conversely, inhabitants of Russia’s only agricultural science city, Michurinsk and inhabitants of the Tambov Region have eaten Michurinsk apples and peas (and this is really one of Russia’s recognised agricultural brands). The situation on the vegetable market is also grave: over 60% of products are imported.

The question that comes to mind is: don’t we have our own vegetables? I can prove that we do, taking the example of Michurinsk. Michurinsk scientists have recently developed a new variety of pumpkin. This new variety has more natural sugar in it than melon. It is sweeter than melon. The positive dietary influence of this traditional Russian vegetable is obvious.

Vladimir Putin: Is it sucrose or fructose?

Alexander Nikitin: It is natural sugar, fructose.

I would like to draw your attention to another novelty: a new variety of cherry tomato has attracted the attention of the Institute of Nutrition at the Russian Academy of Medical Sciences and the Institute of Biomedical Problems at the Russian Academy of Sciences… These varieties have the highest amount of carotene and lycopene among any Russian or foreign varieties. This means that they decrease the risk of cancer, as you might have guessed. These results of artificial selection were used as the basis of the diet for our cosmonauts under the Mars-500 project. Seventeen new meal products were made on the basis of these varieties.

Vladimir Putin: At the ISS?

Alexander Nikitin: Yes.

Vladimir Putin: That means that foreigners also ate it. They ate our apples.

Alexander Nikitin: Yes.

Vladimir Putin: With fructose.

Alexander Nikitin: As for the new varieties of the black, white, and red current, they contain three times more vitamin C than a lemon.

Vladimir Putin: Yours is a rather mouth-watering speech. You should have brought some here.

Alexander Nikitin: Colleagues, I want to say that we developed this fresh vitamin production line. For example, the wild strawberry… now I'm arousing your senses.

Vladimir Putin: I see that.

Alexander Nikitin: We have created a fresh vitamin production line. People living in the Central Federal District (the Tambov Region, the Lipetsk Region, etc.) will be able to eat our raspberries and wild strawberries until late September. We could not even dream of such things before because of our climate and natural environment.

 Of course, this all is the result of cooperation between science and production. A new research institution is now being established under Michurinsk State Agricultural University to work together with the institutions of the Russian Academy of Agricultural Sciences. It is here, in Michurinsk, that new technology for intensive orchard production is being developed. This is our best resource, I think.

Our Michurinsk orchards have been bringing produce to market for two years already. Their yield is five times higher than the yield of ordinary orchards, but the recoupment is only half as much. It is thus pleasing that the creation of such orchards has become one of this year’s agricultural priorities in the federal budget.

I wish to say that this is the achievement of the innovation infrastructure established at the agricultural university. We have set up 20 small enterprises in recent years. All of them are research-oriented.

We have set up a technological transfer centre. However, the volume of production is unfortunately very small. In order to sell these healthy products across the country, we need to cooperate with the industry.

  The Tambov Region today has a project to set up an agricultural research and production facility which will become the basis for three new plants. One will be producing processed foods, such as vitamin-rich juices, jams, fruit mousses and vegetables in fruit sauce.

There is another project for an interested party to produce frozen foods. It goes without saying that foods that reach the consumer must be fresh, so storage issues are of key importance here.

It is also planned to build a plant to manufacture packaging materials based on polylactide, a biodegradable polymer. It takes this chemical 40 days to decompose to a non-toxic condition in the soil.

Today, in order to launch these plants, it is necessary to have extensive primary resources, and such resources are already being produced in the Tambov Region.

Since 2009, we have been establishing berry and bush plantations using the most advanced technology. And, of course, the personnel issue is also a top priority. I must say our training facilities have been preserved intact. With other regions interested in similar projects, we could train staff for them on a contract basis, too.

What is central to making these projects more effective, better and productive? In the first place, it is innovative higher education agriculture programmes. But today, although we produce limited amounts of pilot products, we do not get any tax exemptions. Our status is not that of an agricultural producer, and so we cannot take advantage of state support in its many forms. If we could, that would be great help indeed.

And my last point. These projects are not only economically efficient, but also socially beneficial. If they are included in a state programme of farm development (not only hothouse methods, but also the full range of products – fruit, berries and vegetables), and are granted loans at subsidised interest rates, their effect and their economic performance will be much better.

In conclusion, I would like to say that these projects should get special state support and attention because they are concerned with the health of the nation – the main ingredient of national security. Thank you.

Vladimir Putin: Mr Nikitin, all the things you mentioned are very important. But you must be aware that the state has been investing heavily in farming in the recent period. This year alone, we plan to allocate 250 billion roubles for this sector. Last year it was 150 billion. Each year, we subsidise interest rates and extend previous loans. And this extension requires additional money from the federal budget, because when you fail to pay off your loans on time, we must do it for you. We also subsidise leasing rates. Now we have decided to allocate an additional billion roubles for seeds and another billion for seed purchases. We have cut fuel and lubricant prices by 10% and not from today’s levels, but from the November 1, 2010 benchmark – that means, 30% to 37% down from the current levels in some regions. We propose to allocate a further five billion in support of farms that will not cut down their livestock numbers by this spring. Another decision concerns equipment sales from Rosagroleasing, at a 50% discount. There is a plethora of other measures and we can see that farming is indeed yielding real and tangible results. It is growing perhaps faster than any other branch in our economy.

In this context it is very important to know what research centres are doing. We were once very competent in this field and had good academic traditions. We may be lagging behind in some areas now, but we are absolutely competitive in certain ways. So what you said deserves every support. You said your educational establishment is growing into a practically new institution of learning – a federal research university. Is that right?

Alexander Nikitin: Yes, that is our objective. We are actively collaborating with the research system and incorporating secondary vocational colleges, with the focus on the research component. We strongly hope that if we obtain the status of a research university …

Vladimir Putin: But you haven’t got it yet, have you?

Alexander Nikitin: No, it has not been granted, but we have taken part in every contest and each time made a convincing case for our educational establishment.

Vladimir Putin: Alright then, we will look at your application once more. Do you fall under the Ministry of Agriculture or in general education?

Alexander Nikitin: The Ministry of Agriculture.

Vladimir Putin: Good, we’ll see to it.

Alexander Nikitin: Mr Putin, we also won a contest among Russian colleges and universities last year for a government grant to develop innovation infrastructure. It helped a great deal with the problems I just described.

Vladimir Putin: We will revisit the issue, agreed? Will you be making a new bid or will it be the old one?

Alexander Nikitin: No, we will be making a new bid.

Vladimir Putin: Good. We’ll see.

Alexander Nikitin: Thank you.

Vladimir Putin: This was one aspect. But apart from farm products you also spoke about a modern packaging material that is self-decomposing, which is of key importance for the environment. Our European colleagues value that very highly. The Italians are leading the field in that area, I think. You are probably better informed,  and can correct me if I am wrong. Our friend, Silvio Berlusconi, is not just interested in chasing girls, he also does business. The most stringent standards among European countries are in Italy – the country has lots of packaging material. And so will we. And unless we start the production in good time, we’ll be facing a real problem. It is already a major problem, and we can expect it to deteriorate. The course you are working in the right area.

Now concerning an issue that, I believe, is key for you. It concerns giving innovation-based educational institutions like yours the status of a farm producer to qualify for the benefits I just mentioned. I am referring to subsidised rates and lower costs for fertilisers, fuel and lubricants. Is that what you had in mind?

Alexander Nikitin: Yes, grants to compensate for costs, and such matters.

Vladimir Putin: You see, Mr Nikitin, the point is that you are a higher educational institution and seek a research status for it. If you get one, it will give you certain privileges as an innovation-oriented institution of learning. Such privileges will become available to you.

But the principal objective of educational institutions is to provide teaching services and do research, not to make profits by growing potatoes, apples and other products. Where do I see the danger? It lies in that you may switch over to direct production and give up research altogether.

But do you know what I thought? You said you were planning to build three plants. They would be production facilities  and legal entities in their own right. It seems to me we could find some way of extending the benefits to them as well, just as we do with research and high-tech enterprises set up by universities. As I said, there are 700 of them across the country, with 200 in the Central Federal District. That’s quite an army.

Economic Development Minister Nabiullina is sitting there, nodding. This means she agrees. Ms Nabiullina, have a think about that and submit your proposals. Clearly, colleges and universities cannot qualify for such benefits. It is logical: their job is to teach. But if they set up affiliate production units, why can’t these enjoy such benefits? This is a proposal worth considering. Could you calculate the costs and draft a proposal?

Elvira Nabiullina: I will.

Stanislav Obolentsev: Stanislav Obolentsev, general director of Agrotekhnologii, Smolensk. Mr Putin, you said in your speech that food security is one of the government’s priorities. But you only need to go into a food store to see that although there is a considerable amount of Russian-made meat and fish products, the share of imported fruits and vegetables, especially in winter, has grown from 60% (average level for the whole year) last year to as high as 80%.

Vladimir Putin: Yes, this is true.

Stanislav Obolentsev: Moreover, these products are mostly imported from the countries to which we sell energy, which they use for their greenhouses. My company builds and services greenhouses. Take Poland, to which we supply energy: it exports vegetables and other foods to us.

On the whole, this is a branch of agriculture that is not developing in Russia. The number of greenhouses has been decreasing since the 1990s, although there are objective conditions in Russia, such as energy resources, to make it one of the world’s leaders in this area.

There are several problems hindering this. You have outlined a solution for one of them during a meeting in Tambov; it implies fines for [excessive gas consumption]. Gas consumption in greenhouses depends on the weather, which we cannot predict.

Another problem, which is very important for us and which explains why the greenhouse sector is not developing in Russia, concerns connection to electricity grids.

You mentioned that the cost of infrastructure development should not shouldered by consumers and the people. But the greenhouse business is very energy consuming: it takes nearly 2 MW of electricity to heat one hectare of a modern vegetable hothouse. More precisely, we need 1.8 MW to ensure 15,000 to 18,000 lux per square meter.

This is why greenhouse companies cannot keep within the boundaries of electricity supply assigned to them, and the contracts we sign with energy suppliers are very expensive, sometimes they can be up to 60% to 70% of business worth. . These problems are resolved in other countries through long-term loans and other measures. How can this financial pressure on greenhouse companies be reduced?

Vladimir Putin: First, I think, as I’m sure you will agree, that building hothouses in Krasnodar [in south Russia] is much easier than in Krasnoyarsk [in east Siberia]. You must agree that there is a difference, and energy costs are different too. Of course, Russia is a northern country and hence the greenhouse business is more expensive here, especially in its northernmost regions. But this does not mean that it should not be developed. Where the problem is addressed reasonably, the business grows and is quite effective. Here is an example from the Northwestern Federal District. The Leningrad Region imported nearly 100% of flowers from abroad only recently, but now it grows almost everything it needs in the local hothouses.

As for connection to grids, I fully agree with you that, although we should also take the grid companies’ requirements into account, the problems of connecting users to the grids and of insufficient or excessive consumption of electricity and gas have not been addressed properly, which hinders business development. I have said at a recent meeting with farmers, and you have mentioned this too, that a decision has been made. Two days ago I signed a government resolution to change the procedure for payment for excessive or insufficient use of electricity.

The procedure has been changed. Small and medium-sized companies used to pay for the electricity they consumed at a higher rate than was approved for large companies, which consume about 4.5 kW a year. We have now decided to approve an average consumption figure, so that small and medium-sized companies, which consume 1.5 kW to 2 kW, will not be fined for excessive consumption or insufficient use of electricity.

Gazprom has made a different decision: it cancelled the penalty for 10% of excessive consumption and for 20% of insufficient consumption. But I think the corridor should be broadened; we will discuss this issue with Gazprom. Or we may convince it to cancel the fine for small and medium-sized companies. But first we should approve a criterion, which will also take into account the interests of the power industry. Do you agree that we need to comply with business discipline? Otherwise the power industry will have problems. Power generation is a complicated industry that needs help and attention, but extremities must be precluded.

We will certainly do it, and we will also consider other options, including non-tariff measures of regulating the food market and supporting domestic producers. We will certainly continue to subsidise our producers. European countries have much larger subsidies for their producers. We will gradually increase subsidies and will also use measures of non-tariff regulation. Our rivals [in Europe] also use them, and very effectively.

There are problems with retail chains. You know that we have held lengthy and fruitful debates before approving a law on trade and a decision to facilitate the access of our products to retail chains. We have made a decision stipulating payment for the supply of perishables within ten days. We have cancelled bonuses for stores’ supply managers. But if you see some other problems…

I hope I have answered at least part of your question. If you have more questions, please feel free to ask them. As I see it, all of us here are United Russia members. You can ask your questions through the party or through the governor. We will discuss all of them. Thank you.

Svetlana Orlova: Svetlana Orlova, member of the Federation Council. Mr Putin, projects are part of our development strategy. As the leading political force in the country, Untied Russia has assumed part of responsibility for the people, for the country, for our children and grandchildren. We are not afraid of discussing acute problems even when they are very unpleasant.

Strategy 2020 is a vital document. We have held 28 conferences in the regions to discuss it. People want to know what their lives will be like today and in eight years, how our industries and cities will develop, if the environmental will be comfortable, and if we will have domestically made products enriched with vitamin C.

You know, I think we have something to say to the liberals. We have overcome, or almost overcome the crisis, thanks to systemic measures, as you have said. Financial and legal provisions were approved to support these measures. The distribution of budget funds is a major problem, and the energy reform is also a challenge. But I wonder why only experts from the liberal wing have been selected for the commission we have established today? Let’s invite all Russians to contribute to discussions through United Russia. We have many experts who could participate. Is there competition or not? I think so. Let’s compete [as equals], and then start implementing the post-crisis development strategy through 2020 jointly with the liberals. Thank you.

