Transcript:

Vladimir Putin: Good afternoon, colleagues and friends.

I am very pleased to see you here in Cherepovets, which is one of Russia’s largest industrial centres. Today we are holding the eighth and final interregional United Russia conference.

In April 2010, nearly one and a half years ago, we held the first forum of this series in Novosibirsk, followed by more meetings in Kislovodsk, Nizhny Novgorod, Khabarovsk, Bryansk, Volgograd and Yekaterinburg where we discussed current projects and strategic development plans, as well as the most pressing and sensitive problems and concerns shared by people living in our vast country, stretching from the Pacific coast in the east to the Baltic Sea in the west.

We have developed a truly effective feedback mechanism, which allows us to identify problems and come up with specific solutions. As a result of these conferences, we have expanded air travel discount programmes for residents of Siberia and the Far East, and the Kaliningrad exclave. Student allowance for medical interns has been increased; large projects have been initiated to support the national healthcare system, schools and preschool education. The North-Caucasus Federal University is in the process of being established. A special development fund has been put together for the Far East and the Baikal Territory. And this is only a partial list of the decisions taken as a result of our conferences.

The past conferences were platforms where fresh ideas were proposed and improved upon and also – let me stress this – where energetic and dedicated people could prove their worth. Although different, these people had something very important in common – confidence in Russia’s future. They set themselves ambitious goals, pursue their plans without finding excuses, and gradually improve life around them, in their city, town, village, region, or in Russia as a whole.

I am also referring to people who have presented their projects at the conferences. They are now cooperating intensively with the newly established Strategic Initiatives Agency. Every fifth individual were chosen as leaders in the primary popular vote. Just imagine, every fifth person involved!

I believe that these people constitute a good reserve for expanding the United Russia presence in the federal parliament as well as in regional legislatures across Russia.

I’d like to emphasise that anyone who wants to innovate, to attain a goal and achieve success must be given an opportunity to realise their potential as well as our support. United Russia is open to anyone who is ready to advance civil or business initiatives.

There is one more important point that I’ve mentioned many times. I am convinced that if a political party wants popular support, it must understand the people’s concerns, their needs, and make improving their quality of life its priority. It should focus on increasing people’s welfare – not in some abstract way, but specifically in one’s city, village, region or in Russia as a whole. This approach is the foundation of our future plans.

We accept as fact that all Russian regions have enormous growth potential. After discussing it at our interregional conferences, the government approved development strategies for six federal districts: the Siberian, Far Eastern, Volga, North Caucasus, Central and Southern Federal Districts. We plan to adopt similar programmes for the Urals and the Northwestern Federal Districts. The core of the strategy consists of over 200 projects, which are meant to be engines of growth for the Russian regions. Total investment in these projects is estimated at over seven trillion roubles.

The priorities of the federal district strategies as well as the key development projects will certainly be included in our election programme – the People’s Programme – which is to be adopted at the United Russia conference on September 23-24. It will contain the most important concerns as well as substantial proposals for solutions, specific steps to be made and plans to be implemented in each of the Russian regions.

Colleagues,

I would like to touch on the problems of the Northwestern Federal District now.

Veliky Novgorod and Arkhangelsk have served as Russia’s major commercial gateways for centuries, while St Petersburg was designed and built by Peter the Great not only as his new capital but also as a major seaport connecting our country with its European neighbours as well as other countries and continents.

Today, the Northwestern Federal District plays as important a role in the country’s life, promoting Russia’s integration with the global economy. Suffice it to say that in 2010, the northwestern regions, with their logistics potential, accounted for one-third of Russia’s trade. I believe that these regions can be national leaders in transport and modern logistics development, setting high standards in this industry. This is certainly a large and challenging task, where every aspect is equally important: from designing strategic transit routes to building rural roads and road infrastructure.

We are amassing resources for a consistent overhaul of Russia’s road network. The regional road-building fund in the Northwestern Federal District alone is planned at about 140 billion roubles for the next three years. Is this a lot? For comparison, governments at the various levels (from federal to local) have allocated 2.7 trillion roubles for road construction over eight years (from 2002 to 2010). For the next eight years, starting in 2012, they will provide 8.3 trillion roubles for the same purpose, not 2.7 trillion.

It is important to identify some priorities here. Let me remind you that this year alone we have allocated 34 billion roubles for municipal road repairs and local grounds development in all big cities that are regional administrative centres. That amount includes the 3.7 billion roubles provided by the federal budget for municipal road repairs and local grounds development in big cities in the Northwestern Federal District. It would only be right to extend these improvements to smaller cities, regional centres and villages.

Therefore, I suggest that all regions spend a large portion of financing from their road funds on improving city, town and village roads. In fact, we have made a great effort to restore road funds, which were an older practice. We have restored them now, and I have already told you how much money we are planning to accumulate there – over eight trillion roubles in eight years, which is a lot of money. The regional governors themselves have initiated the establishment of these funds, but now some of them have asked permission to use the money on other purposes. But this is not what we have agreed on. I would like to use this opportunity to repeat to my colleagues, the regional governors – the road fund money must be spent on road construction.

On its part, the federal government is committed to overhauling all the federal highways in the next five years: the Russia, Baltia, Kola, Narva, Scandinavia and Kholmogory motorways. We will rebuild and broaden the border crossings to spare people humiliating traffic jams, but we very much hope that our neighbours in adjacent territories will implement their development programmes, too.

This year we completed the Ring Road around St Petersburg and at long last finished building the complex of protective dams. More than 300 years ago Tsar Peter the Great founded St Petersburg and built it, and for all those three hundred years the city experienced floods. Now, thank God, that work has been finished. I would like once again to thank the builders.

Work should start on the northern and southern bypasses around Kaliningrad, and then we must address the problem of truck and car transit in other major cities in the region.

The goal is at least to double the amount of road construction in Russia. That calls not only for money and advanced technologies, but for new approaches to infrastructure development and attracting investments, and above all various models of public-private partnership.

By the way, I have to say that 45 regions of the Russian Federation have already adopted regional legislation in support of this form of work, and that creates favourable conditions for attracting additional investments in infrastructure. The Moscow-St Petersburg-Western High-Speed Diameter high way in St Petersburg and the new terminal at Pulkovo Airport are being built on the basis of public-private partnership.

By 2014, Pulkovo Airport should double its capacity from seven to thirteen million passengers a year to become one of the biggest air hubs not only in Russia but in Europe.

At the same time we will continue the reconstruction of all the key airports in the Northwestern Federal District: Murmansk, Syktyvkar, Kaliningrad, Arkhangelsk, Petrozavodsk, Pskov and Vorkuta.

We are determined to support interregional and northern air carriage, and renovate the local airports at Veliky Ustyug, Ukhta, Amderm, Usinsk and Naryan-Mar. More than 60 billion roubles will be invested in the development of airports in the North-West by 2019.

The capacity of our seaports practically trebled in the last nine years. Our seaports on the Baltic and Barents Seas have got a second lease of life. Already today their capacity is about 220 million tonnes, which is 40% of the total amount of cargoes handled by all Russian ports.

I remember how we struggled to launch construction in Primorsk; we started from scratch. There were a lot of problems and noise, some of it coming from our partners, about environmental concerns. Well, there is not a single complaint. The port is doing a brilliant job and building up its operation.

I would like to single out the Ust-Luga port, which is also being built from scratch. The first structures appeared there quite recently, in 2007, and we hope that by 2018 Ust-Luga will become one of the ten biggest ports in the world. Today its capacity is over 11.8 million tonnes. I expect that by 2018 Ust-Luga will be able to handle about 180 million tonnes of cargoes every year.

The future of Ust-Luga hinges on the creation of a powerful industrial zone. Modern factories, housing and the social infrastructure must be built there. In effect a new city of about 35,000-40,000 people is being created.

For the first time in recent decades we are talking about building new cities in our country. This applies to Ust-Luga and to the new spaceport in the Far East where we expect to accomplish something similar.

The country is developing and reaching new milestones thanks to the work and energy of millions of our citizens.

I hope that in the foreseeable future the Northern Sea Route will start operating on a permanent and stable basis, and we are sure that it can compete with traditional trade routes in terms of cost, safety and the quality of carriage. Murmansk, of course, will be the main base of the Northern Sea Route.

We should also make full use of Russia’s inland waterways. The White Sea-Baltic Canal and the Volga-Baltic Canal will be modernised by 2018. The capacity of the main railways, including between Moscow and St Petersburg, and from St Petersburg to the Finnish border, where high-speed passenger trains are already running, should be considerably increased.

Additional routes should remove many problems, though some new problems, unfortunately, have arisen, which the people implementing these projects should have considered well in advance. For example, people complain that express trains have a negative impact on commuter train traffic. People simply find it hard to get to work in time. This should have been taken into consideration from the start. But nobody thought ahead. I believe all necessary measures should be taken to solve all these problems.

Esteemed colleagues, we estimate that the country’s GDP this year will increase by more than 4%. That means that by the beginning of 2012 our economy will make up for the economic crisis. I think 4.2-4.3% is not a bad result, but we should aim for still more impressive results. On the whole, even that rate of recovery will allow us to reach the pre-crisis level. Russia will do it sooner than many other countries, countries with so-called developed economies.

During the global crisis there were many factors beyond our control. The risks came from outside our country, and they were many. But we did not use them as an excuse, did not look for any justifications and did not expect “manna from heaven.” We assumed full responsibility.

I would like to say that United Russia should always react quickly to acute situations whether they affect the interests of the whole country, or people in a single region or city. It is important to always think about real people.

Many complaints reach the government, including through our public reception offices. Many of the petitioners ask for help obtaining equipment for people with disabilities. We discussed it recently at a meeting of the Popular Front. Representatives of organisations of disabled people spoke about how difficult it is to obtain a wheelchair, prosthetics and other devices.  

I think that by the end of the first quarter of 2012 we should do our utmost to meet all the requests for rehabilitation equipment and to eliminate the waiting lists. Both federal and regional authorities must do their duty.

I would like to stress that the rights and interests of people come first. Under no circumstances will we renounce our social obligations; we will protect people just like we did at the height of the crisis.

You remember the situation that existed at one time in Pikalyovo, a city in the Leningrad Region. They still have many problems there, but the worst is behind them and a 16 billion roubles privately financed development programme is being prepared. We have stabilised the situation, and we must now move forward. I think these plans are quite realistic. I have met with potential investors and looked at their plans. We shall try to help them so that they can move on to new frontiers.

A new stage of development is beginning for the whole Russian economy. We must move forward and set new targets. I think it is important that during the crisis, while addressing pressing problems, we set our sights on long-term horizons. These were the years when work got underway to form a strong nucleus in our higher education. A network of federal and research universities was being created: in the Northwestern Federal District these are the Northern and Baltic federal universities, in Archangelsk and Kaliningrad, as well as four national research universities. For their development we will allocate more than 26 billion roubles additionally. A special programme, similar to the one drafted for Moscow State University, has been developed for St Petersburg University.

Furthermore, we have earmarked 19 billion roubles for joint high-tech projects between higher education institutions and businesses. In the Northwestern Federal District that involves 16 projects worth a total of 5 billion roubles.

The business community in the Northwest has already invested 2.7 billion roubles for the purpose and the government has invested 2.3 billion roubles.

I should note that the higher education establishments and research centres in the district have created nearly 100 small and medium-sized innovative enterprises. There are more than a thousand such enterprises across Russia. That means that the Northwest accounts for 10% of them. Is that a lot? Honestly, I don’t think it is all that much. After all, this is such a powerful scientific and educational cluster that I think more could be done and you could move more quickly. On the whole, though, 10% of the national figure is not bad.

The company RUSNANO is cooperating actively with the education centres; it already has 16 projects worth 35 billion roubles in the northwestern regions.

We recently discussed plans to boost professional education with the members of the Russian Union of University Rectors. I would like to stress that higher education is a key resource for the long-term development of the country and its regions, so we will by all means increase investments in this sphere and pay special attention to it.

As you know, student scholarships have been raised by 9% as of September 1. This is not so much in absolute figures, but anyway, the initial target was 6% and we managed 9%. If more can be done we will consider it.  

In this regard, I would like to draw your attention to a very important and socially sensitive problem. While we say that the salaries of school teachers should be brought up to the average across the region, the incomes of university professors should be at least as high. I urge the federal and regional authorities to give this some thought. 

I have to say that so far only three regions in the Northwestern District – the Leningrad, Archangelsk and Pskov regions – pay higher education professors more than the average wage in their economies.

This year we will launch a pilot project to increase financial support for the training of engineers at ten universities, including St Petersburg State Electro-Technical University. We will launch the programme, assess its results and decide whether to expand this practice. These are surely investments in the future, in the future of our industry and economy. Incidentally, that programme alone would increase the earnings of university professors by at least 7.5%.

I would like to mention another sector that outperformed the average, and that was infrastructure. In 2010, the national economy was only beginning to recover from the crisis, and yet more than 3.2 gigawatts of power generating capacity was put into operation. Is that a lot? It is the highest number in the last ten years. This year we are to launch twice as much, 6.3 gigawatts, of which 1.4 gigawatts will be in the Northwestern Federal District of Russia.

Before 2015 more than 4 gigawatts of generating capacity will be built in the district, along with 3,000 kilometres of power transmission lines. What’s more, the Northwestern Federal District is becoming indispensable for European and perhaps even global energy security.

You will remember how many lances were broken, and how much was said about our gas exports to Europe, and how many spanners were thrown in the works to impede, for example, the Nord Stream project, the gas system under the Baltic Sea, how many alternative projects were proposed. What happened to them? They have remained on paper. But Nord Stream has essentially been implemented. The capacity is 55 billion cubic metres a year, once two strips are in operation. One has been completed. We will start pumping process gas near Vyborg tomorrow. That will take about a month, and in late October-early November we will be able to provide gas to consumers.

What does that mean? It means that we are gradually, calmly freeing ourselves from the dictate of transit states, without any abrupt movements. This is “a window to Europe” in the energy field.

Incidentally, the total cost of the project is 7.4 billion euro. That is a considerable sum in investment. I should add that the second part of the Baltic pipeline system will be launched in two months’ time, which will substantially diversify our energy exports. I want to alert Gazprom and the heads of regions to one thing. I have just been speaking about exports. But we should on no account forget and we will not forget about equipping the Russian regions to run on gas. That topic merits separate discussion.

A major effort will be made in the Northwest to develop the fuel and energy resources in general. We will use the local seams in the Pechora coalfield. Particular attention must be paid to mine safety and solving miners’ social problems. We must of course preserve our coal industries in the Russian settlement of Barentsburg on Spitsbergen, or Grumant, as our Pomors used to call it.

Regarding oil, the Timano-Pechorskaya oil province has the best prospects. The Kharyaginsky and Usinsky fields in the Republic of Komi and the Nenets Autonomous Area are being actively developed. Of course, we will go to the Arctic offshore zone. The first ice-resistant platform was installed this year at the Prirazlomnoye oilfield where the Barents and Kara seas meet. Commercial production of hydrocarbons will begin in a few months.

The first oil from Prirazlomnoye field will start flowing in the first quarter of 2012, and commercial production will start in the fourth quarter of the following year. You know that Rosneft has signed a long-term strategic partnership agreement with one of the leading world companies, Exxon-Mobil. The agreement includes the development of the Arctic continental shelf. It will bring in unique technologies and colossal investments – we are talking about hundreds of millions of dollars. In fact they are talking billions. These are large-scale, global-level projects.

I should add that a centre is being set up in St Petersburg under this joint project, which will provide scientific and technical support for offshore production. In the gas industry, Shtokman, one of the world’s largest fields, will be developed.

Of course, Gazprom had to put the brakes on this work because of the falling demand for gas and falling gas prices, and I think they did the right thing, but we are not going to abandon that project. A consortium involving Gazprom and a number of foreign energy companies has been set up, and we believe that all investment decisions regarding the first stage of the project will be made before the end of the year. As part of the development of Shtockman, a seaport and the world’s largest gas liquefaction plant are to be built.

Russia should become a leader in the global LNG market. The deadline for completing the first phase of the gas supply project is the end of 2016, the third or fourth quarters, and the LNG plant is tentatively scheduled to be launched in 2017.

What is equally important for us is that the development of gas production will enable us to make substantial progress in equipping the Northwestern regions to run on gas, including the Murmansk region which is still essentially without gas.   

I would like to emphasise that if the government or businesses implement megaprojects, they should by all means benefit the regions where these projects are being implemented, in order for us not to find ourselves in a situation in which funds and resources end up somewhere far from the regions they were intended for, while these regions get only headaches, environmental issues and other problems. For example, a good deal of oil is produced in northwestern Russia, but all local refineries are export-oriented. Therefore, fuel oil required for power engineering and the utilities sector in the Murmansk and Arkhangelsk Regions, and the Republic of Karelia, has to be brought in from refineries that are located a thousand kilometres away, which costs a fair amount of money. Incidentally, these refineries cover only 11% of regional requirements. The rest is exported either abroad or to other regions in Russia.

We will therefore need to significantly expand refining capacities, and build a powerful petrochemical cluster in northwestern Russia.

Certainly, not a single industrial project, neither production on the shelf nor construction of new plants, will be implemented without compliance with the most stringent ecological requirements. A protective, civilised relationship with nature is a prerequisite for the implementation of all our development programmes. Another 11 federal nature reserves and 20 national parks will be established in Russia within the next ten years. The areas of another nine nature reserves and two national parks will be significantly expanded. We are about to start a pilot project to develop the necessary infrastructure at 12 specially protected natural areas. We will provide 1.5 billion roubles for this purpose, which we have already set aside in the budget. Our goal is to make unique natural landmarks available to tourists, in the way this is done all over the world, so that young people, families with children could come visit and enjoy the spectacular natural beauty of our nation.

In 2009, The Russian Arctic park was established, which includes the northern part of the Novaya Zemlya archipelago and Franz Josef Land, as well as a vast water area of 1.5 million square kilometres. Research expeditions have already started their work to assess the environmental risks in the Russian Arctic. Later, we will begin a major cleaning of our northern territories.

As a point of reference, I have already mentioned before, and will repeat it for this audience: there are sad numbers according to preliminary estimates. Up to 250,000 barrels have been dumped on the Franz Josef Land, with contain 40,000 – 60,000 tonnes of petroleum products. About one million empty barrels are lying around as scrap metal. They need to be removed from the area – as these barrels rust, the contents seep through and damage the vulnerable northern environment.

Another critical point. Investments in megaprojects should proceed effectively above all within Russia itself, in order to prevent all orders from going to our foreign partners. They should receive some of them too, but there must also be competition on the domestic market. These orders should primarily go to our Russian enterprises – Russian machine-building, metallurgical and shipbuilding enterprises. For example, drilling rigs for production on the shelf are designed by the Krylov St Petersburg R&D Institute; the construction of sea vessels and special platforms will be carried out at plants located in St Petersburg, Severodvinsk, Vyborg and Murmansk.

We will need to upgrade and expand existing shipyards, including those for building ice-class vessels, tankers, ice platforms, and floating nuclear power plants. The first ever power plant of this kind – Akademik Lomonosov – is currently being built on the Baltic plant. I know that they have certain financial problems, and we will see to resolving them.

We are also about to start building a number of ice-breakers, including the nuclear powered Lider, with a capacity of 110 mWt. These vessels will be built here in the northwestern shipyards in Russia.

And of course, the shipbuilding industry of the Northwest should reinforce its position as the main arsenal of the Russian Navy.

In fact, we are beginning a major shipbuilding programme after a hiatus of several years. As much as 4.7 trillion roubles will be allocated for retrofitting the Russian Navy until 2020. The goal is clear: to build a modern fleet that is capable of tackling all tasks, ranging from nuclear containment to maintaining a presence in the world ocean, to protecting our economic interests and biological resources.

Last year, the Sevmash shipbuilding plant manufactured the fourth-generation nuclear submarines Alexander Nevsky and Severodvinsk. The strategic missile carrier Yury Dolgoruky is being successfully tested, and is due to become part of the Pacific Fleet already in 2011. They are currently building the submarines Vladimir Monomakh and Kazan, as well as a number of frigates and corvettes.

I cannot help touching upon the subject of government contracting. Many saw and followed these developments, and the shipbuilders certainly did. Unfortunately, the Defence Ministry and manufacturers failed to reach a complete agreement by September 1, as they planned. They continue to disagree in certain areas.

I’d like to draw attention of all parties involved in this process: first of all, we have a huge sum of money allocated towards strengthening our national security. We have never allocated this much money before, except perhaps under the Soviet Union, when they didn’t spare any resources for defence – but not lately. The issue concerns about 20 trillion roubles until 2020. We are compelled to cancel or restrict spending on many other issues, but these measures are necessary in order to secure our defence capabilities. But we don't need to assimilate these billions and trillions of roubles; we need to provide the necessary quantity and quality of equipment.

