Transcript: 

Vladimir Putin: Good afternoon,

We held a video conference about two weeks ago when you were at the Innoprom Exhibition in Yekaterinburg. I very much regret that I could not be there personally. I'm told it was really quite interesting. We agreed then to meet with the winners of the contest who joined the Strategic Initiatives Agency (SIA) Expert Council.

First of all, I’d like to thank you and everyone else who took part in this process. There were about a thousand young, active and successful people who participated in this contest. The contest commission, which had to choose four people to head the agency and its three main areas of activity, was faced with the very difficult task of selecting from among a thousand successful, personable and ambitious young people.

I’d like to note that there will be no losers in this marathon race, because we’ll try to make sure that in any event, all of you have work to do, nobody gets abandoned and everyone can take part in the agency’s activities in the regions. As I’ve said more than once, I’d like for the agency not to limit itself to Moscow, not to function only within the limits of the Garden Ring.

We had different approaches and different views regarding the final decision-making. But let me repeat again that despite the complexity of this process the commission had to make a decision, and we did. I’d like to make public the results on behalf of my colleagues. I won’t keep you in suspense any longer. Andrei Nikitin, director-general of the managing company Ruscomposite, has been elected the agency’s director-general. Artyom Avetisyan, president of the NEO Centre Consulting Group, will head the New Business area. Dmitry Peskov, general director of the Metaver project group, will be in charge of the Young Professionals area and Vladimir Yablonsky, director of the state educational institution Information and Analytical Centre, will head the Social Projects area. Congratulations. I’d like to congratulate all of you foremost. I’m sure you will organise the agency’s work properly and turn it into an effective instrument for promoting innovations and forward progress in the chosen fields.

I’m confident that everything will work out for us. Most important is that all of you, practically all one thousand of you, have the drive, the daring and the readiness to achieve success.

The activity of the agency should be striking and multifaceted, it should change existing stereotypes and overcome the barriers of which there are, unfortunately, still so many. We often rightly criticise ourselves about these barriers. I must say that in reality they are everywhere, but we should have fewer of them than in other countries. I’d like to give the floor to those colleagues whose names I mentioned. Let’s start with the director-general. Please, go ahead.

Andrei Nikitin: Mr Putin, thank you for giving me the opportunity to speak. I’m grateful to the members of the contest commission for selecting me. When we started our business nine years ago, we had the option of either opening a trade centre in place of the factory or doing something absolutely new. We chose the second path. Now our company produces 90% of something that has never been manufactured in Russia before. Some products had never been manufactured in the rest of the world, either.

We don’t regret our choice. In my opinion, the agency’s primary goal should be to support projects by removing regulatory and administrative barriers that foster irresponsible behaviour and may lead to disastrous consequences. We must assist business people in packaging projects and obtaining funding from development institutions. I think this should be the main task.

The second task is connected with the image of business people in modern society. To put it mildly, it is difficult to communicate with a society that perceives business people as not exactly respectable. I believe we should improve the image of business people.

Third and final, excuse me, I am a little nervous. The third goal is to improve the business environment. My view on the workings of the government machine is as follows: the government machine carries out instructions, and once an instruction has been carried out hardly anyone ever follows up to monitor the actual effect of a particular regulation on business operations. I believe that the agency should work closely with business associations, Delovaya Rossiya, Opora and so on.

Finally, professional standards don’t get enough attention these days. As a businessman, I can say from my own experience that it’s hard to find good professionals among college graduates. Actually, we are using some ingenious ways trying to find them, including the Zvorykin project among others. The educational standards and approaches practiced by higher educational institutions are totally out of sync with what medium-sized businesses are looking for in applicants.

Vladimir Putin: Mr Nikitin, what is the Zvorykin project about? Please let us in on it.

Andrei Nikitin: The Zvorykin project is run by the Federal Agency for Youth Affairs. This project has young people post their ideas on the internet, and businesses are supposed to choose the ones that are worth implementing. We joined this project this year. We held a special contest as part of the composite materials project and managed to find young people who will help us significantly cut our spending on foreign-based research. In other words, these guys are doing things that… In short, this is really a top-notch way to conduct calculations and manufacture the latest composite and carbonic materials.

Vladimir Putin: Where are these young people from?

Andrei Nikitin: Moscow, Samara, Cheboksary. Actually, from all over Russia, Mr Putin.

Vladimir Putin: They work at research institutions, don’t they?

Andrei Nikitin: Yes, these are post-graduate students and researchers, people who love science and do their work not because… You know, the designs they showed us aren’t about some project that’s being done in six months with the only goal being to get grants from us. These people have been involved in these projects for years, seeking ways to strengthen structures and improve the reliability and service life of various devices.

Vladimir Putin: So, you are hiring them or what? How is it going to be organised?

Andrei Nikitin: We will invite some of them to work with us. Those who wish to stay with their research educational institution, perhaps we will sign a contract with such an institution and they will work on some projects. Anyway, we will work closely with them.

Vladimir Putin: In what fields could their research and designs have applications? What is the end result of their proposals?

Andrei Nikitin: One of the projects pursued by our company involves the creation of innovative composite slabs for building makeshift runways in remote regions to be used by aeromedical aircraft and so on.

Vladimir Putin: This is very important.

Andrei Nikitin: Durability and longevity are very important in such projects. Initially, we planned to have the Dutch run the calculations for us, but now I realise that by using this kind of talent we will be able to do it in Russia.

Vladimir Putin: Great. This is really important, especially knowing that, unfortunately, the small aircraft industry has been unraveling in Russia since the early 1990s. We should move forward with building such runways, because the infrastructure is poorly developed in remote Russian regions. Whether you are aware or not, you are working on something that is extremely important.

Andrei Nikitin: Thank you very much. Finally, promoting social initiatives is perhaps the most important objective. I will not elaborate, because I believe my colleague will do a much better job of this. I can say that personally this will be among my priorities, because this is really important. This is something that we absolutely must do.

Vladimir Putin: Mr Nikitin, speaking about the organisation of work at the agency, what are your priorities?

Andrei Nikitin: I believe that we have chosen the best organisational form for the agency, because, above all, the agency is a civil society institution, right? We should be very friendly towards business, educational institutions and social initiatives. Perhaps the first thing we will discuss with our colleagues will be how to create an empowering environment so that we do not turn into inaccessible bureaucrats. When I was filing the application, I was primarily driven by the fact that this is a non-profit organisation. I believe that we will start with this premise and work concurrently with our colleagues from the expert council on refining specific approaches and ways to support medium-sized businesses. My favourite Eastern saying is that a journey begins with a single step. Thank you very much, Mr Putin, for giving me the opportunity to make this step. We will follow this road. We will try to talk less and do more.

Vladimir Putin: Good, thank you. Please, Mr Avetisyan, go ahead.

Artyom Avetisyan: First of all, I would like to thank the competition committee and you personally, Mr Putin, for choosing me. I understand that the choice was hard to make, and, therefore, my responsibility is great. I know this from personal experience. I started my business at age 22 using my own assets: cell phone, business suit and my confidence in myself. They taught us at the Finance Academy, and they taught us well, that in order to be successful we must stand out from the crowd. It is called “competitive advantage” in business. Back then, 13 years ago, I realised that a deep understanding of Russia and the way business is conducted in Russia will be a competitive edge for my company. This understanding helped my company become a competitor to leading international businesses. Second, the experience I gained from working in a competitive environment taught me that success, however small, doesn’t come by itself, but through hard work. I spent 13 years building my company. I evolved together with my team, and we followed in the wake of changes that took place in the Russian economy. Of course, we knew successes and disappointments. Perhaps the biggest disappointment for me as the head of a consulting company was when the business-building ideas that we generated for our clients failed to get off the ground for whatever reason. When I heard your speech, Mr Putin, about a month ago, where you explained the logic behind the Strategic Initiatives Agency, I realised that this agency will, for the first time ever in Russia, help implement the ideas that failed to be implemented previously. Indeed, there’s a fairly large distance between a good idea and its translation into reality.

The agency is called on to shorten this distance. Perhaps something useful will be created on top of an initiative that comes from the bottom. I think this is exactly the way the agency should work. Any smart and proactive person with a worthy business idea should not only be heard but should also be able to implement this idea with the agency’s help.  

You are all aware of the many problems confronting medium-sized businesses, and I am aware of them from my own experience, too. However, I believe that the agency’s resources should not be spent on discussing these problems (although it’s also important), but on creating the so-called lifts for entrepreneurs in the sphere of social initiatives, training professional teams and, certainly, new projects. Not just new projects, but the ones that can be implemented across Russia.

As a businessman, I appreciate that time is a factor. Therefore, I believe that bureaucracy has no place in the agency.

Vladimir Putin: Mr Avetisyan, how many people are employed in your company?

Artyom Avetisyan: About four hundred.

Vladimir Putin: Quite a lot. You’ve got that many consultants?

Artyom Avetisyan: Yes.

Vladimir Putin: Four hundred people providing consulting services day and night?

Artyom Avetisyan: Day and night, exactly.

Vladimir Putin: Wow! Round-the-clock consulting! I’m really impressed.

