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

Minutes of Prime Minister Vladimir Putin's Question and Answer Session

MARIA SITTEL: Good afternoon, I'm Maria Sittel.

Public reception offices of Prime Minister Vladimir Putin, the leader of the United Russia party, opened several months ago. In less than six months, they have received hundreds of thousands of letters from people around the country.

Those who work with these letters on a daily basis are in this room today. We have also invited the people who had personally brought their letters to Vladimir Putin's public reception offices.

ERNEST MACKEVICIUS: Welcome to Moscow, to Vladimir Putin's question and answer session. I'm Ernest Mackevicius. With us is Prime Minister Vladimir Putin, the leader of the United Russia party, live.

MARIA SITTEL: Each of you can address your questions to Vladimir Putin. Telephone calls will be forwarded here, to the information processing centre. Our number - you can see it on your screens - is 8-800-2004040. Calls are free. You can send your text messages to number 0-40-40, or ask your questions via www.moskva-putinu.ru.

During today's session, we will link up with some of Vladimir Putin's public reception offices in different parts of Russia. In this room, my colleague Ernest Mackevicius and I will work together with a group of assistants Anna Titova, Pyotr Rovnov and Dmitry Sedov.

ERNEST MACKEVICIUS: Good afternoon, Mr Prime Minister.

VLADIMIR PUTIN: Good afternoon.

ERNEST MACKEVICIUS: You were appointed Prime Minister over six months ago. How do you feel in that office? And could you tell us about some of your achievements?

VLADIMIR PUTIN: It is not the office that matters, but the responsibilities of a state post. This job is not new to me. I chaired the Government in 1999, and I maintained close ties with the Government when I was President. This is a very demanding job, especially in the current situation. But I am happy I got this chance to serve the people in this position.

ERNEST MACKEVICIUS: You have hinted when you assumed the post that the foreign economic situation was different.

VLADIMIR PUTIN: Yes, of course. In fact, the current events in the Russian economy are a result of the global financial crisis. Nobody needs to be told today - it is a fact - that the crisis began in the United States, whose financial and economic policy has resulted in the crisis, which has spread to nearly all the leading economies. It has also reached Russia, we can feel it, but on the whole, our economic results in 2008 are positive even despite the negative effects of the global financial crisis.

Let me just remind you of the figures. The economic growth target was above 7%, or more precisely 7.5%. The annual growth rate will be around 7%, possibly 6.8% or 6.9%. This is good.

What is particularly important for us is the results of our efforts in the social sphere. The increase in take-home wages will be approximately 12.6% and pensions slightly more than 12% - 25% in nominal figures. Industrial production growth will be nearly 5% (4.8%).

As for agriculture, it posted record-high growth over the past few years, 8.8%. We have gathered in a record-large harvest, including over 100 million metric tons of grain, which is the highest in many years.

It is true that we have problems with inflation. The target figure was slightly above 12%, but annual inflation is likely to be 13%, because of the global crisis and because the Central Bank and the Finance Ministry had to inject a huge amount of liquidity into the economy. It certainly spurred inflation.

But on the whole, I repeat, the annual results will be good despite the global financial crisis.

ERNEST MACKEVICIUS: Mr Putin, will you have to change plans for the future, and if so, to what extent?

VLADIMIR PUTIN: In principle, we have no intention to change any plans, which is very important. I am referring also to the investment plans of Russia's largest companies, and the planned reform of the housing and utilities sector, healthcare and compulsory health insurance, as well as the planned reform of education and the pension system.

In addition - I think we will discuss these issues in detail later, since there are bound to be questions - I want to say at the beginning of this session that we will fulfil all our plans in the social sphere, all decisions aimed at increasing social payments and pensions.

Everyone knows that some countries which have been hit by the crisis are planning to cut wages and people's incomes. We will not do this in the social sphere. On the contrary, we intend to implement all our plans aimed at increasing allocations.

ERNEST MACKEVICIUS: The people's reaction in this room speaks louder than words. Mr Putin, when we were preparing for this session you selected the most frequently asked questions, issues that are of greatest concern to the people. And the biggest question is, will we survive the crisis?

VLADIMIR PUTIN: To be honest, it is going to be a difficult period in the global economy, including Russia. And we must be prepared for it morally, administratively, financially and even politically. But as you know, Russia has survived bigger troubles in over a thousand years of its history.

Not very long ago, in the early 1990s, we faced the problem of territorial integrity, and industrial and social disintegration.

Today the situation in the country is totally different. We have a good chance of getting through this difficult time - and I repeat, it will be a difficult time - with minimal losses for the economy and the people.

ERNEST MACKEVICIUS: I want to remind you that you can ask the Prime Minister questions over the telephone, using text messages and also online. The questions are forwarded to the information centre where my colleague, Maria Sittel, is now working. Masha, we are waiting for your information.

MARIA SITTEL: Yes, Ernest, the number of telephone calls has peaked in the first few minutes of our live broadcast. Text-message users, which include senior citizens, are very active, as can be seen by their serious and socially oriented questions. Here are just a few remarks highlighting various issues of interest to Russians.

"Mr Vladimir Putin, please save the Fatherland! When will you close all gambling houses nationwide? I want my husband to bring his money home, not waste it at a casino," says a woman from Dimitrograd in the Ulyanovsk Region.

Here is another remark, which sounds more like a proposal: "I don't remember a single case when a civil servant resigned voluntarily for bad work. Why is this so?"

Naturally, most remarks deal with the crisis, loans, mortgages and employment.

I am putting through a telephone call from Bashkortostan. Hello, what's your name?

DMITRY SALNIKOV: Good afternoon, Mr Vladimir Putin. This is Dmitry Salnikov from the village of Tirlyansky.

We would like to ask you this question. We are a young and currently jobless family because our company could be shut down anytime due to the global crisis. Most locals are also unemployed because they used to work for the metallurgical sector. What are we supposed to do in this situation?

VLADIMIR PUTIN: I have mentioned these difficulties from the very outset. To be frank, we started our conversation with this.

Companies used to expand and hired the required number of workers during the economic development period and in conditions of soaring global demand for some of our traditional products, including those in the metals industry.

I have already told the United Russia congress in this same hall that worldwide metals consumption plunged after the automotive industry curtailed production. The main US, Japanese and European consumers have decreased production by over 30%, 15% and 20%, respectively.

Russia has also cut exports. Our steel mills used to export almost 50% of their products elsewhere. Naturally, we cannot directly influence this objective problem.

At the same time, I am absolutely convinced that the global market will change, and that this country will need more metals and other traditional products. Naturally, human resources, especially skilled workers, will be in great demand.

But what can and must be done today?

As I have already said, we are raising unemployment benefits for jobless people to 4,900 roubles ($175) per month. This is the first thing.

Moreover, I believe that private and public authorities will have to draft an entire range of measures in an effort to preserve jobs wherever possible and to start implementing them in the near future, I mean within the next few days. On Tuesday, I discussed this problem with a large group of regional governors.

The relevant allocations must be used to finance retraining courses for the workers of affected businesses. We must provide additional regional migration opportunities and redirect human resources to regions requiring such resources. We could pay relocation allowances to such people.

We must implement public works and infrastructure construction projects. We have the required funding for accomplishing this objective and have also accumulated resources at the Road Fund, transport monopoly Russian Railways and some other major companies.

We will implement this entire range of measures.

Also, I consider it necessary that employment services accumulate the required funding for reacting promptly to these most pressing problems.

ERNEST MACKEVICIUS: Mr Putin, you mentioned the aid being rendered by the state to some other areas of the economy. But as I looked through the questions that arrived at our website, I see that not everybody understands these measures. People are under the impression that large banks mainly receive the money.

Here is one question on the subject: "Are the big banks worth helping? The banks take money from the state at 6% per annum, but lend at 25%, including to small and medium-sized businesses. Perhaps, it would be better to help the industry?"

And in general people want to know if the Reserve Fund has enough cash to live through the crisis.

VLADIMIR PUTIN: First about the banks. Banks are the circulation system of any economy. We should remember the negative consequences of previous years or the negative results of meltdowns in previous years, for example in 1998, when the whole banking system collapsed. We cannot, of course, allow this to happen again, because behind the banks are not only industrial businesses, behind them are millions of savers - the ordinary people of Russia, who want banking institutions to function properly and have enough cash to meet people's interests. This is why we are channelling vast resources into the banking sector. We have already reported this figure - about 5 trillion roubles. The Central Bank is allocating all kinds of resources. Long-term resources are already on the way, as are medium-term resources (although long-term resources are in short supply, and we will discuss that later) and short-term resources. These resources are all available and are being injected into the banking system.

Of course, we worked above all with banks that would not squander state money, or rather your money, citizens of Russia, the money contributed by taxpayers. What are these banks? We call them "system-forming" banks. These are banks with state ownership: Sberbank, VTB (Vneshtorgbank), and Gazprombank. Partly, it is VEB (bank for foreign economic relations): but properly speaking, it is a separate institution, one through which we carry out a number of other functions. But of course what we see now is that these efforts to support only the banking sector are not enough, because today's crisis is largely unique. The global economy has not met with a crisis of this size before.

So today we decided to support the industry directly through the banking system, and directly through the banking sector. I will tell you now what I mean by directly. To support the industry we allocated 175 billion roubles. These are long-term loans which must be directed to production or service-based businesses. At the same time, we will demand from the banks that they report to us on three sectors to which they are going to lend money. What are these sectors? These are farming, the defence industry and small and medium-sized businesses, as well as a long list of enterprises which we recommend.

My starting point is that this might not be enough. Currently, we are taking a close look at how the banking system operates. Their problem today is not that of liquidity, it is one of trust - between the banks themselves and the banks and the production and service-based businesses. Of course, we will be insisting that state money reaches the end user. But this too might not be enough, and then we will need to use other tools. What tools? For example, joining directly the capital of large companies where the state and the taxpayer will ultimately benefit; capital of enterprises that are the core of the Russian economy. We are not ruling out that such tools could be applied on a wide scale.

As for the banking sector, this form of state participation is already stipulated through the Deposit Insurance Agency, which has been allocated the necessary resources totalling 200 billion roubles and which has the right to join the capital of problem banks.

If necessary, we also consider it possible to spread the practice to the industry in the near future.

ERNEST MACKEVICIUS: The second part of my question is about the Reserve Fund.

VLADIMIR PUTIN: When a TV viewer asks a question about the Reserve Fund, he probably means all the state reserves in general. Because we have the Reserve Fund, the National Welfare Fund and the gold and currency reserves of the Central Bank. I won't dwell on how each of these funds works, but I can say that, of course, we have these reserves, and they are large. Russia has the third biggest gold and currency reserves in the world.

In fact, I have just received updated information from the Central Bank, and for the first time in recent weeks we see a growth of the gold and currency reserves of the Central Bank of the Russian Federation.

We have been saving these assets to use them in case of crises in the world economy and, as a consequence, in the Russian economy. That is what we are doing. But we will do it carefully.

What does "carefully" mean?

We should have a clear idea of how much currency flows into the country and because of the falling world prices for our main commodities - energy, oil, gas, petroleum products, metals, fertiliser and some other products ¬- because of the falling prices for all these goods in the world markets and because we continue spending significant amounts of currency on imports, the inflow and outflow is regulated by instruments that are well known in the economic and financial sphere, and we will use these instruments.

But we will not allow leaps in the economy and sudden changes in the exchange rate of the national currency. To secure the interests of both the citizens and the economy we will, if necessary - and we have done so before - we will carefully use the gold and currency reserves and the other funds at the Government's disposal. If we pursue a balanced, meaningful and responsible economic policy, these assets will be sufficient.

ERNEST MACKEVICIUS: Some people in the room would also like to ask a question.

Pyotr, I am addressing Pyotr Rovnov, give them a chance to ask a question.

PYOTR ROVNOV: Yes, Ernest. Who would like to ask Vladimir Putin a question? Ask your question, and please introduce yourself.

ALEXEI LISHENIN: Alexei Lishenin, Volgograd. Good afternoon, Mr Putin. On the eve of the New Year holiday Russian people have two problems: where to buy a Christmas tree and will Ukraine pay up for the gas we have supplied?

We can handle the first problem, but as for the second one, I would like to hear your competent opinion. Thank you.

VLADIMIR PUTIN: As for the Christmas tree, I think every family that wants to have one will be able to buy it, a real or a synthetic one (people use synthetic ones more and more often nowadays). It creates a certain atmosphere in communities and in homes. In general, it is a very joyful and beautiful holiday. In spite of all the problems, I think people will enjoy seeing the New Year in.

