The KBP Instrument Design Bureau is one of the leading companies in the Russian defence industry. Mr Putin began his visit by examining the production units for the Pantsir. The unique Pantsir is able to simultaneously hit four targets with missiles or anti-aircraft guns.

The Prime Minister also examined small firearms, ranging from sniper rifles to hunting guns.

He was especially interested in the PP-2000 submachine gun and the Stechkin silent revolver, which has proven its worth in counter-terrorist operations.

Mr Putin spoke with the company's personnel.

Vladimir Putin: Good afternoon.

Voices: Good afternoon.

Vladimir Putin: You are doing a fine job.

Voice: We are glad to see you.

Vladimir Putin: We have been to Novomoskovsk and spoken with colleagues there, and here we are now.

Question: How do you like Tula and the area around it?

Vladimir Putin: It's wonderful, and the weather has been warm. The Governor had good news for us-he not only showed us excellent machinery that you have manufactured, but also told us about an excellent harvest. The Tula Region has seen the largest grain yield of the last 70 years. That's a good sign.

Voice: Mr Putin, may I welcome you to Tula. We seldom have such high officials here.

Vladimir Putin: I see. How do you like your job?

Voice: It's good when we have good contracts.

Vladimir Putin: There are many export contracts now, but it is up to the Defence Ministry to set priorities and distribute contracts.

Voice: May I ask you for advice? We will elect our regional diet in a month. Seven parties are running.

Vladimir Putin: Seven is a lucky number.

Voice: I know you are the leader of the United Russia Party. Who should those of us who are not affiliated vote for? What do you think?

Vladimir Putin: Though I have never been a United Russia member, I was directly involved in its establishment.

Life is complicated throughout the entire world right now, and Russia is also going through a difficult time. We have lost too much from our past. At one time, even our priorities were vague. And in these circumstances, it is essential that the country's political powers not be focused on the business environment of the present day, but shoulder the responsibility for difficult but necessary decisions.

The worst thing to do in the present situation would be to get flustered and promise the sky. Russia went through such a time in the early 1990s, when everything was promised and almost nothing was done. The bitterest disappointment comes when great expectations and hopes that you had are thwarted. .

Worse still, this sort of situation brings destruction afterwards. When one tries to fulfil bloated promises, it leads to wasted resources and destruction, however hard one might try to be true to his word. Take your company. It can manufacture not just 10, 15 or 20 units, but 300-500. But what then? Where would send them? We must work out everything in advance, and only then will there be success.

The United Russia Party has steadily and unswervingly helped me over these last years to create the conditions for the country's growth. As to your vote, it is up to you to decide. It is your own choice.

Voice: I see. Thank you, Mr Putin. I have another question to ask. The defence industry had problems with government contracts at the beginning of the year, perhaps because of the crisis. What can you as the Prime Minister say on this issue? Is the worst behind us yet or not?

Vladimir Putin: The irregularities in defence contracts are not connected with the crisis. The crisis has brought problems galore, unfortunately, but irregular funding has been a problem in the defence industry for years. Despite the crisis, we essentially have not cut government financing for the defence industry. We essentially have not cut it.

The irregularities are due to other problems. They are due to significant red tape, especially in the first months of each year. We are doing what we can to reduce the red tape. We have done even more this year than before, precisely because during the crisis I have tried to make the Defence Ministry and other agencies work more dynamically.

Sixty percent of all government contracts have been already paid for by now. Overall, this number is somewhat higher than usual. All government contracts will be fully paid for before the end of the year. That's certain. We will do what we can in the years to come to improve our bureaucratic system so that it will not impede the normal rhythm of industrial work.

Voice: Thank you.

Vladimir Putin: On the subject of defence contracts: the drafts for the 2010, 2011 and 2012 budgets will certainly not be bad for the defence industry.

Voice: Mr Putin, you are always travelling around Russia and abroad. I wonder if there is a place on earth you've never been to. We see you travelling whenever we switch on the television. Do you have any free weekends at all? And if you do, how do you spend them?

