ARCHIVE OF THE OFFICIAL SITE OF THE 2008-2012 PRIME MINISTER OF THE RUSSIAN FEDERATION VLADIMIR PUTIN

Vladimir Putin's opening remarks:

Good morning. What a bright sunny day you have today. It's pleasant to work in such weather.

I will not start with regional problems, although this is what has brought us all here. I would like to once again congratulate everyone, especially sports lovers, on the event that happened just recently, our being awarded the 2018 World Cup.

Unfortunately, we are not planning to hold any of its matches in the Far Eastern regions. It has less to do with the lack of infrastructure – we would have coped with that – than with the FIFA requirement that competitions should be held on a more or less compact territory. When we were putting together our bid, I was afraid that if we showed them the entire territory of the Russian Federation they would be terrified at how much moving about would be needed, across so many time zones. Even the athletes would have found it hard to get acclimated here and play. But for the country at large, including the Far East, the holding of these events will of course have a positive effect, including economically.

You should be familiar with the experts' economic forecasts. Some industries have already reacted to the news, in particular the metallurgical industry, because a lot of construction materials, including steel, will be used. And there are such industries in the Far East. It will surely make a difference to Far Eastern industry and benefit it.

And in general it will help promote sports and a healthy way of life. It should prompt the building of new sports facilities, not only football pitches (we are planning to build 500 of them across the country, new, modern ones, with modern artificial turf where you can play all year round) but it will stimulate the building of other facilities. All this will undoubtedly be useful.

Now let us turn to the topic of our meeting. This is the fourth regional United Russia conference. This year we discussed problems in Siberia, the North Caucasus and the Volga area. Here in Khabarovsk we will, of course, discuss the Far East.

In effect, we are forming the regional component of the strategy of Russia's development until 2020, a long-term national development plan. Let me stress that in our work we proceed from the proposals made by the regions, businesses, non-governmental organisations and, of course, United Russia Party organisations. We would like to see the broadest possible discussion of regional strategies so that our plans will be clear to everyone and be supported by all citizens.

United Russia must have effective feedback tools, engaging as many people as possible in a city or region or municipality. One should not forget that the party is assuming responsibility for the fulfillment of the announced plans, for achieving solid results. So, there should be constant monitoring of the regional strategies, with due attention to interim results.

There should be no hollow initiatives or populist proposals. Those who come forward with a new project and count on our support must be ready to work seriously themselves. That requirement applies to the regional authorities and to the business community.

We are in an environment of political competition and naturally face criticism on the part of our opponents; well-grounded and well-argued criticism is undoubtedly useful and helps to avoid errors.

But to win in competition we must be able to prove by concrete deeds that we are right, and we must help to solve people's real problems.

United Russia has everything to implement its plans. We command the majority in the representative power bodies at all levels and, most importantly, we have popular support, and we are aware of it here in the Far East. That is understandable: you only have to look at the results of the recent elections. But we are not working simply for the sake of elections. If we think of nothing else but winning elections, in the long run, the result will be negative. We should think about the end result, about real people.

I would like to stress that the Far East will always receive our close attention because of its location, its geopolitical role and, above all, the interests of the people in the Far East.

The Far Eastern Federal District has less population than other Russian federal districts and, thus, sends few deputies to the Duma, while issues to be resolved there are quite numerous.

I think that the most authoritative and prominent Duma members from United Russia must take additional responsibility and, along with the areas they represent, engage in the development of the Far East as a whole and provide real assistance to the Far Eastern regions. I think that if our MPs work more with the regions, it will only benefit the whole party.

Colleagues, you must have faced various problems and surely heard doubts concerning Far East’s potential. I have always regarded this attitude as negative and harmful.

Beginning in 2000, federal support for the Far Eastern regions grew almost seven times. The total volume of federal funds exceeds 150 billion roubles annually.

Tens of billions of roubles are also being invested in the construction of state facilities in the Far East. To this we must add large-scale investments made by state and private companies, meaning that the Far East now has large resources for development. The list of implemented projects alone speaks for itself.

The Bureiskaya hydroelectric power station has been launched and now provides almost 5% of Russia’s hydroelectric energy. I would like to emphasise that the energy problems in the Amur Region and nearby regions have been resolved for decades to come. We have studied the related projects and will now talk about solutions. We have a problem with the supply of electricity to the local grid system, but energy production is growing fast.

Russia is, in fact, becoming one of the Pacific Rim’s energy leaders. The first section of the Eastern Siberia–Pacific Ocean oil pipeline has been put in operation, and a new oil and gas production centre has been established in Sakhalin.

Thanks to this project, in 2011 the Sakhalin Region will cease to be dependent on federal budget support and will acquire a stable economic base. I am sure that other Far Eastern regions can take a similar path to success. And, finally, the Chita-Khabarovsk motorway, two thousand kilometres long, was recently completed.

As you can see, these are separate issues, separate large projects that we talked about a few years ago. I remember how all of this was discussed then. The overwhelming majority doubted this could be done at all. Of course, this is not all we would like to do. Many things are still to be done, but these are real steps towards the improvement of the Far East.

We are gradually integrating the Far East into our country’s common economic space, removing obstacles that impede the region’s normal development and laying a stable base for future growth.

What is the main objective and what priorities will we focus on in our work?

First of all, we must create a transport infrastructure that will be comfortable and affordable for the public and efficient for business and operation.

In 2009, we launched a programme of subsidies for air flights to the European part of the country. Incidentally, I remember how that idea originated. We were holding an event organised by United Russia near Moscow, where delegates from the country’s Far East raised the issue of flight problems. It was a targeted decision taken outside our systemic approach.

We must yet determine how they calculate the price of air fare and jet fuel and taxes to see why problems arise in internal flights and why we create preferable conditions for rivals making foreign flights. I have issued relevant instructions to the ministries of transport and finance, which are to report back to me.

However, the idea of subsidised flights for some categories of people living in the Far East was generated by United Russia delegates from that region after one of their meetings in Moscow. I am pleased that the measure has proven effective.

It was introduced in 2009, when tickets for young people and pensioners were cut by 50%. They can now fly from Khabarovsk to Moscow for 7,000-8,000 roubles and not 15,000-20,000 roubles as before. Half a million people have used this benefit in the past two years.

People often ask if this programme will be extended. I can assure you that it will. Moreover, we plan to expand it; allocations for 2011 have been approved at 2.5 billion roubles.

However, I would like to repeat that we should find a systemic solution to this problem by cutting the cost of return tickets to the European part of the country. We must keep working on a solution. Why do the tickets cost so much now? It is cheaper to fly to New York than from Moscow to Vladivostok.

At the same time, we should support local airports and airlines, and make tickets more affordable for residents of outlying towns and villages, especially those located on the Arctic shores, in Yakutia or the Kurils. We have approved federal allocations for these purposes, also worth 2.5 billion roubles.

It is clear that we must upgrade the local airports, and I am not referring only to Vladivostok, where we must build a super-modern international class terminal.

I’m sorry to report that, according to analysts, this project will not be paid back soon, because the number of passengers and the volume of cargo are so far small. The economic parameters of this project are not very effective in terms of investment, but we will do it with a view to future growth. I am confident that we will boost development by doing this.

The list of 2011 priorities includes the airports of Petropavlovsk-Kamchatsky, Magadan, Anadyr and Yakutsk, as well as the airports on the Kuril islands of Iturup and Kunashir.

Overall, we will invest over 25 billion roubles in airport modernisation next year; a third of this sum will be channelled into the Far East.

I have already mentioned the Chita-Khabarovsk highway. It has been built, but laying asphalt is not enough. We must turn the Amur Highway into a modern route by upgrading those parts of the highway that were built in the 1980s and, logically, no longer meet today’s requirements. We plan to modernise over 500 kilometres of that highway by 2013.

We will work jointly with federal entities to create effective security and emergency medical assistance systems for the highway. By the end of 2011, the Communications Ministry and mobile operators are to provide mobile communication systems for the Chita-Khabarovsk highway. I have just signed the instruction, which implies the allocation of federal funds in addition to the overall funding earmarked for providing the necessary equipment for the Chita-Khabarovsk highway.

Mr Ivanov (Sergei Ivanov, Deputy Prime Minister of Russia), how much do you propose allocating?

Sergei Ivanov: We plan to allocate 2 billion roubles for a communication system, which includes building the towers and connecting them to electricity networks.

Vladimir Putin: So, we will allocate 2 billion roubles for communications only. But we must also help the authorities in regions and cities to connect nearby cities and villages to the Amur Highway, so that the people who live and work near the highway will be able to use it.

Car maintenance centres, hotels, cafes and restaurants are being built near the highway. Some businesses working on these projects lack requisite documents or permits. I want regional authorities to focus on this problem, to help business overcome barriers and to prevent any new obstacles. Instead of ferreting out small violations, they should help startup businesses get on their feet and formalise the documents, including land allotments and connections to infrastructure networks. Please consider this as my instruction to our allies and supporters in the local governments.

I’d like to thank once again everyone who helped build the Chita-Khabarovsk highway and to say again that professional road construction companies will have a lot to do because we are planning many projects for the Far East.

Our party has initiated a project to repair urban roads and develop city yards. In 2010-2011, we plan to spend as much as 50 billion roubles for this purpose. These funds will be provided to all regional centres including large cities in the Far East such as Yakutsk, Petropavlovsk-Kamchatsky, Vladivostok, Khabarovsk, Blagoveshchensk, Magadan, Yuzhno-Sakhalinsk, Birobidzhan and Anadyr. Getting money is always pleasant, but we must also discuss how the local authorities will spend it.

We have decided to set up a federal road fund, and I am going to speak about it now. In the next three years, we will accumulate about 1 trillion roubles in the fund, which is very much for Russia. A considerable part of this money will be provided to the Far Eastern region. We will move on from individual large projects to a comprehensive regional road-building programme. In particular, we will continue to modernise the Lena Highway in Yakutia and the Ussuri Highway from Khabarovsk to Vladivostok. We will build a highway from Yakutsk to Magadan.

Moreover, plans for the modernisation of the Vilyui highway, that will link Yakutia and the Irkutsk Region, are currently being designed. This road will make it possible to expedite the development of Eastern Siberian oil and gas deposits and will also provide direct access to Verkhnaya Chona, Talakan and Chaynda.

Far Eastern seaports are virtually receiving a new lease of life. In the past three years, their annual transshipment capacity has surged by 67%, that is, from 96 million tonnes to 152 million tonnes. This is a very good indicator! I have visited all these world class facilities with state-of-the-art equipment, and I was really proud to see them. This is great! New ports, including Kozmino in the Primorye Territory and De Castri in the Khabarovsk Territory, as well as a liquefied natural gas terminal at Sakhalin Island, have been built.

Private business investment is also playing a part in developing port infrastructure, in building coal, grain and container terminals at virtually every key port, including Vanino, Nakhodka and Sovetskaya Gavan. However, the pace of construction could be higher, if the expansion of the port infrastructure was not hindered by rail limitations. Consequently, the Trans-Siberian Railway will have to be modernised and the Baikal-Amur Mainline’s capacity increased in the next few years. Just recently, they told me that the completed Baikal-Amur Mainline (BAM) was not in high demand. But now its potential has become inadequate, and it happened in the past three or four years. Freight volume has increased to such an extent that BAM can no longer handle the potential traffic. This is an important indicator of economic development. As far as BAM is concerned, construction of the new Kuznetsovsky tunnel is a key project here. This will make it possible to remove restrictions in freight traffic in the direction of Vanino and Sovetskaya Gavan. A total of 59.5 billion roubles will be invested in the Kuznetsovsky tunnel construction project.

It took this country almost 40 years to build BAM. At that time, the project won fame for the tremendous effort that went into it and its cost. The project also received investment just recently. Based on what I just said, this was absolutely correct.

Construction of new roads can drastically change the entire region. For instance, a railway built from Tynda to the right bank of the Lena River could drive the complex development of South Yakutia where promising uranium, iron-ore and coal deposits will be exploited. Construction of additional railways and a bridge over the Amur River will make it possible to establish a modern ore-mining/iron and steel centre in the Amur and Jewish Autonomous Regions.

I would like to add that, starting with 2011, we have decided to charge zero severance tax rates on the mining of tin deposits in remote areas of Russia’s Far East. Hopefully, this will make it possible to create about 2,500 jobs in Yakutia and the Khabarovsk Territory.

Moreover, we should learn to exploit the Far Eastern region’s tremendous transit potential. The quality of logistics services needs to be improved drastically in order to facilitate freight transshipments via Russia. This is a task for the transport business and the governments of Far Eastern regions.

The Government will continue to simplify customs clearance, border control and other formalities. And I am confident that we will be able to establish a competitive Europe-Asia transport corridor with cooperative efforts. Russia’s Far Eastern regions will profit most of all from this project. To be honest, this is a chance to create another powerful and successful sector of the regional economy.

All in all, Russia’s Far East has plenty of interesting business ideas. However, costs in this region are high for objective reasons. We need investment in infrastructure, area development as well as in the purchase, acquisition and creation of new technology.

Naturally we involve banks with government participation in the development of the region’s economy. The consolidated loan portfolio of Vnesheconombank, VTB and Sberbank for Far Eastern projects already exceeds 270 billion roubles. At the same time, it’s clear that special tools are needed to attract additional investment.

What am I referring to? A Direct Investment Foundation will be set up under the auspices of Vnesheconombank. It will not only be responsible for the implementation of investment projects but will also provide information support for Russia’s Far East and promote it as a promising area for investment.

Vnesheconombank’s reputation will undoubtedly add credibility in attracting major Russian and foreign financial institutions, banks and investment firms to the foundation. Even at this point, the foundation’s investment projects could reach, according to our estimates, between 80 and 90 billion roubles.

Ladies and gentlemen, the word “exploration” has been used in relation to Russia’s Far East for several decades. And this is absolutely justified. The region’s area and the scope of objectives are truly vast. There are lots of things that we have to start from scratch, even now.

We will certainly continue “exploring” the Far East. The question is what our guidelines will be.

Clearly, we have to draw lessons from past mistakes and there have been quite a number of them.

We cannot commission new state-of-the-art production facilities without, for example, providing comfortable housing for people. We must not develop the region’s industries and produce raw materials at the expense of the environment.

New facilities must harmonise with the region’s economic and social life and create new opportunities rather than difficulties for people.

Let’s speak about, for example, the fuel and energy sector. Many towns in Russia’s Far East still burn expensive diesel fuel or coal using, unfortunately, dirty 50-year old technology. The Eastern gas programme is now gaining full momentum. It can be compared to the major industrial projects in the history of this country such as the development of oil in the Volga and Tyumen regions as well as of natural gas on Yamal.

In 2006 Russia’s eastern regions yielded only 8 billion cubic metres of natural gas. So, in 2006 the figure stood at 8 billion, in 2009 – already at 22 billion and by 2020 it will reach between 70 and 100 billion cubic metres. And I am 100% sure this will be done.

Naturally, the development of the region’s gas transport system will significantly diversify the country’s export routes and strengthen Russia’s position in the Asia Pacific market. But I would like to stress that the priority market for East Siberian and Far Eastern natural gas remains the domestic market. This natural gas should become a resource base for new high tech gas and petrochemical complexes.

In 2010 the transition to natural gas has begun in Kamchatka’s largest cities – Petropavlovsk and Yelizovo. Vladivostok and major cities of the Primorye Territory will follow in 2011. The energy industry on Sakhalin will be overhauled. The continental shelf is already yielding billions of cubic metres of natural gas but the island itself has not been using this to its advantage. Early next year, Yuzhno-Sakhalinsk will start burning natural gas instead of coal which will bring a dramatic drop in polluting emissions.

We will also be addressing the issues of other Far Eastern areas, including Yakutia, the Khabarovsk Territory, the Amur Region and the Jewish Autonomous Region. Natural gas will be supplied to households everywhere it is technically possible and economically feasible.

In this respect, I would like to point out a few issues.

First, the price of energy resources should not undermine the region’s competitiveness and create an additional burden for local budgets, residents or businesses. This also relates to natural gas. For objective reasons, the prices are still high in Russia’s Far East – higher than in other regions of the country. This is why we have decided to subsidise natural gas via the Sakhalin-Khabarovsk-Vladivostok pipeline from the federal budget which will help decrease the price for the end user.

For this purpose we have set aside 1.9 billion roubles from the federal budget in 2011, 11.2 billion roubles in 2012 and 11.5 billion roubles in 2013.

These funds are meant to compensate for the difference in the rather expensive Sakhalin II purchase price and the lower prices Gazprom sets for its consumers.

Second, refitting the region’s energy production facilities for natural gas should not put an end to the coal industry. There are projects envisaging reasonable use of the region’s prospective mines and strip mines and they need to be supported.

Naturally, attention should be given to the housing and public utilities infrastructure. This is a major issue. I believe we all understand this, but this work has to be done. I would like to point out to those in charge that we should never have freezing villages or cities here. The infrastructure that we are creating will have a significant safety margin and guarantee that all crucial systems operate reliably.

I have been speaking about the development of the natural gas sector. When inspecting the projects at the exhibition I pointed out to some officials that we should not be switching everything to natural gas. The energy system needs to be balanced and should use different primary sources of energy. If not, we will create a certain risk by relying on only one source of energy and getting an entire region hooked on it. Both prices and primary sources of energy must be balanced. Some facilities can continue using fuel oil, some places coal and for some state-of-the-art technologies are needed. There are so many up-to-date technologies for coal, including liquefying and gasification that can use coal efficiently, from the environmental point of view, too. This is a completely different situation. And we need to do this.

Ladies and gentlemen,

Forests and fish are the traditional riches of the Far East, which account for 25% of Russia’s timber and over two-thirds of its biological water resources. Unfortunately, these industries have been symbols of mismanagement, a grey zone where people with unclear priorities ruled and where criminal groups, smuggling and poaching prospered.

It took much effort but our joint work has allowed us to “overcome this problem,” as it is written in my report. But have we overcome it? Yes, I think we have. The industry leaders say we have, and I hope we have indeed. At the very least, we have formulated the rules that encourage normal, civilised business, and now we must work to strengthen this approach. Yes, there is a positive trend and we must strengthen it.

There are certain complaints about the Forest Code, and we are working to amend it, introducing stricter forest protection and fire safety standards. But the Code’s main precept is absolutely correct: these forests must have an efficient and prudent master interested in working there for a long time and investing in the deep processing of timber.

I’d like to remind you that the length of a forest lease has been extended to 49 years. I know that the timber companies have proposed taking one more step by extending lease terms to 100 years or longer. I understand their logic as forests take a long time to grow and stable conditions are critical for this business.

But it was not by chance that we approved leasing over forest ownership when approving the Forest Code. Leasing for 100 years and longer almost amounts to ownership, so we had to choose between ownership and a 49-year lease. The Code also says that forests are leased “with a priority right to extend” the lease contract. If the lease holders act wisely in the interests of the national economy and the people, rather than only in their own interests, they will enjoy the priority right to extend the lease. I am not suggesting that this will necessarily happen; I’m just mulling the question out loud. Let’s consider the issue together again.

Initially, I thought a 49-year lease with an extension option would be enough. But if you don’t agree, let’s consider the question again. This is a very important question; it must not be addressed by a narrow circle but considered publicly.

Twelve large timber mills are being built in the Far East with an annual capacity of 6.5 million cubic metres. They will create 4,000 jobs; three of them have already been opened. This is not bad at all, for starters.

I think that in seven or eight years we will be able to process nearly all timber logged in the Far East and to export not round timber but finished product, in addition to satisfying domestic market needs.

The situation with the fishing industry has also come up frequently: the catch quotas have been approved for 10 years, so companies can now make long-term plans and renew their fishing fleets. The government has approved a three-hour deadline for registering ships in ports and provided the possibility of multiple water border crossings.

The work to rule out bureaucratic barriers is far from over. I’d like to emphasise that everything we recently discussed with fishing companies in Petropavlovsk-Kamchatsky, all their problems must be resolved. I am referring to cancelling customs duties for fish caught in our economic zone and the so-called coastal storm protection for reloading the catch, so that fishermen will not risk their lives on the high seas but complete all their work safely.

