Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon, colleagues,

This is our first session of the Presidium of the Russian Government in 2012. There are many items on the agenda. Strange as it may seem, I’d like to begin with a pleasant topic, although we normally start by discussing problems. I’d like to begin with some statistics.

I've asked our colleagues to prepare these statistical data using such sources as the IMF, the European Commission, Global Inside, the Federal Service for State Statistics, and the Ministry of Economic Development. I've asked them to compare the numbers across major global economies including Russia, so that we could have an objective picture of our 2011 results.

What do our major macroeconomic and social indicators for 2011 look like? As we all know, GDP growth is the most important macroeconomic indicator. We rank third in terms of this indicator among the leading global economies, with China and India in the first two places, respectively. GDP growth in China stands at 9.5%, it is 7.8% in India and 4.2% in Russia. The growth rate is smaller for all other countries, not to mention those that went in the red, such as Greece (minus 5.5%) and Japan (minus 0.4%). The eurozone's GDP grew by 1.5%, and GDP in the United States was up 1.6%.

We are sitting in fourth place in terms of industrial output after China, India and Germany. The eurozone's industrial output grew by 3.2%, which is less than in Russia. However, Germany, the locomotive of the European economy, did quite well under current conditions with 7.2%, while Russia’s industrial production grew by 4.7% in 2011.

Keeping inflation under control is critically important for our economy. Inflation is still high at 6.1%, but this is the best figure that we've had over the past 20 years. This is the best it’s been in the last 20 years. Overall, if we compare it with economies that are structured similarly, it’s looking good. For instance, India, which I have already mentioned, and which posts substantial GDP and industrial production growth, has chalked up 9% inflation. In Brazil, where the economy is comparable, it is at 6.3%, and it is at 4.5% and 3.5% in the United Kingdom and the United States, respectively.

Moving on to the budget deficit. I should note that we are confidently taking the lead on this. There is a noticeable deficit everywhere. The Federal Republic of Germany, Europe’s economic leader, has a deficit of 4.3%. The eurozone overall has a deficit of 6.2%. Of course, there are some rather alarming things: Greece has a deficit of 10.8%, Spain’s is 9.3%, France’s is 7.1%, the United Kingdom’s is 11.2%, the United States’ is 9.6%, and Japan’s is 10.3%. Rather than having a budget deficit, Russia will boast a 0.8% budget surplus this year. This is almost 1 percentage point of GDP.

You are also aware of the government debt situation. Government debt in the eurozone tops 80%. I am not talking about the United States or individual European Union countries, such as Greece, Spain and Italy. Russia’s government debt stands at 10.4% of GDP, while external debt equals only 2.5% of GDP. This is virtually nil.

The gold and foreign currency reserves have recovered to a very good level, currently exceeding $500 billion. In global terms Russia takes third place in this regard after Japan and China (China and Japan). The government’s reserve funds remain stable, and have even shown some growth. The National Prosperity Fund totals two trillion, 790 billion roubles. The Government Reserve Fund equals one trillion, 893 billion roubles, or 8.7 percentage points of the GDP.

And, in conclusion – unemployment: arguably the most important socio-economic indicator. Russia essentially holds third place after Japan and China in terms of unemployment levels, virtually sharing this ranking with Brazil. In December unemployment was at 6.2% here, it was 6.3% in Brazil, and for the year nationwide unemployment levels will be in the region of 6.2-6.5%. This is a good indicator, showing that the pre-crisis labour market volumes have been reinstated. Overall, this positive result was attained thanks to the foreign economic situation and the targeted action taken by the government and regional administrations. This manifested itself in focused inflation targeting and anti-inflation measures through various avenues, including efforts to curb prices and support agriculture. This explains the impressive harvests and low food prices in autumn 2011. I remind you that we enjoyed favourable conditions, but that the agriculture sector would have been unlikely to attain such results without targeted support after two years of drought. This support involved soft loans, funding, the sale of petroleum, oil and lubricants at reduced prices, the sale of mineral resources and mineral fertilizers at reduced prices, as well as transport support and support for the transport network.

As for the labour market, regional leaders, the government and our services which created a system to combat unemployment in 2009, 2010 and 2011 have accomplished a great deal in this sphere. I would like to thank them for this. Overall, this system has proved itself.

I would like to draw your attention to the fact that, just like any other government, the Russian government has always prioritised and will continue to prioritise efforts to improve people’s living standards. This is the goal of any government, and the goal of any state’s activity.

