Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon. Let’s begin with a few pressing issues. Mr Ivanov, are you here? We are opening MAKS next week. How are the preparations going?

Sergei Ivanov: Yes Mr Putin, the tenth International Aviation and Space Show, MAKS-2011, will take place in Zhukovsky from August 16 to 21. It is becoming one of the world’s leading air and space shows, alongside Le Bourget and Farnborough. This year, 794 companies from 40 countries will be in attendance. As a comparison, in 2009, 735 companies from 34 countries took part. The number of participants is constantly growing.

As always, the show will showcase all the latest developments in aviation, helicopter and engine technology. But in general, visitors are primarily drawn to the flight programme. This year 211 aircraft will take part in the programme. We will present for the first time in flight our fifth generation fighter, PAK FA, which you have seen more than once. And after a break of four years, aircraft from the U.S. Air Force will also take part in the show.   

Concerning civilian aircraft, I would like to point out the first appearance of the Airbus-380, the world’s largest passenger plane today, as well as the Boeing Dreamliner. They will be presented, in addition to our own AN-124 (Ruslan). So, in terms of large transport and passenger aircraft, the best that the world has to offer will be on display at the show.

There will also be a number of modern helicopters. Ours will be on display in the Roskosmos section. We hope that the show will attract a large audience, as usual – there is a lot to see. I’d also like to invite you…   

Vladimir Putin: Good, thank you.

Sergei Ivanov: …to come see the show, if you can.

Vladimir Putin: The MAKS Air and Space Show is truly becoming a prestigious, world-class international venue. What is the situation with our air transport service? Yet another airline has gone bankrupt. It was the Continent Airline, wasn't it? I asked what you thought could be done about this – about the issue of reliable air transportation. What are your proposals?

Sergei Ivanov: As I reported to you previously, air passenger traffic is the fastest growing transportation industry. It grew by 26% last year, and during the current period of this year, growth is already at around 15%. This is a good thing, of course. People are flying more and more often.

What's not so good is that we have some problems with air transportation safety. The recent Tu-134 accident near Petrozavodsk, the crash landing of an AN-24 in the Tomsk Region, in which people died, the recent emergency landing in Blagoveshchensk and the accident with the An-12 transport all have one feature in common: they all involve airplanes belonging to companies that possess two, three, or, at best, four aircraft. It is becoming quite obvious that they are unable to guarantee the level of technology required to ensure adequate transportational safety.

In this regard, the Ministry of Transport proposes introducing certain quantitative and qualitative limitations on air fleets that make regular commercial flights. There are currently 139 airlines that are licensed to transport passengers, but the 15 leading companies in the country carry up to 90% of all passengers. These are large, reliable companies, and they haven't had any accidents in several years (knock on wood!). They carry 90% of passengers, and the remaining 120 companies carry just 8-9%.

These small companies (I, as well as others, call them "wildcat airlines") are simply unable to ensure the proper training of personnel and adequate technological safety standards. Therefore, the Transport Ministry suggests introducing quantitative and qualitative restrictions for companies performing regular commercial flights: they must have at least 20 aircraft. These regulations will not affect charter flights, local airlines, where one airplane flies back and forth between two regions, or socially important flights within a federal district.

I support these proposals because I believe that safety is essential in transportation, and not only in aviation as we have seen from the recent example of the Bulgaria cruiser. Safety must come before profits, especially since there is such tough competition within air transportation: with the exception of Aeroflot the 15 leading airlines, which carry 90% of passengers, are all private companies. By competing with each other, they reduce costs and make their airplanes more comfortable. Disregarding fluctuations in the price of petrol, airfares are quite stable. So this is the first proposal.

As for the Continent Airline, it ceased to exist on July 29, having sold about 30,000 tickets for 280 million roubles shortly before. Rosaviatsia (the Federal Air Transport Agency) and the Transport Ministry immediately established temporary office and regional task groups, because this airline primarily sold tickets for flights from the Far East and Eastern Siberia to destinations on the Black Sea coast in the Krasnodar Territory, and people became stuck either on the Black Sea coast or in departure cities in the Far East.

There are funds allocated in our budget for these kinds of cases – about 300 million roubles – so Transport Ministry temporary office reacted promptly this time. Those who could not fly with Continent Airlines were picked up by other carriers - the 12 big domestic airlines – either from the south to their home cities or to the south for vacations.The clearing company has already taken tickets worth about 100 million roubles. If passengers bought tickets through the national clearing company, they would be fully reimbursed for the money they spent. As for the top managers of Continent Airlines, the Investigative Committee has already started criminal proceedings against them. I believe that there is every indication of fraud.