Artyom Avetisyan: We’re involved in what is known as project packaging. We make projects attractive to investors.

Vladimir Putin: So people come to you with their project proposals, and you help them find sources of financing, right?

Artyom Avetisyan: Well, an idea, however bright, cannot be translated into reality without a proper business plan. And there’s also a need for a financial model, for market research and for attractive packaging because different banks and investors have different requirements.

Vladimir Putin: So that’s what you do?

Artyom Avetisyan: Yes, we cover the entire spectrum.

Vladimir Putin: I see. I’m torturing you with questions because this is, actually, what the agency will have to provide, albeit at a different level.

Artyom Avetisyan: Of course. Medium-sized businesses have been part of my clientele for 13 years. We’ve had close to 4,000 such clients over this period. One point I’d like to make here…

Vladimir Putin: I wonder just how much money consulting agencies make? How big are the earnings of your agency, for one?

Artyom Avetisyan: We are a medium-sized business, and we make about a billion roubles.

Vladimir Putin: A billion annually?

Artyom Avetisyan: We are among the leaders on the Russian market. 

Vladimir Putin: So your 400-strong team generates a billion roubles every year, right?

Artyom Avetisyan: Yes.

Vladimir Putin: Using just a pen and a computer.

Artyom Avetisyan: Well, I was surprised to meet so many bright and talented people over the past month when the competition was in its final stage. I thought to myself that the Strategic Initiatives Agency was, indeed, a step in the right direction. It’s not just a good concept but also a platform for communication. We had an open and frank dialogue in Yekaterinburg. Perhaps it’s that openness that has attracted so many of my business colleagues. I, too, have readily embraced the idea. And now I realise that it’s a serious commitment, as well.

We simply can’t let down the people who are already sending their applications and project proposals to the Agency. And, of course, I feel responsible vis-à-vis you personally, Mr Putin, and all the other people who have chosen me among other contenders.

Vladimir Putin: Thank you. I’d like to point out that it’s not the only forum we’ve got. But perhaps it’s one of a kind. We’re now trying to create a whole network of organisations through which we can propose and implement some ambitious and interesting projects that are important to the advancement of specific fields as well as to the nation.

We’ve created a whole network of special economic zones. They aren’t structured in the same way and their modes of operation differ, but all of them function quite efficiently. We shouldn’t lose sight of that fact. Ms Nabiullina, how many of them do we have, all in all?

Elvira Nabiullina: Twenty-four. Most of these are tourism and recreation zones; only a couple of zones so far are related to advanced technology and innovation. And then we have several industrial and port zones. They are all different.

Vladimir Putin: Indeed. The Agency should operate throughout the country. In my view, it’s extremely important to enable young, talented individuals to promote their ideas and implement their projects on the ground. Thank you. Mr Avetisyan just spoke of professional training. We have a programme aimed at advancing such training among young Russians. Mr Peskov, please have your say.

Dmitry Peskov: Mr Putin, thank you for believing in us. I represent a small firm involved in designing innovative educational systems. The team consists of people from venture businesses, IT companies, government agencies, and higher educational establishments. We’re trying to create training systems that are truly competitive and that could turn out highly-qualified professionals within a short span of time.

To be honest with you, being, as we are, part of what is now known as the creative class, we are rather skeptical and cautious about any initiatives coming from the government.

It's always very difficult for us to take part in such projects. All else being equal, we probably would not participate in this project either.

Vladimir Putin: Mr Avetisyan has just spoken – I wanted to ask you a question, but have forgotten – about the Russian way of doing business. It derives from the Russian mentality. Everything that is done at the top has to be subject to doubt.

Dmitry Peskov: Yes. But, you see, our children are already growing up, and when children start to grow up, you begin to think about the kind of country they will live in, and you realise that at some point you have to take a risk and assume responsibility. This was an extremely difficult decision for me, because we are not working with the state on principle, we don't take part in any state bidding, and we receive absolutely no budgetary funding. We have built a structure with no offices (there are separate project groups), with no internal bureaucracy, with no hierarchy. We are a kind of a network group.

Vladimir Putin: Just imagine, all this has been done under our conditions! And who could have created these conditions, including the Government?

Dmitry Peskov: Absolutely. Yes, sometimes when overcoming obstacles, things work out very well. Frankly, on first glance it appears that the specific objectives in my area that the Strategic Initiatives Agency faces cannot be accomplished. It feels as though we will be the first to go to the front and our first lines will be killed there, because in this country today, we have trouble predicting and realising the value of education.

Several years ago, the entire country made a huge mistake and sent its children to study economics and law. And now, Russian labour exchanges are swarming with superfluous economists and lawyers. And our universities today… You know, there is a saying that universities are like generals: Generals prepare for past wars, and universities produce specialists that are no longer needed. It seems to us that we should listen to the business community and to its requirements more actively, so as not to become such generals.

The goal of the Strategic Initiatives Agency is to teach the business community to communicate with the education system in the same language. This is because professional standards, rather than educational standards, are the main pillar worldwide. But such standards are formulated by the business community, relying on its professional associations. The situation in Russia is bad because there are so few professional associations here, and those that are here are quite weak and unable to formulate the necessary objectives. College and university students graduate after completing four-year and six-year courses. In effect, we need to clearly understand subsequent economic developments, the range of goods and who our rivals will be in the next year, five years and ten years.

This is an extremely important function of the Strategic Initiatives Agency, which is called upon to train and employ current and future liaison officers, as well as to create a national school of individuals who understand global trends, technologies, risks and legislative systems, and who can cooperate with and assist medium-sized businesses. In military terms, they need to breach the front – to enter global markets and seize new markets for Russian business. From my point of view, the benefit of posing the question this way is that if you have managed to sell a product on the global market, this means that everything is in order, and that you are competitive. If you sell in Russia, however, this could be due to a thousand other non-market factors. It seems that the Strategic Initiatives Agency should create a system for the development of human resources for such rapidly growing Russian companies.

Finally, I would like to say that all this could be pointless, because a country whose youth is leaving to go elsewhere, has no use for a strong education system. With this system, we will be feeding other countries. Therefore, the Strategic Initiatives Agency’s most important task is to make things such that young professionals will not leave the country – that is, to create mechanisms of long-term loyalty in which professional development would be linked with various bonuses. Instead of training individuals, the education system should train teams that could conduct business while still in school. I think we should introduce the concept of a “venture holiday”, where students, working with their professors, would be able to leave school, implement a business project and return after two years. We need the Strategic Initiatives Agency to act as a contractual platform for the main parties, in order that they can take risks, take responsibility. Thank you.

Vladimir Putin: Thank you very much. I would like to make two comments and to ask a question. You said that a country whose young specialists are leaving to go elsewhere does not need a good education system. You can look at this problem from different angles. If major companies hire Russian specialists then, pardon me, this means that the national education system produces competitive specialists, because this speaks to the level and quality of training standards. I'll cite an example that is already well known. The Boeing Company operates here in Moscow. One of its local engineering centres has made a 70% contribution to the latest Boeing aircraft model.

This indicates that the Russian education system still produces world-class specialists, and this is its main product. The machinery works. It's another issue that the Russian economy still does not understand these high quality educational commodities. We have to address this problem. As usual, the labour force, as a commodity, seeks the best employment opportunities, where there are competitive wages, the necessary technical means for achieving their professional goals, and so on. This is a multifaceted and complex task. Of course, we need to assess labour market demand and bring the national education system in conformity with this demand, otherwise the system will fail.

And now my question. We have long been discussing with the professional community the issue of working out criteria that would allow us to adequately assess professionals. Mr Peskov, what do you think we can do in this area, as well as with your experience and the structure of the Strategic Initiatives Agency?

Dmitry Peskov: I would say that first off, we should create an image of a professional, a person whom this country will need in a few years. We should determine his or her qualities and aptitudes, create agencies and support educational initiatives that will bring this image to life. For instance, medium-sized businesses face a serious problem. Large businesses have the capacity to order an educational programme, including targeted programmes in the West, or purchase a faculty or department. But medium-sized businesses don’t have this opportunity. If we teach them how to pool their resources and create network groups, how to train specialists in line with real, quality, global standards, then we can accomplish this objective. But first, we need to understand exactly what we are striving towards.

Vladimir Putin: In principle, together we can accomplish a very important objective. If we work out the criteria of this quality, then I promise you that we will be able to introduce them gradually into the educational system. A lot will depend on the quality of these criteria and our ability to introduce them into real, practical life, into educational establishments and then the labour market. As a result, small, medium and even large businesses will have criteria for selecting specialists. This is an extremely important task.

Dmitry Peskov: Yes, and we have a good foundation for this, because the Soviet educational system trained, and continues to train, skilled specialists. They need to acquire new qualities that did not exist before, including the ability to continue their studies, the ability to take risks and an understanding of globalism. In principle, there is a good foundation for this.

Vladimir Putin: An academic degree by itself is no longer enough. 

Dmitry Peskov: Yes.

Vladimir Putin: And we need to understand what else is needed, besides a degree. How can we understand this? This is highly important, in fact it is one of the key challenges in this area.

