Transcript of the beginning of the meeting:
Vladimir Putin: Good afternoon, distinguished colleagues. We are gathered in Pyatigorsk, part of the newly created North Caucasus Federal District.
It is specifically from here that our main coordinating efforts to develop the North Caucasus should be carried out. Everything connected with the North Caucasus is of special interest to the Russian people, and for good reason. Russia paid a high price to counter the aggression of international terrorism and end the criminal regime of those who had seized power in the Chechen Republic, who sowed the seeds of hate, who tormented people and made the slave trade profitable; and, finally, those who attacked neighbouring regions and republics.
It became obvious to everyone that attempts were being made to create a staging area for attacks on neighbouring regions, an instrument for the "shakedown" of all of Russia, an instrument to threaten our territorial integrity. Accordingly, I would like to emphasise once more - we will never allow any intervention in our internal affairs.
These gangsters were dealt with harshly. All of us did this, but first and foremost were the residents of the Chechen Republic themselves, who did not want to have anything to do with those who imposed foreign values on them. The residents of other North Caucasus republics did this, the militia man, including militiamen from Dagestan and soldiers of the Russian Army.
We will always remember those who gave their lives for the unity of the country and for peace in the North Caucasus. We will remember the civilians, the women and children who were the victims of criminals who committed terrorist acts in Budyonnovsk, Pervomaisk, on Dubrovka and in Beslan.
In those hard times, the residents of the North Caucasus republics took up arms, and what's more they took them up themselves without any prompting from the federal government. They did not give in to the criminals, fought for their homeland, for their homes, for the future of their children, for Russia.
We were victorious together then and we brought back peace. Now we need to take the next steps and as it turns out, these are no less difficult. Sometimes these problems are only overcome with great difficulty and expense. I'm talking about corruption.
By the way, this is not specific to the North Caucasus. As you know, we're talking about this problem in terms of the entire country.
We also need to overcome substandard living conditions, poverty, unemployment and a devil-may-care attitude among the authorities - everything that hinders a peaceful existence today in the North Caucasus.
The government must prove that it is capable of guaranteeing security, justice and the rule of law. It must provide stability, strengthen interregional accord and interfaith relations. We need to achieve a decisive watershed in the economic and social development of the North Caucasus.
It is obvious that we need to improve the efficiency and effectiveness of government policy in the region by a considerable amount. This is the rationale behind the decision to create the new North Caucasus Federal District, and the appointment of a new leader, Alexander Khloponin, who will perform the duties of both the presidential envoy and deputy prime minister. You all know him already.
But today we will talk about the operational side of things, and we'll discuss how we should organise this work.
Mr Khloponin will have to work on a resolution for all the political, economic and social problems in the North Caucasus and coordinate the operations of the federal agencies and local authorities in order to implement these plans.
Our goal is to strengthen those positive processes that, regardless of all of the problems, nevertheless have their place and have been in progress for more than a year in the North Caucasus thanks primarily to our efforts.
Three federal programmes are currently being implemented - these are the South of Russia, Development of the Chechen Republic and Development of Ingushetia.
Scores of public facilities have been built and renovated within the context of these programmes - schools, hospitals, athletic facilities and kindergartens. Water supplies have been improved for many communities.
The Gazprom programme has also made considerable progress. The level of gasification in Chechnya, North Ossetia-Alania and Ingushetia is at more than 90%, which is to say that a normal infrastructure system will gradually facilitate the regions' potential to make steady economic progress which in turn will enable the entire area to develop more consistently.
I must note that when such an approach is implemented, the results are visible. Accordingly, thousands of new jobs have been created in the Chechen Republic - in construction and related industries. And the amount of new housing is up 65% on last year. Grozny has been practically rebuilt from scratch. This is the result of our common effort, but above all, of course, this is the result of the actions of the republic's leadership.
Another example - the Prielbrusye tourist complex in Kabardino-Balkaria is being developed rapidly. There are other positive examples and other areas of our operations where we are achieving positive results.
Nevertheless, as before, one of the most painful and acute problems in the North Caucasus is unemployment. In the very same Ingushetia, more than 50% of the employable population does not have work. In Chechnya, this figure is 30% and in Kabardino-Balkaria it is 20%.
