Transcript of the beginning of the meeting:

Vladimir Putin: Mr Khloponin, what is the current situation like in the North Caucasus? On the whole, the objective data and reference materials suggest that the economy is reviving. Can you feel this there?

Alexander Khloponin: Mr Putin, we have summed up the region’s performance in socio-economic development in the first six months of this year, and all the main indicators indeed suggest that the local economy is growing fast. I would like to cite some figures that speak to our achievements in the first half of this year. The gross regional product grew by 11%, and the industrial production index was 113%, which is the second best result across all of Russia’s federal districts.

We have also achieved good results in agricultural production: local farm produce accounted for 8% of Russia’s total, and is still growing fast. Retail grew 6%, which is above the national average. Commercial services are also growing fast, also at about 6%.

Another important indicator that we are monitoring very closely is unemployment. Thanks to the programmes developed in order to ease the tension in the market – there are currently three ongoing federal targeted programmes – we have achieved very good results, reducing registered unemployment by 23% as of July 1, 2011. At the moment, 358,000 people are registered as unemployed in the region, which is almost 100,000 down from 460,000 people in the same period last year. But we are not relaxing. We know that the situation remains difficult and that there are a lot of young people who need to find employment there. Regarding this, I would like to discuss certain very important results that we have achieved under the programme aimed at supporting investment projects in the North Caucasus Federal District.

Mr Putin, you have chaired a number of conferences on the issue, and you personally head a government commission that works on investment projects. We have analysed over 1,000 projects proposed by different regions of the North Caucasus Federal District, and selected 372 of them, worth over 1 trillion roubles in total. Of that number, we have chosen 70 priority projects, worth over 268 billion roubles, to be implemented in the first stage of our strategy. In the first place, these include 30 projects, worth 121 billion roubles, that involve government guarantees – a mechanism that has been approved and will go into effect this year. In fact, we hope to launch it within the next few months.

Vladimir Putin: Is anybody using government guarantees now?

Alexander Khloponin: We have a waiting list for government guarantees. The applicants are not only local regions proposing their projects. They also include interested investors who are ready to start up projects once they are provided with government guarantees. The projects I mentioned – the 372 we selected – already have specific investors who are ready to finance them, to provide resources. Let me point out once more that there are 30 priority projects on the list, worth a total of 121 billion roubles, which has already been approved by federal ministries. We are ready to provide guarantees worth 50 billion roubles. This represents a powerful impetus to economic development. The priority projects are expected to create 9,000 jobs – and this is only for the projects implemented with government guarantees.

This year, we have started financing projects through the Investment Fund. The total worth of these projects in the federal district is 31 billion roubles, with the Investment Fund contributing about 6 billion roubles. This money is going towards infrastructure development, including power grids, new roads and other utilities. These projects have been listed and agreed upon with investors. Also, according to your instructions, Mr Putin, we have established the North Caucasus Development Corporation, which has already studied 54 investment projects. Seven projects – worth 67 billion roubles – have been submitted for consideration to the new corporation’s board of directors – these are different projects, separate from those that are to be implemented with government guarantees.

Vladimir Putin: What are the sources of these funds?

Alexander Khloponin: Private investors, as well as the corporation’s own funds. The corporation will invest 4.5 billion roubles out of 67 billion, while private investors and financial institutions will contribute the rest. These projects have been approved and they are also working.

The project to develop North Caucasus resorts is also progressing at a fast pace, Mr Putin. We are implementing a joint venture agreement with French partners. The project is progressing quickly, there have been frequent meetings, and we expect to achieve some results with the first project as soon as this year. Builders have broken ground for the Arkhyz resort project, driving in the first piles and connecting it to utilities. I hope we will be able to ski there next winter.

Vladimir Putin: Good.