Vladimir Putin’s opening remarks:

Ladies and Gentlemen,

Today, we are holding the second meeting of the government commission on the socio-economic development of the North Caucasus. As we agreed, today we’ll discuss the draft federal programme on the region’s development. In effect, this federal programme for the  development of the North Caucasus must become a major instrument in resolving the region’s socio-economic issues, supporting business, launching new production lines, forming a modern social infrastructure, and reducing unemployment, which has become the main social headache in the region. It is very important to make sure that all those who live in this region see the results of this programme’s implementation.

No doubt, much will have to be done. It will be necessary to attract considerable funding and improve the investment climate. The mechanism of government guarantees is designed to encourage business activity in the region by minimising the risks of investors and supporting the most important projects.

Today, I have signed the relevant government resolution: this year alone, the total value of state guarantees for the North Caucasus will amount to 50 billion roubles. In this context, I’d like to draw the attention of the federal and regional authorities to what is happening with government guarantees that have been granted for projects in the Chechen Republic. We dealt with this issue over the past year and discussed it at the commission’s previous meeting, but, regrettably, nothing has changed. This is absolutely impermissible. I’d like to know right now why Chechnya has not yet made use of its government guarantees. I am familiar with the excuses that are being made. The Finance Ministry says that the projects have not been thoroughly outlined. But you know what? Making excuses is easy. If they haven’t been thoroughly analysed, then help them get it done! Let the Ministry of Regional Development, the Ministry of Economic Development, and the Finance Ministry assist them. We initially had the same problem in 2009 when we suggested a package of government guarantees as one of the ways of supporting the real economy. Who took advantage of these guarantees? Very few. And we should not allow this to happen again.

It is necessary to make the most of the development institutions that have been set up expressly for the North Caucasus. They are designed to attract domestic and foreign capital to the region and to render expert assistance to the business community in implementing investment projects. I hope that our colleagues from Vnesheconombank and the North Caucasus Development Corporation will make a meaningful contribution to this effort. As of today, the corporation has reviewed several dozen business plans and selected five of the best, which require total funding to the tune of 62 billion roubles. The corporation will issue a loan of 7 billion roubles to support them. These projects will include the development of an iron ore deposit Kizil-Dere in Dagestan, establishment of a chemical centre in the Stavropol Territory, building of year-round health resorts in Arkhyz and Veduchi, and upgrading of the tourist and resort zone of the Caucasian Mineral Waters.

These projects will create hundreds of jobs, remove a number of infrastructure restrictions on business development, and substantially increase tax revenues at all levels.

We also expect promising results from the North Caucasian Resorts joint-stock company. It will carry out projects in six special economic tourist zones in the Caucasus, including four in the North Caucasus.

The plans provide for the establishment of infrastructure – roads, hotels, and ski runs. It is very important to ensure the safety of tourist centres and of the people who arrive there on vacation.

Allow me to repeat that the federal programme for the North Caucasus development should become one of the main instruments of development in the region. It integrates major federal programmes that are already operational – such as the “Southern Russia,” “Development of the Chechen Republic,” and “Development of Ingushetia” programmes – along with new sub-programmes that are to be drafted for each region of the North Caucasus Federal District. In other words, after the adoption of this federal programme, all territories of the district will have their own development plans and will receive adequate federal support for their implementation.

The work and funding of the former federal targeted programmes will remain unchanged. In this context, however, I’d like to request the Ministry of Regional Development to rule out a potential overlap of measures in the federal targeted programmes and sub-programmes for the regions of the North Caucasus Federal District.

I hope that this comprehensive approach to the federal programme will improve the management of budget resources and make it possible to channel funding into priority areas. Apart from that, I’d also like to ask the Ministry of Regional Development to step up its efforts in finalising and adapting the federal programme – all the more so since over 30 investment projects with total funding of 145 billion roubles have already been approved and any delay on the programme would impede the efficacy and timeliness of their implementation.

