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Prime Minister Vladimir Putin chairs a meeting of the Government Presidium

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In his opening remarks, Prime Minister Putin noted that documents establishing a single customs space containing Russia, Belarus and Kazakhstan had been successfully finalised, and thanked all those who took an active part in this "very difficult" work. In addition, when discussing the formation of an organising committee to plan and hold Russian-Ukrainian interregional economic forums, the prime minister noted that relations between the two countries were making progress.

Finally, Prime Minister Putin also touched on issues of providing support from the federal budget for the constituent entities of the Russian Federation, the future of the coal industry and progress in this year's harvest, particularly in light of the drought in some regions.

Transcript of the beginning of the meeting:

Vladimir Putin: Let's start by exchanging the latest information. Mr Kudrin (Alexei Kudrin, Deputy Prime Minister and Finance Minister), please tell us about support from the federal budget for the constituent entities of the Russian Federation in the first half of the year.

Alexei Kudrin: Mr Putin, ladies and gentlemen of the government, we are currently analysing the results of federal budget spending during the first half of the year. A final statement is not yet ready, but we already have an idea of the amount of federal support that went to the regions in the first half of the year.

By July 1, we had distributed 234.3 billion roubles from the federal budget in support of the regions, or 59% of the target figure, which means we have distributed more than half of the planned funds to the regions. Funding was allocated in accordance with the rules for helping regions balance their budgets, which means that funds were given primarily to regions that receive significant support to ensure that they honour their social obligations and can quickly provide funding to government institutions in education, healthcare, housing, road construction and maintenance etc.

Moreover, we provided additional support through our antirecessionary measures to those regions that were hit hardest by falling revenues of major production facilities in communities centred around a single industry, as well as by other changes in antirecessionary spending. We have allocated 32 billion roubles from a special fund to help the regions balance their budgets, which accounts for 53% of this fund to help regions balance their budgets and carry out antirecessionary measures, including support single-industry communities that I just mentioned. 

Other support measures for the regions include providing cheap credit, which will help regions partially cover their budget deficits through borrowing. Sixty-one regions have borrowed 66.5 billion roubles through these three-year, preferential loans with interest rates slightly above 2%.

We also have a special 50-billion rouble fund to provide credit for road construction and maintenance. We coordinated the distribution of these funds in conjunction with the Ministry of Transport, the regional governments and deputies in the State Duma from all Russian regions.

Of these 50 billion roubles, we have given out 34.4 billion roubles to 57 regions at slightly more than 2% annual interest, with a maturity of five years.

Some regions have not yet received all of the loans to which they are entitled. Therefore, an agreement to provide 7.9 billion roubles in such loans to 12 regions is being formalised by the Ministry of Finance.

Moscow City has filed an application, but is now making amendments to this application because of violations of the rules for granting such loans.

More importantly, 14 regions have not even filed loan requests. Although such loans are seldom sufficient to meet the needs of all the regions, and there are some regions that ask for additional support for road construction, 14 regions have not even filed loan requests within the approved limit of 7.7 billion roubles per region.

I have a list of these regions here. In my opinion, if they do not apply for these five-year, favourable loans at 2% annual interest by the end of July, these funds should be redistributed in favour of the regions that care about the state of their roads. There will be no other such loans. Thank you.

Vladimir Putin: I'd also like to see the list of those regions where everything is in order.

Alexei Kudrin: Of course.

Vladimir Putin: Mr Sechin (Deputy Prime Minister Igor Sechin), you recently chaired a meeting to discuss the future of the coal industry. Please, what issues did you discuss, and how did the meeting go?

Igor Sechin: Mr Prime Minister, ladies and gentlemen. The meeting was held late last week in Neryungri, in accordance with your instructions and the decisions you took in Novokuznetsk on June 24.

Neryungri was chosen as the location of the meeting because the Elginskoye coalmine is finally ready to begin operation. It should start commercial production in November. The deposit contains reserves of 2.1 billion metric tons of coking, power-generating coals, and its development will make up for the shortage of this type of coal due to decreased production capacity at the Raspadskaya coal mine.

We formulated the following proposals at the meeting. 

The Government Commission on the Fuel and Energy Complex will establish an interagency task force for the development of coal industry. Federal executive agencies were instructed to prepare a comprehensive programme, which will then be approved at a meeting of the commission, for licensing coal deposits in order to develop new deposits, strike a balance between internal consumption and exports and oversee supply logistics. They will also discuss the construction of a new generation of thermal power stations based on so-called clean coal technologies, which will improve energy technology.

In order to increase the export of coal products while meeting the demands of the Russian coal market, the Russian Ministry of Transport and other involved federal executive agencies were instructed to study the possibility of building coal export terminals in the Far East, the north-west and the Black Sea Coast.

In order to increase coal production safety - which you discussed on the 24th in Novokuznetsk - we asked for proposals to develop a comprehensive system of technical regulations for the coal industry, which would entail standards for coal transport equipment, mining equipment and a versatile system for monitoring the locations of coal miners. The technology for this exists, and has already been put in place in one mine, Mr Putin. This will enable us to refine the technology and be able to know the location of everyone working in the mine within a range of two metres.

Due to the need to increase the cost effectiveness of coal use, we have requested an analysis of the possibility of increasing the number products that utilise coal, which would involve advances in coal technology, coal enrichment, liquid fuels made from coal, as well as an analysis of a number of other issues, including regulatory reform.

Vladimir Putin: Good. Was the lower limit of average salaries increased from between 28,000 and 30,000 roubles to 40,000 at the Raspadskaya mine, as we agreed?

Igor Sechin: Yes, it was, Mr Putin.

Vladimir Putin: Have you checked in on this?

