Mr Putin's opening remarks: 

Ladies and gentlemen, colleagues,

We are gathered here today for a regular meeting of the Commission for Regional Development.

Experience shows that this commission is a good coordination tool between federal and regional government bodies.

I suggest that we spend this time analyzing the latest data on social and economic conditions in Russia's constituent regions. I would also like you to focus on the regional governments' priorities in implementing the Government Anti-crisis Programme.

The economic situation remains tight despite a number of positive signs. This is evident at the regional, municipal and corporate levels.

According to the latest statistics, May  did not see any tangible changes in industrial dynamics. Production has stabilised at around 83%-85% of last year's level.

The auto industry is still down. However, most industries are gradually adapting to the new economic environment, specifically the chemicals, metals, food producers and some other sectors.

The number of individuals officially registered as unemployed has started down, standing at 2.19 million as of June 10, or 100,000 people below last April. This is a tangible change, although possibly due to seasonal fluctuations in the labour market. Still, it is due in part to our targeted anti-crisis measures, including regional employment programmes, which have helped about 500,000 people at this point.

At the same time, let me highlight that these programmes are not working equally successfully in all regions. Where officials show sincere concern and commitment and work hard, especially governors, the programmes produce good results. Where officials are rather passive, there is no result.

Today we are beginning a revision of our employment programmes. We are ready to increase financing and willing to study initiatives and proposals from the regions.

In turn, we expect regional governors to participate effectively, and more, to directly manage these employment programmes. I have asked you on several occasions to personally head regional programme headquarters and employment advocacy groups. This should be handled personally, not delegated to deputies.

Maximum attention should be given to single-industry towns, as the situation there is extremely tense. We have decided at the federal level to set up a special working group on single-industry towns. The government will also work out an action plan for the social and economic stabilisation of these towns. The Regional Development Ministry will coordinate the group's work. I am asking the governors to work in close contact with Minister Viktor Basargin.

It is also necessary to permanently monitor the situation with the payment of salaries. Unfortunately, following April's 9.5% drop, wages in arrears grew again slightly in May. These fluctuations might seem negligible compared with the overall payroll funds, but these problems hit specific companies and people still.

Regional governments should not evade the management problems of specific companies. As I have said, these are not just abstract economic entities. They are specific companies employing specific people. They should provide assistance to the management, owners of struggling companies, promote civilized settlement of corporate conflict and help in obtaining loans, contacts and customers for their products. Sometimes they also need help in solving other problems that are often "on the surface."

Although these problems are often beyond the competence of regional governors, it would be good practice to help amid the economic downturn. There are issues that are well beyond our competence as well, but we agree to handle them and will continue doing so.

If certain issues cannot be resolved at the regional level, if regional authorities do not have the tools, let me repeat that, you are more than welcome to appeal to the federal authorities, to federal ministries for cooperation.

They will provide assistance because it is their responsibility. They have received relevant instructions on various occasions, and I am repeating it again now.

Next, I would like to focus specifically on regional and local finances. It is extremely important to balance local budgets. According to the Regional Development Ministry's estimates, in January-April 2009 the aggregate revenue of consolidated regional budgets was 5% less than a year ago. In 11 regions, the revenue drop was deeper than 15%.

We at the federal level are now beginning work on the country's budget for next year. We are currently discussing these matters in the Government. What I can say now is that support for the regions has always been and will remain one of our budget policy priorities.

However, for our part, we expect the regional governors to demonstrate a responsible and realistic approach in planning their respective budgets. I would like you to complete, in the near future, the adjustment of your regional budgets for this year, 2009, if you haven't done it already. This is a painful process, but it has to be done. Neglecting it will be fraught with defaults and unfulfilled obligations.

Social commitments must top your priorities, such as promotion of employment, raising salaries in the public sector, as well as full payment for the energy used by government agencies, conclude construction projects that are already nearing completion, support of small and medium business, and housing programmes.

Efforts should be made to ensure effective budget expenses. Let me call the attention of my colleagues from those regions that receive substantial financial assistance from the Federal Government. We have allocated large subsidies and we require that you are careful about spending the money. Use it well.

The key tools to improve spending efficiency are the general modernisation of companies, social services and agencies financed by the government; changing business practices at such companies and developing so-called "autonomous" companies that receive government financing for specific projects but enjoy more freedom in financial issues. Other tools are competition based placement of orders and contracts for social services, and higher energy efficiency at state and municipal services and agencies.

