Transcript of the beginning of the meeting:

Vladimir Putin: Mr Ilyumzhinov, despite the well-known problems caused by the economic and financial crisis, in 2009 your republic showed positive trends in housing construction, production and GRP growth. There was also noticeable improvement in the labour market, which is equally important. These problems have been very acute in recent years, and there are still a lot of issues to address. However, 2009 saw positive changes and trends in this area. There are still a lot of problems, which is why I suggest analysing the areas I mentioned more thoroughly and discussing the challenges of 2010.

Kirsan Ilyumzhinov: Thank you. Mr Putin, allow me to report on the last year's numbers. It was a remarkable year for the peoples of the Kalmyk Republic. We marked the 400th anniversary of the Kalmyk people's voluntary incorporation into the Russian state.

The decree on organising anniversary celebrations was signed in 2006. And of course, dedicated, hard work and resolving the issues that stood before the Kalmyk Republic's leadership are good gifts for the republic and its people.

I would like to report that the people of the Kalmyk Republic worked hard in 2009, which has born concrete results. We fulfilled almost all your directives, as well as the directives of the government and the president.

Since the previous year was very challenging due to the downturn, our main task was ensuring that people receive their salaries. In early 2009 unpaid wages amounted to some 50 million roubles, but, thanks to the coordinated efforts of government agencies, local authorities and the regional government...

Yesterday the Federal Service for State Statistics published its latest findings, and unpaid wages have fallen to zero in Kalmykia. We made all the necessary payments, and there will be no unpaid wages in the future.

Vladimir Putin: Are you referring to both salaries that come out of the government budget and jobs in the wider economy?

Kirsan Ilyumzhinov: Yes, both government-paid salaries and jobs in the wider economy, and at all state-owned and privately owned enterprises.

We faced the most serious problems when dealing with the private employers, who refused to pay. The federal and regional government did our best to support them. We fulfilled your directive to the letter.

Second, we could not allow Kalmykia's economic growth to slow. In 2009 GDP and the economy grew by almost 2%, and we did not allow this rate to decrease. Production also increased by some 2% in 2009. In spite of the recession, we did not cut investment. The investors who signed agreements with us in 2007 and 2008 continued working. Investment in fixed asset increased by 15%.

This is sustained and not just temporary growth. In 2008 and 2009, tax revenues rose by 15.5%. We did not allow them to decrease, hence the 7% increase in net cash revenues in 2009.

Vladimir Putin: How big was the increase?

Kirsan Ilyumzhinov: If monthly revenues stood at 10,000-12,000 roubles, they increased by 2,000-3,000 roubles.

This is primarily explained by the fact that the population of Kalmykia is mostly rural.

The number of small businesses soared by almost 30% thanks to the national priority programme in agriculture. The number of rural households and private farms reached 4,000. The Russian Agricultural Bank issued more loans for rural households in Kalmykia than in any other Russian region.

Since Kalmykia is an agricultural republic, and since our agricultural industry, including our livestock industry, has been receiving concrete support, the past ten years saw a stable growth in livestock population. Over the past ten years the number of sheep increased from 470,000 to some 4 million. To be exact, 3.8 million.

Vladimir Putin: It has increased tenfold?

Kirsan Ilyumzhinov: Correct. And we have almost 400,000 head of cattle. According to official data, 76% of Russia's beef cattle are in Kalmykia.

And so now the Republic of Kalmykia can be referred to as Russia's beef belt.

Our main goal is to ensure that Russians consume quality, fresh meat from Kalmykia, rather than frozen beef shipped from far-off Argentina or Brazil, or mutton from Australia.

We are working on this objective as a follow-up to your directive on the formation of the Russian beef belt, which was part of the national priority programme. Most importantly, we are developing a new upmarket cattle breed. Fifty one percent of Russia's up-market cattle stock is in Kalmykia.

I would like to emphasise that Kalmykia has seen sustained, natural growth in its population over the past five years. Last year growth was 3.5%, and so we have had natural growth of about 3-4% annually for the past four years.

Vladimir Putin: Let's discuss problems now. What challenges can you see for 2010?

Kirsan Ilyumzhinov: First of all, we need to sustain this stable development. We must not lose the investment we have received. The main objective for Kalmykia this year is the construction of electric power stations.

What has prevented Kalmykia's industry and economy from developing in the past? The thing is, Kalmykia purchased all necessary electric power from neighbouring regions. The price of electricity for industrial and agricultural producers was 2-3 times higher than in neighbouring economically developed regions, such as the Stavropol Territory, the Volgograd Region and the Rostov Region.

We decided to construct our electric power stations as a follow-up to the directive you gave in 2005. One hundred percent of the investment we have attracted comes from private companies. We have already built the first gas-turbine electric power station, which has a capacity of 20MW. I would like to invite you to the inauguration ceremony, which will be held in a month. This station will allow us to meet the demands of half the city.

Kalmykia was the first Russian region to participate in the pilot project to produce green renewable energy. In a month we will commission two wind turbines, and we plan to commission 18 more by the end of this year. We will thus produce 50MW.

We haven't invested almost anything in it. All funds are provided by Swiss, German and Danish investors.

We have set an ambitious goal of constructing 3,000 wind turbines to produce 9GW. We have the necessary potential. The German company Lahmeyer International studied Kalmykia's wind energy potential and concluded that Kalmykia is the next Kuwait. In these terms, Kalmykia is a leader among the other regions of the European part of Russia and in Europe in general. We have joined the Green Energy programme and started the construction of wind farms.

This will allow us to reduce the fixed cost of industrial products, providing our agricultural producers with cheap energy.

The second challenge is water shortages. Seventy percent of Kalmykia's communities import water. It is shipped by railway, with a barrel costing 500 roubles. The programme you approved in 2006 envisions the construction of the Iki-Burul water pipeline to deliver water from the Stavropol Region. It will meet the needs of some 55 communities in Kalmykia and about ten communities in the Stavropol Region. This is an investment in social services. No village or town can exist without water.

Vladimir Putin: How is this work going?

Kirsan Ilyumzhinov: That's what I want to report on. I'd like to show you pertinent materials and photos. Two main facilities have been constructed in the Levokumskoye area in the Stavropol Region, including an electric power substation and water intake facilities, with the first 17 kilometres of the water pipeline laid already. We hope this year water will start flowing in Kalmykia through this pipeline.

Vladimir Putin: Good. Let's look at it in more detail.