Certainly, the profitability of these enterprises should be guaranteed to be no less than 15%. We need to ensure this profitability in order to possess the resources for future development and to provide decent pay to employees. I hope that this process will be finalised for shipbuilding, missiles and aviation within the next week.

Orders, advance payments and other payments to enterprises should be made in full by March 2012. I am very much counting on this.

Colleagues, the logic behind our projects is to create well-paid jobs and competitive manufacturing facilities in Russia. For example, northwestern Russia has already become a major hub of the Russian automobile industry. In 2010, Russia manufactured 1.4 million cars of all body types, of which 400,000 were manufactured in northwestern Russia, which is not bad at all. Leading world manufacturers, such as Ford, General Motors, Nissan, Toyota, Hyundai and Scania, have opened plants here, creating 25,000 high-paid and high-tech jobs.

Lately, we have come up with new localisation requirements, such as the requirement that a certain proportion of parts be manufactured in Russia. Our key foreign partners are prepared to abide by these arrangements. We have signed corresponding agreements with Ford, General Motors and Volkswagen.

The essential conditions for this new assembly arrangement include increased localisation of up to 60%, and the mandatory establishment of engineering centres here in Russia, that manufacture engines and other major components. The issue is one of creating a fully-operational industrial chain, from R&D to high-volume output.

We have provided substantial assistance to our auto-makers during the crisis, and have managed to keep all our major projects running. The output of cars doubled last year. It doubled in the course of one year! Output increased by another 76% during the first six months of 2011. In 2009, the share of domestically assembled cars was slightly above 50%, and now it’s is almost 70%. According to the opinion of experts, the Russian car-building market may become the largest in Europe by 2015-2016. This is how it will be, I have no doubt about it. We have huge growth potential. This is a good incentive for carmakers and their numerous suppliers, such as the metallurgical and mining industries. An entire production chain.

In recent years, the major Russian metallurgical enterprises have invested over 800 billion roubles towards upgrading programmes. The metallurgical industry is becoming a truly new-generation industry with an advanced manufacturing culture and technical equipment, and competitive wages. I visited all of our leading enterprises. At times, you can't even tell where you are, whether it's a health care institution or a metallurgical plant. Honestly! I’ve seen a lot, but some plants truly surprised me. They are equipped with the latest equipment available on the market and employ superbly trained employees. They are world-class facilities. Well done!

The Kolsky ore mining and smelting plant built a new mine, Severny. The Severstal plant commissioned a modern unit to produce unique grades of polymer-coated metals. The Izhora pipe-making plant is effectively participating in implementing key infrastructural projects conducted by Gazprom and Transneft.

Traditionally, the pride of northwestern Russia has been engineering: industrial, energy and transport machine-building. It is sufficient to mention the names of the Kirov or Izhora plants. However, I’m sure you have heard on many occasions some sceptics saying that our leadership in this area has slipped once and for all, and, as they say, it’s too late to catch up. Some say that heavy engineering is a thing of the past.

You know, I visited a school outside Moscow on September 1, and saw a social science manual which stated that unlike the 20^th century, the 21^st century is all about the provision of services, and that the production sphere ranks second on the list of priorities. This is a rather debatable issue.

We can see that some countries, which engaged too heavily in de-industrialisation policies, are now reaping bitter fruit. Engineering centres and skilled employees are following in the wake of disappearing production facilities. This creates conditions of degradation; therefore, it’s very premature to speak about the death of industrialisation. We need a new industrialisation based on new approaches. That is the right thing to do.

I believe that we were absolutely right to prioritise support of the machine-building industry. We have everything we need to be the owners of our own market first of all, which is vast. The power generation and grid companies alone plan to purchase equipment worth 1.5 trillion roubles within the next three years – we have covered this issue at a meeting in St Petersburg. We should be sure to fill this market with Russian-made goods.

Second, we can substantially increase our exports of high-tech equipment. I am confident that this task is feasible. For example, the Siloviye Mashiny plant is already on the list of the top five global manufacturers of power engineering equipment. Incidentally, they are building a new enterprise in St Petersburg, and have invested 30 billion roubles towards this construction. Not bad at all. I wish you success.

The Siloviye Mashiny plant is carrying out a very important task, participating in the restoration of the Sayano-Shushenskaya Hydroelectic Power Plant. By 2014, all power generation equipment in the plant will be replaced, and ten new turbines will be installed. These turbines comply with the most stringent requirements with regard to reliability and safety. The first hydraulic unit will already be commissioned in December 2011. Units that have previously been installed are already working, but entirely new unit will become operational in December 2011.

I would like to note that an effective industrial policy for economic development requires a concerted effort at all levels of government. For example, the federal government decided to gradually increase duties on the export of timber, while at the same time establishing preferential treatment for timber processors.

The crisis has certainly forced us to make certain adjustments. We weren't as tough as we had initially planned to be with regard to export customs duties. I will come back to this later. Still, these modest, but systemic measures brought about some results, and the export of logs was reduced by more than half, from 50 million cubic metres to 21 million cubic metres per year.

This may be not the most important thing, as some opponents may say that the markets were down and the demand for timber fell along with them. Not only that. We have begun implementing 98 investment projects for the deep processing of lumber, of which 28 are being implemented in northwestern Russia with a total investment of 105 billion roubles, which is an entirely objective indicator.

Same as in the case of the auto industry, this means new jobs for the region and additional budget revenue. We met our Finnish partners halfway, and agreed to impose a temporary ban on the growth of export duties for logs. I want to emphasise that this is a temporary measure. We want our partners and friends in Finland to have some time to make proper decisions and find solutions that are mutually acceptable.

However, we will not abandon our strategy of reducing exports of rough timber. This is a position that we stand by on principle.

This also goes for our marine bio-resources. There have indeed been certain improvements in the fishing industry over the past few years. Above all, they created order on the most basic level, and removed at least some of the awful administrative barriers.

There was a time when we actually lost our entire domestic market, and everything was imported. Now, the share of the Russian-made products has grown to 75% on the domestic market and should be as high as 80% within the next few years.

Certainly, the implementation of development projects depends on the active, independent stance adopted by the Russian regions. For example, the Vologda Region decided to revive its rich traditions of making natural linen fabric. They are busy reconstructing the entire production chain, from growing flax to manufacturing fashionable and comfortable clothing.

St Petersburg is effectively forming an entire pharmaceutical cluster. The St Petersburg authorities deserve credit for their goal-oriented and effective work in this area. First of all, they developed production sites, and built utilities and infrastructure. Second, they reduced profit tax to 13.5% and waived the corporate property tax. They have also made provisions for tax holidays. They have adopted an entire package of measures.

And there are visible results. They are currently implementing nine projects with a total investment of 25 billion roubles. The first production lines will already be commissioned in 2012-2013. Almost all projects include the establishment of research centres to develop new medicines. This is real progress. One can only congratulate them and be grateful for this.

It is clear that each region is starting off on its own level, but all of the regions have the chance to set their priorities in the right way, to effectively organise their work with potential investors, and to invest in development programmes and support small- and medium-sized businesses.

Unfortunately, this logic is not applied in all of the regions. For example, the decision to simplify the tax code by lowering taxes has yet to be made in Arkhangelsk and Kaliningrad. Practically all of the regions have programmes offering facilities for small- and medium-sized businesses on preferential terms. I only recently spoke about St Petersburg and a pharmaceutical cluster’s work. However, there are problems with these facilities as well. In nearly all of the north-western regions, and in Russia in general, improvements, if they are made, are made slowly. These changes unfortunately go unnoticed by the market.  

I would like to draw the attention of my colleagues, governors, and my fellows from the local government bodies to the fact that we need to constantly support entrepreneurship in practice instead of simply talking about doing so. Upon assessing regional governing teams, we will certainly consider the business development environment in the regions, among other factors.

Esteemed colleagues! Everything that is important to individuals, everything that defines their wellbeing and opportunities for self-realisation, should be at the forefront for all of us.

I would like to note that by the end of 2011, we will see a significant increase in construction in the north-western regions. The construction industry has come alive, but still at a slow pace. It is slow in Russia in general, but the process is very slow in the northwest, increasing by only 0.1%.

By 2020, we must double housing construction in the north-western regions and reach the mark of 12 million square metres per year. To achieve this figure, we plan to engage the Housing Development Fund. In the north-western regions, the fund is already actively involved in multiple complex construction projects. The total amount of square metres planned to be built under the fund’s supervision exceeds 1 million square metres, and that is just in the northwest.

In addition, there are plans to open businesses producing energy-efficient and environmentally friendly construction materials. With the fund’s assistance, 13,000 multifamily residences have been repaired, which means that the living conditions of 2 million residents were improved.

Early this year, United Russia began monitoring and controlling housing and utilities rates. I would like to note that the increase in housing and utilities rates in the north-western regions did not exceed the planned 15%, and the differences between the increased rates were rather large.

The average increase amounted to about 11.5 %, with the largest hike in St Petersburg (14.4%), which did not surpass the 15% mark, and the lowest in Kaliningrad (6.1%) and the Leningrad Region (6.8%).

We need to make further sequential changes in the housing and utilities sector. Such discrepancies in the rates are closely linked to the immediate conditions in the region.

A village in the Leningrad Region differs tremendously from a city such as St Petersburg. However, individuals should pay for actual high-quality services, instead of paying superficial rates and bills to support ineffective management, monopolisation, an unwillingness to invest in updating infrastructure, and at times, even plain theft.

The primary issue is the availability of housing for public sector employees, such as doctors, teachers, young families and professionals, active military and veterans. All World War II veterans residing in the North-West Federal District who got on the waiting list for municipal housing before March 1, 2005, received housing. That is 8,984 individuals. After we widened the scope of the housing programme, an additional 21,000 individuals applied for housing. Of them, the living conditions of 14,500 have already been improved.

We will certainly continue such programmes.

To demonstrate this dynamic, I would like to give you a few examples. In the past two years, active duty military members of the Defence Ministry were provided with 100,000 flats. I would like to emphasise that never before have military members received so many housing units. Here in the North-West Federal District, 486 flats were built in 2009. In 2010, the figure grew 10 times to 4,587. In 2011, the plan is to build 14,910 flats. And, of course, we will not stop there.

In Russia overall, members of the armed services will receive 77,000 flats, which should fully meet the demand for 2011-2013. I count on this happening, and I hope that this will happen. For sure, in newly established residential areas and neighbourhoods, we will build not only new housing, but also the necessary infrastructure. We will create jobs and build new schools, kindergartens, and outpatient clinics to ensure a high standard of living for families. The role of local governing bodies is of immense importance here. And many local governments perform their role well. A wonderful example is Valentina Matvienko (Governor of St Petersburg). I travelled to many towns and observed how St Petersburg allocated a lot of city funds for these purposes, and rightfully so. I would like to draw my colleagues’ attention to this fact.

I would like to note that we invested more than 47 billion roubles in the North-West Federal District’s healthcare system in the national health project. We will speak about the programme shortly. Thirty billion roubles were allocated from the federal budget and 17 billion roubles from regional budgets.

Three prenatal centres recently opened in St Petersburg and the Kaliningrad and Murmansk regions. Last year, child mortality in the regions fell by 10%. By March 2012, a new cardiac surgery federal centre should also open its doors in Kaliningrad.

At a recent meeting in Smolensk, we discussed each region’s standings in careful detail. I expect that the right conclusions will be drawn and all of the projects will be completed on time.

When we first decided to launch the health project in 2005, the federal budget provided 60,000 individuals with high technology medical assistance. This year, the number has grown five times to 300,000. But even this is insufficient. I know the parameters and understand that behind each case are a human life and that individual’s health. So, we will increase our capacity. To this end, we have decided to allocate 2.5 billon roubles for high technology healthcare. This will allow medical professionals to perform 20,000 surgeries on people requiring medical treatment. 

As is the custom here in Russia, children are the object of special attention. There should be no such thing as “children’s queue for surgery”.

We have also set aside 2.3 billion roubles for additional pharmacological support for categories of citizens entitled to benefits.

My first announcement is that we have coordinated the parameters with the Finance Ministry, the Economic Development Ministry and the Health Ministry just the other day. The money will be sent to the regions; I ask the Russian Federation’s constituent entities to make purchases before the end of this year so that we have no supply failures in early January next year that will affect people who need medicine.

This also concerns the regional healthcare modernisation programmes. In 2011 and 2012, the Northwestern regions will receive over 44 billion roubles to overhaul hospitals and clinics, buy new equipment, and introduce modern standards of medical care. These are additional resources.

I would like to draw your attention to the following: the funds for this year have been transferred in full. Now it is up to the local authorities to do active and competent work. Among other things, I ask you to focus on introducing advanced information technologies that will help make the process of making an appointment with a doctor as orderly and convenient as possible, saving patients the trouble of scurrying around to all sorts of offices with all sorts of registration tickets in hand.

A key plank of the regional healthcare modernisation programmes is increasing the wages of health professionals. Let me remind you that the wage fund is to grow by 30-35% during the next two years.

Here, too, I can give you some figures regarding the Northwest. They are interesting. The difference is considerable, as is the variation. Living standards clearly vary across the regions. In 2010, a doctor’s average after-tax wage in the Northwestern Federal District amounted to 30,365 roubles per month. The highest level is in the Nenets Autonomous Area – 69,390 roubles. The most modest one, at 18,648 roubles, is in the Arkhangelsk Region. The difference is considerable.

To make a more or less decent wage – we have talked with some health professionals at a meeting – they have to scurry about like a squirrel in a cage, working in many offices and combining that with constant shifts elsewhere.  

This is the picture in the Northwest. Or let’s take the rural areas as a whole. The schedule of positions and salaries has 2,512 medical slots; 2,144 are filled. It seems to be rather a good picture. But if you look at the reality, it not as rosy, because those positions are manned by 1,448 people. This means that almost everyone works for two. Hence the queues, the physical demands on the doctors, the negligence, and so on.

For Russia as a whole, the personnel situation in the countryside is as follows. There are about 66,000 doctor’s positions; and 41,000 working doctors, of whom only 6,500 are young doctors. I believe we must create some additional incentives for doctors to join rural medical establishments.

I suggest we pay 1,000,000 roubles in appointment allowances to every specialist willing to take a job in the country. He will be able to use this money to buy necessities or deal with housing and other everyday problems. The only condition is that he must work for no less than five years. I think this is quite justified and logical. This is a square deal.

I would like to draw your attention to the following. First, we do have the funds, and this means making certain savings within the framework of the modernisation programme. We do not even need any additional resources there. This will cost approximately 11 billion roubles, but primarily we will have to help the regions that take the initiative and do something on their own to make life easier for their medical professionals. There are regions of this kind.

I hope that this step will make it possible at least to halve the shortage of doctors in the countryside as early as next year. Currently the shortage amounts to around 22,000. Some amendments to the legislation will be needed, of course, and I ask our State Duma group to assure that the required amendments are promptly considered and approved.

This must be done as soon as possible so that we might start this programme as early as December or January. It will run for the whole of 2012. We will evaluate its results and decide what is to be done next.

I suggest that the regions also support this initiative – all the more so, as I said, as many constituent entities of the Russian Federation have gained some positive experience. For example, rural doctors in the Kemerovo Region are granted favourable housing loans; in Karachayevo-Circassia, 25% bonuses are planned for young rural doctors. There are special increases to the wage fund in the Lipetsk Region.

It would be right for the regions, in their turn, to devise a system of incentives for mid-level medical personnel. These specialists are also in short supply in the countryside, and this must be done, all the more so as the majority of medical universities are under the jurisdiction of the constituent entities of the Russian Federation.

I urge my colleagues, legislators at all levels, Popular Front representatives, and heads or regions to thoroughly discuss this issue with the professional community and make it a priority going forward, including in the context of drafting of regional budgets.

Now let me say a few words about a programme to support Russia’s schools. As you know, we plan to allocate an additional 120 billion roubles in federal funds to the regions over the next two academic years. These funds are to be used to buy equipment, to equip school cafeterias, to address the problems of rural schools with few pupils, and to run additional training courses for teachers. The constituent entities of the Russian Federation, in turn, have a duty to raise teachers’ wages with the money they save as a result.

Please note that the teachers should see pay raises at the end of this September  as money in their pocket, not as part of a plan.

According to the Education and Science Ministry’s data, teacher pay will draw level, as early as this month, with the average pay in the economies in 40 constituent entities of the Russian Federation. In four regions this indicator will be exceeded, which means that teachers will be paid even higher than the average in the regional economy.

In 38 constituent entities of the Russian Federation, average teacher pay will grow by no less than 30%. At the same time, it still falls short of the average in the the economy, and so these entities must resolve this issue as soon as possible.

Let me repeat it once again: during the current and the next academic years, teacher pay in all regions and constituent entities of the Russian Federation, without exception, should reach the average in their respective economies. I ask United Russia’s party structures to monitor this problem locally and to achieve the desired result.

All of us know full well what the low school wages can lead to. Not only is it humiliating – and we say that teachers are responsible for our future, for our children – but it also bars a teacher’s access to many economic and socioeconomic opportunities. For example, if you are a teacher, a young teacher, and your pay is low – as a rule, no more than 8,000 roubles a month – you have to forget, in this case, about getting even the cheapest mortgage, because not a single bank will take a risk with this kind of pay as collateral. Now that teachers’ wages are approaching the level of average pay in the economy, home loans will be more accessible.

Therefore, there are some proposals for this sphere as well. I would like to familiarise you with them.

First, I propose special mortgages for young teachers, with a reduced interest rate and the lowest possible down payment; and there should be no restrictions as to the amount the teacher earns.  

The current rate is around 13-14% and it has been suggested that the rate be fixed at around 8.5%. The first instalment currently stands at 20% and it has been suggested that it be kept at 10% or below. I think it would be right for the regional authorities to take care of the initial instalment, as many regions are capable of this. It is entirely possible.

I am talking about professionals aged 35 and younger, and specifically young teachers. We expect some 50,000-60,000 people can be granted such loans. Generally, young professionals make up just over 22% of the total number of teachers, which is 238,000 people. But we believe such a mortgage system can support 50,000-60,000 people. It appears to be an efficient preliminary solution to the problem of housing for teachers in rural areas.

I have mentioned that the regional authorities could take care of the initial instalment. Many of them already do a lot in this area. The Pskov Region is a good example. It pays housing allowances to young professionals that seek employment in schools.

I ask the federal agencies, the Housing Mortgage Agency to develop this special mortgage scheme for young teachers and, as I said, I ask our colleagues in the regions to look into the issue.

Another proposal involves cooperative housing. It should be available to all school teachers regardless of their age. The Fund for Housing Construction Development will allocate plots of land to such cooperatives while the regions will undertake to provide the necessary utilities. It is not a financial burden and, moreover, it is also a solution to the development of cooperative houses.

The estimated cost of economy class housing may consequently drop by at least 25-30% of its market price. This will be a huge relief for those participating in such cooperatives. Amendments shall be made to the laws, including the Land Code. Members of the United Russia parliament group should pay attention to this.

I believe the United Russia and our deputies in the regions must seize the opportunities they have and I’m asking you to pay specific attention to this project. We can call it Teacher’s House.

We can also help the regions that are actively engaged in preschool education. We can allocate an additional nine billion roubles from the federal budget for this purpose, one billion of which will be directly allocated from the federal budget and another eight billion roubles will be provided in the form of public budget loans and loans to the regions. This will help eliminate the number of children on kindergarten waiting lists. It is a pressing issue especially for the Northwest. Over 110,000 kids are waiting to get accepted to kindergartens, while some regions expect to solve the problem in five or even ten years. However, this is not the solution. The children will grow up and get jobs by that time. This approach must be reviewed. I believe we can and must find resources for such an important issue.

You know, I visit the regions quite often and I know that many kindergartens had been turned into administrative offices and the first thing on the agenda is to free up those buildings.

I understand that it is hard to recover the properties that were sold to businesses, even through legal procedures, but we can free up the buildings that house public offices. We can and must do it. Step by step, we must establish decent and comfortable conditions for people and families and create opportunities for their personal achievements in work, creative activities, sport and education. Obviously, we must take care of our historical and cultural heritage, which helps bind our nation together.

In the past ten years, the federal budget alone has funded the restoration of monuments of wooden architecture in Russia’s North, as well as the construction and renovation of museums, theatres, and libraries in Veliky Novgorod, Pskov, St Petersburg and other cities in the Northwest, spending over 66 billion roubles in total. We are also developing sport infrastructure. We have allocated eight billion roubles for the construction of sport centres in the Northwest. Stadiums for the upcoming World Cup will be built in St Petersburg and Kaliningrad. This opens up new prospects for the whole region.

Now I should say a few words about the elections. The State Duma elections will take place during the upcoming conference of United Russia. We will of course talk about the programme and the nominations for the pre-election work.