Our colleagues from the regions should also actively join these efforts, assist those who are initiating the projects I just mentioned, and, if need be, adjust their business plans and complete the necessary estimates and documentation. 

Today, we’ll listen to the reports of the leaders of Dagestan and Ingushetia on the socio-economic development of their republics. Let’s get down to business. Mr Basargin, please go ahead.

Viktor Basargin: Mr Putin, Ladies and Gentlemen,

Last September, the government approved the Strategy for the Development of the North Caucasus Federal District up to 2025. The strategy relied on major investment projects that were selected upon review of the situation in the regions of the North Caucasus Federal District and identified priorities in its development.

The federal programme must become an instrument for implementing this strategy. In line with your instructions, a decision was made on drafting this programme. The Ministry of Regional Development elaborated its draft and submitted it for approval to all federal departments and all regions of the North Caucasus Federal District on April 15.

As you’ve noted, the programme is aimed at promoting the socio-economic development of the district’s regions and upgrading its living standards. To achieve this goal, we are planning to improve the investment climate: to attract investment to the projects that will be selected under the programme, to establish development institutes in the district, to develop its social services through federal funding, and, last but not least, to create a more positive perception of the North Caucasus.  

As you’ve said, there are already three federal targeted programmes directed at the south of Russia (up to 2013), the socio-economic development of the Chechen Republic (up to 2012), and the same development of the Republic of Ingushetia (2010-2016). To achieve the objectives of these programmes, we would like to request their extension for another year. In conclusion, I’d like to mention a problem that all the three programmes share.

After the programmes on Chechnya and Ingushetia are carried out, we will introduce amendments to the federal programme and adopt sub-programmes for these republics. In other words, they will not be left in the cold upon the completion of their federal targeted programmes. The federal programme includes eight sub-programmes directed at five regions of the North Caucasus Federal District.  We have also adopted three additional sub-programmes. The first two are dedicated to the socio-economic development of the Caucasian Mineral Waters area (in line with your instructions) and the Prigorodny District of North Ossetia (Alania), where Ingush and Ossetian people live side by side. The third is designed to enhance the overall investment appeal of the regions of the North Caucasus Federal District.

That is, these are three additional sub-programmes, and the undertakings under the federal targeted programmes and the sub-programmes – as you mentioned, Mr Putin – do not overlap. We checked everything in detail to avoid redundancy.

While working on the draft federal programme, special attention was paid to defining a list of priority investment projects. From a total of 1,200 projects considered, the Ministry of Regional Development selected 370 to the tune of over 1.3 trillion roubles. This, in fact, will serve to supplement the sub-programme to promote these regions’ investment climates.

Of these 370 projects, we selected 30 priority ones with the total funding of 145 billion roubles. We have been told that the design documents are completed for many of them. Investors have also been established, and we would like to begin the implementation of some of these 30 projects as soon as this year – I think, it will be at the start of this year’s second half.

According to the plan, 12 out of these 30 priority projects will be in the agro-industrial sector. There are three projects in the construction industry, four in tourism, three in glass production, three in the food and chemical industries, one in solid household waste management, and one in high technology – namely, the IT Park in Nevinnomyssk.

These 30 projects alone will allow us to create more than 26,000 jobs in the North Caucasus.

Together with the Corporation for the Development of the North Caucasus, we have selected another five priority projects, as you said. They will form a separate block of the programme designed to enhance the investment attractiveness of the North Caucasus Federal District. This state programme will be implemented in two stages – 2012-2017 and 2018-2025 – as the development strategy for the North Caucasus Federal District stipulates.

The first stage envisages the streamlining of relevant legislation and management, the establishment of development agencies, social investment, and bringing federal targeted programmes to a successful conclusion. The second stage envisages the development of small- and medium-sized businesses, the provision of a business-friendly environment, the establishment of industrial clusters, and the modernisation of those industries that our present programmes concern.