It is highly unacceptable to be tempted to boost regional finances by cutting the revenues of municipal budgets. I think you realize that this kind of tug of war will be of no practical use.

Another thing I'd like to discuss with the governors is the action plan for the implementation of the Government Anti-crisis Programme. The Government is working closely with the regions. Economic Development Minister Elvira Nabiullina will report on this issue.

I have signed the final version of this plan today. It was very thoroughly discussed at both the federal and regional levels, in parliament, by public associations and experts. It is finally signed now.

This plan is in fact a sequence of practical steps we will be making together in the second half of 2009. I expect to hear your comments and proposals today.

Now I am giving the floor to Minister Viktor Basargin.

Prime Minister Vladimir Putin's speech at the meeting:

I will take five to seven minutes at the most. Otherwise, there will not be enough time for comments. I would like to make some remarks on what Mr Karlin (Altai Territory Governor) said here.

First, I would like to make a point which concerns everyone. Mr Karlin mentioned the effective work of the Housing and Utilities Fund. Indeed, this year we have transferred much more funds to the regions for this purpose. Last year, we sent them 54 billion roubles, and this year we have already allocated 86 billion roubles. Yesterday, we decided to add another 10 billion roubles. Thus, this year the regions will have received 104.5 billion. Allow me to repeat that last year's 54 billion roubles does not compare with this year's 104.5 billion roubles. I would like you to remember this fact and to work with the fund more actively. Please, submit applications to this effect.

Now I would like to make one more general remark - about dairy farming. Mr Karlin said that we do not have dairy farming as a separate branch. What we do not have is beef stock farming, but we do have dairy farming. Beef stock farming is merely a continuation of dairy stock farming. Obviously, this does not meet today's requirements. We must move forward in this respect and develop beef stock farming as such. We must also continue to support dairy farming.

As for relations with our CIS partners, including Belarus, we do provide substantial budgetary support to them. Some people criticise us for giving money to Belarus. In 2007, we sent them $1.5 billion, and one more billion in the end of last year. In the beginning of this year, we gave them another half billion dollars, and Gazprom added yet another $650 million. Hence, this year Belarus received from Russia more than one billion dollars - at least $1.15 billion.

Yes, this is subsidizing. In addition, we sent them oil for processing. Our colleagues are processing relatively cheap Russian oil, and exporting petroleum products to the West for hard currency. Considering the chemical products produced from our relatively cheap gas (Belarus pays less for gas than any other CIS country), these currency revenues are substantial.

This support and other measures allow Belarus to subsidize agriculture. Milk production is subsidized at 24%. In Russia, the relevant figure is 3%. But we have agreed with Belarus to pursue a common agricultural policy. We understand each other.

We should carry out our agreement. The quotas on our domestic market should be also observed. Regrettably, our Belarusian partners exceeded them by 40%, thereby creating difficulties for our milk producing and processing companies. The latter were not affected too much because they received inexpensive milk powder from Belarus, but milk producers found it hard to compete in such conditions.

All these talks and processes are difficult. Our partners reacted in an over sensitive and emotional way. But the economy is the economy, and we must balance our relations in these market conditions. Despite the emotions, the Ministry of Agriculture managed to come to terms with its Belarusian partners, and they agreed not to supply any milk powder in the second and third quarters. They will supply us with more cheese, and cottage cheese; and I hope that we will gradually straighten everything out.

If we form a common customs space, we will take one more step towards harmonizing our relations. I proceed from the premise that we will achieve this.

Now, Mr Karlin, I would like to respond to your comment about layoffs related to new technology. To be honest, you surprise me. Humanity has been faced with this problem since the bourgeois, technical revolutions.
At one time, British workers smashed machines blamed for eliminating jobs. But this was the period of uncontrolled markets and now conditions are quite different. It goes without saying that the authorities should monitor developments in the economy at both the regional and even the municipal levels. They should know how many people are laid off, and how to provide them with jobs.

Incidentally, our ability to accomplish objectives in this respect is more clearly revealed by the crisis. For instance, we drafted a programme on temporary employment, but provided jobs for three times fewer people than we had planned. I am sure that there are objective reasons as well.

I would like to emphasize that on the whole, social and economic conditions in the Altai Territory are quite satisfactory, and I would like all of you to carry out the anti-crisis plans yourselves, I mean personally.