What have we done in this respect? In the past ten years we have cut in half the number of people living below the poverty line. They account for 12.5% of population now; half the figure ten years ago. But this is according to Russian methodology. Using international standards, approximately 26% of Russians live below the poverty line. This is a lot, even though the figure is comparable to countries like Greece and Spain (20% and 20.7%, respectively). The figure for the United States is 18%.

Unemployment is very high in the countries where the economic situation is difficult. It is 6.6% in Russia but as high as 22% going on 23% in Spain. Just imagine, every fourth – nearly every fourth – person is jobless in Spain. Unemployment is 17.3% in Greece and 9.7% in France, which is very high, and 9.1% in the United States.

So, we still have too many people living below the poverty line. And the second thing I’d like to point out is that this figure changed only slightly last year, for various reasons. Wages grew 7.1% [last year], but this year’s real income will be only 0.4%-0.5%, due to a very slight increase in social allowances and pensions. We raised pensions significantly in 2010 but only adjusted them to inflation in 2011. These are the issues we should highlight in 2012. I will speak more about this later, but to put it shortly, the government should ensure a proper average income in the economy and within the budget, and, judging by our economic achievements, we can and must do this. On the other hand, I’d like to say that 2012 will not be an easy year, but rather more difficult than 2011. The facts I have mentioned about the world’s leading economies and the alarming signals coming from them should encourage us to work very hard to secure our citizens’ interests. We will be speaking about this many more times.

The first thing I’d like to talk about today in the social context concerns a pay rise for military personnel. As you know, it was decided to raise their remuneration by 150%-200% starting January 1, 2012. Military pensions will be increased 60% regardless of the military branch or agency. I’d like senior officials from the Defence Ministry to report on the re-calculation of salaries and pensions and to say when military personnel will start receiving higher pay.

Who is going to do this? Please, Ms Shevtsova (Tatyana Shevtsova, Deputy Defence Minister).

Tatyana Shevtsova: We have formed the legal base for implementing the federal law introducing a new system of remuneration and pensions for military personnel from January 1, 2012. All the orders approving new salaries depending on post and additional payments depending on military rank starting January 1 will have been signed by January 10. This concerns over 350,000 military personnel serving by contract. We have compared the salaries our military personnel received in 2011 plus all monetary compensation and exemptions with the payments they will draw in 2012. Lieutenants/platoon commanders received aggregately 24,000 roubles a month in 2011 and will receive 50,000 roubles in 2012. Captains/company commanders drew 27,000 roubles last year and will receive 66,000 roubles in 2012, which is 150% or 38,000 roubles more. One more example: lieutenant colonels/battalion commanders received about 30,000 roubles in 2011 but will see a 251% increase in their salary from January 1, 2012, to 76,000 roubles.

Military remuneration will be calculated and transferred through the Unified Settlements Centre, which we have set up in Moscow. We believe that a centralised procedure will ensure the timely calculation and transfer of remuneration and greater control over spending in this sphere. The Settlements Centre has an information service to answer questions about the new salaries and payments. I’d like to point out that this centralised procedure does not entail changes in the transfer of income tax. This question has been raised by governors and administration heads. Income tax will be transferred in compliance with the tax code in the region where the given military unit is deployed. We plan to transfer January’s military personnel payments to the recipient’s debit cards on January 25.

As for military pensions, they have been re-calculated based on the new military salaries depending on military post and rank. New pensions for January 2012 calculated in accordance with legislation jointly with the Finance Ministry were transferred in late 2011. The legislation allows for this if the payment date, in this case January 5, falls on a holiday, which is why we transferred military pensions between December 22 and 27.

Vladimir Putin: It is probably good that your have centralised this process, provided there are no malfunctions. Problems are possible during such reforms; people can forget something while trying to do their best. I’d like you and Mr Serdyukov (Minister of Defence Anatoly Serdyukov) to bear in mind that this new settlements centre… I hope it will help improve the process and not have too many problems. So, military personnel will receive their new salaries on January 25, right?

Tatyana Shevtsova: Yes sir.

Vladimir Putin: Mr Serdyukov, please ensure that everything goes well.

Anatoly Serdyukov: Mr Putin, we can still use the old financial agency while introducing the new one, which is exactly what we will do during the first three months of the year. As soon as the new agency gathers momentum we will dissolve the old one, so we don’t expect many problems here.

Vladimir Putin: Good. Mr Siluanov (Minister of Finance Anton Siluanov), please report on the fulfilment of the federal budget.