And, Mr Putin, the last point. Here are some pictures that Mr Shchegolev has provided. As the Chita Region governor recently reported, we are now actively building mobile phone towers for Russia’s three leading mobile operators along Chita-Khabarovsk route, and by October 1 mobile phone communications should be fully operational all along the 2,000 km motor road.

Vladimir Putin: Mr Shchegolev, how is work going on communications along the Chita-Khabarovsk motor road?

Igor Shchegolev: Actually, this is a fine example of an informal public-private partnership – all the leading companies have entered into an operators’ consortium. Our railway and power engineers are providing us with energy. We are building access roads with Rosavtodor (the Federal Highway Agency). The local authorities are very helpful in allocating plots of land. We have completed most of the logistical work, and have already started construction. And we will be able to launch this network by October 1.

There will also be organised cooperation from within, between mobile operators. If some of them do not have base stations, their customers will be able to use the services of other companies via inter-operator roaming. This was also a new solution in our country. Of course, given the tight schedule and the major importance of the project, we have gotten ahead of certain bureaucratic procedures in some cases, because we need to obtain a lot of approvals, submit numerous project documents, pass expert evaluations and commission the project. Therefore, we’d like to request permission to begin providing services before completing these bureaucratic procedures. We would be able to launch the network and start providing services before completing this mess of paperwork.

Vladimir Putin: What is needed for this?

Igor Shchegolev: Your approval.

Vladimir Putin: Go ahead! Thank you.

Mr Trutnev, our first expedition has left for Franz Josef Land to begin the work of clearing the environmental mess that has accumulated there. As we agreed, we allocated about 840 million roubles towards this purpose for 2011, 2012 and 2013, is that right? How is the work going?

Yury Trutnev: Mr Putin, in accordance with your instructions, this expedition has started ameliorating accumulated environmental damage for the first time in Russia. We’ve begun with Franz Josef Land. Two expedition vessels are involved in this work. The first, the Mikhail Somov, has already reached its destination. They’ve brought in tents, electricity and equipment. The second, the Academician Nikolai Strakhov, will bring 30 people there on August 17. They will collect samples, inspect the territory and develop cleaning technology. Once this is done, they will draft plans for 2012 and 2013. We have conducted tenders for two more places – the Dzhidinsky Wolfram Molybdenum Combine on Lake Baikal and Wrangel Island. The contractors have been selected and the work has begun.

Vladimir Putin: Excellent.

Mr Fursenko, now about professional training and education. We allocated one billion roubles this year, right? We also planned to conduct an experiment to improve the vocational training system in 30 regions. What progress has been made?

Andrei Fursenko: This work is part of our targeted federal programme. We have held two contests to support primary and secondary vocational training. One contest seeks to develop regional vocational training programmes. The other one is aimed at creating resource centres for primary and secondary vocational training. To do so, we have announced contests. Both events provide for the participation of regions, industrial enterprises, economic agents and businesses. We have selected industries which will participate in these regional contests, including power engineering, metallurgy, aerospace, petroleum processing, medicine and biology, pharmaceuticals, and mineral production. In addition to that, we have established resource centres for forestry and agriculture. Forty-six regions and about 100 companies took part in the contest, including such majors as Gazprom, United Aircraft Corporation, Norilsk Nickel, to name a few. Twenty-four regions won the regional projects contests.  An additional seven resource centres were set up in seven regions. As I reported to you earlier, of seven federal districts, the North Caucasus Federal District did not participate in the first contest. Therefore, we have announced an additional contest specifically for the North Caucasus Federal District.

About one billion roubles will be released from the federal budget this year and two billion more will come as co-financing from regional budgets and industrial enterprises. All contests and all projects will last three years. Most importantly, all participating regions have drafted comprehensive programmes designed to develop vocational training in the Russian regions, and we will continue this work in almost all districts.

Vladimir Putin: Good. It’s important to be in touch with the companies.

Andrei Fursenko: The companies realised that lack of skilled employees is a major factor that holds back their development. We are now summing up the results of enrolling new students in higher educational institutions, and I can say that this year leading colleges have admitted better applicants to their technical and engineering departments than in previous years. The final results will be available in late August, and I will be able to provide more detail then. I think that this is a pivotal moment. On several occasions,  we discussed  the need to focus more on technical specialists who are employed in the real economy. I believe that the situation has finally turned around.  

Vladimir Putin: Ms Golikova, we see positive dynamics in demography. At stake here is not only an increase in birth rate but also reduction of the mortality rate. I believe there has been a decline in the number of deaths caused by cardiovascular diseases, 4.5%; cancer, 1.1%; road accidents, 5.7%; and tuberculosis, 6.3%. Overall, the dynamics are positive. What do you think about this and what are the near-term objectives?