What I would like to highlight is that the United Russia will stand for the election to the State Duma along with a broad social coalition, with a common foundation and programme. It will support and promote new innovative and motivated candidates. We have established the Popular Front, which is open to all public organisations and companies, to representatives of other political parties, to anyone who has new suggestions and is eager to work for the future of our country.

I believe this idea of national consolidation was right and useful for society and for United Russia as well. The majority of people want to come together to achieve positive goals – this is as clear as the ambition of our citizens to influence politics. Therefore, the opportunities and the mechanisms that United Russia now offers will be in demand. This has been proved by the preliminary poll results. Many activist groups and high-profile public figures demonstrated their willingness and ability to solve the country’s problems.

Of course, United Russia itself has many problems and criticisms of United Russia are fair. However, the United Russia party has indeed demonstrated its progress, the expansion of intraparty democracy and a general qualitative renewal of the party’s principles.

According to the preliminary polls, a significant number of our nominees in the State Duma elections are representatives of various social groups, such as doctors, teachers, engineers, workers and farmers, servicemen and entrepreneurs, pensioners and young people. At the same time, there will be many new young politicians from the party and workforce reserves and from the youth organisations. Our group in the State Duma will be significantly renewed, by at least fifty percent. I think this is a positive trend. But we must not lose the people who proved and demonstrated that they can work for the good of the country and its citizens. We must not lose these people. We can use their potential and desire to work. Both the party structures and the government will give this thought.

We all must ensure the new people who get engaged with politics, power and the party can be effective at all levels. I believe we must use preliminary poll scheme in the upcoming regional elections.

I suggest the United Russia party nominees be 25% representatives of the Popular Front. It will be for the best.

There is no doubt that the Popular Front’s objectives that I have just mentioned are not limited merely to elections and new power formation mechanisms. Perhaps the most important thing is the open discussion of the society and the country’s primary challenges. To implement our strategic goals and bring Russia to a higher level, we will need to take crucial decisions, thoroughly discuss important projects, and choose those priorities that merit special attention. Such decisions should be based on the support of the entire Russian people; they should not be taken solely by officials or experts. And these decisions should be competent and precise as well as comprehensible, in-demand and supported by society. They should meet the interests of the overwhelming majority of Russian citizens, which means that they must be fair.

That is why, with the help of the mechanisms offered by the Popular Front, we should expand the participation of Russian civil society in shaping the national agenda. We have already used the Popular Front as a platform for discussing the features of the federal budget for the next year and such crucial issues as healthcare and education modernisation, social policy, and civil and interethnic harmony with public associations and citizens. Naturally, this work should be continued. For example, public discussion of the budget should become a regular thing, both at the federal and regional levels.

I also propose that we improve the mechanism of our party’s interaction with the participants of the Popular Front while reviewing the key and most socially significant projects during the State Duma’s autumn session (and I believe that its plenary sessions begin tomorrow). Actually, this process has already begun. It is necessary to form the list of priority draft laws for the autumn session and to stipulate the procedures for their preliminary discussion.

For example, this can be done as part of regular joint meetings of the party leaders and the representatives of the Popular Front’s Federal Coordination Council.

I also believe it is possible to discuss increasing the participation of Popular Front representatives in expert councils and commissions under specialised Duma committees. This will allow those colleagues who enter the Duma for the first time on our lists to gain experience.

We have outlined large-scale regional strategic development plans at regional conferences; they will be included in our election programme. This means that we will make commitments to Russian citizens and assume responsibility for the results and the efficiency with which our projects will be implemented in concrete laws and solutions, and in budget items at the federal, regional or local levels. There is much to be done; we have to solve a number of complicated and important tasks. I am sure that we will be up to the challenge. Thank you very much for your patience and attention.

(a video is shown)

Vladimir Putin: Friends, colleagues – let us continue our work. According to the established procedure at such events, we will now hear about the proposed projects. Our colleagues will present them to us. And after that we will have an open discussion on the problems of the country’s Northwest.

Alla Startseva, from the Dominion Company. Please, go ahead.

Alla Startseva: Good afternoon, Mr Putin. Good afternoon, colleagues.

I suggest that we look at our wonderful flax before talking about it.

(video)

To add to what we have just seen and heard, I would like to highlight several key points of our project.

Why is it so important to revive flax in Russia? First, we should understand clearly that flax is the country’s only domestically produced raw material used in the textile industry. It is the only viable alternative to the ever price growing cotton and hence it can free our industry from its dependence on imports.

Second, the demand for flax on the world market has been growing, so the industry is very commercially promising.

And third, flax for Russia is not merely a material, flax is Russia’s soul. Russia has always had a special relationship with flax. Flax both fed our people, provided them with clothes and shoes, and kept them warm. It used to be said in Russia: whoever sows flax will reap gold. And so by reviving flax we are also reviving our national brand. We are implementing our project in the Vologda Region, which has always been Russia’s flax capital. The entire production and processing cycle has been preserved here – as we put it, from the field to shop counter. Actually, in the Vologda Region the flax industry is a marriage of the agricultural and textile industries. And the most important point is that there are people, outstanding workers both in agriculture and the textile industry, who have the knowledge, skill and desire to grow and process this wonderful material. Our project is expected to be completed by 2021. The total cost is estimated at 9.8 billion roubles. The essence of the project is clear; you have mentioned it today – modernisation, modernisation,  modernisation. The form of implementation is also obvious, it has no alternatives – it is public-private partnership. We have been implementing this project for three years with the support of the government of the Vologda Region. Certainly, much has been done already, as you have seen in our video. It has already yielded results. You have also seen our wonderful cloth and clothing. As for 2010 results, our flax plant, Vologodsky Textil, the integrated result of the work of our flax industry, has become the country’s leader for the production of cloth for suits and dresses for the first time.

Of course, a lot has been done, but there is even more that is yet to be done, and this is why we require state support so much.

Thank you very much for the fact that the state is already turning its attention to the textile industry. A lot has already been accomplished.

I know that you have recently signed an executive order on measures of support for economically important regional programmes, which included the programme of our region, Vologda. In 2011, the region will receive 111 million roubles. This is certainly very important, but at least this much still has to be done, because the problems in the industry are systemic. We discussed them yesterday at a meeting of the agro-industrial section of our conference. I would now like to consider two of them that are crucial for the modernisation of the industry.

First of all, for efficient modernisation we need long and inexpensive borrowed money. This means loans for longer than 12 years at a rate that does not exceed the Central Bank’s refinance rate plus 1.5%, while at the same time maintaining the current subsidising rules laid out by resolution No. 993 and providing a respite on principal debt repayment for two or three years. Or, as an alternative: give up subsidies in order to avoid transferring money from one state “pocket” to another, and instead provide loans on truly preferential terms, at 3%-4% annually, like they do in the West. Only loans of this nature can be efficient.

There is another support measure, which is no less important and, perhaps, even more pressing. Since we are in the active stage of modernisation, we urgently need amendments to resolution No. 372, which regulates lists of technical equipment that is not subject to the VAT when imported, so that agro-industrial companies do not spend a significant portion of their working capital on this temporary tax. Notably, this list does not include most finishing equipment, with which we began our modernisation, because the finishing of fabrics has the biggest influence on improving the competitiveness of our products. We hope that the Ministry of Industry and Trade will help us by putting these measures into effect, because the contracts are already signed and the equipment is being produced.

In conclusion, I'd like to say that we manufacture products that are oriented towards all of us, towards every resident of our country. Simply put, it is the goal of our project to allow all Russians see for themselves that wearing linen is wonderful, and to make this luxury accessible for all Russians, because our fabrics are environmentally friendly, trendy, modern and incredibly beautiful. I would love for you to see and touch them. We love our Vologda linen very much and we would like you to fall in love with it too. I cannot think of another rhyme for “linen” [in Russian] than “in love” – so we will dress everyone in linen.

Vladimir Putin: As concerns loans below their market cost, below the inflation rate, you said that these are provided in some economies in Europe, in Western countries. First of all, there is a lower inflation rate there. I don’t remember exactly, but I believe that here, the rate was 5% in the first six months of the year, which is the lowest it has ever been in modern history. But the rate remains at 5%, and I don’t know what it will be by the end of the year – close to 8%, I think. This is also low for Russia, but it is still 8%. Embarking down the path of providing loans at rates that are economically ungrounded is very dangerous. Some countries, our neighbours, used to do so. For example, loans in the construction sector were provided at 1%-2%. This is akin to printing money, quite simply. After this, it is only a matter of time until a crisis. It would be unavoidable.

The same thing happened with mortgage loans in the United States, when banks did not even check the solvency of borrowers and simply handed out huge amounts of money for mortgages. This brought about the mortgage crisis. You may remember how hard it shook the US economy, with those two major companies that worked with mortgages, Fannie May, or whatever their names were. This then shook the entire financial sector, and then it spread to the economy. This is a very dangerous path.

So today, I believe we should be talking about subsidies. These subsidies exist, in small amounts – just 3 billion from 2006 until now, I think. Incidentally, there are subsidies for three purposes: the interest rate, the purchase of raw materials and for technological overhaul (something along these lines).

Alla Startseva: Loans go towards technical overhaul.

Vladimir Putin: So we're better off looking into how we can increase the amount of these subsidies. We will instruct the Finance Ministry and the Ministry of Industry and Trade to do this. We will look into it.

As to the reduction or even complete cancellation of import customs duties on technological equipment, we are already working on this. I don’t remember exactly, but there are about 50 items that are already included, some of which are related to the textile industry. If you don’t think this is enough, I can tell you that, first of all, this list is not set in stone. And if experts from the Ministry of Economic Development and the Ministry of Industry and Trade indeed conclude that we do not manufacture certain types of equipment and will not do so in the near future, we will try to support you, and to create conditions for modernisation. Please submit your proposals on these import customs duties as soon as possible.

Alla Startseva: We certainly will. Thank you very much. I am referring to that very list of equipment for which the customs duty has already been abolished – those which have no domestic analogues. It is only because of the formal matching of codes that the same codes happen to be given to foreign finishing equipment that does not have analogues in Russia and, for example, dryers and irons for laundry, which Russia not only produces, but, fortunately, even exports. So we need these codes to be checked.

Vladimir Putin: I agree. It's true what they say, the devil is in the details. So we need to figure this out. We'll do this quickly.

Alla Startseva: Thank you. This is very important to us.

Vladimir Putin: And I'd like to wish you success. This is indeed a product that we traditionally manufacture, and it is wonderful that you are restoring it. You have an outstanding project. We could also think about ways to expand your sales markets, including through state purchases. We could think about this.

Please, Alexei Vinogradov from Nord Hydro, a company in Karelia.

Alexei Vinogradov: Mr Putin, ladies and gentlemen. It is impossible to describe small-scale hydropower generation in words, so to start, please direct your attention to the screen. (A video is shown.)

Russia is truly a country that possesses enormous water resources, which includes small rivers. This potential was recognised back in the Soviet era, and in the 1940s-1950s, over 6,500 small-scale hydropower plants were built. However, the majority of them were destroyed, and only a few dozen of them are functioning today. Based on the quick pace of development of small-scale hydropower generation in Brazil, China, Canada and in many European countries, the shareholders of Nord Hydro have decided to begin restoring the most efficient plants of those destroyed in the Soviet era.

In four years, we have developed an excellent professional team of over 70 people, with an average age of about 35.

Money. Investment in the project has exceeded 700 million roubles. At present, we are in the final stage of talks with Vnesheconombank, and are dealing with a sum of 2 billion roubles.

Prospects. RusHydro estimates that by 2020, small-scale hydropower generation will generate about 20 billion kWh per year. It currently accounts for less than 1 billion. Nord Hydro plans to independently generate about 1 billion kWh annually by the end of 2020. Simply put, they plan to build 100 plants in ten years. This is a very ambitious goal, although the Soviet Union built over 200 plants a year, so it should be feasible.

Economy. The cost of electricity in isolated systems is 15-20 roubles per 1 kWh. This is for legal entities; for households, the cost is subsidised. In any case, the entire burden falls to the region.

Obviously, developing investment projects or talking about improving the population’s living standards is quite difficult under these circumstances. Small-scale hydropower generation is prepared to start saving the region money, starting the first year after the plant goes on stream.

The situation is somewhat more difficult with the centralised electricity supply system. This requires subsidies from the region for the first five to seven years, which we consider the plant’s payoff period following its commissioning. But for the next 70 years, regions will have access to safe, environmentally-friendly and clean power that does not depend on fuel, from stable supply sources. As has already been said, a hydropower plant in Karelia was put into operation in August, with support from the republic. Its capacity is 4.8 MW.

Of course, there were several difficulties having to do with the implementation of the project. The first I would like to address has to do with a lack of competitive Russian equipment, however strange that may seem. We have been to a lot of places, have seen a lot, have talked to a lot of people. I worked for three years at a plant in Leningrad that produced turbines and for five years at a plant that produced power generators. So I am quite familiar with the situation.

I will provide just one example. We arrived at the Tyazhmash plant in Syzran, in the Samara Region. They asked us, “Who are you? RusHydro?” “No, we are Nord Hydro,” we said. “Well, that means you don’t have any money,” they said. “Why not? We do,” we said. “How many plants are you going to build?” they asked. “A hundred,” we replied. “Then let’s sign a contract for a hundred.” We said, “First make us one, and then we'll see. Then we will sign.” And they said, “No, in that case we are not interested. Come back in about two years. Then maybe we'll talk.”

Obviously, it is difficult to expect any efficient cooperation with this approach. So we are currently in the middle of talks with Czech companies about setting up a joint assembly enterprise in Russia in order for at least part of the added value to remain in Russia. But this is very strange. We can manufacture big turbines, but it seems we cannot make small ones. I think there is nothing complicated here: we can design them and build them, but, unfortunately, at the moment, we don’t want to.

There is another aspect I would like to mention. By now we have agreed on the terms of work and payment with a significant number of regions, and not only in the Northwestern federal district: the Republic of Karelia, the Komi Republic, the Samara Region, the Lipetsk Region, the Krasnoyarsk Territory, the Khanty-Mansi Autonomous Area, the Saratov Region. Moreover, the Krasnoyarsk Territory approached us on its own, we didn’t go to them.

But currently, our agreements have not been confirmed at the federal level. The law on electricity lays the legal framework for this, but certain legislative acts, such as government resolution No. 109 on the basics of price setting, and methodology No. 20 of the Federal Tariff Service, do not contain the necessary provisions for us to function properly. As a result, regions have difficulty interpreting current legislative acts.

And, finally, a request. The official commissioning of the plant has been timed to coincide with today's interregional conference. Could you please give the command to launch the plant? They are watching us from the plant through a live broadcast.

Vladimir Putin: This is completely unexpected. It would be my pleasure: Start it.

Alexei Vinogradov: Thank you.

Vladimir Putin: Mr Vinogradov has told us about plans for the development of small-scale power generation. RusHydro and the Ministry of Energy have drafted a programme for small-scale power generation development within the Water Strategy. It envisages construction not of 100, but, I believe, 700 hydropower plants by 2020 that will work on small and medium-sized rivers. This is a very good market, and a big one. It is a shame, of course, that domestic producers respond to your proposals in this way.

I will ask our colleagues from the Ministry of Energy and the Ministry of Industry and Trade to address this, but this is indeed a big programme. Moreover, it is not only for Russia, but for other CIS countries as well. This can be a very, very big project. No doubt, it is very important for increasing the country’s overall energy security and energy stability.

I can only wish you success. And I also have a request for you. You say that some issues require additional administrative regulation and an amendment of existing legislative acts. Please, state directly, what exactly…

Alexei Vinogradov: I should say that we have discussed these proposals, even down to the wording of them, with both the Ministry of Energy and the Federal Tariff Service, and with the Government Staff. We have reached an understanding on principle, but it will be difficult without your support.

Vladimir Putin: You know, our colleagues here are listening to us and understand everything, and if you have already discussed this and believe that you have come to an understanding, I am positive that there will be forward progress.

The head of the Government Staff is here. And do we have anyone from the Ministry of Energy? Have you discussed this problem?

Response: We have, indeed, discussed this issue, and I have all the formulations with me now. We believe that these are the right things to do, and we will work to implement them.

Vladimir Putin: What needs to be done in order to accomplish this, to eliminate the existing obstacles?

Alexei Vinogradov: At present, there are no obstacles as such. They are being coordinated by agencies. I think the issue will be resolved soon.

Vladimir Putin: How soon?

Alexei Vinogradov: Within a month.

Vladimir Putin: That is soon. There are only 12 months in a year. All right, good. Does that work for you?

Response: Very much so.

Vladimir Putin: Thank you very much.

Let's move on. Svetlana Olkenitskaya, the United Family project. Please.

Svetlana Olkenitskaya: Mr Putin, friends, we can now look into the eyes of the children whom this project has already helped. Let's watch a video.

(A video is shown.)

I'm here representing this project because our family is a vivid example of how this project has helped the children that we found. We have a close-knit, friendly family. There are seven of us – three adopted daughters, our daughter and our eldest son, who is a businessman and postgraduate. We moved from St Petersburg to the city of Vsevolozhsk – the home of my husband’s family. St Petersburg is nearby, and we live off the land, like in the country. We have a personal subsidiary plot with poultry that provides us with additional income.

We are Russian Orthodox, and it was our faith that inspired us to go down this path. Out of our religion have emerged our patriotism, and our concern about Russia’s future – this is our children, whom we should bring up to respect moral and cultural values. Without this foundation, our house would have been built on sand. These are not empty words – this is the life of our family, from the inside, out.

Having embarked down this road, we were relieved to learn that national social policy is aimed at this worthy cause. This project has helped us to do what we wanted. Thanks to the project, we found two of our daughters, received the necessary information about the steps we needed to take, went through the foster parents schooling at the Family Centre, received a psychological evaluation and collected the necessary documents. We chose our children based on project's video passports. Our father was the first to discover our first daughter, and my heart responded to the second.

When I saw the new video passports for the first time and started to tell our daughter Serafima about this girl, Olesya, I could hardly blink away my tears. I was not simply being sentimental; our life was filled with emotion at the time, since we were adopting our first daughter Nastya. Antoine de Saint-Exupéry was right when he said, “The essential things in life are seen not with the eyes, but with the heart.” Our intuition has not let us down. We have been together for more than a year. These children are our own flesh and blood.

We faced difficulties along this road. We saw that the interests of these orphanages run contrary to national social policy. The first girl was kept in the non-government orphanage “Children’s Ark” in Rybatskoye, which openly prevented us from adopting her. To please their administration, the psychologist of this orphanage said, “Let Nastya remain at her own social level.” We were stunned and indignant at this. We told them that the leaders of this country are not indifferent to the social level of our children, and this idea encouraged us to fight. This was our first experience, and we were worried this was only the tip of the iceberg.

When we went to special children’s orphanage No. 19 of the Krasnogvardeisky District, their chilling formalism drove us to despair. This was even worse than our first experience. We were not openly obstructed, but they sneered at us without making any attempt to help. We had to make incredible efforts to get this girl out. The head of the patronage department also deserves credit for this. All deadlines established by law had passed. As people explained to us who are knowledgeable about such matters, these institutions are afraid of being disbanded and losing their funding. This is why they don’t want to change the contingent. Meanwhile, all documents have expiration dates on them, and this contributed to our anxieties. Our Vsevolozhsk patronage offered for us to take the third girl, knowing that we have a good home.

And this is what we have discovered. Nastya and Masha were raised in families until there were four and a half years old and had some concept of morality. We found it easier to deal with them. The girl from the special orphanage was abandoned since birth and had acquired many vicious habits. I really do mean habits – she wanted to do what was prohibited behind the back of adults; she was pushy and wanted to get everything first; she was also aggressive to animals and made no distinction between good and evil. This was not in her character – she’s simply a very emotional girl. She told us how they learn to act this way from each other. They threatened to send her to a special school, but she could read quickly and describe what she read accurately even before going to school. This speaks to the fact that commissions that determine the intellectual level of children may issue formal statements.

The girl even wanted to change her name. Her Christian name was Olga but she asked us to call her Olya, and quickly grew accustomed to this name. Having understood the malignancy of lying, and feeling the confidence and love that reign in our family, she is purposefully working to improve herself. Every day she repeats the same phrases, as if to herself, realising her happiness over and over again: how wonderful it is in this home, how great it is with Mom and Dad and how delicious food is (speaking of any meal).

We are doing everything we can to make these girls' childhood up to them. We read good books to them; Dad tells them his own fairy tales; we watch interesting films with them, animated cartoons filled with humanity, doing everything we can to save them from the pernicious influence of popular culture.

When we return home from a trip (we were compelled to support our domestic auto makers because we cannot fit in into any other cars), they movingly sing the song, “How pleasant homecoming is…” Another favourite song (I’m not exaggerating – you can ask them) is, “I call you Russia, the only one…”

We have seen for ourselves that a family with many children is a blessing. The educational process never ends. If someone does a bad thing, the others are unanimous in renouncing it, and this helps improve the character of even the adults.

