Russian Federation Prime Minister Vladimir Putin Remarks during the United Russia Party...

8/7/2019 Russian Federation Prime Minister Vladimir Putin Remarks during the United Russia Party Interregional Conference

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Russian Federation Prime Minister Vladimir Putin

Remarks during the United Russia Party Interregional

Conference on the Development Strategy for Central

Russia through 2020

Transcript:

Vladimir Putin: Good afternoon, colleagues,

Bryansk has welcomed us with good weather, which instantly puts one in a positive, springmood. We are holding our first interregional party conference in the new year of 2011 in thisalmost festive or at least pre-holiday atmosphere. We are to discuss projects concerning thedevelopment of the Central Federal District. First, I'd like to say a few words about what we haveachieved, and then allow me to make a number of proposals.

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We realise full well that if a political party claims the support of the people, it should know thesepeople and their needs and put them at the top of its agenda. It is no accident that United Russiahas undertaken to draft development projects for all regions of Russia from the Far East toKaliningrad. At our interregional forums, we discussed many important and urgent issues and,most importantly, we started implementing our initiatives.

Following the party's conferences, our government has made a number of decisions forinstance, to reduce the price of gas for Kamchatka. I will simply remind you of the decisions thathave been made at preceding regional party conferences and what has been done. So, to repeat,we have decided to reduce the price of gas on Kamchatka and expand the programme of discount

flights for the residents of Siberia and the Far East. We have allocated funds to restore the forestsburnt by fires in the Central Region and launched the programme for modernising AvtoVAZ andimproving municipal development in Togliatti and other single-industry cities. VEB is takingpart in establishing a fund for direct investment in the projects in the Far East. We are alsoworking on institutions of development for the North Caucasus.

We have supported these measures with more than 3 trillion roubles spread over 100 investmentprojects in the Volga, Siberian, and Far Eastern Regions. In the North Caucasian Federal Districtalone, 37 major projects worth 400 billion roubles will be started this year alone. This is quite asignificant sum for this district. No doubt, we will accomplish all our plans despite attempts tohinder the normal development of the North Caucasus.

Last year, our GDP grew by 4% and the real incomes of the population increased by 4.1%. Iwould like to reiterate that I'm referring to real incomes, or incomes after accounting forinflation. Industrial production grew 8.2%, and the processing industry grew by 12%. Thegrowth in individual economic sectors was even higher. For example, Russia's automotiveindustry doubled its output as compared to the crisis year of 2009. Car sales grew 30%, trucksales surged by 122%, and buses by almost 30%. And it was Russian car makers that benefitedthe most from all this. For your reference, cars assembled in Russia now account for 70% ofsales, and nine out of the ten most popular models are produced in Russia.

The automotive industry displayed the following performance in 2009: the manufacture of cars

dropped by 60%, trucks by 65%, and buses by 47%. In 2010, the manufacture of cars grew by101.4%, trucks by 74.5%, and buses by 23.6%.

Our financial institutions and banks are again expanding their investment in Russia's economy.The loan portfolio grew by more than 12% in 2010. Mortgage and consumer loan markets arerecovering.

You know that during the crisis, the Central Bank and the government were providing thenecessary resources and liquidity to our banking sector. This aid reached 5 trillion roubles in late

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2008. This is an immense sum for Russia. The government is currently recovering these fundswith surplus interest. The government has already earned 200 billion roubles. The funds weprovided to banks were not a sop or a gift. All in all, there are positive trends in our economy.

At the same time, I would like to urge you not to rest on your laurels. This year will be veryimportant for this country. We are transitioning to post-crisis development and recovery. This hasbeen achieved in certain economic sectors, but not in all.

At the peak of the economic crisis, we had to focus on emergency measures and on helping ourcitizens, individual sectors, and enterprises. And as we see in the automotive industry, there are

positive results. Naturally, we will continue our long-term programmes. It is also evident thatseveral systemic problems have accumulated over this complicated period, and they need to beaddressed. We need to draw conclusions and learn lessons from the crisis and recover as rapidlyas possible, but we have to think in terms of qualitative development. We talk about this all thetime. Whatever the situation in global markets, Russia needs to do away with its dependency onnatural resources, and that is evident.