Anton Siluanov: Mr Putin, you have outlined the main aspects of the budget’s execution, but I will highlight several figures. Our revenues last year totalled 11.350 trillion roubles, 2.5 trillion more than initially planned in the budget that was approved in November-December of the previous year. The best thing is that we have reached the pre-crisis 2008 level in real terms, the target we initially planned to reach in real terms by 2014, yes, by 2014. It is important that we spent only about 10.5% of the surplus 2.5 trillion roubles on expenses, and this is why we have a budget surplus of 0.8% of GDP, or 427.8 billion roubles, as you mentioned, Mr Putin, and which was one of the key factors allowing us to reduce inflation to 6.1%.

If we compare budget execution in 2011 and in previous years, we will see that revenues amounted to 21.1% of GDP, which is 2.6 percentage points higher than in 2010 but lower than before the crisis in 2008. What I mean is we reduced the tax burden in 2009, which is why our revenues fell against GDP. But we have made serious progress [last year] compared to 2010 primarily thanks to [increased] tax revenue, in particular VAT.

Mr Putin, it is also important that we have been working to slash the non-energy deficit, which was 9.7% of GDP in 2011, compared to 12.6% in 2010 and 13.7% in 2009. This does not mean that we can rest on laurels, because we believe a safe level for the non-energy deficit is around 4%-5% of GDP.

We have certainly faced challenges while managing the 2011 budget. December saw the highest spending level, 19.5% of the total 2011 expenditures, something we haven’t seen in recent years. According to the previous two years’ statistics, we spent 17.7% of annual allocations in December 2010, and 15% in December 2009. Moreover, last year, the government spending level peaked in the final days of December, exceeding 1 trillion roubles, reaching 1.1 trillion roubles. We have never before amassed so much liability at the end of the year. One of the reasons for this was that we made budgetary adjustments raising our spending commitments, which is why the additional expenditures came in December. We also have some unused funds, 198.9 billion roubles – mainly in the road construction fund (26.2 billion roubles), which will go over to the next annual budget and will be spent in 2012. We have also failed to fully transfer the money allocated for the Pension Fund, because there was no need for more, so we have effectively saved 47 billion roubles of planned transfers to the Pension Fund. There have been other similar changes.

I would also like to note that the oil and gas revenue we gained in 2011, 5.6 trillion roubles, will be partly channelled into the Reserve Fund (slightly over 1 billion roubles). We have submitted a draft resolution containing this proposal to the government and have suggested considering it sooner rather than later, because the law requires that we augment the Reserve Fund with last year’s oil and gas proceeds before February 1, 2012.

About the Reserve Fund and the National Welfare Fund – the two rainy-day funds we have, you were correct that they currently total 8.7% of GDP, down from 16.1% before the crisis. On the other hand, the GDP was lower at that time. In terms of roubles, the two funds decreased from 6.6 billion roubles before the economic downturn to 4.7 billion roubles as of January 1 this year. This means that we are returning to the pre-crisis level, although the initial plan was to make use of the Reserve Fund money in full.

I would also like to report that the Ministry of Finance as well as other ministries and departments were collectively successful in drafting the laws and regulations required for the 2012 federal budget. A total of 69 regulatory acts had to be drafted in 2011, and almost all of them were completed on time and for the most part submitted to the government. Twenty four have already been adopted and a little over 40 still need to be adopted. These acts will facilitate the execution of the 2012 budget. In summary, 2011 was a good year in terms of federal budget execution. We will continue monitoring the process this year. Incidentally, we have a backup mechanism in case the foreign economic situation worsens. But I sincerely hope that we will not have to resort to it.

Vladimir Putin: Colleagues, I would like to emphasize the following. I began the day by citing very encouraging figures. Indeed, Russia’s economic results and the Russian government’s performance have been among the best in the world without exaggeration. But we also know the weak points of the national economy, the most important being its lopsided development and excessive dependence on the oil and gas sector. That we have managed to reduce the shortfall of non-oil and gas revenues is a good and encouraging trend. So it is our priority to carry this on to 2012 and achieve real economic diversification and shift the emphasis from commodities to innovation, and create more high-tech jobs – as I said, no less than 25 million new or refurbished ones. This is our key goal for the next few years and I would like you to keep it in mind. Therefore, our budget policy has to be geared toward this goal too. In fact this should be a priority – maybe even the top concern – in budgeting. I mean that industrial and economic growth largely depends on how we plan our budget. In 2009, as you remember, we faced a general slump, while the aerospace sector showed a 17% increase. How was this possible? It was achieved with direct government support. Of course, the government is not able to support every company in every sector, but it is quite possible to prop up the key high-tech industries, like we did with auto manufacturing and some other industries, and agriculture. We will continue doing so, including agriculture, as I just said. Mr Zubkov will speak about it now. (to First Deputy Prime Minister Viktor Zubkov:)  Go ahead, please.