Moreover, we will continue to subsidise interest rates on loans issued for building and modernising fishing vessels and fish processing facilities. We have earmarked 275 million roubles for these purposes.

I am confident that the Russian fishing industry will regain a leading position on the domestic market and our fishing people will have stable jobs and good wages.

There is one more area that could help boost the competitiveness of the Far East. It is its unique nature with Kamchatka's Valley of Geysers and volcanoes, the Lena Pillars [on the River Lena] and other natural phenomenon famous in this country. But today they are virtually inaccessible. We must say frankly that the region lacks comfortable transportation routes, hotels and the rudimentary conveniences; in fact, there is no tourism business there, although ecotourism is a highly important educational and moral factor. It helps enhance people’s respect for nature and encourages a feeling of pride in one’s country. Many countries are aware of this, and millions of people there visit natural parks and preserves annually.

This is why I am asking the United Russia party in the State Duma to accelerate the adoption of amendments to the law On Protected Natural Areas, which would create the legal framework for boosting leisure and tourism activities in national parks. If we do it right and ensure proper control, this will not damage the environment but, on the contrary, attract additional funds for investment in science, environmental protection, and the protection of animals that are the heritage of the Far East, Russia and sometimes the entire planet such as the Amur tiger, the white whale, the Polar bear and the leopard.

Ladies and gentlemen,

I must remind you about a decision that has provoked heated debate here in the Far East and was quite unpopular which concerns the interests of many people. Before we approved [customs] duties, over 500,000 used cars were imported through the Far Eastern ports annually. I want the people who live here to know that only about 15% to 20% of them remained in the Far Eastern Federal District. The rest were shipped to other Russian regions.

During the economic downturn, we decided to introduce prohibitive customs duties on imported used cars. You must know that nobody wants to close or damage businesses. I want everyone to thoroughly understand the problem. Who should we support during a crisis, South Korean and Japanese car makers, or the Russian automobile industry? The industry employs 600,000 people and two or three million work in related industries. And what’s the total if we count their families? So we simply had no other option. I want you to understand this: We had no choice! We could approve the import of used vehicles and by doing so kill the national automobile industry and leave millions of people jobless. I want everyone to understand this. Including their families, there are 6 million people in question. It was a forced measure, but it has, on the whole, proved worthwhile.

It was one of the measures taken by the government to support the automobile industry, and it worked... Nationwide car output grew in 2010 … I want to make this clear to everyone. The entire system of measures made these results possible but also it has had an extremely negative impact on car importers. I regret this very much, but I repeat that there was no choice. Due to the entire range of measures, nationwide car output this year reached pre-crisis levels. In 2009, new car output had plunged 60%, but then soared by 100%, January to October 2010.

I would like to stress that by curbing used foreign-car imports, we promised an alternative to people in the Far East, namely, the construction of an automotive plant in the Primorye Territory. This year, the Sollers automotive plant in Vladivostok will be able to manufacture over 13,000 vehicles, and next year – 25,000 cars. Naturally, I have been there, watching the assembly process. These initial results are quite modest. But unless we take such initial steps, we will have to buy everything abroad. We are also in talks with major global automakers and car-component manufacturers, so that they could operate in the Primorye Territory. And I am confident that the automotive business will remain an important sector in the Far Eastern economy based on a new, civilised national production plan.

I would like to remind you that we supported the ship-building and aircraft-production sectors in Russia’s Far East during the crisis. We were able to preserve jobs and to launch new projects inside these sectors. In all, aircraft-industry enterprises received 127.9 billion roubles under the anti-crisis programme in 2009-2010. The ship-building sector received 14.5 billion roubles. Far Eastern aircraft building plants and shipyards received about four billion roubles and 7.9 billion roubles’ worth of direct funding, respectively.

We still face a lot of problems there. I have seen the state of these facilities. We still have to accomplish a lot in terms of modernisation. The construction of two new shipyards is getting underway in the Primorye Territory. They will turn out offshore oil and gas rigs, as well as tankers and gas carriers for exploiting continental-shelf deposits. Such sea-going technology is currently in high demand. I can safely say that Russia can carve out a niche of its own in this market. As you know, we have reached an agreement with a Singaporean company and are getting down to business. A joint venture involving South Korea’s Daewoo Shipbuilding has also been established. The Zvezda shipyard is being prepared for start up. The governor has told me that there is movement, and that the first steps are already being taken. Hopefully, everything will be accomplished on schedule.

As far as the aircraft industry is concerned, Komsomolsk-on-Amur is launching production of the new Sukhoi SuperJet-100 civilian airliner. This is full production, not just prototypes.

As you know, President Dmitry Medvedev and I recently showed this plane to Italian Prime Minister Silvio Berlusconi in Sochi. This is our joint project. Russia and France jointly developed the plane’s engines. Its avionics were developed with Italy. I have repeatedly visited the enterprise. As you know, I was extremely pleased to see the way it worked. It has a diverse international workforce comprising French-, Italian-, Russian- and English-speaking specialists. This is our first completely digitally designed civilian aircraft meeting the latest civilian aviation standards.

Our Italian partners are ready to buy a large number of these planes, thereby enabling them to enter the European market. We have deliberately chosen this niche enabling us to compete with European manufacturers and to promote our products on the European market. This is very important.

It is common knowledge that a considerable part of the Far Eastern aircraft and ship-building sectors fulfill orders from the Russian Armed Forces. The 2011-2020 State Rearmament Programme will soon be approved. I can say that Far Eastern plants will receive additional defence contracts, including production of the fifth-generation fighter.

One of modern Russia’s largest and most ambitious projects is being implemented in the Amur Region. Construction of the Vostochny national space centre will begin here in 2011. The project will receive 24 billion roubles in the next three years. The new space centre will enable Russia to independently launch manned and unmanned missions. The implementation of this project is called on to reaffirm this country’s high technological status, enabling thousands of specialists, primarily young talented people, to unlock their potential, to achieve success and to realise their boldest dreams. Instead of merely being a launch pad, Vostochny should essentially become a new city. Our task is to facilitate ahead-of-schedule construction of housing and social facilities, including hospitals, schools and daycare centres. This should become a real modern high-tech hub with the required modern social infrastructure.

Colleagues,

Despite the obvious progress in demographics, let me say a few words about the growth in fertility and reduction in mortality. Despite the positive figures in general, the population of Far Eastern regions is still declining. The main reason here is not the birth rate or the mortality rate – this is the old reason – but migration. As in the past, more people leave the Far East than come here. However, I'm convinced that together, we will be able to change this situation – we can change it, if we offer people not only decent jobs, but also a comfortable life, and a clear perspective for resolving social problems.

In 2011, we will start implementing regional programmes to modernise healthcare. In terms of healthcare, the Far East will receive investment – a good word! – worth tens of billions of roubles in federal funds. I want to emphasise that this is in addition to current funding.

Participation in the programme will give the Far East the opportunity to upgrade medical facilities and recruit qualified physicians. It is important to place the correct emphasis on and clearly focus on solving the problems that are relevant to the region's residents. And please consider the issue of public health and improvement of the healthcare system as the United Russia party's most important task. We must take this issue under special control. This is, in fact, a party project, and we'll accept responsibility for it.

It is no exaggeration that one of the main problems for the northern and Far Eastern regions is dilapidated and hazardous housing. Pensioners who worked in the northernmost region of Yakutia and the Magadan region, who helped build the Baikal-Amur Mainline (BAM) are absolutely right when they raise the issue of their resettlement in areas with more favourable climates, such as southern Primorye. And we intend to address these issues.

As in the rest of the country, all WWII veterans who are in need of housing and live in the Far East will be provided with housing – this is almost 7,000 people. You know very well how the work has been going to provide housing for veterans – those who registered before March 1, 2005 and later. I've already talked about this several times in public – since that time, after we said that we would provide housing for everybody, the waiting list grew many times over – I want to stress this – many times over! And the list is not closed, the queue is getting longer. However, our preliminary estimates suggest that in spite of this growing volume, we intend to cope with the issue next year all the same. We will do everything necessary to make it happen, to provide housing for all veterans. The Ministry of Regional Development has calculated the additional resources we'll need, and this money has been budgeted for 2011. And we see from the receding growth in the queue, the numbers are declining. It is clear from the number of veterans who apply for this housing that the list will gradually decline. I think by the end of this year or early next year, the list will be finalised and we can, working consistently, resolve this commitment.

We will also fulfil our commitment to families of the servicemen and military pensioners. In the Far East, another 10,000 flats will be allocated for them. And we are considering the possibility of providing bigger flats for them than those in other regions of the country. I have talked about this several times with the Ministry of Economic Development, and we agreed with the Ministry of Defence that if we want people to stay here and not move to European Russia, we need to offer some incentive for the people; there needs to be some extra benefit. Frankly, we are interested in retired military men continuing to live and work in the Far East, settling down and putting down roots here.

Under the programme of the Fund for Housing Utilities Reform, some 3,612 apartment buildings have been renovated in the Far East, which improved the living conditions for almost half a million people – 407,000, to be more exact. As many as 3,341 people have been resettled out of hazardous housing. In general, these are good figures. But we understand that general federal housing programmes are still not enough for the Far East. Given the scale of the accumulated problems, we will launch special “pinpoint” projects here. We have had such experience – in 2004, we decided to rebuild the Vilyuchinsk Naval Base in Kamchatka. Today it is a new and modern city, which has everything that is needed for a normal life for naval servicemen and their families.

In 2003-2004, when I first arrived there, officials at the Ministry of Defence and General Staff told me, “We will close the base.”

I said, “Why?”

“Well, we have one more base in the European part, and we cannot afford this one.”

But we made a different decision. And I am very glad that this decision was correct, and everything that was planned is almost done. Now we have not only preserved the base, but we have virtually created a new modern base here. This applies both to the maintenance of military operations and social conditions. I think that the medical facilities there are probably the best in the Far East. A new city was built. There is now a waiting list among seamen to serve there, although this is the most remote part of the Far East. Anyway, people are happy to go there, because they will live in normal conditions – there are both places to relax and train in sport.

Now we have also come up with solutions for the capital of the BAM – the town of Tynda. In the next five years, we need to relocate more than 6,000 Tynda residents into serviceable flats, eliminate the old barracks and upgrade housing and utilities, along with social facilities. Those who want to move to other cities in the region – this, of course, primarily refers to pensioners – should be provided the opportunity to do so. I want to stress that using the example of Tynda, we must develop a method for comprehensive infrastructure development, its renovation and revival. In the BAM area, in six constituent entities of the Federation, there is a total of 1.2 million square metres of dilapidated, hazardous and so-called temporary housing, which is home to more than 57,000 people. And temporary housing – not everyone is aware of it – is generally no housing at all. People worked there and they were abandoned there, and now they do not even fall into any category. It's strange...

If we look at the situation as a whole, a total of 1.5 million square metres of housing per year is now being built in the Far East. This situation is absolutely unsatisfactory.

I urge our colleagues, the regional executive authorities, legislative assemblies and municipalities to actually make housing one of the most important priorities.

You have the political resources, the possibility to promptly adopt the necessary legislative acts, to dispose of funds and allocate land. No need to sit and wait – you need to take the initiative and address the issues in real earnest. After all, the only way to earn the trust of the people is to prove your worth. I believe that we are capable of doubling the amount of housing construction in the Far East by 2020.

We need to launch new housing projects in places where there are prospects for the economy, where there are new jobs and where we can create a comfortable environment for people. And we will try to support the Far East regions through the new federal targeted programme “Housing” and through the Fund for the Assistance of Housing Construction.

In July 2010, Vladivostok turned 150 years old. I take this opportunity to congratulate all the residents of the city and all the residents of Primorye on this anniversary.

Vladivostok is now opening a new chapter in its history. We see its future as the business, cultural, scientific and educational centre of the Russian Far East. I am convinced that this city can become one of the recognised major cities of Russia and can take its rightful place among the leading metropolises of the Asia-Pacific region.

The demands that we make to the new image of Vladivostok and the massive investments that are directed at the development of its infrastructure stem from this. It is more than 200 billion roubles that we are going to invested.

By 2012, Vladivostok airport should be commissioned, as I said, as well as the bridge to Russky Island, roads, a university complex, energy and utilities infrastructure and new residential areas. We talked about housing for the military, and there is an entire residential area there, the Snegovaya Pad' (“Snowfall”), that is almost ready for occupancy, as I was just told. And in the coming weeks, I hope the military will move there, and I congratulate them on their new homes! There is also another residential area – the Patrokl (“Patroclus”).

Even after the APEC summit, we will continue to invest in Vladivostok’s development: in the tourist zone on Russky Island, in new residential developments, and of course in the Far Eastern Federal University.

I would like to take this opportunity to say a few words about the education system in the Far East and about the tasks we need to accomplish together.

First of all, there is a shortage of preschool childcare institutions in the region, leaving about 74,000 children on a waiting list. This “queue” needs to be eliminated. Under our party’s project “Childcare to Children,” we will allocate federal resources to support those regions that are actively working on their preschool education systems: restoring nurseries in premises that had been repurposed, building more preschool services, and developing innovative early childhood education programmes such as family and private education centres.

Second, we will push ahead the modernisation of the school education system in Russia, while taking regional specifics into account. We must ensure that school children living in the Far East – especially in remote and inaccessible villages – have equal opportunities to receive high quality educational services just like their peers living elsewhere. How to accomplish this on such a vast territory?

Broader use of modern IT equipment could be a solution, as well as heavier reliance on long-distance learning in addition to conventional formats and the preservation of small local schools in places where there is no viable alternative.

Third, the vocational education system should be improved as well. I have already cited plans for industrial development of the Far East, which will be impossible to implement without more highly-qualified professionals.

Finally, higher education: I must admit that it does not meet modern requirements right now. Sadly enough, not one of the six local universities that competed for the status of “research university” was qualified to win.

Therefore, to change this situation – to build a solid and effective higher education system in the Far East and ensure an inflow of faculty and new educational technologies – we decided to open two federal universities in the region.

The Russian government has approved the education programme of the Northeastern Federal University in Yakutsk; the Far Eastern Federal University in Vladivostok will soon have government-approved programme as well. I already have the documents. Both universities will receive 5 billion roubles each from the federal budget to implement their development plans. The universities will specialise in projects that are crucial for the region’s development. They will train industry professionals and research staff in areas such as World Ocean Resources, Biomedicine, Transport, Logistics, Northern Studies, Nature Conservation, and Energy Saving.

Let me highlight that the role of the Far Eastern universities is not only to train professionals for the region’s needs but also to popularise Russian education and Russian culture in the Asia-Pacific countries. They need to learn how to recruit foreign faculty, organise student exchange programmes, and facilitate inter-university cooperation with other Russian regions and neighbouring countries.

Dear friends,

In conclusion, I would like to share a few impressions with you. As you know, in August, I visited the Far East, where I spent nearly two weeks.

There are indeed still plenty of problems: there are too many vicissitudes of everyday life – things are in a mess, and it is difficult to get a job, an education, and quality medical treatment, particularly in one company towns and remote villages. In some areas, basic services that have long since become a fixture in other regions of the country are completely lacking. Nonetheless, I feel strongly that the public mood is changing and that it is for the better.

This is first due to the fact that our plans do not remain on paper. They are translated into real projects and the creation of new jobs. Second, people see for themselves that there is a demand for their work and initiatives that offer them an opportunity to experience personal fulfillment right here on Far Eastern soil.

Now it is very important to support this positive public mood with concrete actions. We have no right to fail their expectations.

Here in the Far East – on Sakhalin and the Kuril Islands, in Kamchatka and Chukotka – Russia begins: our nation, in which we have faith. We live and work for its benefit and prosperity today and in the future. We shall no doubt succeed if we do this honestly and faithfully.

Thank you very much for your attention.

Let us listen to our colleagues. Oleg Misevra, president of Sakhalinugol, will tell us about his projects. Our other colleagues are also welcome... We’ll go into detail on some issues. I invite everyone to join in this lively discussion. We can see that apart from Oleg Miserva, the Sakhalin team is broadly represented by other people, and therefore, there could be questions and commentaries. The floor is yours, Mr Misevra.

Oleg Misevra: Thank you, Mr Prime Minister. The project I would like to present here has to do with updating the power grid on Sakhalin. Earlier today you visited the exhibition, and the governor spoke with you about the primary goals of this project. However, I'll brief you on it further.

The first thing I would like to mention is the Sakhalin Island's primeval nature. It has become the site of such ultra modern economic projects as offshore drilling, a liquefied gas plant, a gas pipeline, and an oil pipeline. However, so far the gas produced on Sakhalin has not been used on the island itself. A coal power station in Yuzhno-Sakhalinsk discharges waste that gets trapped in the city. The ash dump is located within the city limit. We have a problem, and the solution is switching over to gas. As you have already said, the thermal power station in Yuzhno-Sakhalinsk will be shifted to gas, and its fourth generator unit will be put into operation. This work has already started: we have injected 3 billion roubles, and the foundation is under way. The work under this project is in full swing; however, when we resolve this problem, we'll have to address other issues.

Vladimir Putin: The foundation pouring is in full swing? When is the construction to be completed?

Oleg Misevra: It is to be completed in 2012. This includes both commissioning the fourth generator and making the shift to gas by the end of 2012. Problems are likely to arise with coal and with the coal industry as a whole. What is to be done with Sakhalin’s coal production, 80% of which is used on the island? What is to become of the coal miners? What is the future of our coal reserves? The explored coal reserves on Sakhalin are estimated at about 2.5 billion tonnes. What is the solution? The offshore area, which is a source of income for the island, is, on the other hand, an obstacle that prevents the coal industry from reaching Asian markets – vessels with a large deadweight cannot be loaded in the shallow waters. We have to load vessels that have a deadweight capacity of no more than 5,000 tonnes. That means that we cannot export more than a million tonnes of coal per year. Now we have developed a project that provides a clue to the shelf problem. We envision the construction of a modern shipping terminal near Izylmetyev Cape, where the sea is 16 metres deep, so that vessels with a deadweight capacity of 60,000 tonnes and more can be loaded.

What would this give us? This will allow us to ship at least 5 million tonnes of coal per year, create an additional 3,000 jobs, and avoid laying off about 2,000 employees – in short, this is a project that will save the coal industry from collapse, giving it a new lease on life and the opportunity to develop. The project is worth 4.5 billion roubles: 3 billion will be invested by businesses and 1.5 billion will be contributed by the regional government. The construction will proceed in two phases: the first phase will take two years and the second phase three and a half. The payback period is 5 years.

As you said, many people did not believe that the government would deliver on its plans for the Far East. A year ago, nobody believed that we could push our project through. When the regional government offered their support, people gradually started listening to us. When the [United Russia] party threw its weight behind us, everyone started saying that it was one of the most promising projects. This is true.

We believe that when implemented, the project will demonstrate numerous advantages. First, we’ll save jobs for miners; second, we’ll boost coal shipments six times, bringing them to six million tonnes. We’ll expand their taxable value by one billion roubles a year.

Now the environment. First, upon shifting to more environmentally-friendly gas power, the station in Yuzhno-Sakhalinsk will stop discharging pollutants into the surrounding areas. Second, there’s the issue of carbon dust. Trucks carrying coal will be replaced with an environmentally-friendly electrical conveyor. That is, this project offers all the advantages that one might think of. Now as for what you said in your speech, I listened attentively to what you were saying about modern ports in the Far East today. The port that we propose is an ultra modern facility, the only one of its kind in the world today. Under our project, coal will be shipped directly from the deposit to the ship without any transshipment. Therefore, not only residents of Sakhalin but of the whole country are likely to take pride in the project – it is innovative and one-of-a-kind.

Of course, we need the party's support. We want the party to help us get through all of the administrative hurdles in our way. We ask for your support. The regional authorities offer us their support, and we also ask you to support us. We have three questions to ask.

The first question is about the border checkpoint and the customs clearance point. We won't be able to resolve this issue without government support and your backing. It is fairly difficult to address issues relating to safe navigation harborage. And, finally, we request the allotment and registration of a plot of land for building a conveyor. Practically everything you mentioned in your speech, Mr Prime Minister, is incorporated into our project. But we are not copycats. It simply means that society, the authorities, and businesses can sometimes all agree. Thank you.