We’ve met children from orphanages and everyone knows how hard it is for them to find their path in life. It is easier, and probably cheaper to reform children than adults. It is difficult to imagine what our daughters might have gone through when they became adults. Most probably, they would have repeated the sad fates of their mothers. The hearts of our children are filled with permanent gratitude – to the Lord and to the country that did not abandon them. Despite the hardships of reforming – and we’ve been through hard times – their joy comes from filling our lives with meaning and brightness, and this continuous celebration with our adopted children never ends.

This project helps implement national social policy, and it makes society much kinder. Our relatives, acquaintances and even complete strangers had never thought about fostering orphans. And now they are trying to pay more attention to them, and this makes the children so happy. They need their own adults, rather than officials. They were so happy to leave their orphanages and join our family! We will never forget the eyes of the other children when we took home Nastya, Masha and Olya.

It goes without saying we witnessed many bitter scenes and saw the children’s hungry eyes staring up at us with hope. Everyone has hope. They take interest in everything and derive enormous pleasure from life. It would be great if the United Russia-United Family project operated all over Russia. It has helped our children to have not just a better life, but a life, and a future. As you know, half of the 5,000 children in St Petersburg have already found families.

The programme of video passports is implemented in all 27 children’s homes. It is no accident that this programme emerged in St Petersburg. This is the first national programme of its kind. Who else but a woman could facilitate the development of this programme? I’m referring to Valentina Matviyenko.

Vadim Tyulpanov, the project’s initiator, told me that it wasn’t expensive. The goal of the project is to show society the right path. Russian society still has the potential and the demand to take care of its children, to give them a chance to have a childhood. The implementation of this project will make things easier for us. The problems we faced are linked with obstructions and a lack of action on behalf of orphanages that break deadlines. At times, society can be very cruel and cold-hearted. We have faced extreme cases of indifference and ruthlessness, not only on behalf of orphanage authorities but also among neighbours, but we cannot discuss all cases at a single conference.

The government aids adopted children by providing allowances of 7,000 roubles and salaries to their foster parents, but as you know cost of keeping a child in a children’s home is 40,000 roubles per month. If foster families were to receive incentives, many good families would adopt children.

It is very important to be thorough when selecting foster parents. It is necessary to see the atmosphere and values of each family, and decide whether potential foster parents would be able to bring up children properly.

We must help foster parents that do not have enough positive experience in raising many children, and we have to shut down orphanages. Russia should not have them, and our society should not sustain such losses. Our United Russia must become a united family.

Thank you.

Vladimir Putin: More and more children are finding parents and guardians. The number of children in orphanages is decreasing. This is a real trend in Russia, and it has been gaining momentum recently. We are very happy about this. It speaks to the maturity of our society, which is becoming more mature and more humane. Nothing can replace a family. No children’s home is capable of doing this. There are several alternatives – foster families, guardianship and adoption. No money is paid monthly for adoption, only a lump sum of 11,500 roubles, if I’m correct. Some regions pay much larger sums. I think the Kemerovo Region pays 200,000 roubles to a family that adopts a child.

The process of guardianship or adoption takes two month on average. A children’s home is given two weeks to process the necessary papers, but it does not deal with guardianship or adoption. This is the responsibility of the guardianship and wardship authority.

I can imagine that some orphanages create artificial obstacles to adoption but this authority must closely monitor their actions.

There is another problem that you mentioned – the more children are adopted, the more orphanages are shut down. I’m appealing to the regional governors because this is their direct responsibility – they need to find jobs for employees of orphanages. I think we have more than a thousand operating centres for the rehabilitation of children from orphanages, and they have good specialists. You have come across some negative cases, but the majority of these people are kind and professional.

There is an example before my eyes that I’ve already mentioned, in the form of one of my former colleagues: I’m referring to former West German Chancellor Gerhard Schroeder, who adopted two Russian children – a boy and a girl. He told me about his impressions of these children. He said that it is clear that very kind people had brought them up. This is an obvious fact. He recalled how they came to an orphanage and how their employee handed over the children to them. He said she was a simple woman, but obviously kind and positive, and he could feel the same in the adopted children.

So, we should not lose people like this, but rather, we should find new jobs for them. We can do this, it is not very difficult. We have a special programme and even a website for expanding this practice. I think the site is called “usynovite.ru” [adopt.ru]. I’m afraid to make an error, but I think there are 34,500 children in their database. We will do everything we can to support this work in the future.

Now I’d like to say a few words about funding. Indeed, it costs about 40,000 roubles to keep a child in an orphanage, whereas foster families receive 6,700 roubles. But even in orphanages, only 6,500-6,600 roubles of this money are spent on the child. The rest covers the expenses of administrative personnel, utilities, etc. Only 6,600 roubles go to the child, whereas foster families receive 6,700 or 6,800 roubles. I agree that we should think about raising this sum in order to encourage this process in the future. We’ll think about this. And I would like to thank you, to bow to you and wish you every success. 

Svetlana Olkenitskaya: Thank you.

Arthur Sarnitz: Mr Putin, I’m an architect and designer from Kaliningrad. I think the answer to my question is obvious. You said more than 100,000 children are on the waiting list for a kindergarten in the region. I don’t know how many of them will get in. I know the government is allocating huge funds for the construction of kindergartens, but I think we should build them on a much larger scale.

Here is an example from my experience. Our initiative group of architects looked at what our European neighbours are doing in Poland, Germany and Austria. There is something interesting going on there. The majority of these facilities are built under the system of unit construction. In other words, there are factories that produce kindergartens, and imagine, it takes these factories 87 days to make one. This is the time from the application to the commissioning. Assembling the constructed foundation takes two weeks. These kindergartens offer an alternative to orphanages. Every family with working parents can put their children into a kindergarten.

I tried to make a design for unit construction. Everything conforms to our Sanitary Regulations and Standards. We have carried out all calculations for this project at two factories. The most interesting thing is that despite the huge shipping costs, it still makes sense to ship kindergartens and assemble them in our region, because we are not so far away – 600 km to Berlin and 350 km to Warsaw. It is still better to import a kindergarten and assemble it here, even though the shipping costs are astronomical. Yet this can be done. We can buy two or three kindergartens and assemble them in our region in conformity with all sanitary norms, fire safety requirements, etc., and test them in the near future.

I’m sure it would be good to assemble them here, because it works the same way as car assembly. Our factories assemble even better cars than in Germany. Assembling kindergartens is not so difficult. I have visited these factories and have seen how this is being done. We can cope, I think, and if we take up this production, it will demonstrate the three basic indices of economic efficiency – pace, cost and quality. Pace is clear – a company that builds two prefab kindergartens a month might improve production methods to build three. As for the quality of conveyor production, we will know the required amount of production, prospective clients and sales prices as soon as we make proper blueprints. Costs can be estimated with a great degree of certainty because prefab buildings rule out emergencies in construction – such as bad weather or similar things. A construction team just comes and assembles a kindergarten on a prepared foundation.

What makes such kindergartens especially convenient is that they can be joined to school buildings. I saw two versions of this combination in Poland. This arrangement makes it possible to save energy as well as on food, security, and so on.

I think this programme is interesting and has a great potential. If we are successful with it, our experience might come in handy in other parts of the country. There’s an ambitious programme, Russian Kindergartens, which envisages 500 kindergartens built. I think it’s worthwhile discussing it, especially because many people said they found it interesting when I spoke about it at yesterday’s meeting. We have similar production though we do not manufacture such modules as in Germany or Poland. I studied them. The kindergartens I saw are very cost-effective, with energy-saving equipment, excellent ventilation systems, and generally very convenient.

Vladimir Putin: I fully agree. We have similar experience with high-tech healthcare centre modules.

Arthur Sarnitz: We built such a centre in our region – or rather assembled it – literally within a month. That’s what gave me the idea.

Vladimir Putin: The infrastructure and groundwork are the most time-consuming assignments, while the assembly is very quick even according to the highest standards. I think the same is true about kindergartens as well as other structures.

If I am not mistaken, we held a competition last year for the best projects of typical kindergartens. It concluded last January. The jury, which included architects and representatives of public organisations and government agencies, selected about forty projects. It’s up to the regions to implement them. As I said, the federal government has earmarked an extra nine billion roubles for grants to the regions. Is the Kaliningrad Region governor here?

Nikolai Tsukanov: Yes.

Vladimir Putin: Look, it might be a good project – effective, low-cost and competitive. Talk it over. Did you get anything of the nine billion I mentioned?

Nikolai Tsukanov: We’ll get something, I am sure now.

Vladimir Putin: Good.

Arthur Sarnitz: Should we announce the construction of such a kindergarten and finish it as soon as possible? We’ll see then if it’s a feasible project.

Nikolai Tsukanov: Mr Putin, we will begin construction of two kindergartens within the year.

Arthur Sarnitz: That would be really good!

Vladimir Putin: Agreed. You’re quick at decision-making. Good for you! I see this meeting is bearing practical fruit. Thank you.

Let’s go on. Mr Churikov has the floor. He represents the Young Scientists project.

Anatoly Churikov: Good afternoon, Mr Putin. I would like to introduce the project with a very informative and optimistic video on how a young scientist should arrange his or her workday. Let’s watch it.

(Video)

Mr Putin, these are scientists who enjoy all the conditions they need for a normal life and work. I think they set the standards we should meet. We must implement every programme with an eye toward Russia’s innovative development. I am sure of this.

But I think that everyone here in this room understands that this inspiring video is far from the way things really are. Many young people see research and the design of new technology as more of charity than self-fulfilment for a variety of reasons. They have no social protection to speak of, and cannot afford to do fulltime research with their token wages. Even more important are housing and other everyday problems.

However, there are many hopeful factors and ways to improve the situation. Despite all the hardships, a great many young researchers implement their projects. They create prototypes. However, only a few lucky ones can implement their ideas in practice and make them competitive commodities. There is no system to put research on a commercial footing and develop ideas into turnkey projects.

Here is an example. My team has been doing research on touch screens for three years. It’s a very promising field. By the end of last year, we had developed a technology superior to its Western and other analogues in terms of a majority of characteristics. We patented our invention and established a small innovative business in compliance with Federal Law No. 217. We were ready to launch production.

Vladimir Putin: Was your company affiliated to your university?

Anatoly Churikov: Yes, it was one of the first small businesses at our university. We were overjoyed – we were ready to start manufacturing the screens and act as an example of success and self-fulfilment. But that was easier said than done: a mere month later, our Western competitors came out with an idea incomparably superior to what we had done. So here we are, marking time for a year now. Not that we have no new ideas – on the contrary, we’re brimming with ideas. But we have no adequate technological basis. I think you will agree that outdated equipment is no use in future-oriented R&D.

Thank you very much for establishing the Baltic Federal University and its development programme. Only now, a year too late, have we received the opportunity to make something truly competitive, and we will surely make it. The challenge we are currently facing has to do with the interaction between small businesses and universities. As you know, Law No. 217, according to which university-affiliated companies are established, did not specify leasing terms until relevant amendments were recently adopted. But, Mr Putin, it is vital to bear in mind that the majority of such small businesses are established by young scientists like us, who make an invention while still studying at the university and want to make money out of it. Meanwhile, they must pay for the use of the equipment they need to make the invention marketable – and where can young people find the money they need? Could you please address this problem as soon as possible – even a month’s delay can be fatal in the world of high technologies.

Vladimir Putin: Just what should we address, Mr Churikov?

Anatoly Churikov: Subsidising small university-affiliated businesses as they lease equipment provided they use it to develop the technology for whose implementation these businesses are established. Otherwise, it’s impossible to bring a new technology into a marketable state. That’s one of the biggest problems concerning Law No. 217.

Vladimir Putin: Let me get this straight: there’s a university which possesses equipment, and there’s a business affiliated to the university, which leases its premises and equipment from the university, right?

Anatoly Churikov: We lease it all to make marketable the technology we invented at the university. We are its inventors and designers – we just want to make it saleable. That’s what we need the equipment for.

Vladimir Putin: Look, here’s a federal university from which you are leasing equipment and premises. It’s a federal institution. You want a subsidy, which means that we should issue grants from the federal budget to a federal university so that it reduces its fees for you. Wouldn’t it be simpler for the university to just decrease the rent?

Anatoly Churikov: It might be even simpler to do without subsidies and authorise free use of equipment and premises by businesses to develop the technology on whose basis they were established.

I think we are on the right road because the idea is as follows. A small business does not have full rights to use the new technology. These rights belong to the university. The business cedes 30% or more [of its profit] to the university to use the new technology and, in line with the new amendments, pays to the university to develop that technology, even though it belongs to the university not the designers. We pay 30% as it is, which is a great deal for that type of businesses.

It doesn’t make any sense to pay the universities twice for the right to develop a technology that does not belong to us. In this case, we are just its exclusive users. I don’t think that’s right.

Vladimir Putin: Is the university the owner of your invention?

Anatoly Churikov: Yes, that’s how the law has it. This system generates many more problems. Let say, doctors and biologists set up a small business. They can develop their own aspect of their invention. But when they want to develop medical equipment, they have to attract experts from other fields, for instance, microelectronics. So problems arise when they attract another organisation – let say, another small business affiliated to the same university. They have no right to do so because the business does not own the new technology. In this case, the law should envisage the opportunity of several businesses developing it jointly.

This problem is a great obstacle in putting R&D on a commercial footing. For instance, a team of medical and biological scientists decides to apply to a technological cluster. By the way, we have a very successful one in the Kaliningrad Region: Gusevo. However, the law does not allow them to apply to it because they have no right to disclose the idea of their new technology. So they cannot have normal contacts.

We realise that such R&D cannot get on a commercial footing unless we have three links in the chain: universities, with their research basis; businesses that can manufacture the new technology; and experts who think that such research must be done in this country. The problem is in the relations between those three components.

We have come a long way: we have established a federal university and a technological cluster, we have young specialists and everything else we need. However, we have no programme to bind those three components together. We cannot afford to be too slow because the future depends on it. We cannot waste even a month because a month is a long time where high technology is concerned.

Vladimir Putin: Thank you very much. A colleague wants to say something. Go ahead, please.

Remark: I would like to come back to the beginning of the clip. I represent the project shown there. Young scientists have a problem: when they invent and work at test samples, they either come across ignorance or cannot launch mass production. They would like to establish small innovative businesses, about which you said today that the Northwest accounts for 10% of them. As we see it, one of the reasons why we lack the opportunity is that we have no system, as Mr Churikov has said: a system that would establish contact between businesses, the education network and individual scientists.

As for this particular project, our technological cluster includes four enterprises – in particular, Eastern Europe’s largest radio-electronic industrial cluster. As we see it, the next  stage of development of the social infrastructure for young professionals should be as follows: these young scientists should have comfortable housing and competitive salaries like in Silicon Valley, where the project was developed as a private one. What matters even more, these young scientists should develop Russian technology to be used by Russian industry. That would ensure Russia’s progress in the world microelectronic market, and give the Kaliningrad Region, which I represent, the opportunity to become another centre of innovative development not only in Russia but in the whole world. We believe that, at present, the Kaliningrad Region is a potential world-class site for export-oriented production – a real example of the “technopolis”.

You have spoken today about different forms of public/private partnership and that different forms should be developed. One of our initiatives is a proposal for the state’s participation in projects of federal and regional co-financing, with the participation of businesses. Then businesses, successful businesses, will start implementing the social component. Notably, there are plans to give away 50 hectares of land, 25 of which has already been given to an industrial enterprise, and another 25 will be given to new enterprises, including land allocated to the state-of-the-art microelectronics center. And we plan to allocate 150 hectares for the development of social infrastructure, i.e. for playgrounds, recreation centers, sports facilities and other types of social infrastructure.  To make sure that young scientists do not go abroad, but stay here in this creative environment and have an opportunity to create something new, we are willing to support such specialists, but we are saying that when businesses start carrying out big social infrastructure projects outside industrial zones, the costs become different, and the regional budget may not be able to cover them. And here businesses require support. Thank you.

Vladimir Putin: Do you want to say anything else? About the same topic? No? Then we will move on.

Pertaining to the subject of leasing, there is a gradation of preferences, both overall and under current regulations. During the first year, it is, I think, 40% of the total cost of the leased premises and equipment, in a year, it is 60%, in another year, 80%, and only during the fourth year 100% is paid.

Overall, I don’t remember if 40% is stipulated anywhere. We could lower it.

Anatoly Churikov: It is stipulated by the project.

Vladimir Putin: We could lower it, from 40% to, I don’t know, 10%, but I don’t think it should be zero. This is not a fundamental science; this is a business project, after all. You have a commercial enterprise that should earn something. You could also take a loan, etc. But, of course, we could lower the upper limit of even the preferential lease rate. Let us discuss it. I will ask our colleagues from the Economic Development Ministry and the Finance Ministry and experts of the Ministry of Education and Science to think about it and to make adjustments. We can do that.

As to guaranteeing a market and building relationships between businesses, higher schools and innovative companies at higher schools, we have an entire project devoted to it. I don’t remember and I am afraid I may be wrong, but we have allocated between 19 and 50 billion roubles that can and should go to businesses, which in turn will order the products of these innovative companies, invest their 50% and will then put the product on the market. We have such a mechanism in place and we allocate money for it. And it is not completely exhausted, by the way. We are allocating some resources, but we need initiatives from you – from these innovative companies, from businesses. There is money, it is provided by the budget. Use it to your benefit.

But there is a third aspect you have mentioned. It is the possibility of interacting with other innovative companies. If you see that there are any obstacles to it, let us eliminate them. But we need to understand what it is about. You should state clearly, what actually is impeding progress. I promise you that we will actively work in an effort to try to eradicate these hindrances.

Anatoly Churikov: Thank you very much.

Vladimir Putin: I wish you success. Thank you. Please, Konstantin Dobrynin, let’s move on to your project; the construction of a new office-paper production facility. You have the floor.

Konstantin Dobrynin: Mr Putin, colleagues. Let me present to you our video clip. There is only one professional actor there, and the rest are real workers. (A video is shown.)

Konstantin Dobrynin: Colleagues, let me present to you Russia’s first chalk overlay paper production facility and a new office-paper production facility in Koryazhma, the Arkhangelsk Region. The project is being carried out by the Ilim group under the national strategy for deep timber processing developed by the Russian government.

Direct investment in the project totals $270 million. I would like to emphasise that not even a single rouble is being drawn from the state treasury; funding comes from private investment.

The aggregate output will amount to 150,000 tonnes of office paper and 70,000 tonnes of chalk overlay paper annually. To be more precise, this will be about 25% of Russia’s demand – a demand which will be met by our Arkhangelsk company, which has no parallel in Russia.

The construction has already begun. We have bought all the necessary equipment in Scotland and in Norway and delivered it to Koryazhma. So it is ready for assembling.

Now a few words about what the company will give Koryazhma, the Arkhangelsk Region and Russia. Our project is grounded on three basic components.

The first one is strategic. Chalk overlay paper today is used in almost all high-quality books, in all textbooks, magazines and in lots of other printed products. Demand for it grows steadily. Russia does not manufacture it, and every sheet is imported from the West – from Finland, Sweden and even from Korea. It is expensive, impractical and, finally, absurd, when our territory holds up to one-fourth of the world’s forest resources. And I am positive that our Western rivals, colleagues, will have to make room for us already in the near future, because we will exceed the output of the Soviet Union by 150% already at the initial stage, and we want to fully replace imports in the long run. Speaking of our most ambitious goal, I think that at some moment we will stop selling pulp to the West. We will process it into paper and we will sell this Russian paper to our colleagues in the West.

The other aspect is social. The thing is, we are creating new jobs. We will create about 382 jobs at our new enterprise. This is a significant figure for the town of Koryazhma. Furthermore, we will be able to resolve yet another pressing social problem the region is facing: we will reduce the outflow of talented and educated young people from the town.

The third aspect is environment. Our production facility is the rare case when you can say that a potential damage to the environment is zero. It does not have waste that can pollute the air, water and soil.

Vladimir Putin: This won’t produce a foul odor in the region?

Konstantin Dobrynin: No.

Vladimir Putin: Good.

Konstantin Dobrynin: We have the most cutting-edge technology that currently exists in the world’s paper and pulp industry. It is the climax of deep timber processing, it cannot be deeper at the moment, believe me. Figuratively speaking, what we are doing in Koryazhma now is a revolution in the Russian paper industry, because we are setting up a domestic production of chalk overlay paper for the first time in the post-Soviet period. And I believe that our country now needs such technological revolutions.

To speak of problems – honestly, there aren’t any real ones. However, one potentially minor problem is emerging. The thing is that the Russian government plans to reduce the customs duty for Western importers threefold. The market is currently fully controlled by the West. We are only beginning to enter it. Obviously, we will now be entering it with triple energy, but still, I believe that there is a contradiction here.