Dmitry Peskov: This should amount to a personal profile of an individual’s skills and aptitudes throughout his or her entire life.

Vladimir Putin: Yes, exactly. Thank you. Now let’s move on to Social Projects. Mr Vladimir Yablonsky, please.

Vladimir Yablonsky: Mr Putin, first of all, I would like to thank you for your trust. I have also been conducting business operations and implementing IT projects since I was a student. I joined the social sphere over 15 years ago. Since then, it has been possible to implement more than 50 educational and healthcare projects, including those at the federal level. This includes such IT projects as electronic class registers and journals, online grading, as well as innovative systems. For example, there has been a reorganisation of the professional education system, including primary and secondary education, the creation of a professional guidance system, as well as a new generation of daycare centres. We are currently working on this. Moreover, we are involved in the Zworykin Project, which has been mentioned. New Palaces of Young Pioneers are filled with new content, from which, naturally, students should subsequently enrol in colleges and universities, then to the Bauman Moscow State Technical University or the Skolkovo innovation hub, according to their trajectory.

I’m very glad that within the framework of the Strategic Initiatives Agency there are such areas as Social Projects. This is very important, I consider it a major opportunity, a chance to do something, something that the regions have frequently failed to accomplish. They failed because various solutions are often being introduced despite the system, and unfortunately, we have to persuade the parties involved to reach agreement with them. I have fallen victim to this myself, and I think that I can help others who want to do this and are able to do it.

I would like to say a few words about how Russia’s social sphere currently operates, and to express my opinion on this matter, based on my experience. The organisation of this system is rather cumbersome, resembling an obsolete social security agency which squanders human resources and finances. This leads to a shortage of these resources – people and finances. Additional resources are allocated, meaning we have to invest more. This inefficiency is repeated, thus forming a cycle. Numerous agencies, including public-sector organisations and various federal state unitary enterprises, operate in this field. At the same time, there are many dedicated people with lots of initiative working on the market and in society. They enter into medium-sized businesses or public-sector organisations, or teams employing young or middle-aged professionals. They also work for non-profit organisations and public organisations. They create all sorts of initiatives, but they are unable to break through because the system often does not provide them with the resources to enter into regional or federal targeted programmes that support small businesses and public organisations.

Although we work within the social sphere, even we have been unable to win competitions at some Moscow-based or state agencies for years, to accomplish something, or even to promote our achievements. For instance, we introduced student cards at 300 schools in Moscow several years ago, but we are unable to promote this project at the federal level, even though it is directly linked with the Universal Electronic Card project.  

Each governor has his or her own agencies and interests. Naturally, the situation does not develop. We have the relevant experience, and I think that business people with initiative, as well as public-sector employees, can already create a viable alternative to this unwieldy system currently in place. With this in mind, they should be trained in how to prepare projects. Public-sector workers, for example, do not know how to present their projects in an appealing way.

I'd like to say that I’m very lucky to have such colleagues. Fortunately, we have had some teamwork experience while we passed various stages of competition. We were able to communicate well at the International Ural
Exhibition and Forum of Industry and Innovations Innoprom 2011, and we realised that we all support each other, that we have common goals, a common vision and a real desire to change something. By combining our different skills and aptitudes, along with the structure of this agency that could truly be free of bureaucracy, this will make it possible to truly accomplish something and to promote, for example, the best existing practices, or those that we will search for in line with specific criteria.

I do not think it would be appropriate to expand budgetary allocations or invest additional budgetary funding in these initiatives. This should come from the business community and from people's initiative. In my opinion, there are four main aspects regarding the structure of the agency’s work. First, there is the matter of organisation. We need to find people. There are many people in this country, and they should be connected through modern social networks, for example. The agency’s forum receives 8,000 e-mails a day. This is surprising, since no one goes out of their way to advertise the agency. People hotly debate projects and ideas that have been advanced. We will actively promote such activity, support these people and protect them at the regional level.

Second, we need to try to modify regulatory documents as best we can. We should be a driving force and initiate these changes, because we simply need to open the road for medium-sized businesses, in order for them to be able to enter the social sphere. It is possible to open one private school, but you won't be able to open ten; this is unrealistic because of regulatory documents and because of the stagnation of the system. Moscow has 2,000 public schools and about 150 private schools. There is a desire to open the gate.

The next aspect concerns financial resources. This includes issues such as endowment, loan issues and, naturally, the influx of private investment in any form in the social sphere. Of course, this should not impair the quality of education or healthcare. Nor should there be any sharp changes which, God forbid, could negatively affect people's quality of life. We also discussed this at Innoprom 2011.

The next aspect, and probably the main one, is support for projects and active teams. This includes benchmarking, television and online PR, as well as PR abroad and wherever possible, for people who have accomplished something. We need to monitor regional developments, and we need feedback. This means “pinpoint” projects and the promotion of best practices. We have now introduced these practices at the regional level. When I attended the Innoprom 2011 exhibition in Yekaterinburg, I was surprised to see many things which, in my opinion, the regions lack. As I see it, we need to catch up with them in terms of our own projects, and we have already fallen behind in some cases. There are no promotion campaigns and there is no information support. I think we need to work on this. Thank you again for your trust. I hope everything will work.

Vladimir Putin: Thank you. You have quite aptly pointed out the stagnant nature of the system, particularly that of the social sphere. We have inherited it from Soviet times. Under modern conditions, the system is slow, unwieldy, unprofitable and ineffective. This is absolutely right. There is therefore tremendous potential for work in this sphere. On the whole, you have identified virtually all aspects of necessary work. Rather well-known and successful persons have submitted their applications. But the competition commission wanted to make their decision in favour of those who are just starting out. This does not mean that those successful, famous and interesting people are in any way inferior. But, I repeat, we made our decision on the basis of this reason. Nevertheless, we don’t want to lose anyone, and we would very much like these people to continue working at the Expert and Supervisory Councils. This would make it possible to unite the team.

Mr Valery Fadeyev, Editor in Chief of the magazine Expert, and some other colleagues are present here today. I would now like to give them the floor.

Valery Fadeyev: Thank you, Mr Putin. First of all, I would like to mention a statistic that stood out to me some time ago. People enjoy saying that Russia is building a post-industrial society, that industry is somehow second-rate, that the economic pattern is shifting in favour of non-industrial sectors, and that this indicates a similar situation in Russia, which seemingly prioritises the service sector and banking.

I looked into this, and found that in developed countries, the processing industry accounts for $7-10 thousand per person per year. In Switzerland, this accounts for $11,000 of annual per-capita added value. In the United States, where there are some well-known problems, this figure is $5,500 per person per year. In Russia, it is $1,500 worth of annual per-capita added value. But this amount includes aluminium ingots, rolled stock and nitrogen fertilisers, because these products are the result of initial stages of conversion. And the so-called processing industry accounts for several hundred dollars’ worth of annual added value. We are behind by 10-15 times. In terms of the overall economic situation, this represents a serious lag. As I see it, one of the tasks of the Strategic Initiatives Agency is to overcome this lag using the resources of young teams, fast-growing companies, and so on. Gazprom cannot be turned into General Electric. It will be a giant, powerful and productive commodity company. New processing companies will evolve from companies which seem tiny by global standards.

Two weeks ago, during a TV link-up with Yekaterinburg, you asked where the demand will come from. I believe there are three types of demand, and therefore, three types of projects that we should discuss. First, this involves fast-growing segments of the Russian economy, where there is growing investment, and where further investment is expected, primarily state investment, because the state is the main national investor. There are also infrastructure projects, including construction, roads, agriculture and power grids. Then there is healthcare. This sector is likely to grow very quickly, and many private companies could expand as a result of this growth.

I have noted several companies here for myself. UniKhimTech manufactures protective fire-resistant coatings. It appears that no one buys its products, because weapons and ammunition dumps continue to burn every year. Turbokon manufactures energy sources for Gazprom, as well as boiler-room turbines. They are not installed in boiler-rooms for obvious reasons, because it is more profitable to repair, rather than replace them. The Belgorod-based Reinforced Concrete Products Plant No. 1 turns out concrete plates tightened by steel cables, as well as sliding plates. Experiments show that these make the best roads for the Russian climate and surfaces. Such roads have been built and continue to operate, this company continues to work, and these roads last several times longer… There are other examples as well. Many such companies have already emerged, and the potential demand for their products is quite impressive. Of course, we need substantial incentives – for the housing/municipal utilities sector, for Gazprom and for other state institutions.

The second group comprises fast-growing companies, also called “gazelle companies”. The gazelle runs fast and far, but it is quite small. Few people know that Russia had 600 gazelle companies in 2008. Our understanding of a gazelle is a company that posts at least 30% annual growth for a period of five years. There were 600 such companies with a turnover between $20 million and $300 million, so in fact, they are medium-sized companies. In 2009, when the crisis was in full swing, there were 120 such companies left, but they continued to grow at a rate of 30% annually. No other country in the world can boast such growth. We have written about the many colleagues that are present here. No other country has so many fast-growing companies. The only thing is that they are small.