Vladimir Putin: You know, it will be rather difficult to involve everyone in the commission’s work. There was a good example in our history, although from a different area, northwest Russia. I am referring to the “Novgorod veche”, a popular assembly in the Middle Ages, when people gathered in central square to discuss a problem. Solutions were found in a simple way: approval went to those who shouted louder.

But this method is unlikely to be effective now, although the expert group you mentioned comprises people holding different views. But if you think that several other experts should be added to the group, you can submit your proposals and the specified persons will be automatically included in the group. Have we agreed? Yes, let’s add a few more experts.

In general, opinions always differ, and this is as it should be. Our economic policy was largely based on the liberal views, although we have always adjusted them to reality, and I think we were right to do so.

Colleagues, you know that when production slumps during a crisis it is deemed right to freeze the growth of wages and social payments, or even to cut them in order to reduce budget spending. This is logical, because when production slumps, tax collection falls and budget revenues decrease dramatically. If we continue to honour all the obligations we assumed in the previous years, the budget deficit soars and we have to borrow funds. Where can we get the money we need? The economy doesn’t generate money, so there are no revenues while expenditures remain large. Where can we get the money? You have to borrow in the domestic or foreign markets, increasing the sovereign debt.

 If we start borrowing money on the domestic market, let’s say, if we get the money from the banks or from other lenders, the banks will be happy to oblige, the banks are always there to lend money to the government against various government securities, because it’s a safe loan. But when we remove liquidity from the domestic market, by the same token we remove liquidity from the real sector of the economy that also needs money to stay afloat during the crisis. But there’s no money left, the government took it all. That means we either have to turn on the printing press or borrow on the domestic market, where the interest rates go up during economic turmoil. The expenses are huge.­­ 

Therefore, all leading economists believe that social expenses should be cut during the crisis; there must be no pension or benefits indexations or pay rises. On the contrary, although it’s understandably hard to do, the authorities must assume the responsibility and say upfront that this is exactly what needs to be done.

This is the right thing to do if we follow the economic logic. However, we failed dismally in this respect and increased the pensions by 46%.  When I mentioned the figure 46% to my European colleagues whom I had known for many years, they nearly fell off their chairs. They just couldn’t believe it. I explain that people in Russia have smaller savings than in the West European countries. If we take a look at the accounts held by retired people in a Western bank, we’ll see that each one of them has at least 300, 400, or 500 euros. That’s not a lot, not for a person who had worked all his or her life, but everyone has some money for the rainy day, while the Russians don’t. Russia’s social sphere is different. Russians live from paycheck to paycheck, from pension to pension, they have just enough money to last till the next payday, and they don’t have any savings. This is the first point.

Secondly, we were building up our reserve funds with a specific purpose in mind. What was it? We have established a National Wealth Fund and, when the foreign trade situation was favorable and prices for Russia’s traditional export items were high, we deposited money into it to bolster Russia’s pension system.

We have established the Government Reserve Fund for a reason. The reason is that when prices eventually fall, we’d be in a position to keep the expenses at their current level and keep our promises to Russian people. That’s exactly what we did. That is why we had an opportunity to support the economy, finances, banks, real sector, and enterprises without having to cut our official obligations. However, we were able to do so only due to smart economic and financial policies of previous years. If it were not for these reserves, we would be going through rough times now. We would probably have to do what they did in Greece and cut all expenses or increase the retirement age. Would there be any other viable option? Getting into debt? I’ve already said how that usually ends. Certainly, no matter what they say, foreign debt is a straight path to the country’s eventual loss of its sovereignty. Russia is unlike any other country. We should always keep this in mind and never come close to this edge. Ever.

The liberals you’ve mentioned aren’t all alike. There are some who are not really liberals, just talkers; others are serious people with sound economic reasoning.  What is the difference between people in power and observers? We have responsibilities to the people, and they don’t. They build theories, occasionally say the right things, but their theories are hard to implement, sometimes even impossible. I’m also talking about the Russian mentality. Let’s admit it, most Russians expect the government to come out and support them. This is what reality in Russia is like. We can’t pretend that we live in a different country or just came from Mars.

Even if we realise that we should have done things a little bit differently, at times we still act contrary to the economic logic. However, I believe that it is extremely important that we managed to retain people’s trust in what we do. This is important; this is our basis for moving forward. When foreign trade and other factors are right, we make appropriate liberal decisions. However, there’s no way to accomplish anything without public support. That is why I address you again, all of you. This is the most important aspect in any political work. What matters is not to score big or be the first to cross the finish line, like in sports, what matters is that we keep people’s trust, and this is quite a delicate issue. Crude errors of judgment have no place in the economic policy, but we should still always strive to meet the expectations of the Russian people. We should keep moving ahead with our social sphere, sometimes making just tiny steps, one at a time, but we must do it and we will do it.

Let’s continue. Anna Grushevich, Russia’s Golden Ring Project.

Anna Grushevich: Mr Putin, colleagues, I represent the Yaroslavl Region, the international Golden Ring Resort. Russia’s Golden Ring is a popular tourist destination combining several cities and towns in northeastern Russia. As a matter of fact, it’s the first product of the Soviet tourist industry, which has retained its popularity and unique nature and still enjoys demand having a niche of its own among other Russian attractions. Over six million tourists travel this route every year. The cities included in the Golden Ring tell the story of all evolutionary stages of the Russian state, Russian culture, and Ancient Rus architecture from the white stone temples of the 12th century to outstanding architectural masterpieces of the 17th – 19th centuries. This is the place with the highest concentration of Russia’s historical landmarks: 22 monuments per 1,000 km2 as compared with only 4 per 1,000 km2 for the rest of Russia.

The Yaroslavl Region with its four Golden Ring towns is the Golden Ring’s main attraction and its historical center. One of these towns is Pereyaslavl-Zalessky, one of Russia’s oldest ones, a popular tourist destination you are all familiar with, which was founded by Yury Dolgoruky in 1152. It is the home town of St Alexander Nevsky and the birthplace of the Russian Navy. The city’s 134 cultural heritage monuments, unique tourist trails and the available hospitality infrastructure attract 300,000 tourists on an annual basis.­­

Just like other Golden Ring towns, Pereyaslavl-Zalessky has changed a great deal. All of these towns did their best to keep up with the tourists’ changing interests and needs. As you are probably aware, small private museums have sprung up in these towns in addition to existing architectural landmarks. These include the Museum of Myths and Superstitions in Uglich, the Museum of Mouse and Russian Felt Boots in Myshkino, the Music and Time Museum in Yaroslavl, as well as the Museum of Irons, the House of Legendary Tsar Berendei (a character from the Snow Maiden fairytale) and the Museum of Teapots in Pereyaslavl-Zalessky.  One may wonder what’s so special about a collection of old irons or teapots. The answer probably lies in the new interactive museum format where each visitor gets the chance to touch the cultural artifacts that are part of Russia’s historical legacy.

Indeed, we can see that the popularity of the Golden Ring with tourists keeps growing. But  tourist traffic is held back by aging  tourist and recreation infrastructure that dates back to the Soviet era.

The deteriorating road infrastructure, a shortage of much–needed budget hotels, parking lots and recreation  and entertainment facilities, and a poor price to quality ratio – all these problems are typical of towns in the Golden Ring.

A lot is being done now to improve the situation. Work is underway to build new hotels (large and small), catering facilities and museums; many of the cultural heritage sites are being restored, including, significantly, with money from private investors. But this is just the beginning.

One way to improve the Golden Ring’s tourist infrastructure is by creating multifunctional tourist complexes that would offer a whole range of services while also addressing the problem of seasonality in Russian tourism.

Our project of a world-class resort 10 kilometers from Pereslavl Zalessky is aimed at creating an atmosphere of truly Russian hospitality, and we hope it will change the spectrum and the quality of services for local and foreign tourists. The resort will be built on an area of 200 hectares. Its hotel facilities will have a total capacity of 1,800 rooms to accommodate 3,900 guests. Total investments at the current stage amount to 12 billion roubles.

The construction of such a resort is of great socio-economic importance not just for the Yaroslavl Region, but for the entire Golden Ring area as well. Small and medium-sized businesses are becoming more proactive in tourism and the associated sectors, including in culture, sports, and in arts and crafts. According to preliminary estimates, 5,000 new jobs will be created in local tourism-related industries. This will raise the quality of life in the area and reduce migration among young people, who will have more career opportunities at home.

Also, people living in Moscow will have a place nearby to get away to for high-quality, yet affordable holidaymaking. Here they could recharge their batteries, benefiting both from the area’s clean natural environment and its rich cultural landscape. Such a resort will boost the development of cultural tourism in the Golden Ring area. It could become a popular destination for family and business trips and a venue of various national and international events, including ones to be staged as part of the 2018 FIFA World Cup.

State support for this project and its inclusion into the federal targeted programme on tourism for 2011-2016 will ensure that this project is successfully carried out, encouraging the development of the surrounding areas and further promoting  the Golden Ring as a tourist destination.

The federal programme has been outlined and all agencies concerned have approved it in principle. But it still needs to be coordinated with the Economic Development Ministry. All of the areas comprising the Golden Ring are eagerly awaiting this programme. And it has been drafted with careful consideration of the interests of each. Hopefully, it will be adopted before long.

I personally live in the Golden Ring area. I was born here, and I live here now with my family and friends. My work’s in the Golden Ring, and I have no plans to leave. I love the area and feel proud of its heritage. In my view, investing in the promotion of the Golden Ring as a Russian cultural brand is tantamount to investing in the nation’s future.

Vladimir Putin: Of course, the Golden Ring is a world-famous Russian brand, which rings a bell for many. It’s highly popular with Russian and foreign tourists alike.

But why do you call your project a ‘resort,’ Ms Grushevich? This term is normally associated with health, right? In the Caucasus, for example, we’ve got spa resorts where people come for treatment and rehabilitation. But your Golden Ring ‘resort’ is quite another story, is it not?

Anna Grushevich:  It’s about a multifunctional tourism complex located near a national park outside Pereslavl Zalessky. Beside the park is Lake Pleshcheyevo, one of central Russia’s largest and cleanest lakes. Why do we refer to our project as a resort? The reason is its versatile nature, with opportunities to develop many different types of tourism, including health tourism.

Vladimir Putin: I see. Well, Vitaly Mutko brings this up all the time during cabinet meetings. And he tries to prove the necessity of adopting the programme that you just mentioned.

Let me make this clear. Initially, this was a serious programme with large-scale investment. But in 2009-2010 we had to cut down on the number of areas covered. This arose from the need to meet the investment targets we had originally set for 2009 and 2010. At the same time, we had to divert some of the money to solve problems brought about by the crisis. We had to tackle unemployment, a decline in production, and a host of problems that surfaced in single-industry towns. We also had economic sectors to bail out, notably the auto industry.

With only one-sixth of the original funding left, the programme became impractical. Which is not to say that we don’t need it. It’s about our cultural heritage as well as about business, and it could help us to instill patriotism in our people, among other things.

We’re already running similar programmes in some regions of Russia; they have proved to be effective in Siberia and the Pacific Coast. The Central Federal District, too, should benefit. So, we’ll get back to this by all means and see what we can do.

Anna Grushevich: Thanks.

Lidia Likholit: Good afternoon, Mr Prime Minister. My name is Lidia Likholit, I am the head of the social security directorate of Moscow’s Yakimanka district.

I like to travel around Russia’s Golden Ring with my family, and I usually take my son with me so that he learns about Russia’s historical legacy. We have already been to Rostov, Suzdal, Pereyaslavl-Zalessky and other towns. However, hotel and camping rates are much too high, and the price does not reflect the quality. I’d like to know which measures will be taken to improve the situation in family tourism.

Vladimir Putin: Our colleague has just made a very good point. Clearly, prices are formed based on the relationship between demand and supply. A price is fair if demand matches supply. If not, the system is distorted. How can the state help in this situation? Well, it can help by implementing its tourism programmes, developing infrastructure, creating good conditions for businesses, giving them an opportunity to reduce their costs if they build hotels, provide various services, set up cafes and other catering facilities where service is good and prices are low. To this end, businesses need to invest in infrastructure, but they don’t always have enough funds for this. This is the aim of the federal targeted programme for domestic tourism. We will return to this issue later, because it pertains to roads, heat and gas supplies, security and healthcare. There are many areas where the state could invest, but this can place a large burden on the budget. Nevertheless, we will allocate funds, I don’t know yet how much but we will certainly provide them.

Mikhail Kiselyov: Hello, I am the director of Kalashnikov River College, the branch of Moscow State Academy of Water Transport in Rybinsk, Yaroslavl Region. This year our college will celebrate its 135th anniversary. Yury Andropov studied here.

Mr Putin, I live in Rybinsk, seated on the banks of the great Russian river, Volga. The river fleet gave me everything – a profession, a job and confidence in the future. But this fleet is becoming old and redundant in front of my very eyes. It’s already fourty years now that we don’t build river ships. Former Communist countries, such as Czechoslovakia, Romania and East Germany, used to build ships for us, but they don’t any longer, and we don’t build ships for our fleet either. What future are our graduates facing? We produce high-class specialists, but they can find  jobs only outside Russia. They are patriots of Russia and want to operate new ships. They are eager to fulfil any tasks and do their best to strengthen the economy. Our graduate Batunov was awarded the Order of Courage in August. I am confident that our graduates will perform any job very well.