Anyway, thank you for your attention. This is all.

Vladimir Putin: On this topic? Please.

Remark: Yes. You have said that the water remains clean, so we understand that you apparently have a closed cycle. Can the same be done on Lake Baikal? Thank you.

Konstantin Dobrynin: Chalk overlay paper is not manufactured on Baikal.

Vladimir Putin: But pulp is.

Konstantin Dobrynin: Yes. Chalk overlay paper, to make it clear, is the hallmark of the paper and pulp industry, that is, it is like making a Mercedes – this is what chalk overlay paper is. Regarding Baikal, unfortunately, we are the first in Russia in this sector. Perhaps, we will set a good example to all other companies in the industry, and they may follow suit and start producing chalk overlay paper, too.

Vladimir Putin: New technology should be used everywhere, including at the Baikal paper and pulp plant.

There is a problem we should not forget about. We have certain reserves of pulp. However strange and unexpected it may seem, this material is also needed for the rocket industry. And some hotheads who want to change it all immediately – and it does need to be changed – say that we will buy it abroad. But no one abroad will sell us anything for the rocket industry. It should be clear. It does not mean that we should not resolve the problem with paper and pulp plants. Perhaps, they should be converted. But we should look into the problem and resolve it comprehensively. It’s true that we’ve been waiting for a decision on this for decades. But we shall not forget about it. We will definitely address it.

Do you want to address this issue? Please go ahead.

I.Yevtushenko: I would like the raise the problem of illegal forest felling. Unfortunately, it remains relevant. Moreover, to cover up for their actions, Russian illegal loggers set fire to our forests to cover their tracks, explaining why we have frequent forest fires and other related issues. I would like to understand, Mr Putin, how to resolve this and how you would go about it.

Vladimir Putin: All right. Does anyone want to speak on the topic? No?

Then, if you don’t mind, I will start where our colleague finished, that is, import customs duties on chalk overlay paper and some other paper products, cardboard, I think, and something else. The decision on reducing the import customs duty is not being worked on; it has already been adopted. It was adopted earlier, and now we have extended it for a year within the Customs Union – we now have to coordinate such issues with Kazakhstan and Belarus within the Customs Union. The reason for this is the fact that our country does not manufacture this product – you have said so yourself – but printing offices, etc. need it.

The present rate is 5%, I believe. Given your plans, I think we can come to an agreement. We will work on going back to the initial customs rate on these products with our Kazakh and Belarusian colleagues. The initial rate was 15%. This is where we will be moving as your enterprise will go in commission and increase its output. This is the first thing.

Konstantin Dobrynin: Thank you. I have a couple of words to add. Yesterday was the 50^th anniversary of the Kotlas paper and pulp plant. I think it is the pride of both the Soviet and Russian forest chemical industry. Could you please congratulate our employees?

Vladimir Putin: I congratulate you and wish you every success.

Konstantin Dobrynin: Thank you.

Vladimir Putin: Now about illegal forest felling and the chain reaction: the initial illegal logging and then the loggers who set the forest on fire in order to cover their tracks. Unfortunately, this criminal practice is widespread not only in the Northwest, but also in other regions – in Siberia and the Far East. We need to improve our regulations or introduce new ones. At present, we have virtually no state regulations.

Europeans are now compiling the so-called European registry and, in fact, introducing state regulations. Apparently, we will have to draft corresponding regulations, too. To sell logs, you currently need only one document, and that is a phyto-sanitary certificate. This is all. We need to introduce these new norms and draft them. In some areas, we are giving up state regulation, but taking into account the realities of life, we will, apparently, have to reconsider the forms and ways of regulations. This is one thing. A second thing that needs and can be done is to establish control over the movements of goods.

In the former case, we will establish control over sales of goods, if we introduce regulations. In the latter, it will be over movement. We should establish control over the movement of these goods so that supervising agencies could clearly and accurately establish the origin of timber. We will work in these two areas, and I hope that we will see results. This will not be an easy process. The money there is really big, and the sector is highly corrupt. Unfortunately, it spreads to regional authorities and law-enforcement structures. We will work on it. Let me repeat, we will also introduce these new forms of regulation. Thank you.

Please, now I will hear Valery Izrailit, Ust-Luga Company.

Valery Izrailit: Good afternoon, colleagues. Mr Putin, you have many times come to the port of Ust Luga on work visits, and you have seen the port at different stages of construction. I would like to present to you a video report on what has been done and talk about the development prospects.

Vladimir Putin: Please proceed.

(A video is shown.)

Valery Izrailit: Thank you for showing an interest, not so much in the video but in the project.

I would like to take this opportunity to thank you personally, Mr Putin, and those present in this room who have helped with this project. Today, we can say that the port exists. Yes, construction continues, problems are inevitable, but we can say that the main task – ensuring the country’s transport security – has now been solved. And we would like to see greater development of the potential on the vacant area around the port.

During a meeting in Ust-Luga in 2008, you issued instructions to prepare a comprehensive development strategy for the area. That work has been done, with the help of international advisors who have extensive experience in implementing these kinds of projects all over the world. The best world practices were used to strike a balance between social and economic development and the comfort of the people who live in the area.

We submitted the project to the government of the Leningrad Region and it is certain to be approved. The project was also reviewed by the Ministry of Regional Development and has also been approved.

Today, in introducing this project, we would like to talk about its operative significance, given its well-developed engineering and transport infrastructure, the availability of pipelines, and the comparatively short distances to the markets for the expected commodity shipments: they are both Europe and the domestic market, above all the Northwestern region. As a result of multilevel macro-economic analysis, we and the advisors came to the conclusion that this is the best site for implementing the plans that you referred to today, the deep conversion of hydrocarbons.

It is our conviction that a gas & chemical plant should be located here as an anchor project. You know that today natural gas is sold together with ethane, one of its components. Most countries take advantage of this and separate ethane, and this is good raw material for the gas & chemical industry – I am thinking of polymers, polystyrene, and so on. In our opinion, another anchor project could be the construction of a modern deep-conversion refinery, considering that, as you have noted today, the Baltic Pipeline System, BPS-2, for oil transport has practically been completed. The proposed development of these two anchor projects will form a major gas and petrochemical cluster in the Northwest in line with the gas & chemical industry development strategy until 2030 approved by the government.

The existence of these two facilities in this zone will increase added value. That will pave the way for the creation of about 40 petrochemical businesses. We will be able to introduce new-generation, cutting-edge technology. This industrial zone will create 17,000 new jobs. This will be a new entity with new people and new technology. This is precisely the innovation that is discussed so much today. All this combined – the port construction and the industrial zone – can become a powerful driver for the creation of other centres to facilitate the comprehensive development of the whole territory. We are referring above all to a residential cluster. This amounts to constructing a new city. The country has not built a new city for a long time. Here, we can envisage proper and comfortable conditions for the future workers of the port and the industrial zone. That’s important.

The comprehensive development of the territory will incorporate the principle of sustainable development, which, on the one hand, will promote the growth of the industrial and agro-industrial cluster, and on the other hand, will ensure a comfortable environment for people. Of course, there are issues. A project on such a scale is a challenge, it is a vast project that requires resolving complicated technological problems, but the social and economic returns will be great. In addition to jobs, it will increase the region’s tax revenues by 20% and gross regional product by 20%. One has to bear in mind the various aspects of state support for this project. During the conference yesterday, I was the moderator of the roundtable on Infrastructure and Construction. You know, I used to think that the problems we face in Ust-Luga were peculiar to this place. In reality, it turns out that practically every major project introduced yesterday for St Petersburg and for the sea transport hub has faced similar problems.

I have been on the Ust-Luga project for 12 years. It was heavy going at first. In 1999, there was no money, no confidence, and most importantly no legislation covering such projects. We did it from scratch. There was a state contract with the Transport Ministry. For the purpose of that contract, we signed an agreement with the government of the Leningrad Region, Russian Railways and the Federal Agency for State Property Management to create a prototype public-private partnership. This is something that concerns many. You mentioned that various formats have been successfully tried in the regions for relations between the state and private business. But in our opinion, what is really important is to finalise and adopt a law on public-private partnership. Some of its elements, for example, concessions, are already in place. Perhaps not everybody is happy with the programme. Well, we ourselves have been waiting for the law on sea ports for ten years, and I cannot say it’s a good law, but it’s still better than nothing.

I think that the legal framework will make possible the development of such projects. Yes, they will take more fine-tuning and study, and each project or group of projects will perhaps require a government resolution as a follow-up, but there must be a legal framework.

Speaking about priority investment projects, in principle, Federal Law 39 provides a good follow-up. You recently signed a resolution on priority investment projects. I believe this topic may be pursued a little further.

I would ask for the following: given that these mechanisms are still not working – or not working fully in the absence of a law on public-private partnership – I think it would make sense to create a working group, perhaps under the Ministry of Regional Development, and include our experts, who have massive experience from the first project. We were the trailblazers, and this project is the first and perhaps the most successful instance of public-private partnership. I think such joint work would be very useful.

Another set of problems is connected with property. Ever since the first decree on property was passed in this country we have had problems with it. At present, there is no mechanism for obtaining a large plot of land for comprehensive projects. There are mechanisms for individual, stand-alone projects, for housing construction projects, but there are no mechanisms for obtaining plots of land for comprehensive area development projects. I could go into more detail, but there is no point because property in this sense does not exist. An important issue that concerns all the projects, not only Ust-Luga, has to do with concession contracts in St Petersburg concerning transport hubs during the construction of new roads and railways. Property issues are very complicated and call for a separate body of regulations.

I would like to enlist your support for developing and improving the mechanisms of state regulation in the two areas I have mentioned. Thank you.

Vladimir Putin: Thank you. Projects of this kind are vital for this country. Your video actually said it all. After the Soviet Union we had no deep-water ports in the Northwest, in the Baltics. The Soviet Union once invested heavily in building ports in the Baltics: in Estonia (the Novotallinsky Port), Lithuania, and Latvia, while the cluster in St Petersburg was hardly developed at all. During the Soviet times, I believe, we handled 20 million metric tonnes, or perhaps 35 million, but then it dropped, and then it hovered around that level. I must say that this is a highly competitive environment, and I know that the construction of ports in Primorsk faced a lot of obstacles. In spite of numerous directives, nothing was being done. There were some stormy meetings. Once I was forced to say that it was a clear case of sabotage and that the saboteurs were sitting in the room. Thereafter, work speeded up and they built the port in Primorsk very quickly. I think, if I am not mistaken, it handles 70 million tonnes.

Valery Izrailit: Yes, nearly 80 million.

Vladimir Putin: It started from zero and reached 80 million tonnes. All sorts of fears had been expressed concerning the environment. Well, we did everything up to the highest international standards. You have to bear in mind the ice, and in the south, in Novorossiisk, vessels are stuck for weeks due to demurrage. The weather there makes it quite difficult to navigate the sea, especially in autumn. And here, if the ice is thin, the operation of small icebreakers makes good economic sense. True, it was a little worse last year because we had a harsh winter. But on the whole it was a success. Look at the growth rate. The same happened at Ust-Luga. Things were difficult, but the project is moving forward.

I would like to thank you and your colleagues. Really, you have done a lot to implement this very important project.

Valery Izrailit: Thank you.

Vladimir Putin: Next speaker.

Sergei Rumyantsev: Good afternoon. I would like to continue the topic of the port and ships. These things are interconnected, but before asking a question I would like to go back to the case of Pikalyovo. I’ll be brief. You see, after the Pikalyovo incident many newspapers wrote that Putin had come to the village over this particular issue and so on, but in reality this is what happened: Not only the whole plant at Apatity, the three factories in Pikalyovo, in Boksitogorsk and Volkhov resumed work, but the entire federal programme on single-industry towns got a boost, and in Russia, one-third of all cities and towns are single-industry communities. So, on behalf of the trade unions and the people of Pikalyovo I would like to publicly thank you, because I think in the post-Soviet space it is the people in single-industry towns that have the hardest time. Naturally, this programme will grow, but anyway we are already improving the living standards in these towns. That is what I wanted to say before asking my question.

My question is as follows: In St Petersburg, problems are emerging between owners. You have touched upon the problem – I mean the Baltic plant. The topic of owners, especially in major industries, former defence sectors and so on is not addressed in our legislation in any way. In my opinion, we should take another hard look at the draft law on the change of ownership in such cases. This is a major problem in Russia. And my second point. The problems that have arisen at the Baltic plant are being kept at bay by the trade union committee, by the plant’s management, and by the regional branch of the United Russia party in the person of Vadim Tyulpanov, and so on. But we would like this problem to be closed. And on behalf of the work collective I invite you to visit the Baltic plant and express your point of view on the problems that have arisen there and may continue to crop up. Thank you.

Vladimir Putin: Thank you.

I will try to formulate my position on the Baltic plant. But first I would like to finish with the topic that was brought up here concerning Ust-Luga. You have raised two questions, the law on public-private partnership, and on the allocation of property. Both are important topics. As for public-private partnership, this is indeed a major development area. We try to use it wherever possible and reasonable. I have already mentioned some instances, including in the Northwest. As regards the Ust-Luga port, in principle, interaction between business and the state is making good progress.

You have said yourself that private companies invest about seven times more than the state. We work there through the Investment Fund. The Investment Fund has contributed 1.9 billion roubles, and private companies, I think, 6.5 billion. And this is only within one project, the South-2 staging post.

Valery Izrailit: Yes, this is our project that we implemented together with the Investment Fund. It’s an important tool of state support for such projects when a lot of money needs to be invested in federal infrastructure.

Vladimir Putin: Let us think together. Let’s see once again what is still missing.

Today, the principles of public-private partnership are set forth in several documents. You find them in the law on concessions, in the law on the work of the Development Bank, Vnesheconombank, and in other documents. If they are really not enough, I am ready to issue a corresponding instruction to the Ministry of Economic Development. I have nothing against this.

The question of property is though much more complicated. You are right. True, we have passed a law on the condemnation of land for state needs. But if something is missing, feel free to formulate the proposals. And the relevant agencies will work on it. We can create an ad hoc group on the issue.

Valery Izrailit: That would be great, because it is quite a tricky issue.

Vladimir Putin: A very tricky process. Unfortunately, and I hate to talk about it, but we often face problems of abuse and corruption as soon as they learn that a new pipeline or power transmission line or road or railway is to be built. But who finds out? First and foremost, it’s officials in city halls and regional governments. Immediately they start buying up all the land that would be needed for the project, and the government then is forced to buy this land from them at three times its price. We must decide how best to protect the interests of society and government. Let’s think about it together.

Valery Izrailit: Mr Putin, I would like to add something. In your speech today, you mentioned a potential programme called Teachers’ Home, which could partly subsidise infrastructure costs for residential construction projects. We are building a whole new town, and it might be a good idea to revise the existing schemes for state support of such projects involving development from the ground up. They always involve building the utilities and transport infrastructure that future residents will have to pay for. I think that we should take a different approach to such projects – not single buildings inserted in a previously developed area, or even bigger development projects – but whole towns built from the ground up. An approach that would give an impetus for development.

Vladimir Putin: I agree. Let’s think what we can do. But I have something to ask you too. I have already mentioned that your team has made a valuable contribution to this project, a highly important one for Russia, but investors have to be treated with care. Because the ratio is 1 to 7. We have invested 1.2 billion, and they, 6.5 billion or more. The total investment is larger still. They always moan about having to invest in infrastructure, which formally they do not have to do – in access roads, power grids and so on.

The Transport Ministry is now modernising a canal there. They are crying, literally, shedding crocodile tears over the money they have already invested in coastal infrastructure, while the current work is causing them harm. I would like you to keep this in mind. We’ll be working in this direction.

Now, about the Baltiysky Zavod shipyard, one of the oldest and respected companies, with great growth potential. Unfortunately, it is facing some problems, arising from … What’s the company’s name again, United Industrial Corporation? As far as I know, they are building a nuclear power plant for Rosatom now – I have already mentioned this. Rosatom has paid in advance and in full, over seven billion – 7.3 billion roubles. The shipyard has spent slightly over five billion; I think 5.2 or 5.3 billion roubles. The remaining money is stuck in Mezhprombank, which is going through bankruptcy proceedings now. We have reason to believe that, although the money is formally in one of the bank’s accounts, it isn’t actually there. This predicament needs to be handled by the Central Bank and law enforcement authorities. In any case, it is our job to think how to ensure the plants’ stable operation.

The problems arise because the group may face claims and enforce recovery on their property, but they skilfully manoeuvre through legal loopholes, delaying resolution of the problem. But I still hope they have enough common sense to honour their liabilities to the Central Bank and to their workers by ensuring the stable operation of their plants. We will monitor the situation so that we can intervene if and where necessary.

About Pikalyovo – I have already mentioned it. I appreciate your evaluation of the problem. Pikalyovo is important, but another important point is that the case prodded on other processes in related industries, and prompted whole new programmes, although there are still many outstanding issues there. I think we should feel satisfied after we got this ball rolling. Although there has been progress, there are more problems waiting to be resolved. We’ll take care of that too.

Go ahead.

Anastasia Melnikova: I’d like to change the subject if you don’t mind.

At 16, when I had just entered university, I began acting in films at Lenfilm studio. I have had an opportunity to work with very gifted professionals. So it is of great concern to me and my colleagues – people in the arts and art lovers as well – what is going to happen with the studio. We do not understand. I know that our best film directors have written a letter to you asking to suspend the sale of Lenfilm to a major film company.

Do you think there is a chance we could block this and keep Lenfilm, which is part of our film history? We are deeply concerned because we do not understand what’s going on.

Vladimir Putin: Lenfilm is certainly one of the oldest companies in the film business, with extensive experience and longstanding traditions. Unfortunately, it has been posting losses for the past few years – I mean if we are talking about its financial performance, as a business. I forget how many films they shoot, exactly. I guess they have made about 10 or 20 in many years, and they are definitely operating at a loss. Its facilities are degrading. We allocated 60 million in 2010 or 2011 to support its current operation, but for real growth, the studio will need ten times as much. So what is the idea there? It is not being sold; it is being merged with a similar private business.

The preliminary offer was for the government to keep 25% of Lenfilm plus one share so as to preserve its core business. The final decision has not been made yet; I know about the letter you were taking about. I am ready to respond – to mollify some of the ardour of the parties concerned and review the options…

Anastasia Melnikova: Do you mean there is a possibility that, like, say, we work in a state theatre company, where everybody knows we don’t make a lot of money but we do it for other reasons – because we love the art with meaningful content and enjoy doing it – while making money elsewhere – in films, TV series and ads? I mean to say we combine the spirituality which does not pay, financially, with commercial possibilities that produce gains we can live on while working on non-commercial artistic projects. Can this sort of combination be possible at Lenfilm, or not, if part of its precious history is preserved?

Vladimir Putin: If anyone understands what she just said, please interpret.

Anastasia Melnikova: I mean, you say that Lenfilm is operating at a loss and needs a commercial company. But there are also art films, which never yield a lot of money but are nevertheless part of cinematography history.

Vladimir Putin: But it’s still production. It involves sets and equipment.

We must understand all that and take a decision. Suppose we could simply raise government financing and invest 600 million roubles, or 1 billion rather than 60 million, in Lenfilm’s development. Or we could merge it with a private production company that agrees to shoulder part of these costs.

Let me repeat: frankly speaking, I am sorry about this too. I am being absolutely honest with you now, and we still have to think and understand what will happen. The current balance-sheet value of Lenfilm is over 100 million, but there is also the land the studio uses in the centre of St Petersburg. This land alone must be worth several billion.

Therefore, as we do this… Again, we have not made the decision yet, and the presidential executive order is still in the works. The deal is still in the preliminary stages, but if we decide to go through with it, we will have to determine the studio’s market value. That is, we will not only evaluate its obsolete sound stages and equipment, but also the land it uses, etc.

Let me repeat, I could slow this down and I am ready to sit down and discuss things again with my colleagues, and with the people who are respected and admired by millions…

Anastasia Melnikova: I’m speaking on their behalf, not just for myself.

Vladimir Putin: I was referring to the film directors who wrote the letter. Why don’t we think about it again and come back to the issue.

Anastasia Melnikova: Thank you.

Remark: Just make good films, and you’ll be all right.

Vladimir Putin: You’re right. But Ms Melnikova here is talking about the kind of films which need to be made, because the country and the people need them, but they will never be commercial. I agree with her. This is not, you know, another soap opera, which were first produced in the United States. She means films which involve a lot of creativity, made by uniquely gifted artists – these are unlikely to ever make a profit. But to return the investment, they need to use the same equipment to shoot good commercial films as well, which would yield good box office receipts. So you’re right again.

The Minister of Culture is attending today. Mr Avdeyev, will you please bring me your proposals on this issue some time next week. Frankly, I haven’t even seen the draft executive order yet.

Alexander Avdeyev: Mr Putin, this is the job of the Federal Agency for State Property Management. They are privatising the studio.