This means that these companies create substantial demand for innovation. For instance, Interskol Co. displayed its products at the Yekaterinburg exhibition. They manufacture saws. No one could figure out where the saw’s motor was located, because the innovative, built-in motor was so small. There is no saw like this anywhere else in the world. The demand for the innovation of such inventions is being created.

And so this environment is being created around fast-growing companies, facilitating demand for innovations, science and high-quality educational services. In my opinion, the main task here is to create production chains that would expand production development, education, innovation and other components around these companies.

And, finally, there are champion companies. Unfortunately, there are very few of them. Last month, Valentin Gapontsev received the State Prize. He is an outstanding scientist and organiser, and his company is a global leader in the field of laser manufacturing. Our colleagues have told me that the T Platforms company manufactures super-computers. Their current earnings total about $100 million. He knows how to bring the company to $1 billion earnings. This is not a dream, but a plan. However, this would require global operations, because there is no such demand in Russia. He has a specific plan. And I think the agency should help transfer him from one category into an entirely different category.

I would like to make a brief remark about the methodology of the Expert Council’s work. It seems to me that it need not limit its size, and that all those who have actively taken part in the competition, and who strive to assist the Strategic Initiatives Agency should perhaps be invited to join the Expert Council. If there are too many people, then they could be broken up into separate groups, according to the area of work. I think long-distance work should be implemented.

It seems to me that we should establish distance working. We need to set up a kind of think tank that, on the one hand, could respond to applicants, because there are so many projects and each one has specific points that need to be cleared up, and on the other hand, it would be able to give guidelines to  five or seven experts who do this routine analytical work. Occasionally, we need to get together, even though some colleagues live in cities other than Moscow. And it seems very important to me that we should hold public events in order to show that there are results, there are successes and, as we already talked about here, that there is a constructive face of business. We have already arranged some public sessions with so-called gazelles [high-growth companies] in Moscow and Yekaterinburg. Even the simple fact that they catch the public eye is important, to say nothing of benefiting the Agency. Thank you.

Vladimir Putin: Thank you very much. Alexander Galushka, of Delovaya Rossiya, please.

Alexander Galushka (President of the All-Russian Public Organisation Delovaya Rossiya): Thank you, Mr Putin. Delovaya Rossiya has backed the Strategic Initiatives Agency from the very start because the ideas it promotes are truly important. If we look at our business community, we will see that on the one hand, we have small businesses, and the state has done a good deal to help them: there is a nationwide programme of support for such businesses. The essence of these programmes consists in offering them a variety of preferences: a special tax regime, a special access regime to the infrastructure of natural monopolies, and a special administrative regime. This is understandable and justified: in general, it is the path that all countries follow.

On the other hand, we have big business, which can address its problems by way of individual negotiations. That is also natural and understandable. But there is also a layer between small businesses, that work under special, preferential conditions, and big businesses, that can resolve their issues through personal negotiations, and this layer is most interested in the Agency and in the improvement of the entrepreneurial climate. This is medium-sized business, and this is what shapes most requests to the Agency. Delovaya Rossiya represents this medium-sized business, therefore we have a ready response to the initiative that is easy to explain. We think this business is the target audience for the Agency.

Over the past two months we have held a series of discussions, including at the Yekaterinburg forum. The forum acted as a kind of summary. It is interesting to look at how the Agency formed its policy for supporting business. Various issues and ideas were raised, and out of these five key ideas crystallised. We asked our colleagues at the forum to rank them in order of importance (we conducted an interactive opinion poll in Yekaterinburg), to say which should come first and which should come second. The first problem mentioned was the lack of availability of development resources – finances, infrastructure, land, personnel and government backing. The second problem concerned administrative barriers and corruption. The third dealt with a lack of interest on the part of authorities to improve the investment climate and the entrepreneurial environment, and develop entrepreneurial projects. The fourth described specific competitive conditions in Russia, where business success hinges not on honest competition but on access to administrative resources. The fifth and last problem was the negative attitude to the business community as a social stratum.

These five problems are the targets of the Agency's activities. But they are not insurmountable – they can be coped with. There are examples of this in the world and in Russia, at federal and regional levels, when these problems are addressed and solved.

What can the Agency do to help with these problems?  First, it can address them through the projects which it is expected to undertake, by examining core issues and formulating strategic initiatives to solve them. Practice suggests that when we take the perspective of these real projects, we see these initiatives as strategic and at the same time very specific. Second, what the Agency could do and should begin with is to compile a registry of government support measures (of which there are many within development institutions, targeted programmes and regions, but which are not accessible to businesses) and to describe them in business-friendly terms: an overview of what the government has prepared and ready to offer to businesses and what can be accessed easily.

The Agency could put together a separate package of government support for every concrete project: offering to work in a special economic zone, VEB backing, or support from some targeted programme. This is a niche where there is great demand today, and it is not occupied by anyone. The Agency could play a unique role here. Moreover, it could function as a feedback mechanism, appraising the efficiency of such measures, their completeness and adequacy though the prism of project implementation, and suggesting ways to improve and develop them.

The third and final goal is for the Agency to supervise projects. As practice shows, there are few regions in Russia with project support structures. They are all non-government structures and the fact that the Agency is one of them is excellent. This is a strong and crucial principle of its activity. It means that a businessman can hire an agency officer to guide his or her project through all the administrative barriers. The attitudes and treatment that this officer will meet with at these bodies that issue permits, grant consent and exercise control will be quite different than if a businessman were to meet with these people on his or her own. The fact that the Agency is a non-profit organisation has a very positive potential.

It seems to us that the combination of these three things – the formulation of specific strategic initiatives through project implementation, selecting appropriate measures of support, using existing programmes, and the supervision of projects – should give a big boost to new projects and to the entrepreneurial climate in Russia. Thank you.

Vladimir Putin: Thank you very much. Yelena Nikolayeva, a Public Chamber member, please.

Yelena Nikolayeva: Good afternoon, Mr Putin. Today should be a historic day for the Agency. Or, shall we say, its birthday. This leads me to want to express a few wishes, or fantasies. Why fantasies? Because, frankly, I think neither the managers nor expert council members have a clear understanding of what they will be doing, yet there are already so many desires. At brain-storming sessions in Yekaterinburg we came up with so many ideas that an entire government would be needed to address them. But we are optimistic: we think this can and should be done. You will remember our recent meeting at Stupino where we discussed the construction of low-rise housing. I mentioned that our association for low-rise housing helped to create a whole industry in five years. We accomplished this out of desperation, because otherwise we would not have broken through the bureaucratic barriers which are, in reality, a lobby for big business. If we had not pooled our efforts we would not have 51.9% of low-rise buildings in the housing breakdown today.

You are aware of the problems that we encounter every day. And, to be honest, I am glad that you feel outraged: you may wonder, how do we build anything at all? We do so against all odds. Yes, we introduce new methods and technology, we build new plants, and some of them were put into operation this year. We are building housing quickly. But what is the purpose of what I am saying? We are guiding a whole industry, but we are not tearing down barriers, we are not untying knots or altering our tax laws or dealing with grid connection issues. Most important of all, we should stop seeking administrative resources, because this is the same corruption scheme, and we want real medium-sized business to emerge. What's more, medium-sized business emerges out of small business, and feeds it in turn.

I think we are witnessing the emergence of a team. I would truly like to wish this team the best of success, because we have big hopes for them, and they face serious risks to their reputation.

We recently discussed social policy issues with you, including at a Delovaya Rossiya forum, and, if you remember, I emphasised the need for social modernisation in Russia, because the unwieldy system you spoke about today is rooted in the Soviet past and has not been reformed for a long time. It is dragging our economy backward. This means that the Agency should choose those initiatives, teams and projects that will become growth points, and on the other hand, identify difficulties and systemic problems that are in need of solution. Why? Because strategy awakens faith in the future. We are therefore looking towards the future with hope – everything will depend on how we will be shaping it.

We have done a lot of groundwork: we reviewed, for example, our social laws and opportunities that we have not yet taken advantage of. There is not yet any business present in the social sphere, business is just beginning to enter it, while in the rest of the world everything is neatly divided: the state is here, business is there, and non-profit organisations are over there. We are all able to implement these opportunities, and we need to be in contact with the government, and thank God, the government understands our concerns and listens to us. I will not scold the government, because those who work there are normal, proactive people. We simply need to learn how to work with them and become persistently annoying each time we meet with them.

Vladimir Putin: Listen, this is an experienced entrepreneur speaking!

Yelena Nikolayeva: No, Mr Putin, it is true. At times you need to know how to be a nuisance in order to find solutions, you see? We found solutions for low-rise housing and we are finding them now in social affairs. Do you think this is pleasant? Of course it isn't. They brush us aside, but we forge ahead and come up with our projects, including non-profit and business projects.  I recently described how I launched my first business while still a physics student. It took a good deal of effort to get one of my recent projects going (the production of innovative medical equipment to treat incurable diseases without medicaments). I spent eight years struggling through clearance procedures in Russia to achieve my goal. I could write an epic novel on how it is impossible to clear all bureaucratic hurdles without giving bribes. But I told myself I would not give bribes and would do everything honestly. It took me eight years to launch my first plant in St Petersburg and start production. The biggest project that I have in development I am planning to launch in Malaysia. Do you know why? Because they offered me conditions that I am denied in Russia. But I want to live to see the day when such production is profitable in Russia.