Igor Sechin: Yes, I did.

Vladimir Putin: Good, thank you.

We face a complicated situation with agriculture in many regions, territories, and other constituent entities of the Russian Federation due to drought. How is this situation being dealt with, and what is the overall situation as far as the harvest is concerned.

Yelena Skrynnik: As far as the overall situation with the harvest, Mr Putin, the harvest in the Southern and North Caucasian Federal Districts is in line with last year: 1.1 million hectares and some four million tonnes of grain have been harvested. This is mainly in the Stavropol Territory, which produced two million tonnes of grain, and the Krasnodar Territory, which produced less: 1.3 million tonnes of grain.

The situation with fodder crops is also not bad: we have already harvested two million tonnes of fodder. No problems here. However, regions in the Privolzhsky, Urals and Central Federal Districts are affected by drought, and 12 regions have already declared a state of emergency. We are carrying out a comprehensive analysis of the situation in each area, as requested by Mr Zubkov, and will have set up measures for you by the eighth, Mr Putin, so you can take a decision. A final decision.

I would like to say a couple of words about grain stores. Consumption is 77 million tonnes, with reserves at 24 million tonnes, 20% more than last year. Therefore, even with decreased grain production we will be able to meet all our needs and produce grain for export. In other words, there is no cause for alarm here.

Vladimir Putin: Approximately how much grain will we be able to export, in your opinion?

Yelena Skrynnik: I believe it will be about 20 million tonnes, because when we initially made the forecast for this year, we talked about 90 million tonnes, taking the drought into account. But the drought is more severe than expected, and so even minus five million tonnes, that's 85 million tonnes. That means there will be enough for exports.

Vladimir Putin: Fine. So by the 8^th of July, please make a thorough analysis and pass on that information to me. And as we have agreed, Mr Zubkov, once the preliminary work is done, we'll need to meet up in my office with representatives of farms and leaders of regions that are affected by the drought.

Yelena Skrynnik: Okay.

Vladimir Putin: Today, as you know, good news is coming from Astana on finalising agreements related to the full-fledged functioning of a common customs area between three states, Russia, Belarus and Kazakhstan. I would like to thank you for your pro-active involvement in that work, to thank all those who have contributed to the preparation of these documents and to the tricky job of bringing key parameters in line with one  another. Once again, it's about Belarus, Russia and Kazakhstan.

Today we'll consider the issue of setting up an organising committee that would be responsible for preparing and conducting Russian-Ukrainian interregional economic forums. The relationship between our two countries is on the rise now.

First, the negative implications of the global economic downturn are going away little by little, and bilateral trade increased by 86% from January to April 2010, to reach the $10 billion mark.

Second, we have reached a very high level of interstate contacts with the new president of Ukraine and with its government. We are removing the artificial barriers that previously hindered constructive cooperation, and in just a few months we have reached a high level of intergovernmental relations with the new president and government, and put together a substantial portfolio of joint projects, primarily in industries where Russian-Ukrainian cooperation brings our two countries tangible competitive advantages, in particular in aerospace, shipbuilding, energy and transport.

It should be made clear that we do have a competitive edge there, but at the same time, there are quite a few problems that yet remain to be solved.

Our companies share a lot already. They operated as part of one production chain over decades. And those links should be restored, including through the formation of integrated structures. Today we are considering the possibility of setting up a joint venture on the basis of the Russian United Aircraft Corporation and the Ukrainian company Antonov, with the goal being to promote the sales of An-type aircraft on foreign markets.

We would also like to use the capacities of Ukrainian machinery manufacturers to deliver on contracts for the construction of a nuclear power plant.  We could cooperate in nuclear engineering in the territory of our two countries and beyond.

In shipbuilding, Russia would be interested in using Ukrainian shipyards not just for repairs, but for joint manufacturing as well. Of course, we intend to cooperate not only in traditional sectors, but also to look for new areas where innovative projects could be implemented.

For instance, work is now underway to create a common temporal zone for navigation, using Russia's navigation space system GLONASS as the basis. An intergovernment agreement on cooperation in this area was signed on May 17, 2010.

I am certain that by bringing together our scientific and technological capabilities, we will enable our two countries to take up a position they deserve on the global hi-tech market. At the interstate, governmental level, we deal primarily with major initiatives, of course. But it seems equally important for us to make sure that the general climate is favourable for the development of economic cooperation, to develop the infrastructure of these relations in the best interest of thousands of small and medium-sized businesses, and to support initiatives of private entrepreneurs and regions of our two countries. It is they that form the living fabric of mutual trade, tying our economies together with thousands of strings.   

Thus, for instance, cooperation between border regions of Russia and Ukraine accounts for as much as 20% of overall bilateral trade. We expect therefore that Russian-Ukrainian interregional economic forums will provide a platform for discussing new cooperation ideas, establishing direct contacts, building up mutual trust, and creating new links and new projects. Such forums should become an ongoing event, and I am sure they will help us bring our relations to a new, higher quality level.

Another issue we'll consider today has to do with ways to improve the system of protecting our historical and cultural heritage.

Here are some key problems whose resolution is crucial to the conservation of monuments for generations to come, as well as to creating conditions for sensible use of the heritage for the benefit of people today, for the advancement of culture, the arts, and education, and for the activity of religious organisations. Specifically, we need to draw an inventory of historical monuments and to delineate territories where the status of a historically and culturally valuable zone is applicable.

Each cultural site should get an ID card spelling out why this particular monument is a listed one and setting clear-cut limits on its use.

The Federal Service for the Oversight of Legislation in the Protection of Cultural Heritage should keep all related issues under control. Today, we are going to specify its powers.

So let's get down to work.