The current favourable conditions for our hydrocarbon, metallurgical, and chemical sectorsshould not put a damper on our ardour or be a pretext to let old problems drag on. This is why inmaintaining the fundamental goals and principles of the development strategy through 2020, weneed to find new flashpoints for growth, introduce new factors into the development of industry

and business and identify reserves for boosting Russia's international competitiveness.

I would now like to say a very simple thing that we rarely say. United Russia played a verysignificant role in Russia's contemporary history, especially during the crisis, when decisions hadto be made very promptly I mean what I say. What has been and what is United Russia's value?It is the fact that the party is the cornerstone of Russia's political and economic stability. Thankyou for your applause.

But I would like to tell you that this is not enough anymore because we need to move forward.We need a model based on highly qualified and professional people, on smart governance, and aclever investment policy, on dramatically improved efficiency, and on creating conduciveconditions for the success of small and medium-sized businesses. We need to advance and lookinto the future. And the United Russia party needs to mobilise its resources. It must find and offerour society appropriate short-term and strategic long-term solutions to the problems Russia isfacing.

Earlier this week I met with farmers in Tambov. The government has to continue supportingRussian agriculture. All the more so, since this issue involves the country's food independenceand affordable, high-quality goods for our people. One of the most topical issues today is thegrowth of food prices.

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I would like to request regional leaders and United Russia deputies to intensify price control,react flexibly to the situation, set up regional agricultural funds, and establish efficientinterregional cooperation. We are using a mechanism like this in the grain market: to supportcattle breeding, we are providing fodder grain to regions at prices lower than the market value.

We know that prices keep growing on the international market as well. And they are puttingsome pressure on the Russian market. Our farmers have gone through two lean years,compounded with the consequences of the global economic downturn, which had a negativeimpact on our economy and thus affected the social sphere and the country's standard of living.Russia, unlike some other countries, including those with stable and developed economy, did not

cut wages of public sector employees, did not reduce pensions, or increase the pension age allof you are well aware of this. We have been fulfilling all of our social obligations. But manyRussian citizens are nonetheless facing unemployment and a drop in real wages and incomes. Wedidn't adjust wages of budget-dependent employees at all last year, and their wages are very low.But, in general, we implemented all our programmes of social development. For example, weincreased pensions by almost 46%, as you know. We are getting additional opportunities today,and, of course, people want to see how we will use them and what we will make a priority.

The expert community offers various recipes, but there is one thing we know for sure: we can'tneglect our social obligations. And, of course, we will not leave the people to fend forthemselves, while promising them future prosperity, the way it was decades ago. This has

happened many times over the course of our history, and we know how such stories end.

We must find solutions that allow the country to develop steadily while also giving the majorityof citizens the opportunity to experience the impact of this development in their own lives, to seefor themselves how it has improved their lives and the lives of their children, to reap the benefitsof this development not in the remote future, but today.

Despite all the difficulties and limited financial resources, we, as I have already said,significantly increased pension payments in 2010. Labour pensions have been again adjusted forinflation by 8.8% in Russia since February 1, 2011.

We are preparing to adjust social pensions, also by 8.8%, as of April 1. We still have someobligations to fulfill. We will consider what to do next in this field. We can't do otherwise: inmost cases, pensions are the only or the primary means of subsistence for the elderly. We didn'tlet their incomes fall during the crisis, and we can't let it happen now.

Now I would like to speak about other things we have to do. This year we will have to make adecision on increasing the scholarship fund because we haven't been indexing it for two years.We need to support Russian students. We increased the wage fund of public sector employees by30% in late 2008, and they lived through 2009 more or less successfully against a backdrop of

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falling wages in the country's economy in general. But in 2010, their wages again sagged, andscholarships hadn't been increased in two years. We examined the issue, and I can say, as I havealready mentioned, that scholarships will be adjusted by no less than 9% as of September 1,2011. We will do our best to make the figure higher.