I do not want us to regard Russia solely as a source of raw materials. Russia is, above all, our future. It is a brilliant land where brilliant people are born. Four physics graduates are sitting here. Each of them has done serious work in research, business and strategic plans. Let us help them realise the potential of their plans with the help of the Agency. I think we will succeed. Thank you.

Vladimir Putin: Thank you very much. Is there anyone who would like to add something? Mr Balabolin, please.

Dmitry Balabolin: Thank you for giving me the opportunity to speak. Like all of you here, I am also a businessman, fairly successful, and I could manage fine without the Agency, but I want to do something bigger. With so many administrative barriers and problems to overcome, you cannot cope with them on your own, you need the help of a serious organisation like this one. And if you collaborate in some way, it will certainly be easier.

It concerns me a great deal when people say that we are a country producing only natural resources. This certainly isn't a bad thing, it's fine that we supply everyone with oil and gas. It is an excellent starting condition for business – this is not a defect of our economy, it is one of its major assets. But we are lacking in something else: our lorries do not carry goods abroad. Look at the Novorizhskoye Highway. In-bound lorries run full and the wheel tracks are deep, while out-bound ones are empty and there is no wheel track, because we do not export any goods.

Vladimir Putin: Perhaps the quality of the road surface is simply better in that direction?

Dmitry Balabolin: This is a question for Gromov (Boris Gromov, Moscow Region governor), but the road surface seems to be the same in both directions. This is still a matter of our lorries. I would like to see our country start exporting goods, not just raw materials. I see this as my mission. I would gladly dedicate the rest of my life to fulfilling it.

My second question concerns a serious matter. Every business person sitting here knows that administrative barriers seem simple enough. For example, there is the phrase: “… and other documents.” You apply to some office, and you find written there that we must provide this, this, and this, and other documents. If the government helps us remove these last words from all documents – with your help – then we will purge 20% of bureaucracy. Thank you. 

Vladimir Putin: Thank you very much. Ms Topoleva-Soldunova, please.

Yelena Topoleva-Soldunova: I'd like to point out that not everyone here is a businessperson. I, for one, represent a non-profit organisation. It is called the Social Information Agency, and it has the same acronym: SIA. I am also a Public Chamber member, like Yelena Nikolayeva.

I wanted to say that my concern, the main concern of my life, is non-profit organisations. I would very much like the Agency not to forget about them. I think their contribution to social affairs may be very important. Yes, they are not yet very numerous or very active in our country. But the projects they have created are unique and pursue one key goal – producing social capital. They make our people become more socially active, overcome paternalistic attitudes and stop complaining and expecting authorities to solve their problems for them. Our people begin to show initiative, and non-profit organisations help them. The practices that we have created, the social information that we have gathered in our agency, we are prepared to hand over to the newly established Strategic Initiatives Agency.

One is a local community funds partnership – a wonderful model that helps accumulate social capital in a region. Local communities set up their funds to collect resources and concentrate them in local businesses or individuals to be distributed between socially important projects on a competitive basis. This is the technology that we have. Another striking technology has to do with socially active schools that are also set up by non-profit organisations. Such schools are already functioning in Siberia, and there is even an association of them.

Then there is a “generous town” technology, wherein every year some new town hosts a festival to pool residents’ money to address the town’s problems.

But all these technologies need support and publicity. I think it is very important, first, to see why they are not developed and spread widely enough and, second, to improve laws, eliminate barriers and promote such initiatives. I think the Agency should keep these things in mind in its future efforts.

Vladimir Putin: I fully agree. We have a whole area of the Agency’s activity devoted to this. This practice is bound to grow. Yes, go ahead.

Stanislav Naumov (the Skolkovo Foundation’s vice-president for public affairs): Stanislav Naumov, from Skolkovo. We are one of those development institutions that focus on medium-sized companies. We started from scratch, and are already working on 100 projects. I think the timeline (seven weeks) required to make support decisions will allow our expert council to select a group of projects to be launched as early as this year. And one more critical point: these are all non-profit partnerships; we began establishing them at the Innoprom exhibition in Yekaterinburg together with the Urals pharmbiocluster. We met with their leaders and issued them directives. We are currently preparing a pilot project which, without waiting for Skolkovo to become fully operational, will pool the resources of the New Federal University, Academy of Sciences’s institutes, a technology park and, properly speaking, industrial production to introduce these new methods directly into the area of mass consumption.

Vladimir Putin: Excellent. And we are already cooperating to build this work. It is an element of our joint efforts to promote innovation and develop new ways to achieve common goals. Please, Mr Neverov.

Ildar Neverov (chairman of Delovaya Rossiya’s environmental committee): Thank you. Mr Putin, I would like to draw your attention and the attention of the Agency’s management to environmental issues. I have been concerned with these issues, and have led the relevant committee of Delovaya Rossiya for 13 years. In my mind, the business community, financial institutions and the public feel somehow skeptical about our environmental projects. Not all of them are subsidised, some of them are profitable, tremendously profitable. I have projects with 60% net profit that are socially oriented and benefit the environment. I would therefore like to call upon all of us to eliminate unnecessary administrative barriers within this key sector, and to create conditions for businesspeople to be able to import equipment that is effectively used abroad or develop and produce such equipment domestically to help us successfully deal with environmental problems. The Far North is feeling the pressure of the growing mass of automobile and electronic waste, and needs to find ways to dispose of it. This is my message to you. Thank you very much.

Vladimir Putin: Incidentally, we are beginning a programme to clean up the north of Russia and the Arctic.

Ildar Neverov: I am involved in it.

Vladimir Putin: Very soon we will be launching a major effort in this territory to clean up abandoned Soviet-era structures, such as empty petrol and chemical drums, and so forth. This is a serious task. The Arctic is environmentally very vulnerable.

As far as environmental projects are concerned, this sector is important primarily because the environment is our habitat, and we must keep it clean. But it is also important economically. When our partner competitors develop new methods and adopt new standards, business is forced to apply them, and these technologies prove to be more competitive than those used in other countries. In this way they promote competition. And here may lie one of the most important and sensitive of the Agency’s functions that relates, if not to each of you, then certainly at least every other one of you – we cannot make mistakes when introducing new environmental standards. These standards must prompt business to adopt new efficient and environment-friendly technologies, and their rate of introduction must not outpace the financial and investment capabilities of our companies, so as not to cause business collapse. This is a very subtle process, and I hope that you, too, will work proactively with government agencies so that we can acquire additional assessment from independent experts. The Ministry of Natural Resources does that in cooperation with the Ministry of Industry and Trade and a few other departments. There is constant infighting between the Ministry of Natural Resources, which seeks to introduce rigorous standards as soon as possible, and industrial authorities that fear that this may lead to the collapse of their enterprises. But we need to pass between Scylla and Charybdis and find the golden mean. I hope for your direct involvement.

Please go ahead.

Anna Belova (Director-General of the New and Innovative Technologies Centre): Thank you, Mr Putin. The emotionally charged atmosphere following the Yekaterinburg forum is something to be treasured, I believe.

Some 15-20 emails with project proposals come through our corporate email network daily. As a moderator of panel discussions, I put it to my colleagues: “If you are not elected into government bodies, will you be able to commit yourselves to some specific projects in your region? What results do you think you will be able to achieve at the end of the day?”

Project proposals keep coming in. Brainstorming is very helpful, but the sense of responsibility for the final result is equally important, in my view. In the Agency’s early days, it’s truly important to shape the configuration of the expert council and the supervisory council so as to ensure powerful organisational support later on.

It’s been argued that business projects should first be packaged at the [Strategic Initiatives] Agency and then passed on for further consideration to a special unit within Vnesheconombank. But, under its charter, the bank does not consider projects worth less than 2 billion roubles.

A project takes nine months to consider, and we’ll need to work out a whole set of interior organisational mechanisms.

Vladimir Putin: The chairperson of Vnesheconombank’s Supervisory Board is at your service. We could modify the bank’s rules of operation. It’s a development institution, after all.

Anna Belova: I’m saying that we’ll need to do a lot of fine tuning to make sure that this initiative yields tangible results because it would be awful if it failed to deliver. Many people involved in medium-sized businesses have embraced the initiative, and they willingly come to ask us for expertise and assistance. Government agencies will have to work hard to sustain that dynamism, I think.

Vladimir Putin: Mr Alasheyev, what do you have to say?

Yury Alasheyev: Thank you for giving me the floor. Someone announced that today is the Agency’s birthday. I’m not quite in a festive mood, though. On the one hand, I feel great about having been invited to the government headquarters – for the first time in my life – and about being able to speak here to a receptive audience. But, on the other hand, I had very high expectations for the SIA early on, and I was very eager to contribute… But today’s conversation has deviated somewhat from the Agency’s original line. We’re talking so much about the technical side of things, about how we’re going to consider and package projects, but we ignore human resources, and that is the key factor.