I would like to take this opportunity to wish all of you a very happy New Year.

As regards Ukraine, we have a complex ongoing dialogue. It is true that our Ukrainian partners have outstanding debts, over $2.5 billion, which is quite a big amount for Gazprom and for the country as a whole.

We are aware that the Ukrainian economy is having even bigger problems than Russia: the metallurgical industry there, as far as I know, has dropped not by 50%, like here, but by 70%, and that is very serious. Nevertheless, commodities cannot be free, everyone has to pay for them.

Our partners tell us: keep the prices of the current year. How can we leave the prices of the current year if even today our Ukrainian partners get our gas at almost half the price of what we get from Europe. We have an understanding to work towards market prices. We cannot sell liquid commodities at half the price or provide them for free; we need money ourselves, we have our own social problems to solve. A friend of mine used to say whenever I asked him a tricky question like this, "Are you off your rocker?"

It's the same situation. Go to Germany, enter any store and say: I want a Mercedes for free or at half a price. Who would give it to you? Why should we sell gas at half a price?

But of course we will treat each other as partners. We are negotiating for a smooth transition. In principle, we have agreed on price formation and these are not just agreements of an administrative nature.

The whole point of our agreements with our Ukrainian partners is that we pass on to market pricing. The price of gas is linked to world oil prices, and if the oil price goes up, the gas price goes up to, if oil goes down, the gas price goes down and we will then lose some of our earnings. But that is fair, we do not control these prices.

We hope to be able to reach mutual understanding with our partners, and we assume that we will not have any problems with the transit of our energy resources to the main consumers in Western Europe. We had reached such agreements with Ukraine in earlier years and I hope that they will duly abide by these agreements.

But if our partners fail to honour these agreements or, as it has happened in the past, siphon off our resources from the transit pipeline illegally, we will have to reduce the feeding of gas. What else can we do? We have no other option.

We are going to brief our European partners on that in the near future.

ERNEST MACKEVICIUS: The directors are telling me that our colleagues in other Russian cities are already on line. But I see some raised hands in the hall. So, Anna, let us have some questions from the studio.

ANNA TITOVA: The audience is ready to join in the conversation. There are questions in the front row.

OLEG BELAN: Good afternoon, Mr Putin. Nenets Autonomous Area. I am Oleg Belan and I am a deputy of the regional assembly.

Do you think our relations with the United States will change after the election of Barack Obama as President? Will they become more pragmatic and constructive? Thank you.

VLADIMIR PUTIN: The question should be directed first and foremost to the new US Administration. Usually, when there is a change of power in any country, especially such a superpower as the United States, such changes do take place. We very much hope that the changes will be positive.

We see these positive signals. What are they? Look at the meeting of NATO foreign ministers: both Ukraine and Georgia have been denied a Membership Action Plan. We already hear at the level of experts, the people who are close to the President elect and the people around him, his aides, that there should be no hurry, that relations with Russia should not be jeopardised. We already hear that the practicability of deploying the third position of missile defence in Poland and a radar in the Czech Republic should be considered once again.

We hear that the relations with Russia should be built with respect for our interests. If these are not just words, and if they are translated into practical policies, then of course we will react in kind and our American partners will immediately feel it.

ERNEST MACKEVICIUS: Thank you, Mr Prime Minister. We have a question from Severodvinsk, where my colleague Dmitry Petrov is working now. Go ahead, Dmitry.

DMITRY PETROV: Good afternoon, Mr Prime Minister, colleagues, Severodvinsk here. This is the Zvezdochka plant, a leading defence enterprise producing cutting-edge equipment for developing offshore Arctic resources. But it specialises in repairing submarines. This beauty here is the Karelia strategic submarine. It has just been repaired and will now be prepared for returning to combat duty.

We have here the plant's workers, engineers and designers as well as sailors. All of them are directly contributing to the country's defence capability, and they have questions for Mr Putin.

PAVEL PERSHIN: My name is Pavel Pershin, I am an engineer at the Zvezdochka plant. The Government's attention is now focused on the defence sector. We have almost no problems with allocations or state contracts. We hope this situation will persist despite the financial crisis, but it will not solve the plant's other problems.

The main problem is the depreciation of fixed assets. Government allocations to shipbuilding are now mostly invested in research.

The second problem is personnel. In Soviet times, people went to work in the north of the country because the jobs paid well, but now I earn as much as engineers working in central Russia.

My question is what will the Government do to modernise defence enterprises and to reinstitute full-scale salary increases for personnel working in northern regions?

Thank you.

VLADIMIR PUTIN: I know the Zvezdochka plant very well; I have visited it more than once. In fact, I even know the submarine I can see in the background. I have been on board of that submarine as President when I visited the Northern Fleet; I even went to sea in it. My best regards to its crew.

As for the plant, I'm sure you definitely know about its financial problems. We are dealing with them, and we will not leave the plant to struggle with them on its own. We have taken measures to improve the financial situation, and we will continue to help the plant.

As for the salaries, they should largely and primarily depend on the plant's economic efficiency and work orders. This is why we plan to place state contracts at the Zvezdochka plant and also to help it to get other, civilian contracts. As you know, the plant is already working on such contracts.

As for pay increases for working in rigorous northern conditions, the system is still in place. But since there are certain problems with it, we have been looking at ways to improve it. The same goes for the people who are planning to move to other regions after retiring. I'm sure people know about the problems I am talking about, and we have been tackling these problems regularly. We will continue to work on them.

As for the main question, I want to repeat that we will send more contracts to Zvezdochka and help to resolve its financial problems.

ERNEST MACKEVICIUS: I see people in this room want to comment. Dmitry, let people ask their questions.

PYOTR ROVNOV: Many people have questions for Mr Putin, but I think we should give the floor to the man in the uniform. Please, introduce yourself.

ALBERT SLYUSAR: Lieutenant General Albert Slyusar, from Ryazan, representing the International Union of Veterans of the Airborne Force, the Airmobile Force and the Special Operations Forces.

Mr Prime Minister, the army reform provides for dismissing over 200,000 officers and liquidating the institute of warrant officers. This makes many of them wonder what they would do in the future, if they would have housing and get jobs, pensions, health and other insurance.

My second question is if the army reform will have a negative effect on the country's defence capability.

Thank you.

VLADIMIR PUTIN: I expect the reforms that have been planned and are being implemented in the armed forces will certainly influence our defence capability - for the better, by improving it. This is why we are doing it.

As for the dismissals you mentioned, we are not planning mass layoffs. Moreover, only the officers who are slated for retirement - the first category - will be dismissed in 2009. The second category includes officers conscripted for two years after finishing military training at civilian higher schools, whose conscription period is ending.

As for warrant officers, we will stop training them, but those who wish to continue serving in that rank will be able to do so. Those who wish to fulfil the same duties as civilian personnel, which implies higher pay, can make their choice. I repeat, the warrant officers will not be dismissed only because they hold this rank. Their fears are ungrounded.

If some officials go too far, if we expose unplanned problems, we will react immediately. I have no doubt about this.

Now to the housing problem. In 2010 all officers are to be provided with permanent housing, and all servicemen will receive service housing in 2012.

Our speed in tackling this problem is high enough to ensure that we reach these targets.

ERNEST MACKEVICIUS: Thank you, Mr Prime Minister.

I suggest that we keep the linkup to Severodvinsk, but ask what questions have been addressed to the information processing centre where my colleague Maria Sittel is working.

Maria, what questions do TV viewers have for the Prime Minister?

MARIA SITTEL: They concern many issues, but I suggest we keep to the military aspect for the moment.

Mr Prime Minister, a huge number of young mothers and young people are sending text messages and phoning to ask if it is true the Government plans to extend the term of military service to 32 months instead of one year?

VLADIMIR PUTIN: Absolutely not; it is just an ungrounded rumour.

The decision has been taken to cut military service to 12 months, and we are not going to change it. I am referring to service by conscription, of course.

ERNEST MACKEVICIUS: I can see on the monitor that there are not only civilians but also navy officers in Severodvinsk. Let's give them a chance to ask their questions.

VLADIMIR PUTIN: Yes, let's.

DMITRY PETROV: Are any Navy servicemen ready?

Captain Third Class, please introduce yourself.

VADIM KOLENKO: I am Captain Third Class Vadim Kolenko, combat-unit commander with the strategic missile submarine Karelia.

Mr Prime Minister,

In continuation of the Lieutenant General's question, I would like to ask you to explain the system for acquiring housing under the programme State Housing Certificates.

Many submarine crews are solving their problems with the help of this programme. The concerned parties have already raised the issue of bringing housing certificates' value in conformity with the market value of one square metre of housing.

I will be discharged in 2010 at retirement age. So, my first question is: Will my comrades and I be able to obtain housing in line with these certificates?

Second, how do you plan to provide housing to military personnel serving in the Far North?

Thank you.

VLADIMIR PUTIN: Please forgive me if I am mistaken on some details, but the statistics will, nonetheless, be fairly accurate. In early 2008, one certificate cost 26,400 roubles. In the first six months of 2008, we raised the value of these certificates. Today, one certificate costs about 28,500 roubles nationwide and nearly 34,800 roubles in Moscow and St Petersburg.

One square metre of housing costs an average of 28,000 roubles nationwide. Consequently, each certificate has an adequate value. To be fair, it should be noted that, although one certificate costs 34,000 roubles in Moscow and St Petersburg, local housing is worth about 42,000-44,000 roubles.

But every cloud has a silver lining. I proceed from the premise that nationwide housing prices, including those in Moscow and St Petersburg, will go down. Consequently, these certificates will make it possible to buy apartments even in sprawling megalopolises.

Naturally, this will be more difficult in Moscow and St Petersburg because local housing costs 42,000-44,000, while the certificate is worth 34,000 roubles.

In addition, we are allocating another 21 billion roubles for the Defence Ministry which will use the funding to buy complete or nearly complete apartments for military personnel on the market.

This means that the Defence Ministry will be able to buy another 10,000 apartments for military personnel. This is an impressive amount.

The St Petersburg municipal administration and we have now agreed that the administration will compensate the gap between 34,000-rouble certificates and 42,000-rouble market prices (the average price of one sq m for St Petersburg) at its own expense.

We would make considerable headway, if we manage to reach a similar agreement with Moscow on this score. I hope Mr Luzhkov can hear me.

I want to repeat once again that, on the whole, we are convinced that we will solve the private-housing problem in 2010.

As to your question about the allocation of housing for active military personnel, they will receive service apartments. We plan to completely solve this problem by 2012.

ERNEST MACKEVICIUS: Thank you, Mr Putin. Thank you, Severodvinsk.

Let's move on.

ANNA TITOVA: Excuse me, Ernest, but what about mortgages? People are asking many questions on this issue. Everyone is really concerned about housing. Let's give the audience a chance to ask one more question on the subject.

ERNEST MACKEVICIUS: Tell us your name, please.

NATALIA GOGOL: Hello.

My name is Natalia Gogol, I am an accountant from the Moscow Region.

I would like to tell you that banks have been refusing to issue mortgage loans lately under various pretexts. Some set prohibitive rates, and it becomes virtually impossible, or at least not easy, to take out a loan. Some banks insist that customers clear any outstanding loans first. Will the Government do something about this? What are we to do? Thank you.

VLADIMIR PUTIN: The rates are rising, I admit. It is an effect of the global financial crisis, its repercussions for the Russian economy. It is also happening because the Central Bank is compelled to raise its refinance rate in order to prevent further outflow of capital from the country. I won't go deep into economic theory here, there have been a lot of proposals on how to mitigate the negative effects on consumers, how to encourage consumer demand and also housing construction.

As for the banks' demands of early clearance of mortgage loans, it is basically a civil law issue. If your loan agreement contains a recapture clause stating that, if the collateral value drops, the bank has the right to require additional collateral amount, then the bank's demand is formally legitimate. Usually banks ask their clients to repay part of the principal loan. However, banks really shouldn't be doing this, because they end up with the same problem as their borrowers: property as collateral. The bank won't be able to liquidate an apartment easily now.

This is a separate issue we have already discussed. Here is what we could do. I think the Government could issue state guarantees to banks through the Agency for Housing Mortgage Lending. The banks could use these guarantees to solve their financial problems rather than "terrorise" their customers. I think it would be the best solution for all.

If there are more questions, I can talk about it in more detail later.

Go ahead, please.

ERNEST MACKEVICIUS: But there are many questions about the same problem, Mr Putin: "I lost my job, I cannot make my mortgage payments, please help me keep my home."