Vladimir Putin: What about you?

Voice: We always have Saturdays and Sundays free.

Vladimir Putin: And how do you spend them?

Voice: Well, I go to my country house.

Vladimir Putin: And I manage to go fishing from time to time. As for yesterday, it was paperwork for me. I signed four huge folders of papers.

Voice: Some weekend!

Vladimir Putin: It was satisfying to finish such huge job. But I always try to find time for exercise, and for my children.

Voice: What was the biggest fish you ever caught?

Voice: His arms aren't long enough...

Vladimir Putin: I can stretch my arms to show it. It was that big, believe it or not! Really big! I didn't catch it with a fishing rod, but shot it with my harpoon gun. It was a wild carp in the Volga estuary. That is a beautiful place. Everyone should see it. Besides, it is not an expensive trip, and diving gear is affordable, too-flippers, mask, spear and all. It was beautiful, believe me!

Voice: Mr Putin, what are your first impressions of what you've seen here?

Vladimir Putin: My first impressions are from several years ago - this is not my first time here. I keep coming here because this is one of the leading industrial companies, the pride of the Russian military industry. You have fine traditions, and produce modern and diverse machinery and weapons that are in high demand. You have fine personnel. Families stay with the company generation after generation. This in true throughout Tula, but your company is even better. It is the backbone of our defence industry.

Voice: Another question, if you don't mind, Mr Putin. As we all know, a decision has been made to raise pensions beginning in January 2010. Might the economic situation in the country hinder these plans?

Vladimir Putin: This is not an irrelevant question! It is hard to resolve such matters during a crisis, of course. In fact, no country would assume such a large social responsibility during a crisis. That is understandable. Your colleague has said it would be good to have more contracts. But then, defence contracts are simply government financing. The state alone can guarantee them-private sponsors and investors would not be able to.

There are some other sectors that require government funding, for example engineering and transportation. Who orders railway cars? The Russian Railways Company. And where do they get their money? Either through fares or from the government. Deliveries have decreased with the crisis, so the company needs government subsidies. This all is part of state expenditures, just as pensions are. No one can provide them but the state.

But as I said in my State of the Nation address in 2006, Russian social pensions will be no less than the average subsistence wage for the country by the end of 2009. I said this three years ago, so I think it is my duty now to fulfil my promise despite the crisis.

And so at the end of the year, in December, we will raise the basic portion of pensions by 31%. As you know, a pension consists of a basic portion and an insurance portion. An increase of 31% in basic allows us to solve this problem. And so by the end of the year, the social pension will be no lower average subsistence wage for the country, though the subsistence level varies from region to region.

There is another injustice that has persisted for years-work from Soviet times is not taken into account when calculating pensions. That is why in January, we will begin what is called valorisation. This is a fancy word, and it means that we will recalculate pensions for people who worked in the Soviet Union's times. These people will receive a 10% increase, as well as an additional 1% for every year of employment in the times of the Soviet Union. This will increase the total amount of pensions by 46%.

I would like to point out that Russia has never seen such a large increase in pensions. Never.

Voice: Will the increase affect military officers? Pensions are small...

Vladimir Putin: As regards all types of pensioners, beginning in 2010, not a single pensioner in the Russian Federation will receive less than the subsistence wage in his region. Why? Let me explain.

The average pension for the nation is sometime below the regional average in some parts of Russia. Increases will be financed from the federal budget in regions where pensions are below the national subsistence level, and from the regional budget in regions where average pensions are above that level. That is how we will make everything equal.

Voice: Do military pensions have federal status or not?

Vladimir Putin: Federal, of course.

Voice: We have some doubts here ...

Vladimir Putin: The disparities between regions will be levelled out. Let me repeat: no one will get less than the subsistence sum.

Voice: But that's what you said then about the increase in military pensions. But the latest increase was 200 roubles a month.

Vladimir Putin: This money was added due to an increase in the compensation for those serving on active duty, because military pensions are calculated based on such compensation.

I wish you every success.