I remember Mr Belousov saying at the Yekaterinburg forum that the SIA is not so much about projects and institutes as it is about people. And, as far as I understand, this is what could help the Agency stand out. We have quite a few project-oriented initiatives already, including Skolkovo, Rosnano, and RVC (the Russian Venture Company). These institutions are aimed primarily at advancing innovative technology.

There’s a stark contrast between our largely technical discussions today and the original emphasis on people – people who care about their country and who want to make a difference. I recall the motto that appeared on the Agency website: “What have you done for your country?”

I believe that we need to set our priorities straight. Should we look for projects? Or, rather, for people who have distinguished themselves as talented and creative individuals, capable of generating projects important and beneficial to this country? We’re moving too far away from this [human dimension] today, and I wouldn’t want us to continue down this road.  I hoped this initiative was primarily about mobilising human resources. I’m aware that an ambitious long-term project, especially a strategic one, can produce great results for the country, improving its image and its [business] climate. Such projects should be thoroughly planned and properly packaged, especially if the customer is a bank. But the driving force behind it is far more important, I think – especially if the situation changes along the way. The conditions of interaction with associated institutions may change as we go along; some red tape may be removed, and so on. So I think that we should instead focus on people – people who have the capacity to get things done and who love their country and seek to make it a better place for themselves, their children, and their fellow citizens.

Now I want to ask you something if I may. I’ve got some concrete proposals on ways to organise our practical work, and I wonder just how the expert council will be functioning at this formative stage? I’d like to contribute my two cents to the organisation of its efforts.  Has any relevant mechanism been developed? How should I share my ideas with you?

Vladimir Putin: I agree that the emphasis should be placed on talented individuals and that we should seek out such people and then help them realise their ideas.

Yury Alasheyev: I thought as much.

Vladimir Putin: There may be a hundred projects, not just one.

Yury Alasheyev: It’s quite common, yes.

Vladimir Putin: We recently began providing grants for researchers through universities, you know. But we release our grants (each is worth about 150 million roubles, I think) not to the university or the research institute where this or that person works…

Yury Alasheyev: But directly to that person, right?

Vladimir Putin: Yes, to a specific researcher who has a project that he or she is attempting to realise. The researcher gets the money, builds a team, and then gets down to work. Such models have worked well in many other countries.

Yury Alasheyev: I thought that would be the most distinctive feature.

Vladimir Putin: Yes, you’re right.

Yury Alasheyev: So, at the end of the day, it’s not the properly completed 200-page application form that matters. It’s the person behind it.

Vladimir Putin: Right you are. I would really appreciate it. You said you had some proposals. Tell us about them, please.

Yury Alasheyev: Right now?

Vladimir Putin: Why should we beat about the bush?

Yury Alasheyev: Okay. I don’t think that administrative obstacles and access to resources are businesses’ biggest problems. As for myself, nothing bothers me more than unfair competition. I employ about a thousand people, my company’s turnover approaches six billion roubles, and I pay about 100 million a month in taxes. Now, when my competitors dodge taxes and bribe police to cover it up, they make profits while I make none. So I can’t afford to develop my business, train my personnel and hire the best specialists.

Another problem is really proficiency, which was mentioned in the context of education and young specialists. I have firsthand knowledge of this problem – I studied physics at the university but eventually started a business. There are many other young talented people but it’s hard to attract them to science. There are no professional associations or standards. That’s our second problem.

When we stood in the lobby talking before the meeting, it could have been a university social at the rector’s office because the professors were talking shop. They talked about their problems with the students. Undergraduates study haphazardly, and the best of them do not take up postgraduate research. In general, there is public prejudice against their universities, and they have problems with enrolment. Why not launch projects to help them? For instance, universities might be equipped with wi-fi to make tuition easier. Text books might be updated, too, and much else can be done. But the worst problem is that students copy essays from each other or bribe the professors. That is how academic incentives are lost.

Vladimir Putin: The atmosphere in education is quite different now…

Yury Alasheyev: Naturally, the public doesn’t think much of such universities. But how do we improve their reputation? Students will never stop cheating, and corruption will always be an issue. Every country has anti-competitive issues but it’s the scope and depth of the problem that matter. Students will always cheat. It’s one thing when we hear rumours that something happens somewhere but it’s quite different when everyone knows the amount a professor takes for a good mark at an exam. This is the main problem – to me at least.

If the Strategic Initiatives Agency addresses it… But how should the problem be addressed? We should first select professors who know from personal experience how to stop it and contact conscientious students. There are many such students, in fact. There might be a low percent but the contest has shown that there are many honest and hardworking students.

We should help them by promoting their projects. I agree that projects must be launched at any rate because we need practical work. As the saying goes, we should sweep the streets instead of calling the city to clean them. Many of the people who have applied to the Agency – a majority, in fact – have many projects underway already. Apart from four applications, I gave the go ahead to social projects not connected with business on Ms Belova’s request. I think there are many people who deserve help, and we should promote their projects.

Filling in application forms, say, in Skolkovo, is an extremely complicated job, formalised to the extreme. After you fill out no end of forms, you learn that the project documentation is all wrong. I received a similar response just today. They don’t see the people behind projects though the human factor matters most.

How should we select people? First, we should proceed from their experience, past successes and ability to work. Second, we should judge by moral convictions displayed by behaviour and by previous projects. Someone might have good ideas, but what really counts is a project the applicant has not just drawn up but one that he has been actually working on, say, for a year or so. These people deserve help and will help us in return to get every team in order.

Let’s get back to the universities. Say a student invents something but another student says he copied it from his iPad and the professor is covering for him. It takes time to fight this. It requires slow resistance not sharp turns, of which we have had too many.

Vladimir Putin: Mr Alasheyev has made some important points. I think we should consider them when we get to this, especially on the expert/supervisory council.

Yury Alasheyev: This is why I kept pestering everyone with questions in the lobby about how they think the job should be organised.

Vladimir Putin: That’s approximately our idea of it. Think it over at the expert council and make some proposals. Mr Nikitin should join you and arrange for some other colleagues to work with you.

Yury Alasheyev: I would like very much...

Vladimir Putin: Now he’s talking!

Yury Alasheyev: I wasn’t so enthusiastic two months ago because, despite the declared openness, it was all very difficult. We didn’t know what it was all for, and for whom it was meant. The competition wasn’t open enough, part of it based in Yekaterinburg. We made a surprise visit there and saw that some contestants were crossing the VIP room to get into the presidium – and never mind that we were also in the competition. Some also came through the back door. All that gave the impression that the contest was not clear or fair.

Vladimir Putin: We’ll see now who was doing that… Who came through the back door?

Yury Alasheyev: Oh no, it was just the way things were arranged. Now, take the interviews. I received the invitation for a Thursday interview the same morning, three days ago. I couldn’t come. “Couldn’t you have at least told me two days earlier?” I asked. So I didn’t get the grant – and it was all seemingly aboveboard. But where is the $2,000 grant? If they are after real openness, they should make announcements as universities do during entrance examinations: those who pass an exam successfully are listed in one column, and their marks in another. That’s what openness is about. What we have in this competition is not real openness.

Remark: Mr Putin, can I offer concise information?

Yury Alasheyev: I only hope that now when the team has been manned…

Vladimir Putin: Do you know what’s good about this, Mr Alasheyev? You are free to speak openly about it here at the Government House despite everything.

Yury Alasheyev: That’s what I said: we have mixed feelings. On the one hand, it’s like a holiday, and we feel like kids at a birthday party but, on the other hand, we feel it may all come to nothing again.

Vladimir Putin: It should not all come to nothing but be a success, as I said at my videoconference, if I am not mistaken. For this, I suggest direct proposals and the arrangement of teamwork from the beginning at our expert/supervisory council together with your colleagues who were mentioned just now as principal organisers and moderators in this work. I said from the start and will repeat it now, after Mr Alasheyev’s speech, I see I was right: everyone must feel needed and be heard, and corrections must certainly be made regarding some people.

Yury Alasheyev: Yes, we should switch the emphasis from technology to people, and from people to the values that bring them together.

Vladimir Putin: Yes. We should have already planned a format for work in projects in solid sectors.

Yury Alasheyev: However, we should begin with values, all the same. People should come first and projects second.

Vladimir Putin: Of course.

Yury Alasheyev: Thank you.

Vladimir Putin: Mr Shchedrovitsky has the floor.

Pyotr Shchedrovitsky (adviser to the Rosatom director-general): Thank you, Mr Putin. I would like to focus on two points, especially considering what Mr Alasheyev said. We have many development institutions, but they all work on the selective principle: you submit a project to which certain standards are applied. If your project qualifies, it is promoted according to their standards. So it all starts with a project submission.

I think selection is one thing but launching a project is another, and should be a critical part of the Strategic Initiatives Agency’s work. Many projects were considered for a long time and eventually appeared. It is no secret that the same projects from years ago are now offered to the acting development institutions.