VLADIMIR PUTIN: Then let's discuss the problem further. It is certainly a very sensitive issue. I can understand people who find themselves in this situation, one of life's major emergencies. Persons losing their jobs, or their employers shortening their hours or wages due to global economic and financial turmoil - but one still has to make regular mortgage payments. What is to be done in such cases? Can the Government help? Yes it can and it must. How?

Here is what we propose. For those who lost their jobs or whose pay was cut dramatically - I will repeat that we plan to issue state guarantees through the Agency for Housing Mortgage Lending. The Agency can take over mortgage certificates on condition that the bank revises the agreement with the borrower. With these certificates, the bank can even raise liquidity by applying to the Central Bank.
I think we should try to implement the proposals I am formulating now as soon as possible, because they will help those Russians who got in trouble, and rehabilitate the banking system.

ERNEST MACKEVICIUS: Thank you, Mr Putin. Now let's take one more question from the audience. Mr Rovnov, let it come from the left side.

PYOTR ROVNOV: Who wants to ask Mr Putin a question? Please introduce yourself.

VLADIMIR BELOUSOV: Good afternoon, Mr Putin. My name is Vladimir Belousov and I am from the National Society of Motorists, chairman of its Moscow regional organisation.

Motorists and, as I understand, all people employed in industry, are asking the same question: with world oil prices plummeting across the board, will our fuel prices finally come down? Thank you.

VLADIMIR PUTIN: That's a very good question, and people are, of course, right to ask it. Oil prices on world markets have fallen by half or even two-thirds, while inside the country there has been an insignificant, if any, reduction in them. Why is that?

Mr Belousov, what is happening is this: even when oil prices were high, we took most of oil companies' windfall profits away from them and into the budget - through export and customs duties and taxes, as much as 80% and sometimes even 90%. It was thanks to these revenues that we formed most of the country's gold and hard currency reserves, which today, as I said earlier, are the third largest in the world - $450 billion. They are our "safety cushion" and allow us to make things easier during the crisis for millions of people.

What is happening today? Today we have slightly reduced the tax burden on the oil and gas sector, but it still remains quite high. Oil companies are, of course, suffering losses and now that world prices are down and taxes still high, they are trying to make money at the expense of domestic consumers. True, it is also in a way the state's policy, and it can be discussed with deputies.

What is actually happening? At the expense of people with large or even medium incomes, at the expense of people who can afford to have a car and buy petrol, we are withdrawing revenues into the budget and distribute them among those badly in need: the unemployed, the disabled, the retired, and servicemen. But, of course, there are limits and we should always seek the golden mean.

Oil companies today lose $68 per tonne of exported oil. What is more, when we announced we were reducing the mineral resource extraction tax from December 1, they simply stopped shipments to avoid having to pay extra into the budget. We made them resume the shipments and replenished the budget, while they honoured their promises to consumers. But this means losses for them, of course.

From January 1, 2009, we are planning a further reduction in the resource extraction tax. In this case, many companies will break even or be slightly in the black, if we disregard their current investment spending. But we will discuss this topic separately. And we expect that our next steps to lessen the tax burden will no doubt bring down domestic prices inside Russia.

ERNEST MACKEVICIUS: Thank you, Mr Putin. Now I will again give the floor to Ms Sittel, to be followed by a direct link-up with Khabarovsk. But first Maria Sittel. Please, go ahead.

MARIA SITTEL: Work is in full swing; operators are receiving phone calls real-time and are processing text messages and e-mails from the site. It is too early to give any comparative statistics, see which region is the most active. Most likely, we will be able to do it only after the air.

But what I can say with statistical accuracy: up to this minute the information processing centre has received 1,310,000 calls and 550,000 text messages. Interestingly, despite being shorter, some text messages are not second to phone calls in terms of meaningfulness. Here is a short, terse and emotional text message: "To Putin. From Nadezhda Mukhanova, a pensioner, 68 years old. My pension is 3,500 roubles, fire wood costs 10,000 roubles. How can I survive?"

VLADIMIR PUTIN: Of course metropolitan residents and the majority of people in this country might think such a problem is insignificant. But in fact it is a serious problem for people living in rural areas; I am well aware of it. It is not simply a matter of pensions, although it is obvious that pensions must be raised. Certainly, if more questions of this kind are voiced today, we will touch upon the outlook for the pension system's development. Undoubtedly, pensions must be raised.

As for the fire wood Nadezhda Mukhanova asks about, this problem is addressed in the framework of the notorious Law No. 122 that states the responsibility for timely fire wood supply to rural areas be attached to local governments, which in turn are to allot adequate funds to municipal authorities. When purchases are made on a centralised basis, by municipal authorities proper, they sell fire wood at 10,000; and they can actually make a bid of 20,000. But if money is given directly to people, as a rule, they manage to find other distributors whose prices are two or three times lower.

Unfortunately, I do not know where Nadezhda Mukhanova lives; it is necessary to check what is happening in the region, territory or republic where this TV viewer lives. If we are able to find out after the programme, I will try my best to take the necessary steps. Of course, I hope for local governments' support as well.

I would like to reiterate that this problem is being addressed rather effectively. I know that in some regions, for example, in the Tyumen Region, there is no such problem anymore, which means that it can be resolved effectively in other constituent entities too.

ERNEST MACKEVICIUS: If you don't mind it, I would like to read a text message on foreign affairs: "Europe withstands the world crisis better than the US. Perhaps it makes sense to step up efforts towards integration with Europe?"

VLADIMIR PUTIN: You know we pursue multi-vector foreign and foreign economic policies. We cooperate with Asia's actively developing markets, with the countries of the Asia-Pacific region; we interact both with Latin America, and the US, which is one of our major trade and economic partners; and I hope it will remain so in the future.

As to Europe, it is still our major partner. The European Union accounts for over 50% of trade turnover with Russia. As far as I remember, its share reached 53%, or even more. Furthermore, we do not simply trade with the European Union - in the general economy, in its key areas, real integration is taking place. One such area is certainly the energy industry.

I made this point already, and I can repeat it. We admitted a number of European companies - Finnish, Italian and German - to our energy sector; they acquired the biggest blocks of shares with our power companies, invested literally billions of dollars and euros. We invite such investments. We admitted them to participate in the development of hydrocarbons - both oil and gas.

I have to do justice to our European partners. For their part, they ventured the construction of new routes for our energy resource supplies to Europe. An excellent example is the constructing of the North Stream gas pipeline and our plans for the South Stream, as well as some other projects. Europeans have also admitted us to their energy transport system, namely the trunk pipeline. These are very good examples of integration in a crucial economic sphere: energy. This cooperation will increase the transparency, reliability and stability of both the Russian and European economies. We will continue pursuing this policy. Also, one can see obvious progress in politics.

Unfortunately, there is a lot of prejudice. Some attitudes are taken from the past; there are a lot of phobias, especially in the so-called New Europe. But I think that those nations, especially their governments, will eventually come to realise that it is necessary to face the future instead of clinging to the past.

ERNEST MACKEVICIUS: Thank you.

I suggest that we come back to the regions. It is no secret that the most frequent questions people send to our editorial office and to your public reception offices have to do with the social sphere, above all with healthcare. So, the staff at your reception office in Khabarovsk went to a regional health centre.

Let us hear from Khabarovsk. Russia Channel's Pavel Zarubin is at the health centre now.

PAVEL ZARUBIN: Hallo, Moscow. Good afternoon, Mr Putin.

Welcome to Khabarovsk, the capital of the Far East, the city whose picture adorns the 5,000 rouble note and which has more than once been named as the most comfortable city in Russia to live.

It also has perhaps one of the best perinatal centres in the country, which is where we are at the moment. A new building is to be opened here tomorrow. The doctors here will use state-of-the-art technology to bring babies to life, even if they are in a critical condition.

Today the Centre's staff, patients and simply people who live in Khabarovsk have all gathered here. I think, let's get down to questions. So, raise your hands if you want to ask a question.

Though it's a perinatal centre, the young man there has raised his hand the highest. Introduce yourself, please.

STANISLAV KHARIZOV: Good afternoon. My name is Stanislav Kharizov, and I'm a student. I am very fond of my little sister, and I always worry about her, and this leads me to my question.

Throughout the last year all my family including myself had queued up for a very long time to get her a place at a kindergarten, and we had to confirm every month, standing in queues, that we wanted my sister to go to that particular kindergarten. I realised talking to the people in these huge crowds that there are not enough kindergartens in our city. However, passing by the kindergarten where I went when I was a child, I saw with regret that it had been turned into a hotel for the Chinese.

Mr Putin, I would like to ask a question. I expect to have a family of my own at some time in the future. How will this issue, this mess be dealt with in the future?

VLADIMIR PUTIN: I am sorry if that sector in Khabarovsk is in a mess. But judging from the fact that you are now at a top-level health centre, there are also many positive things in Khabarovsk.

I know your Governor well. Viktor Ishayev is an efficient and very experienced man, he knows which link in the chain to pull first, as our classics used to say, in order to pull the whole chain. As for kindergartens, it is true that there are not enough of them. Part of the reason is the growing birthrate.

I cannot help being glad at what is happening in this sphere. In spite of many problems, the Government's efforts are bringing results. The birthrate this year has grown by about 7 percent, the highest growth in the last 15 years. I won't cite the absolute figures, but it is about 7 percent.

As for kindergartens, that is above all the responsibility of the regions and cities. At the federal level, we will do everything to encourage that work, we will help the regions to do it, but I would like to tell you that the shortage of places at kindergartens all over Russia has dropped by 30 percent in 2008 alone. That is a major step forward.

If the problem is not being solved as quickly as it should be in the Khabarovsk Territory, I think that Viktor Ishayev and the people who work with him, his team, should pay more attention to this. Let me repeat, if necessary, the Government, the federal centre, is prepared to help.

ERNEST MACKEVICIUS: Khabarovsk, stay on the line, I've seen some raised hands, and they are probably questions about similar issues.

Dmitry, let us have another question for the Prime Minister.

DMITRY SEDOV: Yes, Ernest, we are ready to join in the conversation. Who will ask a question? Let's have a question from a woman. Please introduce yourself and ask your question.

SVETLANA ROMANCHUK: Good afternoon, Mr Putin. My name is Svetlana Romanchuk, and I am from the city of Ivanovo. I am a doctor, a cardiologist.

My question is about Federal Law 122. We have many problems with providing people who are entitled to social benefits with costly medicines. For example diabetics, cancer patients, those on kidney dialysis, who have had heart surgery in the first year after the operation. I would like to ask you, as the leader of the United Russia party, to instruct its members in the State Duma to revise that law. In our opinion, as it stands today, it calls for reworking.

VLADIMIR PUTIN: It is true that providing people entitled to benefits with drugs is an acute problem. While I admit it, I would remind you that a massive effort was mounted to address it in 2004 and since then progress has been fast. Let's be honest, before that time subsidised medicines were impossible to get because they did not exist. Since then subsidies for medicines have increased seven-fold.

A further problem cropped up in 2007. How did it arise?

If you remember, we determined a social package of benefits, which at the time were worth 450 roubles, and people were free to choose whether to take the cash or the benefits. Those who did not need expensive medicines, chose cash. Only the people who really suffer from serious diseases and need costly medicines have kept the benefits. So, there was not enough money to provide these people with all the medicines they needed.

If you remember, or if you know, we greatly increased the funding, we identified a special group of people suffering from grave diseases who need medicines. That group, and it is not a large group, 54,000 if I am not mistaken, has by and large been provided with medicines. That group includes people who need organ transplants, you mentioned a kidney a moment ago.

Of course, it would be good to increase that group at the expense of those who do not need such costly treatment, but are nevertheless included in the category of patients who need costly drugs. The Government, United Russia or any other parties cannot just wish this problem away. It depends on the budget potential. Still, we should look into it. We will think about it.

ERNEST MACKEVICIUS: Maria Sittel is signalling to me that we've got questions about health. Is that right, Maria?

MARIA SITTEL: Yes, we started getting them a while ago, as health insurance is one of the most painful issues.

Mr Putin, I am for increasing the birth rate and a positive demographic situation in the country.

We have a question from the web site. Women giving birth to a second child are entitled to maternity capital, but a concerned mother is pointing to a drawback in the law on maternity capital, according to which a first-time mother giving birth to twins or triplets is not entitled to the money.

This doesn't seem fair, because she still has two or three children, doesn't she?

VLADIMIR PUTIN: Yes, this is true, but the point at issue, as I said when answering the fist question, is the size of the budget.