Vladimir Putin: As far as the land is concerned: is it owned by the municipal or regional authorities?

Oleg Misevra: By the regional authorities.

Vladimir Putin: Where is the governor of the region?

Alexander Khoroshavin (governor of the Sakhalin Region): Mr Prime Minister, we are aware of the problem. We shall settle this issue, of course, when we get down specifically to allotting plots of land. We'll consider the situation now as the project reaches the implementation stage. There might be lands there owned by Goslesfond [the State Forest Fund], so we'll have to resolve this problem at the federal level.

Vladimir Putin: Good.

Alexander Khoroshavin: As I see it, there are not going to be any problems in the region.

Vladimir Putin: You see, Mr Misevra has applied to United Russia for support. Here we have such a happy combination of the head of a region being a party functionary. There is nothing to prevent him from settling the issue of allotting a plot of land.

As for the port, I don't see any problems here either. It is for the Transport Ministry…

Oleg Misevra: Rosmorport [the Russian Seaport Authority].

Vladimir Putin: [Let it be] Rosmorport. Is Mr Levitin [the transport minister] present here?

Oleg Belozyorov: Oleg Belozyorov, deputy minister (deputy transport minister of the Russian Federation). The head of Rosmorport is also here. We discussed this issue yesterday. We won’t have a problem with navigation safety. We’ll guarantee it together with Rosmorport.

Vladimir Putin: Could you please give the microphone to Mr Rusu?

Igor Rusu (Rosmorport general director): Mr Putin, as you’ve correctly noted, three ports were opened in the Far East in the last few years – Prigorodnoye on Sakhalin, De-Kastri in the Khabarovsk Territory and one in the Kozmino Bay. We were in charge of all the issues related to navigation safety. So we are always in touch with Mr Misevra. By the end of the year, we will complete the letter of intent, sign an investment agreement in January and carry out this project according to plan.

Vladimir Putin: Good luck! Thank you.

Do you remember this saying from Soviet times, Mr Pronichev (head of the Border Guard Service)?

“A guard is keeping safe the frontiers, not dozing drunk under a fir tree.”

Vladimir Pronichev: We have received a request to create a checkpoint. There will be no problem there. We have vacancies on the staff list...

Vladimir Putin: But the guys need working premises.

Vladimir Pronichev: A federal targeted programme for 2012-2017 is now being drafted. It is being reviewed by Rosgranitsa (the Federal Service for the Development of the State Border Infrastructure). They are receiving all the information and requests, and working on them…

Vladimir Putin: Yes, the money for this must be earmarked in a timely manner so that the border guards have a place to work.

Dmitry Bezdelov: My name is Dmitry Bezdelov, and I’m the head of Rosgranitsa. Mr Putin, as far as procedural issues are concerned, we understand what to do and how. The only problem is that the programme for border development will expire next year and there will be no funds for this work. This is something we need to discuss.

Vladimir Putin: This is what I’m talking about. So, what do you suggest?

Dmitry Bezdelov: We have proposals, we are moving in both directions. We understand the procedures, but as for the funding, we have some issues that business…

Vladimir Putin: What business are you talking about?! We must develop the border for our border guards! Will business do this for us?

Dmitry Bezdelov: Mr Putin, then I’ll switch to the second issue – we can simply draft a request for additional…

Vladimir Putin: Please, address this request to me so that it will be reflected in the budget for 2012. When do you need to open it?

Oleg Misevra: We’ll open the first section at the end of 2012.

Vladimir Putin: And how much time do you need to build these premises?

Oleg Misevra: Construction will take up to 12 months.

Vladimir Putin: So, you must start in 2011 but no funds have been allocated from the budget for that in 2011. Is this right?

Oleg Misevra: No funds have been allocated. It goes without saying that we can save some money and start designing now. This is a financial rather than a procedural issue.

Vladimir Putin: In this case, please write a note in my name and we’ll think together with the Finance Ministry where to get at least the first part of the funds so as to do the designing and start working with a view toward setting aside the bulk of the money in the budget for 2012.

Vladimir Putin: (addressing Andrei Belyaninov, head of the Customs Service). And why are you smiling? Will customs give the go-ahead or not?

Oleg Misevra: We’ll convince them to.

Andrei Belyaninov: Mr Putin, I’m smiling because I’m in a good mood.

Vladimir Putin: Mr Belyaninov, why don’t you say something to put the authors of the project in a good mood as well?

Andrei Belyaninov: You know, when our meeting started I was sure that I was sitting in front of Marat Safin. When Mr Misevra began talking, I didn’t expect him to turn out to be an industrialist from Sakhalin.

Vladimir Putin: Now that you no longer have any doubts, tell us what you will do.

Andrei Belyaninov: All procedural issues are also clear. We will assign more people to the construction of the checkpoint and will work simultaneously with the border guards.

Vladimir Putin: What about adequate premises? Are you working in the same way together with Rosgranitsa?

Andrei Belyaninov: These are common requirements set by all services working on the borders.

Vladimir Putin: So, you are going to build a common structure for them?

Andrei Belyaninov: Yes, of course. We have a common set of premises that we grant only to customs officials and border guards.

Vladimir Putin: OK. But in this case the customs and the border guards should promptly decide on the numerical strength.

And will there be any problems at the mine? What about the wages of miners? How do you run payroll calculations? What is the permanent part? What is the other part?

Oleg Misevra: Mr Putin, after the accident at the Raspadskaya mine, the permanent part is 70% at all mines.

Vladimir Putin: In other words, you have brought it…

Oleg Misevra: Of course, we were closely monitoring the developments and met all the new requirements. Today, the permanent part is 70% everywhere, and 30% are subject to change.

Vladimir Putin: So, you have done all that, haven’t you?

Oleg Misevra: We did it back in the summer.

Vladimir Putin: And what are the average wages of miners?

Oleg Misevra: At our mine, specialists earn from 38 to 45 thousand roubles a month on average. Average wages at the mine as a whole are about 28 thousand roubles.

Vladimir Putin: So, the lowest wages are about 20 thousand? This is not enough.

Oleg Misevra: About 18 thousand roubles.

Vladimir Putin: This is not enough for Sakhalin.

Oleg Misevra: This is a very small category of people, Mr Putin. Our main specialists, miners, are well paid. But we will gradually raise wages, all the more so now that we will change everything when we reach our rated capacity. We will replace the old equipment. We have already held talks with Liebherr and Caterpillar. We’ll train people now, we’ll change this situation. Labour productivity will grow and we’ll automatically change all this.

Vladimir Putin: Yes, sure, but you must upgrade production and raise it to a new technological level.

Oleg Misevra: We won’t be able to produce anything with the old equipment.

Vladimir Putin: And what about these additional three thousand people? Where will you take them from?

Oleg Misevra: They will undergo training.

Vladimir Putin: Are they locals?

Oleg Misevra: Yes, they are. We are already launching a programme. We will send the first group of specialists to America and Germany in the beginning of 2011. They will learn how to use the new equipment. This is our first step. Later on we will organise training at home. Of course, it is expensive to invite specialists, but we have to do this because we have a shortage of them. We bring them from Russia but we’d like to get rid of this practice because it is too expensive.

Vladimir Putin: What are you talking about? From what Russia? And where are we now? Not in Russia?

Oleg Misevra: Because Sakhalin is an island and we bring them from the mainland. There is such an expression.

Vladimir Putin: “From the mainland” is OK but not “from Russia.” Remember the name of our party – United Russia.

Does anyone from Sakhalin have any questions or comments on the project we are discussing, or any other questions about the island’s development?

Remark: Let’s endorse it.

Vladimir Putin: We are endorsing it. So I’m sure this project will go well. OK. Now I’d like Ms Tatyana Chusova, deputy head of the Amur Region’s government, to take the floor. Please, tell us about the development of this region.

Dmitry Kolesnikov: Mr Putin, I have a question.

Vladimir Putin: Yes, please.

Dmitry Kolesnikov: Sorry for being late to the meeting. My name is Dmitry Kolesnikov, and I’m the chief engineer with GeoTherm, a subsidiary of RusHydro in the Kamchatka Territory.

Mr Prime Minister, here is my question. Clearly, the projects related to coal, which we have discussed today, are vitally important. We need them. But what is the characteristic feature of the Far East? It is its huge potential for alternative sources of energy, for renewable energy. Geothermal energy makes up the bulk of this potential, although wind and tidal energy are also interesting.

My question is: Will the government support alternative energy projects in the Far East? This is the main question, but I’d also like to say a few words about our problems. Take Iceland, which is a very good country, as we know. But Kamchatka is no worse in terms of natural renewable sources of energy.

I’d like to ask you to finally approve a development strategy for the energy industry in Kamchatka. What will be its underlying principle: traditional power plants burning fuel oil and gas, which produce expensive electricity, or floating nuclear power plants, or geothermal energy?

Geothermal energy has been used in Kamchatka for a long time, producing 30% of the electricity in the Kamchatka Central Energy System. We need a clearly formulated strategic objective for our energy industry, because the individual projects, if discussed separately, will not be sufficiently effective. We need a systemic approach.

Thank you.

Vladimir Putin: As I have said before, even in my address today, we must create a balanced energy system. Only a balanced energy system can be stable. As for alternative sources of energy … The energy balance compiled by UN specialists or specialists hired by the UN shows that energy consumption will grow, but the balance of energy sources will remain approximately the same as now.

Russia should certainly use alternative energy, which is currently not used to its full potential. This concerns all sources of energy, including geothermal, solar, tidal and wind energy.

All of these types of energy – probably with the exception of solar energy – have their pros and cons. Take wind farms, which are so popular in Europe. They seem to produce clean, environmentally friendly energy. But it turns out that this is not quite so, as they kill birds. The windmills vibrate so strongly that they drive away worms, not to mention moles. This is an environmental problem. But this does not mean we should not consider using wind energy.

We should also think about hydrogen energy.

But while developing these types of energy, which we should do by all means, we should also think about the future and about economic expediency. One should always look forward.

The geothermal sources in Kamchatka are highly promising, which is why after my meeting with the Icelandic president I asked that a group of professionals from the Energy Ministry and a group of officials from the Kamchatka government be sent on a visit there. Mr Kuzmitsky (Alexei Kuzmitsky, the governor of the Kamchatka Territory), tell us about that visit, please.

Alexei Kuzmitsky: Acting upon your instruction, the energy minister, myself and executives from RusHydro went to Iceland, where we learned about Iceland’s experience with geothermal power plants. They are using all possible innovative technologies. The energy minister reported on that visit at a meeting of the Government Presidium, where it was decided that we should promote cooperation [with Iceland]. Everyone, from the president to the lowest ministry officials, spoke about Kamchatka.

In the future, we may sign an agreement to develop geothermal energy in Kamchatka using the innovative technology currently employed in Iceland. Although the investments required for such power plants are large, the operating costs are low.

This should be a priority, given the resources we have in Kamchatka and provided we have an energy development concept. Russia has a complicated fuel and energy balance, and our current capacity is twice as large as peak consumption. Currently, we are focused on the use of gas and geothermal energy.

Vladimir Putin: We are devoting attention to this. We won’t avoid the problem you’ve raised. We will develop all these types of energy. I recently attended the opening ceremony for a new plant (built by NOVATEK) to produce natural gas and pump it into pipelines, and I was surprised to learn that they use wind and solar energy to pump the gas through the pipeline. And at such high latitudes! In the Arctic Circle! I asked them, “How do solar batteries work here?” The answer was, “They work.” This energy is enough to supply gas-pumping substations. When the sun sets in the Artic Circle, the wind turbines start working.

The combination of these elements is possible even in such conditions. Shocking but true. Again, we must closely monitor how efficiently all types of energy are being used and remember that our country has rich deposits of oil and gas. We must not forget this, because it seems to me that European and American companies that produce energy equipment advertise their products and try to downplay our energy options. But we must think about all types of energy. And this is what we are doing.

Alexei Kuzmitsky: I would like to stress that geothermal plants in the Kamchatka Territory offer the lowest price rates.

Vladimir Putin: Yes.

Alexei Kuzmitsky: One rouble and 78 kopecks. This is a good figure given the conditions.

Vladimir Putin: Yes, I know.

Dmitry Kolesnikov: I would like to note that the geothermal energy industry does not only produce energy. It develops new projects to reuse thermal energy – units with low parameters that can use excess heat generated by industrial enterprises, not only where there is thermal water resources, but throughout Russia.

The first unit will be launched at the end of 2011. The project will be difficult, but I hope we will carry it out. We will use our technology, our scientific discoveries and our equipment in this project. So we are developing this type of energy, and we have promising projects in the geothermal energy industry. This will open up whole new levels with great prospects.

Vladimir Putin: Great. Do you need additional support to implement your plans?

Dmitry Kolesnikov: We always need support, of course. The thing is Geotherm and RusHydro do not have the investment needed for the development, because a lot of investment is required for high-voltage lines, the exploration of new geothermal fields…

Vladimir Putin: Did you report to the governor on this? Does he know?

Dmitry Kolesnikov: Of course we did.

Alexei Kuzmitsky: I know about this project, Mr Putin. This is called a binary cycle – it is an innovative technology. It will be implemented: the project has money from RusHydro’s investment programme.

Vladimir Putin: Then get together with the company and think things through. If you need federal support, tell me. Let’s think together about what we can do.

Alexei Kuzmitsky: Mr Putin, we do not need financial support. We need another kind of support.

Vladimir Putin: What kind of support?

Alexei Kuzmitsky: Political support.

Vladimir Putin: Political? What has politics to do with it? You just have to do the work.

Alexei Kuzmitsky: I would like to add to it. In isolated…

Vladimir Putin: Alexei, sum up everything that was said before. If you know about this project, give me your opinion.

Alexei Kuzmitsky: OK.

Vladimir Putin: Let’s think about what we need to do, OK?

Alexei Kuzmitsky: OK.

Vladimir Putin: Agreed. Let’s move on. Tatyana Chusova, please.

Тatyana Chusova (deputy prime minister of the Amur Region, coordinator of the regional party project “Developing the Amur Region”): The project I am going to present to you is, without exaggeration, unique. It is about creating a new industry (ferrous metallurgy) in the Far East, and it is based on modern technology developed in the last ten years.

The idea of creating a metallurgical complex in the Amur Region is not new, it is 60 years old. But it only began to be implemented several years ago when the project was launched.

The purpose of the project is to create four metallurgical enterprises in the Amur Region and the neighbouring Jewish Autonomous Region. The first one, the Olekminsky Ore-Dressing Plant, was put into operation this year. I would like to stress that the enterprise was built in two years, which is no small achievement for an enterprise of this kind (design, expert examination and construction). The enterprise today produces iron ore concentrate. In the future, it will produce ilmenite concentrate. Ilmenite is iron ore with a high titanium content. Ilmenite concentrate is used to produce titanium dioxide.

Vladimir Putin: I’m sorry, what is your job title? Deputy prime minister of the Amur Region?

Тatyana Chusova: Yes.

Vladimir Putin: You are a real metallurgist.

Tatyana Chusova: Titanium dioxide is the basis for most modern dyes. The project calls for the construction of a titanium dioxide plant in 2015, when gas will be brought to the Amur Region. White titanium is widely used in pharmaceuticals, the food industry, and the production of glass and paper. This sheet of paper would not be as white without white titanium. Yet in spite of sustained demand for this stuff, Russia does not produce it domestically. The only such enterprise in the CIS is in Ukraine.

Another enterprise forming this complex is the Garinsky Ore-Dressing Plant, it is located…

Vladimir Putin: Did you say Ukraine?

Tatyana Chusova: Yes, in Ukraine.

Vladimir Putin: Where exactly?

Voice: The city of Armyansk and the city of Sumy.

Vladimir Putin: The reason I am asking is we have bought something there. Perhaps it already belongs to us. Anyway, we will look into it. Sorry to interrupt you.

Tatyana Chusova: The second enterprise of the complex is the Gari Ore-Dressing Plant, which is situated in the centre of the Amur Region. This is also not a new story. The deposit was discovered in 1960, but it was never brought into commercial use, even though the reserves there are enough to last 100 years. The field is at an equal distance – 140 km – both from the Baikal-Amur Railway and from the Trans-Siberian Railway. The enterprise is in the design stage and construction is due to start in 2012.

Work is under way at the third enterprise, the Kimkano-Sutarsky Ore-Dressing Plant in the neighbouring Jewish Autonomous Region. It is due to be launched in 2013. Once that enterprise is launched, the region will break even and will need no more state subsidies. The project will be crowned with the establishment of metallurgical production in the Amur Region. Let me stress that it will use innovative technology, which only began to be used commercially in the world last year. There is only one such enterprise at present, and it is in America. Ours will be the second such enterprise. The technology is based on direct iron reduction, it is a complete production cycle, the technological process will be displayed on the computer screen.

This handful of nuggets is reduced iron and the display unit shows the technological process, one can monitor the separation of slag. The enterprise consumes a lot of energy, but it is a third more effective than the traditional technology.

These are the key elements of the project. But, of course, such a large-scale project cannot be implemented without a transport infrastructure. We are not talking about dozens or thousands but millions of tonnes of cargo. Herein lies the problem. The investor in the project (it is a capital-intensive project worth more than 108 billion roubles, of which the investor has already disbursed 40 billion) is ready to invest in the development of the infrastructure as well, but only if the financing scheme is transparent and the investment in the infrastructure yields returns.

I would like to note that the success of the project hinges on investment. The company (it is the Petropavlovsk group of companies) has a comprehensive approach to the project, starting from geological prospecting and ending with the training of personnel for the metallurgical enterprises. It has its own college, the Pokrovsky Mining College, which offers training in 42 professions. Amur University has prepared a curriculum for engineers and the students get on-the-job training at the pilot industrial enterprise. By the way, Mr Putin, this is the only such enterprise in the Far East and Siberia. It uses the same ore-dressing technologies as modern ore-dressing plants in the world. Any young man considers himself lucky to get a job at that enterprise. The first group of graduates consists of 200 students, and 196 of them have received jobs at the company’s enterprises. It is, without a doubt, a systemic project not only for the industry but for the entire Far East. Not only for the Amur Region, where the core enterprises are located, but also for the Jewish Autonomous Region where the ore-dressing plant and the railway and the railway bridge are located. Also for Khabarovsk with the Sovetskaya Harbour terminal, which will ship the products of the metallurgical complex to China, Korea, Japan and other countries. And, of course, for Yakutia where Olekma coal will be used in metallurgical production. And the Primorye Territory with its shipyards. At least these six regions may see the structure of their economies change, but in fact the economic structure of the whole Far East will be transformed. We hope that with the party’s support the project will be followed through. Building the transport infrastructure will bring metallurgical products closer to the consumers.

Vladimir Putin: What is the total volume of investment in this enterprise? How much?

Tatyana Chusova: One hundred and eight billion roubles. Forty billion have already been invested.

Vladimir Putin: Billion?

Tatyana Chusova: Billion. Metallurgical production is very capital-intensive. It’s in the billions.

Vladimir Putin: Already invested?

Tatyana Chusova: Forty billion roubles have been invested in the entire complex, not only in the Amur Region but in the entire complex.

Vladimir Putin: I am impressed. I really am, no joking.

Tatyana Chusova: This is unique. It can be called a mega-project, the second after the space launch facility.

Vladimir Putin: Yes, excellent. You mentioned infrastructure. You said “parallel development of infrastructure is needed.” What infrastructure?

Tatyana Chusosvaya: Two things. If we are talking about the Amur Region, it is of course the railway. As I said, the location is midway between the Trans-Siberian and the Baikal-Amur railways. It is part of the strategy for developing the railway…

Vladimir Putin: The mining field is located exactly midway between these two railways?

Tatyana Chusova: That is correct. That is why the deposit was not developed for so many years. The railway transport development strategy includes the building of a route between Shimonovsk and Gari, but only in the long term, by 2030, whereas the Gari Ore-Dressing Plant will be put into operation in 2014. This is the main problem for the Amur Region.

