Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues!

Mr Sechin, you have been to Cuba. Tell us about the trip. As far as I know there was a large group of businessmen with you. Please go ahead.

Igor Sechin: As part of your instructions to step up the activities of the Intergovernmental Commission for Trade and Economic Cooperation with Cuba I visited Havana from July 30 to August 1, as head of the delegation comprising officials from several ministries, departments and Russian companies. I had a meeting with the head of the Republic of Cuba, Raul Castro. He sent his best regards to you. He believes that the basis for Russian-Cuban cooperation was laid in 2000 during your visit there.

Vladimir Putin: How is Fidel? Did he tell you?

Igor Sechin: We did not discuss this issue, but during the meeting it was mentioned that he remembered with gratitude contacts with you.

In addition, we held negotiations with the Deputy Chairman of the State Council of Cuba Carlos Lakhe and Cuba's co-chairman of the Intergovernmental Commission Ricardo Cabrisas and the Foreign Minister and other colleagues.

We agreed on priorities for cooperation in the areas of energy, mineral resources, transport, shipbuilding, agriculture, tourism, public health, communication, telecommunications and interbank cooperation. In the course of our visit we signed agreements with Cuba on the purchase of Тu-204 cargo aircraft and aircraft engines. We signed an agreement on organizing assembly production for KAMAZ vehicles in Cuba and some other interdepartmental documents.

Vladimir Putin: Were there any agreements reached on the Lada?

Igor Sechin: In addition to the KAMAZ representatives there were also representatives from AvtoVAZ, ZIL and GAZ in our delegation. All of them held talks with their partners.

And we started preparations for the 9th meeting of Intergovernmental Commission.

Vladimir Putin: When did the Intergovernmental Commission meet last?

Igor Sechin: The last meeting of the Intergovernmental Commission was held in April this year. This visit allowed us in addition to fill our cooperation with practical content - nine working groups for implementation of specific projects have been set up. Now we are sorting all this out. By January we will submit to you some additional proposals. This work will be carried out jointly with our Cuban colleagues.

Vladimir Putin: Fine. We will re-establish our position in Cuba and in other countries. Thank you.

Mr Levitin, have you visited Brest and Smolensk?

Igor Levitin: I'm planning to go there.

Vladimir Putin: On the matter of a customs terminal?

Igor Levitin: We want to check progress in the implementation of your instruction to transfer functions to customs authorities on the border. We would like to see what kind of problems and questions there are. Several measures aimed at simplifying the movement of Russian commercial vehicles across the border in Brest and in Smolensk on our side are mapped out as part of the responsibilities of the Union State.

This visit has been planned. A forum on the development of traffic infrastructure will be held in Smolensk. Together with our colleagues from Belarus and with the Interior Ministry we intend to provide the highest safety levels en route from Brest to Moscow. Special attention will be paid to these matters.

Vladimir Putin: A meeting with our Belarusian colleague will be held soon as we need to examine power industry issues and financial relations. Mr Kudrin, you are considering an issue of granting an additional loan to our colleagues. So, please, look at all these questions in the package and report to me later.

Mr Gordeyev, on August 2-3 you held a meeting with your Ukrainian colleagues in Dnepropetrovsk. Please, tell us about it.

Aleksei Gordeev: Yes, Mr Putin.

According to the plan approved by you I visited the Dnepropetrovsk Region at the invitation of my Ukrainian colleagues. We held a meeting of the subcommittee on agricultural sector issues. At the same time we took part in an exhibition held on all-Ukrainian Field Day. Prime Minister Yulia Tymoshenko also took part in this event. We discussed expanding our relations in agriculture and related industries. We discussed support for the integration process. I should say that business is now becoming very interested in integration in this area and mutual investments are on the rise. In addition, there are some joint innovative projects, taking into account that our agricultural science has a long common history. We talked about coordination in food markets - grain, sugar and meat products in particular.

There was a common awareness that we moving to mutual understanding on joint agricultural policy. A delegation from Belarus headed by the agriculture minister also took part.

Vladimir Putin: Mr Gordeyev, what exactly is implied by joint agricultural policy?