In 2012, we will start introducing a new salary system for military officers and employees oflaw-enforcement agencies. The system allows for substantial increases in wages according toranks and positions. The wages will depend on the level of the servicemen's professionalqualifications and on the complexity and responsibility of the tasks they are charged withperforming. We have already cited the figures. Lieutenants serving in the interior ministry

agencies will get wages from 33,000 to 45,000 roubles, and lieutenants serving in the armedforces will have a wage of 50,000 roubles. The wages of those service members who risk theirlives or work in extreme conditions will be higher. Novice officers may have a salary of 80,000or even 90,000 roubles. Military pensions will be increased by no less than 50% since January 1,2012.

I have already started speaking about public sector employees. I can only repeat that theirsituation is the most difficult. First, we haven't adjusted their wages in two years. I have alreadysaid that we increased their wage fund by 30% in 2008, and we lived well through 2009, but wehad difficulties in 2010. Second, there is quite a big income gap in different regions of thecountry. The average wage of teachers and doctors working in the constituent entities of the

Central Federal District, not counting Moscow and the Moscow Region, is about 10,000 roubles,and this leaves much to be desired. In reality, wages of employees working at regional clinicsand hospitals are smaller, much smaller.

We will be adjusting public sector employees' wages by 6.5%, as stipulated by the law onbudget, starting June 1, 2011. But, of course, we understand that this is not enough, and that'swhy we will continue thinking about taking a second step in autumn. Dmitry Medvedev sharesmy opinion; we spoke about this two days ago.

Let us be realistic and keep within the budget. We will certainly take the next step in September.I am sure that accumulated inflation will not exceed 6.5% by June it will be around 6%,

slightly above the current six-month inflation. We'll take the next step in autumn and we'll seewhat that step will be.

I would like to emphasise to the regional governors present here, as well as the heads andmembers of regional legislatures, that regional policies make all the difference in the effort toincrease the incomes of teachers, doctors, librarians, and social workers.

Let's see. In the Belgorod Region, the average salary of a teacher is 40% higher than in theBryansk Region. In the Kaluga Region, it is 30% higher than in the Kostroma Region. There are

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more examples of this discrepancy, not only in the Central Federal District. These figures showhow regional governments' priorities differ across the country. They show which regions aremore determined to improve their social policy.

Colleagues, as I have said, this year is going to be a crucial one for any political party, includingUnited Russia. You know why that's the case. The parliamentary vote is scheduled for December2011. The party has been working hard to get fully prepared for this important event: it hasinitiated a law assuring each political party equal access to media resources and reducing theState Duma eligibility barrier. Why am I saying this now?

The strongest party is the one focused on its voters' needs, not the one supported by a group ofhigh-ranking officials. Only a party that is sensitive to public sentiment and is capable of meetingtheir expectations wins in the end. What it wins is worth more than seats or some abstractproportion of the vote. Its prize is the mandate of public trust, which it can use effectively topursue the policy that it deems right and appropriate for the benefit of the country. What I'msaying is, this should be our position of principle. This kind of attitude will lead us to effectivedecision-making.

We decided at our last congress to hold an intra-party vote on the candidates we nominate. Ibelieve this approach has proved effective during regional election campaigns. This intra-partydemocracy helps our members get to know the candidates better. It puts the candidates to an

important test. It also consolidates the party as regional branches learn to nominate theircandidates with greater responsibility. There should be no outsiders or dark horse candidates. Weneed responsible and effective people, professionals who will represent United Russia in theparliament.

We have heard a lot of clever anti-corruption rhetoric. We all agree that anyone who goes intopolitics must be transparent and must disclose his or her income. Disclosing expenses is also agood idea; we need to discuss potential tools for this initiative.

We will finalise our list of candidates at our September congress and adopt our electionprogramme. Incidentally, if we are to start working on a national development programme nowand United Russia's programme for the period after 2012, then we must absolutely include anagenda for regional development, incorporating all the work that has been done at regionalconferences. This will make our strategy clearer and easier to understand and will make the partybetter organised.

Colleagues, when drafting our regional plans, we try to build on the specific competitiveadvantages that I am sure all regions have. Central Russian regions have advanced industry andtechnology, a developed educational system, and intensive business activity, which thereforeattracts investment. Central Russia has unique historical and cultural heritage, which is

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internationally recognised. In short, this region has vast potential and is bound to be a leader inthe development of an advanced high-tech economy and strong industry.