Mr Putin, I’d like to hear from you how you see the future of the river fleet. Will it receive support? What plans do you have for it? The problem is that not only ships are becoming obsolete but also the infrastructure, including moorings, quay walls, docks and waterworks. Shipyard facilities are becoming dilapidated since they are standing idle. Naturally, the technical fleet, which escorts ships… I will return to my hometown today, and my students are certain to ask what you replied to me and if you gave me confidence in the future.

We pin our hopes on you, Mr Putin. We want to believe that our students will find a job in this industry. Since the issue of tourism has just been raised, I’d like to note that we also have to transport foreign tourists across the Golden Ring aboard modern ships in order to raise the industry’s revenues. Thank you.

Vladimir Putin: It’s not a simple question. You know why?

 You said that “in the Soviet times, we got river vessels from the German Democratic Republic, Czechoslovakia, etc.” Not because we could not build them ourselves, but because we divided functions within the Council for Mutual Economic Assistance: they were in charge of this function while the Soviet Union hardly built any river vessels. Similarly, we turned over a large part of the shipbuilding industry to Finland. By the way, when we stopped ordering ships from Finland after the breakup of the Soviet Union, it experienced a systemic crisis in the shipbuilding industry. But we are the world’s biggest country, and rivers play a major role as transport routes. Rivers helped to establish Kievan Rus. According to our most prominent historians, such rivers as the Volkhov and the Neva made a major contribution to the growth of the Russian state. Rivers were important transport routes, so people built settlements along their banks. This is true, and I agree with the theory that rivers played the greatest role in the establishment of a centralised Russian state.

Today rivers continue to play a great role in the country’s economy. There are many urgent challenges in this area, including property issues. There are disputes, as you may have heard, between different economic entities and owners. Unfortunately, the state invested little in the maintenance of hydropower facilities, did not help to deepen riverbeds, etc, so today navigation problems occur on many rivers, even on the Volga River. However, the transport development programme until 2030 and the shipbuilding programme allocate the necessary resources to revive the national shipbuilding, reconstruct hydropower facilities, deepen riverbeds, etc. We have started investing this money to achieve the goals you named.

Of course, we can’t do it in a single step because we have lost whatever expertise we had in the past. But there is no doubt that we will revive the Russian shipbuilding industry, including river shipbuilding. As a specialist, you must know how popular river transportation is, for example to transport oil, oil products, metals, building materials and agricultural products. They are very popular. The country cannot exist without river transport, so there is good potential for development.

Let’s go on? Maxim Shereikin, coordinator of the project Innovation in the Kaluga Region. Go ahead, please.

Maxim Shereikin: Mr Putin, after what you said about the Kaluga Region, the audience is probably expecting me to reveal the secret of Kaluga Region’s great success in attracting large industrial investors. The focus of our project is to build an innovation economy and supporting innovation project. This issue is very important for the Kaluga Region today; it is a new step after industrialisation.

As for our secret, it is not just the fact that every investor has the Governor’s mobile phone number. First of all, it is the system we created and a team of professionals that each day addresses the investors’ needs and resolves their issues, helping to implement investment projects. Where else can an investor build a plant in under a year? On the basis of this industrialisation experience, the Kaluga Region government initiated and financed a project to establish a similar system for innovation companies, as large industrial investors and innovators and researchers are two completely different target audiences with different needs. Their needs must also be met.

When we discussed the necessity to improve production and the uncertain need for some abstract innovations, proposing to modernise the existing enterprises instead, in the backrooms at the forum, I cited the example of the Apple iPod music player. In 2007, it cost $299, and the Chinese manufacturer got only $4 for them. The rest went for research, development and marketing. We can see a similar situation in the Kaluga Region. In ten years, the physical volume of production grew 300% due to import of technology, but the volume of the gross regional product grew only 100%, i.e. the income of the population, of the budget, of businesses themselves from imported technology grew less than the volume of production. Of course, we do not want to be like China. We want to make money by selling Russian technology and intellectual property. This is why we developed a project whose aim is to encourage innovation business in the Kaluga Region.

I often hear people ask where we are going to get these innovations. There are many ideas and ways of supporting them around the country and in different regions. Venture capitalists have money to invest in projects, but they will tell you that there are few finished, promising, challenging projects 100% ready for financing.

Our objective is to tackle this problem, at least in our region, by organising an R&D process that could lead to a finished product with the help of the state, through various measures of government support. How does this process work? Through subsidies, grants, education, venture financing, allocating benefit space and equipment in the technology park that we are now building in the Kaluga Region. The first large business incubator (7,500 square metres) will open in 2012.

The most important aspect is not fixed infrastructure or equipment; it is projects themselves and a flexible infrastructure to support them. This is why, after having made some mistakes at the first stage of supporting innovation projects and having felt a shortage of projects, we have established the Innovation Development Agency, not as a state agency but as an open joint-stock company, so that it can work on the market and respond to the innovators’ needs. The main goal of this agency is to find projects, put in support mechanisms for each project using existing resources and become a partner in the implementation of these projects. This is not an intermediary between the innovator and the venture investor, but a partner that helps them reach agreement.

This problem is common around the world. It is no accident that the process of turning research findings into finished products is called “the death valley” in many countries, not only in Russia. It is not the result of a business-friendly environment, but the aspect of the innovation technology business. This is not just our view of the possible ways of developing business: we already have certain projects. For example, we have a technology partner, the Medbiofarm company. It builds a similar infrastructure to commercialise projects on the basis of our technology park in Obninsk. Commercialisation in the pharmaceutical industry goes through the following stages: research, preclinical studies, registration of substances, clinical studies – all this takes from five to ten years.

The company is basically called on to establish the required infrastructure and a team of professionals, which is already working to collect the so-called active molecules, future substances and medications from research institutes. The company’s portfolio currently contains research on 14 molecules. They are assuring us that two of those molecules are in a high stage of commercialisation. They are negotiating the sale of this intellectual property at this stage, even pending clinical tests, and they plan to earn about a billion roubles from each molecule. This is what intellectual business is all about.

Vladimir Putin: Yes, I’ve seen these R&D projects.

Maxim Shereikin: They include cyto-protectors for treating malignant tumours, the development of a less toxic new generation anti-virus drug, and cardio-markers for early cardiac infarction diagnosis. In effect, this is what we should promote along this conveyor, so that these products could be used to help the people.

In reality, everything is going well. The region’s governor is tackling many problems. But, as you understand, the establishment of a special innovation technology economic zone is the logical end of creating this conveyor. Consequently, we would be able to take these innovations from the technology park and the business incubator after venture funding and transfer them to the respective special economic zone. This way we would not waste them in our industry park, which has major engineering production facilities.

I think what has helped us today can be… We are currently co-financing the high-tech technology park together with the Ministry of Communications and Mass Media on a parity basis. We have involved a private investor in the construction of the engineering infrastructure, including a gas turbine thermal power station, at our technology park.

In our opinion, it would be fair if such private investment was included in regional financing obligations. We don’t necessarily have to waste budgetary allocations and regional allocations in order to fulfill co-financing obligations. If we find a private investor, then we can save our budgetary allocations and invest them in new innovation projects. On the whole, the project’s objective is to make a profit from intellectual property and intellectual business. In that case, we would have entirely different wages and salaries, as well as entirely different regional budgets. I hope we will implement this project in the Kaluga Region and will also expand it to the entire Central Federal District because every region can establish its innovation development territory similar to Obninsk in the Kaluga Region. Thank you.

Vladimir Putin: First, I would like to tell you that all this is very interesting and in high demand. Indeed, this is not some kind of primitive intermediary work. This implies intellectual involvement in production organisation. This is very interesting and important – a modern way of supporting and promoting intellectual products and innovations. This is my first general and positive impression. And now we’ll find out whether such projects can evolve into special economic zones. Ms Nabiullina has the floor. Please, give the microphone to the Minister of Economic Development.

Elvira Nabiullina: The governor and I have already started discussing the prospect of establishing special economic innovation technology zones on the basis of such projects. I completely support this. As long as the system of tenders exists, this country has four innovation technology zones so far, selected during tenders. But, in my opinion, we could do this where the regions have already made headway and have established a management company.

And now the second question raised by our colleague, if I may. He wants to know whether private investment can be included in place of regional obligations.

Vladimir Putin: I don’t know what you are about to say but can I say what I think? Everything can be included. But is this necessary? This is private investment, you know. What have we agreed on with the regions? We invest 50%, and the rest comes from the regional budget. If we burden private investors with financing infrastructure, they would channel less into the project’s essence.

Elvira Nabiullina: On the whole, I would like to say that this is not limited to technology parks alone. Technology parks were listed among regional areas of responsibility, and the Ministry of Telecommunications and Mass Media should take a look at this aspect. As I see it, new dialogues and a new stage in the development of economic zones and technology parks should stipulate the involvement of private companies that would provide investment and finance the infrastructure. This is becoming a business with more cost-effective management. And many projects that today …

Vladimir Putin: Do you see how democratic our government is? I have spoken my mind, and the Minister replies that she thinks otherwise. But this makes things easier for the regions. Considering the fact that we subsidise a considerable number of regional budgets, this takes the burden off the federal budget as well. In my opinion, it would be better to channel private investment into the essence of the project. Although if the Ministry agrees with you, we can liberalise this.

Elvira Nabiullina: Mr Putin, this is not a burden on private investors financing the projects. This is a special category of investors financing the infrastructure and possibly profiting from this. Numerous projects presented at the exhibition here today, numerous technology parks and industrial parks being established by the regions and supported by United Russia are based on this new principle. I think we should reassess our approach.

Vladimir Putin: In that case, we must see how the regional budget funds  investment projects.

Elvira Nabiullina: In addition, we will cut back on federal spending and shift part of the burden on the regional budget.

Vladimir Putin: You see, this is the right approach. We should assess the regional budget’s investment projects. The regional budget must also invest in projects. This is not because allocations have to be squeezed out of the regional budget no matter what. You see, investors treat any specific project in a more frugal manner. 

Remark: A final comment, Mr Putin, about one of our secrets in the Kaluga Region. Originally, we had invested 1.5 billion roubles in the industrial park infrastructure, but then we realised that it was a mistake and abandoned the idea. Instead, we set up a private company, the Kaluga Region Development Corporation, and borrowed funds from Vnesheconombank. In other words, we substituted budget financing for private financing. Of course, Vnesheconombank is a state bank, but it is still a business model.  

Vladimir Putin: Since the Economic Development Minister supports you, I second this position, as well. Good for you.

Remark: Thank you.

Marina Troitskaya: Marina Troitskaya, Nordtex Corporation, Ivanovo Region. Mr Putin, we are also creating a technology park based in the single industry town of Rodniki. We have our own substation, a consultancy that provides assistance with all business registration issues, and investors have been given a green light in the town. Currently, there are already six resident companies in the park, and five more are preparing to launch operations. For a single industry town like Rodniki with population of 27,500, this means additional jobs not only in textiles, but also in other industries.      

But we have a problem. We want to develop and expand, but there is not enough land. The neighbouring state company Svetoch owns 300 hectares of land, which it is not using due to economic difficulties. We can and are very keen on using this land. We have already spoken with Minister of Economic Development Elvira Nabiullina at the exhibition, and want to also request that you instruct the Federal Agency for State Property Management to transfer these lands to the region. Thank you.  

Vladimir Putin: Ms Nabiullina, please look into this. I understand you have a successful project and would like to build something on this land, is that right?

Marina Troitskaya: We have ambitious plans of attracting large Russian and foreign investors. Currently, we have 79 hectares of land with 25% of the production facilities in use. We are currently in talks and have a great need for more land to expand and attract new investors.

Vladimir Putin: Under which ministry is Svetoch? What field does it work in?

Marina Troitskaya: These are agricultural lands. 

Vladimir Putin: Agricultural lands?

Marina Troitskaya: That’s right.

Vladimir Putin: And you would like to build an industrial facility there?

Marina Troitskaya: Yes.

Vladimir Putin: This means the land use category will also need to be changed? Plus, if I am not mistaken, there is also some ongoing commercial litigation, correct?

Marina Troitskaya: I can’t say for certain, but I think that is correct.

Vladimir Putin: Yes, there is an ongoing litigation over these lands involving the company. Let’s return to this issue once there is a court decision. The project needs to be evaluated. Ms Nabiullina, please coordinate this and help the colleagues with this. The Agriculture Ministry should also be consulted as to the efficiency of using the land for agricultural purposes before the final decision is made. If the project is promising, it should definitely be supported.

Marina Troitskaya: Thank you.

Vladimir Putin: Let’s move on. Mr Gorelov, please. The Tver paint and varnish plant, New Russian Plants project.

Alexander Gorelov: Mr Putin, colleagues, I am very happy to have the honour of presenting our project at today’s meeting, all the more so as we put all our energy and souls in this project. We started in 1993 as a small paint selection laboratory employing just 3 people. By 2001 we became market leaders in auto repair painting materials in Russia. Unfortunately, the painting materials have always been imported. In 2008, we launched the construction of the Tver paint and varnish plant. One may ask why. The company was steadily growing, and by and large things were going well. 

First of all, the idea of import substitution has always been right on the surface. Secondly, my partner and I have always been interested not just in making money, but also creating a substantive and large-scale project. And I believe building this plant from scratch was really an interesting and extensive project. In addition, I believe any Russian would be happy to contribute to the innovative development of his country.

