Transcript of the beginning of the meeting:

Alexander Volkov: Good afternoon, Mr Putin.

Vladimir Putin: Good afternoon.

Mr Volkov, we’ll discuss the region’s socio-economic problems in general, but at first I’d like to ask you about some current issues. Some time ago, you had an emergency in one of the Defence Ministry’s depots. A number of residential houses were damaged. The first question is about the recovery efforts.

Second, you and I visited IzhAvto and agreed to resume cooperation with AvtoVaz. It has been launched. How is it going? Then we’ll discuss other issues. Please, go ahead. 

Alexander Volkov: Okay. The Defence Ministry’s arsenal exploded in the village of Pugachyovo two months ago. The damage was substantial, but only one person died – a serviceman trying to fight the fire… Some 3,232 buildings and 49 social facilities – schools, clinics and cultural centres – were damaged or completely destroyed.

After the emergency regime was lifted within three days, we immediately started the recovery efforts. I wrote a letter to you and the Finance Ministry promptly sent us 1 billion roubles for recovery. We have already restored two-thirds of what was damaged – 2,100 buildings. I believe that everything will be in good shape by Sept. 1 – the start of the chilly weather and the autumn season.

We are constantly in touch with the Defence Ministry and Spetsstroy because the ministry is still in charge of the garrison and most of the damage occurred there. The explosion completely destroyed the boiler-house, substation and a number of other facilities. But we are all working, the entire republic, because 11 settlements have been damaged… Destruction occurred up to five kilometres from ground zero.

I hope that we’ll do everything before it gets cold. We stated paying compensation as soon as we received the money. Seven two-storey buildings are unfit for living. We’ll have to move 112 families and this is the most complicated issue, but we’ll deal with it together with the Defence Ministry. We are already discussing with people who must move. So we are grateful for your support without which we… We think this recovery work will cost us 2 billion roubles.

Vladimir Putin: But please don’t delay. Keep an eye on this and make sure all of the facilities are commissioned on time.

Alexander Volkov: Okay. We’ll work on this and I’ll send a cable to you.

Vladimir Putin: Okay. What about IzhAvto?

Alexander Volkov: I’d like to thank you once again for the decisions that you made in December. In July, we switched to loss-free car production. We manufactured 8,230 cars compared with 800 cars in January-February, and 2,000 later. The plan for this month is already 10,000 cars. The plant is working. The main thing is that since New Year, we have employed 2,600 people and increased the average salary by 15%.

I attend a working meeting every month. People are in a different mood. They are smiling, talking and asking questions. In brief, the plant is afloat. Mr Putin, the main thing is that this month we’ll complete all of the procedures that you mentioned in your instructions. In September, the plant will become the sole property of IzhAvto. In the fourth quarter, Nissan will come to us with its models and I think it will primarily develop them at our plant.

Vladimir Putin: I’ll talk with shareholders again. It is time to think about reconstruction plans.

Alexander Volkov: I’d like to note that the business plan that you have approved is feasible – we’ll be able to produce up to 300,000 cars by 2015.

Vladimir Putin: Are you talking about modern cars?

Alexander Volkov: Yes, Nissan-based cars. So, it’s great that the plant is working.

Vladimir Putin: Okay. I looked at the papers and they show that there is a small decline in housing commissioning over the past year. But I know you have good programmes to support young families and major housing construction projects. What is going on there?

Alexander Volkov: By New Year, we will not only match last year’s figures, but exceed the 500,000 mark (last year’s figure was 480,000 square metres). The programme for young families that you endorsed three years ago is playing a big role. We continue issuing loans at an annual interest of 5%. This programme covers 5,000 young families, 3,000 of which have already received these loans at 5%. Some 1,600 have already moved into new flats and another 880 will follow suit before the New Year. We are fully in charge of the programme and work under an agreement with Sberbank. The Stolichny micro-district that Spetsstroy is building in Izhevsk…

Vladimir Putin: And what about your programme? How does it encourage young people to buy housing?

Alexander Volkov: First, they only pay 5% interest. This is the first incentive. Their initial contribution is 10% rather than 30% and this is the second incentive. The third incentive is that we give them 200,000 roubles in addition to the maternity capital for the birth of a third child.

Vladimir Putin: This time you transfer the money from your budget, don’t you? In addition to other funds.