For the Jewish Autonomous Region, it is the bridge across the Amur. If it is built, it will shorten the distance over which metallurgical products are delivered to South East Asian countries by 1,500 kilometres. This speaks volumes.

Vladimir Putin: Vladimir Yakunin will now tell us how he will go about building that route.

Vladimir Yakunin (president of Russian Railways): Mr Putin, I visited that enterprise last autumn. I met with its owner and the management. We discussed transport support for the project. We have signed an agreement with them. The agreement calls for a public-private partnership for the approach to our station. They were prepared to foot the bill.

As for the branch line, which is currently deadlocked from the connection point to the border, it has already been included in our programmes, and we are investing into its development.

Anything concerning the bridge across the Amur River is not for me to decide. This issue should have been considered so as to allocate investment from the Investment Fund of the Russian Federation.

Vladimir Putin: How long is the bridge?

Vladimir Yakunin: I cannot say how many metres it is, but the cost is 12 billion roubles.

Vladimir Putin: It’s more than 12 billion.

Vladimir Yakunin: On paper, it is 12.2 billion. Well, as a matter of principle, Mr Putin, whether it is 12 or 10 billion, the problem in terms of commercial use is that it will take dozens of years for this infrastructure to make returns. It is clear from a business point of view that it is not attractive for development. Of course, here government support is necessary.

As far as the questions that have been raised here, I can say that we are working in cooperation with the company and that they are actually included in the programme.

As for investments allocated to an earlier period, this is beyond the power of the company’s board of directors.

Vladimir Putin: Why?

Vladimir Yakunin: Because our programme is to be approved by the government. This programme provides …

Vladimir Putin: Write another one, please. We will approve it.

Vladimir Yakunin: Mr Putin, I would certainly have written it, but there is the Finance Ministry. And there are natural financial limitations.

Vladimir Putin: Mr Yakunin, of course, there is the Finance Ministry and there are limitations based on budget spending, but there are priorities, too. What comes next depends on you – not on the Finance Ministry.

Vladimir Yakunin: Mr Putin, with your permission, I want to say a couple of words about infrastructure in general, so that it will be clear that this is our specific approach to the investment programme.

Today I met with Viktor Ishayev, an authorised presidential representative. He is running a joint programme aimed at producing a plan for Baikal-Amur Railway development in general. Likewise, we work with all the governors. Today’s cargo volume destined for Far Eastern ports exceeds that of 1988, the peak load year of the Soviet era. This year alone, we have increased the amount of cargo transported along the route by 23%–28%.

The Baikal-Amur Railway area needs development. It is dictated not only by the Petropavlovsk project. This issue generally requires a nationally conscious approach endowed with federal attention. I know that the party has taken this project under its control. State Duma member and Deputy Chairman of the Transport Committee Vladimir Klimenko has prepared a plan. But it is impossible to solve such problems simply by allocating 10 or 40 billion more. We suggest considering the issue of infrastructural bonds, without which, in fact, the development of transportation infrastructure in the region and in the country as a whole is very difficult. As for this particular project, we are working on it.

Thank you.

Vladimir Putin: Mr Yakunin has finished on a positive note, although the message was that you are also facing major problems, which require resolution. Of course, there are a lot of problems in our country, including transportation and railways. Anyway, let us take a closer look at this specific project. And if the investor is really putting so much money into it, which is serious enough for the country, to say nothing of the Far East... Did you say that total investment exceeds 100 billion?

Answer: 108. More than 108 billion.

Vladimir Putin: Quite a decent investment! Simply huge. For any project in any part of the country. This is a super-project! No exaggeration. Are those all private investments?

Answer: Yes, so far without budget funds.

Vladimir Putin: Without budget funds. Mr Yakunin and I have certainly talked today about the development of the Baikal-Amur Railway area, and I have mentioned it in my address. Naturally, it is a large-scale effort, and we will get back to it. Please prepare your detailed proposals.

Vladimir Yakunin: Alright.

Vladimir Putin: Nonetheless, the project requires our special attention. Such projects must be supported.

Vladimir Yakunin: Alright, Mr Putin.

Vladimir Putin: You must certainly support it.

Welcome.

Representative of the Petropavlovsk company: Good afternoon, Mr Putin, I am representing the Petropavlovsk company, which, actually, is the investor in all this.

Vladimir Putin: Where did you get all that money? Well, well, we won’t fumble about in your pockets.

Representative of the Petropavlovsk company: No, it’s a pleasure to tell you. There is nothing secret about it. We have been collecting money at the exchange for 12 years now. Up until now, we were doing it at the London exchange, then we started at the Hong Kong exchange this autumn.

Vladimir Putin: Indeed, one can well raise money for good projects if one works competently and prospective investors can see that the project will pay off. Why not? In fact, there is so much money in the world and so few places to apply it. It is a serious thing. And, by the way, it becomes easier and easier in our country. I mean that our economic development is stable and the political situation is stable, too. That is extremely important for prospective investors who are looking to safeguard their capital.

Representative of the Petropavlovsk company: Collecting such amounts of money is a very complicated process, especially for such an undeveloped region, which is very remote and, more importantly, unknown internationally. It is very difficult to explain to people how an enterprise can be constructed in the Northeast Amur Region. However, over the recent 15 years, we have built five enterprises already, all of them are new and none is privatized, and, as Tatyana Chusova mentioned, we have created about 9,000 jobs over that period.

If possible, I would like to express just a few wishes that always emerge with such projects. We have spent almost the entire autumn hat-in-hand trying to find investment for our project in the Jewish Autonomous Region. We have found it, but, regretfully, not as much as we would like. However, when I talked to prospective investors (and we had about 108 meetings over three weeks), the main problem was that everybody wondered how we would attempt to set up a mining and iron-ore production facility so far from the sea. Everybody understands that an iron-ore production facility should be as close to the sea as possible so that the cargo can be loaded into a ship and delivered to the consumer. Now, we can understand that very well, too. Formerly, when we had just begun construction on our first facility, which is already completed, delivery to the consumer cost 13 dollars per tonne (sorry, but I will use dollars); it now costs 43 dollars. The cost will be somewhat less when our first facility reaches full capacity; still, it is a hard fact that the delivery is very costly.

Vladimir Putin: To which port do you take it?

Representative of the Petropavlovsk company: We do not take it to a port, we take it to an ordinary border terminal in Grodekovo.

Vladimir Putin: To China?

Representative of the Petropavlovsk company: It is in the Primorye Territory. Yes, to China. The consumer is very close to Suifenhe, and it is very convenient to them.

There are many other mineral deposits in the area, and if those who are trying to develop these iron-ore resources have a look at the current economy – which is badly affected by the cost of delivery – they might, I am afraid, lose their desire to engage in such development. Those already on the fence about investing may decide not to do so.

Vladimir Putin: Are you referring to growing railway tariffs?

Representative of the company Petropavlovsk: Not tariffs, just transportation costs in general. They are growing faster than the tariffs.

Vladimir Putin: What’s the breakdown? What does it consist of, apart from tariffs?

Representative of the company Petropavlovsk: The services of a freight company, which since 2009… I have a proposal… I hear there is a programme for the BAM development…

Vladimir Putin: Wait a second. Let’s get this straight… If tariffs are not the main expense, then what contributes to the price of a freight company’s services? How do they come by these prices?

Representative of the company Petropavlovsk: About 30% of the price is the tariff proper, Tariff 10/01. Technically, it’s payment for the services of railway companies. Another 60% is the cost of leasing cars from a freight company. We work with a state-funded company – a Russian Railways affiliate. You know, I’m not going to complain about them now, but…

Vladimir Putin: I see, so you’re afraid to speak about it in the presence of Vladimir Yakunin. Mr Yakunin, you were supposed to privatise this company long ago, which you haven’t done yet. And also, you mark up tariffs arbitrarily, to my knowledge.

Vladimir Yakunin: Mr Prime Minister, I don’t think that you’re taking a proper view of the situation. Everything related to railway tariffs set by the state is economically justified. The cost of leasing a car accounts for a maximum of 20% of a tariff. Everything depends on the demand. The chairman of the Evraz Board, who is sitting in front of me, knows that very well. He has insider knowledge of the whole process.

Vladimir Putin: Yes, I know Mr Abramov well.

Vladimir Yakunin: The problem is long distances, which necessitate high infrastructure tariffs and car lease charges.

Vladimir Putin: What do long distances have to do with it? Cargos are transported to the state border, not European Russia, after all.

Vladimir Yakunin: It’s a pretty long distance, Mr Prime Minister.

Representative of the company Petropavlovsk: In my opinion, the state could provide subsidies to companies operating in the territory. It is very difficult to transport cargo from here.

Vladimir Putin: But there are already freight traffic subsidies in the Far East.

Representative of the company Petropavlovsk: No, freight transportation by railway is not subsidised.

Vladimir Putin: What do you mean? The tariffs are lower…

Representative of the company Petropavlovsk: Not for iron ore transportation.

Vladimir Yakunin: Mr Prime Minister, they can’t manage this problem on their own without subsidies or a special tariff. The distances really are too long.

Vladimir Putin: Hold on please. What’s the current markdown on long-distance freight transportation?

Vladimir Yakunin: In accordance with the 10/01 protocols, tariffs are reduced for cargos transported at a distance over 3,000 km. But that’s still not enough for remote regions.

Representative of the company Petropavlovsk: We have taken account of this reduction in our calculations.

Vladimir Yakunin: It’s a common situation. Special tariffs were used for freight transportation in Russia’s Far East and extreme northern regions…

Vladimir Putin: Okay, clear. But as far as car lease charges, I think the Federal Antimonopoly Service should look into the issue.

Vladimir Yakunin: No problem.

Vladimir Putin: I suggest that we review this issue later so as to formulate a directive for the Ministry of Economic Development and the Ministry of Transport. Let’s consider the problem together. Pricing is one of the issues critical to the future of the Far East.

Representative of the company Petropavlovsk: This can be linked to new cargos that will need to be transported as new fields are developed.

Vladimir Putin: Let’s consider this as well, and let’s formulate a directive to the ministries.

Vladimir Yakunin: I’d like to add that we have been discussing cargo transported to China. But they can also be consumed domestically…

Vladimir Putin: This is about creating a steel mill, right?

Representative of the company Petropavlovsk: Well, we enrich ore at the field proper. We invested $200 million in our first company, most of which has gone toward the enrichment facility.

Vladimir Putin: We will do everything in our power to create the necessary conditions for processing ore in Russia, as we have in other industries. I said the same when I spoke about the lumber industry: if we keep the timber in Russia, we’ll be able to develop the industry. The same goes for this sector.

Representative of the company Petropavlovsk: Distances really are very long, and we really are interested in reducing the amount of cargo we transport, even though Russian Railways would certainly like us to transport more.

Vladimir Putin: We’ll look at this issue again, in Moscow.

Representative of the company Petropavlovsk: I have one more request to make. May I?

Vladimir Putin: Please.

Representative of the company Petropavlovsk: This railway line, connecting Shimonovsk with Gar… We can find funding for it – that’s no problem – but we need to know how we can receive a return on our investment. The same goes for the bridge. We need to understand how we can make a profit. We believe that Russian Railways could buy the line once we have built it – if, of course, the company is interested. The line could also be available to other freight companies.

Vladimir Putin: This is a recurrent issue and relates to all types of transport, including pipelines. We will build the pipeline and then let Gazprom buy it from us. We will build a railway line and then let the Russian Railways buy it from us. All these projects need to be thoroughly considered and assessed. That’s what we’ll do. Let’s do the numbers and take it from there.

Representative of the company Petropavlovsk: If there is a mechanism like this, if we can find a mechanism to do this, it will have a positive impact on the region’s mining industry.

Vladimir Putin: Let’s consider this. I would like to emphasise once again… It’s not often that we have meetings like this. This is very important for the production facility, for a particular project and the region. Naturally, we will be supporting projects like this entailing primary, secondary and tertiary processing and so on rather than the export of raw materials. Mr Yakunin has it right. We need to proceed from this.

Representative of the company Petropavlovsk: Don’t worry, you have my word: we will do this.

Vladimir Putin: I will be worrying, I have to.

Representative of the company Petropavlovsk: Anyway, I will be waiting for your aid.

Vladimir Putin: Good. Understood, thank you.

Vladimir Mikhalyov: Mr Putin, may I ask a question about processing?

Vladimir Putin: Go ahead.

Vladimir Mikhalyov (Komsomolsk-on-Amur mayor): Thanks to your great support, Komsomolsk-on-Amur has retained its large metals company capable of processing 2 million tonnes of scrap metal and 2 million tonnes of direct reduced iron, as stipulated by this project.

Vladimir Putin: Do you mean Amurmetal?

Vladimir Mikhalyov: Yes, Amurmetal. Due to the current decrease in scrap metal in the Far East the issue of raw materials for Amurmetal is becoming more pressing. Naturally, I would be happy if this project envisages supplying, above all, reduced iron to Komsomolsk-on-Amur prior to the construction of the bridge to China. Moving forward the schedule for DRI plant construction would also mean a great deal.

Vladimir Putin: This is a very important issue. Todays’ meeting is proving to be extremely useful. I’m serious, these are crucial issues for the development of the Far East and the entire country. This is very important and very good. I think this open and substantive discussion is just what we need. Yes, Mr Belyaninov, go ahead.

Andrei Belyaninov: Mr Putin, I would like to draw your attention to the fact that we had a ban in place for over a year on the export of scrap metal from nearly the whole of the Russian Far East except for Kamchatka and Magadan.

Vladimir Putin: You cannot imagine how much fuss there was about it with the European Union.

Andrei Belyaninov: We have increased the price so that it has become profitable to first transport the scrap metal to Kamchatka and then export it to third countries from there.

I would like to point out that the general director of Amurmetal said: if they fail to deliver on their promise again this time, it will most likely be difficult for all of us both in terms of setting tariff and customs policy and the development of the region and the metals industry. This is very important. We have also been criticised – the government on the whole rather than only the customs service – that these measures were meant to benefit a single company, Amurmetal, while in fact we were thinking about restrictive measures to impose certain limits on scrap metal export.

And another point. In the situation when we were introducing this measure all our metals companies promised to organise scrap metal purchases and to build up stocks. They did not make good on their promise either. These issues are very important, Mr Putin. I understand that it’s more satisfying to listen to success reports but all of this has to be intertwined. Thank you.

Vladimir Putin: We will make sure it is. So that’s how things really stand.

Vladimir Mikhalyov: Mr Putin, first, I’m not a plant CEO, I’m a town mayor. Second, even with these measures in place the amounts of scrap metal are decreasing.

A former head of this plant once told me: “It would be good if Kamchatka banned scrap metal export.” However, we now have some scrap metal and are working on it. This is good. The measures were timely and helped preserve the metals industry in the Far East. But for these restrictive customs measures our metals plant would have closed down, that’s for sure.

Vladimir Putin: I agree, that’s true. So, what’s about the Evraz Group?

Vladimir Mikhalyov: Thank you very much, Mr Putin, for this decision. When you visited Komsomolsk-on-Amur we discussed the introduction of these restrictive measures while travelling in the bus. The people of this town are grateful to you for preserving the metals plant.

Vladimir Putin: You’re welcome. So, how does the Evraz Group address this issue?

Alexander Abramov: The issue of scrap metal?

Vladimir Putin: Yes.

Alexander Abramov: We consume a large amount of scrap metal – 300,000 tonnes per month. This is why speaking about scrap metal stock… We cannot store 5 or 7 million tonnes – we don’t have the warehouses needed and it has never been considered. We process almost all materials immediately after delivery. We only build up certain stock for winter, when the amount of scrap metal collected decreases due to snow. This is why I didn’t quite understand the point about warehouses.

All in all, the situation with scrap metal in the region, and particularly for Amurmetal, has been predicted long ago. In my opinion, it will never have 2 million tonnes of scrap metal. Therefore, the briquetted iron seems to be a good solution, though it is costly.

Vladimir Putin: Did this measure have a positive impact on your companies?

Alexander Abramov: We don’t buy scrap metal in this region, Mr Putin, so I can’t…

Vladimir Putin: So, this is irrelevant for you?

Alexander Abramov: Yes. We buy scrap metal beginning with the Irkutsk Region.

Vladimir Putin: Okay. Thank you.

Let’s move on. Mr Zverev, the president of the Pollack Producers Association, will speak about fish and fish processing. Please, go ahead.

German Zverev: Thank you, Mr Putin. I’m running several fish processing projects. The Far East leads the country not only in the production of raw materials – we also account for two thirds of the national fish catch. Plus we lead in fish processing. The Far East produces 57 percent of all fishery products in this country. We send a considerable part of our produce (first handling) for processing in central Russia.

Now we are working to tailor the structure of our fisheries production to growing market requirements. Today, 55 percent of our produce has low added value. Obviously, people buy and will continue to buy frozen fish but they will also continue to buy chilled fish, ready to eat products with a high added value. The domestic market is growing, and the fisheries industry has recovered. Now we must develop a modern, high-tech industry for processing, storing and delivering fish products.

The projects you have seen at the exhibition and discussed here are successful ones. But for them to reach critical mass it is necessary to have a system of government support, primarily, precise and timely legislative control.

Here is a simple example. During the past year, the total investment in the national fisheries industry was less than four billion roubles. This year, the investment of Far Eastern fishing companies alone has already exceeded six billion roubles. It is very important for us to stand on firm ground. For us, firm ground means the long-term quotas that you’ve mentioned and 20 year-long entitlements to fishing sites. So, all my very brief questions and requests to you are about precise and timely legislative control.

The first question is about a draft law on storm shelters that was submitted to the State Duma on your instructions. These shelters will allow fishermen to transship fish during a storm not in the high seas but in special shelter zones. The Duma has not yet reviewed this draft but on January 1 almost 200 vessels will sail off for the Pollack fishing season in the Sea of Okhotsk. So, my big request is to adopt this draft in three readings before the end of the year and make it work.

Second, the harvest of water bioresources has increased by one million tons, that is by one third in the last five years, but the production of aquaculture has been stalled at 80 to 90 thousand tons for more than a decade now. We don’t have similar long-term, clear-cut and transparent rules. We need a law on aquaculture, a federal law on aquaculture.

Vladimir Putin: What should this law determine? Why do we need it?

German Zverev: It should establish the order and procedures for user access to aquaculture sites, define aquaculture and its classifications, and, most important, establish a system of government support for aquaculture, because today this problem is not limited to the Far East. Aquaculture may be developed on Sakhalin, in Primorye Territory, Karelia and the south of Russia. There is a law on aquaculture, but currently, it is drowning in the process of interdepartmental approvals and the government has not submitted it to the Duma. In the meantime, it could provide the same catalyst to aquaculture as the law on fishing did to the fisheries industry. This is my second point.

And now a third point that is also very important. The Administrative Code, or, to be more exact, the Administrative Offences Code does not draw a clear-cut line between a poacher and a legal fisherman that made an honest counting error. The code provides for the same punishment in both cases – the seizure of a fishing vessel. We don’t consider this enforcement fair or civilized. This is a very serious investment risk. We suggest drafting a “law on types of fishing offenses” in cooperation with the Border Guard Service. This draft law could be submitted as amendments to the Administrative Offences Code. Today, two articles – 8.17 and 8.37 – regulate these offences and penalties. We believe that there should be more defining articles and that they should be distinct. The penalty should match the offense. This is the third major legislative problem. In general, the fisheries industry is developing well. The consumption of fishery products is also growing.

We hope that when we develop a modern industry for fish processing, storage and delivery we will be able to produce more products with high added value.

Vladimir Putin: Thank you. Mr Krainy (head of the Federal Agency for Fishery), what about this law on aquaculture? Where has it stalled?

Andrei Krainy: Mr Putin, this law has been approved by all ministers and departments and submitted to the Government Executive Office. Now it is being approved by the presidential Main Legal Department. I hope we’ll review it at the Lawmaking Commission next Monday and submit it to the Duma. I must say that this is not the only draft law that the Duma should adopt quickly because this law also defines the rights of ownership.

It is also possible to grow harvested products, such as scallops or trepang, not just fish. Suppose an aquaculture expert grows a scallop. Then inspectors, including us, will come to check. How can we prove what scallop it is? One can grow a scallop but not withdraw it. This is a big headache.