Why did we choose Tver for our project? First, logistically it is an ideal location for our business. Second, there is a good situation with the workforce. And the third important factor is the favourable investment climate in the region.

These images show the progress of our project. In 2008, we launched the construction, the framework was built in 2009, and at the end of last year we fully completed the construction and landscaping work. Currently, we are finishing the equipment installation and preparing to launch the plant.      

I will not go into the technical details of the project but I would like to note that we invested over 1 billion roubles in it and continue spending on the equipment. The plant will employ up to 250 people.

As of this February, the average salary at the plant is 33,000 roubles. I would like to underscore that this average rate is not achieved due to extremely high managerial salaries. It is a real average wage, as the minimum salary at the plant is 20,000 roubles. This means that there are no employees at the plant with a salary of under 20,000 roubles per month, including workers, yard cleaners and janitors.

The basic principles we were guided by when creating the project were the environment, safety and creating our own research base. We have already set up a well-equipped research laboratory, which controls the quality of raw materials and finished products, and works on developing new products.

We have also established an educational centre at the plant, where we train painters and our clients to properly use our materials and comply with the technology. The centre also conducts regular professional training courses for our employees. This is what our plant looks like. We tried to create a comfortable work environment for our employees. This is the plant canteen for the employees.

In conclusion, I would also like to mention some problems we have encountered with customs regulations. Today, we are facing a strange situation when the customs duty on raw materials for our products is 10%, while the duty on importing finished paint is 5%. This inconsistency clearly hinders the development of paint production in Russia. It is cheaper to import, which is exactly what we have been doing for 17 years. But we want to finally start producing paints in Russia. Thank you and I will be glad to answer your questions.

Vladimir Putin: What raw materials you are referring to, Mr Gorelov?

Alexander Gorelov: Above all it is the acrylic resin.

Vladimir Putin: Acrylic resin… Because you have a 0% and 5% duty on other components.

Alexander Gorelov: Mostly it’s 5%. But the major problem is the acrylic resin – 10%, and isocyanates, which is 7%.

Vladimir Putin: Who are your consumers here?

Alexander Gorelov: The consumers are mainly car service stations that repair cars. These centres are of various classes, but they are mainly large service centres, the official dealers of famous brands such as Mercedes, BMW, Toyota, and so on.

Vladimir Putin: Are car plants among your clients?

Alexander Gorelov:  Not yet, but we'll talk, we will try to discuss it with them.

Vladimir Putin: Basically, do you provide the same quality as Western producers?  

Alexander Gorelov: Absolutely. It’s Western technology, from Germany, and all the raw materials are imported.

Vladimir Putin: I think they will buy from you considering the new local assembly requirements. That is one way for them to meet their commitments to us. If 60% of the components are local, they will have to foot 60% of the total cost of the end products of Russian-produced goods on the domestic market. If you are producing it anyway, of course, your products will be bought. That situation should be rectified. Look into what is happening there. Why 10%? Somebody must have lobbied the 10% at some point.

Alexander Gorelov: I think it’s an oversight. Nobody has raised the issue.

Vladimir Putin: No, I don’t think it’s a case of oversight. On the contrary, somebody had a very sharp eye. Elvira Nabiullina, please.

Elvira Nabiullina: Let me comment. Usually, of course, we apply the escalation principle. That’s when the import duties on finished products are higher than on raw materials. But the principle may change depending on how our domestic production develops. As for raw materials, the local content is 50%, but as for car paints, they are imported.  Lately, however, our own production of raw materials for paints has been growing; it's now at 20%, and for some types, 80% is locally produced. So, you have to look at the kind of raw material you need, and if it is available locally, then we should support our domestic production assuming that it's competitive. You have to know the exact type of raw material you need. Incidentally, as regards finished products, such as car paint, I would like to say that in addition to 5% local paints, we have paints that are 15% local – for example, acryl polymer paints. Perhaps your products are covered by this protection.  

Vladimir Putin:  Do we produce the components that you need locally?

Alexander Gorelov: Unfortunately we don’t. That’s the problem, we have to import all the raw materials because they are not produced in Russia.

Elvira Nabiullina: Then we must look at specific kinds of raw materials.

Vladimir Putin: This needs to be done as quickly as possible.

Alexander Gorelov: I must add that this is not a problem that concerns only my enterprise. It’s a problem for the whole industry. For example, the well-known Russian Paints factory in Yaroslavl…

Vladimir Putin: The preservation of the 10% rate can only be justified by fiscal considerations. But I do not see any fiscal connection here.

Elvira Nabiullina: There is no fiscal connection. It’s just to protect domestic producers, if there are any.

Vladimir Putin: One just has to check it. If the gentleman says there are no such producers in Russia, we should minimise the rate and push it down to 5%, 2%, or even 0%.

Elvira Nabiullina: If there is no producer it had better be 0% of course.

Vladimir Putin: Of course it should be nullified, and that’s that.

Elvira Nabiullina: Very well.

Vladimir Putin: We’ll check up on it of course.

Alexander Gorelov: We would be glad to work with a Russian producer – it’s cheaper and more convenient.

Vladimir Putin: You can rest assured. Those who fixed that rate will check everything and bring it to us, and we shall see. Okay?

Alexander Gorelov: Thank you.

Lyudmila Kotik: I am Chief Paediatrician of the Tula Region, Merited Physician.

Mr Putin, like all those present I am glad that our country is developing its own European-level environmental standards. But such enterprises are few and far between. Most enterprises are building up their capacity and are oblivious of environmental safety. The harmful emissions pollute the air and are accumulated in the top soil; they have a harmful effect, especially on children and infants. I receive children who have respiratory problems eight or ten times a year. One in every three or four children has skin diseases. Cancer strikes younger and younger people. My heart bleeds every time I see these mothers and children because it creates problems at work, what with sick leave and so on.

I would like to ask you whether tougher fines will be imposed on the enterprises that violate environmental standards. Because with the fines as they are today, managers would rather pay a fine than do something real. Thank you.

Vladimir Putin: That is a very important issue, one of the key issues for the economy and for people today. Production volumes are growing, and we are seeking to increase our gross domestic product, boost our economy, and increase real production. Of course production should expand on the basis of modern technology in order to minimise the burden on the environment. We present such demands to all new enterprises. It is not for nothing that we have signed the Kyoto Protocol and assumed rigid obligations. That should stimulate the expanding enterprises to pay more attention and invest in more modern and environment-friendly equipment. I would like, however, to take issue with you and say that not all growth, as you claim, creates “dirty” enterprises. Even such complicated and environmentally taxing sectors as metallurgy and the coal industry use new technologies more and more. I know it for a fact. I know the exact amounts of investments. Look at the Magnitogorsk Plant – look at what it was like eight or ten years ago and what it is like today. A totally different situation. I went there ten years ago and the snow was black there (I came there in winter). Now the situation is different. Not perhaps so much in the coal industry, but even there, investments are increasing. Government sanctions will undoubtedly be toughened. True, we must strike a balance and bear in mind environmental concerns and, above all, people’s health. But we should not shut everything down and deprive people of their jobs and so on.

Yury Trutnev here is better qualified to give you the lay of the land. Yury Trutnev, the Ecology Minister.

Yury Trutnev: First of all, I have to say that as industrial output in the country increases, air and water pollution decreases. Nevertheless we understand that the environmental legislation is obsolete and needs to be improved. The government has prepared a full array of documents, and we are switching to new principles based on the best available technologies. These are the standards used in the European Union, and we are ready, after final approvals, to submit these documents to the government within a month.

Vladimir Putin: Tell us more about them for the benefit of our colleagues. What will these standards be like? What will be the result, and what is the rationale of adopting that document?

Yury Trutnev: Several things. First, we are introducing a system of economic incentives. The enterprises that modernise production or build new facilities in line with the best existing technologies – i.e., those causing the least environmental damage – will enjoy various benefits.

Conversely, those who fail to switch to new standards before 2016 under a deferred scheme will face heavy fines.

And lastly, we are not only thinking about the future but we remember the past. Beginning this year, in accordance with your instructions, we will start cleaning Russia up. We are beginning to eliminate accumulated environmental damage. Thank you.

Vladimir Putin: Natalya Afonina, of the Kovany Stil trading house.

Natalya Afonina (Oryol Region): Thank you very much. We are among the few representatives of small business here. But we have ambitious plans. Kovany Stil is a company that seeks to build up a federal network for the sale of wrought-iron goods on the basis of our production facilities in every region where we are present.

What do we want to do in order to achieve our goal? Of course, we want to identify what sort of product we want to offer our clients, and we want to try out technologies at our pilot office – in particular, technologies related to production, quality standards, and client service – and we want to formulate these standards and technologies and use them at our offices all over Russia.

Of course, creating a federal production network is a challenge. There has been no precedent for it in our sector, in our market. If we do it, then we will be the forerunners.

Let’s begin from the very beginning – that is, the product that will form the basis of our business. The blacksmith’s trade is many years old. From ancient times blacksmiths have shaped metal by heating and moulding it. Even modern blacksmiths mainly rely on manual labour. The objects they make are of course beautiful and custom-made, but they take a very long time to produce and the cost of such an article is very high. Very few people can afford them.

We use a different production method. We use factory-made forged elements. In effect we use casting, shaping metal with machines without heating it; this so-called cold forging has long been used in the world.

What’s in it for the end user? First, high quality and standardisation. But our goods are customised for every client. What's the result? Custom-made products combined with serial production. This is much faster and much more affordable for the client. In this way, we expand the market, make wrought iron goods accessible, and at the same time can cater to the needs of high-end clients.

What is the resource base of our project? Of course, the suppliers of these forged blanks. But that is not the main thing. What we do is important, but how we do it and who we are is also important. The project is called Promoting Youth Entrepreneurship. I am 24 years old. I started organising the project eighteen months ago as soon as I finished university. The average age of my employees is 23, that is, we are working with young people. We hire and accept interns among college seniors and recent graduates. Even the manual workers are under 30.

Vladimir Putin: Natasha, your business is blacksmithing?

Natalya Afonina: Yes, we do assembly work.

Vladimir Putin: You are a blacksmith, right?

Natalya Afonina: No, I am not a blacksmith, I am a manager.

Vladimir Putin: Well, anyway.

Natalya Afonina: I suppose you could say that.

Vladimir Putin: You see how modern technologies have changed what a blacksmith looks like?

Natalya Afonina: Thank you.

Vladimir Putin: Our idea of a blacksmith is a brawny man with huge hands and a hammer. Look at what modern technology has done.  

Natalya Afonina: What point would I like to get across? We already have a presence in the regions, and we are already building a network. The guys who set up shop in Yaroslavl, Ulyanovsk, Ivanovo, and Kursk are also young people, and we recruited them a year and a half or two years ago at the Seliger forum. They warmed to our idea, and today they use our technology to run a profitable business. We would like to demonstrate that starting from scratch is not as difficult as it once seemed. We have recourse to state support, and we do not mind saying so. The guys in Ulyanovsk, Yaroslavl, and Kursk got grants in the amount of 300,000 roubles, which they won for their business plans. State support has been actively developing in Oryol recently. Those who received 300,000-rouble grants last winter now got three easy-term loans.

Vladimir Putin: By way of support for small and medium-sized business?

Natalya Afonina: Yes, as part of support measures for small and medium-sized business. That is the case. We are involved in the universal consulting centre programme and send our people for retraining. They are yesterday’s students, who are now willing to learn and acquire skills.

Vladimir Putin: You must have gotten 300,000 roubles through connections because that is the upper limit.

Natalya Afonina: Not through connections.

Vladimir Putin: 100,000, 150,000, and 300,000. But that is the maximum.

Natalya Afonina: My word of honour. I can say for myself that we did not do any lobbying. I spent a week writing up the business plan myself. I can say honestly that we won this grant, we defended our rights and our positions…

Vladimir Putin: And you won.

Natalya Afonina: We won the grant. Now about the long-term vision of our business. We see it as a far-flung network. That’s 30-50 offices, most of which are independent in the regions. Why did we decide to build a network? Of course one reason is a powerful brand, the recognition factor, and customer confidence – we talk about all that frequently. But at the same time, there is one more profound idea: by having a network, we can split the considerable cost – advertising, logistics, software development – among many branches. In this way, we relieve the end user of these costs. If there is only one company, it has to include the whole cost of production in the price of the end product. We practically split the cost so that the cost per unit is small. That is the great plus of having a network. In the next slide you will see our innovative approach to this business. We want our art objects to make the customer sit up and take notice. This table here, we took it to Seliger this year where it was unanimously named the most interesting piece of art. It is three metres tall. At the same time, we try to reduce costs to keep our ornamental metalwork products affordable while maintaining its high quality. We have achieved most of our goals: we have created the product as well as standards, approved these standards and opened six regional offices, in Yaroslavl, Ivanovo, Ulyanovsk, two offices in Orel and one in Livny.

We are currently in the intensive network development phase. We are in talks with many regions – with Kursk, Lipetsk and even Yekaterinburg. We have made a lot of interesting and useful contacts at this conference, which we greatly appreciate because we met a lot of active people here. These are not necessarily young people; but these people became interested in what we do and decided to work with us. This is wonderful.