We decided that maternity capital would be provided to the families and the mothers who give birth to a second child. We may consider the problem again, and try to make amendments to it, but the deputies will first have to calculate how fast our social obligations with grow, and if we will be able to meet them.

Somebody asked at the beginning of this session if we would be able to meet our obligations in conditions of the current crisis, and I replied firmly that yes, we will be able to do so. The question Maria has formulated calls for additional resources and calculations. On the other hand, we are trying to encourage the families that have decided to have more children. This brings me to the issue of mortgages, which we've also received questions about. I believe that the use of maternity capital in the amounts planned to begin on January 1, 2010 may be moved to early 2009 in view of the financial problems in the world and in this country, so as to allow the families and mothers to use this money to pay off their mortgages.

To be able to do so, we need to amend legislation and the budget. I am going to issue a directive to the Government today, and I'm confident that the United Russia party and other parties in the State Duma will support it.

ERNEST MACKEVICIUS: Maria, you probably did not hear but Mr Putin has asked you personally what you have done to improve the demographic situation. I repeat this question.

MARIA SITTEL: I have a wonderful daughter, but I promise to work on this problem some more in the future.

ERNEST MACKEVICIUS: Thank you.

Back to work. We have Khabarovsk on the line. Pavel, do you have any more questions?

PAVEL ZARUBIN: Yes, Ernest, you probably saw many raised hands here, many questions. Please, any more questions?

OKSANA KLIMOVA: Good afternoon, Mr Putin. My name is Oksana Klimova. I'd like to express the pain of many people who live in the Far East. We feel detached from central Russia, since many families cannot buy train or air tickets, because air tickets cost around 30,000 roubles or even more. My kid asked me if we could go to St Petersburg for winter holidays, but I said No.

What will be done for the healthcare and education professionals to help them afford such luxury?

Thank you.

VLADIMIR PUTIN: I agree that this is an acute problem which badly needs a solution. It has many component parts.

First, it is the pool of our aircraft, and what I mean is not so much their safety as their economic efficiency, or rather economic inefficiency.

The planes made back in Soviet times consume too much fuel, are not competitive, and hence are loss-making. This prompts the following question: Should we allow our air carriers to buy foreign planes and in this way stop the revival of the national aircraft industry, or must they continue to use technically sound but inefficient Soviet-made aircraft?

I think the solution lies somewhere in-between, as it often happens. We will allow airlines, first, to buy such aircraft as our industry will not produce and, second, to lease the aircraft our industry plans to manufacture. We will lease foreign-made aircraft and will return them as soon as we start producing the aircraft of the same quality, noise and fuel standards. So much for the first problem.

The second problem concerns refuelling centres. As we have said before, we need to get rid of monopolies on the market, which prevent airlines from buying jet fuel at market, not inflated prices. We will continue to address this problem persistently.

And finally, the third problem. To defuse the situation - and what you have said here is creating problems not only for the people but also for the state, as it is easier to fly to South Korea than to Moscow... This will not do, because this is affecting the country's territorial integrity.

So, to deal with this problem we will subsidise air travel beginning in 2009. As far as I know, amendments have been made worth 2.5 billion roubles for 2009 and 5 billion roubles for 2010. I don't think this will be enough, but we'll see.

ERNEST MACKEVICIUS: Thank you, Mr Putin, and thank you, Khabarovsk.

Indeed, this is a very serious problem, a painful problem for our big country. Here is an example, since you have touched on this issue. When KrasAir went bankrupt in the Krasnoyarsk Territory, Aeroflot started to make flights from Norilsk to Krasnoyarsk. As a result prices have grown several-fold, from 6,500 roubles to 18,000 and 32,000 roubles. And I am talking about an economy class ticket within a single region.

VLADIMIR PUTIN: What can I say? You know that some financial organisations, some banks took deposits from clients offering them huge interest rates, but then went bankrupt putting the people into a difficult situation.

I don't know how the company you mentioned worked, but I will assume that low ticket prices could be one of the reasons for their subsequent financial problems. But this does not mean that the company that has taken over their responsibilities can raise prices endlessly. This problem has many elements to it, and I have mentioned the elements we need to address. But the Antimonopoly Service must also monitor the situation on the air transportation market.

ERNEST MACKEVICIUS: Thank you. We are back in touch with the information processing centre and Maria Sittel. Go ahead, Maria.

MARIA SITTEL: Thank you, Ernest. We have been on the air for more than one hour already. It is difficult to say which topic comes first and which second - we have loans, housing, and health services. Basically, all the issues we've been discussing. We've received 1,333,000 telephone calls and 560,000 text messages. Some of the messages are as long as emails, because one message can hold up to 400 characters, and you can imagine how you need to press small buttons on the phone 400 times to write your question. And we have such messages.

Here comes a telephone call. Sorry, we've lost the connection here. Now let us try another line. Perhaps we will be lucky there.

Hello, you are on the air. Omsk, can you hear us? Good afternoon, introduce yourself and ask your question.

NINA SMIRNOVA: Good afternoon, Mr Putin. My name is Nina Smirnova, I'm from Omsk and I'm retired.

I have this question for you. Of course, I understand that our country is in a difficult position because of the crisis. You know, in Omsk we have very high utilities tariffs. And I would like to ask you to postpone raising them until the economy gets steady. Is that possible?

VLADIMIR PUTIN: I hope you can hear me, Ms Smirnova. Of course, this is one of the problems, and a very old one. We can postpone everything, but it is not just a question of tariffs. Let me try to explain my attitude to this problem.

Firstly, 80% of our networks are worn out. If the system continues to be under-financed, it will collapse entirely. Last year, utilities went up by 15% to 17%. Next year they will be the responsibility of the regions, but we will follow developments there closely.

Many things contribute to tariff growth. One of them is a monopolised services market. We have set up a fund for reforming the housing and utilities totalling 240 billion roubles, a huge amount, and we are not using the money elsewhere, despite financial difficulties: the money has been allocated and will be used for its stated purpose. But we intend to give it only to the regions that make their own moves to improve the housing and utilities situation.

These moves can be of different kinds, and the regions know that.

The first is to abolish the monopoly so that the "insider" organisations and companies at the municipal level do not charge monopoly-high service tariffs and prices.

The second is to set up housing partnerships and hand over blocks of flats and housing stock to them in good condition.

There also are some other factors. One of the most serious ones is tariffs charged by the so-called infrastructure monopolies - Gazprom and the electric power companies. Just yesterday we discussed them with Governors. Your concern is understandable.

These large companies look to these tariffs because they are included in their investment programmes and they pay for metals bought from our metal companies, for building materials, etc. That is to say, they serve to preserve jobs and keep afloat whole sectors of the economy.

Nevertheless I can agree with you that we can demand from the infrastructure monopolies that they at least slow down the growth of utilities, remembering that the price of materials they need to purchase to implement their investment programmes is also falling due to current economic developments. We will try to keep their effects on ordinary people as low as possible.

MARIA SITTEL: Mr Putin, among the text messages and telephone calls received there are also many personal letters. Perhaps, we can pass them to you after the question-and-answer session.

But here is one message about the tiger cub you received as a present on your birthday.

VLADIMIR PUTIN: The cub has been moved to a zoo, where it feels good and receives good care from specialists. The zoo is in the Krasnodar Territory. Everyone who wants to, can see it there.

ERNEST MACKEVICIUS: I see.

Maria, I have this text message: "What will happen to the rouble, and what is the best bank deposit currency?"

VLADIMIR PUTIN: As I have already said, national, Central Bank, and Government gold and currency reserves, Government reserves, the National Welfare Fund, and the Reserve Fund allow us to avoid sharp national currency rate fluctuations.

I proceed from the premise that we will not allow this to happen. There will be no sharp fluctuations in the rouble's exchange rate. Naturally, the rouble's rate will be adjusted to some extent in connection with global market prices for our traditional products, namely, fuel, energy and metals, as I already mentioned, and fertiliser.

I want to repeat once again that we receive the bulk of foreign currency proceeds from such exports, and that we must service substantial imports still being received by our country. This is a natural outflow.

The influx and outflow must be balanced. Gold and currency reserves, as well as national currency rate fluctuations, largely facilitate this process. I repeat, we will not make any abrupt moves.

Every person can choose any bank deposit currency. Those going abroad often should convert part of their deposits into foreign currency. As you know, European and US economies are facing major problems. National currency rates directly depend on the state of the economy. For those who live in Russia, buy goods and services in Russia, rouble is a preferable currency. I repeat, everyone is free to make this choice.

Incidentally, we have no intention of restricting those liberal currency and money import-export regulations that were introduced on July 1, 2007, when the currency market was liberalised completely. We do not plan to abolish such regulations.

ERNEST MACKEVICIUS: Thank you, Mr Putin.

I think it's time we returned to regional questions. I would like to say that when we were preparing for today's live broadcast, we noted that nearly one-third of all messages came from rural dwellers. Most of them are offended that Moscow does not pay enough attention to rural problems and forgets about them.

Our next live broadcast is from the Maisky state farm in the Tatarstan Republic's Zelenodolsky District. Our correspondent, Yevgeny Rozhkov, is working there.

Yevgeny, you have the floor.

YEVGENY ROZHKOV: Good afternoon, Ernest. Good afternoon, Mr Putin.

VLADIMIR PUTIN: Good afternoon.

YEVGENY ROZHKOV: Indeed, this is the Maisky greenhouse farm in Osinovo village, Tatarstan. I am surrounded by greenhouses that cover a huge area of 50 hectares. The farm grows cucumbers, tomatoes, and vegetables without any chemical additives.

As you can see, everyone here is wearing a white gown or other uniforms. I want to assure: We did not tell our workers to put on these clothes just for the sake of this live broadcast.

We would not be allowed to work here without such uniforms, because every greenhouse has its own micro-climate and humidity levels. We even have our own bees and bumblebees flying all over the place. This is why we are here today.

We have a lot of questions to ask. They have told me that local workers and people from other farms and Tatarstan districts have come here. Let's hear their questions.
So, who wants to ask a question?

LYUSIANA ZAHVATOVA: Good afternoon, Mr Putin.

My name is Lyusana, and I am a greenhouse agronomist. We grow environmentally friendly, pure, and safe products, but are having trouble selling our fresh vegetables at stores that are often overflowing with imported products.

Because of this, many greenhouse farms curtail production. Some of them stop working and are shut down.

How can we survive in such conditions? Maybe we should introduce some tough product-import standards, making it possible to buy the same fresh and environmentally sound products. Mr Putin, what do you think about this?

VLADIMIR PUTIN: Judging by your working conditions, namely, the micro-climate and white gowns, it appears that the situation at your company is not very bad, and even good.

However, I don't know anything about your company's economic performance. If you feel that there are problems, then such problems really exist.

What are we doing in this sphere, and what are our subsequent plans? First, we are trying to limit red meat, namely, pork, beef, and even poultry, imports. Surely, you know about this.

We cannot stop such imports or bring them down to critical levels because, frankly speaking, our agricultural sector is still unable to fully meet the demand of large cities.

We must heed the interests of agricultural producers and consumers, especially those in large cities, so that our actions in the customs-tariffs sphere do not cause sharp and unjustified food price hikes.

As far as the plant-growing sector is concerned, the Government regularly and annually introduces additional seasonal restrictions precisely when our agricultural producers are offering their products on the market.

Nevertheless, if you feel that, judging by your company's economic performance, this is not enough, I promise you that the Economic Development Ministry and the Agriculture Ministry - I'm sure the heads of the concerned departments are watching our dialogue - will be ordered today after our session to once again analyse the situation with imported plant-growing sector products and to submit the relevant proposals.

ERNEST MACKEVICIUS: Could Tatarstan stay on the line, please? I think we have related questions from Moscow. Dmitry, you have the floor.

DMITRY SEDOV: People in this part of the room want to ask about agriculture. There is a lot of interest here. I hope we will soon know exactly what the people want to ask, for example, in this row, I've seen raised hands there.

Please, introduce yourself.

NIKOLAI PUSTOVALOV: My name is Nikolai Pustovalov, from the Penza Region, a farmer growing grain and sugar beet.

This year we have gathered a record large grain harvest, at a prime cost of 3 roubles per kilogram, but the market price is 2.70 roubles now. Where is the 5.50 promised by the Agriculture Ministry and subsidies for farmers?