The federal funding of the state programme amounts to 336.9 billion roubles, 202 billion of which is allocated by sectoral federal ministries and agencies to the development of the North Caucasus Federal District up to 2013. Another 53.9 billion will be allocated to the federal targeted programmes supervised by the Ministry of Regional Development – also up to 2013 – that is, within the present budget period. The remaining 80 billion goes to the implementation of individual projects within the programme, which are to be launched on the Russian president’s and government’s prerogative. 

Extra-budgetary investment, which will account for 30 priority projects, is roughly estimated at 172.4 billion roubles without consideration of off-budget grants on other programmes and will be implemented in parallel with the three programmes already mentioned in the state programme for the North Caucasus.

The state programme for the North Caucasus Federal District promises 33 new industrial projects, 88 agro-industrial projects, 13 energy projects, 210 transport projects, over 170 public utility infrastructure systems, 790 healthcare, educational, cultural and sport facilities, and 13 tourist projects. So we have ambitious plans, as you can see.

The implementation of the programme will have a great social impact, as you said. The gross per capita regional product will increase from the present-day 79,000 roubles to 219,000, and the average nominal accrued wage will rise from 10,000 roubles a month to 23,000 – that is, almost by 150%.

Vladimir Putin: The present average wage is somewhat below 10,000 – it’s 9,400 or 9,800 roubles.

Viktor Basargin: Yes. We expect the programme to increase the average monthly wage to 23,800 roubles. We plan to reduce registered unemployment from 16% to 5% by 2025, and the share of people with monetary incomes below the subsistence level from 16.5% to 9%.

Mr Putin, we encountered many problems as we were drawing up the state programme. First, I don’t think that any other programme, with the exception of territorial ones, envisages so many offices with which to coordinate, and thus faces impeded paperwork. We have 22 federal and seven regional agencies involved, which makes almost 30, in approving the state programme. However, we promise once again to coordinate it quite soon and submit it for approval in July, along with all the amendments that might be proposed by the regions and federal agencies.

Second, federal targeted programmes are being amended on the basis of government decisions to bring their funding into conformity with indices set by the federal law on the federal budget for 2011-2013. However, Mr Putin, budget allocations for 2013 are not earmarked for the “Southern Russian” programme (2008-2013), which means that [the programme] will be terminated next year. Considering the national importance of the North Caucasus Federal District, we deem it necessary to earmark funding for the programme up to 2013 without cutting the funding we envisaged for particular programmes, whereas the cuts we planned should be postponed until 2014. We have reached an understanding with the Ministry of Economic Development on this point, and I think that we will also come to terms with the Finance Ministry. Please support us, Mr Putin. I think that there are political reasons, among others, to continue financing the programme in 2013.

Third, the implementation of the state programme demands sizeable multi-sourced funding. This means that a central financial coordinator should be appointed. When we discuss state programme expenditures, we should take into account the 256.2 billion roubles earmarked in the current budget on federal targeted programmes and sector-based programmes, in addition to 80 billion roubles in extra-budgetary requests, which either the president or the government has decided upon already.

Lists have been drawn up of the measures and investment programmes discussed here, and there are expenditures to be made outside current budget planning – that is, starting in 2015. Today, we considered all the proposals of the regions in the North Caucasus Federal District in the context of this process, which imply more than 1 trillion 287 million roubles. We are ready to analyse these matters more closely as we cross all our t’s and dot all our i’s on the programme, earmark all the expenditures to be made before 2025, and see which expenditures find approval as we coordinate them.

We believe that all the expenditures dedicated to the development of the North Caucasus demand a coordinator. At present, as I said, the total expenditures of all related ministries and agencies up to 2013 approach 202 billion roubles. Meanwhile, the draft federal programme includes them as an analytical estimate. We need to see what the money will be spent on and to what extent the deadlines for related projects correspond. Thus, the Ministry of Regional Development asks you to appoint a coordinator. Funding should not be passed through us. Let the funds stay with the agencies responsible for them. We just need to supervise the job and see how the deadlines are met.

If we pass all these decisions today, we will apply the final touches to the draft quite soon, and the programme will improve the development of the North Caucasus Federal District.

Thank you. Please satisfy our request.