In the long run, we plan to expand our project to two other areas. When we have a retail network of our own, we won’t be satisfied with what we have achieved. Our first plan is to set up metalwork supermarkets. We have already opened one in Orel. It is a large 200-250 sq m store, where we display our ornamental metalwork products and customers can see them. The Orel store has an indoor furniture display – a well-designed display with draperies and other accessories, so that our customers can see what this metalwork would look like as part of interior designs. Many simply do not know about these products or do not believe they can afford them.

The second plan is equally important. We currently buy ready-made metal ornament pieces and install them in our products. We often have to import those pieces from Turkey, Italy or China. Why don’t we make these things here in Russia? If there is a market for these products why not set up local production? This will not require much investment. A cast iron facility would cost about 30 million roubles, and a pressing plant, 12-13 million roubles. This is quite reasonable. But, for some reason, we don’t have these facilities in Russia. We would like to fill this gap in the future.

There are problems, of course. Not all regions are as lucky as we are to have effective SME support policies. We encountered this difficulty 18 months ago when we were opening an office in Ivanovo. The local government did not provide grants or start-up loans. It was a major obstacle for local small businesses. New businesses also had problems with raising bank loans.

Vladimir Putin: I can tell you what you should do. First of all, register with a local labour exchange and apply for a 58,000-rouble start-up benefit.

Natalia Afonina: This is not enough to set up production.

Vladimir Putin: But that’s a start, until we expand opportunities for obtaining start-up capital under out small business support programme. But I am not joking. This is absolutely real. People can apply for this start-up benefit if they have lost their job and got registered with the labour exchange. There is a real opportunity to receive 58,000 to start a business.

Natalia Afonina: Yes, we know about that. We know it’s real. But this is still not enough for our business. This money isn’t enough to organise production. But we hope some new loan products will emerge. There are guarantee funds that also help resolve this problem, at least they help secure our loans, don’t they?

There is another small problem we are currently trying to resolve. We would like to advertise: we need financial resources to tell young people and to all start-up entrepreneurs that this is possible. We have systems, and standards, and we can attract financial resources.

Our project would create 1,500-2,000 jobs across Russia, 70% of these jobs are in the industry. I am talking about small plants, but we believe our nationwide result is high enough. We build production clusters in the regions and cooperate with local producers – woodworkers, platters, and textile makers. We offer our customers integrated products while at the same time supporting local industries. We are ready to ensure a solid inflow of tax to the budget and to further develop business initiative among young people.

Vladimir Putin: You know, while I was listening to you, I simply admired what you were talking about and the way you were talking.

Natalia Afonina: Thank you. It is our life.

Vladimir Putin: You know what? I think that – well, please, do not take this personally, the last thing I want is to offend anyone – I just thought about this famous perestroika-time movie Intergirl, the Soviet prostitute story. Just imagine how some Russian women have gone all the way from intergirls to businesswomen. This is just great. I have only one request, Natalia – please do not forget about women’s role in resolving demographic problems.

Mr Liksutov, go ahead please (to Maxim Liksutov, member of the Aeroexpress board of directors). Tell us about your project please.

Maxim Liksutov: Thank you. Our project involves intermodal passenger transport services provided at the Moscow transport hub. Our company, Aeroexpress, was established in 2005 by Russian railways and private investors. We are very proud of this project, which is an example of effective public-private partnership. We have invested 12 billion roubles since the beginning of the project to buy trains, develop railway infrastructure, build railway terminals and introduce modern technology.

It took us 16 months to complete the preparatory phase and launch the first train. The first pilot route was to Sheremetyevo Airport. In 2006 we obtained a Transport Ministry licence to transport passengers and freight. In 2009, our company was issued an ISO-9001 quality certificate. We have introduced advanced security and control systems and innovative customer service technologies. In 2008, as an international level operator, Aeroexpress joined International Air Rail Organisation, an international association of companies planning, developing, building and operating rail air links.

Aeroexpress today is an integral part of Moscow’s transport system, linking the airports Vnukovo, Domodedovo and Sheremetyevo with three of the city’s central railway terminals. We also have a suburban express line, Moscow-Lobnya. Our company daily performs 182 runs to airports with 99.8% compliance with the schedule.

Last year we increased passenger traffic 30% and plan to carry 12 million passengers to airports this year.

Vladimir Putin: Did you say your trains comply with their schedule 99.9%?

Maxim Liksutov: 99.8%. Our shareholders also agreed in 2009 to provide each passenger with 2 million rouble accident insurance. It is our goodwill contribution. We believe we should do it, in case any problems emerge related to our operation. Also this year we adopted a new policy: if our train to the airport is more than 15 minutes late, we refund the ticket cost.

Aeroexpress experts estimate that the company’s operation has helped reduce annual exhaust emissions in Moscow by 60 tonnes and traffic jams by 40,000 km, because air passengers opt for rail transfer to the airports. Aeroexpress has terminals at three central railway stations, Belorussky, Kievsky and Paveletsky. They are also conveniently linked by the Circle Line of the metro. We also offer a single ticket that can be used on the metro and on Aeroexpress lines.

Next slide please. This is Aeroexpress’ ranking relative to major global and European companies. As you can see, Aeroexpress ranks 3rd. And here is the percentage of air passengers travelling to or from the airports that used Aeroexpress services.

This slide is interesting: Oslo is a clear leader here, with its trains to the airport running every 10 to 15 minutes at 150 kmh. As a result, 40% of all passengers flying to or from Oslo use rail transport to the city.

This means Aeroexpress has room for growth – we can make our services more convenient by increasing the speed of transportation. A train currently takes 35 minutes to reach Sheremetyevo from the city centre. If we increase the speed to 120 kmh, the time in transit will be reduced to 20 minutes. It would simply make no sense to use any other means of transport.

We have prepared two joint projects to present at this meeting, one with the Moscow Region government, and the other with Russian Railways. The first is to develop the Kalanchevsky transport hub. The idea is to build a larger facility incorporating the three railway stations where people travelling from, say, Sheremetyevo Airport could change trains and go on to Demodedovo to catch their next flight. These three stations currently serve a million passengers daily. The new hub would streamline passenger transit across the city and ease the burden on the city transport system.

The new hub will include a metro station and provide other opportunities such as using other kinds of city transport or taking a taxi. It will be able to serve around 36 million passengers, which will make it the world’s largest by passenger traffic.

The other project is the so-called Minor Ring of the Moscow Railway. It was built nearly 100 years ago, but was never connected to power circuits and never used for passenger transportation. But it is possible to organise a passenger service there – in fact that’s what it was built for. What will it do? If we send 100 pairs of trains running along that ring daily, which could carry about 250 million passengers a year, it would significantly ease the traffic on the metro Circle Line. It will become an attractive transport option for people to get around Moscow and the Moscow Region.

We propose that this project is implemented as a public-private partnership again. The Moscow government will in fact outsource a set of services. The city of Moscow and Russian Railways will thus invest in infrastructure, while Aeroexpress, which is a private company, will invest in trains, in passenger services development and in building passenger terminals and hubs.

As a result, Moscow will have a system of intermodal passenger services combining all kinds of city transport. It will have comfortable and convenient intermodal hubs at places where the Minor Ring links with metro lines, suburban trains and Aeroexpress lines. People in Moscow will be able to use modern transportation services with their quality standards at the level of other international capitals.

Maxim Liksutov: The implementation of such an ambitious project will contribute to the creation of many new jobs in road construction, transport machine building and other industries. If decisions on the first and second projects are made soon enough, we will see the results of their implementation in the near future, that is, in a matter of three to five years. The results will be obvious to everyone living near the Moscow transport hub.

Vladimir Putin: Are you working on the project with Russian Railways?

Maxim Liksutov: Yes, we are the dependent company.

Vladimir Putin: How are shares distributed between the companies?

Maxim Liksutov: Fifty-fifty.

Vladimir Putin: With Russian Railways?

Maxim Liksutov: Yes. It’s fifty-fifty, not 49 to 51 as is the usual arrangement, because we are a dependent company though we have a fair amount of power in decision-making.

Vladimir Putin: Mr Morozov. Is Morozov here? (Vadim Morozov, first vice president of Russian Railways Company) Mr Morozov, what do you think of this project?

Vadim Morozov: Thank you very much, Mr Putin. The project will certainly pay off. If it is tied in with suburban passenger trains, its value will grow immediately. It was not by chance that we tied three Moscow airports in a transport network, first testing the idea on airport express trains, and each of the two companies invested six billion [roubles] in the project. Our infrastructure consists of rails, energy, and stations – naturally within the structure of Russian Railways. Our partner built it all with its own money. As for Sheremetyevo Airport, we really funded its new complex on a parity arrangement.

What next? Naturally, everyone sees the benefits now. A joint decision between the Moscow mayor, City Hall and Russian Railways was signed in Moscow today. The smaller ring, which has attracted private capital, is a huge project. The cost of its hubs alone exceeds 100 billion, the cost of the railway infrastructure is 42 billion, and of the depots roughly 20 billion. We are starting to execute this project. But what matters no less is that the people of Kazan, Vladivostok, Sochi, St Petersburg have seen that this project should be carried out. For all the projects I have mentioned, work is either beginning or construction and development are already underway. Or, again, as is the case in St Petersburg, we are developing an ambitious project to discuss with the governor.

Vladimir Putin: What do municipal authorities in Moscow think of it? Mr Sobyanin (Moscow Mayor Sergei Sobyanin) is working elsewhere now, but there is the chairman of the City Duma…

Vladimir Platonov (chairman of the Moscow City Duma): Moscow is involved in this project. No one will gain more from it than Moscow, and we will further develop the third ring road as has been planned. The construction of this branch began even under the monarchy, and I am sure that eventually it will be electrified.

Response: The Research and Design Office of the General Plan for Moscow Development is making a detailed study of traffic conditions. We all know that traffic is one of our most critical problems. We are discussing every possible option. On the one hand, we are reducing the load on connecting roads while, on the other hand, we are concentrating traffic in the city centre because Mr Liksutov was right that the Kalanchevsky hub also includes a parking lot. It will hold about 3,000 private cars and taxis. It will be a very convenient arrangement – you come to Kalanchevskaya Ploshchad [city square with three railway terminals], park your car there, and take a train to Sheremetyevo or Vnukovo. So you don’t have to take a car to the airport.

It is a very promising project. We’ve also worked with Russian Railways on the Moscow transport hub together. Now, I think, we have a real chance to do something, and we have a private investor who will fund it.

Vladimir Putin: What does the Ministry of Transport think of it? I suppose Mr Belozerov is here (Deputy Minister of Transport Oleg Belozerov).  It is our common duty to solve Moscow’s transport problems. Speak up please.

Oleg Belozerov: Mr Putin, the coordination council for the Moscow transport hub met a week ago. Experts are reporting on one of the projects now. But I would like to say that we consider the development of Moscow railways the most promising project because nothing can reduce the traffic load on streets and highways more than railways. Then, there are the three components mentioned just now – the smaller ring railway, the Kalanchevsky hub, now under construction, and additional exits from the city – which promise to solve Moscow’s problems. So we fully support the project, and we are taking part in it.

Vladimir Putin: Mr Liksutov, I wish you every success.

Maxim Liksutov: Mr Putin, I would like to say that the general mood is very positive, and I am sure that we will manage with all these projects, especially because we have such partners as Russian Railways, the Moscow City Hall, and the Ministry of Transport. However, there are many minor problems. All these projects concern very complex transport infrastructure, so they are difficult to implement. They demand coordinated efforts from many ministries, agencies and other entities. So I’d like to ask you to spare some of your time for the sake of coordinating the work of all involved in the project, especially at its start.

On our company’s behalf, I invite you to take advantage of our train, perhaps holding a coordination meeting on the train or at the terminal. I know that Sheremetyevo Airport is something of a second home for a well-travelled person such as you.

Vladimir Putin: It will have to be a very brief meeting. How long is the trip – half an hour or so?

Maxim Liksutov: It takes 35 minutes. But, Mr Putin, we have a terminal, and it’s very convenient for meetings.

Vladimir Putin: So we are in for a train ride.

Maxim Liksutov: We will see to everything and hold a meeting at once.

Vladimir Putin: Good. Let’s consider the matter settled. It is an important question that deserves our attention.

Vadim Morozov: It would be wrong not to use the chance for such representation… Last August, the government adopted Resolution No. 1322, which, in fact, solved the age-old question of how much to pay for suburban transport infrastructure. Imagine what profits Russian Railways is missing out on, considering that this year’s federal budget earmarks just the amount to cover all these costs… But then, we have already established 22 special suburban rail companies to implement the reform. We will set up another four, and that will be enough – we will finish the formation of such companies. But the arrangement on which a region or all present here will get the money remains vague. On the whole, we may lose 40 billion in profits, and the regions whose governors are here stand to lose 16 billion. Such are lost profits – the money we cannot see, while what the regions have in their budgets, without considering the federal budget, makes a mere 2.5%. But if there is a meeting on this problem... Possibly, it would be worthwhile to pass a decision today for us to get money this year and not miss another year for the implementation of these and other ambitious projects.

Vladimir Putin: Thank you. It is really a critical matter, of great economic and social significance. It is no exaggeration to say that it is a sensitive issue for millions of people. Mr Shatalov is representing the Ministry of Finance here. Mr Shatalov, I discussed this question with Mr Kudrin and your other colleagues, the Ministry of Transport, and regional governors.

Sergei Shatalov: Mr Putin, it is outside my duties.

Vladimir Putin: I know, but you represent the Ministry of Finance, so it falls on you.

Sergei Shatalov: Yes, I really represent the Ministry of Finance. We will certainly pay the greatest possible attention to this matter, I will report it to the minister, and I think we’ll find a solution.