Vladimir Putin: I talked with the Economic Development Minister today, and the property agency reports to that ministry. This is nothing personal, but it sounds like you are bouncing the issue from one to another, which is very often the case. They told me it’s your job, and now you tell me it’s theirs. Let’s look at it together now.

Alexander Avdeyev: I haven’t finished. I was going to say that the Culture Ministry is also greatly concerned about Lenfilm, as much as Ms Melnikova and the directors she spoke of. In the worst case, the planned merger will deal a serious blow to national film production. We agree with the film activists.

Vladimir Putin: Do you? I didn’t know.

Alright. Let’s have a meeting at my office next week to discuss this subject in greater detail. Please, invite the directors who wrote the letter.

Remark: Can I ask a question?

There is another big problem. On April 22, the Defence Ministry closed down all of its children’s summer camps, 38 across Russia, following a directive issued by the minister. There are two such camps in our region, Smirnov and Belousovo. They were not reopened this summer because allegedly they were not ready. But that was a lame excuse because they were. They never reopened because the ministry feared an epidemic.

So one problem is that it’s not easy to take children out to other summer recreation places because they are too far from the Kaliningrad Region. Another problem is that we’ve been deceived.

And, most importantly, tension is mounting among the local people. Many officers have retired recently. Many officers have school-age children. All servicemen, including retired ones, are entitled to a 50% discount on their children’s vacation voucher at one of the Defence Ministry’s camps. We have been struggling over this issue for four months. We sent requests to all authorities that might have helped. We have a whole pile of them, thick as a book. But there has been no progress. However, I should say that the regional government and United Russia members have been supporting us all the way. This is my first concern.

Second, the Kaliningrad Region is home to 8,000 veterans of various wars. I am one of them. Most of us need healthcare and rehabilitation services, which are not provided properly. So we decided to ask for your assistance. We need a rehabilitation centre to be built in the region, preferably in the coastal area. There is the Rus centre in the Moscow Region, but it is so far away that we cannot get there.

And finally, the region has built two beautiful preschools for children aged three to seven – all modern, and complete with swimming pools and interior gardens. But the problem is, a teacher with a university degree gets 6,000 roubles a month there. You can’t support a family on that. It’s ridiculous.

These are my three greatest concerns.

Vladimir Putin: We have discussed preschool and kindergarten teachers’ salaries with regional governors on multiple occasions. All regions should increase their pay along with raising salaries of secondary school teachers. This much is clear. We will raise this issue again. We should not allow such a gap between them.

I can tell you that regional governors understand this perfectly. I am counting on the Kaliningrad Region governor listening to me right now. We should not accept a situation where a schoolteacher makes an amount comparable with the average wage across industries, while teachers and caregivers working with children under seven receive 6,000 roubles. This is absolutely ridiculous and unacceptable.

As for the children’s summer camps, this is the first time I’ve heard about this problem. I promise, I will discuss this with the Defence Minister later today and try to find out what is happening. I can’t say whether his refusal to reopen them was reasonable or not before I look into the situation.

As far as I understand, they refused to reopen the camps because they did not comply with health standards. That must be checked.

Remark: The Smirnov Recreation Camp in Svetlogorsk was ready. They received a permit from a sanitary and epidemiology commission on May 12.

Vladimir Putin: But you just told me the ministry said the camp wasn’t ready. We need to check that, it is a purely social issue. We’ll check it. We’ll work on it. I will talk to the minister today. Could you please hand your microphone over to the governor? He seems to want to say something.

Nikolai Tsukanov: Mr Putin, this question has already been discussed, and the minister has already answered it. They will repair the camps over the winter and will reopen them for their own needs because ministry officials have children, too. They believe these camps will provide good recreational services.

The camp was indeed closed this summer. We asked them to open it. They gave the reasons you know about. Now they have agreed to make the necessary improvements by next summer.

Vladimir Putin: Was their reason that repairs were needed?

Nikolai Tsukan: Yes.

Vladimir Putin: Nevertheless, as I just said, I will talk to the minster today. Go ahead please.

Tatyana Zadorkina: Good afternoon.

Vladimir Putin: We’ve been overwhelmed by Kaliningrad today.

Tatyana Zadorkina: That’s probably because we are such proactive people.

This is my question. Our region is implementing a very good programme to attract young doctors. They are now provided with housing or with land to build their own houses. My question is, what about young doctors who arrived, say, five years ago, before this programme began? Are you planning to help us too – to provide housing, or to introduce another programme similar to the one planned for teachers? They will get low interest loans under this programme. Or could we have land for construction too?

Vladimir Putin: You know, the only fair and understandable thing I can tell you is that the federal government cannot resolve all the issues that are the regional government’s responsibility.

Let’s take teachers, for example. As I have said, the shortage of personnel in education is 22,000 people. This is a really urgent problem. There is no one to teach children in Kaliningrad. We had to intervene. But more than that, what can I say?

When we were discussing support programmes at the Finance Ministry and the Economic Development Ministry, I was asked this question: What about the people who had arrived earlier and had not received any       settling-in allowance? And the obvious solution they suggested was to provide no support to anyone at all. That seemed like a good way out. But if we don’t start doing it now, we’ll do nothing at all ever.

Tatyana Zadorkina: But we will leave if you don’t. You must do something to keep us here.

This is what I suggest: why doesn’t the government give us land in return for commitment that we will build houses for ourselves within two years? We’ll take out loans. We are not asking you to give us houses right away. Only to help us a little. You have already given us higher salaries. True, we now have more or less good working conditions thanks to modernisation, but we also need help with housing. This is an urgent issue.

I am personally ready to build a house of my own, but with my salary of 20,000 to 25,000 roubles a month I simply cannot pay 600,000 roubles for a plot of land and build a house on it.

Vladimir Putin: You are right.

We could adopt such a programme. We could use our housing agency and distribute state-owned land free of charge. I have already discussed this as a way to help teachers.

The regions could help provide them with utility services and hand them over to you for development. It is possible to draw up such a programme.

Tatyana Zadorkina: Then please do it.

Vladimir Putin: We’ll give it some thought. Go ahead, please.

Yulia Isakova: You may smile, but I am also from the Kaliningrad Region. But my question is one for the government to decide, at the federal level.

I was born and have lived in the Kaliningrad Region for 32 years. And I believe the Kaliningrad Region’s potential, especially its tourism potential, is inexhaustible. But people prefer to spend their vacations in Palanga and Gdansk, because they have every amenity there, while we lack the infrastructure. I think our development is hampered by departmental ownership of the land. The land west of Svetlogorsk belongs to the Defence Ministry, while the Courland Spit is a national park. But there is a place where tourism can and must be developed: the town of Pionersky.

The port of Pionersky is administered by the Federal Agency for Fishery. We have a project, and we have an investor, a real one, and many know about the project: it provides for 180 potential ship calls by cruise liners a year and 5,000 new jobs. But it is now three years that we have been asking for a pier, and there has been no progress. When the government stepped in, the matter got off the ground, but now it has stalled again. We want to ask you to help us, to take personal charge of the project.

Vladimir Putin: Once more: what’s the problem about?

Yulia Isakova: The investor owns the land adjoining the Pionersky terminal, but it is necessary to frame a public and private partnership and grant rights to the hydro-engineering facilities, to the pier.

Vladimir Putin: This port belongs to the fishery agency?

Yulia Isakova: Yes, to the Federal Agency for Fishery.

Vladimir Putin: You want the port to serve a double purpose – to cater to the federal agency and to tourism?

Yulia Isakova: Yes, to use the passenger port for tourism in the Kaliningrad Region.

Vladimir Putin: Is it possible technically? There might be some restrictions or the port needs expanding to accept passenger ships? I simply do not know.

Yulia Isakova: Yes, the port needs to be fully rebuilt, but the investor is ready to do so.

Vladimir Putin: The investor is ready to do so?

Yulia Isakova: Yes, the investor is ready. But in order to do this, it is necessary to restructure the property and investment relations between the investor and the state. Unfortunately, it is now three years that we have been agreeing this idea with the federal agency. We have formulated engineering specifications. The last remaining step is to frame a public private partnership. We have the investor.

Vladimir Putin: I will try. Mark it down so that we do not forget it. Let us try and help. Of course, the Kaliningrad Region’s tourism potential is tremendous. The area has a mild climate, for one thing, which is good for people with health problems. It is also an ideal recreation spot for the whole country, for all of Russia. It can, of course, cater to cruise ships, but if its infrastructure is well developed, the flow from Russian regions will be massive, there’s no doubt about that. It could be a lucrative business, very interesting and attractive economically.

The region has a lot of departmentally owned land, but incidentally the Defence Ministry owns less than 5%. A greater proportion – over 16% – belongs to the border department. These lands could be put to use. Incidentally, the fact that a certain amount of land belonged to the security agencies played a positive role at some stage, because this helped to preserve cultural artefacts.

But all this needs attention, including attention from the regional administration, because the Courland Spit, which is 300 metres wide in some places, and the Baltic Spit require particular care from nature management bodies. But we will try to implement your project.

Yulia Isakova: Many thanks.

Vladimir Putin: Go ahead.

Sergei Agarkov: Mr Putin, I represent the Murmansk Region and my question will be about the issues of the Far North.

You noted in your speech that bringing piped gas to the regions is one of the state’s top priorities. As regards the Murmansk Region, it is directly connected with the development of the Shtokman deposit. This is our mid- and long-term prospect, one might say.

Today’s situation in the Murmansk Region is as follows: all fuel and energy supplies are brought in from other regions. Something like 80% of all thermal power consumed in the Murmansk Region is generated by boiler houses burning furnace oil, which is also brought in from other regions.

This generates a host of issues: high tariffs for the consumers, financial problems for thermal and electric utilities, and undoubtedly a great load on the regional budget, which is forced to compensate the heat suppliers for the tariff difference. Then there is heavy burden of energy spending for businesses – especially small and mid-sized businesses – which are placed in unequal conditions compared with similar businesses operating in areas with a more favourable climate. The region is unable to solve this problem by its own efforts due to legislative and budgetary restrictions. This makes me wonder if it is time to introduce state administration of the northern territories to address all issues of economic and social development in a comprehensive way. I am referring to a special administrative regime for the Far North. Thank you. 

Vladimir Putin: As regards Murmansk, you must know as well as I do and even better than me, since you come from there, that Murmansk was built that way from the start: all energy was imported. It was not us that thought this up and built the city and its energy infrastructure. This, unfortunately, is the problem of Murmansk and its inhabitants.

I have mentioned in my address and can say it again: we will be able to alter the situation radically only with the commissioning of the Shtokman deposit. You said it yourself. That means the second half of 2016. In the fourth quarter, I hope we will be able to obtain gas from the deposit and start piping it to power facilities and consumers for everyday use. Gradually. It is also necessary that the authorities of Murmansk and the region be prepared for this in advance by coordinating their actions with Gazprom. We should avoid a situation when a trunk pipeline reaches Murmansk and then it takes five more years to establish a distribution network. Everything should be ready by that time. That is point one.

Point two. Within the municipalities, all heat and electricity suppliers should be reequipped to ensure that the available resources are used efficiently. In the world and in our country equipment is available that can accumulate electric or thermal power generated at night and distribute it in the daytime in equally disbursed amounts. This minimises costs.

It is also necessary to develop grid facilities. This is all in our plans. I do not know if Murmansk needs a special programme. Murmansk is an efficient region. Eastern Siberia and the Far East, for example, have special development programmes. Is one necessary for the Murmansk Region? It has major development potential. Unfortunately, it also suffers from human outflow. And still, its infrastructure is far better developed than, say, in the Far East. Some additional tools could be considered, I agree. Something else could also be made, I repeat, but the situation can be altered radically only with the commissioning of the Shtokman deposit.

Maria Lagutinskaya: Mr Putin, colleagues, I am addressing you on behalf of young businesspeople of the Kaliningrad Region. I am chair of the Kaliningrad branch and my name is Maria Lagutinskaya. The problem we encounter most often is that our staff working in the amber industry have to travel to neighbouring Poland to buy raw amber although Kaliningrad accounts for 90% of its global commercial reserves. Our Kaliningrad amber factory produced 340 tonnes of amber last year and earned 20 million roubles. Poland, on the other hand, produced only 25 tonnes, but earned something like 250 million roubles.

We have drafted an amber cluster project. It provides for building a town of craftsmen. Something like 5,000 jobs will be created, and 15,000 workers will be involved in the business indirectly. To start implementing the project, we need your support on a number of issues.

First, prohibitive duties should be introduces on the export of raw amber, because  no duty is charged on amber when it is exported from Russia today.

Second, prohibitive duties should be lifted from finished amber products. Our Kaliningrad craftsmen have trouble taking their wares even to Moscow. And they often do this, generally speaking, unofficially.

Third, the Kaliningrad amber factory should be made the property of the Kaliningrad Region. For us, amber is a Kaliningrad brand. It must become like Swarovski products, recognised all over the world. The possibility for our younger generation to realise this amber cluster project is above all an incentive to stay on and develop our own region. I strongly hope for your support. Thank you.

Vladimir Putin: It is regrettable to hear what you just told us. It is really a disgrace to have 90% of world reserves and at the same time to export raw amber and import finished products. This is going beyond the pale. I agree with your proposals and will issue a directive to the Economic Development Ministry concerning import and export duties on raw materials and finished products.

As regards the ownership of the factory, we can think of it. It might be possible to give the regional administration some form of control. Perhaps we will not need to hand it over lock, stock and barrel, but to put things in order first. Then we could allow the regional authorities to take part in its management. I will consider it.

Maria Lagutinskaya: Thank you.

Vladimir Putin: Thank you.

Yelena Palkina: Mr Putin, as a St Petersburg resident I am deeply concerned over the preservation of the historical core of our northern capital.

Like many inhabitants of our city, I enjoy strolling through the city centre and along its embankments to admire the splendour and beauty of St Petersburg. But, in my view, the look of the city has started changing lately.

Understandably, many historical buildings dating back to the 18th and 19th centuries deteriorate with time and need restoring. But on the other hand some dishonest private investors do not always honour their commitments under investment agreements and do not fully restore the facades of buildings on whose sites they raise their commercial facilities.

To be honest, I was happy when on September 2 I read in an interview with our new governor, Georgy Poltavchenko, that he …

Vladimir Putin: Is he governor already?

Yelena Palkina: I think, they have approved him.

Vladimir Putin: Have they? Mr Poltavchenko, we congratulate you and wish you every success. You were a presidential envoy to the Central Federal District. Is your new job a promotion or a demotion?

Georgy Poltavchenko: Mr Putin, it is a joyous occasion for me.

Vladimir Putin: Good for you!

Yelena Palkina: Well, I was glad when I read in one of Mr Poltavchenko’s first interviews that preserving the cultural aspect of our city will be one of his priorities. Mr Putin, I would like to ask you to support Mr Poltavchenko in this noble effort at the federal level.

Vladimir Putin: What specifically must I do? He is a big guy and can do it all by himself. 

Yelena Palkina: Many facilities are federally owned, and now, as far as I know, Russia’s cultural watchdog, Rosokhrankultury, has been abolished at the federal level and the issue of a successor agency is still unresolved.

Vladimir Putin: But there is a successor. It is the Ministry of Culture of the Russian Federation. The minister is right here: could you comment, Mr Avdeyev?

Yelena Palkina: I would be very grateful. 

Alexander Avdeyev: Mr Putin, you are absolutely right. Previously, Rosokhrankultury was not perceived as an authority either by the Prosecutor-General’s Office or governors – perhaps by others, not the people present here. They dismissed all complaints filed by Rosokhrankultury about the sensitive issue that was just mentioned. Now Rosokhrankultury has been made part of the Ministry of Culture and the minister himself will submit complaints. If these are brushed aside again, then we will ask for your help.

Yelena Palkina: Thank you. 

Vladimir Putin: You see, the changes are for the better and improve the situation.

In general, I know and am certain that not only its inhabitants but the whole country is proud of St Petersburg. It is a unique city, with nothing to match it in the world. There is Rome, there is Paris and there is Venice. They are nice in their own ways, but St Petersburg has its own unique and distinctive face. And of course, we will do our best to preserve this heritage of our country.

It is 20 years since UNESCO has put St Petersburg’s historical centre on its list. And I know that the city’s previous administration decided to expand the centre’s area. A good deal of analysis has been performed to do so. I think the new governor will join forces with the city’s public in preserving the historical legacy.

Yelena Palkina: Mr Putin, could I ask you one more small question?

The world is currently paying increasing attention to the environment and environmental protection and is altering its strategy of automotive development. In 2020, for example, in the view of many analysts, over 50% of all newly made cars will be equipped with electric drives, not internal combustion engines. These electric cars, which are environment-friendly and do not release carbon dioxide into the air, run silently. What do you think of the idea of building an electric car infrastructure in the Russian Federation? It seems to me a pilot project could kick off in St Petersburg because an automotive cluster is already in place and moreover there are the required capacities, and the city is all for innovations. In my view, innovation could help to develop a less expensive and smaller storage battery, which now accounts for over half of the vehicle’s volume and half of its cost. If Russian scientists were to get ahead of their competitors in other countries, making such a development a reality and patenting it, our budget could receive additional revenues through these developments. Thank you.

Vladimir Putin: That’s right. You must have heard about Mikhail Prokhorov’s Yo-mobile project. It’s an apt name, it can describe both a good car and a bad car. In reality, however, such production is organised only in Italy. Volvo has just presented its new vehicle. To the best of my knowledge, they have already started mass-producing it.

There is also the issue of price. And we need to think about the car's marketability. Swedish manufacturers are offering a car with a range of 100 kilometres, with a recharging time of eight hours.

Maria Lagutinskaya: That is not enough yet.

Vladimir Putin: The manufacturers themselves will promptly create the necessary infrastructure in the case of high market demand. The infrastructure is quite primitive. All you need is a 220-volt network with electric plugs and sockets. This is a nice option for a city car which will most likely continue to develop. The question is that of price, and its competitiveness compared with internal combustion engines. We need time.

The storage battery is a highly important component, one that the Russian industry considers a rather difficult objective. This is true of the automotive sector, the ship-building industry and some other production sectors. It would be great if Russian producers could start turning out competitive, world-class products.

Maria Lagutinskaya: Thank you.

Vladimir Putin: You are welcome.

Remark: My name is Olga. I’m from St Petersburg, and I represent the “No More Trash” public movement. I’m a coordinator for St. Petersburg.

Vladimir Putin: And where did the trash go? Did they burn it? As I understand, there are plans to build some enterprises in St Petersburg. Don’t you remember, Mr Poltavchenko?

Georgy Poltavchenko: Modern trash-recycling plants, not trash-incinerating facilities, will be introduced.

Vladimir Putin: In general, trash recycling is a high-profit business.

Remark: Certainly, under conditions of the required state policy.

Vladimir Putin: That’s right.

Remark: I represent a public movement, and we believe that trash should, first of all, be swept away from people’s minds, and in this way it will not accumulate again. I represent a network of action groups in 90 Russian cities, including Cherepovets, St Petersburg and Vladivostok. Young people clean the hills in Vladivostok and by Lake Pastorskoye in St Petersburg. There are many other natural areas where, as a rule, there is trash. But all of us know that trash accumulates in these places for some reason. Trash and happy get-togethers go hand-in-hand.

This has been an amazing year, with two nationwide trash-removal campaigns organised in 2011. They involved around 250,000 people who responded, came out and directly participated in these events. We try to deliver most of the trash to separate recycling facilities, rather than trash-incinerating plants which are, fortunately, not very numerous. We deliver plastic and glass trash to their corresponding procurement centres.

Next year, we plan to hold … and we would very much like Russia to take part, we would like to clean up this country on a large scale.

Today, the word “ecology” was mentioned here far more often than other words. In your introductory remarks, you mentioned barrels in the Arctic region. In my opinion, this directly resonates with this project. Indeed, we need to clean up this country, and everyone can become involved to the best of his or her ability. Some people could simply participate, and others could organise something because an organiser may not be a volunteer.

Here is my question: Mr Putin, would you personally support this wonderful project and take part in it?

Vladimir Putin: I’ll walk around with a log just like Vladimir Lenin.

Remark: With a sack.

Vladimir Putin: It seems to me that this is a very good initiative. Mr Nikita Mikhalkov is constantly promoting this initiative. He calls it “cleaning up" the country. I think that if you are also coming up with the same ideas on your own, this means there must be a good reason behind it. Let’s give it a try.

When do you plan to implement this project?

Remark: The project will be launched in September 2012. It’s important that we already begin preparing for it today. The first project will get underway September 17. There are some rather serious organisational aspects involved in implementing this nationwide project. It requires the consolidation of the business community, the government, society, private individuals and pressure groups.

Vladimir Putin: Let’s agree that we will take all necessary action in order to support you. We will follow through on this.