VLADIMIR PUTIN: The promise is on the market. I don't know why the promise has not reached you yet, but I can tell you that we have allocated over 30 billion roubles, I think it is 34 billion roubles, to the Agriculture Ministry from the budget for this purpose. We have purchased 2.5 million tonnes of grain at a price that is above the market price, at 5,000 roubles, and at 6,000 roubles in the Urals and Siberia. I repeat, we have purchased 2.5 million and the Ministry is now buying 5,000 tonnes per week. We will keep up the pace until we use up all of the allocations.

We have recently discussed the possibility of allocating more funds. In principle, the budget and the Finance Ministry are ready to do so. The problem lies with the producers, who are now asking more often that they be offered affordable railway tariffs for exporting surplus grain.

I repeat once again that we are ready to invest all of the more than 30 billion roubles to make purchases on the domestic market, and we are even prepared to increase that amount. The funds may not have reached some farms yet, including yours, but the system is working. I hope you will contribute to the 500 kilograms to be sold weekly.

ERNEST MACKEVICIUS: Thank you, Mr Putin. I repeat that we have Tatarstan on the line, and can take one more question from the Maisky farm.

YEVGENY ROZHKOV: Your question, please. Introduce yourself.

VLADIMIR APAGOV: Vladimir Apagov, a farmer. I have been working on this farm for 18 years.

Good afternoon, Mr Putin.

We get a good harvest from our 715 hectares, increasing quality and working standards, but our profits are still falling because we are selling grain below the prime cost. Our only salvation is potato and vegetables, which we sell at prices set 10-12 years ago, because nobody buys them at other prices. But this year fertiliser and fuel prices have doubled, increasing the price gap. The main reason for this is the absence of clear rules of the game at the state level, honest and fair rules for agricultural producers, above all farmers.

So, my question is, will the state participate in setting prices of agricultural products?

And I also have a request from the farmers. We would like to ask for your personal help in facilitating adopting programmes and regulations to help individual farmers and small farms, because the livings standards in rural areas depend on them.

Thank you.

VLADIMIR PUTIN: You are right; there is such a problem, and it has existed for many years. I mean the disparity of prices in the energy sector and in agriculture. We have been trying, with varying success, to solve this problem.

This is what we have done this year: we have allocated an additional 10 billion roubles to cover the price gap in the fuel sector. If necessary - we have coordinated the issue with the Agriculture Minister, who maintains contacts with agricultural producers - we will analyse the result and possibly increase allocations in the first quarter of next year. We have also allocated additional funds for fertilisers.

In general, it must be said that this year we have nearly doubled allocations under different agricultural assistance programmes. I'm sure you know what we have done within the national project of agricultural development, subsidising interest rates and establishing different funds, including regional ones, to support small farms.

Another measure is connected with the decision to refinance 100% of interest rates for certain types of investment projects in agriculture. And we will look for other methods of assistance, we will certainly do.

ERNEST MACKEVICIUS: Thank you, Mr Putin, and thanks you, Maisky.

Back to the telephone group and Maria Sittel. Maria, what questions are the people asking?

MARIA SITTEL: The operators are working selflessly, with tens of thousands of telephone calls per second. Not every caller succeeds; the telephone lines are so busy it seems to me I can feel the ringing vibrations.

As for the people who want to ask their questions, some are extremely persistent. The operators say one of them is now on the line. Let's put him on the air. Hello, please introduce yourself.

OLEG YAKOVLEV: Good afternoon, Mr Putin. My name is Oleg Yakovlev, from Penza.

A terrible tragedy happened in South Ossetia in August. Is it true you said you were going to hang Saakashvili by the balls?

VLADIMIR PUTIN: And why not? Seriously, you and I know about the tragedy in another part of the world, Iraq, where US troops were sent under the far-fetched pretext of searching for weapons of mass destruction. They have not found the weapons, but hanged the head of state anyway, although for different reasons, for exterminating people in several Shiite villages.

The current leaders of Georgia have massacred innocent civilians in South Ossetia, razing ten Ossetian villages, as we know, and attacking our peacekeepers, many of whom have died. Iraq had not attacked the United States, but Georgia has attacked our servicemen who were doing their duty under international commitments. Many of them died, and someone must answer for this.

Moreover, it was a crime not only against Russia and its citizens and the Ossetian people, but also against the Georgian people and Georgia. If not for that aggression, Russia would have continued to work towards a territorial reintegration of Georgia.

But the aggression showed that such efforts are no longer possible and that we must take other actions to preclude more bloodshed in the region.

In this connection, I think the Georgian people themselves will make the decision regarding the responsibility of their politicians whose actions have had such painful and dramatic results.

ERNEST MACKEVICIUS: Mr Putin, we have a response in that section of the hall where Anna Titova is working.

ANNA TITOVA: Ernest, we have here rescue workers and specialists from the Disaster Medicine Centre who worked in South Ossetia during the war. Obviously, they have something to say. Let's give them the floor.

ERNEST MACKEVICIUS: Yes, please.

VАLERY SHABANOV: I am Valery Shabanov from the Zashchita Disaster Medicine Centre.

We were in South Ossetia when those events happened. As we left, active efforts started to restore the damaged hospital in Tskhinval.

To be frank, the people of Tskhinval consider that hospital to be a litmus test of Russia's ability to stay there till the end and to facilitate their self-determination.

Won't we have to go there once again on schedule and provide medical assistance to ordinary Tshkinval residents.

Thank you.

VLADIMIR PUTIN: Speaking of Russian support, you know that we have signed mutual assistance treaties with South Ossetia and Abkhazia. This is the best guarantee of the fact that Russia does not plan to leave this region.

Given the desire of these states' citizens, we will be ready to provide any aid even at this difficult time of the global financial crisis.

Our budget reserves sizeable allocations for restoring South Ossetia. The funding has been reserved in the budget and will be used for this purpose.

ERNEST MACKEVICIUS: The number of calls to the studio has increased considerably. Maria, we are waiting for information from your call centre.

MARIA SITTEL: Yes, let's try to promptly contact our viewers. If I am not mistaken, we have received a call from Nizhny Novgorod. Hello, can you hear us?

Hello!

OLGA MIKHAILOVNA: Yes, this is Nizhny Novgorod.

Good afternoon, Mr Putin. I am Olga Mikhailovna from Nizhny Novgorod.

Our Mayor Vadim Bulavinov has decided to shut down local milk kitchens for children. Is this a good birth-rate incentive? What are we to do? Please, help us.

VLADIMIR PUTIN: Frankly speaking, I don't know why the Mayor of Nizhny Novgorod has decided to shut down these milk kitchens. Although municipal authorities have the right to make this decision, I think it was unjustified.

I believe people should react accordingly because, under current legislation, the mayors of municipal entities, including such cities as Nizhny Novgorod, are elected through universal suffrage by secret ballot. Such elections involve the populations of their territories.

Municipal leaders would feel the people's reaction during subsequent elections, unless they respond to their concerns.

Naturally, we will advise the Mayor of Nizhny Novgorod, all other top municipal officials and the regional Governor to support the people and not to create additional problems for them without good reason.

They should not force people to buy baby food at local stores. Although some might want people to spend their money on this market, but they must think about ways of supporting families with children, rather than about the sales market for foreign producers.

MARIA SITTEL: Let's handle some more telephone calls. We have received a call from Buryatia. What's your name?

DASHA VARFOLOMEYEVA: Good afternoon, my name is Dasha Varfolomeyeva.

VLADIMIR PUTIN: Hello, Dasha.

DASHA VARFOLOMEYEVA: Hello, Uncle Volodya. We'll be celebrating the New Year soon. We live on our grandmother's pension. There is no work in our village. My sister and I are dreaming of new dresses. May I ask you to give me a Cinderella-style dress? You would be our "fairy godmother" if you fulfill our wish.

Thank you.

VLADIMIR PUTIN: Dashenka, I heard you. And I think that you and other children, not only in Buryatia but all across the nation, must have a wonderful time celebrating Happy New Year.

Grownups must do everything in order to fulfill their wishes.

As far as the dress and other New Years gifts are concerned, this is a natural wish. Still I think it would be better if you thought about what your grandmother needs for New Year's Eve, rather than just about your own needs.

Let's see what we can do for you and your sister. I invite you, your sister and grandmother to celebrate New Year at a Christmas-tree party in Moscow. When you come, we'll decide all about gifts.

ERNEST MACKEVICIUS: Maria, let's ask another question from the information processing centre.

Maria, do you have any more questions?

MARIA SITTEL: Let's try and put this telephone call through.

If you can hear us, please tell us your name. Where are you from?

QUESTION: Good afternoon, this is Abakan in the Khakasia Republic.

Good afternoon, Mr Putin.

The State Duma has amended the Criminal Code and has introduced tougher punishment for pedophiles. Why haven't these amendments been adopted to date? Do they have lobbyists there?

VLADIMIR PUTIN: What can I say? This is a grave and terrible crime. Frankly speaking, we must focus on the protection of children's health and lives.

If I am not mistaken, the Russian Criminal Code's article 132 envisions punishment for rape and sexual harassment. The article's part three deals with aggravated crimes, regulates this sphere with regard to minors and stipulates prison terms of between eight and 15 years. On the whole, this article must be enforced.

I know that we can and must discuss tougher penalties for such crimes which have increased all over the world and in our country. We could also increase minimum and maximum sentences.

State Duma Speaker, Boris Gryzlov, should be sitting in this hall. I proceed from the premise that State Duma deputies will think about your question. We will work out decisions matching the current threat during our dialogue with the public at large.

ERNEST MACKEVICIUS: Thank you, Mr Putin. Now let us allow guests in this studio to ask their questions and then will go back to the regions. Mr Rovnov, go ahead, please.

PYOTR ROVNOV: Good, Mr Mackevicius. In our section men have already asked questions. Now let's give the floor to ladies. Judging by your expressions, you have many questions for Mr Putin.

VALENTINA PIVNENKO: Good afternoon, Mr Putin. My name is Valentina Pivnenko, I am from the Republic of Karelia, head of the public reception office of the United Russia party, and a State Duma deputy.

Today, at a time of global financial crisis, which has also, unfortunately, affected Russia, it is very important to support small business, as has already been said. It seems to me more attention should be paid to the taxation authorities, which in these conditions must fulfil not only a fiscal function, but also act as advisers to help small-business leaders, who are in effect an administrator, a production engineer and a financier all rolled in to one, to conduct their business the right way so that this form of production ensures full employment in crisis conditions. Thank you.

VLADIMIR PUTIN: You are right, of course. Small and mid-sized businesses are no doubt very flexible forms of economic management and the quickest to respond to changes in the labour market, and in these conditions, complicated by the global financial system, deserve the closest attention and support.

I will say that the Government is preparing a series of moves, which are as follows: first, we will substantially increase federal budget support, raising it to 10.5 billion roubles; then, additional funds will be allocated by Vneshekonombank - 30 billion roubles; we will also preserve all former types of support for small and mid-sized businesses.

We have taken a decision allowing the regions to adopt a simplified procedure and to reduce small-business taxes from 15% to 5%; regional funds for support of small businesses and micro-crediting funds that issue loans of between 200,000 roubles and one million roubles will continue to operate. All these things taken together - and if necessary, we are ready to allocate additional resources - must, in our view, have a substantive influence on the development of small and medium-sized entrepreneurship.

Incidentally, as I have mentioned, even when a bank grants big loans, we stipulate that a certain part of the resources should be used to support small and mid-sized businesses. There have already been questions about support for small and mid-sized entrepreneurship in rural areas. I must say and repeat that we have allocated considerable resources for the additional capitalisation of Rosselkhozbank and Agroleasing. The sums are measured in billions of roubles. For Agroleasing, it is four billion, and for Rosselkhozbank, tens of billions. They must all be invested in agricultural entrepreneurship.

In the case of other system-forming banks, and in general a system of banks that meet certain requirements, of which there are over 120, these resources will be allocated on condition that they are channelled into support of small and mid-sized entrepreneurship. The same kind of programmes will be prepared in the Russian regions.

ERNEST MACKEVICIUS: Thank you, Mr Putin.

We continue our contacts with the cities. We are in touch with the studio "Conversation with Vladimir Putin." It is your public reception office in Saratov.

This is our correspondent Maria Morgun in Saratov. Please, go ahead.

MARIA MORGUN: Saratov extends its greetings to Moscow. Good afternoon, Mr Putin. Good afternoon, Mr Mackevicius.

I am at the United Russia public reception office in one of the most beautiful cities of our country. Saratov is an ancient city and sprawls on the high right bank of the River Volga. It has well developed agriculture and industry. Also, Saratov is a large educational centre in the Volga area. It educates specialists at more than ten institutions of higher learning.