Why is modern industry important for us? Because it stimulates the creation of engineering andresearch centres, the demand for a quality engineering education, for research and development,and is a powerful element of the national system of innovation. We will continue to stimulateindustrial development programmes, will subsidise interest rates on loans for the modernisationof production, and will assist those who export high-tech products. This is for the first time thatwe have introduced such an instrument (we had no such instruments before). Last year, 13 billionroubles were allocated to enterprises in the Central Federal District for these purposes. The

recipients included machine-building, chemical, aeronautical, automotive, radio-electronic, andengine-building enterprises.

The first sectors to be converted to new technologies will of course be those that poseenvironmental hazards. For example, major oil refineries in Moscow, Ryazan, and Yaroslavl are located practically within the city limits. Residents reasonably complain about theenvironmental hazards they present: chimney stacks spewing smoke, inefficient purificationsystems, etc. Over the next few years a drastic modernisation of all of these oil refineries willtake place. Companies will invest about 118 billion roubles in modern equipment andconservation efforts, and harmful emissions will be cut almost by half. About 56 billion roubleswill be invested in the Moscow refinery, 19.5 billion in Yaroslavl, and 42.9 billion in Ryazan.

In the energy sector over the next ten years, we will replace nearly 25% of the district'sgenerating capacity and decommission all the outdated, so-called dirty and inefficient powerunits, which are 50-60 years old and older. By 2020, 11.5 gigawatts of generating capacity willbe introduced in the Central Federal District.

We cannot afford to forget the lessons of this winter. We should do everything in our power toprevent the recurrence of the massive power failures we saw to residential and strategic facilities,towns, and villages.

More than 60,000 kilometres of power grids, half of the existing lines, will be repaired or builtthis year in the Central Federal District. That is a large number that calls for a lot of work. Theimplementation of such a massive programme will require a lot of funding: over 100 billionroubles this year and 0.5 trillion roubles until 2015. I would like you to note that we havedecided to limit the growth of prices in the energy market to an average 15% nationwide. And, ofcourse, I think it is inadmissible when an investment programme (important as it is formaintaining the networks in proper order) that is intended for five years is crammed into a one-year period. It pushes electricity prices up 30-50% and in some regions by 70%. But why do it?Why? Frankly, all sorts of suspicions arise that somebody just wants to load some crony

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companies with money: hurry, hurry, don't miss the train. The network infrastructure should ofcourse be supported, and investment programmes should be carried out, but all this should bedone at an even pace and at the right time.

Our basic position is that neither the economy nor the individual consumer should be made topay for infrastructure modernisation. Otherwise, by solving some problems, we will simplycreate others. Let me remind you that the Central Federal District is the epicentre of our lightindustry and textile industry, and some factories are several hundred years old. After the breakupof the Soviet Union, all our sources of raw materials were lost, the equipment has since becomeobsolete, and it is hard to compete with imports, many of which are often illegal or only semi-

legal.

But in spite of this, we managed to build up competitive production. It needs our help. It wouldopen up prospects for many towns and settlements, for tens of thousands of people. We proposetaking action in several areas. First, we need to put the domestic market in order, sustaining thefight against fraudulent goods and adopting modern technological rules and quality standards.Second, we need to develop the production base and search for niches in which Russian productsare in demand, not only in the domestic but also in the global market. For instance, there isgrowing global demand in construction, biotechnology, medicine, and chemistry for natural,environmentally clean textiles and fabrics. They can be produced at textile clusters being createdin the Ivanovo, Yaroslavl, and Kostroma regions. These and other light industry projects can be

assured of our support.

Another key industry for the country as a whole and for the Central Federal District, inparticular, is aircraft building. All the main aviation design offices, research institutes, and thelegendary Central Aerohydrodynamics Institute (TsAGI) are located in the district. This is anintellectual and technological resource that must be used effectively for the benefit of our entireeconomy. We are creating a National Aircraft Building Centre. It will be located, as we haveagreed, in Zhukovsky outside Moscow. It is a convenient location that has traditionallyfacilitated such plans. It will comprise the Gromov Test Flight Institute, and the Sukhoi, Ilyushin,Yakovlev, Tupolev and MIG plants and design offices. We are planning to turn it into a powerful,high-tech research and production cluster, effectively an innovative zone for the country's

aviation industry. Even during the difficult crisis years, we continued to shore up the aviationindustry.