Please.

Irina Sheetova: I live in the Khibiny mountain range of the Murmansk Region. Ours is a very attractive area for promoting tourism and alpine skiing, and for creating nature reserves.

Vladimir Putin: Do you ski?

Irina Sheetova: Yes. But there are many environmental problems, including water purification, waste from iron-and-steel enterprises, the primary sector and radioactive waste. Of course, all this harms the environment and our people, and hinders the expansion of tourism, including international tourism.

Tell me please, what does the government plan to do to address the Murmansk Region’s environmental problems?

Thank you.

Vladimir Putin: You have touched upon radioactive waste, a very sensitive issue. We have several programmes related to this. The first programme deals with nuclear safety, and another facilitates radiation safety. I believe that five billion roubles have been allocated for the Murmansk and Arkhangelsk regions until 2016. These specific allocations will be used to facilitate radiation safety.

Under current legislation, enterprises handling such materials should address organisational safety issues at their own expense. And watchdog agencies should facilitate compliance with these requirements.

There is also another programme called “Recycling Nuclear Waste in the Defence Industry Sphere”. The government provides just over six billion roubles, something like 6.3 billion roubles, for these purposes in the next two to three years. But international organisations are also prepared to take part in this work. We plan to attract another 14 billion roubles from this source. You can be assured that the government will definitely keep an eye on this issue.

Of course, it is mostly up to regional authorities to deal with the water supply and other issues of this nature. If necessary, we are ready to facilitate cooperation between federal and regional budgets by allocating relevant subsidies. But they should display this initiative themselves.

Irina Sheetova: Thank you very much.

Vladimir Putin: Thank you.

Dmitry Makarov: I probably have the most modest question. Mr Putin, about 50% of St Petersburg’s population, who live mostly in residential areas, lack access to metro lines. I’ve been working as train engineer for the past 20 years. No more than ten major facilities, including stations and depots, have been opened during this period. If I’m not mistaken, several metro stations are opened in Moscow every six months. Compared with the capital, the St Petersburg metro construction sector is stuck in the Stone Age.

Mr Putin, please help with construction in our St Petersburg metro and subsequent development by providing fifty-fifty state co-financing. In other words, the state and the municipal government should jointly finance these projects. Our city has a very expensive metro network. Believe me, this very old metro network, the deepest in the country, is in need of repairs. We will be unable to build any new facilities without your assistance.

Vladimir Putin: Indeed, these are very expensive projects. But at the same time, this is very important for St Petersburg, it's true.

Indeed, a city with a population of five million has to expand its metro network, and this is true. Under current legislation, construction of metro networks is the responsibility of the regions. Nevertheless, we provide federal allocations to almost every subway construction project.

In all, 15 billion roubles are set aside for expanding St Petersburg’s transport infrastructure. Of this, I believe 12 billion should be spent on metro construction. This will make it possible to build five kilometres of metro lines each year. Although we would like to expedite and expand metro construction, these extremely expensive projects require substantial funding. Moscow receives the necessary support, but a considerable part of these allocations come from the city budget. Of course, Moscow has a larger budget because far more taxpayers live there.

In the past few years, we have been trying to attract major taxpayers to St Petersburg, and the city's budgetary income has swelled considerably. This was facilitated in part by economic and production expansion, and by new taxpayers. The new governor should also assess all this more closely, chart the proper priorities and see what is most important for the municipal economy. And we will see what else can be done for St Petersburg.

Please.

N. V. Ivanova: Mr Putin, in your speech you have already discussed additional allocations for education. But I would like to make rural schools a priority. The thing is, about 2,000 rural educational establishments have been shut down in the past few years. I myself work at a small village school, and I can see that 40% of its students travel dozens of kilometres back and forth each day. In some cases, they set out for school at 7:00 a.m. and come back at 5:00 p.m. This quality of life for children leaves a lot to be desired.

Tell me, please, will rural schools continue to be shut down?

Vladimir Putin: Did you say 2,000? According to my information, it's far less -- around just over 500 schools have been closed in Russia. True, the lion’s share of these closings, more than 400, have been in rural areas.

We have discussed modernisation programmes for schools. We need to make school facilities accessible to children, and at the same time, improve the quality of education, so that children living in the countryside will be able to receive the same adequate education as their peers in the city. Only in that case will we be able to provide equal initial opportunities for all young Russian citizens.

How can this be done? I'm sure you know, and you will agree with me that it is difficult to teach mathematics and home economics simultaneously at small schools. In some cases, this process is objective and inevitable. But I think schools should be maintained whenever possible.

You mentioned that children leave for school at 7:00 a.m. and come back at 5:00 p.m. We should delay shutting down schools in those areas where the infrastructure is not yet ready, where there is a lack of normal, good roads, and where they have failed to buy transport, such as buses, on time, although we have provided funding for these purposes.

That's the first thing.

Second. As I’ve also noted in my public speech, we can minimise expenses for small village schools as an option under a project to modernise school education. We can accomplish this by reducing managerial expenses and including these small schools in a major educational centre with the help of modern long-distance tutorial technologies. As I see it, this is a path that we should pursue.

Please.

Daniil Sorokin: Good evening, Mr Putin, colleagues. Although I don’t live there, my question also concerns the Kaliningrad Region.

Mr Putin, the Russian Popular Front supports the government. But there are certain things that we should oppose staunchly, such as drug addiction. This scourge kills millions of people, and young people are extremely vulnerable to drug addiction. Mr Putin, there are several aspects that I perceive as part of this struggle. This primarily concerns the fight against drug trafficking, which is currently being waged. But, in my opinion, there needs to be tougher action. Of course, we should expand the number of medical centres. Quite possibly, all this amounts to coping with the aftereffects of drug addiction. And we need to prioritise work that can prevent these situations.

At one point, back in my school years, I took up Taekwondo. I was thrilled and fascinated by my practice of this martial art. I had time for nothing else, besides my studies and Taekwondo. Well, I would like to say that I’m grateful for this situation in my life because I didn’t give into smoking, alcohol abuse and drug addiction. I eventually left the St Petersburg and Leningrad Region select team, and started coaching youngsters. I became convinced this all tends to repeat itself: those youngsters who attended training sessions were also protected from these temptations. When my students grew up, they started coaching people in various cities. Right now, over 150 youngsters train in various towns of the Leningrad Region’s Kirov District, because students have grown up and started training others in various cities.

I think that we should focus on this area and devote more attention to it. But there is another important aspect to this. You see, not everyone can take up sports and professional sports. In my opinion, we should also stress wide-scale accessible sports and physical fitness, including, for example, backyard sports. We also need hobby clubs like those which existed in the past, as we remember. People used to play football and hockey until nightfall. This doesn’t happen everywhere today. In reality, I think the problem is that we now have many sports facilities that have been constructed, including those under the United Russia party’s programme. Yes? We now need to direct our focus on coaches, those enthusiasts who are ready to gather young people around them and guide them. It turns out that now, they work somewhere, receive very modest wages and play football with youngsters in the evening somewhere. We need to support these people.

Mr Putin, this is a proposal or, perhaps even a request. Here is my question: What steps should the United Russia party and the Russian Popular Front take in order to combat the threat of drug addiction? What do you think about this personally?

Vladimir Putin: First of all, I would like to say that you have raised a very important issue. This issue is important not only for the United Russia party or the Popular Front, but for all Russian citizens. This country faces a real threat, called narco-aggression. First of all, why did this problem emerge? I have already mentioned this. For better or for worse, the Soviet borders were tightly controlled.

When the USSR broke up, its former external perimeter began to be guarded by the newly independent states. Because of their financial problems, this border is guarded in a satisfactory manner, but not an excellent one. And Russia has never maintained any borders with these republics. As a result, the gate was flung wide open. As you know, Afghanistan accounts for 90% of global heroin production. And so, this heroin has flooded into the Russian territory. This is a complicated and multi-vector problem. The entire country and society need to address this problem, regardless of partisan, religious or ethnic affiliation, because it threatens every Russian citizen and every young person. I agree with you completely on the issue of sports. I also took up sports, and you have just told me about this yourself. The situation was the same at that time.

Daniil Sorokin: You are a professional athlete yourself. We can see this.

Vladimir Putin: The same happened with me. I never smoked a cigarette because I was constantly busy.

Daniil Sorokin: Mr Putin, we should all tackle this issue together.

Vladimir Putin: Yes. But we need professional sports in order to popularise a healthy lifestyle, to say the least. What do you think, why are we planning to hold the 2018 FIFA World Cup, the 2016 Ice Hockey World Cup, the 2014 Winter Olympic Games, the 2013 World University Games and other major competitions? We aren't doing this just to make the fans happy, although this, too, is a positive aspect. We need to promote a healthy lifestyle. We are doing this in order to create new heroes that serve as an example for young people. This is a complex issue. Of course, at the same time, the state’s task… The Government and the Ministry of Sport, Tourism and Youth Policy should deal with professional sports. At the same time, regions and municipal entities should facilitate sports on a wide scale. In this sphere we are too ready to provide assistance via various channels.

Daniil Sorokin: Probably a programme is needed to support such enthusiasts?

Vladimir Putin: There is a programme like this. The Ministry of Sport, Tourism and Youth Policy is offering this programme and organising it with the regional authorities.

In this respect, support for the training staff is extremely important and we will be cooperating with regional authorities in this area. However, the main responsibility rests with regional authorities.

Daniil Sorokin: Thank you, Mr Putin. Here is a colleague from the Republic of Komi who has long asked for the floor.

Vladimir Putin: Please.

Andrei Kulikov: Mr Putin, let me first extend sincere gratitude on behalf of the widows of the late miners. It is only your personal involvement that finally helped resolve the decades-long issue of their resettling to mainland.

Vladimir Putin: Thank God, I’m glad to hear that.

Andrei Kulikov: Please accept their deep gratitude.

Vladimir Putin: Thank you. The main thing is that they settled fine.

Andrei Kulikov: They often come to the party branch in Vorkuta and we are addressing almost all issues they face because you have given the impetus.

My second point is also related to resettling, that of pensioners. In Vorkuta alone more than 16,000 pensioners are on the waiting list but given the financing that is currently provided, many of them may not survive until they receive a flat. I would like to draw your attention to this issue and see greater amounts set aside for resettling [retired] miners.

Thank you very much.

Vladimir Putin: Good. As you are aware, the number of the late miners’ widows is incomparable to that of pensioners that are entitled to, and need, resettling. We will need to carefully look into this programme together with the regional authorities. Together, we will probably expand our approach to this problem. It indeed exists and we will be addressing it. You are right, time is very important here. We will look into it.

Please.

Vladislav Suprun: I am a member of the online community “Pskov’s Ruined Roads” and a member of the Popular Front.

Vladimir Putin: Your colleagues are currently visiting various regions.

Vladislav Suprun: I was going to say that members of our movement are currently driving across the country from Vladivostok to Kaliningrad. At this moment they are at Krasnoyarsk. In the region we are all closely following their trek and worry about them very much.

Mr Putin, you have supported a very important project, the northern bypass road around Pskov. I believe we will complete this project. But there is another city in the Pskov Region, the second largest but probably the first in production capacity. The city is currently split in two by a railway line. This is a serious issue that hampers the day to day lives of the city’s residents.

I would like to request that you to get involved in our city, Velikiye Luki, and help promote and implement a project for an overpass that would unite our city. This is crucial for our city.

Vladimir Putin: Is the Ministry of Transport aware of this? Do you know anything about this problem? Have you ever addressed it?

Igor Levitin: This must be a railway crossing in the city…

V. Suprun: No, we have lots of railway crossing, and we do not need any new ones. But they are all at grade level…

Igor Levitin: You have crossings but you need an overpass. I understand what you are saying. We will discuss this with the governor.

Remark: Mr Putin, we would like to thank you for supporting the road sector in the Pskov Region. Indeed, we are seeing some progress on the Pskov bypass road. We have ordered the project with the region’s funds and we are receiving support from the Ministry of Transport. Let me now turn to the overpass in Velikiye Luki. Indeed, the city is split in two and sometimes an ambulance or a fire engine just can’t get to the necessary place. The project is known. The minister held a meeting on this and rather a positive outcome was reached. There are records. The meeting included regional authorities, the Ministry of Transport with the Oktyabrskaya Railway representing Russian Railways. An agreement was reached that said that we would pursue the project at our own expense and pass the necessary inspections. This was done and the regional government spent 18 million roubles on it. The Ministry of Transport was ready to pay for the project and project funding was confirmed. Initially, the project included three parties. Unfortunately, Russian Railways withdrew from it. This is why we are currently discussing it again with the Ministry of Transport.

Vladimir Putin: Mr Yakunin, why are you being so greedy? Your railway line cuts the city in two, but you refuse to take part in the project.

Vladimir Yakunin: First, we never agreed to take part in it. Second, Mr Putin, the Russian Railways programme does not include the construction of automobile overpasses. We do not receive funds for this. This is why Mr Levitin said they are discussing this issue with the governor. Indeed, the problem of railway crossings exists. Our railway is so enormous – we will celebrate our 175^th anniversary next year – that railway crossings, especially in modern transport systems, are a serious issue. Unfortunately, we have not yet received an adequate response.

We have suggested setting up a Railway Crossings targeted programme. The Ministry of Economic Development has not supported it so far.

Let me make another small comment, if I may. In your address you mentioned that the development of high-speed rail service results in problems for commuter trains. I don’t know where the government receives this information. We did have problems in the Tver Region when launching the Sapsan train. But I have reported to you that all scheduled commuter trains were restored.

Commuter trains are currently cancelled only if deemed unnecessary by regional authorities as they have to compensate for the losses generated by commuter rail service. We are not facing any other problems. However, the issue of overpasses does exist.

Thank you.

Vladimir Putin: Fine. As for the railway crossings, the minister of transport already said that they would continue discussing this issue and seeking to resolve it. If anything depends on you, Russian Railways, I request you to take an informal approach to it and support the project. As for commuter and high-speed rail service, the information about problems comes from people rather than some administrative entities. If the situation is as you say, the regional heads then need to explain clearly to people that this happens because a route is economically unfeasible or loss-making rather than because of the development of high-speed service. Anyway, unfeasible routes for commuter service are unfortunately loss-making in general, but people need them to travel and get to their jobs and back home. Please do not consider this a resolved issue. Rather, I request that you discuss with the governors how to restore anything that was lost in the implementation of other undoubtedly important projects.

Vladimir Yakunin: Mr Putin, this is the way we work. We have signed corresponding agreements with most of the governors. I believe that given the government’s decision – at least what I heard of it – to set aside 25 billion roubles to co-fund commuter rail service, this problem will be addressed. Further on there will be a separate report and a separate discussion. As for now, I can say that this is the way we work.

As for Russian Railways’ participation in various projects, we usually manage to agree with regional authorities that we will undertake all the expenses related to providing windows for construction and for moving our infrastructure. This constitutes our rather substantial organisational participation in these projects.

Thank you.

Vladimir Putin: Good.

Yes, please.

Olga Krylova: Good afternoon, Mr Putin.

I would like to tell you about the Krasny Chum (Red Tent) project, a long-term social investment project to carry out medical examinations for reindeer breeders and their families to detect possible diseases at an early stage. Medical specialists that will travel to remote communities will also examine local residents.

This is a very interesting and important project. And we have achieved impressive results. Eight children were sent to the Bakulev Centre for Cardiovascular Surgery in Moscow and 25 people were sent to a cancer clinic in Arkhangelsk in a timely manner. These are impressive numbers for us because they represent saved lives.

We intend to continue developing this project and invest 130 million roubles in it within the next two years. We will invest a little over 3 million this year and then we will be putting money into the construction of a centre. The only thing is that we do not know what will happen to this project after January 1, 2012 in light of the federal law On Healthcare that’s being discussed. This law envisages a transfer of primary medical care services from municipalities to the regional executive authorities.

And the situation will be as follows: In a local government reform, the Zapolyarny District was set up. Administratively, we did not have districts before, and now we have one. We assumed responsibility for the medical institutions, began developing them and put our heart into this work. And now we may lose it all. Can a flexible mechanism be provided for in the law or can things stay as they are?

Vladimir Putin: Please pass the microphone to Mr Roshal. He has expressed concerns of this nature before.

Leonid Roshal: Mr Putin, I’m in a better mood today because even though our media today makes it seem like we are falling into an abyss, that nothing is being done in Russia and we are at a dead-end, I am hugely pleased to hear from these representatives. Russia is doing great. Look at these amazing people and their programmes! It is great! Thank you!

Let me also thank you for the concern you have shown for healthcare today. I don’t know how the Popular Front contributed to this decision, but we discussed the issue with you. Even if the contribution is small it is wonderful. These efforts are not in vain. I am not a member of United Russia, but I did the right thing when I joined the Popular Front because we have a common goal. It is really good.

Of course, I have talked many times on television and in public about what a shame it is that children cannot get treatment in this country only for lack of funding. What you have just said is exactly what we are talking about all the time. This shameful situation must change. Children must receive the treatment they need.

The one million in aid [for rural teachers] is indeed huge. I expected you to say they would have to work it off in three years though – it is five years, but it does not really matter. I still envy the teachers. I hope a similar housing scheme can be developed for medical workers. I believe it would be the right and sensible thing to do.

Regarding the distribution of authority, as you remember, it was one of the reasons why the law was not adopted in its second reading. You supported us when we told you, “Mr Putin, they delegate and take away our authority while the conditions must be created at the municipal level. What are the conditions? Shall we plant flowers?”

We must consider the issue in more details. You have supported us and much is being done in the area. On September 8, we are holding a roundtable meeting of the Popular Front with the Duma to discuss this matter. It is not that easy.

I have just come back from the meeting of the heads of municipal authorities from several cities in Pskov. From twenty cities, if I’m not mistaken. I asked if accessibility and quality would be improved as a result of the law being adopted. And I did not get a clear answer; I did not get anything like “go ahead, it will be alright.” We should think about it.

The cities are different. Some have a population of one million, others 500,000 or 200,000 people. And the municipal authorities keep saying they do not need it. They say they invested the money in construction, they all… Why would they give it away and then get it back again? It is ridiculous.

On September 8, we will try to find an answer. So I support your question.

Thank you.

Vladimir Putin: Basically, Mr Roshal has given an answer. The issue is being considered.

We planned to start the project in 2013. Initially, the authors of the idea stressed that many cities do not have the resources to ensure a good quality. They believed the responsibility of the regions for the situation in healthcare must be extended as the first measure. But Mr Roshal said in some of the independent municipalities a lot is being done and a lot has been done. But we should think more carefully about which authorities may be delegated and which should be maintained. 

Olga Krylova: Mr Putin, I think it should be done as soon as possible, as we are in the middle of the budgeting period.

Vladimir Putin: Yes, I agree.

Olga Krylova: We must know what is going to happen with the Krasny Chum project.

Vladimir Putin: Yes, as soon as possible. I agree.

Olga Krylova: Thank you.

Vladimir Putin: Now, can we hear from someone from the upper rows?

Alexander Bibenin: Mr Putin, I am a professional communications engineer from the Nenets Autonomous Area. I understand that your time is valuable, so I have two suggestions and a question.

It is a responsibility of the federal authorities to ensure communications, so my first proposal is…

Vladimir Putin: It depends on the type of communications.

Alexander Bibenin: Telecommunications. I suggest the responsibilities in this area be divided between the regional and federal authorities.

Vladimir Putin: Please explain why.

Alexander Bibenin: Because there are regions, such as the Nenets Autonomous Area, that can assist in developing telecommunications but they do not have the necessary authority.

Vladimir Putin: I see.

Alexander Bibenin: Second. The road network in our region is practically non-existent. According to the current standards, there is only one payphone in a remote village. So I suggest mobile communications be included in the general services category, as defined in the law On Communications, for remote and hard-to-access areas with a population between 100 and 2,000 people.

Vladimir Putin: This project is under development, as you know.

Alexander Bibenin: Honestly, I haven’t heard about this project.

Vladimir Putin: It exists, and the transition to mobile communications in remote areas is underway. The Communications Ministry is in charge of it.

Alexander Bibenin: It is the first time I have heard about this. I know about the payphones and the public access points.

The third question concerns small aircrafts. The Antonov An-2 fleet is totally worn out. What is being done in this regard?

Vladimir Putin: I agree.

Regarding the first question, I agree, I totally agree with you. Although the regions can and want to do something, the law does not give them enough power and it must be changed. I will issue relevant instructions to the Ministry of Communications. They will consider possible solutions. There are many other areas where, similarly, the regional authorities can help but are restricted by law. I do not see why we should restrict the regions. Regarding mobile communications and expanding public access points, this is the direction we are heading in. You know how mobile communications are developing in Russia. There is perhaps no other country in the world where they are developing faster than in Russia. Many problems remain unresolved, but we must provide our citizens with adequate means of communication. This is the direction we are heading in. We will try to make it cheaper and build up the networks.With regard to small aircraft, I don’t have much to add because you have said it all. Indeed, the fleet is obsolete, and the United Aircraft Corporation should propose optional national aircraft that could replace the old An-2. We need to build more airfields for small aircraft. I already said this in my opening remarks. In addition to north-western Russia, we will build them in all of Russia’s northern regions, in the Far East, Eastern Siberia, and all across Russia.