Moreover, Mr Putin, about a year and a half ago I told you that if we pass the law on aquaculture (though at that time we did not have the authority to do so – but it was transferred to us on August 2 of this year), we will create up to 80,000 jobs in Primorye Territory and the south of Sakhalin alone! Just imagine – 80,000 jobs!

Vladimir Putin: I don’t get it. What’s the problem?

Andrei Krainy: Now the law will be submitted to the Duma and we’d ask the ruling party to discuss it quickly.

Vladimir Putin: I still don’t get it. Are there any difficulties or objections? What’s the problem?

Andrei Krainy: Mr Putin, we’ve been dealing with this problem since August 2. Before us our colleagues have been drafting it for about seven years but to no avail. We have now drafted it, received approvals from all departments and submitted to the Executive Office. I think that the first reading could be held in December and in January...

Vladimir Putin: Can you tell me what the problem is? Are there any disagreements?

Andrei Krainy: No. But the discussions and agreeing on it took some time. And the bill had to be drafted. That took all of September. In October, everything was approved with the agencies and departments. That went on through October and November. It’s all ready now. There were no interdepartmental disputes. The draft is ready; it’s in the government’s executive office. We’ll follow the procedure.

Vladimir Putin: Can you find this draft? Where is it?

Andrei Krainy: There is something else, Mr Putin. I would like to use this opportunity to make a request to the ruling party, as 90% of Russian fishermen vote for United Russia.

There is no use smiling like that – I am citing authentic data. There’s no need to push anyone into it. We just tell fishermen about the laws the party has pushed through. Quotas for ten years, and designated areas for 20 years – that gives them the necessary time to plan. They can plan their own lives, do you understand? Before that, rules used to change every year or so. It’s like dealing out cards and then telling the players, let’s play dominoes. United Russia has eliminated that inconsistency.

I have a request to make of the party. There is one bill awaiting consideration in the State Duma. It is aimed at, say, fine-tuning the law. It includes several important definitions that absolutely need to be adopted: Law No. 166 on Fishing. I would like to ask the United Russia party in the Duma: please consider it at a plenary meeting. It has gone through the required procedure; it has been approved by the government and by Evgeny Tugolukov’s Committee on Natural Resources. Please consider it. Thank you.

Boris Gryzlov: Do you mean the bill on sheltering boats during storms? That’s the one we have.

Vladimir Putin: Could you explain more clearly which law you mean exactly? One more time, please.

Andrei Krainy: Well it includes several important clauses, about the reproduction…

Vladimir Putin: Which law is it?

Andrei Krainy: Law No. 166 On Fishing. Amendments to that law.

Vladimir Putin: Amendments to Law No. 166.

Andrei Krainy: Yes.

Vladimir Putin: Did you say it’s all ready? The only problem now is to include it in the agenda?

Andrei Krainy: Right.

Boris Gryzlov: Alright, I understand. I think we’ll look at it at a meeting. As for the sheltering law, it was approved by the government commission in November. We are preparing it for the first reading now.

Vladimir Putin: Mr Gryzlov…

Boris Gryzlov: In the next few days.

Vladimir Putin: Mr Gryzlov, put it into the same package with the second one, if everything is prepared properly, why not?

Boris Gryzlov: I’ll look it up. If it is ready, we can hold the first reading this or next week.

Vladimir Putin: Yes, please do. As far as I understand, the Border Guard Service and the Customs Service have no more questions about storm shelters. You have come to terms on everything, haven’t you?

Vladimir Pronichev: Mr Putin, the first hearing on storm warning in this context will take place on December 8. I’ll deliver a report on the government’s instructions at the Duma.

As for the second part of this issue that concerns vessels and offenses, in line with your instructions we held a comprehensive meeting with all fishermen on October 12, and established a working group. We are reviewing the draft’s provisions on fishing offenses. We have done this.

Vladimir Putin: Are you referring to the Administrative Code?

Vladimir Pronichev: Yes, the Administrative Offenses Code. Absolutely.

And a few words about the third issue that was raised. A working meeting on the Pollack fishing season will be held on December 17 of this year in Vladivostok. The season lasts from January through April. Meeting participants will consider every detail for cooperation and create favourable conditions for the season so the fishermen can do their best.

Vladimir Putin: Okay. Many thanks.

I believe that potential amendments to the Administrative Offenses Code should be fair but should not lead to a total absence of authority. This is a serious issue, and I hope we all understand that offenders must be penalised.

Obviously, honest fishermen should not be equated with persistent offenders or poachers, but a violation is a violation and those who commit it must be taken to task. Responsibility must be fair, but it must exist. I hope all those present are aware of this.

German Zverev: It does exist, Mr Putin.

Vladimir Putin: Okay. Many thanks. Shall we move on or does anyone have questions or comments? Please, go ahead.

Marina Dedyushko: I have a question to Mr Zverev, the reporter. My name is Marina Dedyushko, I’m the minister of the Amur Region Economic Development. After a break of many years, the Blagoveshchensky Shipbuilding Plant has resumed the production of small upgraded fishing seiners with the support of our regional government. They are designed for in-shore fishing. This year the shipyard has built ten of these seiners. Today the shipyard has the production facilities and the workers and it is ready to participate in the programme of updating the fishing fleet.

We will be able to build up to 16 seiners next year and in the following years. In addition to this, the shipyard has been developing new products. It has been developing vessels with an unlimited fishing range.

I would like to ask you a question: how do you assess the prospects for using this type of vessel in the Far Eastern Region? Thank you for your reply.

German Zverev: Some 747 small-displacement vessels have been involved in in-shore fishing. And in the next ten years, 150 of them, practically every fifth vessel will become obsolete and should be decommissioned. This is why we are aware of the shipyard, and that it has been repaired and under development in the Amur region. By the way, Mr Putin, Marina Dedyushko mentioned ten vessels, which were acquired by the projects I represent, and that are being used in Kamchatka. This enterprise has been involved in onshore processing and has purchased two small fishing seiners. That’s why the fishing firms of Kamchatka, Sakhalin and the Primorye Territory are interested in reviewing any proposals. Of course we have questions about pricing, but in general we are coming to terms with the factory while trying to satisfy the fishermen’s financial abilities too.

That’s why the product is in demand. We satisfy the demand by purchasing the product, because we have no other way around it.

Vladimir Putin: The need of replacement leaves no other options, so as far as I know, the shipyard will have enough work.

German Zverev: Yes, as you know a comprehensive lease programme could have played a positive role here. Not just a regional lease programme, but the major federal lease programme that would promote the development of fishing vessels.

A special strategy for the development of fishing vessels has been under preparation in accordance with your order, and a provision for leasing has been included in it. Leasing has played a tremendous role in aircraft construction. It could be very positive for the fishing industry as well.

Vladimir Putin: Yes, Mr Dmitriev (Vladimir Dmitriev, Vnesheconombank (VEB) chairman), what do you think about using lease programmes? I think this is the right approach.

Vladimir Dmitriev: Mr Putin, we have been using lease programmes in several projects. You know, we were told that two ice class tankers were sold to Sovcomflot as part of a leasing programme. We did the same with Silvenit. I do not see…

Vladimir Putin: I would like to introduce Vnesheconombank to those who do not know it.

Vladimir Dmitriev: Thank you. We see no problem in launching this programme with regard to fishing vessels at the federal level.

Vladimir Putin: Let’s examine the situation in relation to the Far East and these products.

Vladimir Dmitriev: Good.

Vladimir Putin: That’s settled.

Vladimir Dmitriev: It’s settled then.

Vladimir Putin: Thank you. Let’s move on. Thank you very much. Prepare the proposals for VEB’s Supervisory Board as information to start with.

Please, Marina Lomakina representing the Primorye Territory.

Marina Lomakina (CEO of Nash Dom – Primorye (Our House – Primorye), United Russia party member in the State Duma of Vladivostok): Good afternoon, Mr Putin! Today, the Primorye Territory is a megaproject of developing business, culture, research, education, tourism, and transport. Today some 69 projects with an investment volume of more than 2 trillion roubles are being implemented. Vladivostok became an open city in 1992, but the creation of a hospitality infrastructure has only been launched recently.

We will have new roads, an airport express train, new hotels with international standards, opera and ballet theatres, an aquarium, new embankments, public gardens, and a new international airport, which is very important to us. I have no doubts that it will have enough work soon, because the Primorye Territory has enjoyed enormous interest lately. It is impossible to accommodate all of our visitors at hotels these days, especially when events are taking place.

We saw the first sketches of a bridge over Golden Horn Bay in 1906. And now this 100-year-old dream of our forefathers is coming true: the bridge pylons are 170 metres high. And the bridge over the Eastern Bosphorus will be truly unique. These are the symbols of new development, not only for the Primorye Territory, but for the Far East, I believe.

Vladimir Putin: The governor showed me the postal card of 1913 or 1915…

Marina Lomakina: 1906

Vladimir Putin: …1906…

Marina Lomakina: The original is kept at the Arseniev State Museum.

Vladimir Putin: …where this bridge is represented as a prospect for development of the Far East and the Primorye Territory. 1906! We will finally implement it in 2010.

Marina Lomakina: This Spring we held a children’s contest, entitled My Favourite Town. Amazingly, the children perceived it as a new city with new bridges, public gardens and parks as the city they live in. What the future is for us - is the present for our children…

The Far Eastern Federal University as the first educational institution then called the Institute of Oriental Studies, was actually established in 1890. And we have evidence that both teachers and students dreamt of their own research city even at that time. Now we can see new buildings of the Far Eastern Federal University. Due to the abilities of the Far Eastern Branch of the Academy of Sciences and a new aquarium we believe that this is the most ambitious project of the region, which will really change the face and the culture of the Far East.

Mr Putin, as the mother of three children, I would like to thank you for all of the environmental projects personally and on behalf of all the Primorye Territory’s residents. The city dump had been smoldering for more 30 years. This problem has been solved, the sea has been cleaned and the fishermen are catching all the candlefish they want. The city has never had any water treatment facilities; the sewage was simply discharged right into the sea. This will stop next year. We expect the Peter the Great Gulf to clear up soon.

Vladimir Putin: And how long will the sea’s self-cleaning last, according to the specialists’ estimates?

Marina Lomakina: Green environmentalists say that it will take some time, but I spoke with the heads of the Pacific Research Fisheries Center, and it will take about 2.5 years, according to their estimates. We face the open ocean. The sea’s resources are vast.

Vladimir Putin: There is a replacement, isn’t there?

Marina Lomakina: I can give you a simple example; I am from Dalnegorsk, north of the Primorye Territory. We have polymetallic deposits there. There was a taiga, but as soon as the factories were built, the hills became bare. During perestroika’s changes, the factories stopped working. And nature revived itself: trees appeared at the places, when only grass had grown previously. Nature is enormously resilient, all we need to do is stop interfering with it, and everything will be restored.

Vladimir Putin: But still, what is the alternative point of view? How long will the self-cleaning process at the Peter the Great Gulf take, according to the other opinion?

Marina Lomakina: About 15-20 years, according to the alternative opinion. But I believe that in 2.5 years we will see who was right.

Vladimir Putin: That is not important, what is important is the absence of sewage.

Marina Lomakina: Of course! Every day tens of thousands of residents of Vladivostok’s four micro-districts wipe the grime from their windowsills. This will stop after the gasification of Thermal Power Station 2, we will breath fresh air and our children will stop falling ill.

Major businesses such as Gazprom, Rosneft, Transneft, Sollers and new shipyards have come to the Primorye Territory. In fact, these are new fields, new jobs. It is very important that new, highly-qualified specialists be invited here, it is important that they train here and that they will have a job.

In addition to that, we have a number of proposals, we hope you will approve. First is to implement a simplified or a visa-free entry process for foreign citizens for a term of up to 72 hours.

Second, the bridge over the Eastern Bosphorus has opened strategically important areas for Vladivostok. We find it reasonable to build residential complexes in areas which are not used by the Defence Ministry.

And a very important third proposal deals with Vladivostok Fortress, a unique monument of exploration in Russia’s eastern reaches. This is an unbowed fort, a reminder of our ancestors. Its current state is our attitude of the past. It can and must become the city’s calling card.

I would also like to add something. We spoke about the housing. It’s very important that there are three complex micro-districts meant to become large-scale residential construction projects, in the Primorye Territory. Snegovaya Pad is a unique district.

Vladimir Putin: It is beautiful.

Marina Lomakina: Our soldiers, who guard the borders, have been waiting for this housing for 20 to 30 years. And a modern micro-district is being built especially for them (for the first time ever), it features five kindergartens, four schools, two clinics (one for children and one for adults), a sports and fitness center with a swimming pool and an ice rink.

Vladimir Putin: We have made a specific decision to allocate additional funds for social infrastructure.

Marina Lomakina: Some 10,000 families are, of course, a lot! I believe that you will be the most desirable guest at any house-warming party. Come, please!

Vladimir Putin: Thank you!

Marina Lomakina: And two other important projects. First is Patroclus Bay. Despite the fact that Vladivostok is a city by the sea, this will be the first residential micro-district, where people will be able to see the sea rather than industrial infrastructure from their windows. It will be implemented with the participation of the Housing Construction Development Fund.

And the second land plot is the settlement of Trudovoye with a new road. This is a district with low-rise buildings. For us it is an opportunity to have our own houses, yards and gardens. That is really important. Thank you for everything the Primorye Territory has today. The Soviet Union, a great power, failed to do it, and you did it. Thank you!

Vladimir Putin: Yes, we did it! In terms of Patroclus Bay, we have changed our plans. At first we wanted to build an aquarium, which you mentioned.

Marina Lomakina: Yes, we remember.

Vladimir Putin: But then we decided to build it at Russky Island, taking into account that the bridge was to be built, and instead launch residential construction at the Patroclus Bay. By the way, part of that housing has been allocated to military officers, hasn’t it?

Sergei Darkin: We will have the most up-to-date housing in Patroclus Bay. We will launch construction this year. We will buy out 30% of the residential inventory. This will be housing for those who need it or are entitled to it, including the military beneficiaries. Mr Putin, 30%!

Vladimir Putin: Good. As for using Defence Ministry property; the Defence Ministry, like any other agency, holds onto its property, and they lack funds, as always. I am speaking without irony, their plans are huge, and funds are needed indeed. Nevertheless, we will talk and work with our colleagues, we will see what will be left vacant, what they do not need, what we can give them, and on which basis we can give it to the territory.

Marina Lomakina: By the way, both Snegovaya Pad and Patroclus Bay is former military land.

Vladimir Putin: Yes, I know that. We will definitely discuss it. And speaking of visa-free tourist entry, 72 hours you said?

Marina Lomakina: Up to 72 hours.

Vladimir Putin: We have a similar approach in St Petersburg. The cruise ships come to the city, the tourists leave the ship in a visa-free regime and then they re-board. Is there anyone here from the Foreign Ministry? No. But we do offer this, I know, it works. We will definitely forward this proposal to the Foreign Ministry. Of course, we will work something out. I think it will be a help to the Primorye Territory. The most important thing is to have something worth visiting! And there are places worth seeing, but we need to create the environment. Just coming to Vladivostok and walking along the embankments is not enough. We need to promote the development of ecotourism, as I mentioned. What plans do you have in this field?

Marina Lomakina: In fact, the hotelier forum was held in Moscow on December 2. And our representatives were there, because we are greatly interested in developing ecotourism. Today these projects are the most profitable. Rafting and diving have begun to develop; even agri-tourism was considered. So there are possibilities. But it is the infrastructure, which comes after the projects that are being developed now.

Vladimir Putin: Good. You mentioned the Federal University, which I also spoke about. Its rector, Mr Miklushevsky, must be here today. Mr Miklushevsky, please tell us about the plans for the university.

Vladimir Miklushevsky: Mr Prime Minister, following up on your directive, we submitted a development programme for the Federal University to the government in a timely manner. The programme focuses on three priorities. The top priority is an investment in human resources. The university will have a very good campus, housed on 800,000 square metres – it’s an entire town! No other university in Russia has such a campus. This facility will use the most advanced technology.

Vladimir Putin: I don’t think everyone has seen what’s being built there, but I strongly recommend that you see it for yourselves. If this work proceeds properly and the project is carried through to the end, this university will become the pride of Russia. This modern campus has been built from scratch specifically for the university. The students and teachers will have everything they need, and I hope this will allow the university to meet the highest academic standards and become a real gem in Russia’s Far East.

Vladimir Miklushevsky: I’d like to describe it. The campus will have three swimming-pools, several gyms, a stadium – it’s really a town, where students and teachers will be able to live and do research.

That’s why our top priority now is our investment in human resources, as I said. We will organise training for our teachers at leading international universities for at least one semester. They will learn to lecture in two languages. Mr Sergei Kislyak, Russia’s Ambassador to the United States, has agreed to work toward providing us with the necessary contacts.

We would like the teachers to work a full day at the university. Currently, they come to the university for a couple of hours to lecture and then they go home. This is because they are not provided with the proper working conditions. We will create these conditions so teachers can stay all day here. We will grant scholarships to encourage academic research.

As far as the students, we have some perks for them also, as they say. We will attract students not only from the Far East but from across the country. We will offer a unique academic programme. Given its location, our university will specialise in ocean studies.

There is an aquarium just a few minutes walk from the campus. Our students will also have lectures and conduct research there, focusing on biomedicine. We are intent on developing new drugs, implants and everything that makes life last longer.

Another priority is the advanced study of the economy, politics, geography and the philology of Pacific Rim countries. The university is located in this region, which is why we need to study the processes happening there.

It’s understood that students should not only study but also conduct research at the university. We would like them to get involved in innovative projects, specifically those in the interests of its investors. Such projects have already been mentioned here today. These include Sakhalin, ESPO, LNG projects and the Vostochny space centre. Students should focus on actual projects, start-ups. I dream that our senior students will create many startups through their graduation projects. We have entered into an agreement with RusNano to build a nanotech centre, a technology transfer centre and a prototype centre. In essence, these will be startup “mills,” so to speak.

The campus will have a variety of sporting facilities. Also, since it is seated on an ocean coast – it’s about 100-150 metres off the coastline – students will have an opportunity to practice aquatic sports, such as diving, windsurfing and yachting. The university will purchase a couple of yachts, and in the future I hope students will make money on their innovative projects and will be able to buy yachts for themselves.

Ultimately, we plan to carry out an experiment this academic year. We will pay for transportation to Vladivostok for the students who did well on the Unified State Exams and are interested in receiving their education here. Everybody is welcome to study in Vladivostok.

Vladimir Putin: Why do you think they should follow your call and move from European Russia, the Urals and Siberia to study here?

Vladimir Miklushevsky: First of all, in their third of fourth year here, many of these students will know where they will be working after graduation. This is important because, as you know, many graduates have no idea what job they will get. We’ll do our best to help our students find a job.

I personally have lived and worked in Vladivostok for only two months – I’ve moved here with my family – and I can tell you that I’ve truly fallen for this city.

Vladimir Putin: Mr Miklushevsky has moved here from Moscow, where he was the Deputy Minister of Education. He moved from Moscow voluntarily, you know…

Good. Thank you, Mr Miklushevsky.

All right, are there any representatives of the Far Eastern branch of the Russian Academy of Sciences? No? I’d like to hear about the progress made on the aquarium.

Sergei Darkin: We are already buying animals …

Vladimir Putin: What? Animals?

Sergei Darkin: Sea animals. The aquarium will be built in 2012.

Vladimir Putin: What progress has been made on it to date? If you buy animals, you need to keep them somewhere…

Sergei Darkin: Next year we’ll finish the acclimatisation facility. The aquarium will be constructed in 2012. This will be the largest oceanarium in the Asia Pacific region.

Vladimir Putin: I know. What about the funding? Are you receiving it on schedule?

Sergei Darkin: Yes, the funding is being provided in full and on schedule. The project is funded by private investors.

Vladimir Putin: I know. Who’s building this aquarium? Which companies have you contracted?

Sergei Darkin: To my knowledge, it’s the same company that is constructing the bridge to Russky Island. It’s based in Russia.