And yet its population is not very large, just under a million. And each has his problems and concerns, and for almost six months now they have been able to come to the public reception office here with their questions. We have counted that the office receives more than 200 applications daily and, of course, all of them are examined. But today, the people of Saratov have a unique chance to communicate directly with you, Mr Putin. You can see a lot of people gathered here. I will not take their time. We would rather go over to their questions.

So who wants to ask his or her question?

SERGEI: Good afternoon, my name is Sergei. I am a student Saratov State University. I have a question to you, Mr Putin.

You are the Prime Minister and the leader of United Russia. How do you manage to combine these two top positions? Do you have enough time and stamina for that? How does the work in these two positions help you resolve vital national tasks?

VLADIMIR PUTIN: The Government's reliance on the leading political force in parliament is standard practice on a global scale, but this is not even the point. The matter is that without such support in parliament, the Government would be unable to function as one, not to mention function effectively. It is particularly important now to make quick decisions, to react without delay to the events which are taking place in the world economy and world finances, and hence, in this country as well.

To be honest, we are often late. If there were no cooperation with parliament's political mainstay, the situation would have been much worse. Now I would like to recall the recent parliamentary election campaign, and to thank the voters for their choice because now we have created an effective mechanism of responding to the events taking place in this country and the rest of the world.

The formation of this mechanism is crucial, and we will certainly try to use these opportunities adequately, and in full measure.

As for the time, the party itself has already established a pattern of performance. It has its own mechanism which I think should be improved. I have said this many times. This applies to the party's administration and the membership drive for competent people who are interested in the development of the regions and the country as a whole, including young people, people like you.

ERNEST MACKEVICIUS: Maria, we are waiting for your questions.

MARIA MORGUN: Moscow, please, allow one more question from Saratov. Who wants to ask a question? Please, introduce yourself first.

OLGA SAVELYEVA: Good afternoon, Mr Putin. My name is Olga Savelyeva.

I am a single mother. My daughter is 16. She studies in the 11th grade, this is her final year. I work at the radio-electronics plant, the Kontakt plant with billions in sales. These days, they have announced layoffs because of the crisis. Out of its 4,000 workers, 1,500 will be dismissed. I have worked as a production engineer for more than 20 years, and my salary grew from 6,000 to 8,000 roubles, but now it is being reduced. I am afraid I may lose my job.

Mr Putin, how will you deal with massive unemployment?

VLADIMIR PUTIN: I'm still hoping that we won't have massive unemployment. Although looking at the labour market, we can, of course, expect more people to lose their jobs for some time. Now we have about 1,700,000 registered unemployed, and this number will be a little over two million.

It goes without saying that we should react accordingly. I've already spoken about this. But this is an important issue, and I will say it again. We will earmark additional funds from the federal budget to the Federal Employment Service, I think from 10 billion to 50 billion roubles, to enable it to react quickly, and operate in several directions.

First, it should use the labour market downturn to prepare employees for the next cycle of economic upsurge, for the advance of individual industries of the world and national economy, to invest with businessmen and regions in establishing retraining centers.

Second, it should help people get jobs in neighbouring regions to facilitate labour migration.

Third, it should encourage major companies to carry out their projects primarily in problem regions. This applies to the construction of infrastructure, roads and railways, and the building industry as a whole.

Finally, we have raised unemployment benefits considerably, to 4,900 roubles. I've already said that this is an extreme measure but I consider it justified. This is a tangible sum, if we recall that the pension is 4,500 roubles. I understand that a person will receive this money for a rather short amount of time, not for life. But the regions and the Federal Employment Service must tackle this problem without delay.

ERNEST MACKEVICIUS: Thank you, Saratov.

We are returning to Moscow, to the studio of the question-and-answer session in order to listen to the questions of the audience.

Who is ready to ask a question?

ANNA TITOVA: Some people are very active. They have raised their hands many times, so let them have a go.

I see that you have a Certificate of Merit.

IRINA SOKOLOVA: Good afternoon, Mr Putin. My name is Irina Sokolova. I head the party chairman's public reception office in St Petersburg.

The results of the contest for the best public reception offices in federal regions have been summed up, and now the winners have received certificates of merit from you as the party chairman.

On behalf of all winners of the contest, I would like to express my heartfelt gratitude to you for your support, and for appreciating our work. I would also like to ask a question.

Could you please say what major tasks are you setting for the party, regional party organisations, and for public reception officers for the next year in the context of the mounting financial crisis? Thank you.

VLADIMIR PUTIN: You know, I've already spoken about this at the United Russia congress. Would you like to add something?

VLADIMIR DERBIN: Mr Putin, I would like to add a few things on this subject. I'm Vladimir Derbin, chairman of St Petersburg's and the Leningrad Region's trade unions.

I would also like to ask you a question on this subject. What is your attitude as the Prime Minister and the party's chairman to trade unions in light of the crisis? This is important for social stability, especially in the workforce. Thank you.

VLADIMIR PUTIN: I will start with the last part. I think that the trade unions have started carrying out a natural function in this country, which is very important for them. I mean defending the interests of working people. They have stopped being some school of communism, or something else. This is an entirely different sphere of activities. They have stopped being a political appendage of some party, but have begun fulfilling an independent function. Responsible conduct of trade unions is very important, very much in demand. "A pike lives in the lake to keep all fish awake."

Trade unions should be very sensitive to what is taking place in the labour market. You see how many anxious questions have been asked here today. But I proceed from the premise that trade unions will not be involved in the nuts and bolts of politics. I expect them to have responsible professionals who formulate their demands based on the real situation in the economy, and on budget potential. Up to now we have found mutually acceptable solutions in the interests of the Russian people although our dialogue was not easy. I hope we will be able to do this in the future, too.

In the same context, I consider it necessary to set the tasks for United Russia, and for the public reception offices. They were set up in proper time. The goal was to put the party agencies to the fore so that people would know where they could go with their concerns, and to prevent an attitude of dismissal. The goal was to enable United Party agencies, including the public reception offices to do all they could to respond to arising problems in a timely manner; to allow them to cooperate with the local or regional authorities, and if need be, to contact directly the government or party agencies in Moscow and find solutions together.

Let me repeat that we have all opportunities for that. All we have to do is decrease the attitude of not caring, and to be responsive to the problems of the man-in-the-street who faces difficult problems today.

Incidentally, despite a difficult dialogue with the tripartite commission, we have managed to find mutually acceptable solutions so far. I hope that party agencies will facilitate this work.

ERNEST MACKEVICIUS: Thank you very much, Mr Putin. Judging by what I see on the monitor screens, the load on the information-processing centre is not diminishing. How are you coping, Ms Sittel?

MARIA SITTEL: Yes, the load is tremendous, Mr Mackevicius. No time for rest. I think we have crossed an important psychological barrier: 2.2 million communications, including 1.5 million telephone calls and just over 600,000 text messages. The rest is from the Internet.

Despite the time difference, calls are coming in from all corners of our country. Now let us choose this call on our line.

Good afternoon, introduce yourself. Is this Moscow?

YELIZAVETA KUZNETSOVA: Yes, this is Moscow. My name is Yelizaveta Kuznetsova. Good afternoon, Mr Putin.

I find it strange that while many people are now being laid off, you, as far as I know, have recently approved new quotas for foreign workforce. It also appears that our companies dismiss their workers and hire guest workers who are unskilled and may be paid less. But look at Belarus, it does for itself without any guest workers. Also, we are concerned about our national security.

Thank you, Mr Putin.

VLADIMIR PUTIN: Ms Kuznetsova, such a problem exists, and it is due to the fact that our country has practically no borders with CIS countries, we have a visa-free regime, and it is very simple to enter Russian territory. Even when we clamp down certain restrictions, they are easily overlooked.

We have, for example, introduced a visa regime with Georgia, and still the number of Georgians who live and work in Russia is not decreasing. They may enter Russia via Belarus, where they do no meet with such restrictions.

The quotas you mentioned are set up at the regional level, in the Russian regions, including by the Moscow authorities, and sent up to federal services. It is true, though, that their request is now put together and totals, I think, over three million people.

The actual number of foreign nationals working in Russia and living on its territory is much larger. We estimate it at over 10 million. Of course, both in the Russian regions and at the government level, we must think about how to regulate these issues.

I won't digress too much now and spell out all possible scenarios for our behaviour. In the existing conditions, however, I believe you are right in posing this question, although many regional leaders and heads of businesses complain that even when foreign workers are denied hire, and despite cuts on the Russian labour market, Russians still cannot be found to fill the jobs vacated by foreigners. Our people do not agree to do the work for which our businesses hire foreign workers.

Nevertheless, knowing the difficult situation on the labour market, I believe you were right to raise this issue. We have not yet approved these quotas, in fact, they are barely formed, so I believe it would be justified to cut these requests by at least 50%.

ERNEST MACKIEVICIUS: Ms Sittel, we are still awaiting communications to the Prime Minister that come in not only through telephone channels, but also via the SMS service and the Internet.

MARIA SITTEL: A few seconds ago, I received the following text message: "Mr Putin, stay strong, we are with you." A pleasant remark.

A question from the website: "Since December 1, public sector organisations have shifted to a new system of work payment, and it now appears that salaries of state-sector personnel depend on the boss. Will it not occur that if the boss likes you, your salary will be large, and if not, it will amount to peanuts?"

VLADIMIR PUTIN: This is a fair question. At the same time, firstly, I want to remind you that the Government, the trade unions, and the employers have found the move to a new system of work payment and abandonment of the tariff scale a progressive step aimed at raising pay. On December 1 - for starters, I will return to the question of whether we will fulfil all our commitments - we increased the wage and salary bill for the federal sector by 30%. Despite all crises, we fulfilled our promises.

Now, concerning the dependence of staff on the boss: such dependence exists, but I do not think it will be determined by the willingness of the person at the top, because it is mutual dependence: firstly, we formulated and approved rules that determine the size of pay for basic personnel and, secondly, made the salary of the manager dependent on the average wages and salaries of basic personnel, an important factor in the measures being taken.

We already have cases on record, and not single cases, when business managers, after fixing their personnel average wages, became aware that their own personal incomes depended on this average wage, and have more than once, in fact twice, thrice, and some four times, applied to the Government asking to upwardly adjust the pay of their basic personnel. This has proved to be a very serious mechanism, influencing both increased pay and a fair assessment of an individual's contribution to the common labour effort.

ERNEST MACKEVICIUS: Thank you, Mr Putin. Now let us listen to the audience again, which is getting increasingly active.

Mr Rovnov, do the guests in your section have any more questions?

PYOTR ROVNOV: Yes, of course, there are more than enough of these, and I see many who are willing to ask them.

Please, introduce yourself.

VIKTOR GALYSHEV: I am Viktor Galyshev, from Krasnoyarsk.

Mr Putin, you must remember how we discussed the problems of United Russia over a cup of tea in Krasnoyarsk. Being young and energetic, you said that you could still work more, and now you are the party leader. What has changed since then?

VLADIMIR PUTIN: I have already said that party leadership is an important factor, but it is far more important that I, as Prime Minister and leader of the party, have the possibility of relying on the United Russia majority in the State Duma. This enables me to implement long-term decisions and promptly respond to problems as they arise. That is the first point.

The second point is that the party itself is changing. This does not happen as quickly as one would like it, but we are still creating mechanisms that make it possible, in today's conditions, to more promptly react to processes, including negative ones, in economic and social affairs. I also refer to the establishment of public reception offices in the Russian regions. We will continue improving the work of this public organisation, which, in my view, is becoming increasingly significant, as well as strengthening the country's multi-party system. I believe party pluralism is an important element of democratic institutions in present-day Russia.

PYOTR ROVNOV: Pardon my short question: what is your occupation, given that you met with Mr Putin over a cup of tea in Krasnoyarsk?

VIKTOR GALYSHEV: I am an industrial engineer. Mr Putin and I have met more than once.

ERNEST MACKEVICIUS: Thank you; and thank you, Mr Putin.

We have the public reception office in Rostov on the line, and my colleague, Igor Kozhevin. It's your turn, Igor.

IGOR KOZHEVIN: Good afternoon, Mr Putin, and good afternoon, Ernest.

More than 2,000 people have come to the public reception office in Rostov which opened three months ago. Today is Thursday, a reception day, but it is different because of this session. The form is different, but the essence has not changed: people who have questions have come here. I think we should give them the chance to ask their questions.

Let's decide who wants to speak. You were the first, I think. Please, introduce yourself.

OLEG GORBUNOV: Good afternoon, Mr Putin, God be with you and keep working to our benefit.