Unfortunately, we have suffered many losses in this area, but without small aircraft we will be unable to provide requisite levels of healthcare or other services. People will be inconvenienced by the lack of such aircraft, as they will have to make connecting flights in Moscow or St Petersburg. I agree. Not much to add here. We just need to start working. Such are the plans. We will implement them.

Please go ahead.

Vladimir Varnayev: I have been working at the Novgorod museum reserve for over 20 years now and realised lately – I think, teachers, other museum workers and everybody who is involved in education have also – that a large number of schoolchildren and students are losing interest in Russian history. In other words, they have stopped being patriots. They now show an interest in Scandinavia, Germany, Japan and other countries. This is good. We must know this, too.

You see, without patriotism, people will either leave the country – not everybody can, but some will – or stay in Russia and remain indifferent to their motherland. All of these projects that we are now discussing will be poorly developed because people will not be interested in improving life in their homeland.

I have a proposal. We have come up with a proposal at our conference, namely, Veliky Novgorod proposed to look into a project focused on the Rurik settlement, which gave birth to Russian statehood. Next year, we will mark its 1150^th anniversary.

There are many reference points of civic awareness in Russia. Perhaps, visits to such places should become a part of the mandatory curriculum for school and college students. Such museum sites also help tourists get answers to their questions. And this is exciting.

I would like to invite you to come see the project after its completion. You will see that this is a really interesting project. When he or she sees it, any school or college student will realise that this is a wonderful place to live and they should be proud.

I am not sure what type of programme this should be a part of – educational, work-oriented or historical – but I believe that the time is ripe to address this issue. In my experience, at least one-third of school students do not believe in Russia or have no interest in the country. Perhaps, this is a form of nihilism. However, this is a trend and a powerful one. It touches upon millions of our schoolchildren who are the future of Russia.

I understand that this doesn’t come cheap. But perhaps it makes sense to invest in the future of Russian citizens. This is my proposal and also a statement about a problem. It has not been raised before, and this is why I wanted to take the floor. Thank you.

Vladimir Putin: You know, you work in a very important sphere. It is my understanding that you gave your entire life to this work. Certainly, just like anyone who is fully immersed in his or her field, you would like the government and the society to pay more attention to relevant issues.

Has anyone counted? I don’t think that one-third of schoolchildren – who can tell...

Vladimir Varnayev: This is a mass phenomenon, trust me.

Vladimir Putin: ...are not interested in the history of their motherland. I have a different feeling. I visited Novgorod several times. I saw the archaeological sites and the level of interest among the students working there. The interest in Russia is on the rise. Some time ago, in the late 1990s, life was harder. We had a bloodbath in the Caucasus, unending economic problems and social collapse. The patriotic self-awareness of the majority of the Russian people has changed for the better in the past years. This does not mean that we should just let things go and drop the patriotic education. I understand what you are talking about and I agree with what you said in general.

Vladimir Varnayev: Excuse me for interrupting you. The school curriculum in many European countries includes visits to such landmark sites. In Russia we do not have such a programme and, as far as I know, have no plans to make one. Why should we have less respect for our country than Norway, Germany or Italy? They have similar programmes.

Vladimir Putin: The US authorities are even more aggressive in imposing and inculcating this kind of knowledge. Overall, this is sound practice. As for your proposal, it could and should be implemented. First of all, I believe that you were absolutely right in bringing up this issue, perhaps in a slightly controversial manner.

Vladimir Varnayev: I stated a problem.

Vladimir Putin: You are right about posing this problem. The government and society should take care of providing patriotic education to our citizens, especially youths. There is no doubt about it. Your idea could be implemented as part of the programme to develop domestic tourism. We have adopted this programme and, in fact, it is designed specifically to implement your proposals. 

Vladimir Varnayev: Does it commit to…?

Vladimir Putin: I am not sure about the Rurik settlement.

Vladimir Varnayev: No, not the Rurik settlement, I am speaking for everybody now. I understand that people living in Siberia might find it difficult to go see the Rurik settlement in Veliky Novgorod. Perhaps, something should be organised there, in Tobolsk, for example – some kind of reference points.

Vladimir Putin: Yes, yes.

Vladimir Varnayev: To develop civic awareness.

Vladimir Putin: This is what the programme is all about. It includes cultural, historical and natural landmarks. Your proposal could be implemented as part of this programme. I will not only think how to do it, but also ask my colleagues to do so as well.

Vladimir Varnayev: Thank you.

Vladimir Putin: You are welcome.

Alexei Kharin: Good afternoon, Mr Putin. It’s not that I object to what the previous speaker said, but I would like to support your point of view that the attitude of young people regarding Russia is changing. As a member of United Russia’s Young Guard, I participate in this process. For example, they routinely hold such forums as Team 21C in the Vologda Region with the governor’s support. This forum is similar to Seliger, which clearly shows that young people take an interest in their homeland and do their best to fully participate.

Now, here comes the question. It’s a short one, but I believe an important one from a practical standpoint.

Fairly significant amounts are allocated to support young families in Russia, and, particularly, their children. Federal and regional authorities allocate maternity capital to families who decide to have a second child, and so on. There are many areas where these funds can be used, including education and housing. 

Vladimir Putin: And pensions…

Alexei Kharin: Yes, and pensions. Do you think it is possible to consider the possibility of spending maternity capital on buying a car? A car is a real help for running all sorts of errands, especially in rural areas, where public transit is poorly developed and accessing schools and hospitals can be a real challenge. Is that possible at all? Thank you.

Vladimir Putin: The sky is the limit. United Russia is well represented in the Duma. It has a controlling interest there, to put it mildly. The constitutional majority can make such a decision. The issue concerns securing the interests of children and women.

You know, you can spend this money to buy a car or go on a vacation, or do something else. My concern is that this money will be simply squandered. Buying a car is tricky. One day you buy it, the next day you sell or total it, and so much for owning a car.

There are two kinds of property – movable and immovable. Housing is a fundamental property. You need a house to raise a child. Education is also important. We have expanded the options for using maternity capital. We made it possible to not only buy an apartment or add money to buy an apartment, but we also allowed for the building of private homes using maternity capital.

Buying a car? You know, I have a bad feeling that this money won’t last long if we do this. I’m not being tight-fisted here. It’s just that there is such a possibility. However, we can discuss this issue, but do so carefully. This is a lot of budget money, and for many households, it’s a significant addition to their budgets and can be used to address basic family problems. Let’s take our time and go slowly, okay? Please go ahead. And let’s wrap it up, okay?

Alexei Likhatsky: Thank you for the opportunity to ask you a question. I am the director of the Promotion of Palliative Hospice Medicine charity fund. I received a call today from a leukaemia patient. His name is Andrei Zhukov. There is a problem with donors in Russia. If a patient needs a bone marrow transplant, then a close relative may become a donor. However, if a relative is not an option, then we have to start looking for a donor abroad, say, in Germany, and the price is huge. He says $15,000. Certainly, we can come up with that money, but this is not the right solution. The issue concerns creating a domestic donor bank. Perhaps, there is a need to establish legal arrangements to do so. What needs to be done? Indeed, there’s a real need. Many Russians suffer and die as a result.

Vladimir Putin: So, the issue concerns creating a data bank?

Alexei Likhatsky: A bank of bone marrow donors.

Vladimir Putin: A donor data bank?

Alexei Likhatsky: Yes. A donor database in Russia.

Vladimir Putin: Why is this a problem? Are there any legal restrictions?

Alexey Likhatsky: No, we do not have any.

Vladimir Putin: Is there anyone from the Health and Social Development Ministry here? A colleague will provide the comments.

Remark: Mr Putin, Mr Likhatsky, such a data bank is presently being created. It will operate across several locations in Russia and share a database. In addition, we have held talks with the WHO. In the near future, we plan to join the international database. To do so, we need to enter 5,000 samples in this database. Once we do so, we will have access to the entire network of phenotypic codes matching these samples. We will be ready to report on this issue in the near future.

Alexei Likhatsky: Thank you very much. That is timely information.

Vladimir Putin: Please excuse me. You gave us a specific name and said that money will settle his problem. Let’s help him. Please go ahead.

Vadim Nekrasov: When we discussed the issue related to the development of north-western Russia today, we did not discuss the issue of relations between business, monopolies and authorities – both municipal and regional.

I would like to highlight the situation in the power engineering industry. I believe that if we do not amend the law on power engineering, then we will not be able to operate normally because this is a serious factor in the development of our region’s economic potential.

Vladimir Putin: What exactly needs to be amended?

Vadim Nekrasov: Today, the relations between this entity, the monopoly and small and medium-sized businesses are particularly poor. Advance payments are still required, the connected load is still being paid for in instalments, and power generating enterprises have on several occasions switched to unregulated tariffs. We found ourselves in a situation where tariffs greatly exceed the declared figures.

Another important point is that the consumer rights law is not being enforced at all. We are buying electricity without knowing its real current price. We find it out only when we receive the electricity bill a month later. This is wrong. Primarily, this concerns small and medium-sized businesses because they are not in the position to compete with major power engineering companies in this area.

Therefore, Mr Putin, I have a request on behalf of businesses because this is a sensitive issue for our municipal enterprises, too. Please help to draft new amendments to the law because we need them badly and we will not be able to expand small and medium-sized businesses if nothing changes.

Vladimir Putin: Are you aware of the decisions designed to equalise major and minor consumers, so they do not run into unneeded expenses while using small amounts of electric power? Do you think that this is not enough?

Vadim Nekrasov: Absolutely not enough. Power generation companies can buy resources by obtaining cash gap loans at 8% APR, whereas small and medium-sized businesses are hit with 15%-20% APR. We, as the municipal authorities who support small and medium-sized businesses, understand that small businesses find it difficult to issue loans to these major power engineering companies. Therefore, this is an extremely important issue.

Vladimir Putin: Does this concern mandatory advance payments?

Vadim Nekrasov: That is a part of the problem.

Vladimir Putin: Can you formulate these proposals?

Vadim Nekrasov: Yes, of course. I also represent the Delovaya Rossiya public organisation. Our bosses are here and we are ready to come up with proposals on this issue.

Vladimir Putin: Please pass the microphone to Mr Titov.

Boris Titov: We have a continuing dialogue with the Energy Ministry. Some of our proposals were taken into account. The things that you have mentioned have improved through the introduction of tariffs for small businesses. The tariffs are levelled out now. On the other hand, the uncontrolled rise in the tariffs in the first quarter was levelled off, and they now stand at about 15% per year. This is good progress. On the other hand, we owe these accomplishments to you as the head of the government because we basically managed to stop the tariff growth manually.

Certainly, we need to create a legislative base for setting these tariffs. So far, many things still need to be done. In other words, the tariffs may continue to grow.

Vladimir Putin: Is there anyone from the Energy Ministry in the audience?  Please pass the microphone.

Remark: Mr Putin, we have a continuing dialogue. We regularly meet with Mr Titov to discuss this and other issues. If anyone, like the entrepreneur from Kirovsk, has any specific questions, we can look into them additionally.

Many decisions have been made already and I reported on the progress, including at the meetings that you held. In particular, the issue concerns technical connections and other questions that have already been resolved.

For your information, the State Duma is preparing a set of amendments to the basic law on power engineering for a second reading scheduled for the autumn session. If there are any issues that need more attention, we can submit additional changes to the law on power engineering.

Vladimir Putin: We have already talked about this, and I also mentioned today that small and medium-sized businesses using small amounts of power should not pay more for this power or for associated services than major enterprises. I will say for those who are not privy to this information that major consumers pay less than smaller consumers. This has been the case so far because servicing the latter allegedly comes at a higher price.

We have levelled the playing field for large and small consumers. Now they pay the same tariffs. However, our colleague believes that this is not enough and you know what triggered my concern regarding what he said? We agreed that power engineering companies would not include their investment expenses in tariffs. It is my understanding that this does not always happen in real life. Am I right? Please take a look at this issue.

I would like to ask you to formulate your additional requests regarding changes to the law and pass them along to Mr Titov. It’s not too late. The Duma will look into this during the second reading. Let us try to formulate this properly. Thank you. I understand that there are a lot of questions and they are all important but we need to wrap up. So let us conclude.

Pavel Potashev: At first I was upset that I would not get a chance to speak.

Vladimir Putin: Union representatives tell me that I need to wrap up, that we are violating labor laws.

Pavel Potashev: Then I realised that to get to be the one to conclude is best of all, for the best actors like to perform at the end of the show. The public will remember them better. I have one suggestion and one question. Eight years ago while addressing the Taxation Service, you said that tens of thousands create laws, but millions look for ways to get around them. Last week you reiterated this point. It seems that lawmaking has not changed much during these eight years.   

Vladimir Putin: This is not lawmaking. This is simply an attitude that exists in any nation, and in any economy.

Pavel Potashev: I have a suggestion. Often civil society institutions become involved in public consultations on draft laws after they have been posted online. Currently, a third draft of the law On Recreational and Sport Fishing Activities has become publicly available. Perhaps, civil society institutions should be invited to engage in consultations on the development phase of the lawmaking process?  

Vladimir Putin: True.

Pavel Potashev: Then we will have less of a headache later.

Vladimir Putin: Certainly. Your suggestion is well taken. You're absolutely right.

Pavel Potashev: Thank you. And I have a request. I have written you letters twice and have received replies from the Ministry of Finance, from lower level officials, also from the regulatory affairs department. I have an interesting proposal that I would like to put forth to you, but I would like for you to give it your personal attention.

Vladimir Putin: No need to keep writing. Why bother writing, just tell me directly, what is it that you need?  

Pavel Potashev: All right. It's a three-minute proposal, but I'll cut it down. It has to do with the World Cup.

Vladimir Putin: Which World Cup?

Pavel Potashev: The one in 2018.

Vladimir Putin: In which sport?

Pavel Potashev: In football.

Vladimir Putin: All right.

Pavel Potashev: The proposal is titled, World Cup 2018. I brought it up to be included in the programme of the Popular Front, but it seems that Nikolai Fyodorov (Head of the Institute of Socioeconomic and Political Studies) had a lot on his plate, and my proposal may not make it into the programme. So I'll take the opportunity to voice it here. I propose issuing 1,000, 3,000, 5,000, 10,000 and 15,000 rouble World Cup-2018 government bonds. People who purchase these bonds will be entered into a lottery for 20% of the tickets for the 1/8, quarterfinal, semifinal and final matches. The funds accumulated from bond sales will then be used to finance the construction of the main stadium, where the final match of the World Cup will be played.    

This could bring in a lot of money; people have a lot of money. I suspect that the fans will support it, they will support United Russia and will vote for them in election and the next one, because they will be afraid to lose their money. After the championship, the money can be returned, having been purchased at 6% interest, to be placed into deposit accounts.

Lastly, the tickets that will be distributed through the lottery would be paid for using the accrued dividends. I think this is an interesting idea, but a Finance Ministry official informed me that my proposal is not interesting, that the state has plenty of money and that they will hold the championship without my help. I would like to say that once the World Cup is over, the heads of state corporations, wealthy oligarchs and officials will receive medals and honors. But I would like for the World Cup-2018 to be a People’s Project. Thank you very much.    

Vladimir Putin: Thank you.

Mr Potashev, I find it strange that a Finance Ministry official would tell you that the state has sufficient funds. Today when I speak with these officials, and ask them to improve something here or there, they inform me that we have no money. They never have any money, but here they tell you that there are plenty of funds.

We have a Deputy Finance Minister here. What you suggest is in essence a lottery, which falls under the responsibility of the Ministry of Finance. Mr Siluanov, would you please comment on this proposal?

Anton Siluanov: Actually, you have touched upon two issues here. The first pertains to the construction of the stadium, and the second, to the Olympics lottery. I believe that we have already established that the regions hosting the World Cup games will address the stadium construction issues. As for the lottery …     

Vladimir Putin: I beg your pardon. The FIFA organisation certainly considers it more secure that these issues are resolved on the federal and regional levels. And this is how we will approach it. This will be an enormous construction project. If we trust the financing of this construction to a lottery, the FIFA organisers will start shaking in their boots. But why not use it as an additional source of income…

Anton Siluanov: That’s possible. If we are in need of additional funds, we can certainly issue bonds. But the second question pertains to the lottery tickets draw and holding a lottery. This question should be considered separately in order to decide how we can optimally distribute …

Pavel Potashev:  Point out the officials whom I should address.

 I will share my ideas with them, because you are moving away from the essence of my idea. My idea is different. Whom should I write to? 

Vladimir Putin: You keep talking about ‘writing.’ You surely are some kind of ‘writer.’

Anton Potashev: Because this issue keeps getting brushed aside.

Vladimir Putin: Yes, that may be. But you are mistaken if you think that your written petition will receive any attention. 

Pavel Potashev: But if I write to Putin, and Putin provides the instructions to look into the issue, it will receive the attention it is due.

Vladimir Putin: That’s one way to do it. But I have another suggestion. Mr Siluvanov, here in the same room as you, is a dedicated professional and a competent specialist. After this meeting he will stay behind, so you can approach him and address your ideas to him. I'm completely serious, I mean this without any irony. You should speak with him. Perhaps something useful can be extracted from your ideas. But we would like to thank you for considering ways to alleviate the burdens on the budget allocations for the organisation of these large events. And the first issue you brought up is also of great importance. In line with the agenda of the Russian Popular Front, we are attempting to incorporate public consultations into the early stages of important social projects. This is a very appropriate proposal, and a good one.  

Vladimir Ribachenko: I would like to speak about the rivers of the Kola Peninsula. Today a new fishing law was posted online, and it seems that now we find ourselves at the other end of the spectrum. Before we had to pay for everything, and now everything is free. 

Let's say that Atlantic salmon have to be preserved, and that these preservation and protection efforts are not cheap. At present, the owners of the camps on the Ponoy, Kharlovka, Rynda and Varzino rivers are carrying out the tasks of protecting these rare fish. Essentially, the Atlantic salmon population remains only here. In Norway, Finland, and a large part of England, they actually have no Atlantic salmon in their waters anymore and, say, in Norway and Finland, they recently allowed only the locals to fish. And even though these are law-abiding citizens, there is no Atlantic salmon left in their waters. 

Let's say that the Kola River (a vast river) has the largest population of salmon. It’s only two years since people have been allowed to fish there without restrictions, and in that popular section of the river there are no fish left. The past experiences of the Umba, Chavanga and Chapama rivers reveal that because the cycle for these fish is four years, in four years the fish population in the river is fully depleted. I believe that such valuable fish as Atlantic salmon require special treatment.  

Vladimir Putin: Well, you won't deplete anything with a fishing pole. If we're talking about commercial fishing nets, even a small mesh net, then you can certainly wipe out all fish, if that is your objective. The Japanese did this, and I believe their crabs are unable to repopulate. Here, we're talking about fishing with a pole. In this case, I don't think there need to be restrictions for that, and there's no need to take money from people.

What is available on the website is not a law, but rather a draft. And if you have some suggestions to improve the project, why not address them? That is why it's on the website. Let's think about it.

Vladimir Ribachenko: We took an active role in voting in the second iteration of the draft law. But I would like to say that Atlantic salmon can be wiped out with four fishing poles.

Vladimir Putin: Only if they're electric fishing poles. Can all the salmon really be fished out with a fishing pole? 

Vladimir Ribachenko: Yes, only 10-12 of them swim through a river per day. With two fishermen on each river bank, all the fish can be wiped out. 

Vladimir Putin: You must be some kind of story-teller. 

Vladimir Ribachenko: No.

Vladimir Putin: Really, I cannot even imagine that. I have not been to the most popular spots, but in the places that I visited, if there was any salmon, there was plenty of it. 

Vladimir Ribachenko:  No, that's Far Eastern salmon, which swims up a river once and then dies after spawning.

Vladimir Putin: It's hard for me to say now, but I'd like to reemphasise that what you see on the website is just a draft project. If you notice some minor flaws or potential threats, let's discuss them. I will then direct the attention of the appropriate government bodies to these issues.

Vladimir Ribachenko: Thank you.

Vladimir Putin: Thank you.

It is time to wrap our meeting up. I would like to conclude by saying that Russia is a vast and powerful nation. But what we have here, in the North West, it’s a unique potential. Above all else, this comes from the highly educated people who live in this region. Only in this region does there exist such a vast research and production cluster. Our task is to effectively utilise this for the common good of our citizens, for our people. If we join our efforts, choose the right priorities and the right tools to reach our objectives, we will succeed. Thank you very much!