Vladimir Putin: Let us do it like this: first, we will appoint the deadline for working out this mechanism. Just when can we do this? What do you think? It’s March already. We will be celebrating March 8 in a couple of days. Then we will celebrate May 9, and then... seasonal trips to dachas will start. It’s really serious! Summer travellers will join an army of commuters – and spring gardening is also a serious thing.

Sergei Shatalov:  Mr Putin, can we make a special report on it? It will be quite soon.

Vladimir Putin: Okay. Let us gather again on March 10 or 11 to take stock of your practical proposals.

Sergei Shatalov: Good.

Vladimir Putin: Settled. Ladies and gentlemen, our principal speakers have told about their plans, prospects and problems. Now, we can have a free and easy talk. Please speak up on your ideas and proposals for joint work.

Svetlana Maximova: My name is Svetlana Maximova. I am a private farmer and the president of the Tver Regional Union of Private Farmers and Subsidiary Plot Holders. First of all, I would like to use this opportunity to thank you for your talk with us in Tambov. You know, we farmers left it feeling elated and full of hope. You instilled a sense of optimism in the farming movement. My fellow farmers of Tver – there were 15 of us – were jubilant.

We have a major concern, however. When we asked you about diesel fuel, you called on the members of the regional Association of Russian Private Farms and Agricultural Cooperatives to help you with monitoring prices. So, on our trip from Tambov to Bryansk for this meeting yesterday, the farmer Vasily Yegorov from Yaroslavl and I decided to inquire about prices in several regions by making some telephone calls. We discovered some alarming figures. Just look! Gazpromneft charges 16.8 roubles for a kilogram of diesel fuel in the Yaroslavl Region and 15.3 roubles in the Belgorod Region (people from Belgorod confirmed the figure – they are sitting here next to me, and they wouldn’t let me tell lies). Now, LUKoil charges 28.5 roubles in the Vologda Region. I phoned them on three occasions to verify – I couldn’t believe it. I asked them if they were sure they had the figure right. So they went to the relevant department, and the office people said that the manufacturers’ price really was 28.5 roubles – and this with a 10% discount for agricultural producers. Surgutneftegaz charges 21.15 roubles in the Tver Region.

Vladimir Putin: Where does LUKoil charge 28.5 roubles?

Svetlana Maximova: In the Vologda Region, while Surgutneftegaz charges 21.15 roubles in my region, the Tver Region – that for a kilo of diesel fuel. But then, the Tver Region is unlike any other. We have wonderful people in the regional administration and its agricultural department. They foresaw current prices and gave us farmers grants at 5 roubles a kilogram – but it is only for those who have not cut their crop areas. Know what? I am a farmer, and to give up my grant to oil companies is the last thing I want to do. Why should I? I am a dairy farmer, and I also keep pigs, so I’d rather buy something good – pedigree livestock, for instance. It takes some thinking to see what should be done about such matters. I joined the (United Russia) party right when it was established. See, I’ll come back to my region and farmers will say: “Svetlana, what’s the big idea? The party asked us to work in such a way as to bring food prices down.”

The farmers’ markets that we arrange in the Tver Region have an impact on retail prices. Manufacturers sell their goods themselves at these markets. By the way, we’re having one tomorrow. Our farmers sell packaged milk at no more than 23 roubles a litre, and the average price for meat is 170 roubles a kilogram – and don’t forget that we live in Central Russia, between Moscow and St Petersburg. Muscovites go to Tver to pick up low-price meat.

Alarmed shopkeepers are lowering meat prices little by little. The middlemen are crying out about this because farmers no longer sell them the meat from their private farms and household plots but take it to the market. What should I do in this situation, Mr Putin? What should I say to my fellow farmers?

Vladimir Putin: Tell them you told me all about this. We will surely address the problem together.

Svetlana Maximova: Thank you.

Vladimir Putin: We have a strict agreement with oil companies to sell fuel at last November’s prices minus 10% for spring sowing. We will see to it that the oil bosses comply. I know that prices vary between regions, and starting prices are no exception – but I am sure they can’t rise as high as 28.5 roubles. We will certainly check on all of this. The deputy minister of energy is with us in this room. I will immediately notify the Federal Antimonopoly Service and the Ministry of Agriculture. We will monitor price formation, and comply with all our agreements as closely as possible.

Prices may vary from region to region, but overall, across the country they have fallen by somewhere between 3% and 4.5%. The rate varies from brand to brand and from region to region. Of course, winter fuel prices have fallen lower than summer fuel prices.

We will certainly carry everything through to the end and fulfil these commitments to the letter. You should have no doubt.

Darya Sibiryova: Hello, my name is Darya Sibiryova. I’m a member of the Belgorod Student Union. My question may seem frivolous, but I think it is very important. I’d like to ask you about the law On the Police and the new names of its divisions, like the State Inspectorate of Traffic Safety. My friends said they stumbled across the acronyms of the new posts’ names. I am not going to swear, I’ll just read out the acronyms.

Vladimir Putin: You’re going to read out the acronyms for the new divisions or the names of the new divisions?

Darya Sibiryova: Same divisions – new names…

Vladimir Putin: Names, okay…

Darya Sibiryova: PUPS [Russian for “baby doll”], PIZDYUN [sounds like an insulting expletive in Russian].

Vladimir Putin: Sorry?

Darya Sibiryova: PIZDYUN – a police inspector for the protection of children and teenagers. Sorry, but I wasn’t the one to come up with them. A police inspector for traffic is abbreviated to PIDR [sounds like the Russian for “faggot”]. The state united inspection would be GEI [Russian for “gays”]. I hope that it’s not so, but there is a rumour going around on social networks. I want to believe that it’s just a rumour. If so, maybe it’s better to think up something different before it’s not too late? Sorry if my question sounded inappropriate.

Vladimir Putin: This is the first time I’ve heard these acronyms. I mean these words are quite common. But it’s certainly strange that law enforcement agencies should be called this way. Anyway, I think you will agree with me that the need for a reform of the law enforcement system became evident long ago. The main idea behind President Medvedev’s initiatives is to overhaul current practices in law enforcement agencies and change their staff, not just their names. It’s certainly too premature to speak about the effects of the reform, but it’s obvious that it has a righteous goal and is needed.

Clearly, the question is whether the state will meet its targets. We’ll see. By and large, it is not a matter of new names. The reform is aimed at changing the essence of law enforcement and changing its staff. The entire system will undergo a major transformation, which I mentioned in my address.

If you took a closer look, you’d see that very few agencies will remain as they are. The law enforcement system is being reformed. We are raising wages. I gave the figures in my address. New staff members will receive 33,000-35,000 roubles, or even more. These are good wages, compared to the average salary in the economy. In 2012, it is expected to approach 25,000 roubles, while new law enforcement staff members will receive 33,000 roubles, or even more, up to 40,000. That’s already something. The average salary will be 25,000 roubles… A nurse receives only 4,300 roubles. There will be something to choose from, I hope. There is no room for nonsense in the new system, I understand. Anyway, society will give the verdict on our effectiveness. And we need to try our best to be as effective as possible.

Vladimir Babichev (Speaker of the Tver legislature and Mayor of Tver): Mr Prime Minister, as you know, our party is implementing a programme called New Roads in Cities of United Russia. Through this programme, the party helps cities to repair roads and beautify courtyards. Ordinary people are really positive about it. And most importantly, it has a positive impact on United Russia’s image. But, unfortunately, there is one problem. Federal budget funds arrive at the end of the year, when it begins to rain and snow, and the quality of work done in this season is very poor. As you said, the Central Federal District will receive 11.5 billion roubles for the beautification of courtyards. It would be great if this money arrived in good time, in the first half of the year so that work can be done properly. Thank you.

Vladimir Putin: Of course. That’s exactly how I put it in my address: everything must be coordinated as soon as possible; the agreements and contracts with regions must be concluded in May; all preparations must be finished in April so as to begin on-site work in May. The Ministry of Finance and the Ministry of Regional Development are aware of these directives and will budget the required funds soon.

Olesya Vorobyova: Hello, I am the director of the private preschool centre Lichnost [Personality] in Tula. The entire country, including our region, is facing a very severe problem, the lack of kindergartens. Thank God that there are more private kindergartens emerging. I think it’s obvious that such initiatives should be supported and promoted. Not all parents in our region and in the country in general can afford such kindergartens for their children. They’re very expensive. But if we are funded through a government order, this service will become more affordable for ordinary people. We will help the state to deal with the problem of waiting lists in kindergartens. Private kindergartens are eager to help the state resolve its problems, but we expect the state to reciprocate.

Vladimir Putin: This issue is addressed by regional governments. There are many governors here. I think the situation is different in different regions… Colleagues, any comments? Who’d like to tell us how this problem is addressed in their region?

Yevgeny Savchenko (Belgorod Region Governor): Mr Putin, in the Belgorod Region, we co-finance private kindergartens. In fact, we provide some funding for all kindergartens. It adds up to about 5,000 roubles per child a month, from 5,000 to 10,000 roubles. We do the same for private kindergartens. The rest is paid by the parents.

Vladimir Putin: I’d like to remind everyone of how the funding of kindergartens is set up. Regional authorities reimburse parents for 20% of the payments they make to a kindergarten. If there are two children, the reimbursement is 40%, as far as I know. If there are more than two children, it’s 70%. Regional authorities took up this commitment. That’s how it works in this region. As I understand, you would like this principle to be adopted in other regions…

Yevgeny Savchenko: Yes.

Vladimir Putin: I’d like to address regional leaders. I fully agree with this point. I would like you to do your best to adopt this practice. Please.

Natalya Chudakova: Mr Prime Minister, I would like to return to the question on small businesses. I am a businesswoman. I own a convenience store. My name is Natalya Chudakova. I am from the Moscow Region. Currently, I pay the uniform tax on imputed income. I’ve heard a bill on repealing this tax was introduced to the State Duma. But this tax is very transparent and is calculated easily. And also, it’s the lowest tax I could pay.

We would like to ask you to consider the possibility of keeping this tax in case taxation changes.

Vladimir Putin: The uniform tax on imputed income was introduced to bring small and medium-sized businesses out of the shadows and simplify the tax payment procedure. The Ministry of Economic Development and other government agencies have suggested a gradual transition to the system of patents for small companies. This mechanism is very clear and transparent: you buy a patent and then use it.

But we proceeded from the assumption that there must be a transition period. Patents will be introduced on January 1, 2012, while the uniform tax on imputed income will be revoked on January 1, 2014. So companies will have a transition period of two years.

But let’s review this situation again. Let’s ask the unions of small and medium-sized businesses. We are in close touch with them.

Olga Agafonova: Olga Agafonova, head of the small town of Vlasikha, Moscow Region. Mr Putin, on behalf of Vlasikha’s residents, I would like to thank you for making the decision to turn a closed military town into a closed administrative-territorial district. This opens brand new opportunities for the area’s development. 

Housing and utilities infrastructure and social works are being transferred from the federal property of the Defence Ministry to municipal authorities. And land relations aren’t being documented at all. The Defence Ministry’s facilities from more than 80 closed military towns are being transferred in the Moscow Region alone. That is a serious problem for the population, indeed. The municipalities are virtually unable to develop the area’s infrastructure in this situation from a legal standpoint.  

Mr Putin, I ask you to consider the possibility of transferring the housing, utilities, and social facilities with the land, and, if possible, to provide assistance in repairing the infrastructure, since the facilities need to be fully repaired, modernised and reconstructed.

Vladimir Putin: I understand that many facilities are dilapidated. The land issue is purely administrative. I believe this is connected with the fact that the Defence Ministry didn’t register the land properly. 

Alexander Viktorov: Mr Putin, can I comment on this?

Vladimir Putin: Yes, please.

Alexander Viktorov: Ministry of Regional Development, Deputy Minister Alexander Viktorov. In fact, the Defence Ministry did not register anything in many cases at all. I have encountered this problem. It’s a paradox that arises when the land plot is not being transferred with the property. Other land categories, such as apartment buildings, kindergartens, and infrastructure facilities, must be transferred with lands and settlements. If the land isn’t transferred, the settlement will remain on the land of the Defence Ministry and its industrial facilities – quite a paradoxical situation. That’s why the facility must be transferred with the land. During the transfer, design and town planning documents should be prepared as well. And then, if necessary, these facilities should be registered on the borders of settlements, if they are adjacent to any; or new settlements with defined borders should be established. This can be done only this way. We are ready to take part in it.

Vladimir Putin: Is Yury Petrov here? Mr Petrov (Head of the Federal Agency for State Property Management), please.

Yury Petrov: Mr Putin! The thing is that everything that used to belong to the Federal Agency for State Property Management was given to the Defence Ministry, including the land situated in military towns. That’s why this issue is under the Defence Ministry’s purview. But they seem to lack some data, land surveys, and so forth. 

Vladimir Putin: This land has not been registered for sure.

Yury Petrov: Yes, for sure.

Vladimir Putin: No land surveys.

Yury Petrov: Yes.

Vladimit Putin: But, you know, we still need… The land has not been registered, they can’t be blamed for that because it wasn’t registered in the past, and they had no problems with living on land that wasn’t registered. The land must be transferred to municipalities and registered at that time. This is what we should do, at least.

Yury Petrov: Yes, you are absolutely right.

Vladimir Putin: So because all this is up in the air, the land is up in the air, too.

Yury Petrov: Absolutely right.

Vladimir Putin: So let’s put things in place.

