Transcript of the beginning of the meeting:

Vladimir Putin: Mr Chubais, I have several questions for you. The first concerns your achievements in 2008 and 2009. The second concerns your priority projects, which you mention so often. Let us return to this issue once again. Last but not least, what is being done to improve the corporation's legal framework? Does it correspond to current objectives?

Anatoly Chubais: Let us begin with your first question. Putting it in a nutshell, we have a basic document, the corporate strategy adopted two years ago. It sets out our basic objectives. We fell behind the schedule, somewhat, in 2008 but caught up last year and reached targets for both years.

I mean, first of all, the number of projects the company approved, and investment in practical projects. We have approved 64 projects so far. The majority of them stipulate opening a new plant, though some concern only expansion and modernisation.

The total makes 64 projects, as I have said, with total funds of 196 billion roubles, of which private co-investment accounts for a major part. That is of great importance to us. Our own investment slightly exceeds 90 billion roubles. The rest comes from investors in the nanotechnology innovation sector.

On the whole, we think we have attained a satisfactory level as far as pace, quantitative indices and the rate of innovations launched are concerned. The job no longer needs revolutionary breakthroughs.

However, the quality of projects leaves ample room for improvement. We are shifting emphasis from quantity, where we believe we have achieved our aims, to quality.

As for the principal projects, there are several areas, even I should say entire industries, that are totally new to Russia. They were non-existent just recently, and are born now under our eyes.

Solar energy industry comes first. Its world market is growing fast, at 30 to 40% a year. Even the crisis has not hit it badly. We think Russia has every chance to make a competitive appearance in this market.

A solar panel plant currently under construction in Novocheboksarsk in Chuvashia is one of the most promising projects in this field. It also has a private partner, Mr Vekselberg's company.

Vladimir Putin: There are also some assets purchased in Europe. That was a good acquisition.

Anatoly Chubais: Yes, it was.

Vladimir Putin: There is also an opportunity to pool technological and other efforts.

Anatoly Chubais: That's what we are doing. We think it is the most sensible course of action because there is a European-Swiss plant that will make comprehensive equipment supplies to Novocheboksarsk for the manufacture of solar panels.

I have visited the construction site. The plant is being designed now, and preparations are made to purchase equipment. The plant will open no later than in two years to start mass production of solar panels with a total capacity of up to 120 megawatts a year.

What matters to us is that our partner can take over the next stage of the technological cycle, which is solar power plant construction and assembly. It is a good company with considerable experience. So we have got hold of the entire processing chain from start to finish.

It needs another thing for the start. I mean polysilicon. The entire silicon energy industry rests on polysilicon, and our plant is no exception.

That is why we have launched an infrastructural project which I consider essential: polysilicon manufacture in Usolye Sibirskoye, in the Irkutsk Region.

The plant has opened already, and its output is 1,500 tonnes, which will increase toward the end of the year when another production line is launched.

The plant's production exceeds Soviet polysilicon output significantly, and it will be able to supply the entire Russian solar energy industry.

There are several other similar projects in this sphere, some of which belong to our corporation.

You have visited a plant in the Krasnoyarsk Territory which is working along the same lines. All such companies depend on polysilicon. We will not merely satisfy the demand of the Russian market entirely but also export polysilicon, judging by the quality of that company's products.

Vladimir Putin: Mr Chubais, two years ago we discussed joint research projects. I mean cooperation with our Western partners and even closer work with colleagues from former Soviet republics. Many of them have preserved personnel but lost production capabilities. They can have our support in creating a united nanotechnology research network. Is anything being done in this respect? What is your opinion?

Anatoly Chubais: We are contributing to this work. What we know about efforts made outside our corporation is that the Ministry of Education and Science has initiated the establishment of what can be termed "CIS Nanocentre", to focus on research. It is only in the making.

As for our corporation, our brief is to focus on a later stage. That is the stage at which research begins to bring results in production and business. Here, we do not have any major achievements so far, but some things have been done.

Our rather difficult talks with our Kazakh partners have resulted in a decision to start a joint nanotechnology fund, to which Russia and Kazakhstan will contribute. We have a strong partner there. It is Kazyna, Kazakhstan's largest government fund. We would like to take up Kazakh and Russian projects together to develop them into businesses.

Vladimir Putin: Now, for the regulatory framework.

Anatoly Chubais: There are many legislative gaps and there are also redundant barriers and downright bans on innovation products. These are not just theoretical problems. We come across them in our projects and so gain practical knowledge, which is invaluable, on what improvements the acting legislation demands.

The work is rather active. We have close contacts with the Economic Development, Science and Finance ministries, and we have our first results. Here are our principal achievements.

First, surprisingly, almost all innovators complain not so much of taxation as obstacles to export and import of innovation products.

