Prime Minister Dmitry Medvedev chairs meeting in Grozny of Government Commission on the Socio-Economic Development of the North Caucasus Federal District


“We must fundamentally change the situation in the region, make life in the North Caucasus attractive and, it goes without saying, safe and stable. This is our common goal.”


Dmitry Medvedev: Good afternoon, colleagues.

Colleagues, first of all, I would like to welcome you all and to say that this is our first meeting of the Government Commission on the Socio-Economic Development of the North Caucasus Federal District involving members of the new government. I would like to say that naturally, as before, I plan to continue dealing with the development of the North Caucasus, and therefore I will head this commission because I believe that this is one of our most important state priorities.

Today we will examine the drafting of the state programme on the development of the North Caucasus Federal District up to 2025, as well as the creation of the North Caucasus tourist cluster. We must fundamentally change the situation in the region, make life in the North Caucasus attractive and, it goes without saying, safe and stable. This is our common goal. So we need to focus on tackling a number of very complex tasks, including the unemployment problem, which remains a very painful issue for this federal district.

We also need to create a modern social and industrial infrastructure and, most importantly, boost housing construction. We have set ourselves targets for addressing each of these issues, including a plan to create hundreds of thousands of jobs. In fact one of our major targets is to reduce the local unemployment rate from 16% (to be clear, this figure is a district average) to 5%. Another goal is to increase the number of residents provided with appropriate housing by almost one third. These are ambitious goals. How successfully they will be addressed depends on how well the federal government will coordinate its actions with federal ministries and regional leaders in the North Caucasus Federal District.

It is also important to stimulate business activity and development. Business development is crucial for implementing these programmes; not only large businesses, which will achieve its aims anyway sooner or later, but also small and medium enterprises (SME). The development of SMEs can be supported by state guarantees. There are government institutions which have been geared to this task; we have to continue doing this.

Allow me to remind you that the government decided earlier this year to provide 50 billion roubles worth of state guarantees. Three major federal programmes are being implemented to address social and economic issues in this federal district: the South of Russia programme, the Chechen Republic development programme and the Ingush Republic development programme.

We have directed over 130 billion roubles to these programmes, including 120 billion roubles from the federal budget, during the last four years. This will help resolve some of the problems that have been piling up for years – for example, building schools. In the past few years, a total of 120 schools have been built in the North Caucasus, as well as over 100 hospitals and outpatient clinics, 270 kilometres of roads, 50 athletic and cultural facilities. The local utilities infrastructure has been improved, and 800,000 square metres of housing has been built.

The new government programme integrates the existing federal target programmes as well as subprogrammes aimed at improving the local investment climate and tourism development in the North Caucasus Federal District, and development subprogrammes for each of the North Caucasus regions. I hope it will optimise government spending and concentrate investment in the priority sectors of the district’s development. The new integrated programme should also help avoid redundant projects and the resulting double financing of the same projects.

The main provisions of the new programme were already discussed in detail at the commission’s meeting in May 2011. At that meeting, a target was set to complete the programme’s development by August 2011. That target wasn’t met. Therefore, I expect now to hear from you the reasons why it wasn’t. After that, we will start making further plans, taking into consideration the factors that had prevented you from fulfilling the instruction.

A finalised draft programme needs to be submitted to the government before December 1, 2012; this is the final deadline which cannot be moved. It is high time we began taking some practical steps. This concludes my introductory remarks on drafting government programmes.

Now a few words about the development of the local tourism industry, which is a very important issue. The decision to develop a tourist cluster in the North Caucasus was taken almost two years ago. I was among those who initiated this programme. I must admit that there have been some accomplishments over that time: most importantly, the legal and regulatory framework has been renewed. Resident companies of special tourist economic zones were granted additional tax benefits and other preferences, and immigration formalities were simplified for qualified professionals coming to work in one of these special zones. But these are only preparatory measures. We have a far-reaching goal: the resorts of the North Caucasus tourist cluster should serve about 10 million guests annually. This includes building hotels and cottages for 100,000 people, over 1,000 kilometres of ski runs, more than 200 ski lifts and other transport infrastructure. Of course, this goal must not be achieved with state financing: the government will encourage relevant activity, but it is very important to attract external investors to this project.