Vladimir Putin: Thank you. Mr Bratukhin will tell us about the problems faced by the forestry industry. Please.

Sergei Bratukhin: Thank you, Mr Putin. Mr Prime Minister, ladies and gentlemen, the forest issue is critical, and much has been said on it today. I would like to begin with concise facts on the value of our shared resource. As mentioned, Far Eastern forests make a quarter of all Russian forests and more than 5% of the total forests in the world. But it’s not only the area that is striking

Vladimir Putin: How much did you say it is? What is the percentage of the world’s forests?

Sergei Bratukhin: The forests of the Russian Far East make slightly more than 5% of all the forests in the world. But it is not only their vastness that strikes the imagination, Mr Putin, but also the quality of our timber. I would like to cite two facts, if I may. First, larch timber from this area was used 13 centuries ago to build Venice. Second, a more recent fact: the Krylatskoye cycle track was also built from boards made of our larch wood. So, even though the Far East will not host football matches in 2018, we can help with timber and other construction materials.

Today, 25% of timber procured in the Far East is processed locally. This might be a small amount but it has doubled in the past two years.

However, the ultimate goal of our industry and one which the government and the State Duma have been tackling for a long time is to process all of the round timber we export. Our main round timber importers are China and Finland.

Vladimir Putin: Do you ship timber from here to Finland, too?

Sergei Bratukhin: Yes, 17 million cubic metres to Finland, and somewhat more to China, a total of 25 million cubic metres to destinations across Russia while the Far East accounts roughly for 10 million. As we see it, only major developed businesses can cope with the construction of timber processing facilities. The poor image of the Russian timber industry is historically rooted in its tremendous fragmentation, with numerous small companies, some of which are not responsible enough.

The strategy launched with the endorsement of the new version of the Forest Code in February 2007 and the decree on the gradual increase of customs duties promotes the consolidation of major companies. The twelve projects you mentioned, which make the basis of the portfolio of the Far Eastern Federal District, have the status of national priority timber processing projects. They have all been advanced by major, civilised and socially responsible businesses, which are implementing them now. Here are some figures: total investment will exceed 35 billion roubles, and 4,300 new jobs will be created under the projects.

What matters most is that by 2015, when all these projects are completed, the entire amount of timber procured in the Far East will go to our target markets as processed not round timber, that is, as products with added value.

Today, I represent the largest investor in this portfolio. The name of our holding is RFPI (Russian Direct Investment Fund). In the first stage, up to 2014, we are investing 12 billion roubles in timber processing construction. We take pride in being Russia’s second largest forest user after Ilim Group. The territory we are leasing from the state is twice as large as Belgium.

We are not only the largest timber procurers in the Far East but also have become its largest timber processors. We take pride in it and are determined to retain this status in the future.

Vladimir Putin: So you’re not going to challenge Smushkin (Zakhar Smushkin, Chairman of the Ilim Pulp timber company)?

Sergei Bratukhin: They are engaged in another industry, pulp and paper.

Vladimir Putin: Look how he’s perked up!

Sergei Bratukhin: But this is also our dream. I’ll tell you about it, too.

The first stage of our project envisages the construction of the Far Eastern High-Level Timber Processing Centre. Construction costs up to 2014 are estimated at 12 billion roubles, to be funded by the project shareholders, with Vnesheconombank’s support. I’ll talk about it separately in a minute.

Let me tell you about added value as an example. A cubic metre of round timber is priced at an average of $100-120 on the border. The facility we will build will raise the price to $250-300. That’s the added value we are talking about. We have been working towards this since 2006. We will produce highly sought commodities: larch veneer, MDF blocks and high-quality seasoned lumber.

As for our dream and Ilim Group, I can say we have a dream. We have plans to build a pulp and paper plant in the Far East from 2015 to 2018. All veterans of the industry say the region will have such a plant sooner or later. This is a good place for it, from a historical point of view. After all, life will go on after 2014.

As far as Vnesheconombank is concerned, this is a great day for our group: we have signed the main package of contracts on funding the construction of our first veneer plant.

Mr Putin, I would like to address you as chairman of the Vnesheconombank Supervisory Board. Early next year we will present another application – to build a second plant for the production of high-quality seasoned lumber. I certainly won’t attempt to influence the objective aspects of the consideration process. I only ask to change the deadline because construction should go on without interruption and must retain its pace.

Vladimir Putin: What deadlines have you set for the project?

Sergei Bratukhin: Construction of the first veneer plant began a year ago, and it will open in the first quarter of 2011. All the other processing facilities will be launched in 2013.

Vladimir Putin: What is the total investment?

Sergei Bratukhin: 12 billion roubles up to 2014. We have signed contracts worth 3 billion roubles today, and shareholders have invested roughly 7.5 billion roubles to date.

I would also like to say a few words on the issues you have touched upon today. We are a business and profits are among our priorities, but we are also a socially responsible organisation. Tax authorities of all levels will receive more than 500 million roubles from us as direct tax revenues alone by 2015.

We have something else to be proud of: apart from a thousand new jobs we are creating, we will also employ new engineers and technicians.

Vladimir Putin: How much are you paying?

Sergei Bratukhin: 45 to 60 thousand roubles a month, because we use very expensive high-tech equipment and professionals are in great demand in the Far East. That is all concerning personnel.

Every time we mention the timber industry, it implies not only social responsibility but also environmental responsibility – I mean reforestation. I will not go into it in detail now. I’ll tackle it separately when questions are asked during our discussion.

Unlike oil, gas and ores, timber is a renewable resource, but it can be renewed only when the industry engages in reforestation. This is a critical aspect we should all bear in mind.

Vladimir Putin: Thank you very much.

Sergei Bratukhin: Mr Putin, I would like to make comprehensive proposals concerning our vision of the further role of the state, the leading party and the government in the future promotion of timber processing.

I want to draw your attention to three points. First, we think that customs duties introduced in February 2007 to promote timber processing have proved to be successful. They should be used later with the same purpose, one way or another, in view of joining the World Trade Organisation.

Second, forest roads have been mentioned today. As far as I understand, a decision has been made to fund the construction of a road infrastructure that includes the Far East. It is essential to determine the status of forest roads so that businesses invest in them alongside the government. Last but not least, an issue you referred to as ambiguous today: we believe that the extension of the leasing term from 49 to 99 or 149 years will come to forest users as another economic incentive. Putting it simply, they will have a chance to reap a second harvest. So they will plant good, pedigree saplings.

Vladimir Putin: We should improve our healthcare if you want to see a second harvest in 150 years.

Sergei Bratukhin: We should improve the demographic situation, too. Mr Putin, I would like to share brief personal information with you in this connection. By coincidence, Timofei, my second son, was born as I was preparing this report.

Vladimir Putin: Congratulations! President Medvedev wants you to have three children but you are only having your second …

Sergei Bratukhin: This is part of our investment project.

Vladimir Putin: I see. Good for you!

Sergei Bratukhin: I mean, we have a new Bratukhin generation already, so I can rest easy in the knowledge of who will inherit my right and duty to preserve our forest.

Vladimir Putin: How do you make your reforestation plans? Are they part of investment activities?

Sergei Bratukhin: You know, what I especially like about your public addresses is that your answer to many questions is: “That’s the law.” The way things are, despite certain current stereotypes, forest users have no alternative to reforestation now. It’s in the law.

There is another issue: we purchase saplings for reforestation from state-owned nurseries. They sell good pedigree saplings. Next, we have to make our products competitive in the Far Eastern markets of Russia and other countries. Our reforestation system goes through mandatory international certification, and not only the company but the entire Far East takes pride in our products. I must say that quite a few companies have gone through such certification and, when it finishes by the end of next year, Russia will outrun Canada in terms of the volume of certified forest resources used in the most environment-friendly way possible, and with reforestation among top priorities.

Vladimir Putin: Mr Bratukhin, let us come back to an issue which is particularly sensitive for you and other people engaged in your industry – the prospect of extending the 49-year leasing term. As you know, the law stipulates almost automatic extension for another 49 years. Why should we introduce 100-year contracts?

Sergei Bratukhin: When we talked about Petropavlovsk today, the importance of funding was mentioned. Money doesn’t grow on trees, so the chance of extending the leases beyond the 49-year limit is essential as we emerge in capital markets. Russian and foreign investors see that the law is one thing and our notorious ifs and buts are quite another: will the arrangement hold? What will it depend on in 49 years? There is no end of questions. So funding and access to money is the crux of the matter. We should have allocations exceeding 12 to 20 billion roubles, as iron ore miners have, and we should attract even greater funds for the construction of a pulp and paper plant. It takes three to five years to build it, and the construction costs are recovered in seven to ten years. So long leasing terms do matter to us.

Vladimir Putin: I see. Alright. Let us think together with everyone working in the industry, with deputies and public organisations about how to help the community and the government achieve guarantees of forest users fulfilling their obligations and complying with the law. You, too, should be sure that your investments will be channelled into reforestation and your future generations will benefit from it. That is the happy medium that we must find.

Who’s next to take the floor?

Nadezhda Selyuk (Association of Indigenous Peoples of the Primorye Territory): I’m more concerned with the penalty for poaching. The current law holds that a poacher faces a fine of 1,500 roubles for killing a tiger. This is almost nothing. Therefore, here is my proposal. There are many international foundations for the protection of Ussuri tiger. But it is up to a specific hunter to be responsible for a given hunting area. I would like to see this hunter encouraged and remunerated for watching his area when the tigers migrate. These hunters can be the main stewards of the tigers.

Vladimir Putin: Let’s think about that. Mr Gryzlov (addressing Boris Gryzlov), what committee is in charge of this?

Boris Gryzlov: The Committee for Natural Resources and Environment. We have a law on wildlife protection – it has been submitted and will soon pass through its first reading…

Vladimir Putin: I request that you consider this proposal along with the Ministry of Natural Resources and Yury Trutnev.

Boris Gryzlov: Good, we will. The Ministry of Natural Resources has submitted a bill that significantly toughens the penalty for poaching, especially poaching those species that are red-listed. It includes specific penalties for those found guilty of poaching tigers and leopards, penalties that entail arrest and imprisonment.

Vladimir Putin: We should feed them to the tigers…

Boris Gryzlov: I agree…

Vladimir Putin: Or to the leopards.

Nadezhda Selyuk: Now let’s speak about the law on fishing. We have a ridiculous quota of only 5 tonnes. We used to have a law from 1963, if I’m not mistaken, that stipulated a limit of 50 kg of fish per person per year. This year they have allowed a quota of 5 tonnes of chum salmon for a community in the Olga district. People came from the Krasnoarmeisky district to the Olga district to catch their 5 tonnes. And they left with nothing.

Vladimir Putin: Please, this issue is no less important than the conservation of tigers – it’s about the conservation of people.

Andrei Krainy: Mr Putin, first of all, according to the law On Guaranteed Rights of Small and Indigenous Peoples of the North and the Far East, they can fish both within a fixed fishing area and beyond it. This is why I don’t understand why they were given a quota in one district and came from another district. The local government may be…

Nadezhda Selyuk: There are geographical reasons for this.

Andrei Krainy: I understand. But they didn’t have to leave the Krasnoarmeisky district. They could have caught fish there. This means that Small and Indigenous peoples are allowed to fish anywhere.

Nadezhda Selyuk: There’s not so much fish in the Krasnoarmeisky district.

Andrei Krainy: I see. We have a different story…

Vladimir Putin: No, we don’t need a different story. Let’s discuss this one. We all have are own story …

Andrei Krainy: They are allowed to fish freely without any restrictions.

Nadezhda Selyuk: This is a lie!

Vladimir Putin: A lie?

Nadezhda Selyuk: A lie.

Andrei Krainy: You know, Mr Putin, this is the law. So, what does it mean that this is a lie? Small and Indigenous peoples don’t need permission. That’s why I can’t tell who is deceiving whom. These guarantees are fixed by federal law.

Vladimir Putin: Well, they say that this is an insufficient quota…

Nadezhda Selyuk: Mr Putin, those people were from the village of Udegeiskoye, the Krasnoarmeisky district. They travelled 650 km to the town of Olga and presented their fishing permits…

Andrei Krainy: To whom?

Nadezhda Selyuk: And the permit reads – Amur chum salmon. The fishing inspector was very meticulous. He said: “We don’t have Amur chum salmon. You need to go to Vladivostok” – that’s another 650 km – “to correct your papers.” They went to Vladivostok, had their papers corrected and returned back to Olga. And still they were not allowed to fish because of a single line – “Amur chum salmon.”

Vladimir Putin: Listen, this is indeed a very serious question. This is an example of an administrative barrier that dishonest people use to impede normal work.

Andrei Krainy: Mr Putin, we will investigate this issue. The thing is, I don’t understand what was going on because Small and Indigenous peoples do not need permission according to the law. They can simply go to a river and start catching.

Vladimir Putin: Catching what?

Andrei Krainy: Fish, including chum salmon. They don’t need permission to catch fish for consumption or to maintain their traditional livelihood, not for selling. This is very important, too.

Remark: Just let us fish for food.

Andrei Krainy: In Kamchatka we received applications for 70,000 tonnes from Small and Indigenous peoples. But that’s a different story, a different entity.

Remark: Five tonnes.

Vladimir Putin: Mr Krainy, I understand what you’re speaking about. I have regular meetings with fishermen. Large companies draw attention to the fact that nobody should be allowed to misuse these resources, referring to the need to maintain the traditional livelihood of Small Indigenous peoples. This is clear. Nevertheless, there are basic standards that should be provided for people.

Andrei Krainy: Mr Putin, I’m ready to report to you on this tomorrow.

Vladimir Putin: Mr Krainy, please don’t shrug this off. There is no question that people have to face these problems in real life. Please take a closer look at this. Please talk to them after the conference and then tell me about the problem.

Tatiana Romanova: I am president of the Association of Indigenous Peoples of the Kamchatka Territory. Mr Krainy should not skirt the issue here. There are numerous inspectors overseeing fish catches by indigenous peoples in the Koryak Autonomous Area. At the same time, an old woman and small children who don’t speak Russian need to fill out an application. How can we understand this?

She is right in saying that a permit is needed. Those who are assigned sites for fishing should catch fish in the predetermined area, no matter what. I support her in this respect.

Remark: Mr Putin, I’m from Krasny Yar. Under the law, we have the right to obtain 100 cubic metres of timber for building a home every 25 years. Thirty-six companies are cutting down trees near the place where I live. But they are designating timber for me 60 kilometres away. How much will my home cost?

Vladimir Putin: What region do you live in?

Answer: The Primorye Territory.

Vladimir Putin: Mr Darkin, you have the floor. Honestly, this is no longer funny. This even troubles me as if the matter personally concerned me. What’s going on?

Sergei Darkin: Indeed, there is an indigenous population in Krasny Yar. They live far away from the sea. Consequently, there is no salmon there. Mr Putin, I’ll sort things out, as far as timber is concerned. But there is a protected cedar zone there…

Vladimir Putin: Mr Darkin, but she is saying that they are chopping down trees near her place and the splinters are flying, but they have to go dozens of kilometres away. You know what, please pay more attention to these issues, including fishing issues. Indeed, you can assign a fishing area and tell them to fish there. There are fish and fishermen who catch nothing. There are no fish there; there are no fishermen there either. There is nothing there. To be honest, this is not funny, Mr Krainy. Please discuss this issue and tell me about it later. The same goes for the timber issue.

Pyotr Fyodorov: Mr Putin, I would like to ask a question about processing.

Vladimir Putin: Coastal or in general?

Pyotr Fyodorov: No, I’m from the Republic of Sakha (Yakutia). My name is Pyotr Fyodorov. I’m chairman of the committee on the economy and industry in the republic’s Legislative Assembly. I would like to say a few words on behalf of the 1,249 gem cutters and jewellers working in the republic. In the past few years, the republic’s gem-cutting and jewellery sector has expanded rather broadly. However, this process has been hindered by a protracted value-added tax (VAT) recovery period. So, here is my request. This sector has the potential for an additional 15,000 jobs. Our customs office should receive specialised status and the right to import and export precious metals and stones.

Vladimir Putin: Good. Mr Krainy, if you think that Pyotr Fyodorov has saved you, and that he has led us away from the fishing issue, then you are wrong. I would like to once again ask you to attentively…

Andrei Krainy: Mr Putin, I’ll report to you tomorrow.

Vladimir Putin: Yes. Mr Darkin, please report on this timber issue. Good. I’ve also heard this. The Minister of Finance deals with the ALROSA Company. As you know, he quite actively helps the company. We will also focus on the problem you mentioned.

Please, give the floor to the president.

Yegor Borisov (president of the Republic of Sakha (Yakutia)): Mr Putin, I would like to explain the situation in the fishing sector.

Vladimir Putin: Yes.

Yegor Borisov: The Republic of Sakha (Yakutia) also faces this problem. We are talking about the conflict between two laws, namely, the fisheries law, which was passed in 2008, and the 1995 law on indigenous peoples. The laws contradict each other because all fishing areas, regardless of whether indigenous peoples live there or not, are auctioned off and don’t heed the interests of the people living in their vicinity. Therefore, this problem needs to be solved today, so that the fisheries law would also account for the clauses of the 1995 law.

Vladimir Putin: Good.

Yegor Borisov: Unless we resolve this issue…

Vladimir Putin: There was a problem linked with commercial catches being done under the guise of scientific quotas.

Yegor Borisov: This is exactly right.

Vladimir Putin: Commercial catches under the pretext of protecting the interests of indigenous peoples. However, common sense must prevail, no matter what. If the lady is speaking about existing problems, then they need to be examined.

Yes, please.

Tatiana Romanova: Mr Putin, I would like to focus on the problems of indigenous peoples in the Arctic once again.

The Khabarovsk Territory is a unique region because the sprawling Amur River flows here. Fishing is the main food source for the Khabarovsk Territory’s indigenous peoples.

Today, I would like to ask you something directly. To the best of my knowledge, First Deputy Prime Minister Viktor Zubkov will chair a government meeting on December 7. The meeting will examine the issue of passing amendments and additional clauses to the traditional fishing section of the fisheries law. There will be a review of the Regional Development Ministry’s draft document that completely excludes ethnic communities from the fisheries law. In effect, it is proposed that traditional fishing be equated with private fishing. There are plans to lay down a law that means that those catching fish have the right to eat the fish, use the fish for clothing and for feeding dogs. But they will be unable to sell the fish. It will also be forbidden to allot fishing quotas to communities because the law will not recognise ethnic communities as a party to the fishing process.

This initiative was made by the Kamchatka Territory and is supported by the Federal Agency for Fishery. The Khabarovsk Territory has repeatedly sent proposals on improving the traditional fishing process, so that ethnic communities could stimulate the development of Russia’s Far East and our territory. These are small, remote villages. Big business and the state will never operate here. Only we, indigenous peoples, can contribute to the development of the Far East by expanding our communities and developing our territory. I think this is very important because the indigenous population will never migrate to western Russia. We have lived here, we are living here, and we will continue to live here despite any upheaval because this is our homeland. I would like this issue to be seriously examined, and I’m asking for your support.

Vladimir Putin: Good. I have already noted that we must, naturally, protect the interests of the indigenous peoples of the Arctic. This also concerns the territories that we have mentioned… This should be done in such a way as to prevent various organisations from taking advantage of any privileges and implementing large-scale production projects behind their back under the guise of indigenous peoples. This is what the issue is about. There is no doubt that the interests of indigenous peoples need to be protected. I’m asking the concerned departments to remember this and to take it into account when examining the above-mentioned issues at the government commission’s meeting.

Remark: May I ask just one question on this subject?

Vladimir Putin: Please.

Question: The law’s shortcomings have been noted. I completely disagree with this. In the past, teams of seasonal workers controlled the situation, taking advantage of the law’s shortcomings. And now new regulations for assigning fishing areas have been introduced. Consequently, the Kamchatka Territory alone has five modern fish-processing plants, including the Tymlat fish works in the Koryak Autonomous Area, in northern Kamchatka. There has been a proposal for a model project making it possible to involve indigenous peoples in business and production projects. And there are five plants. Their daily capacity is 2,000 tonnes. This is a very sensitive issue. That’s why it is very important that…

Vladimir Putin: I understand, but a balance of interests is essential. We should look into the matter. Okay, let’s move on.