Project starts are an extremely sophisticated process and some ideas die at a very early stage. Excuse a zoological metaphor: ideas are like fish. They are born in big numbers but about 80% initially die. What matters most is that a majority of ideas die right in their inventors’ brain without being developed. They never reach the stage of being formally put on paper or of a business plans – they are stillborn mostly because inventors have no confidence. Our own mind is our toughest jailer.

I think that if we introduce an initiation process at the Agency, people will have an opportunity to launch a project if it follows the given parameters. It is essential to make the process public, and what we need here is a non-institutional guarantor because formal institutions cannot do this.

The other thing I want to emphasise is synergy, because any particular project is part of a common plan. Projects join each other, and lend each other strength because they are mutually complementary. An example of this is what we are attempting to do now in the regional clusters –lines of added value or commodity refinement or finishing in close geographic proximity, which promotes the creation of ideas, people and technology, and provides mutual support.

We just had a conference in Zheleznogorsk on the development of the local territorial centre. As you know, it offers great opportunities for medium-sized businesses because there are two major companies there – a high-tech satellite parts manufacturing facility, and a mining and chemical plant.

These companies have a great demand for projects from small and medium businesses as related to their development programmes. There is a science park and an industrial centre. The projects can be based there for another stage of the Strategic Initiatives Agency’s competition for projects already in demand in a small market at least within the related industries.

Mobility comes next. Networks are certainly important, just as information exchanges are. But the involved companies might need affiliates someday: for instance, a new business compound in Zheleznogorsk because these things are very topical there. They need highly efficient decisions, which they lack now. If an interested company establishes a branch there, it will benefit both itself and the other businesses. Thank you.

Vladimir Putin: Thank you very much.

Speak out, Ms Khalturina.

Darya Khalturina (head of the Strategic Risk Monitoring Group at the Civilisation and Regional Research Centre of the Russian Academy of Sciences’ Africa Institute): Thank you. Excuse me, I’m a bit nervous – I have never been to such a high-level meeting before. I represent the social side. I would like to say that there are social projects not limited to social welfare. They are unprofitable in the short term but promise tremendous social gains later.

I am the coordinator of the public national coalition against alcohol abuse and smoking. It brings together dozens of public organisations from small ones, like in the town of Kovrov, to major associations that collaborate with the United Nations, the World Health Organisation, and so on.

We might appear a nuisance as we pester you with letters requesting tobacco trade regulation from the Ministry of Agriculture to the Healthcare Ministry, and such. As things really are, our work is beneficial to the public and the state. For instance, we are promoting new cigarette packs with frightening pictures on them. If they appear, perhaps ten million people will give up smoking. Each of them will live and work ten years longer, and society will not need to pay for their cancer treatment. But then, there are similar projects in other areas.

Vladimir Putin: What horror pictures do you want?

Darya Khalturina: Lets say, showing lung cancer, like 40 other countries have.

Vladimir Putin: Horrible!

Darya Khalturina: Why horrible? It’s wonderful. There’s also gangrene…

Vladimir Putin: You mean the picture is wonderful?

Darya Khalturina: Yes. Just think: ten million people would give up smoking merely because of a new design on a cigarette pack!

Remark: A new market for special packs is emerging. They are very popular in Europe.

Vladimir Putin: I don’t care about that market, but they’ll possibly be effective. Remember last year’s temperance shots? They were nauseating! People say they worked.

Darya Khalturina: Right, Father Tikhon was the producer, a highly gifted man. They really had a great impact. But I am not working in my area alone. Such national coalitions and NGOs can have an effect in other campaigns, too – for instance, promoting iodine-treated salt or English language studies. Mr Putin, you said that you studied German for many years but acquired fluency only when you went to Germany. The same can be said about English studies.

So we dare ask for support for such projects. They are not exactly businesses though they need professionals at the level of medium-sized business. We do not necessarily need funding. What we need is to motivate our people to give up the opposition attitude in their dialogue with the authorities. It should be a normal exchange. We should also cooperate with the media and raise funds. We ask for support with this approach. I think we will find common ground. In fact, we have found it already. Our only request is to reflect this work in your programme documents. Thank you.

Vladimir Putin: Thank you. Mr Medvedev has the floor.

Mikhail Medvedev (Intreidinvest director-general): Thank you, Mr Putin. Ladies and gentlemen, please support Mr Shchedrovitsky’s suggestion to no longer use the term “project selection” even in the discussion stage. I’m afraid that the Agency went somewhat astray even when it was being established – partly due to using development institution tools. I think it’s very important to realise, first, that what is submitted are not proper projects but really just concepts. They require serious planning to become real projects. Even if we introduce a selective process with ratings, as the Agency is already doing on its website, most still wouldn’t be considered formal projects; they would still require professional expertise. And 90% of them won’t qualify even with professional planning.

I know that there are many people here connected with investment in one way or another. We understand this. But if we go on like this, 90 out of every 100 people who believe in the Agency will be disappointed in it and will not try to set up their own businesses next time. So I propose we place the emphasis on promotion rather than project selection. We should by no means go down the development institutions’ road.

Second, several versions of the Agency’s goals and strategies were promoted during its establishment and accompanying discussions. I would like to propose the following formula, if my colleagues approve it: the Agency strategy should develop and implement principally new programmes for government and public impact on economic modernisation and the change of social processes. This means, particularly, that we would test certain social initiatives at the regional level. I mean that it would be inefficient to introduce some innovations nationwide but that it might be more efficient to implement and promote them in the regions. Later on, they might develop into programmes for state support to be implemented with consideration for the accumulated experience, errors, and so on. This could concern infrastructure projects to support business, and social projects. Thank you.

Vladimir Putin: Thank you. Ms Vuchkovich has the floor.

Alla Vuchkovich: Thank you, Mr Putin. I am the personnel manager of the United Aircraft Building Corporation. I have worked in personnel for the last 15 years of my career. I came to the aviation industry five years ago and saw how education was lagging behind market demand. We had to change the public image of our industry to attract young specialists. More than that, we had to retrain new employees for at least two years – two years, mind you, not the two months you needed to brush up your German in Germany.

Vladimir Putin: I shouldn’t have blurted that out, I see.

Alla Vuchkovich: That’s okay, I see that you were a good student and had good teachers. We had many more problems.

Vladimir Putin: I should say that two months wouldn’t have been enough to acquire fluent speaking skills without my preliminary training. We all had the same predicament. I wasn’t the stupidest one on my job. We all had what we called “telephone disease”. We worked closely with people from all kinds of East German offices, not only the notorious Stasi. The phone kept ringing all day long. So you pick up the receiver and you can’t make out a word. Every new officer went through it. The Germans asked our local resident to tell every new man not to take the call but call someone else to the phone. This disease passes quickly, though, with people who studied the language previously.

Alla Vuchkovich: I see.

Vladimir Putin: Without previous study, it is certainly impossible to acquire fluency in two months.

Alla Vuchkovich: We went through the same thing with our new engineers. We knew that some businesses train specialists independently for themselves. However, I know from experience that such companies eventually find themselves robbed of resources – not money, I mean, but teachers, tuition techniques, and so on. So we had to come to terms with the educationalists. We were among the first to develop industrial standards. Several other sectors took this approach simultaneously.

I would like to say that industrial standards are mere tools accompanied by a great many other projects helping to select, educate and promote gifted people, and provide incentives for young talented people to teach others when they are no longer young. There is a gap between general educational and vocational training standards – a gap no smaller than, say, between the Russian and Chinese languages. They might have some similarities but no one knows these shared points. That is one of our greatest problems, and I think the agency might help to address it.

This is a very large area. It involves: developing a system to assess graduates’ skills, an independent certification process which will allow them to rise up the career ladder and should help young people achieve the career goals they have set themselves. This project could include employer-accredited educational programmes. We have only just started work on this methodology, and this is what I have been considering.

It has been said here that the agency is not doing enough, but what is the gauge? Many industries have started working in this sphere, but it is true that we lack a national qualification system, a system of professional standards. This is why I was glad when one of my colleagues here said that the agency should advance the initiative. We should set in train the creation of this kind of system for the Young Professionals bracket and find ways of stimulating big business to encourage it to share its achievements – and not only in this given sphere. I know for sure that the Professional Standards and Professional Accreditation brackets already have results to share. For our part, we are ready to share our achievements. I would also like to learn about what others have achieved in this area and teach others about what we have learned to do.

Second, we keep talking about overcoming administrative barriers. It seems to me we need a clear definition of what this means. I think that it entails overcoming administrative barriers not only when implementing each particular project, but also when creating a certain foundation, including the legal basis, for boosting the initiatives made in different areas. A relevant example is the gap between professional and educational standards. This gap exists because we don’t have a legal, a lawful base for making professional standards an obligatory part of the education system. Therefore, if the agency complemented its agenda with the task of creating a knowledge base, it will bring together the achievements made by large corporations, medium-sized and even small business, and give others the opportunity to draw on all that has already been achieved, and second, it will advance initiatives, collect legislative initiatives and subsequently propose them for implementation. Thank you.

Vladimir Putin: Thank you. You know, we should bring this discussion to a close. Let’s have three more speakers and that will be it. Please go ahead, Ms Mastusova.