We need to complete the legal registration of all land and property relations within the boundaries of special economic zones (this responsibility rests with the regional leaders) and to clearly define the energy and transport infrastructure requirements of the tourist cluster, which is a joint responsibility. We understand that investors, no matter how strongly they may want to do something here, will not agree to work on a vacant site; they need to clearly know that the given site will eventually have the necessary roads and gas and electricity supply systems. There are problems hindering the attraction of investment. We are aware of them, but we need to offer something to private investors who are ready to provide their funds – this is a special skill which we have been learning in the past few years and which we have applied successfully in some projects.

We should amend existing federal targeted programmes regarding these issues, as well as the programmes of our natural monopolies, such as Gazprom, FGC UES and IDGC. We will discuss this issue today, and we also need to take decisions to open financing. Lastly, we need to create a comprehensive system to ensure the security of tourist centres and people, taking into account existing risks and threats as much as possible, and also to satisfy all international requirements. This is a difficult task, but I am confident that we can fulfil it. There are no other comparable programmes in terms of volume and importance, and we must implement it. All other programmes are fragmentary. I would like Alexander Khloponin to personally monitor its implementation. In fact, this is what he has been doing. Also, we need to coordinate the activity of corresponding agencies, which are also responsible for security issues, such as the Ministry of the Interior and, Federal Security Service (FSB), and the open joint stock company Northern Caucasus Resorts. This is all I had to say on the issue of tourism.

And lastly, we plan to discuss a number of practical issues today, in particular, approval of an action plan for the commission for the second half of 2012.

Let’s get to work. I will give the floor to the Regional Development Minister. Please, Mr Govorun.

Oleg Govorun: Mr Medvedev, colleagues, the state programme Development of the North Caucasus Federal District to 2025 was drafted by the Ministry of Regional Development and on July 25 of last year it was submitted to the government in the established procedure. It was approved by 22 federal and regional executive bodies that are part of our district. In August 2011, the Finance Ministry and the Ministry of Economic Development held meetings on resolving contradictions and a month later, in September, the draft government programme with the remaining contradictions was again submitted to the State Duma.

The main feature of the government programme on the North Caucasus is territorial development. Regional priorities of comprehensive development had to be tailored to the logic of branch management. The normative base regulating the procedure for drafting and accommodating federal programmes does not consider all the peculiarities of territorial development plans. Nevertheless, participants in the government meetings came to terms on ways of amending the government programme on the North Caucasus to match the priorities of territorial development with branch management. Contradictions on the programme’s content – the details of events, implementation schedule and financial parameters – were generally settled. On November 28 of last year, these decisions were coordinated with the prime minister and brought to the knowledge of all federal executive bodies concerned.

These decisions amounted to the following two points. First, it is necessary to consider projects for the North Caucasus Federal District in branch state programmes, as well as federal budget expenses for their implementation. Second, the Ministry of Regional Development was supposed to submit to the government a draft federal programme on the North Caucasus three months after the endorsement of branch programmes. Against this background, the draft federal programme has changed. I’d like to report on the main provisions associated with these amendments.  

The main goal of the draft is to encourage investment in the economies of the district and to ensure its sustainable and balanced socio-economic development. The main goal is to attain the targets determined by the socio-economic strategy of the district up to 2025.

One of the major principles of the draft is to make the programme more specific and to use the federal funds channeled into the district’s development more effectively. The draft includes two federal targeted programmes of territorial development – South of Russia until 2013 and Socio-Economic Development of Ingushetia until 2016.

The draft also has several sub-programmes. One of these has to do with ensuring the conditions for the implementation of the government programme – it will determine the criteria for assessing the performance of the regions of the district for attaining intermediate results. Another sub-programme is aimed at enhancing the investment appeal of the district. It contains the investment programme of natural monopolies, state support for investment with regional and federal investment funds, state guarantees and other measures of government support. A sub-programme on developing tourist centres in the federal district provides measures to develop the Caucasian Mineral Waters and tourist facilities in the North Caucasus.

In addition, the federal programme includes sub-programmes on the territorial development of each of the district’s seven regions.

The programme is meant to be carried out in three stages. At the initial stage (2013-2015) it provides for the completion of the South of Russia programme and the implementation of the bulk of measures on the programme for the social and economic development of Ingushetia until 2016.