Viktor Zubkov: Mr Putin, colleagues. I chaired a meeting of the agriculture development commission earlier today, which considered a series of issues related to the completion of several important seasonal objectives – sowing winter crops, preparations for regular spring work and stocking fodder for livestock farming.

It is worth noting that winter crops have been sown over an area of 16.129 million hectares, the same as last year’s level. It is also gratifying that – this is the usual time for the weather service to examine the winter crop condition – the condition is very good for the most part, and only 6% of winter crops seem affected by adverse weather. This situation is much better than in previous years. This is very important because winter crops account for 45%-50% of the country’s overall grain harvest, so the crop’s good condition as well as the efforts of the government encourages our expectations of a good winter crop harvest this year.

As for the preparations for spring works, this spring we plan to sow spring crops on 50.8 million hectares of land, up 300,000 hectares from last year. Grain crops will take up 30.3 million hectares. We have discussed the necessary provision of seed, chemicals (mineral fertilisers), fuel and lubricants and loan funding. Seed has been 100% stocked, on average across the country – more in some regions and less in others. Therefore, the Agriculture Ministry is watching over the regions that have not stocked enough grain and legume seed for spring sowing. We have taken steps to prevent this shortage from affecting spring sowing.

Regarding chemicals: 2.53 million tonnes of mineral fertiliser has been stocked (in terms of respective nutrient content). This is a record level, much greater than last year. The government has allocated 5 billion roubles to compensate farm spending on fertiliser, and another 253 million roubles in 2012. Therefore, we can expect that the 3 million tonnes of fertilizer stipulated in the government programme will become reality this year and will be used to boost the harvest.

There is an agreement between fertiliser producers and the Union of Agricultural Producers which keeps the potential rise in fertiliser prices within the 6.9%-11.5% range. We will see to it that this range is observed this year.

Farmers purchased a substantial amount of agricultural equipment in 2011, largely due to government efforts, such as a 50% discount on purchasing farm equipment. Over 5,500 machines were added to Russian agribusiness fleets. In addition, 3.7 billion roubles were added to the share capital of Rosagroleasing, which plans to renew the equipment range it offers for lease in 2012. This gives us confidence that farms will receive a substantial amount of advanced equipment this year.

We had a concern with fuels and lubricants though: Last year, agricultural producers used 2.83 million tonnes of diesel fuel purchased under discounted prices. This year, the regions increased their requests to 3.946 million tonnes, up 48.8% on the previous year, and 506,000 tonnes of vehicle petrol. In fact 16 regions have agreed to the volumes allotted to them, while 56 haven’t. I have given instructions to the Energy and Agriculture Ministries to consider these issues and estimate the volumes of fuel distribution. You have made a decision on discounts… This decision also applies to fuels and lubricants. Last year, earnings totalled 17 billion roubles. I expect about the same level this year, but I think, Mr Putin, that the period set until April 1 is too long. I think we can complete the setting of targets and make them known to the regions, to the agricultural producers, before March 1. I would therefore like you to make an adjustment to the dates, perhaps today. We have your instructions to use an applied preferential system in 2012 from April 1, but since work in the fields gets under way in March-April, I think we need to speed things up.

With regard to loans, Rosselkhozbank today confirmed it has allocated 141.5 billion roubles for spring field work. Moreover, farm producers have already received 20 billion roubles for this work. There are no problems with finance, Mr Putin. The interest rates on annual loans are quite reasonable – between 10% and 10.5%. I think that given the solid foundation laid down in 2011, the good situation regarding the winter-sown crops and with the preparations that have been made for spring field work, we can hope for a fairly good harvest in 2012. The government will do its best to ensure that farm prices and food inflation (which is low this year, just over 4%), at the very least, do not go up, so that I don't think food inflation should rise any higher than to around 4% or so in 2012.

Vladimir Putin:  Are investments growing in the fixed capital of farms?

Yelena Skrynnik: Yes, absolutely.

Vladimir Putin: By how much? Twenty or so per cent in 2011?