Along with the other problems, we have also been faced with high unemployment in the region in which we are now located. A high level of unemployment of course discredits the authorities, gives rise to social tension and creates fertile ground for extremist sentiments.
Therefore at present, as never before, it is important to launch job-creation mechanisms and create conditions for launching new projects, stimulating small and mid-sized businesses, local industry, agriculture, construction and infrastructure in the broadest sense of the term.
It is essential, finally, to learn to fully use the competitive advantages of the North Caucasus and its one-of-a-kind environmental assets. To do this, we have to improve the investment climate in the region by putting in order the regulatory agencies, the power structure in general and the social and budgetary authorities.
It is obvious that there will have to be improvement in federal government policy as well, including the tight monitoring of government funds. We're talking about considerable amounts of money here. Federal transfers to the North Caucasus region last year amounted to 177 billion roubles.
Accordingly, I think that Mr Khloponin and the federal agencies and the leaders of the regions included in the North Caucasus Federal District need to focus their attention on the following problems:
First. Create a systematic strategy for the development of the federal district as a whole. Based on this strategy, prepare specific action plans for each constituent entity in the newly-formed federal district. How, what, in what timeframe and what resources will help solve what problems.
At the same time, Mr Khloponin and our other colleagues must coordinate and monitor the fulfilment of these plans. I hope Mr Khloponin will assemble a small but efficient office that will perform these functions.
Second. We need special solutions for improving the investment climate. We only recently talked about this for the entire country and it is no less important for the North Caucasus.
We need to work through the issue of establishing special economic zones in the federal district with regional industrial parks in every one of the constituent entities of the North Caucasus.
And at that, I emphasise that the industrial parks, special zones and other instruments must be built on the basis of understandable and transparent procedures to eliminate the possibility of abuse and the repetition of past mistakes.
It is vital that such zones and industrial parks be furnished with the essential infrastructure. Here we need to establish procedures that are as simple as possible to provide land plots for companies. We need to resolve issues of energy supply and connection to communal services in a timely manner.
Distinguished colleagues, I turn to you with an insistent request to give this your personal attention. Because if you merely delegate it to the municipal level and do not keep track of it, everything will continue as before - people will be forced to knock on doors, ask and plead and offer bribes. Believe me, our common success will depend very much on how you organize your work.
I ask that the Ministry of Economic Development and the Ministry of Industry and Trade submit proposals on the development of the industrial potential of the region.
Third. Major federal agencies and so-called infrastructure or natural monopolies must formulate special investment programmes for the development of the infrastructure of the North Caucasus and its constituent entities.
This primarily means the Transport Ministry, Energy Ministry, Gazprom, Russian Railways and the Federal Grid Company. And, of course, in the field of agriculture, the Agriculture Ministry must develop a programme.
The development of small and mid-sized business is particularly important. All the more so since the potential for this is great. People in the North Caucasus know and love having their own businesses. They do this well.
I am directing the Ministry of Economic Development to create a concept for supporting business in the region.
This is also relevant to our largest banks, banks with government capital. Vnesheconombank, Vneshtorgbank and Sberbank must prepare a programme for the development of lending to small businesses in the North Caucasus.
I ask the Finance Ministry and its colleagues to work through these issues. It is clear that we are not about to boss anyone around and issue directives. But we can encourage people to work more actively in the region.
Fourth. We need to seriously improve people's quality of life. And therefore, we need to develop and implement plans for the prosperity of cities and other communities in the North Caucasus.
To begin with, we need to require the renovation of municipal housing, repairs, road building and transport improvement.
Fifth. As I said, we need to clean up the process of government and that of the authorities. We need to start with the local branches of federal agencies. They are sometimes off on their own and tend to distance themselves from regional issues. They are often breeding grounds for corruption, incompetence and administrative barriers and they become part of clan and business rivalries thereby undermining the credibility of state authority.
Local government agencies must become real instruments for regional development and they are called upon to be bastions of law and order. All agencies take note - after the newly appointed presidential envoy and deputy prime minister takes office, staff decisions will be made immediately concerning the directors and employees of federal agency branch offices that have committed violations in their work or are unwilling or unable to organise their work in an appropriate manner.