My name is Oleg Gorbunov and to the left of me is my wife. We are both 70 and our combined length of service is 90 years. Our pension is 9,000 roubles. Unfortunately, we have health problems and also problems with high and growing tariffs and the cost of medicine and food, including vitamins.

Here is my question. When will people in Russia have sufficient pensions that will grow ahead of inflation, not lag behind it? I think this question worries many pensioners.

And one more, small question: will the retirement age be raised?

Thank you.

VLADIMIR PUTIN: I agree that our pensions cannot be described as sufficient. By the way, we have been working and will continue working to raise pensions.

Second, pensions have been growing faster than inflation. I agree that prices and tariffs are growing too, but when I said pensions would grow 12% next year, I meant growth minus inflation. Of course, our pensions are not sufficient, they are small, but they are still growing faster than inflation. We will try to keep up the pace.

We have several types of pensions. One is a social pension granted to citizens who do not have the required length of service, and the other is a labour pension.

The social pension should be increased to pensioners' subsistence pay by the end of 2009.

The labour pension is slightly larger than the pensioners' subsistence pay in absolute figures, but this is still not enough.

Therefore, we will take additional measures next year to raise pensions. They will be raised three times - the basic pension twice and the non-funded pension once. If inflation grows too fast, we will increase the non-funded pension twice. On the whole, we plan to raise pensions by approximately 34% next year, and this is not all.

The main thing is to ensure stable revenues for the pension system for the long term, which is why we plan to reform it. In 2010, we will reassess the pension rights of those Russian citizens who retired in the Soviet period. They will get a 10% increase plus a 1% increase per each working year since 1991.

We will use different criterion to do so. Yesterday I discussed the issue with the ministries of healthcare and social development, finance, and economic development. The increase will be 1,700 roubles on average beginning in 2010.

We will continue working to strengthen the accrual part of pensions. I know that there may be questions, and I am prepared to answer them. But this is long money, so don't be alarmed if they do not produce the desired effect immediately. This money is expected to start working effectively in 15 or even 20 years. I am sure that all of you know that the trend will resume growth despite the global economic crisis and problems in the Russian economy and this money will be used effectively.

In short, we will do our best, and I am confident that we will ensure sufficient pensions for those Russians who attain the retirement age in 2010. We will ensure that their pensions will be equivalent to 40% of the reference wage. This is fully in keeping with global and European standards as stipulated by the International Labour Organisation.

ERNEST MACKEVICIUS: Igor [Kozhevin], let's have one more question from Rostov-on-Don.

IGOR KOZHEVIN: Of course. There are about 60 people in the United Russia's reception office, and I think they have more questions.

ANATOLY SIMONOV: Good afternoon, Mr Putin. My name is Anatoly Simonov, a lieutenant-colonel of the Space Force reserve. I have a small business in high-tech.

It is indeed high-tech, I would even say space technology, because we install space communication stations and also deal with information technologies and Linux-based software.

Taking into account everything that has been said here today, I have a question. The Government plans huge investment in social projects, but how is it connected with the interests of small businesses? Won't some officials, notably the tax officials, be tempted to increase pressure, the tax pressure, on small business by imposing fines and other conceivable duties on them? We might not survive under those conditions.

The trouble is that this may be a time of historic import, when not only the state can help small business now that personnel dismissals are planned, but small businesses can also help the state create new jobs, find employment for retired servicemen, such as me, so that we harmonise our relations.

I'd like to hear your opinion on this issue.

VLADIMIR PUTIN: I don't think it is a coincidence that the issue of small and medium-sized businesses has surfaced for, I think, the third time today. I fully agree with you that small and medium-sized businesses can quickly and efficiently react to events in the economy and the labour market, and can quickly create jobs. This is why we are working on a system of federal and regional measures to support small and medium-sized businesses. I will enumerate them now.

First, the regions may reduce taxes to 5% from 15%.

Second, we will continue to co-finance and help the regions maintain their funds. I am referring to the microfinancing of SME support funds which have been created and whose capitalisation will be increased.

We will allocate additional funds from the federal budget, 10.5 billion roubles, and we will provide money through Vnesheconombank - 30 billion roubles, an incredible sum in the past.

I must say that I see no reasons for your concerns regarding the tax services. On the contrary, I expect the tax services and the regional authorities which can influence SMEs to do their best to support small and medium-sized businesses.

The task now is to ensure access to the premises used by small and medium-sized business, liberalise such access, prolong lease contracts, and ensure access to electricity and heat systems, and the like. As for what you said, the work of small and medium-sized business in high technologies will enjoy special support from the state.

If we take into account the measures we plan to ensure stability of the pension system, small businesses will not feel any increase in the tax burden under any development scenario. We will work for this and with this goal in mind.

ERNEST MACKEVICIUS: Thank you, Rostov. Thank you, Igor.

Let us now switch to the Moscow studio - or the people who have come here will feel ignored.

ANNA TITOVA: The front rows have long been silent. Please let them speak.

LARISA TARASYUK: Good afternoon, Mr Putin. I am Larisa Tarasyuk from Shchelkovo in the Moscow Region.

My daughter is finishing school next year, and will have to pass the Unified State Examination, around which opinions are still clashing. The 10th and 11th grades put an emphasis on tedious cramming for tests, at the expense of oral speech and ratiocination. This is alarming. Why are we giving up our fine educational traditions so easily?

VLADIMIR PUTIN: I know what worries experts, graduates, and their parents. The Unified State Examination has its pros and cons, and I don't want to join either its critics or supporters.

On the whole, the arrangement works and reduces corruption in enrolment for higher education. Statistics prove that point - the number of students at the best Russian universities from remote parts of the country has grown by 10%.

I think you are right to say that we should not give up previous achievements by selecting the most brilliant applicants to the best universities.

However, there are some ways of such selection now - enrolment through school competitions, contests, and the like. This system is viable, and we shall promote it.

PYOTR ROVNOV: Ernest, the young man next to me has come from Yakutia. He has a burning question to ask, as far as I know. Shall we give him the floor?

ERNEST MACKEVICIUS: Yes. Please introduce yourself.

ANDREI MARTYNOV: I am Andrei Martynov from the Coordination Council of Young Scientists and Specialists of the Republic of Sakha (Yakutia). It is a public organisation.

Mr Putin, I want to ask you about interethnic relations in Russia. A gang of skinheads brutally murdered my fellow countryman, prominent chess player Sergei Nikolayev, in Moscow. The crime widely resounded in Yakutia and far outside it, yet the sentence was rather lenient. Is there a chance for toughening the laws on such crimes? Should we Russians feel harassed and hunted down when we come to Moscow, the capital of our country?

How, do you think, can extremism be prevented? Thank you.

VLADIMIR PUTIN: I have spoken often on this issue. Now I shall say what I think of it once again.

Russia has become a great power solely through its tolerance toward the ethnic entities that populate it. Russia will remain a great power if every ethnic entity, however small, feels at home in it. The stupid people who violate this principle thinking that they stand up for ethnic Russians' interests really are doing them irreparable damage.

Only one response is possible here. It is much more important to make punishment inevitable than to toughen it. I strongly rely on our community for an explicit expression of intolerance to such outrages. Our law enforcement system will be effective and bring criminals to justice in time. The Moscow City Court is hearing one such case today, as far as I know.

ERNEST MACKEVICIUS: Mr Putin, let us answer another question from the studio before we switch to Nalchik.

The right stall - Dmitry Sedov's, please.

DMITRY SEDOV: I am ready, Ernest.

I see a hand lifted. Please introduce yourself and ask your question.

ROMAN GREBENNIKOV: Good afternoon, Mr Putin. I am Roman Grebennikov, the mayor of the heroic city of Volgograd.

My city stretches along the Volga bank for 89 kilometres, yet to this day, it has no bypass motorway. What we call the Third Lengthway has only a part of the northern stretch, built in 2001. The southern, most important, stretch, about 40 kilometres long, is absent, causing traffic jams and air pollution.

How can the United Russia party help my city, a million-strong in population, to cope with it? Volgograd will not be able to afford the motorway single-handed, considering its municipal budget.

VLADIMIR PUTIN: A part of the highway is ready, you say? I think it's a pure economic matter, and thus should not be entirely rested on a political party. We should merely reconsider the plans of relevant federal services and see whether they correlate to transport development in the region.

Many constituent entities enjoy federal support in such matters because such projects are very expensive, often too expensive for local budgets, even on a regional scale.

We shall come back to the issue. I shall certainly take it up, and the Road Service will have a relevant assignment. The governor and I shall see what must be done to implement the project.

ERNEST MACKEVICIUS: Traffic congestion harasses us Muscovites, too. What can be done about it?

VLADIMIR PUTIN: Moscow receives huge allocations for its transportation network - incomparable to what other parts of Russia have. Moscow has considerable budget revenues. Practically all of Russia's foremost taxpayers are concentrated here, and almost all energy companies are registered in Moscow.

I have discussed the matter with the Moscow mayor, and I know that City Hall has offered long-term plans for transportation infrastructure development for discussion. We shall implement those plans no matter what. How much money should come from the federal purse and how much from the municipal will be settled at the negotiating table. No doubt, we will make all necessary decisions.

ERNEST MACKEVICIUS: This is a hopeful statement. Thank you, Mr Putin.

We have had linkups with Khabarovsk, Severodvinsk, Saratov, Rostov-on-Don, and the Republic of Tatarstan. It is Nalchik's turn now.

My colleague Ilya Kanavin is working in Kabardino-Balkaria. Take the floor, Ilya.

ILYA KANAVIN: Good afternoon, Ernest. Good afternoon, Mr Putin.

Nalchik is the capital of Kabardino-Balkaria. I think you can see that we are in a wrestling gym. It is the republic's Record Sport School. The North Caucasus has a special penchant for wrestling. The school offers classes for all tastes - Greco-Roman, freestyle, judo, karate, and other kinds of wrestling. Many children and adolescents study here. This school brings up champions who do extremely well in contests. Russia owed a great part of its sport glory to North Caucasian and other Caucasian wrestlers at competitions of all levels for many decades.

Here are weightlifter Khadzhimurat Akayev, Beijing Olympics bronze medal-winner, and Olympic champion wrestler Aslambek Khushtov, I cannot help but let him ask his question.

Take the floor, Aslambek.

ASLAMBEK KHUSHTOV: Good afternoon, Mr Putin.

VLADIMIR PUTIN: Good afternoon.

ASLAMBEK KHUSHTOV: By the way, I am a member of the United Russia party.

I talked about the continuity of generations. As far as professional sports are concerned, we can see the state's support. But we are seriously concerned about the training of young athletes. Surely, mere enthusiasm is not enough here.

VLADIMIR PUTIN: You are absolutely right. Last decade, primarily in the early and mid-1990s, the system of sports schools for children and teenagers was discontinued. This is obvious: We have lost a lot of professional coaches and must now reinstate these programmes.

Although we have made some strides in the last few years, it is not enough. We will step up these efforts despite all difficulties.

As you know, large-scale projects are being implemented. In effect, we have started reinstating such major events as the Golden Puck and Leather Ball junior-league hockey and football tournaments. All-out competition involving rural young people and even the All-Russian Rural Youth Sports Games are also being held. I attended one of these events. These are truly large-scale projects.

I repeat that we will step up these efforts and will do our best to restore the prestige of coaches' work.

The number of sports facilities and swimming pools has increased considerably. Although you are a wrestler, you are obviously interested in other sports that amount to a healthy lifestyle. Sports benefit boys, girls and all Russian young people.

We are implementing a football-field construction sub-programme under the federal target sports-development programme. We are doing this in conjunction with the Russian regions. This implies construction of small football fields and large stadiums.

All this is part of our plans which will not be downsized.

ERNEST MACKEVICIUS: Thank you. Ilya, let's put through another question from Nalchik.

ILYA KANAVIN: I think the boys should have a chance to speak.

What are your names?

IDRIS SUMAYEV: Good afternoon, my name is Idris Sumayev, a student at school 16 in Nalchik.

My friends and parents have talked a lot about the war in South Ossetia and are deeply upset in this connection. What if the West decides not to hold the Olympic Games in Sochi under the pretext of the South Ossetian war? Will there be enough funding to prepare for the Olympics?

KERIM KHULAMKHANOV: My name is Kerim Khulamkhanov, a student at school 16 in Nalchik. It is now possible to ski and ride on snowboards in the foothills of Mount Elbrus. Wrestling is not the only local sport.