Aleksei Gordeev: Above all it means that we must not get involved in possible trade wars - there are some manifestations of this sometimes. We have an economic space within the CIS; we grant some mutual benefits in trade and economic cooperation. At the same time we have different customs and tariff regimes at foreign borders and a different level of support for agricultural sector. Of course, all these aspects require coordination. Furthermore, we could coordinate our actions when selling produce to third countries - grain in particular. By the way, a very good harvest is expected in Ukraine. The harvesting there is almost completed. Grain volumes will be 50% more than last year - 43 million tons. This topic was also actively discussed. Grain sowing is being developed steadily with government support.

Vladimir Putin: Thank you. If we are talking about a unified economic policy in separate sector and as a whole, of course, we should discuss harmonization of customs procedures and tariff rates. It is evident that no unified policy can be carried out without it. Therefore, we need to continue dialogue with our colleagues in this direction as well.

Mr Kudrin, on August 5 you will hold a three-party session of the Budget Commision. What are you planning to discuss?

Аleksei Kudrin: Mr Putin, as part of preparing a draft budget for the next three years the three-party commission will meet tomorrow. The State Duma, the Federation Council and the Government will discuss proposals on procedures and the distribution of transfers and subsidies among the Russian regions, which are to be included in the draft budget for 2009-2011.

We always coordinate interdepartmental budget relations during the preliminary stage, before submitting the budget to the Duma. This allows us to have all issues coordinated while considering the draft law in the State Duma.

I would like to say that already in 2009 the volume of transfers for balancing the budgetary support to the regions will be increased by 45.5 billion roubles ($1.85 billion, or €1.26 billion). And their total amount next year will reach 374 billion roubles ($15.22 billion, or €10.32 billion). This is the basic transfer which is distributed for the support of subsidized and low-income regions of the Russian Federation, as regions in our country differ greatly in terms of industrial production or tax returns. The aim of the federal budget is to support some territories.

In addition, we will discuss the procedure of distributing subsidies to the regions of the Russian Federation for the modernisation of motor roads construction. The federal budget will grant additional allocations to the funds envisaged in the regional budgets. This year the amount of such subsidies will be 86.9 billion roubles ($3.54 billion, or €2.4 billion) and next year this amount will be increased by 26.3 billion roubles and reach 113 billion roubles ($4.6 billion, or €3.12 billion).

Dmitry Kozak: As for grants for balancing the regions, we don't have any problems there. This procedure has been agreed in advance. The transport subsidy has also been agreed and it has been already approved.

There is still dispute on the procedure of granting subsidies for the construction of social and engineering infrastructure as well as housing construction. It will be discussed tomorrow.

Аleksei Kudrin: There is one clarification: I would suggest that the proposals of the Government which we have agreed upon today should be also agreed with the Duma and the Federation Council. If we reach an agreement tomorrow, we can say that it will be finally ready.

As for the subsidies for the regions in other areas such as road reconstruction, public health, education, agriculture and others, then the total assistance to the regions of the Russian Federation from the federal budget will increase next year by 100 billion roubles and will reach 1.2 trillion roubles ($48.82 billion, or €33.12 billion). This is the assistance that is granted by the federal budget in all areas to the regions for the execution of their authorities.

Vladimir Putin: How much has it increased in comparison with last year?

Аleksei Kudrin: It has increased by 100 billion roubles ($4.07 billion, or €2.76 billion). The subsidies for the execution of delegated federal powers are also included here. As a matter of fact all this money will be transferred to the budgets of the regions of the Russian Federation.

Vladimir Putin: Mr Kudrin, I entrusted the head of the Federal Antimonopoly Service to prepare a package of draft laws for improving the antimonopoly legislation by the middle of September so as to avoid any possibility of cartel collusion and create transparent and clear, equally understandable to all, rules of competition in the market. We should create a normal, civilized market. We have not succeeded in everything here yet. Therefore I would ask you not as the Minister of Finance, but as the Deputy Prime Minister to take this work under your personal control. I understand that there is a lot of work on the budget but this an important area of our activities. Please, check it, and see to it that it is ready in time.

In the first half of the year we finished our work on birth certificates. Ms Golikova, how was this work carried out?

Тatyana Golikova: We summarized the work of the first half of the year. The total amount granted for the birth certificate programme equals 6.5 billion roubles ($264.44 million, or €179.41 million). In the first half of this year 754,300 children included in the birth certificate programme were born in our country.

If we compare this with the results of the previous year the figure has grown by 10.2%. It is 93% of all children born.

We still do not have official data but the expected figure of all newborn babies for the first half of the year is 801 thousand children. It is also by 7.8% more than for the same period in 2007.