In addition, I ask the representatives of the regional authorities, representatives of local authorities and law enforcement agencies to do everything to provide for the normal operations and activity of human rights organizations that are acting within the framework of current Russian legislation and are actually helping people.
Distinguished colleagues, the main criterion for common efforts in the North Caucasus must be qualitative change in the social well-being and sentiment of the people who live here. The citizenry must be able to feel that they are needed and can find work, can open their own businesses, can provide for their families, make changes for the better with their own hands and honest labour and contribute to the development of their regions. They need to feel that they and their families have a future for which to live and work.
I sincerely wish Mr Khloponin every success and ask all the regional leaders in the North Caucasus to assist him in organising this work.
Thank you. Please, Mr Basargin, you have the floor.
Viktor Basargin: Mr Putin, distinguished colleagues,
We have already identified the main problems, so I want to talk a bit about the socio-economic problems that exist in the North Caucasus today, and provide some statistics.
None of the gross regional product per capita figures in the constituent entities in this new federal district reach even half of the national average. The figure for the entire region is three times less than the national average. The reason for this state of affairs, as we have mentioned, is a weak industrial base and underdeveloped infrastructure including incomplete transport and energy systems.
It is true that behind these figures are unconsidered issues associated with not accounting for the economic activity of personal household farms that are traditional to the North Caucasus republics. This entails jobs that are unaccounted for and the capability to improve the economic situation.
There is relatively rapid socio-economic development - the main year-end figures are generally relatively high for the republics of the North Caucasus. In other words, according to preliminary data, the total industrial output here is 102%, in contrast to the national average of 88%.
The volume of construction work here, given a 17% drop nationwide, is over 100%, according to 2009's results. The volume of residential construction in practically all of the republics was at 2008 levels - the most successful year in terms of volume.
On the whole, we allocate almost 180 billion roubles for three federal programmes. Of this amount 14% is spent on infrastructure, 7% on tourism, almost 39% on social projects and programmes, 12% on industry and agro-industry, 24% on housing and public utilities and 4% for other expenditures.
In other words Mr Putin, our distribution of funds is not emphasizing the very issues that are associated with the development of infrastructure and the economy in the republics, since we are focusing on social programmes. Accordingly, the implementation of the South of Russia programme, which includes all of our North Caucasus republics, would increasing the gross regional product 170% over the 2006 level and would reduce unemployment by 4.6%. But this does not amount to a sea of change in the development of these republics.
Another one of the more pressing issues is being addressed with the federal targeted programme - housing. In 2009 alone, we spent more than 2 billion roubles on construction, providing housing for more than two million families, including World War II veterans.
As the result of these programmes and financial measures, the consolidated budgets of the constituent entities of the North Caucasus federal district grew a total of 6% in 2009 from increased direct inter-budget transfers. Meanwhile, the revenue of the consolidated budgets of all the constituent entities in the Russian Federation decreased 5%, unfortunately.
At the same time, tax and non-tax revenue, which make up only 28% of all revenue, decreased 5% in 2009, compared to 14% growth nationwide. And inter-budget transfers on our part increased 10% and reached 177 billion roubles. Spending from the consolidated budget of the constituent entities of the new federal district increased 16% in 2009 and reached 272 billion roubles, given a general 6% decrease in the Russian Federation.
In addition, you know that we recently reviewed spending efficiency. We have noted that the efficiency of government spending remains questionable. I will not take a long time to enumerate the data, but I will say that generally, the efficiency in many areas in the republics of the North Caucasus is 14.4%. In other words, inefficiently spent funds are at 16.6%, given an average figure of 13% nationwide. The level of inefficiently spent funds here is, of course, higher. This means that there is a need to pay more attention to monitoring the efficiency of the operations of regional authorities. We have developed such processes for a number of republics.
Today, some of our republics have experience with a systematic monitoring information system - Krasnoyarsk, St. Petersburg and Tatarstan. We suggest that for timely monitoring of the general situation, we could also implement such a system here.
As for the economy, a systematic approach today of course requires development of strategies for socio-economic development of the North Caucasus federal district. We are ready to become actively involved in this work. We have experience with this from the Far East district. We are also concluding our work on the Siberian district.