Yelena Skrynnik: Yes, Mr Putin. To continue your remarks, the investment index for fixed capital in agriculture now totals 120%, thanks to the state support agricultural producers received. This is 12 percentage points higher than had been planned for 2011. The banks, accordingly, issued 21% more loans, the total amount of lending reaching 987 billion roubles.

I would like to say a few words about profit margins in farming. In crop growing, the profit margin has grown from 13.7% in 2005 to over 18% now. For milk production it has gone up to 18.3%, pork to 22% and for poultry 24%. In 2011, a total of 289 new livestock enterprises opened up and 11 million tonnes of meat were produced. This is 460,000 tonnes more than in 2010. As far as the food security doctrine is concerned, we met its targets in 2011 for grain, sugar, potatoes, vegetables and, for the first time, for poultry. We have fully met our poultry needs in accordance with the doctrine. We, the Ministry of Agriculture, have drafted, Mr Putin, and agreed with many other ministries and departments a new programme for the development of agriculture, for 2013-2020. The existing programme is finishing this year … I ask for your support to get it adopted as soon as possible so that our farm producers can be assured of further investments.

Vladimir Putin: Good. Thank you.

Mr Avdeyev, we signed a resolution on government prizes in culture. How will this work progress? Who are the recipients? When are you planning on holding the award ceremony?

Alexander Avdeyev: Mr Putin, you signed the executive order on the awarding of prizes for 2011. These prizes are among the most prestigious in the country and they have deservedly gone to many of our most eminent cultural figures this year. New names have also been discovered. First I would like to mention the prize awarded to Galina Vishnevskaya for establishing her remarkable school of opera. The production of Peer Gynt, staged by the Lenkom theatre company, was acclaimed by the entire community and Mark Zakharov and the cast all receive a prize. A new artist, Shavkat Abdusalamov, has been discovered and also receives a government prize. Many artistic unions and exhibition managers are now showing an interest in this splendid painter, a Russian of Uzbek descent who, it turns out, has been living in Moscow all this time, not receiving the acclaim he deserved. I would also like to mention the prize given to Ivan Lubennikov for the three metro stations he designed – Sretensky Bulvar, Mayakovskaya and Slavyansky Bulvar. People travelling on the metro have already been struck by their beauty, and car drivers can go down to take a look at the magnificent designs. Incidentally, after he designed these stations, he was invited to Paris where he designed one of their central stations – Madeleine. His work was lauded as an outstanding contribution to the metro system.

Director Alexei Borodin has been awarded a prize for his production of the play “The Coast of Utopia,” staged in the Russian State Youth Theatre. Prizes also went to a choreographer, or rather two choreographers – Boris Eifman, for three ballets staged in the St Petersburg theatre named after him, and Yury Grigorovich, for his fine children's ballet. I would also like to mention Iosif Kobzon for his 43 shows “Letters from the Front,” with which he toured across the country. The shows were about the anniversary of the end of the war, were all non-profit and received excellent reviews across the entire country.

Awards have also been given to writers. Vladimir Lichutin got one for his very interesting historical novel “The Schism.” It deals with a complex period in our history that has been little covered in literature and is both absorbing and historically accurate. Literary critic and writer Igor Volgin has published a series of books in recent years on Dostoyevsky, well-written and containing interesting new details about the author’s life… A government prize has been awarded to Andrei Turkov, a fine writer and literary critic, for his excellent book about Tvardovsky. We recently celebrated the anniversary of the poet’s birth and this book was published to coincide with the event. Other authors who received prizes and whom I would like to mention are Fazil Iskander, the doyen of our literature, and poet Yunna Morits for her children's poetry. Among the award winners there are also dance troupes, most notably the Stavropol Cossack Group. We are used to seeing the Krasnodar group getting top prizes every time, but now an excellent company from Stavropol has emerged. And then there is the international cultural forum “Dialogue of Cultures” in Dagestan … Awards have gone to book publishers – the Vengerov literary critics. Textile weavers from Udmurtia are also among the winners – they have been awarded a prize for their weaving school, which has artistic merit. Mr Putin, the standards of the winners are very high and the award ceremony is going to be a cultural event for us. Thank you.

Vladimir Putin: We must thank them. Mr Topilin (Deputy Minister of Healthcare and Social Development), what can you add about the labour market?

Maxim Topilin: Mr Putin, presidium members. I would like to add that last year brought good results both on overall and on recorded unemployment: both these figures went down by 20%. The recorded levels are below the levels in November 2008, when the crisis began. In 2011, registered unemployment fell in all regions, admittedly at different rates in different places, but unemployment did not go up  in any of the regions in 2011.