Please, introduce yourself.

Ilona Tankovid: Mr Putin, ladies and gentlemen. I’m from Kamchatka. I’ve made it through to my time to speak. I wanted to say that Russia greets the dawn in Kamchatka, our region is where Russia starts.

Vladimir Putin: Ilona Tankovid is a chemistry and biology teacher.

Ilona Tankovid: Yes, I teach chemistry and biology. The Kamchatka Territory was established as a federal entity just over three years ago [through a merger of the Kamchatka Region with the Koryak Autonomous Area]. I have spent my whole life in Kamchatka. My parents brought me there when I was a little girl way back in 1981. I know the difference between how we lived then and how we live now from my own experience. I grew up and studied there, found an interesting job, got married and had two children. And I want to continue living in Kamchatka.

I’d like to tell you about how our lives have changed, and how our quality of life has improved. The best proof of this improved quality of life is that now more people are coming to live in Kamchatka than are leaving it, and more babies are being born there. We are building housing for servicemen, war veterans and, very importantly, for orphans. And all these changes are to a great extent thanks to the interest you have taken in Kamchatka. This year alone, we received an additional 11 billion roubles, although I think we were not ready to deal with so large a sum of money because we are short of both professionals and projects. However, we can now say that we have surmounted this barrier, and proof of this can be seen in the implementation of the seismic safety programme.

My friends from Petropavlovsk-Kamchatsky will be able to move out of dilapidated housing into new homes this year too, along with over 200 other families. The residents of four hostel-type buildings are to be resettled in December 2010 and January 2011.

It is lovely to see the beautiful new building that was built for our theatre in the centre of our region’s capital. Next on the agenda is a new puppet theatre, which our children are waiting for.

A new modern sports centre has been completed, and a similar centre, but with a swimming pool, is being built in Yelizovo.

I’d like to note that all of these projects were proposed by United Russia. Over the past two years, international biathlon competitions have been held in Kamchatka, something we couldn’t even have dreamed of in the past.

New schools have been built in three outlying villages and two more schools are in the pipes, along with the construction of new kindergartens. We are especially proud of the distance-learning project, which has already been launched and is now being successfully implemented for secondary school students who live in outlying villages. They are taught by the best teachers in Petropavlovsk and, most importantly, the children love it.

Another interesting project we are implementing is called Visiting Teams. The teams sent to outlying villages and reindeer breeding camps include medical specialists and officials who issue documents and register weapons and vehicles. In the past, people in villages and camps like that could not even get a passport photograph done. A new tuberculosis hospital has been built in Palana, in the north of the region where the tuberculosis rate is very high, and outpatient clinics and hospitals have been repaired.

Today, Mr Putin, if we need specialist medical assistance, we have to fly to Khabarovsk, Novosibirsk or Moscow. I think a new hospital would resolve this problem and also provide stimulating work for young specialists. As I see it, this lack of specialists is a major problem in the region. We have formulated a system of privileges in our region: teachers and doctors in Kamchatka don’t have to pay utility or electricity fees and are awarded up to 200,000 roubles for settling there. During the first three years of their time there, they receive an additional month’s salary at the end of the year. However, this doesn’t seem to be enough.

The problem is that ambitious young teachers and doctors want to be working with the most modern equipment and newest technologies. So far this is not something we’ve been able to provide.

Those who have been to Kamchatka will probably agree that ours is a truly spellbinding region. It is obvious that we ought to be developing the tourism industry there, including in national parks and nature reserves. But currently holidaying in the region is very expensive. Why? Because you can’t drive from one reserve to another and so you need to hire a helicopter. I think the road that is being built to the north will solve this problem; it will allow local residents and tourists to move about more freely.

Our region is rich in nature’s bounty, and we would like to see our stores selling local products, including ecologically pure ones. There are entrepreneurs in Kamchatka who are willing and able to take this on, but we ought to develop special breakthrough methods to get them off the ground. One such step was the decision to cut electricity fees. We hope that with the gas pipeline built there, electricity will get even cheaper.

Mr Putin, in your speech you mentioned air fare discounts for people resident in the Far East. This year 33,000 people in Kamchatka, including my relatives, benefited from that programme. But I’d like to ask whether the age limit for this privilege could be lowered to at least 50 years, which is the pension age in the northern regions.

Vladimir Putin: It all depends on how much room there is in the budget. I already said that we have allocated 2.5 billion roubles for those particular age groups, that is young people and pensioners aged over 60. Anything is possible, provided there is scope in the budget. Your proposal means that we will need to allocate not 2.5 billion but 5 billion roubles.

I think we should consider a different solution: cutting flight costs. As I have said here, sometimes I find it difficult to understand what the air fare is based on. The thing is that jet fuel is very expensive because refuelling stations are monopolised. This is first. The second part of the problem is taxes. We need to scrutinise this problem … We could approve a different tax system for such flights. The instructions to this effect have been issued to the Finance Ministry and the Transport Ministry.

Ilona Tankovid: I have one more, related, question. I often fly from Kamchatka; this year I took part in the national Teacher of the Year competition, which was held in Siberia, in Magnitogorsk. To get to Magnitogorsk [which is halfway between Kamchatka and Moscow], I still had to go to Moscow first, and here’s why. First, it’s cheaper [than a direct flight], and second, sometimes there are no direct flights, they all involve a stop-over in Moscow. We often have to fly to destinations within the Far Eastern Federal District, where tickets are much more expensive. This is something you mentioned. Of course, we’d like tickets to become cheaper because we fly so often.

Vladimir Putin: You are absolutely right. This is a problem and there are many regional programmes. I heard about them at the exhibition. We will certainly offer them federal support to develop local airlines and airports and to create several hubs.

Ilona Tankovid: Mr Putin, I’m from Vilyuchinsk. I’d like to tell you that, thinking back to the 1990s, when I was a school graduate, we remember seeing all those houses that were abandoned as people left, and then there’s what we see now. Thank you so much. I have sent my schoolmates photographs to show them how everything has changed.

I hope my speech will help change people’s idea of Kamchatka. Kamchatka is not just volcanoes, geysers, bears and red caviar. It is a rapidly developing region, a comfortable place to live and work. I have stopped my parents from moving to the mainland and I now see my future in Kamchatka only. You often visit us on business. I would like to invite you to come on holiday.

Vladimir Putin: Thank you. You know, I managed to grab some free time when I visited Kamchatka this year. As for the difficult period when we started developing Vilyuchinsk, this is what I remember. The budget lacked funds back then and I appealed to large companies, such as Surgutneftegas, TNK and several other majors, which provided millions of dollars, tens of millions of dollars. This was the first step towards getting the situation under control. Later, the government joined the programme, and budget funds were allocated. We often chastise and criticise our companies, and with good reason. But in this case I have not thought anything up; this is how it was. A sense of corporate social responsibility has grown considerably among our business community. I hope this process will continue, and not only in this particular region but also in others.

Do you have any other suggestions? Please, go ahead.

Sergei Orlov: Mr Putin, my name is Sergei Orlov, Lieutenant Colonel of the Reserve, chair of the Amur Regional Public Chamber’s commission for servicemen, veterans and their families.

Mr Putin, when it comes to veterans, the quality of life enjoyed by veterans, military personnel and people who have carried out their duty of service to the state, this can be summed up in three words: housing, jobs and care.

As for housing, the party’s housing-construction promises either have been or are being fulfilled. Every single World War II veteran has now received housing. This is both a success for the party, and for the country as a whole.

It would be a triple success if a similar programme providing housing to combat veterans were to be launched and implemented as soon as possible. Here we are seeing an improvement with combat veterans being the only remaining category. Naturally, substantial investment in this is required.

There is another active programme in our region. Our retraining programme is yielding wonderful results. When people start debating whether an officer of the reserve can get a civilian job, we point out that a Lieutenant Colonel of the Reserve, Vladimir Putin currently heads the Government. We are trying to convince people that this transfer to civilian employment can and does work, and that education plays a vital role in this.

The Ministry of Defence is now implementing a highly effective retraining programme at 57 military universities. There are two such universities in Russia’s Far East. The one in Vladivostok provides specialist maritime navigation training. Seven of these courses require academic qualifications, nine are based on vocational qualifications. .

Vladimir Putin: Civilian universities should be involved.

Sergei Orlov: Blagoveshchensk University offers two retraining courses, including one in higher education and one towards a degree in human-resources management. This is wonderful, but it neither meets the demands of our regional jobs market nor that of servicemen’s own employment requirements in Russia’s Far East.

My proposal is simple: civilian universities with both the experience and the ability to work in the region should be involved.

Vladimir Putin: I think that’s an apt suggestion, because it will make it possible to involve those universities that are experiencing a drop in the numbers of applicants. Former officers, including discharged navy officers, will also be able to receive a second postgraduate qualification or complete an advanced-training course. For instance, they could work as navigators on board ships, but for this they would need an additional civilian diploma. In cases like this we should, of course, get civilian universities involved. We will definitely consider this option. Go ahead.

K. Kineko: (Deputy Head Physician at the Kamchatka Territorial Hospital): I would like to raise the issue of major personnel shortages, including those at the Vilyuchinsk hospital you mentioned.

First, even those doctors whose education we sponsor do not always come back.

Second, clinical internships were abolished in 2010. Medical students are currently trained by their respective chairs in various cities, where they subsequently find jobs. This is one more argument in favour of clinical internships. In the past, interns received wages, and now doctors get stipends which are three times smaller.

Vladimir Putin: I know. This is not fair. Of course, interns need to be paid.

K. Kineko: Yes. That’s why it’s important that we examine the issue of clinical internships in the Kamchatka Territory.

Vladimir Putin: Good. We’ll see. It’s not fair.

S. S. Cherkasova: Mr Putin, I’m sorry, but I would like to deviate from the subject a bit. I am a nursery school teacher. My child goes to a nursery. We’re a young family. We are planning to have another baby. Just like many other young families, we are concerned about the number of nurseries. Many of my friends have been on waiting lists for kindergarten places for their children since they gave birth. I know that authorities in Khabarovsk are doing a lot, opening kindergartens. Nevertheless, some children are unable to attend daycare centres. I know about the party’s project “Kindergartens for Children.”

My question is: what plans are there to implement it in the Khabarovsk Territory?

Vladimir Putin: As far as the Khabarovsk Territory is concerned, Governor Vyacheslav Shport has a better idea of local developments than I do. You yourself mentioned this programme, which is both a state and party programme. We need to re-convert those former nursery school premises that were converted for alternative uses, we need to build new well-equipped kindergartens, introduce new approaches involving family kindergartens and so on. Governor Shport will now provide additional information on the issue. Please, go ahead.

Vyacheslav Shport: We conducted a survey in the Khabarovsk Territory. In total we need about 6,000 kindergartens. This means we have to build 15-16 more nursery schools. We are drafting the corresponding programme. Demand for nursery schools is highest in Khabarovsk, where there are 800 children on the waiting list for places. There are plans to open two kindergartens next year. Construction work will also begin on another kindergarten. We will now approve the programme, and we will start work with municipal authorities next year to implement it.

Vladimir Putin: How long will it take to ameliorate the situation?

Vyacheslav Shport: I believe it will take three years, if we are to have any serious results.

Vladimir Putin: How large is the deficit that you are facing now?

Vyacheslav Shport: Six thousand across the region. We could deal with the 800 requests on the Khabarovsk waiting list in two years. Khabarovsk is probably the worst case; it’s not as bad in other cities and towns.

Vladimir Putin: I see your point.

Vyacheslav Shport: We’ll keep working on it. We will certainly inform all the top municipal officials and release a statement.

Vladimir Putin: People certainly need to know that you are working on the problem and what the prospects are. Thank you.

Georgy Balakshin: I am Georgy Balakshin from the Republic of Sakha (Yakutia), Merited Master of Sports in boxing.

Vladimir Putin: I guessed that. You look like you might attack me…

Georgy Balakshin: A three-time European Champion.

Vladimir Putin: Three-time European Champion? Way to go!

Georgy Balakshin: Bronze medal winner at the Beijing Olympics and captain of the Russian National Team.

Vladimir Putin: Will you be competing in London?

Georgy Balakshin: We’ll have trials in May, I hope I will make it. I would certainly like to represent Russia, especially at the Olympics. It’s an honour to win medals and become champion.

I am from Antonovka, a village located in the very heart of the Sakha Republic. The place has no sporting facilities. As there was no gym, I had to practice in a school hall. It was very inconvenient.

I think that the defining moment in my career was winning in the first Children of Asia Games in 1996. This was my first international victory. I believe such games provide young athletes with an opportunity to show their skills at a higher level.

Vladimir Putin: You mean the Children of Asia International Sports Games?

Georgy Balakshin: Yes. Thousands of children take part in these games – from Yakutia and other Russian regions as well as from Asian countries. Right now, their main goal is to win these games – their first serious sports goal. These games help cultivate our future Olympic champions and medal-winners. The Russian government and the United Russia party have supported Yakutia’s unique initiative from the very beginning. The international sports forum “Russia: a Sports Power”, to be held in Yakutia in 2012 along with the Children of Asia Games, is also an indication of the international recognition of our achievements.

Mr Putin, I know you are an athletic person. I would like to invite you now, athlete to athlete, to Yakutia in 2012. You’ll see some outstanding performances.

Vladimir Putin: Thank you very much.

Georgy Balakshin: If you attend, there will be more local champions I think. You have just mentioned 2018 – I expect some of the participants of the 2012 games will be selected for the national football team for 2018.

Vladimir Putin: Great! The Children of Asia Games is a major sporting event, a big competition. Yakutia once hosted the games – it was in 2008 I think – and will do so again in 2012.

Yakutia is doing a lot for children in fact. Its climate is severe, with cold winters. How cold is it now? Minus forty five! When I first came to the place, I was glad to see good comfortable schools and the music centre. This centre accepts gifted children from around the region.

This centre is a good model for other regions to follow, especially in the Far East with its vast expanses. They find gifted children from all around Yakutia, bring them to this centre and train them almost individually. This is a great idea, I liked it very much.

It is somewhat basic – a modest but comfortable dormitory, and teachers who work all but individually with each student. They produce good results. Very good results in fact.

As for sports, there is a plan to build a large sports centre. The government will allocate 2.7 billion roubles from the federal budget. The financing will be provided and the centre will certainly be built.

Yekaterina Oshur: I am Yekaterina Oshur from the Primorye Territory. Mr Putin, my question returns to the subject of the facilities built for the summit. Several large road construction projects are underway in the region. One of the major developments planned for the 2012 APEC Summit is the road from the village of Novy to Peninsula De Vries and Sedanka. Low-rise residential buildings and recreation centres were mentioned here earlier.

Vladimir Putin: Do you mean on Russky Island?

Yekaterina Oshur: I mean on De Vries. I’ve heard it reported that the low water bridge will be a toll overpass. In this case residents of Vladivostok and the Primorye Territory will have limited access to this peninsula.

Vladimir Putin: I will have to look this up. I don’t remember how the Transport Ministry has planned it. Is it the Transport Ministry’s project or a regional government project, Mr Darkin?

Sergei Darkin: The region is building it, Mr Putin, with federal support of course, because we never would have raised enough money alone. But we have also contributed money saved through design choices.

Vladimir Putin: Under this project?

Sergei Darkin: According to the project design we decided on, there will be another road that will circle Vladivostok.

Vladimir Putin: Is that part of the preparations for the APEC summit?

Sergei Darkin: Right. That’s why it never even occurred to us to make it a toll road. But that’s a good idea.

Anastasia Kardysh (children’s coach in Russian Sambo and Judo): Good afternoon, Mr Putin, I am Anastasia Kardysh, a judo coach.

Vladimir Putin: Judo?

Anastasia Kardysh: Yes, a children’s coach. I would like to use this opportunity to invite you to join us on our tatami mats.

Vladimir Putin: Thank you.

Anastasia Kardysh: In Yuzhno-Sakhalinsk, Sakhalin Island.

Vladimir Putin: How many kids do you coach?

Anastasia Kardysh: I teach three groups, 50 children in all.

Vladimir Putin: Great! Anastasia, do you work with both girls and boys?

Anastasia Kardysh: Yes.

Vladimir Putin: In mixed groups?

Anastasia Kardysh: Yes.

Vladimir Putin: Any success stories?

Anastasia Kardysh: We generally put an emphasis on health. But one of the girls took part in an international competition in Japan. The children have also done well at city competitions.

Vladimir Putin: How many children are served by your sports centre?

Anastasia Kardysh: I can’t give a precise figure – around 300-400.

Vladimir Putin: That’s a lot. Have you been coaching long, Anastasia?

Anastasia Kardysh: Four years.

Vladimir Putin: Where did you learn to be a judo coach?

Anastasia Kardysh: I am still a fifth-year student at Sakhalin State University, majoring in physical education.

Vladimir Putin: Great. Way to go.

Anastasia Kardysh: I would like to congratulate everyone on Russia’s winning bid for the 2018 FIFA World Cup.

You just said sports will be developed in central Russia. I am also wondering about Siberia and the Far East? Shouldn’t we build facilities here too? Shouldn’t these regions host events?

Vladimir Putin: We certainly should and we will. Stadia will be built. We have just visited one with the governors: a huge hockey stadium for bandy, or Russian hockey. We’ll think of it. The project can be completed with only a small investment, we’ll certainly do that. We’ll do more! We’ll build more centres in the Far East. When I talked about central Russia I meant the World Cup. I didn’t mean that we would not build anything here. But Siberia is so large, we won’t be able to organise a compact enough FIFA World Cup if the different events are scattered from Kaliningrad to Vladivostok. It would be too difficult to arrange all the travel. But I can assure you that the sporting infrastructure will be developed here as well. Absolutely.

Anastasia Kardysh: We’ll look forward to seeing you in Sakhalin.

Vladimir Putin: And good luck to you. By the way, how did you decide to take judo?

Anastasia Kardysh: My father is president of the Sakhalin Federation of Russian Sambo and Judo – I must have had a genetic predisposition. I love martial arts. Thanks to them I have found myself.

Vladimir Putin: Goodbye. Go ahead.

M.L. Shevchenko (Member of the Public Chamber of the Russian Federation): I am a member of the Commission for interethnic relations and freedom of conscience. I would like to go back to the problem of the Indigenous Peoples. We at the Public Chamber recently held hearings on the subject. I think all those who attended it are present here, too. There is one topic that people are usually shy to raise, but that is extremely important for the life of the Indigenous Peoples. I believe that they are the gem of our country and its legacy. I am referring to the continuing supply and sale of vodka in enclaves inhabited by the Indigenous Peoples of the North.

You talked about tuberculosis, and that it “flies in” and that genetic degradation is taking place. I understand the difficulties in introducing any laws that ban or limit these things. But perhaps something can be done to tighten restrictions on the sale of vodka in areas predominantly inhabited by Indigenous Peoples and to strengthen the penalties for those, for example, who bring in hard liquor to Chukotka and other places under the pretext of food tenders.

Vladimir Putin: You know, the issue is totally unexpected for me. This is my first reaction. Restrictions as a rule are easily sidestepped by simply raising the price. But they are possible if imposed at the local, municipal level.

There is nothing to prevent the local authorities from imposing such restrictions. All this can be done, only I don’t think that we should do it at the government level. It can be discussed at the regional and municipal levels. If representatives of the Indigenous Peoples of the North believe there are problems with this, they must consider it and respond accordingly with rules for the retail sales of alcohol. Irina Rodnina, please.

Irina Rodnina: Just a comment on this issue. This problem has been resolved in Canada and indeed in Alaska, too. So, it could be considered at the national level and not just the regional one. That is just my comment.

I have another question. I have long been involved in children’s sport, not the kind of sport that brings medals; but clearly, activities such as children’s sport schools, and the Children of Asia competitions, are our future. But also competitions and events are held among school teams, among children who may not have much chance to deliver spectacular results, but want to go in for sports anyway.