Yury Petrov: Sure.

Vladimir Putin: How much time do you need to prepare the corresponding proposal?

Yury Petrov: One month, I think.

Vladimir Putin: Good. Let’s do it. Then come to me with the papers in early April, or mid-April.

Yury Petrov: Yes.

Vladimir Putin: Please. We will work on it. That’s a serious matter, I understand it extremely well. I know we need to develop infrastructure. The Defence Ministry just goes away and leaves everything as it is, and we will scarcely manage to do anything substantial, but, at least, we need to register and transfer the land duly. Many places have a future and we need to prepare the corresponding targeted programmes along with the region. Prepare your proposals, we will think about how to help.

Olga Voroshilova: Hello, Mr Putin. My name is Olga Voroshilova, I’m an associate professor at economic department of Kursk State University and prize-winner of the 2009 project “Personnel Reserve: the Country's Professional Team.” 

Vladimir Putin: Please.

Olga Voroshilova: The following issue is very important to me. Since I became a prize-winner and was recommended by the party to take part in the election campaign, I would like to explain my situation because I believe that this topic is truly important for all those present.

The party indeed does a lot. This is evident at the meetings we hold with the people: in fact, we have a dialogue every day. Every day people ask really important and sensitive questions related to, first of all, housing and utilities rates and the small wages of public sector employees. The issue of cutting rates on electricity is really important for the Kursk Region, since it is located near a nuclear power station. This is what worries people today, and they are concerned with it.

At the same time, our opponents have the following slogans: 400 roubles for rent; minimum wage – 10,000 roubles; every child who does not go to kindergarten gets 5,000 roubles. They touch upon the most burning and sensitive issues. Tell me, please, how should we react to these attacks, what arguments can we use in this situation, and do they have any right or grounds to make such statements?

And another question, which interests me as a person taking part in the election campaign for the first time: do the opposition parties have to bear the responsibility for the promises they make during the election campaign? Thank you. 

Vladimir Putin: The opposition parties may say everything they find necessary, if it doesn’t contradict the current legislation and does not call for violence or overthrowing the constitutional order.  Do they have to do it or not? To my mind, they don’t, since any form of populism is very dangerous. We experienced such situations in the early 1990s, when the government’s resources were very limited, all kinds of promises were made, and nothing was done. They made decisions that were impossible to carry out. And then they had to do something about those decisions. We had to rectify them, modify them. That’s what the opposition parties are: as in any other democratic society, they try to come to power and prove their just cause. 

What does the leading political party, or the political force, have to do? There is only one option: it should explain to the citizens, its electors, that its economic and social positions are the most advantageous and feasible and that this is not just idle chatter. Yes, this will take time and require patience, as well as professional and persistent work, but it will bring results. But this must be done in clear and transparent language – one shouldn’t be afraid of telling the truth, and then people will believe us.

You said United Russia does a lot, but there are some problems that remain: housing and utilities rates, low wages for public sector employees, and so forth and so on. United Russia does a lot, indeed, but this does not seem to be enough to solve all these problems. This means only one thing - we most work harder and better. We must not conceal any problems from the people, and we must, as I have already said, inform them of our proposals to solve these problems. And then people will trust us, and as I said during my speech: the public’s trust is the most important thing.  And the same is true in reverse when the people see that some political factions or politicians, no matter how spectacularly and impudently they express their views, make unreal promises. They will laugh, applaud, and giggle, but they will vote for those who propose realistic plans to solve these problems. 

Andrei Desyatov: Andrei Desyatov from Voronezh, Director of an IT-company and an active internet user. Today, the internet is an extremely powerful source of informational influence; it is a tool to measure public opinion. Egypt and Libya are bright examples of it. The internet in Russia is a platform for communication between society and the powers that be – it is a tool for getting their feedback. And I believe that this is good.

In fact, I have the following question: how does the government of the Russian Federation and the party use the internet to cooperate with society. And I have a personal and philosophical question for you, do you consider the internet good or evil?  

Vladimir Putin: You know, during the era of industrial revolution in Europe, workers in Great Britain broke machines to prevent job cuts.

People always react this way to the introduction of new production methods, production organisation and organisation of the management process. Our society is not often ready for this, and often can’t use these tools effectively. You ask me whether this is good or bad. It depends. It’s just like with a scalpel, which can be used for surgery and save a person’s life, but it can also be used for a murder. So it does not depend on the tool but the people who are using it and their intentions.

As we can see there are people who use the Internet as a tool to achieve destructive aims. But used in a proper way, the Internet is a powerful factor of modern progress. And we must use it in this way only. Unfortunately, the obscene language, dirt, all the nonsense we read online reflects our general cultural level. But I have not the slightest doubt that common sense, intellectual and moral education of our people will finally prevail in this extremely important sphere too. We must do our best to use modern means of communication to our advantage. For example, we can use the Internet for distance learning and in medicine. The Russian state is starting to use it to create an electronic government, which will reduce bureaucracy and corruption, free our people of the humiliating need to wait in lines, and intensify economic growth by introducing new principles. My colleague has said that the introduction of Internet services increases the growth of regional and domestic product. For sure, in our development we must and we will use the Internet, as well as other new communication means and achievements. And in case these tools are misused, society must have its own defence system. This defence system is very strong in the Russia people, and I doubt that anyone will be able to undermine it.

Olga Nikulina: Good afternoon, Mr Putin. My name is Olga Nikulina, and I am from the Lipetsk Region. I am junior world shooting champion.

Vladimir Putin: Junior world shooting champion?

Olga Nikulina: Yes. In the recent years a lot of attention has been paid to sports and healthy way of life. New schools and sports complexes are opening,  competitions are being staged, and we have Olympic champions. But all our efforts to stop alcohol abuse have been in vain. The number of drug addicts has reached five million.

I live in the village of Kon-Kolodez, Lipetsk Region. We have a wonderful Olympic reserve shooting complex. There are good gyms and some young people do sports. But others, and there are quite a lot of them, prefer drinking. And this problem is not unique to our village. While participating in competitions in different Russian regions, I have often come across this problem. And my heart is just bleeding. Why can’t we fight this evil and win? Thank you.

Vladimir Putin: They say, heavy drinkers have shaking hands in the morning. But some shooters say, a bit of drinking helps you to relax and shoot better, doesn’t it?

Olga Nikulina: I don’t know. I have not tried. I am an athlete and I don’t drink.

Vladimir Putin: Then don’t try.

Olga Nikulina: I won’t. Thank you. 

Vladimir Putin: Don’t ever start. I have already spoken a lot about having a healthy lifestyle. What else is there to say? We need to cover many areas at once. One of them is exactly what you excel at – sports.  We have made a separate entry in the budget, and the Ministry of Sports and Youth Policy has been working on it for a long time, since previously, sports allocations had been included in the healthcare budget. Now sports have a budget line of their own. Certainly, we need to invest more in sports and tourism, which we talked about here today. We need to spend more money on advocating healthy lifestyles. But last year was the first time that we ever allocated money for such programmes. As you may know, they are quite efficient.

Of course, there is another option, which is to increase alcohol and tobacco taxes in order to ultimately effect higher retail prices. We are making progress in this area, too. But I think we should proceed with caution here. We know what happens when we take unreasonable steps and push prices up too high. People just turn to moonshining and backdoor sales. This is another area that we should focus on in order to minimise the illegal production of alcohol. 

We need to pay greater attention to culture and cinematography, with an eye toward directing people, especially young people, away from alcohol and drug use or, for that matter, from any other idle pastime. I know that people who are engaged in the sphere of culture professionally will instantly begin criticising the government. However, the first objective we set in trying to get Russia elected as the next venue of the Winter Olympics, the FIFA World Cup, or the Universiade was precisely to get Russians interested in healthy lifestyles, creating new priorities and new cult figures who would appeal to young people as role models.

I hope you will become such a role model, if you manage to win first place in the junior and, more importantly, senior international championship. We wish every success to all of you.

Olga Nikulina: Thank you very much!

Sergei Shtepa (General Director at Metaklei ZAO): Sergei Shtepa, Karachev, the Bryansk region.  Much was said about environmental protection today, but we don't just talk about it – we’ve been doing much since 2005.  Environmental protection provided the impetus for two federal projects based on one that was really small. One of them is a joint effort with Rosnano state corporation. We are already halfway through it, and we will launch production in October 2011. The plant will manufacture innovative composite materials to be used by Gazprom and other large companies of federal importance. Our output can be used for coating large-diameter pipes with polymer materials to improve the pipes’ service life. Currently, these materials are being supplied by Western companies, mostly by Borealis. Our company will start shipping these polymers to the Russian pipe makers as early as October 2011. Another project is underway with Russian Railways , wherein we are working together with a large company using our materials for building railway shock absorbers that are inserted between rail and tie, which are of particular importance on high-speed tracks. We are also active in the cable industry, which uses imported fire-resistant materials in building nuclear power plants. Together with the Russian Academy of Sciences and three other research institutes, we are developing these materials and will launch production in October 2011, as well.

All the above projects are due to our environmental work, but we haven’t forgotten about the environment either. We are now building a waste separation facility in Bryansk and have run into major problems along the way: There is no law on recycling packaging materials. We’ve been recycling these bottles to make new products or just raw materials since 2005. We have accomplished all this without any state assistance. Now that are we are building this facility, we’d like to see a partner as strong as the state corporation “Rosnano.” If we get some help from the state on this project, particularly in the Bryansk Region and particularly in ecology, we can come up with a really good pilot project because one can go beyond using waste in the production of household items and use it for producing electricity, too. Rosnano could make an expert analysis of such a project. Governor Denin of the Bryansk Region supported us by passing a law on the recycling of packaging. The Bryansk Regional Duma is currently considering a packaging waste bill. Soon, it will be submitted to the State Duma. Mr. Prime Minister, they have been considering it since 2002. We’ve seen major players come in, such as Coca-Cola and Pepsi-Cola. They have bought all large Russian enterprises, including Vimm-Bill-Dann and Lebedyansky. They use the Russian market to derive huge profits because they don’t pay for packaging recycling. All civilised countries, including Germany (a country you know well enough), have since long passed this law. However, the money that should have been used for recycling is withheld by these companies. If you could take a really good look at it….  No one can do anything with them… their lobby is very strong. Nothing gets done, no matter whom we speak with.

Vladimir Putin: So, you want to get back to the 2002 draft law?

Sergei Shtepa: No, there’s an updated version available.

Vladimir Putin: Where is it now?

Sergei Shtepa: It’s with the Bryansk Region governor, currently being considered by the Regional Duma. 

Vladimir Putin: Have you submitted it to the State Duma?

Sergei Shtepa: Yes, we have. We worked on this draft together with the Moscow Regional Duma.

Vladimir Putin: Go ahead, Mr. Trutnev.

Yury Trutnev: Mr. Prime Minister, we’d be glad to see the draft, but the set of draft laws I had previously mentioned already contains a requirement for paying the packaging redemption value, so they will also be submitted to the Duma for consideration within 30 days.

Vladimir Putin: Still, take a look at the draft mentioned by Mr. Shtepa to make sure we don’t miss anything important here. Mr. Trutnev said that the draft would be submitted to the Duma within 30 days, so we’ll get a chance to compare it with the 2002 draft.

Sergei Shtepa: How will you know about it?

Vladimir Putin: Go see the minister and ask him. You are from the same party, so feel free.

Sergei Shtepa: Thank you, Mr. Putin, I’ll do that.

Vladimir Putin: Mr. Trutnev, please get the contact information from your colleague and keep in touch with him. Please see Mr. Trutnev after we are done with the meeting.

Roman Sapelkin: Post-graduate student at Voronezh State Architectural and Construction University. I am engaged in implementing innovations at this university. I believe it’s the right thing to do. First, we can use the university’s equipment and enlist the help of post-graduate and undergraduate students, thus giving them an opportunity to make some extra money. We have achieved certain progress. I, for instance, received a personal grant, “Gazprom Production Yamburg.” We have good contacts and partner relations with the Yamal-Nenets Autonomous Area. However, our problem is the extremely high payments we have to make for leasing federal property from the university. A 40m2 room will cost us one million roubles per year. I think this is unacceptable. Thank you.

Vladimir Putin: What’s the name of the university?

Roman Sapelkin: Voronezh Construction University.

Vladimir Putin: I was in Krasnoyarsk about six months ago. Students and post-graduate students told me that they couldn’t lease premises or any other equipment for small innovative enterprises established at schools of higher education. The government made a decision (I am aware of the issue at hand and will elaborate upon it shortly) whereby institutions of higher education can lease their premises to such enterprises at reduced rates. However, such decisions are at the discretion of your university officials.

Roman Sapelkin: This is federal property, Mr. Prime Minister.

Vladimir Putin: It is, but it has been handed over to the university, which is now entitled to lease it out to you at a certain rate. You may not and cannot sublease it. That’s the established procedure, but it’s up to them to decide on the lease rate. Am I right, Mr. Petrov? (head of  the Federal Agency for the Management of Federal Property). I know I am, case closed.

You should resolve these issues in direct dialogue with university officials. If you fail to settle the issue with them, I will talk with Minister Fursenko , and he will contact the executives at your university.