VLADIMIR PUTIN: Yes, I know that it is possible to ski there. I've been to Kabardino-Balkaria many times. I have skied in Cheget and Elbrus, which are wonderful places.

Although we must accomplish a lot in order to improve the infrastructure of these resorts, the local environment is very good.

As far as the Olympic Games are concerned, the International Olympic Committee, rather than politicians, makes such decisions. I hope very much that as was in previous decades, the International Olympic Committee's activities will not be politicised. This is the first thing.

Despite the attempts of some Western politicians to defend their clients in the Georgian leadership who launched a bloody aggression against South Ossetia, people are becoming convinced that incumbent Georgian leaders are responsible for this aggression and the bloodshed that took place in the North Caucasus and its southern sector, South Ossetia. I believe this trend will become more pronounced.

This is why I see no reason to revise the International Olympic Committee's decisions to organise and hold the 22nd Winter Olympic Games in Sochi in 2014.

We have allocated financial resources for conducting the required preparatory work. These allocations will not be reduced; and we will implement all our plans.

At the same time, I would like to stress once again that most allocations will be spent on the regional infrastructure's development, rather than Olympic-facility construction. The population of the Krasnodar Territory, Sochi residents, as well as holiday visitors from all Russian regions will be able to use that infrastructure in summer and winter.

ERNEST MACKEVICIUS: Thank you, Mr Putin.

Thank you, Nalchik.

Thank you, Ilya.

We have been broadcasting live for almost three hours. We are now switching to the information-processing centre where Maria Sittel is working.

Maria, you have the floor.

MARIA SITTEL: Before we give any statistics on the number of telephone calls and SMS messages, let's listen to this telephone question on a highly important issue.

Bashkortostan, can you hear us?

ELVIRA PAYUSHINA: Good afternoon. I am Elvira Payushina from Karmasan village in the Ufa District, Bashkortostan.

I adopted a six-year-old disabled child from an orphanage. He was born with a tumor on his left leg. The leg was amputated after he was born. The child cannot move by himself. Twice a year, we have to ...

ERNEST MACKEVICIUS: Unfortunately, reception is very bad.

MARIA SITTEL: Thank you. That was Elvira Payushina who wanted to know about medical examinations for permanently disabled persons.

ERNEST MACKEVICIUS: Judging by what we heard, a sick child with just one leg was adopted.

VLADIMIR PUTIN: If I understand correctly, he has to undergo repeat medical examinations.

Frankly speaking, this is strange because we have adopted a decision that there will be no more repeat medical examinations. I am very sorry that the concerned agencies in Bashkortostan have not reacted accordingly to this.

I repeat once again that this issue was settled in early 2008, and that the Government passed the relevant executive order abolishing such repeat medical examinations. I promise you that we will react to this, and the situation will be rectified.

MARIA SITTEL: Thank you, Mr Putin.

Let's listen to another telephone call.

Your question, please, St Petersburg.

ALEXEI NIKOLAYEVICH: Good afternoon, Mr Putin. This is Alexei Nikolayevich from St Petersburg.

I would like to know whether Russia will establish naval bases in Venezuela and Cuba.

VLADIMIR PUTIN: We traditionally maintain very good relations with Venezuela and Cuba. As you know, a joint naval exercise involving the Russian Navy and Venezuelan warships has just ended successfully.

There is no need to establish permanent bases there today. Meanwhile we have reached an agreement with the Venezuelan leadership, I don't think that the Cuban leadership would refuse to abide by its provisions. If necessary, our warships would be able to enter the seaports of both countries in order to replenish their food supplies and to refuel.

On the whole, we have ample opportunities not only in those countries that you have mentioned but at other national seaports.

I want to tell you "a great military secret". When we announced plans to dispatch our warships to Venezuela for subsequent joint naval manoeuvres, we were surprised to receive numerous requests from many other countries asking our warships to call at their seaports.

ERNEST MACKEVICIUS: Maria, do you have news from the information-processing centre?

MARIA SITTEL: Yes, we have news, and not only from the center.

Mr Putin, we know by tradition at the end of a long live session you pick questions yourself. Without breaking this tradition, we would like to offer a blitz interview. Here are questions from the information-processing center.

ERNEST MACKEVICIUS: This is a special folder.

MARIA SITTEL: Nothing personal.

VLADIMIR PUTIN: "You said that there should be no experiments on people serving in the army, but experiments continue: elimination of warrant officers, sweeping layoffs, no pensions, no flats."

I think I heard this question from a person who is here. I have already said that layoffs will affect only those who complete their service next year, or whose contracts expired, or servicemen who were called up within two years of graduating from military departments, or if vacancies are reduced. No other cuts have been planned. And for sure nobody is planning to send people off without flats and adequate payments.

"Good afternoon! Is it true that new money has been issued?"

Rubbish.

"Why don't we equip the Air Force with fifth generation aircraft?"

We don't because we don't yet have them. By the way, they don't yet exist anywhere. But we are developing such aircraft, and this work is going according to plan. I'm sure that the Russian armed forces will receive such aircraft, and it would be great if they are built on schedule.

This note is about problems in the 42nd division and the 291st mountainous motorized rifle regiment. I won't repeat the whole question. And this is not a question, but a request to pay attention to the problems there.

I promise to give this note to the Defence Minister, and response will come.

"Good afternoon, Mr Putin. On behalf of all pensioners I would like to find out whether we will be deprived of all benefits next year?"

No, this is nonsense. Such an idea didn't even occur to anyone.

"Please, look into massive dismissals at the cement plant in Stary Oskol. Its top managers compel employees to apply for the termination of labour contracts."

This is another difficult question but I consider it important because top managers are compelling people to terminate labour contracts.

I'd like to say right off that businessmen, top managers of this particular plant or any other have no right to do this. Employees should not sign documents terminating their contracts because if they do this, they will lose the right to get a dismissal wage, as well as full unemployment benefits which will be raised to 4,900 roubles starting January 1. If they do this, they won't receive the money.

The bodies supervising the operation of companies, including the prosecution agencies should adequately react to this. By the way, we have already talked with trade union officials and representatives of the United Russia party in the provinces, and I recommended they should pay special attention to these cases.

"I have eight children, my eldest daughter is 20. I have not received the Order of Maternal Glory, and, hence, I don't get the benefits."

It goes without saying I will check on this. I can't comment on this particular case now, but this mistake should be corrected. I hope you've left your address here. We will find you.

"What is the Government willing to do to improve relations with Ukraine?"

I think that we are doing all we can for this. We do not raise far-fetched issues like the Holodomor (famine), politicizing these common problems from the past. We are doing everything to promote relations with this truly fraternal republic. Needless to say, we will do all we can. Naturally, in the process we will establish fair interstate relations, in the economy as well. By fair relations I mean market-based relations.

"My niece has only one eye. She had lifelong disability status before the age of 18, when she was deprived of it. According to a response to my inquiry, there was a relevant order in Bashkortostan."

I cannot get it. That is, I know that this is really so, but constituent entities are unable to issue orders of their own on such matters. It was a misunderstanding, I think. At any rate, we will look into it. These issues are up to the Health Ministry social medical service. The ministry will be given a relevant instruction today. The only lawful thing to do about it is to give your niece adult disability status when she has come of age. The issue must be settled urgently.

"Dear Mr Putin, I found my father's grave killed during WWII on the Internet." The man asks to help with restoring the monument, which the local budget cannot afford.

We shall contact you. This is a sacred duty of local and regional authorities alike. If they do not have enough money, I would stress that the matter implies not only money but also morals. We shall help if they cannot afford such things, but I don't think this is a matter where thrift should come in to play.

"We have no school and no art or knitting classes near our home. The children hope you will help."

This is also a matter of regional scope, but we shall help, as the message has reached me. We shall certainly help.

"My request concerns my son, who will be conscripted next autumn. He dreams of serving in the Kremlin Regiment."

Good boy! It's great that he wants to go into the army. As for the Kremlin Regiment, it has certain qualifications. I will pass your message along to the Federal Guard Service, and I believe its chiefs will do something for you.

"Mr Putin, thousands of Internet users are eager for an answer. When will you start your blog and write at least several lines a day?"

You know, the Russian Government has its own website, and I think it has been working smoothly enough. If you think it needs some additions, we will willingly make them.

By the way, the Health Ministry opened a special site for visually impaired people yesterday, on International Day of People with Disabilities.

We will continue to ensure that the public has timely and reliable information about Russian Government work.

"Mr Putin, why should children go to school on Saturdays?"

This is a serious matter, but the question should be addressed to school principals because, whatever they might say to you, the acting legislation makes no one other than school administrators responsible for school arrangements.

"We are writing from Chuvashia. What ideology is reigning on in Russia? What do you think about monuments to Soviet soldiers being destroyed in certain countries?"

This is a downright crime, and should be treated as such. Those who do this are imprudent; he that mischief hatches, mischief catches.

Here is a long message. I think it was faxed. I cannot read all two pages of it now.

"We see you only on short occasions during Government meetings, when you say a sentence or two. There are no interviews, news conferences, messages or meetings broadcast."

I hope I have satisfied those who want to see more of me - at least partly - today.

Here is a request to help with building a swimming pool. I hope we can find the author - it's an SMS with no address, but we can track the author down. Here is a similar request from a child of the town of Pokrovsk - also about building sports facilities. We will certainly try to help.

"What do you think about the Russian steam bath?"

I love it! I like every Russian thing.

"Mr Putin, why aren't Dagestani boys conscripted for the army? It takes a bribe to get into the army. Is it a paid service now?"

Very unexpected! Some people go to great lengths to dodge conscription, while others cannot join the army when they want. This is very peculiar - all the more so since it concerns Dagestan. The Dagestani people have proven many times that they can fight for their native land and for all of Russia. I can't see what the problem is about, but the Defence Ministry will, as in previous instances, look into it. I shall inform the Defence Minister."

Now, as for "prime-ministerial vacations", I have no comments. This is a job that demands hard work. I knew it, so I don't complain.

A question from a 17-year-old from Saratov: "Do you think the prolongation of the presidential and parliamentary terms will improve their performance? What do you think of it?"

The measures President Dmitry Medvedev has proposed to streamline the Russian political system do not boil down to longer presidential and parliamentary terms. It is a package that envisages, in particular, an improvement of the formative principles of the upper parliamentary house. There are other initiatives, as well.

On the whole, the President has not proposed cardinal changes that involve the basis of the constitutional system. The President and the Parliament retain their electivity, swearing-in, and later routine. Mr Medvedev's initiatives do not aim to abolish the principle of removability of the top national leadership, as is the case in certain countries that elect their heads of state for an indefinite term. Russia retains such limitations.

As for longer terms, it is largely a matter of taste. I think it is justified in a country as vast as Russia. Six years of presidency is a reasonable term in a country with such a problematic ethnic composition. Take Finland, a small neighbouring country. Six years is the presidential term there.

"Where will you ring in the New Year?"

At home.

"Are you romantic?"

A bit.

"When will we have snow?"

That's up to God.

"The mess in the country starts with elections, don't you think?"

Which country do you mean?

"Why don't central television channels broadcast morning exercises?"

I think because their bosses feel perfectly fit. But I think you are right, they should consider the matter.

"Do you think your assistants tell you only what you would like to hear?"

No! We never gloss anything over. The Government is very outspoken in its discussions. Opinions clash on many problems, and I think that's the best way to arrive at the best possible decision.

Many messages have come through the public reception offices of the United Russia party leader. They all concern practical matters and come from people burdened with struggles - unmarried mothers, disabled people, and others. I shall not read them all here because they are, for the most part, not questions but requests. We shall take stock of them and make proper responses.

"The crisis is very hard on us! When will it end, Mr Putin?"

This is a vital question. Expert opinions on global economic developments and the impact of the crisis on the Russian economy differ in this and other countries. Some expect a global - which means Russian, too - economic rise as early as the end of the second or third quarter of 2009. Such optimistic experts are few and far between. A majority do not expect a rise earlier than the spring of 2010.

At any rate (I have said so during this discussion, and I stress it again), Russia has seen greater problems, and coped with them. We shall cope with the present crisis, too, if we follow the right course and are purposeful about our complicated economic and social matters. We have every chance to do it, and need to do only one thing - to concentrate on national interests and work together. This was always the case when Russia was facing problems.

"What do you love most of all?"

Russia.

Thank you.

ERNEST MACKEVICIUS: That was the last question and answer.

Our live broadcast took more than three hours.

Thank you, Mr Putin.

The programme "A Conversation with Vladimir Putin" is over.

Good bye.

VLADIMIR PUTIN: Thank you.