The main goal of the first stage is to enhance the investment appeal of the district, to endorse territorial programmes for the development of its regions and to adopt relevant normative acts. The chief objective of the main stage (2016-2020) is to attract considerable investment into the modernization of production and the development of new production lines, and to start active development of tourism and the agro-industrial sector. We plan to finalise work on the tourism cluster and complete all priority projects between 2021 and 2025. We identified key socio-economic development benchmarks to address by 2025 that will allow us to assess intermediate results and adjust our actions if necessary.

We can identify five key strengths of the government programme based on its focus on effective budget administration and better financial discipline. The first one has to do the vertical management of the socio-economic development of the regions located in the North Caucasus Federal District and their resource provision. In fact, the government programme will become the control centre for conducting socio-economic policies in the region. The second concerns the combined use of planning, implementation and coordination of the government policy tools. The third is about creating accounting and regulatory mechanisms and the streamlined use of financial resources. The fourth has to do with forming a long-term budget strategy in the North Caucasus Federal District, which will serve as a benchmark for developing industries outside of the three-year period financed from the budget. Finally, the fifth one is about mobilising the resources of the Russian regions themselves in the North Caucasus Federal District and reducing dependence of regional budgets on federal authorities.

The anticipated financing of the government programme to 2025 stands at 1,700 billion roubles, including 442 billion roubles from the federal budget, 53 billion roubles from regional budgets and 1,232 billion roubles from extrabudgetary sources. Financing calculations were made in the first quarter of 2012, and they will most likely be adjusted to include changes in the current budgeting process. The government programme actions will be financed from existing targeted federal programmes, as I reported earlier, such as South of Russia (2008-2013) and Socio-Economic Development of the Republic of Ingushetia (2010-2016). The total volume of federal financing of these programmes stands at 31.7 billion roubles. As many as 330 facilities will be completed under existing programmes. 

Notably, the targeted federal programme Socio-Economic Development of the Chechen Republic will be completed in 2012, and the South of Russia programme will be finished in 2013. Therefore, we have no plans for financing the district, except the Republic of Ingushetia, beginning in 2014. Given the existing socio-economic problems, the lack of federal financing of programme actions may impact growth in the region. Therefore, once the targeted federal financing is over, we suggest continuing financing in the average annual volumes that have been available in the targeted federal programmes before and during the crisis. The average figure is about 30 billion roubles annually. In addition, the government programme will include the analytical distribution of funds from the federal budget which will be sent to the North Caucasus under industry-specific programmes.

Mr Medvedev, given the task that you assigned -- to finalise the government programme draft before December 1 and submit it to the government -- I would like to ask you to instruct the relevant federal executive bodies to send information about the actions planned under industry-specific government programmes in the North Caucasus, including deadlines and federal spending, to the Ministry of Regional Development before September 1, 2012. That concludes my report.

Dmitry Medvedev: Thank you. We will discuss everything that the minister has said. Mr Kadyrov, please go ahead.

Ramzan Kadyrov: Thank you, Mr Medvedev. Thank you for including Chechnya   on the list of your domestic trips. The socio-political situation in the republic is stable, and key performance indicators are on the rise. New jobs are being created, and living standards are improving. All these results have been achieved mostly with the support of the federal centre. It is important now to secure the results and facilitate further improvements in the welfare of our people.

The Chechen Republic is located in the middle of the North Caucasus at the intersection of key transport roads. It has unique natural and climatic conditions and a rich cultural heritage. The investment appeal of its economy is growing, which makes tourism facilities planned to be built in Chechnya an integral part of the future tourism cluster in the North Caucasus Federal District.

Mr Medvedev, we have carried out a lot of work to prepare investment projects in the sphere of tourism. Tourism is an industry that can create a large number of new jobs. The implementation of the Veduchi project is very important for us, because it will help create 2,000 new jobs, attract tourists, improve the economy in mountain areas, raise our image in the eyes of investors and revitalize the tourism business.

Mr Medvedev, in this regard we have asked you to include the Chechen Republic in the tourist cluster of the North Caucasus Federal District. I am confident that you will support us. Initially, when most people were talking about this, they were doing so ironically. After your deputies Mr Khloponin and Mr Surkov saw these places they gave their legal assessment that resorts in Chechnya have a future. We started working on it, and we ask you to support us and include the Chechen Republic in the tourist cluster of the North Caucasus Federal District.

Thank you again for coming and holding such high-profile events in our republic.

Dmitry Medvedev: Thank you, Mr Kadyrov.



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