Irina Mastusova (Director General of the Foundation for Initiatives to Support Families and Childhood): Thank you. I’d like to draw the attention of this audience to the vital subject of childhood. The subject of childhood became part of my life eight years ago, when the Russian cartoon series Smeshariki was first launched. It should be said that we received a State Prize, the highest award in the Russian Federation which is a great honour to us, several years later exactly because the project was designed to have a social impact.

Of course, it was not overnight that we became aware of the extent of our responsibility for the rising generation. It developed while we were working to make the project a success, because it was clear that we are working in the media and dealing with such a delicate and highly important thing as the trust and love of children and their parents. It should be said that we have accumulated substantial experience in designing and implementing social projects. Of course, there was a moment when it became clear that the project had ceased to be a purely commercial affair, which is why we set up the foundation I now represent, the National Children’s Foundation, which works jointly with business, non-profit organisations and the authorities to create a social childhood infrastructure. We have accumulated considerable experience that can be used in other social projects because this is a highly indicative and all-embracing subject. One thing that has just come to mind: our foundation is a kind of a small strategic initiatives agency in the sphere of childhood, because we tackle our tasks in a highly practical manner. I think that this is the most important objective, because people, and particularly children, are the strategic reserve for the country’s development, our future depends on them and so we must work for this future here and now.

Vladimir Putin: A beautiful project, beautiful indeed. Please go ahead.

Kirill Varlamov (Director General of NAUMEN, software for business and government bodies): Good afternoon, thank you Mr Putin. I want to speak about something I think should be one of the Strategic Initiatives Agency’s important priorities: import replacement. I don’t think we should create any special preferences for domestic suppliers or search for simple solutions, because there aren’t any. I think that the formula is different in each industry. In my opinion, the main objective that we can set ourselves is the creation of equal competitive conditions for domestic producers and suppliers, because, first, there is a high degree of corruption, and second, the state procurement system and state corporations form a large part of the market in some segments. This is where I think we should ensure equal competitive conditions.

Vladimir Putin: You know, import replacement is not, in itself, an end goal, because we should work in the spheres where we are or can become competitive, while it could be more expedient to import some goods. Defence and security are the only exceptions.

Kirill Varlamov: I’d like to explain that the companies that are flourishing in the Russian market often have development potential in foreign markets. For example, the IT market, the area my company works in. By creating a market for these companies in Russia, we will help them develop.

Vladimir Putin: I fully agree with you. Please, go ahead.

Vladimir Skityayev (Director for Development at Interskol, a company that designs, manufactures, markets and services power tools): Thank you. One of the systemic instruments that could be easily applied at the Agency is transparency. I mean the strong demand for transparency in the medium-sized business. On the other hand, everyone knows a little shade hides a multitude of sins. Administrative barriers, discrimination, the violation of competitive terms and conditions, and raids all thrive in an information blackout. In principle, it would be easy to create an interactive map – with the help of the Agency website, which has proved quite active – possibly a map covering the whole of Russia to show where violations, such as raids, and other obstacles are taking place: we can fight them simply by disclosing them.

Vladimir Putin: We have rankings for those who are working to create the best conditions for business, and they could also name those who rank the lowest.

Vladimir Skityayev: Yes, a kind of a targeted mini-WikiLeaks.

Vladimir Putin: Yes, that is possible. In principle, the agency could do this, because it is a non-governmental organisation. Yes, it can do this. Please, go ahead.

Sergei Vorobyov (Ward Howell board chairman): Since the human factor has already been raised, I cannot remain silent. I am a physicist, but it so happened that I am engaged in personnel development. We are involved in leadership issues. Mr Putin, at the meeting in Yekaterinburg we told you we had unpicked the problem, and you told us to pull it together. We tried working it out but we had to encroach upon the agency’s mission, otherwise we wouldn’t make it. So, we drew up an alternative approach. It seems like everyone is starting to use the situation to their own benefit – the Strategic Initiatives Agency is about this, that and the other – but none of this relates to people’s interests, which are always treated as an afterthought, and here it is even worse than in the cultural sector. But why can’t the Agency become an institute fostering human development, leadership development? We have no-one to hold up as an example for our kids. Here’s a question: what does a traffic warden talk about with his children? What can he actually teach them?

Mr Putin, let’s make room in Russian people’s hearts. Let’s invent a hero that could be example for others to follow. This will be a creative hero. Let’s give him opportunities for great deeds. Heroes can’t sit there, twiddling their thumbs, they need to work. If the mission is “developing creative leadership through strategic initiatives”, that means we are not sending him into the jaws of death because he may die, if he’s been sent to, say, clean the Augean stables, it is so he develops, not so he dies. Hence, this principle could be applied to all activities.

I will say that once again: the mission is developing creative leadership through strategic initiatives. Then, the mechanism can come together and we can pick the brightest and the best, people who can be counted on, who have even more ahead of them than they have behind them, who will think of me and my children, not just about themselves. Otherwise, what use are they? We will help them develop personally and give opportunity for great deeds. We have tons of such opportunities in social initiatives, infrastructure, education reform and everything else. As a result we will see positive changes in society, which this hero can be respected for, and finally in our competitive development. This is my scenario. Thank you.

Vladimir Putin: Thank you. I would like to totally agree that we need positive role models. We do have them, and we have them in various areas, including the road traffic police, as strange as it may seem. You asked a somewhat invidious question: “What can a traffic warden actually teach his kids?” We have numerous cases when transport police officers have displayed heroism in the workplace, sacrificing their cars and even lives to save children. All those negative issues we now face, such as corruption and bureaucracy, certainly do really exist, but these are common issues for society as a whole. There are sectors when it is displayed at its worst. The public certainly pays attention to these issues. Your idea is a good one. -

Let’s bring our meeting to a close. Go ahead, please.

Vitaly Maksimov (advisor to general director at the federal state institution for implementing the federal targeted programme for modernising Russia’s transport system): Thank you very much, especially as I will be the final speaker at today’s meeting. For many years, I have been involved in implementing investment projects, particularly those in transport, through private-public partnerships. That is why I would like to note certain practical aspects of project implementation and submitting proposals to the Strategic Initiatives Agency. First, concerning the public expectations placed on our agency. I think that the handling capacity here should be rather high. How we can provide this? I believe that it requires not solely financial aid but non-financial support as well, namely of a consultative and methodological character. If an individual does not know how to implement a project, he can get explanations, say, through attending workshops, without any need for monetary aid. That will enable us to boost the rate at which we deal with projects much more than solely through financial support.

Speaking of financial support, all areas that are being developed under the agency require funding. Actually, this part – attracting investment – is what all these areas have in common. It may be more efficient to single out this area of activity, related to development institutes and direct investment funds, as a separate structural unit aimed at providing finances for the projects in those areas.

Third, I have a proposal. Right now, with the establishment process underway, I think both director-general and the division chiefs could benefit from the expert council’s experience. Then comes the question: how? Maybe through those colleagues who live and work in Moscow. I mean, the positions of advisors to the director-general or division directors could be introduced to offer consultation in their particular areas of competence. I think it will prove efficient, particularly in the early stages.   

Vladimir Putin: Why solely in Moscow? The modern communications allow us connect online from any location. The main thing is that the people are available.

Vitaly Maksimov: Yes, Mr Putin, I think it would be beneficial.

Vladimir Putin: This idea is good and quite proper. I suggest we bring our meeting to a close, and this is what I would like to say in conclusion. Several times, speakers – including our last speaker Mr Maksimov – have mentioned the risks that we all face. I say “we all” as you are involved in this process, and you are not just participants in this project, you are the ones who will implement and take on particular roles within this project. An element of risk is certainly present, due to the abundance of problems, and we will not be able to solve the issues related to human development, business, eliminating business and administrative barriers and corruption with this agency alone. This is just not possible. This has to be the government and society’s system-based work carried out over many years. Risks are there, definitely.

Not meaning to anger Darya Khalturina and all those making efforts to combat smoking and alcohol abuse, but I will quote a well-known saying: “He who doesn’t take a risk never gets to drink champagne”. There is another oft-cited saying: “He that bestirs his feet completes his journey.” We have to move towards our noble goal. The Bible story of Moses, who led the Jews in the wilderness for 40 years, is widely known. There were many different motives, but I guess one of them was the desire to get away from the negative past and establish a new nation. We cannot lead the Russian people in the wilderness for that long for a variety of reasons. But we need certain tools that are capable of eliminating all that prevents us from moving forward, clearing the way to the progress, innovation and all that is new, and which would establish a new state.

The speakers have already mentioned examples related to new products on the market. Someone mentioned a new saw which keeps sawing but it is not clear how it works as the engine is tiny and so well-hidden it is barely noticeable. But it works efficiently. I would very much like the agency we are establishing to grow into just such a small tool we can use to cut through all these Gordian knots.

Thank you all very much, and I hope we can now bring our meeting to a close and our colleagues in charge of the practical part will work actively to continue it. This is above all their responsibility. All of us – me, the economic development minister and the cabinet – will provide every support. But actually, we would like you to take a firm hold on this. Thank you, and I wish you all the best.