You understand of course that sport is impossible without competitions. We are lucky if we have them at the regional level. But even traveling to neighbouring Federal Districts is impractical because of the high cost of travel. Even when we do hold competitions like The White Rook, The Golden Puck and so on, the Far Eastern Region cannot take part because they have to pay for the trip. I am constantly asked this question. I held a training session with young people yesterday… they have opened a fantastic new arena here in Khabarovsk, with two skating rinks.

And another problem: we are in the process of opening a number of sports facilities (and I think we will be opening still more). The problem that they all face is lack of personnel. There is a shortage of figure skating coaches, at present we don’t even have a single figure skating department at the country’s 13 Physical Culture Institutes: all these departments have been shut down.

Skating rinks are opened, children are eager to train but the parents have to take care of everything. Parents will bring their children to Moscow or St Petersburg, but often traveling to China is easier for them because it is closer. How can these issues be solved? Perhaps fare discounts for children going to competitions are the answer? Not the high-achievers, but children who just want to do sports…

Vladimir Putin: Fare discounts are not the likely answer: they would have to be subsidized anyway. The question is that money should be put into related programmes for the development of the Far East, under the sports items. Money should be earmarked to pay for part of these costs.

Irina Rodnina: The regional sports ministries are precisely the ones that do not have these programmes.

Vladimir Putin: Let us develop such programmes. We should allocate money to these programmes

Irina Rodnina: And another small request to you. The APEC Summit will take place in 2012 and we are all of course preparing for it. We have been running a very good programme at Ocean Camp for many years now. This is for school teams.

Vladimir Putin: Yes, that’s great.

Irina Rodnina: We would like a sporting event to be arranged at, for example, Ocean Camp as part of the APEC activities. Youth teams in several sports could come. There are eight APEC participants in all.

Vladimir Putin: On the whole, this is a growing activity, competition, competition among schools, regions and so on, and I think this is highly promising and important. As for subsidizing the travel of young athletes, especially from the Far East , to take part in competition in European Russia and back, that needs to be done. Let us… the budget for 2011-2013 has already been put together, but we can make corrections after the first quarter. Let us think about it… We are not talking about big sums of money, but the effect may be considerable. That’s one thing.

Another approach is what has been done in Alaska and other places. Everything hinges on legislation. In the United States, as you know, one state has the death penalty and another does not. This is a feature of their legislative process and constitution. Not so in this country. Under our laws, these issues, the issues of trade, are within the jurisdiction of the region or even the municipality, there is nothing to prevent them from doing it. But – and it just occurred to me --if this is so critical, the representatives of United Russia at the municipal level and at regional legislatures can and must pay attention to this.

Grigory Tynankergav: I am Grigory Tynankergav, Chairman of the Council of Elders of the Indigenous Peoples of Chukotka. Alcoholism of course is a problem for us. But we cannot solve it locally, because everything that runs counter to federal legislation is pursued by the prosecutor’s office. Just recently we put this issue to the federal authorities seeking greater authority in addressing this issue…

Vladimir Putin: Once again, formulate the specific issue.

Grigory Tynankergav: The decision on combating alcoholism, specifically the legislative process. Our local Duma cannot pass legislation that contradicts federal legislation, but there are too many details to discuss that here, so at this point I simply suggest that the regions be allowed greater discretion on this issue.

Vladimir Putin: You know, what you said is right: we must discuss the specifics. So I would like to ask you to formulate your proposal and pass it to me please through your governor or through the regional branch of the United Russia Party.

Grigory Tynankergav: I see. As for the law on fishing, from what I have heard here it seems to me that every region interprets the law in its own way. The last edition presented here… In general, there was no conflict over the issue last season. Because if one follows the letter and spirit of the law, I think all the issues will be solved. I want to ask you a simple question. But first I would like to thank you on behalf of the Indigenous Peoples for the effective assistance for deer herding and for the marine life harvesting industry that got your support.

Thanks to that assistance, the deer herd population on Chukotka has reached 250,000 and another 50,000 are in personal ownership. As a result of this assistance we can pursue our traditional life styles, and the population gets a healthy diet.

But there is another aspect to it. You have spoken publicly, warning that government money should not be wasted because already now deer-herding is bringing some revenue, for example, meat imports have been reduced by 70% and I think that saves a considerable amount of money.

I think our regional authorities are trying to introduce modern technology in meat processing which could result in the possible export of our products. And we see large gold-mining companies starting business here. We remember that in Soviet times most of the deer meat was bought by our mining companies: that was a source of income for the locals and it enabled these businesses to keep going. We are seeing something like that now. Today, a large company Kinros (the Canadian Gold Mining Company Kinros Gold), which is a world leader in gold mining, is here. At present, of course, it produces no more than 10 tons, but it is growing. I think if such enterprises appear, they will buy our deer meat.

What else? I think Chukotka is probably the only place in Russia where they harvest marine life. No other region does it.

Vladimir Putin: You mean whaling?

Grigory Tynankergav: Walruses, whales, seals. That industry declined in the 1990s. In recent years, thanks to the federal government and to you personally, this industry has been operating in a sustainable manner. At least the equipment these communities have is no worse than that of their eastern neighbours, and the population gets full nutritional value from these products. I think we will process meat to a substantial degree or at least do primary processing in the future.

My question is that some ethnic villages have been rebuilt in the previous seven years, but not all of them. So, social infrastructure is a problem that we cannot solve without federal assistance. Naturally my question is: can we count on such aid in the future? Especially considering that the federal budget funded the construction of two facilities last year, and two more social infrastructure facilities, mainly for healthcare are under construction this year.

And the last thing. I think I speak for many if I say that we see that you travel a lot and touch everything that people have done with your hands. But somehow we have been dropped off your itinerary. So I take this opportunity and use my authority to invite you to visit Chukotka.

Vladimir Putin: Thank you. Regarding assistance to Chukotka. As far as the healthcare system is concerned, Chukotka will also be covered by all the plans that we have as part of the healthcare modernization reform. Let me remind you that nationwide it will cost a healthy sum of money: 460 billion roubles in two years. But Chukotka, like other Russian regions, must present programmes for regional development. I assure you that the necessary funding will be allocated for each programme.

As for the development of the road infrastructure and city roads, there too we have programmes that the federal centre will support. Generally support comes through two channels– I may get some details wrong – but last year, and this year and the following year we have earmarked, I think, 1.7 billion roubles (1.9 billion) for Chukotka to supplement its budget. Next year it will be around 1.5 billion, not to speak of subsidies to the tune of about 2 billion. Support for Chukotka’s budget is envisaged by the federal budget for the next and for the two following years.

There should be no doubt about this. We are very well aware that Chukotka, like many other constituent entities of the Federation, needs support from the federal centre and we put money for this purpose in the federal budget.

Next please.

Dmitry Kogan: Mr Putin, there has been an omission today because not a single question has been asked about culture. I am Dmitry Kogan, a violinist, Merited Artist of the Russian Federation, Winner of the Da Vinci international prize, Moscow.

Historically there has not been a single conservatory from Novosibirsk to Kamchatka, Chukotka and the Primorye Territory. In other words, in none of these places higher musical education is available. The easternmost conservatory is in Novosibirsk.

You were absolutely right today when you spoke about migration, and migration is very much part of the life of my fellow musicians. If a person is gifted and wants to pursue his or her profession he or she has no choice but to leave home and go to Moscow, St Petersburg, Europe or wherever.

A wonderful example was cited here, you spoke about a school in Yakutia. I have been there.

Vladimir Putin: Do you share my opinion?

Dmitry Kogan: Yes, I was amazed. I gave a master class there. This is fantastic. But that is a regional project, and what we need in the Far East is a major federal project, we need a conservatory in the Far East.

I have raised this issue with the President of the Russian Federation and he was very interested. He immediately gave instruction to the Ministry of Culture to consider it, but for some reason the ministry does not see much point to it: I understand their position: they make calculations, count the number of musical works per capita. In general, our Ministry of Culture is very fond of special projects, exhibitions in Venice, ballet tours in Cannes or Nice. But their basic activity…

Vladimir Putin: There’s an attack on the minister of culture.

Dmitry Kogan: … Absolutely not. But we would like the ministry to engage in its core activity.

Vladimir Putin: He used to be our Ambassador to France, so perhaps he feels drawn there.

Dmitry Kogan: That’s understandable. France is a country of high culture. So I would like you to pay more attention to this issue. I had a long talk with the Khabarovsk Territory minister of culture yesterday and he told me that the average age of a member of the Far Eastern Symphony Orchestra is 50. They are people who were educated in Soviet times. There are no young people involved. I am absolutely sure that all the regions, all the musicians here dream of having a conservatory here. Thank you very much.

Vladimir Putin: You see, the ministry has to do the numbers, calculate, compare and weigh the economic pros and cons and look at what the state will have to invest in the material base and at the potential results. This is like building a road: you can build a road, but if it does not carry traffic, it is meaningless. The situation at hand is of course different. Perhaps an interim answer could be to create a branch of the Moscow or St Petersburg conservatory? But something must be done in this field, I agree.

Dmitry Kogan: During our talk with your namesake, Vladimir Vladimirovich, another idea came up…

Vladimir Putin: Yes, yes, I also thought about this…

Dmitry Kogan: A music faculty could be created at the federal university. In America, for example, one of the strongest musical institutions is Indianapolis University. It has a huge music department and a powerful school. This could be the answer.

Vladimir Putin: Yes. Vladimir Miklushevsky, do you think it is possible to combine all these things?

Vladimir Miklushevsky: I think it’s possible. The main problem will be recruiting teachers, that’s why, as we have said before, we must think together how to solve that problem. As it is, the university will have an arts school, we are planning on that, it will be a small school but it will be a credit to the university. It would make sense to include a conservatory..

Vladimir Putin: You make the tentative calculations and submit your proposals on how it should be organized and what the Government should do to support that idea.

Vladimir Miklushevsky: Very well.

Vladimir Putin: First you, and then those higher up. I’ll give you the next question, OK? I see your raised hand. Yours will be the next question, yes, yes, I mean you. I won’t miss you. It’s impossible not to notice somebody in such beautiful clothes.

Vadim Larionov: I am Vadim Larionov, chief doctor of the hospital in the town of Obluchye, Jewish Autonomous Region.

Esteemed Mr Putin, the medical professionals in the Far East have welcomed your programme, the programme of the United Russia Party, aimed at modernizing the healthcare system in our country. That modernization is necessary, is brought home to us vividly each time we come to work and see the state of affairs in the healthcare system. Unfortunately, the modernization, refurbishing and construction of new healthcare centers tend to focus on large federal, regional and territorial clinics.

I work at a small municipal hospital. My colleagues and I are doing all we can to deliver affordable, qualified medical care, but the state of our hospital could not stand up to any critical review. You may have seen the photos of our hospital on our region’s stand. The building is decrepit. There are cracks in the foundation and walls, the floors are rotten, ceilings are falling down, the medical equipment is old and outdated, and this only begins the list of the problems that we face every day. Meanwhile a cluster of enterprises with a great industrial potential is being formed near the town of Obluchye. These include the construction of the Kimkano-Sutarsky Ore Dressing Plant which has been mentioned here today. As a result of labour migration the population here may more than double in the next two or three years. We are already struggling to deliver timely medical assistance to the population. And in the future I think, in spite of our enthusiasm and dedication, we will be physically unable to do it.

Nobody doubts that a new hospital needs to be built. The construction of a new hospital did begin in November this year as part of the programme Social and Economic Development of the Far East and the Trans-Baikal Area to 2013. But at this point there is absolutely no chance for funding to complete the facility under the above programme, although in the future there is a chance that the construction will be financed by the regional budget.

Mr Putin, I am asking you to help us finance the construction of a hospital. If this is done we guarantee that the hospital will start operating in 2012. The ore dressing plant will be launched in 2013. If the construction of the hospital is delayed it would be disastrous, whatever one may say. And also, after the hospital is built we will be able to fulfill your request about comprehensive development of the Amur Highway because our hospital provides services for about a 150 kilometre stretch of that road. We render assistance to road accident victims within a radius of about 150 km on the boundary between the Jewish Autonomous and the Amur Region. Thank you.

Vladimir Putin: Thank you. Take your seat, please. I would like to go back to the programme that we discuss so frequently, the programme of healthcare modernization. For your institution to be included in that programme the Khabarovsk Territory must develop a relevant programme, submit it and defend it. This is about…

Vadim Larionov: The Jewish Autonomous Region.

Vladimir Putin: OK. Let it be the Jewish Autonomous Region or any other Russian region. The Jewish Autonomous Region will have to do the same. As I have said many times, we should not invest in every healthcare institution, we should proceed from the feasibility of developing healthcare within a given region. In some places facilities should be merged, in others new ones should be built and in still others existing ones should be repaired. But it has to be an integrated, clear-cut and articulate programme whose implementation would lead to a quantum improvement in services for the population, in better quality medical service and in higher wages for medical personnel.

As we increase funding under all items, wages should automatically go up. But in that case, like in other cases, and I repeat, your region, in this case the Jewish Autonomous Region, must submit its healthcare development programme to the Ministry of Healthcare and defend it. Funding can come not only from the Ministry, but through other channels. But that is another matter. First the programme must be developed and defended. I am addressing this to the Governor who is present here. He will now tell us how this work is going. You have the floor.

Alexander Vinnikov (Governor of the Jewish Autonomous Region):

Mr Putin, you see this project is part of the Federal Programme of the Social and Economic Development of the Far East and the Trans-Baikal Territory. Under the Programme, funding should have become available in 2009. But for various reasons it was not until this year that we managed, along with the Ministry of Regional Development, the Finance Ministry and the Ministry of Healthcare and Social Development, to get only the small sum of 24.5 million roubles to start construction. Under the programme the remaining funds will be disbursed in 2013.

Vladimir Putin: You know, the source does not matter, the important thing is that this is necessary. And if it is necessary you can put it in the programme of healthcare modernization. We can name the programme money as the source, if only you prove that it is a priority for the development of healthcare in the autonomous region.

Alexander Vinnikov: One feature of that programme is that there is no new construction and no reconstruction.

Vladimir Putin: Why, I think there is.

Alexander Vinnikov: Only capital and current repairs.

Vladimir Putin: I think it has both new construction and capital repairs. Let us see. If your programme is presented in such a way that it is a priority project, then we will do it. We say that children’s health, support of children’s health is a priority. We have agreed that it is about 25% of the total funding of the modernization of the entire healthcare system. But in some places children’s polyclinics and hospitals already exist, in some places nothing has been done in this area. It works out at 25%.

It’s the same in your case. You have done something, started something and it needs to be completed. Let us see if we can find a source of funding. This programme can be identified as the source.

Alexander Vinnikov: Very well, we will continue working on that.

Vladimir Putin: Any further questions? I think we should wind up.

Natalya Grigoryeva: Good day, Mr Putin and colleagues. I am Natalya Grigoryeva from Yakutia. Under the programme to overhaul apartment blocks, everything is repaired except the foundation. I live in a building that was repaired last year in accordance with that programme. Unfortunately the repair did not include the foundation. The commission that accepted the building after the repair said that our house would collapse within five years unless the foundation was repaired soon. This brings me to my question: is it possible to make amendments to the programme of capital repair of apartment blocks to take into account the northern conditions and make it mandatory to repair foundations?

Vladimir Putin: This is a totally unexpected twist because we allocate money for capital repairs. I doubt that we specify what needs to be repaired, the foundation or the roofs. Capital repairs imply the building’s structure and that certainly includes the foundation. What can be categorized as capital more than the foundation? This is a total surprise to me. We will rectify this situation by all means. If our colleagues in Yakutia for some reason do not think it is necessary to repair the foundations and do not include it in capital repairs, that is odd. I took note of what you said and we will react. I will tell Tsytsyn about it (K. G. Tsytsyn is Director General of the Housing and Utilities Reform Fund).

Igor Savinov: Good day, Mr Putin. I am the coordinator of the All-Russian Organization Opora Rossii for the Far East and the Chairman of the Primorye Branch of that organization. A lot has been said here about some excellent projects that have been presented. But for some reason not a word has been said about such an important topic as small and medium-size business. I don’t think this topic can be avoided when prioritising party projects, and I don’t think that it is not worth considering within the context of development in the Far East. I hasten to correct this mistake and touch on this topic.

Vladimir Putin: Please do.

Igor Savinov: What is happening in the Primorye Territory? Huge projects, vast amounts of funding, major companies come here with serious investment. But one should understand that small business will not grow around these large plants by itself. It will develop as a part of the infrastructure: shops, hairdressers’, restaurants. Today we have declared a goal to harness small and medium business to assist in the country’s modernization. Our organization has diligently studied the experience of Japan, where 97% of all enterprises are small. It functions there in the shape of clusters. Our development in this area whereby everything is produced at one place resulting in the cost and competitiveness of a product being beyond criticism is thoroughly outdated. This is a long outdated approach. Small business is involved in this process everywhere. Everywhere large corporations contract with small and medium enterprises. Such giants as Toyota and Nissan trust small business and award orders. As a result a competitive environment is created… Just a minute. I understand that everybody is tired, but even so it is an important topic.

Vladimir Putin: We are about to finish.

Igor Savinov: This is my question. In your opinion, what set of measures must be taken to stimulate large enterprises to adopt this cluster supply system called the “production cluster” which will involve small and medium companies? How can we convince large enterprises that they can benefit from this approach? If we can, the role of small business will increase, we will meet the target of increasing their numbers, and of course it has social implications as well. Thank you.

Vladimir Putin: I was just about to give you the floor. Take your seat.

It is a very important issue not only for the Far East, it is important for the entire Russian economy. In recent years we have done a great deal to support small and medium-sized business and the number of small and medium-sized enterprises is growing and it is growing rapidly. Small business is entering ever new production sectors.

Unfortunately, so far, if you look at the structure of small and medium businesses, 41% of them are in retail, another 7-8% in financial transactions and 7-8% are in real estate and land trade. That leaves much less than half in production. The state, of course, must create a proper environment for the development of medium enterprises, especially in the real sector of the economy.

I am not going to rehearse everything that is being done. Funds are being created; we channel money through the regions, through the Development Bank, through VEB. That is one area.

The second area is improving anti-monopoly legislation so that big companies are encouraged to place orders, as you said, outside the walls of their own business. The Ministry of Economic Development is preparing some proposals concerning this matter. I won’t get ahead of things, but you have touched a sore spot there and an issue that is important for the development of the country’s economy. The relevant government agencies are aware of it and they are developing the necessary proposals.

One of the mangers of Sollers will now tell us what they propose to do.

Vadim Shvetsov: My name is Shvetsov, Director General of Sollers. You know that we will create 1200 jobs next year, “Multiplier 6.” These are service stations, repair shops and the production of car parts. I think we should work more closely and in principle, we will provide these opportunities. As of today, companies are queuing up to become our vendors, to provide services and produce components. For example, we are looking for a contractor to produce car seats, so in principle there are business opportunities, as I said “Multiplier 6.” There is a very good programme for small businesses, but for some reason they ignore it. For example, scrapping used cars is a very good business. The programme will get underway next year. Why can’t small business take on that programme? I think this is a fairly good programme. And I think that we will meet with you, Mr Putin, to decide on and write up a programme. I think we should meet with the governor to include small and medium business in our plans.

Vladimir Putin: Thank you. Dear colleagues, we have been in session for quite a long time, and I see that the audience is tired. This is what I would like to say in closing.

Ladies and gentlemen,

In conclusion, I’d like, first, to thank my colleagues sitting here (points to the presidium seated on a podium) and those who have delivered pertinent speeches. They covered only a small part of what is under way in the Far Eastern region, but it is a very indicative part. They presented nearly all of the main regional industries – the fishing, timber and steel industries.

But this is not all. The energy industry has not been presented vividly enough, although it is an important industry, and neither was infrastructure investment presented in one way or another. We spoke about it, but only in passing, although it is a critically important part of development. We have not mentioned much of what is important, but we never forget about this.

The Far East is not just a huge territory and rich natural resources; it is also the people who live here, who know their land and love it, and who feel that it has a large development potential. Our task is to bolster confidence and to expand the planning horizons of this region. If we work hard to implement the plans we have discussed today we will certainly succeed.

I wish you success.

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