Transcript of the start of the meeting:

Vladimir Putin: Good afternoon. As far as the criminal gangs and terrorists are concerned, we are well aware of the situation and I am sure that, despite all the difficulties, your law enforcement agencies will succeed in accomplishing this work.

I suggest we deal with the social and economic situation in the republic, its development in the context of the crisis-hit world and Russian economy, and with problems that have been aggravated and are not as painful as in other regions of the Russian Federation.

Mukhu Aliyev: Thank you. Four months ago when I visited you, I reported on the social and economic developments in the republic. Briefly speaking, in 2008 we met all the targets that had been set at the beginning of the year.

Quite decent production growth rates have enabled us to commission all the facilities I reported about to you: these are 17 new schools and 53 medical establishments, including the Republican cardiology center boasting state-of-the-art equipment.

Vladimir Putin: In Makhachkala?

Mukhu Aliyev: Yes, in Makhachkala. Among other accomplished projects are 11 district hospitals and over 40 rural health posts; we have built 908,000 square meters of housing, which is 58,000 square meters more than planned early in the year and the highest figure in recent years.

Vladimir Putin: Is it private hosing construction?

Mukhu Aliyev: Over 70% is private housing construction and two-to-three story dwellings. Our population is used to this kind of home building and state support is always available. There is a major consolidated budget increase. Real per-capital income has also gone up, amounting to 11, 400 rubles per capita. These are good earnings for our republic.

Grants-in-aid for our budget have shrunk nine percent over the past three years. This period is also marked by no budget-linked wage or welfare arrears. As of January 1st of last year, the overdue wages in the republic amounted to 18 million, while as of January 1st of this year, the figure is merely 4.5 million.

Vladimir Putin: Are you saying that these arrears pertain to the overall economic performance?

Mukhu Aliyev: Yes. Of this 4.5 million, more than half is the responsibility of two enterprises we are dealing with now. You know that our region, with its steady demographic growth, is rich in manpower.

As the population growth amounts to 25,000-30,000 people a year (over 50,000 babies were born last year) we have failed to create an adequate number of jobs for decades. Still, prior to the crisis, in 2006, a republican program to improve employment in 2006-2010 was endorsed. In pursuit of this program, we are seeking to register every jobless person, both by vocational and territorial standards, and create jobs. Thus far, our gains have been 4,700 more permanent jobs in 2007 and 9,400 last year. A steady tendency in the last two years has been diminishing unemployment, both general and registered.

Vladimir Putin: But it is still rather extensive, isn't it?

Mukhu Aliyev: Yes. In comparison with other Russian regions, it remains high: 13.6% general unemployment and 3.7% unemployment among the economically-engaged population.

This year's indices, despite all the difficulties you've spoken about, are not bad at all. In the past two months, the production growth in commodities and services in the basic areas of economic activity is 10%; as for industrial production, it is 11% and agriculture, 4.6%. We have built 16,000 square meters of housing, which is twice the figure of the corresponding two months last year. Perhaps this pace is notably lower than last year and there might be another decrease by the end of the year, especially in the industry, transport and trade, but on the whole, we hope to attain positive dynamics by the end of the year.

As for the labor market, we have adopted a new program for 2009 that takes extensive unemployment into account and provides for the creation of 3,800 jobs, which will consume 22% from our budget and 78 percent from the federal one. The implementation of this program and the one approved in 2006 are to result, we hope, in making 8,000-9,000 jobs available.

In accordance with our experts' forecast, the present-day unemployment growth of 3.7-3.8%, both in terms of general and registered unemployment, will not increase. With happy prospects of increased jobs in small business, I think we will be able to keep it within these limits. Last year about 5,000 jobs emerged in the republic. There are capacities for the repairs of dilapidated housing and relocation of its residents-allowances for this amount to 2 billion rubles.

Vladimir Putin: How many families do you plan to relocate?

Mukhu Aliyev: Last year saw 305 houses refurbished and 124 families relocated, but there is still plenty of housing that is dangerous to use and many obstacles to relocating people from such areas. It is not easy to persuade people to sign such applications and agree to be relocated. They do not even want to leave dilapidated houses because some are used to living in the central part of the town, others admire their kitchen garden, and others are happy with their orchards. Repairs are easier than coaxing people into better housing. Here much is yet to be done.

Vladimir Putin: People must be offered attractive alternative facilities.

Mukhu Aliyev: Yes, naturally, we have to do this. On the whole there are about 800,000 meters of hazardous housing in the republic. We may fail to meet the target in the next two years, but we will continue to work and will be able to relocate more people, not fewer, this year.