Anatoly Balbekov: Mr Putin, thank you for this opportunity to talk to you. I represent the Bobrov  District of the Voronezh Region, and am head of the local government there. Our country, our Russia, consists not only of regional cities but also of small towns like mine, where people are very responsive. Well, our town has a population of 20,000 … I would like to tell you about our programme for promoting the modernisation of public utility services. Thank you – we have carried out renovation works in two thirds of our town. We want this programme to be extended for another two years at least. We are approaching the 300th anniversary of our town. The governor has done everything within his power. We have an ice arena that just opened a year ago, and this year we opened a stadium, sports grounds, and a hippodrome. More than 40 children’s sports groups are up and running. We have private kindergartens, and we support them. However, it’s not only our regional cities that we would like to see improved through asphalt surfacing programmes, but our towns, too. Mr Putin, I will not live long enough to see a second 300th anniversary, so I would like …

Vladimir Putin: The point is that we allocate the funds as a catalyst to solve the problem, to get things moving. This issue is fully within the purview of municipalities, your town included. However, regional authorities should also help. What we are doing is unprecedented. Surfacing in communal areas and roads leading to them are the direct responsibility of the municipal authorities. We can see that the situation is difficult in some towns. We made a decision, and it was a United Russia initiative… By the way, we talked here about liberalism, and whether liberals are good or bad. I want to emphasise again – they are different people. There are very clever people with proper attitudes towards economic life... This is absolutely a non-market and non-liberal approach. The areas of responsibility are divided, and everyone, like St Francis, shall till their own plot each day. We do understand that the problem is acute, and on United Russia’s initiative, we have made a decision to allocate over 22 billion roubles in addition to other funds for road construction – 34 billion in total. Nonetheless, federal budget funds just cannot extend to every communal area in Russia; it is fundamentally not appropriate. Then it would be absolutely unclear who is doing what, wouldn’t it?

Anatoly Balbekov: Mr Putin, we are not asking for federal assistance for the communal areas but for the streets running across our town. This is because the town has a budget of 30 million roubles. If it is possible to do anything for it …

Vladimir Putin: Fine, we’ll see. Good. Please, go ahead.

Alexander Varseyev: Good afternoon, colleagues. Good afternoon, Mr Putin. My name is Alexander Varseyev. I am in charge of the Vodokanal pumping stations in Ryazan. And I am also the happy father of three children.

Vladimir Putin: My congratulations.

Alexander Varseyev: Thank you. So I have a family question: it’s about mortgages. As we all know, a mortgage is a fairly significant burden for a person over 30, even simply because it is hard to find a guarantor. Sometimes it’s like that joke: “There is no one to drink with – everybody's paying off their mortgages.” I know that Russia’s Sberbank offers reasonable terms and that the interest rate is low enough, but in my opinion a country like ours needs more than one such bank. My question is: do commercial banks shoulder any of this responsibility, and will they reduce their mortgage rates? In your speech today you said that in times of crisis you, as the government, and I, as a taxpayer, bailed them out, as far as I remember, with subsidies of five trillion roubles for 2008. We have given them these funds, but they are not giving us loans and are actually turning a profit on our aid. Could I, please, have some explanation of this? Thank you.

Vladimir Putin: Yes. I have said that we supported the country’s financial system during the crisis. And I will say it again: we were quite right. Can you recall the crisis of 1998, when major financial institutions, to put it bluntly, bit the dust? People lost their savings, and payments between enterprises came to a standstill. Things were on the verge of collapse. Just after the [recent] economic crisis began, at the United Russia congress, I think I said: “We will not let that happen again. I promise.” And we have kept our word. Money is now flowing back into government coffers. I have mentioned today that our returns on funds provided to the banking system have thus far equalled 200 billion roubles. Furthermore, the Central Bank has earned 240-250 or even 280 billion roubles. Some of the funds have not been returned to financial institutions, but these assets were lent to the real economy. Our financial system is recovering gradually and lenders must assume their share of the responsibility for financing both the real economy and private borrowers, including through mortgage loans.

You should remember that quite recently the average interest rate on a mortgage loan was 14-14.5%, and even higher in the provinces. At present, the average nationwide rate is 12.6-12.7%. Before the crisis, the minimum was 12.5%. We are approaching the pre-crisis volume of housing financing and mortgage loans. I still think that the current rates are too high and that we need to continue to push them down. And what is being done? We have developed a number of programmes. First of all, they are to be implemented by the Agency for Housing Mortgage Lending, and second, by the Foreign Trade Bank. As far as I remember, 250 billion roubles have been earmarked for these purposes in total. What does it mean and how do these funds work? You have mentioned one bank. Those funds are provided to several commercial banks. This joint work has already involved eight commercial banks. There are the Sberbank, mentioned here, VTB24, Alfa-Bank, I think, and Rosselkhozbank. So, there are eight, in total. And, sure, Gazprombank. This is why the network capacity has been dramatically enhanced. However, it depends on the borrower: how much of a deposit can they put down, what is their income, how well off are they?

I think that in your case … You have a stable job and a stable salary and, in your case, you should be offered a reasonable interest rate. Which bank did you go to?

Alexander Varseyev: Actually, I contemplated Sberbank, but there are Gazprombank, Avtobank and a variety of other banks where we live...

Vladimir Putin: What rate did they offer you, 11.5-12%?

Alexander Varseyev: 11.5%.

Vladimir Putin: I guessed right. 11.5% is an acceptable rate.

Alexander Varseyev: Yes, it is acceptable, but I want there to be more such banks, so that people can take out mortgage loans under better conditions. In any case, commercial banks have rather strict terms: no early repayments and penalties.

Vladimir Putin: I agree. The issue you raised is a central social policy issue. We will do our best to create conditions for reducing mortgage loan rates.

Alexander Varseyev: Thank you.

Denis Kalugin: Denis Kalugin, General Director of the Creative Experiment Bureau and the Personnel Reserve: the Country's Professional Team.

Mr Putin, the party project has been doing well for more than two years, and during this time, many succession candidates and winners have received government jobs. Appointments are being made at both federal and regional levels. What do you think? Does it make sense to introduce amendments and supplements to the existing legislation on government service to create a normative base for the Personnel Reserve?  I will explain why. Because if so, government bodies will be able to easily review the candidates who have already been tested and selected. I’m talking about professionals who have already achieved something in life. As you said with good reason, “God helps him who helps himself.” Thank you.

Vladimir Putin: Denis, I wholly agree with you. This is one of the weakest points of national life today – the absence of personnel. What you have just suggested is being done, but these are only the first steps. Meanwhile, the government must have an opportunity to attract personnel online and on a daily basis from those candidates who have already passed certain tests. We don’t yet have such a system, and we must establish it. We will definitely work in this direction. We’ll create it by all means.

Alexander Yudin: Good afternoon. I’m Alexander Yudin, director of a youth centre in the city of Chekhov in the Moscow Region. Russia’s entire youth policy is based on laws and guiding principles adopted by the Supreme Soviet of the Russian Federation in 1993. I’d like to ask you to encourage the State Duma to review it – it has been there for too long.

Vladimir Putin: There has been a lot of talk about it, and this is a very sensitive issue. Do we have a youth policy at all, or not? Both yes and no. You see, the problems of the younger generation require special attention and it is clear why. This is a category of people that are the most vulnerable. They don’t have work experience or any start-up capital. They don’t have many things. Therefore, the government should pay special attention to this category, and that's how it should be. The question is: how do we go about it?

Many of our decisions contain elements of youth policy. For instance, we have already mentioned the demographic project. It is obviously one of these elements. These are measures that are aimed at supporting people in the reproductive age – that is, young people. Many regions, and the governors that are present here will confirm this, have programmes on housing construction for young people. The development of student construction teams is also an element of youth policy. When we speak about the development of sports, primarily en masse, this is also an element of youth policy. But we cannot return to the Soviet standards of youth policy because they were wholly based on ideology and propaganda and eventually degenerated. We may miss the Komsomol, but in the end, it became formalised and descended into degeneracy. We cannot allow a repetition of this. We should not head down that road. But it makes sense to generalise everything and use our best experience. Let’s think together on how to do this. In effect, we have not done so yet, and it’s a great pity.

Alexander Yudin: Mr Putin, this law is in the Duma, and it has been generalising it for too long.

Vladimir Putin: The law as such is not the point. This law should not be simply a piece of paper but a meaningful guide to action that would benefit…

Alexander Yudin: This is why we are waiting…

Vladimir Putin: We don’t need formulas. We’ll work on it. Let’s complete this meeting. I’ll answer another three questions, and that’s it. Please, go ahead. 

Mikhail Dushin: Hello, Mikhail Dushin, the Kostroma Region, journalist and City Duma (legislature) member. My school friend’s grandfather lived through the war, he told his children and grandchildren that the thing he was most proud of was that he got to see Stalin and that Stalin shook his hand. And this story was actually passed down from generation to generation. He said it was a family legend. I am proud to be meeting you today.

Vladimir Putin: And he survived that meeting?

Mikhail Dushin: And I am very happy, I’m very proud that I have had this opportunity to see our real leader, an absolute professional, an excellent conversationalist Mr Vladimir Putin, and I’m so keyed up even though I’m a journalist… May I shake your hand and take a picture with you?

Vladimir Putin: Of course. We can do that. Thank you very much. Thank you. We’ll certainly do that. Now for the second and the last one, yes? Please, go ahead.

Inessa Savich-Tereshchenko: Inessa Savich-Tereshchenko, regional coordinator of the project “Personnel Reserve: The Nation’s Professional Team” in the Belgorod Region. Mr Putin, as Denis has already said, the “Personnel Reserve: The Nation’s Professional Team” project has already been running for over three years. It has been developing differently in different regions, but as local coordinators we, and here I’d like my colleagues, regional coordinators, to stand up so everyone sees how many of us there are here. I’d also like those selected to stand up so we can all see you. Stand up please.

We’d like to say that United Russia has this unique initiative, an excellent project “Personnel Reserve: The Nation’s Professional Team,” and there are a great many people, professionals, on our team who are ready and willing to serve Russia. This is not just rhetoric. These are people who take direct action in their areas, on a voluntary basis, to develop sport, to develop manufacturing enterprises, to hold various discussions and create new products. That is why I’d like to remind each member of United Russia to keep in mind that we have this reserve pool, and that we can make even better use of it than we are currently doing. Thank you very much.

Vladimir Putin: We only need to work out an effective mechanism for using this potential. Mr Vyacheslav Volodin, the Chief of the Government Staff, is here. This is largely his domain. We need to develop a mechanism, so that we don’t just have this pool of people with the right skill-set who are eager to work, but so that they are almost automatically selected to work in government bodies at all levels – municipalities, regions and the federal government.

Inessa Savich-Tereshchenko: Exactly, we need to set up a promotion system.

Vladimir Putin: Yes, exactly. And I’d like to reassure you – I’m saying this in all sincerity – the country’s leadership is very interested in this. I believe governors would also like to see local authorities’ staff refreshed, and bright new people, full of potential, join. We will certainly give it some thought and make sure we realise this potential.

Inessa Savich-Tereshchenko: Thank you very much.

Vladimir Putin: And the final question, please.

Dmitry Yendovitsky: Mr Prime Minister, I am a member of the United Russia reserve pool. And I’d like to share my story, to show how the party looks after people in this pool. I was recently appointed Rector of Voronezh State University by a decree of the Ministry of Education and Science.

Vladimir Putin: You’re going to change the rent for your organisation, I suppose?

Dmitry Yendovitsky: It’s not my organisation, and it’s a matter for the regional higher education authority.

Vladimir Putin: Thank you.

Dmitry Yendovitsky: Mr Putin, my question. Ours is a unique city. About 13% of its population are students: 130,000 students. Many universities and colleges have innovative programmes in place and are achieving very interesting results. We applied for federal university status several years ago, but lost the bid, unfortunately. At that time, we received no regional government support. The situation has changed a great deal since then, and our governor, Mr Alexei Gordeyev, meticulously provides considerable support for the region’s universities. I would like to ask you to pay particular attention to Voronezh, a city of students, an innovative city. My respected and outstanding university has a centuries-long history. Going back to Dorpat, Yuryev. In 1918 it was relocated from Yuryev, now Tartu, to Voronezh. We would greatly appreciate your support. Thank you.

Vladimir Putin: Are you talking about federal university status or federal research university status?

Dmitry Yendovitsky: During the hard-fought election campaign for university rector, the regional academic community and our esteemed colleagues from the university all agreed that Voronezh State University’s status should be changed. That it should either be granted the status of a national research university or that of a federal university. I mentioned federal university status because I personally worked out a very comprehensive programme for the Federal University of the Central Black Earth Region. The draft programme was reviewed and approved by a department of the Ministry of Education and Science. But we didn’t push hard enough.

Vladimir Putin: Right. As you know the ministry runs this contest. You need to go through the selection procedure. Nonetheless we will revisit this issue. Mr Gordeyev, you support this project, right? Good. Then I suggest you meet with your former colleague, Mr Fursenko. Talk it over, and then see me in my office, all right? Good. We’ll certainly consider it.

Dmitry Yendovitsky: Thank you very much.

Vladimir Putin: So I would like to draw this meeting to a close. This may seem somewhat trivial, but it’s true. We spoke about acronyms today, this acronym, CFD: the Central Federal District. What is the Central Federal District? It’s the heart of Russia. It includes Moscow, the Kostroma, Lipetsk, Ivanovo, Voronezh, Vladimir, Bryansk, Belgorod, Tambov, Tver, Tula, Yaroslavl, Smolensk, Orel and Moscow Regions. It is where our motherland’s, our country’s historical roots lie. Russia’s future is contingent upon your effective work Irina Kasyanov here, and this is no exaggeration. I wish you every success. Thank you very much.