Andrei Krainy: Mr Putin, you gave a number of orders at the State Council Presidium meeting of July 31, 2007, which was devoted to fishing industry issues. Federal Law No. 333 On Fisheries and Preservation of Aquatic Biological Resources was adopted and came into effect on January 1.

Legislators have adopted a number of fundamentally new laws related to the sector. First of all, I am speaking of the obligatory deliveries of fish caught in Russia's economic zone to the country's coastal territory. We can firmly say that our economic zone is indeed the economic zone of Russia, and not the way it used to be, when the fishermen would enter the 12-mile zone, catch fish and then follow their nose.

We have introduced 25 governmental resolutions to develop this law and help it function. These resolutions have been introduced to the Government, and I am absolutely convinced they will be adopted within the scheduled dates.

Vladimir Putin: When?

Andrei Krainy: Next week. This week we are adopting eight resolutions and the rest will be adopted next week.

Vladimir Putin: You mean developed, not adopted.

Andrei Krainy: Yes, we will develop them. I am saying that we have performed work with all ministries and departments and have introduced the coordinated regulatory acts, and the Government Office is currently working with the departments. The resolutions are rather complex, since these issues have not been regulated before, either in Russia or Soviet Union, for obvious and objective reasons.

Speaking of your order to initiate work of the stock markets, we have prepared two resolutions on holding auctions in Russia. Now all fish caught in Russian waters and intended for export will be sold at these auctions to make this sector really transparent. Under contracts for export deliveries, especially to Russia's neighbouring eastern countries, a kilogram of crab is often sold for the price of a can of anchovies in tomato sauce, which, of course, is far from realistic. This prompted to two very important momentums reflected in the Law.

The fishery areas where Pacific salmon is caught have been granted to fishermen for a period of 20 years, and they received them at contests, in an absolutely transparent way. The contest commissions included fishermen, territorial representatives, police and, consequently, federal fisheries specialists. Fishermen will further receive their share of quotas for ten years for commercial fishing.

During the periods when the rules of the game used to be changed almost every year, it was hard to invest into the sector as it was unattractive for investments. But today, we have goals to plan and there is hope that if someone works under the rules - and these are your words I always put as an example - we will provide them with every opportunity to work under the rules. But if they are unable to catch fish in these conditions, they should change their profession or go cut timber.

Vladimir Putin: How are things going with processing fish catches? What about the territories where fishing is the vital activity for local villages and settlements?

Andrei Krainy: Yes, it is primarily the Russian Far East and its Kamchatka Territory. Several months ago, the Russian Government adopted the resolution On Developing Fish Processing in Coastal Areas, as it has a huge social and economic importance.

About 60% of the Kamchatka Territory's population is entirely dependant on fishing. The businesses started to actively invest into the fishing sector here when we announced the contest to provide fishing areas for a period of 20 years, with the major condition being the availability of processing factories.

Currently, we are discussing in the Government a proposal to introduce a single agricultural tax for enterprises involved in fish processing at coastal territories. This is actually not an administrative but an economic step, which could stimulate the sector's development.

Besides, according to your order we have decreased the rates for utilising marine biological resources, the law now placing it considerably lower, in some cases even two or three times lower.

Moreover, we have introduced a clause that stipulates that if a fisherman delivers his catches to Russian territory and not for export, he pays just 10% of this rate - that is, a minimum. This has already resulted in an increase in the flow of the fish catches delivered to domestic coastal territories.

Recently, Russian fisheries have caught 1.5 million metric tons of fish. If we compare this result to that of the previous years, we can see a tendency: the catch has increased by around 120,000 tonnes in comparison to 2007, and much more in comparison to 2006.

Unfortunately, this process is being hindered by administrative barriers. Some 60% of Russia's fish resources are in its Far Eastern region, while about 75-80% of the country's population reside in its central part. This huge distance between the two is very hard to handle. For instance, a kilogram of herring costs 14 roubles ($0.6) in the Far East, and delivery of the catch to the western part of Russia costs 9 roubles per kilogram. But 14 plus 9 makes 23, while the herring costs 90-100 roubles ($4.3) in the shops. Currently, we are negotiating with the Federal Tariffs Service to lower tariffs for our production, as it used to be in the USSR, when the 50% rate was applied.

We intend to apply the mechanism of fisheries exchanges, to create a big wholesale market for selling marine products to cut out mediators who act between manufacturers and the end customers, that is, ordinary shoppers. Thus, we aim to eliminate the excess profit received by the resellers.

Vladimir Putin: Extra charges.

Andrei Krainy: Yes, exactly. By the way, in Japan legislation limits the extra charges for fish to no more than 15%.

Next, we plan to work with retailers, though the process is not easy. We want to suggest that they collaborate more with domestic, and not foreign, manufacturers, though we cannot force them to do so. Sometimes it is simply ridiculous - the situation in Moscow's shops, with their abundance of imported fish, is especially depressing, since in fact Russia is a country which is not dependent on imported fish and marine products at all. Thanks to God, our country's seas and ocean areas have an abundance of what is consumed by man, ranging from crucian and common carp to sea urchins, scallops and oysters.

However, our retailers often find it easier to deal with western manufacturers for one very obvious reason. A kilogram of, say, surmullet imported from France costs 1,600 roubles in a shop ($68), while a kilogram of the surmullet caught in our Black Sea waters costs 70 roubles ($3). It is obvious that the profit is bigger from the former than the latter. That is why retailers are unwilling to buy domestic product.

We suppose that establishing a domestic fishing market will provide our manufacturers and fishermen with the opportunity to directly reach end consumers, that is, ordinary citizens, owners of small cafes, restaurants, shops, etc.

Vladimir Putin: Good.