Tatyana Golikova: As you are aware, according to the plan approved by you last year, we are implementing the second phase of the demographic policy concept that will take us up to 2025. The second phase focuses on reducing the mortality rate. The areas that you have just mentioned are closely related to the nationwide project Health and programmes designed to improve healthcare that have been implemented since 2011. All healthcare improvement programmes are designed in a way that the areas covered by the nationwide project are an inseparable part of these programmes. Both quantitative and qualitative implementation figures are tied in with the quantitative and qualitative figures that show the Health project implementation progress.

Given that work in such areas as reducing mortality related to cardiovascular diseases and cancer, road accidents and tuberculosis was started earlier, these indicators are better than numbers for other areas that were tackled later.

Overall, the mortality rate dropped 2.8% during the first six months of 2011. This is really a good indicator, but as you have rightly noted, this is mostly due to lower number of deaths caused by circulatory disorders and cancer, road accidents and tuberculosis. We have effectively registered a 1.1% drop in deaths caused by cancer. Perhaps it’s not an eye-catching figure, but this number was on the rise during all previous periods. Therefore, this number going down in the first six months is really important.

We believe that by late 2011 we will see positive changes in other socially important diseases that have been included in the modernisation programmes.

However, there are other important things here. We are seeing a steady reduction in infant mortality rates. In 2005, when the national project began, the infant mortality in Russia stood at 11 per 1,000 births. Back then this number was 3.5 per 1,000 births in Europe. Now, we have 7.1 infant deaths for the first six months and a 6.5% reduction as compared with the same period last year. How did we do it? We use a comprehensive approach across the previously mentioned areas and the ones that are included in the modernisation programme. What I mean is the introduction of new procedures for providing medical assistance that call for appropriate upgrading of the physical infrastructure, personnel training and proper alignment of the so-called patient routing that is designed to provide the best available medical treatment.  

As for the decline in infant mortality, the regions that opened perinatal centres have achieved very high and positive results, because, as you may recall, they established a three-tier system catering to expecting mothers and infants. We very much want to see the regions that promised to complete the construction of perinatal centres to carry this out, and then the indicators will look better by year-end.

Vladimir Putin: The governors report that the work is going according to the schedule, and they have tightened up the deadlines.

Tatyana Golikova: Just a week ago, Mr Zhukov and I held a conference сall. We focused on this issue, and all regions have confirmed the deadlines.

I held an interregional meeting in Moscow on August 9 to discuss the implementation of modernisation programmes during the first six months. They are now picking up pace, which slowed down due to the late adoption of regulations in certain regions. I believe that we could show you one such region for you to see progress in the implementation of the modernisation programme.

Vladimir Putin: Mr Gordeyev (Alexey Gordeyev, governor of the Voronezh Region) called me three times with an invitation to come and see that everything had been finished and commissioned. Is it functioning?

Tatyana Golikova: I would very much like to show you the perinatal centre.

Vladimir Putin: Does it function? Is everything all right?

Tatyana Golikova: Yes.

Vladimir Putin: Thank God!

Tatyana Golikova: Initially, he had put the opening off on several occasions, but then finally opened it.

Vladimir Putin: That’s good. The most important thing is that it is up and running.  

Colleagues, before we move on to the agenda, I would like to say a few words about the Strategic Initiatives Agency that we are now establishing. Actually, it has been established, the government signed the appropriate resolution, and they have approved both the charter and the composition of the supervisory council. As agreed the supervisory council includes representatives of the business community and public organisations, as well as heads of regions with experience of supporting entrepreneurship and the modernisation of the social sphere; they've been selected and appointed. I would like to call on everyone present here and the heads of Russian regions to support the Strategic Initiatives Agency in every way.

As far as the agenda goes, I would like to focus on one issue pertaining to its first item. I believe that we should focus particularly on interactions between the state and business. I am talking about state guarantees. This instrument is all about the commitment of the government and of the country, and it is an important factor for attracting funds to major infrastructure, high-tech and export-oriented projects.

Let me remind you that the federal budget reserved 551 billion roubles for government guarantees in 2011. However, there are issues here, too, including ones related to arrangements for the repayment of state funds used in the execution and use of guarantees. Therefore, risks between the state and recipients of government guarantees should be distributed in the best possible way, and the latter should be made responsible for the unsatisfactory outcome of the projects enjoying state support. In addition to that, I believe it’s time to stop using unconventional, one-of-a-kind guarantees. We should identify shared, unified approaches to using this instrument in specific spheres and sectors. Please take note of that.

Let’s get to work.