Regarding the distribution of funds for federal targeted programmes, we understand that today, the main emphasis in developing a programme must be placed on investment projects and projects associated with the conventional sectors of employment in the North Caucasus. This includes small refineries. This would include reducing pressure on the labour market and promoting regional trademarks and brands especially those associated with this region.
One form of support, Mr Putin, is operating an investment fund. We note that we have carried out such work with the republics. We have selected and reviewed 18 projects. It is true that the total amount of investment needed for the selected projects is 270 billion roubles.
We have seen today, that for every rouble distributed from the federal budget, around 13 roubles in private investment are guaranteed. We selected six projects, and these projects could bring around 12,000 new jobs to the region.
We have already started funding one of the projects - in Dagestan, at the company Anzhi-Steklo. This entails around one billion roubles from the investment fund and we create around 1,000 jobs. We think it would make sense to consider the possibility of allocating additional money to the investment fund for projects in the North Caucasus. Our preliminary estimate is that this amount should be around 20 billion roubles, at least five billion for priority projects - around five billion, with a quota arrangement specifically for projects that will be created this region.
We believe that the possibilities for cross-border cooperation are underused in the region. We have many agreements today that we have signed with our neighbours. This year, Dagestan will be active in this area, but we feel that there is potential in the other republics in this respect.
Apart from socio-economic problems, we have also noted that there is an issue with interethnic strife in the North Caucasus. We need to continue to work on forming a general Russian unity. We are implementing this kind of a programme in the Russian Federation. We hold that this programme is needed here most to eliminate the differences between the Caucasus and the rest of Russia, and also between the ethnic groups of the Caucasus.
There are many unresolved interregional problems. The systematic programme for socio-economic development for the population centres of the Prigorodny district of the republic of North Ossetia-Alania has still not been adopted due to budgetary constraints. We have developed the programme for 2010-2012.
We should pay special attention to the problems of inter-settlement territories in the Kabardino-Balkaria republic and the return of Chechen-Akins to the Novolaksky district of the republic of Dagestan.
One of the biggest problems in the North Caucasus, in our view, is the mass exodus of the Russian-speaking population and most of those of active working age, which inhibits the capacity for modernisation and leads to imbalances in the system of higher education and management. And these migration trends have been observed in a number of municipal districts of Stavropol territory. To minimise the problem, we have developed measures to avert the outflow and return the Russian community to the republics of the North Caucasus and adjacent territories. I am of the opinion that the percentage of those leaving the North Caucasus republics will become an indicator of the effectiveness of the efforts of the executive authorities - if we want the regional authorities to do something about changing this situation today.
The most important problem, as you noted, is the problem of corruption and legal nihilism. We see the solution for this problem in the organisation of a selection process for personnel working in state and municipal administrations. A parallel task is the formation of a new generation of community leaders here, including in the ethnic and cultural sphere. In order to do this, we plan to establish an educational project based at one of the branch campuses of the universities in the federal district. This project would include courses on state and local administration, as well as non-governmental work in the public sector. One of these projects will be the North Caucasus youth camp. We already have experience with this, as we call it, the "Caucasian Seliger."
The aforementioned problems create a culture ripe to accept the negative influence from abroad. Out of this stems the need to establish order in the operations of foreign non-governmental and other organisations in the region.
There is one more serious risk in the North Caucasus, Mr Putin, and you noted it. ??This is the opinion that he who can prove a right to the support of the power structures will drive the economic project.?? We need to increase the monitoring of attempts to engage the Interior Ministry and the Federal Security Service in resolving business issues under the guise of fighting extremism.
Resolving all of these problems, in our view, would promote the advancement of socio-economic life in this region.
Vladimir Putin: Regarding the institution of higher learning, I talked to the science and education minister this morning. We agreed that we will establish a new national university based on the Stavropol Higher School. We have now begun consultations with the heads of the leading universities in Stavropol and we will formulate a development programme in the near future.
I propose structuring our work in the following way: colleagues and the heads of regions will brief us on their constituent entities, followed by the ministers. And after that, we will summarize our meeting today.