About 200 billion roubles were allocated to support the aviation industry in 2009 2010. As aresult, we were able to continue projects that are critical for the future of both our civil andmilitary aviation. Just a month ago, the Sukhoi Superjet 100 was certified. I might add that 150such planes have already been ordered. The Saturn plant in Rybinsk will produce 30 Superjetengines this year, and about 70 next year.

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The Voronezh aviation plant is deploying serial production of the passenger version of theRussian-Ukrainian AN-148 and a special version for the Russian Emergencies Ministry. Thesewill be unique flying hospitals delivering emergency medical assistance. The Mil and Kamovdesign offices are working on modern high-speed Mi-38 and Ka-62 helicopters. Tests continue ofthe fifth-generation fighter plane. As you know, the second such plane took off fromKomsomolsk-on-Amur yesterday.

Defence industry output in Russia increased by 13% in 2010. The average pay in the sectorincreased by more than 16%.

More than 0.5 trillion roubles worth of orders were placed with the defence industry plants in theCentral Federal District in 2009 2011.

True, the situation varies in different parts of the Central Federal District, and certain regions areexperiencing difficulties. For instance, there are certain issues in Bryansk that the governor hasreported to me, but this is a special case, and we will look into it.

Still, it is pleasing that young people are choosing to work in the defence industry. For instance,Rosatom enterprises based in the Central Federal District offer jobs to some 500 university andvocational school graduates annually. The government has adopted a decision to pay monthlygrants to the best young workers, engineers, and designers at defence enterprises. I am speakingof a special monthly scholarship of 20,000 roubles granted to over 1,000 people and paid for upto three years. Starting with 2009, the district-based defence enterprises have received ordersworth over 0.5 trillion roubles, as I have already mentioned.

As you know, the government has developed a new state armaments programme that aims at theoverall re-equipment of the armed forces. This is a budget-consuming programme and is verydifficult to handle but it will certainly serve as a new start for the defence industry becausealong with the armaments programme, we will have to adopt a programme for re-equipping thedefense industry itself, which can only produce new armaments if provided with up-to-dateequipment. In addition to the armed forces' re-equipment programme, the government has drawnup plans for the large-scale modernisation of the military-industrial complex, with substantialfinancing directed at research and development.

I believe that we have to break bureaucratic stereotypes and practices. I suggest that we put anactive effort into attracting the resources of our civil innovative and industrial clusters for thebenefit of scientific work in the defence industry. This approach would make for dual-purposeadvanced technologies. In this regard, I consider the greater volume of defence orders one of themajor instruments for modernising both the military-industrial complex and the country'seconomy.

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You know that it is always gratifying to see joint work and the efforts of thousands of people,despite all difficulties, produce real and tangible results. At the beginning of my address, Imentioned the success achieved by Russia's car industry, with more of the world's top autoconcerns and carmakers entering the Russian market. Currently, we are setting new requirementson the industrial assembly process aimed at increasing industrial localisation that is, raising thevolume of spare parts and components manufactured at Russia-based enterprises. They aredelivered here for further large scale assembly in order to establish a network of small andmedium-sized enterprises, allied suppliers, and car components suppliers, such as the automotivepaint manufacturing plant based in the Tver Region.

But the prime example would be the Kaluga Region, whose car industry was developed fromscratch and has become one of Russia's auto industrial centres. I am sometimes amazed at howthey managed to accomplish it. The governor will probably give the details. They started theindustry from next to nothing, and now they have Volvo, Volkswagen, Peugeot, Citron andMitsubishi operating there, with some 10,000 people now employed at well-paid jobs andadditional investments going to the local social sector and education.

In 2010, the Kaluga Region attracted almost 8% of all direct investments into Russia's economy.But the region is small, indeed, without any gas or coal reserves just people ready and willingto work. By 2012, the region will be fully self-sufficient.