Vladimir Putin: Does it mean that birthrate growth continues?

Тatyana Golikova: It should be also taken into account that the birth certificate programme allowed for the increase of the salaries of medical staff working in this area. If we compare with the same period of the last year when the average salary was 8,900 roubles, by the end of the first half of the year 2008 it was already 11,200 roubles. Although the level is not very high, the increment year on year is rather substantial.

Here we should mention that the number of second and consequent births is on the rise. Compared with the level of 2006, when the number of such births was 39.1%, this year this figure increased to 44.2%. The absolute leaders in this respect are the Siberian District with a growth of 7.2% and the Far Eastern District with a growth of 6.5%.

And, probably, as an interesting point it should be noted that the number of twin and triplet births has increased. It is clear that this is related to physiology but nevertheless this is an interesting fact.

Vladimir Putin: This is evidence that in this area our efforts have brought positive results. It means that the decisions we made were correct and we should increase our efforts in this direction. It concerns both financing and the timely implementation of the programmes that have been mapped out in this area.

Let's discuss the agenda of the Presidium meeting as a whole.

Ms Golikova has mentioned the Far East and Siberia. It's very good to hear because we know that the demographic situation there is far from good. Let's start with this.

Today we should focus on several important issues. These are issues related to international activities and security. We should discuss them and ensure the implementation of the respective programmes.

I would like to begin my comments with the targeted development programme for the Far East and the Trans-Baikal region. Mainly, changes to this programme - and today we will discuss changes to be introduced into this federal programme - are connected with the holding of the APEC Forum in Vladivostok and the establishment of the Far Eastern Federal University. As you know, we are planning to establish a new educational and research centre on the basis of the facility that is to be created for the APEC Forum.

That is why we should implement these two large projects almost simultaneously. At the same time it is necessary to use the infrastructure built for the summit with maximum efficiency for the further development of the university and the entire region. I emphasize this, because we will never be able to accomplish all the tasks, the entire package of tasks for the development of the Far East and Siberia without creating new modern and powerful intellectual centres there.

The total amount of budgetary funds to be additionally allocated for the implementation of the programme - I would like to stress that these funds will be allotted additionally - is more than 100 billion roubles ($4.07 billion, or €2.76 billion). More than 40 billion roubles shall be invested into the construction of the university facilities up to 2011. Total investments in the programme shall be more than 200 billion roubles - 203 billion roubles ($8.26 billion, or €5.6 billion), to be more precise.

A new university should be created that would combine both science and education. The construction of several research centres and a modern campus for students and professors is planned. This will be a new intellectual centre that should be the leading one not only in Siberia and the Far East but in the entire region. Although it is not a simple task, it is feasible.

Of course, this project cannot be implemented without creating a required material and technical basis. That's why at the first stage we should focus on this component. However, simultaneously - and we have discussed it quite recently in a restricted format - we should already think about a programme for the development of the existing university so that while putting into operation new facilities the university could be enriched with a new intellectual content, respective educational and research programmes should be gradually introduced.

Today we should also talk about the development of transport with respect to aviation. The intensity of air transportation including transit, passenger and cargo transportation will further increase. Therefore we need an effective and reliable (that is the most important for providing flight safety) air traffic control system. A respective targeted programme has been worked out for its modernisation up to 2015 with a total amount of financing standing at 82 billion roubles ($3.34 billion, or €2.26 billion). A new flight navigation system is to be created, and the air traffic capacity of Russian airports and air corridors should be increased.

We also constantly focus on other tasks including tasks that deal with strengthening security. We have to adopt a new federal targeted programme "Antiterror". The previous programme was completed in 2007.

We have already done a great deal to build an integral, multilevel counter-terrorism system. Serious strikes have been dealt on the terrorist underground and its leaders.

However we should be aware of the fact that the threat still remains. It is very serious. There is one priority in this work - strengthening the safety of the state, society and every citizen. We will continue to clamp down harshly on any terrorist actions.

But for this purpose, as well as in other areas, we should strengthen the material and technical base of law enforcement agencies fighting terrorism. A serious focus in this regard will be made on the prevention of crimes related to terrorism and extremism. I will not mention final figures but we are talking about dozens of billion roubles to be granted additionally. They will be allocated for this programme.

We will also consider several international agreements that must be submitted to the President for signing.