Alexander Volkov: Yes, this is an additional sum from our budget. As a result, we have a natural increase of 99 people. This is a small figure, but still 99 more were born than died.

Vladimir Putin: Just don’t forget about kindergartens.

Alexander Volkov: Mr Putin, in Izhevsk alone we’ll commission 1,000 places by Sept. 1.

Vladimir Putin: This is great. Well done.

Alexander Volkov: Yes. In the past seven months we had the highest birth-rate in the Volga Federal District…

Vladimir Putin: Your company ASPEK-Domstroy plans to build two micro-districts in Izhevsk, right?

Alexander Volkov: Yes. The Regional Development Ministry has transferred loans to us via the company under the relevant federal programme. We are working with ASPEK, Smalta, Komosstroy and Spetsstroy. Now we have a new micro-district in Izhevsk – it’s called “Stolichny”.

Vladimir Putin: I see that they are investing huge money – more than 25 billion.

Alexander Volkov: Yes. But we are making the utmost use of federal programmes. We have a number of high-tech industrial projects. The Chepetsk Mechanical Plant takes part in the ITER international project and investments in it amount to 23 billion. The project deals with manufacturing superconductors and zirconium production.

Vladimir Putin: This is a very interesting production line.

Alexander Volkov: Yes.

Vladimir Putin: It is a big, diverse and interesting project. How are they doing now?

Alexander Volkov: We regularly meet with the top managers at TVEL. They come to the plant and we visit them, too. Their plant is beautiful and modern. They have carried out large-scale reconstruction in the past five years and Minatom (Nuclear Power Ministry) pays immense attention to this promising plant.

Vladimir Putin: I’ll talk to Kiriyenko again later on (Sergei Kiriyenko, Rosatom CEO).

Alexander Volkov (showing a map): Mr Putin, I’d like to boast about something.  We’ve commissioned a fine campus in our medical academy this year. By tradition we’ll put six schools into operation by Sept. 1. One is still under construction, but look through the scaffolding – kids will go to school on Sept. 1.

Vladimir Putin: Looks beautiful.

Alexander Volkov: This is a big school with a capacity of 400 students in the district centre.

Vladimir Putin: Kiyasovo?

Alexander Volkov: Yes. All in all, there are six schools, Mr Putin. By Sept. 1, we’ll launch an oil and gas institute in Izhevsk because we have our own oil workers… Rusneft has earmarked 300 million to us to train specialists – after all, they are training specialists for their own company. This is the building that we’ll commission by Sept. 1 in Izhevsk as well – almost 8,000 square metres of modern space… The main thing is that despite all of the difficulties we must raise salaries upon your instructions not only for teachers – they are not the only public sector employees – but also for all pre-school day-care staff…

Vladimir Putin: Excellent.

Alexander Volkov: After all, people working in culture and sports are also paid from the budget and we’ll try to fulfil your instructions in full starting on Sept. 1.

Vladimir Putin: What will be the teachers’ salary compared to the regional average?

Alexander Volkov: Considering what has already been done and your instructions, their salary will grow by 30.5% over since last year.

Vladimir Putin: Sept. 1?

Alexander Volkov: Yes. We’ll have to add another 6%-7% to the past year’s salary to match the average.

Vladimir Putin: And when are you going to take this next step?

Alexander Volkov: When the budget is set.

Vladimir Putin: Next year’s budget?

Alexander Volkov: Yes.

Vladimir Putin: When exactly next year?

Alexander Volkov: I’m sure that we won’t lag behind the national average and I think we’ll provide for the increase in the budget starting January.

Vladimir Putin: Correct. This is good. And what about medicine?

Alexander Volkov: I think the Quality of Life project is the most important of our recent undertakings.

Vladimir Putin: How much money have you received?

Alexander Volkov: We’ll receive 4 billion roubles from the federal budget and ask for 2.5 billion from our budget. Our medicine has not had such huge funding at any time in its history.

Vladimir Putin: Have you substantiated the programme?

Alexander Volkov: Yes, we have. This year everything has been done according to schedule. We are carrying out repairs and tenders for medical equipment in full agreement with the Healthcare Ministry. We already have six operating high-tech medical centres. This year we’ll build a cancer centre under the federal programme. Although we have built several centres, we still have to finish providing their equipment. There is no doubt that owing to this project we’ll achieve a longer lifespan. During the past seven months, we have already considerably extended the average lifespan.

Vladimir Putin: Good.