The experience gained in Kaluga, Belgorod, Ryazan, Voronezh, Lipetsk, and Yaroslavl revealsthat the reasonable choice of investors, the abolishment of bureaucratic practices, andinvestments in infrastructure and personnel training can bring impressive results. I believe thatthe assessment of the regional governors' and officials' work to attract investment and supportbusinesses should be as open as possible, hence our proposal to make an annual public rating ofRussian regions' favourability for investment.

I am also certain that we have to provide greater freedom for leading regions. The stimulatingrole of federal budget support should be strengthened and financial autonomy extended for thoseentities that succeed in developing the local economy and modernising the social sector.

Currently, the government is developing relevant proposals, and soon we will adopt a decision onways to stimulate regions' efforts. I can say with absolute certainty that the 2012 federal budgetwill be prepared using new approaches.

There are plans to establish an incentive fund, and I can tell you about it in more detail. The fundwill have 10 billion roubles in its first stage, and constituent entities will be able to use thismoney to pay back loans on infrastructure, high-technology, and other development programmes.

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It is worth noting that the Kaluga Regions economy is not limited to the auto industry: it isdeveloping the pharmaceutical sector as well. The region is using a high-technology park in thescience centre of Obninsk as its platform.

Modern pharmaceutical enterprises are being opened in the Orel and Yaroslavl regions inpartnership with leading foreign manufacturers.

There are also plans to produce medical equipment in the Dubna special economic zone inpartnership with RusNano. RusNano invested a total of 186 billion roubles in the high-technology sector of the Central Federal District.

Realising the importance of cheap, high-quality drugs for the population, we are going to investover 120 billion roubles from the federal budget to improve the pharmaceutical and medicalindustries in the coming years.

This money will be spent on new equipment for over 160 medical enterprises. We plan toestablish 17 science and research centres to develop drugs and medical equipment and involveRussias leading universities and science organisations in this work. We will also extend ourpartnership with foreign partners.

Moscow State University has now organised a biomedical innovation think tank that integratesresearch and educational platforms, a technological transfer centre, and pilot productionprogrammes.

I am convinced that, stage by stage, we must form a powerful, knowledge-based intellectualservice and high-technology business sector in the Central Federal District. Over 120 localcompanies are already operating in the three special economic zones of the Central FederalDistrict: Zelenograd, Dubna, and the Lipetsk Region. The volume of declared investments innuclear technology, bio-technology, electronics, chemistry, and the production of advancedbuilding materials is at over 160 billion roubles.

Conversely, many regions of the Central Federal District have accumulated positive experiencein developing industrial parks, technological parks, and business think tanks. For instance, four

industrial parks engaged in different industries were established in the Belgorod Region. Thesame can be said about the Bryansk Region, which has included a business think tank andtraining centre in the Morozov Project national initiative. The Rodniki technology park,established through private investment, is successfully operating in the Ivanovo Region. I wouldlike the regional authorities and our party organisations to study their neighbours experience andhelp use it in other areas. You have all the necessary resources, including highly skilledspecialists. Russias central region has historically been the core of the countrys leadinguniversities and science centres. Half of all Russian scientists work there.

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In 2011, federal spending on civil science will equal 228 billion roubles, which is twice as muchas in the pre-crisis year of 2007. This money must be used effectively. Eleven out of fourteen ofthe countrys science cities are located in the Central Federal District, and this is, of course, asource of pride and national wealth. We provide federal support for science cities to improvetheir social, engineering, and innovative infrastructure. In 2010 2013, the eleven science citiesof the Central Federal Districts will receive 1.6 billion roubles from the federal budget.

We will soon study these issues in detail. The contributions being made toward technology andinnovation in the Central Federal District are great, and I would like to emphasise that. We planto increase investment in this area and better distribute resources, in particular through the

organisation of contests and grants.