There are other figures that throw a positive light on the jobs situation.  Above all there is the intensity of the labour market. As unemployment has fallen so employers have offered more job vacancies, meaning that the ratio of the number of unemployed to the number of vacancies has been halved.

Also positive is the situation regarding the number of people in part-time employment. We have been monitoring this index throughout the entire crisis – for the first time in Russian history. During the crisis the figure soared to 1.5 million people, dropping to a mere 200,000 by the end of the year, which is practically a baseline value.

Mr Putin, this year we are making further efforts on the labour market, and have allocated 1.5 billion roubles for this task. But the steps we are planning will be targeted, above all, at regions where there is a tense situation on the labour market (the North Caucasus and some other regions) and at regions which need support to create jobs for people with disabilities and large families. Special jobs are being created for them with federal funding. This work with the regions is already drawing to a close: the first phase, that of examining regional programmes, is over, and we are getting ready to distribute the money between the regions and start funding these activities. Concerning unemployment benefits, which are allocated from the federal budget in the form of subsidies, I would like to say that all the money was transferred to the regional budgets on January 10, the first working day. So there will be no slip-ups or problems with unemployment benefits, everything will be provided on time. Thank you.

Vladimir Putin: Good. Many thanks. And thanks to all those who addressed the issue and to the regional heads – I have already said that the regions have done a good job in that respect.

What would I like to draw your attention to? The next year is going to be hard, with a lot of difficult and complex work ahead of us. As you know, on Tuesday we had a conference call with some regional heads and we discussed, in particular, housing and utilities tariffs and social welfare. This is what I would like to point out to you. You know perfectly well that in previous years our utilities and social services rates have shot up at the start of the year. Shot up. In some regions by as much as 70%. We, in Moscow, had to make decisions in order to bring things back to normal and reduce the tariffs to acceptable levels.

I wish to draw the attention of all regional leaders, not only those who took part in the call but everyone without exception. You know how much I care about people and staff. We are entering an election campaign and your humble servant is one of the presidential hopefuls. It is possible that I may win the election. If this happens, right after the inauguration I will make a close study of those who allowed the tariffs to soar. And it would be with a heavy heart, but I would be forced to make personnel decisions. I am being quite serious. We all remember setbacks happening in many regions in previous years at the start of the year. Please do your best to avoid that happening and keep a close eye on developments. Every regional head should know what is going on in every community, every village and every town. I also ask the Ministry of Regional Development to ensure that we do not have to step in to put right failures and risk the displeasure and anger of the people.

I want to emphasise: there is no just cause for raising utility rates. We have decided against lifting the tariffs for natural monopoly services from the start of this year. The target date is July 1. The only exception will be for Russian Railways, for carrying out repairs.

Let me remind you that there is a directive to speed up the drafting of a new and more objective system for assessing the efficacy of regional management teams. I ask you, Mr Kozak, the regional development minister, and other colleagues to take the most active part in this work and, together with regional heads, work out the criteria and put them into practice in the very near future. Proposals made by our regional colleagues to improve inter-budget relations should also be analysed and adopted, with the direct participation of the Ministry of Finance, of course.

As regards today’s agenda, I would like to single out two items. First, there is a proposal to radically alter the procedure for passing through border and customs controls on railways. Many people use other forms of transport, of course, but trains remain the main vehicle. We have already introduced the new rules on the St Petersburg-Helsinki trains: services begin and continue while the train is travelling. This is more convenient than spending hours waiting on the border. Since May 2011, the same procedure has been adopted on the Moscow-Kiev-Moscow route. This procedure, which is more convenient for people, must be introduced on all international railway lines. The same must apply to the Kaliningrad Region. These issues should be worked through with colleagues.

There is one more item I would like to take up. It concerns humanitarian contacts with our partners in Ukraine. We are going to discuss an agreement on legislation governing the operation of Russia’s information and cultural centres in Ukraine and Ukraine’s centres in Russia. We do a lot of mutual trade and enjoy a deep degree of cooperation but, as we all understand, we live under market conditions, with every country protecting its own interests. Of course, everything is and should be done on a partnership basis, but there are deeper and more important things – our historical roots and our shared culture. These centres are called upon to strengthen this aspect of our cooperation. Such an expansion of mutual humanitarian and cultural presence will naturally enrich the colour palette of our relations with our key partner, with our truly fraternal neighbouring republic – Ukraine.

Now let us proceed with the agenda.