Our legislation makes no difference between a million tonnes of grain and, let say, a scientist's test tube. The procedure is extremely complicated. We have prepared a project called Green Corridor for Innovation Products. Its aim is to provide a comprehensive solution, which concerns the Customs Code, the law on currency control, law on export control, and about 30 government resolutions proceeding from them. The goal is to facilitate foreign economic contacts for innovation companies. The Russian Union of Industrialists and Entrepreneurs approved the draft law after its Innovation Committee heard it. We held a meeting with the managers of our plants a few days ago-they know the obstacles from experience.

We have practical support from the Economic Development, Science and Finance ministries as we discuss the basic premises of relevant documents with. I have talked to Igor Shuvalov. What we need is that the proposals we submit are implemented urgently not only in the Russian customs space but also in the new customs union.

Another direction of our work, which is more complicated, concerns the Tax Code. We believe there is ample room for improvement. What we have now is suitable for the industrial economy, while we need legislation for the post-industrial economy. We are about to finish the job. Importantly, the Finance Ministry has shown great understanding and has been very constructive despite its usual conservatism in such matters. Now, we see each other's point of view and we are working together. I think we will be able to submit to you an all-round proposal on Tax Code amendments for innovators and their products by the end of February.

It concerns several kinds of taxes from profit to private income. The target is the same. We do not think the job should finish with that. Legislation in need of revision includes technical regulation, which is of our close concern, and corporate management. Available organisational and legal regulations do not meet the needs of the innovation economy. What we need is to introduce a new organisational and legal pattern, which we are working on: an innovation partnership.

There are many other laws, including migration legislation, that need improvement. A top professional accompanying sophisticated assembly and equipment to Russia has to go through the same formalities as any other worker. That is wrong. The law aims to set limitations, while our goal is to attract people. We think, these laws also demand correction, and we are drawing relevant proposals.

Vladimir Putin: As you know, the fifth generation aircraft made its test flight recently. Nanotechnology was used, among others, in its manufacture. Solar energy might be important and have great potential, and it can help us to acquire a good position in the world market, but we need new materials and microelectronics for our own economic needs. In this field, we have ambitious preliminary agreements with, for example, Israeli experts. What is being done to promote partnership in this field?

Anatoly Chubais: I think we are doing a good job as far as nanocomposites are concerned. Our closest partner in this field is Mr Pogosyan and his aircraft corporation [Mikhail Pogosyan is the First Deputy President of the United Aircraft-Building Corporation, and CEO of the Sukhoi and MIG companies]. He is a member of our Supervisory Council.

This is the first-ever project to manufacture prepregs for aircraft building in Russia. It is an ambitious project. The first pilot line has been launched in Klimovsk, where we had a meeting recently. We expect it to develop into a supplier of civil and military aircraft parts.

Importantly, we have been dealing with potential consumers from the very start. We are paying great attention to this field. Another major project is likely to be launched soon because, side by side with prepregs, we must start manufacturing the fibre from which prepregs are made of.

As for our partnership with Israel, it is developing. An initial project has been launched, though it does not involve nanomaterials. We also hope to develop partnership in nanotechnology. The Ministry of Industry is finishing the work on a treaty with Israel, which focuses on nanotechnology.

Our Israeli partner is the Ministry of Industry, or to be precise, its office of Chief Scientist. The Israeli president and prime minister are promoting the project, and we feel their support.

I think the document will be signed in March or April, at the latest. It will open much broader opportunities for partnership.

Vladimir Putin: Two more questions, please. The first concerns the main directions of your corporation's work. I know you have proposed to expand its range. That is possible. But still, it should stay within the limits of goals for which it has been established. Nanotechnology should remain your main field, though there are many other interesting fields in high technologies that are of crucial importance for the national economy. Nevertheless, please keep to nanotechnology.

Next comes funding. The crisis has made the Finance Ministry withdraw a part of money earmarked for the corporation in the long term. You know my position: I think this money must be reimbursed in full, and we have agreed upon it. You can be sure that the corporation's funding will be closely monitored.

What is the present situation?

Anatoly Chubais: Proceeding from your position, we have elaborated the corporation's long-term financial strategy with the Finance and Science ministries-not year by year but for six years through 2015, for which we have set national production targets to total 900 billion roubles. Our financial strategy has been planned precisely through that year. It has acquired the status of a government document-executive order, to be precise. Now, all our problems are settled.

We have a clear understanding of the content of our work this year, next year, and in two and more years down the line. The strategy also envisages, as a separate clause, loans supported by the Finance Ministry. In fact, these would be sovereign loans. We are ready to emerge in the market of such loans. The market needs the utmost transparency and full realisation of what will become of our financial flows. We are specifying our ratings, and will finish it quite soon. I am confident that the corporation has no unsettled problems as far as funds and financial strategies go. The situation has come back to normal.

Vladimir Putin: Good.