Science cities, that achieve the best results in the sphere of innovation, complete ambitiousscience and technology projects, successfully commercialise these intellectual products, andintegrate science and production, will be the first to receive money from the federal budget. Inmodern times, rapidly changing global tendencies require sharp competitive growth in Russianeducation and science. It is necessary to attract the best Russian and foreign specialists inRussian institutions of higher education. To that end, we are launching a grant supportprogramme. The first forty grant winners have already been chosen. They include Nobel Prizeand Fields Medal winners. The grant winners, including our compatriots working abroad andforeign scientists and teachers, are ready to work with Russian universities and laboratories. The

grant amount is 150 million roubles over a three-year period. So, we are giving these grants notto institutions or teams but to specific scientists to develop their ideas. Starting in 2006, 24leading higher educational institutions of the Central Federal District received support under thenational programme for education.

The next step we made was adopting a special development programme for Moscow StateUniversity and developing a network of 12 national research universities in the Central FederalDistrict. These institutions of higher education will be given around 30 billion roubles to updatetheir research platforms and implement scientific projects.

In 2009 2010, the national research universities of the Central Federal District received 5

billion roubles from the federal budget. In 2010 2011, they will receive another 5 billionroubles towards improvements.

We allocated another 19 billion roubles to help higher educational institutions and privatebusinesses implement jointly developed high-technology projects. Russian companies will beable to benefit from R&D and introduce new products and technology on the market. As for theuniversities, they will get the opportunity to update their research platforms and provideambitious and promising work for their employees. We must pay special attention to the

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following: it is particularly important to attract students and post-graduate students to this work,giving our young people the opportunity to experience professional fulfillment and find theirplace in the sphere of science and high technology.

The procedure is as follows, as you remember: money must go through industrial enterprises thatwork with institutions of higher education by contributing money, concluding contracts, andproviding the institution with access to the sector in which they are engaged. We hope this toolwill prove effective.

In 2009, the United Russia faction of the State Duma ensured the speedy adoption of necessary

amendments to laws. Our science and educational centres were encouraged to found small andmedium-sized companies in order to make use of their intellectual discoveries. Over 700 suchenterprises were established across the country, including 200 enterprises in the Central FederalDistrict.

I already mentioned the great potential for entrepreneurship in the Central Federal District. Lastyear, over 20,000 small and medium-sized companies were founded and private entrepreneursstarted business there. Still, we have to guarantee faster improvement, help new enterprisesemerge on the market, and give people a clear and attractive picture of independententrepreneurship.

Despite the budget deficit and post-crisis challenges, we provided benefits to small businessesengaged in the real economy, high technology, and the agricultural sector; residents oftechnological development zones; small enterprises operating under scientific centres anduniversities; and private entrepreneurs providing social services.

We understand clearly how important it is to develop entrepreneurship. This is why weconsistently work to bring down administrative barriers and get rid of various unnecessary andimposed inspections. I would like to seize this opportunity to request our deputies to boost theadoption of the new law On Licensing. This law envisages indefinite licenses and will almosthalve the list of activities requiring licenses.

Naturally, we need efficient regional programmes to support small businesses, including the

expansion of loan guarantee funds. The total capitalisation of all guarantee funds in the CentralFederal District is a little over 8 billion roubles. But it has already helped small businesses totake out loans totalling more than 33 billion roubles. Can you sense the difference? Some 8billion roubles from the guarantee funds and 33 billion roubles in loans. If regions increase theirfunds and this can be done they will create better conditions for taking out loans. It isespecially important to help young entrepreneurs through financial grants, microloans andcreating a consulting and legal advice system.

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And theres another important issue. We have given regional authorities the right to cut the ratefor simplified taxation from 15% to 5% we did this during the crisis. But only few regions usedthis measure to support small businesses. The Central Federal District, the Kostroma, Voronezhand Vladimir regions have not made a decision on the tax rate. Other regions set it at between7% and 10%. Id like to request that our colleagues in regional governments consider theirbudget capabilities once again and cut the tax rate as much as possible. Clearly, there is thetemptation to dramatically increase tax revenues during a period of economic recovery andgrowth. But regional and municipal authorities pursue a flexible policy that shows foresight andsupports businesses today so that they will benefit much more tomorrow.

Naturally, we need to help those cultivating land to become owners of the land, as agreed. Thistoo was one of the key issues discussed at my meeting with farmers two days ago.

I would like to point out that we want all forms of farming to develop successfully, includingfarm holdings, individual farms and major companies. For example, a meat production projectemploying advanced technology is being carried out with the support of Vnesheconombank inthe Bryansk Region. Is the regions governor here? How much investment does the projectrequire? $250 million?

Remark: About 200 billion roubles.

Vladimir Putin: Yes. So, between $230 and $250 million [about 7 billion roubles] will be spenton this good project, a good company is carrying it out.

And the number of such breakthrough and high-tech ideas and business initiatives in Russianagriculture is on the rise. Almost all regions of the Central Federal District have projects like this.The Smolensk Region, for example, intends to set up a network of hothouses. Money is beinginvested in poultry farms and raw material processing in the Belgorod, Orel and Moscowregions. I remember visiting the Belgorod Region last year You know, when we were investingin the development of livestock breeding and were providing large subsidies, there were seriousconcerns about how these funds would be used. It is a pity that everyone cannot take a helicopterover the Belgorod Region. It cheers the heart to see all the new roofs shining in the sun and thebrand-new high-tech livestock breeding facilities. I was astonished to see all that. It is a verygood example to follow.

We naturally need to think about providing our farmers with new equipment. You have possiblyheard that a decision has been made to set aside an additional 4 billion roubles for the agro-industrial leasing company Rosagroleasing to sell the new equipment it has to farmingcompanies at half the price. And by selling these machines, even at half the price, the leasingcompany will be able to place new orders at Russian machine engineering plants. How manypieces of equipment do you have 5,000 or 6,000 units?

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Ladies and gentlemen, the Central Federal District is the most populated federal district inRussia. It is rightfully considered the most favourable one to work and live in. Yet, it is alsoevident that the regions infrastructure, including the transport, social, and housinginfrastructures and public utilities, is being strained. It is often pushed to its limits and fails tomeet the growing demand of the economy and the people.

New major projects, such as the establishment of an international financial centre in Moscow, ofthe logistics of the North-South and West-East routes, the formation of tourist clusters,immediately come up against the wall of infrastructural limits. Our goal is to reverse thesenegative trends and remedy the emerging imbalances to make peoples lives more comfortable,

provide them with high-quality social services, give them the opportunity to solve their housingissues and have access to the most modern infrastructure.

A total of 61 billion roubles will be allocated in the next three years to rebuild all key federalhighways running across the federal district, including the M10 Russia, M4 Don, M6 Caspian,M5 Urals, M8 Kholmogory, M9 Baltic and M7 Volga highways as well as the A108 Big Ringand A107 Small Ring of the Moscow Region.

The United Russia party has initiated a project to renovate town roads and courtyards inadministrative centres of the Central Federal District. In total, over 22 billion roubles will be setaside for this purpose, and 11.5 billion of that money in the Central Federal District. I would like

to point out that all necessary underlying regulations for this have been adopted. This is why Iam asking those in charge to sign the corresponding agreements with the Ministry of RegionalDevelopment by the end of March so that work can begin in April.

We need to optimise traffic flows in the Central Federal District and consider setting up modernlogistics centres, e.g. in Smolensk, Bryansk and Belgorod. We need to use their favourablelocations and the advantages of border towns and cities above all to strengthen trade andeconomic ties with Ukraine and Belarus, our closest neighbours and partners.

I would also like to mention that the modernisation programme will include MoscowsSheremetyevo, Vnukovo and Domodedovo airports.

Dobrynskoye airport in Vladimir is to open in 2014 after renovation. Moreover, up-to-dateequipment will be installed at airports in Voronezh, Smolensk, Kursk, Belgorod, Tver, Bryansk,Kostroma, Lipetsk, Tambov and Orel. This new equipment will help increase flight safety, cut thetime needed to process flights and improve the quality of services for passengers. All in all,almost 50 billion roubles will be invested from the federal budget in the development of theCentral Federal Districts airports.

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I also believe that the regions of the Central Federal District do have the necessary resources tocatch up with leading countries in mobile and landline communications, internet, digitaltelevision, and e-government. This goal must be set today. The federal government doeseverything in its power to assist the regions and hopes to further strengthen its cooperation withthem in order to promote the adoption of new technology across the country.

We must increase the rate of housing construction in the Central Federal District and in Russia ingeneral, reversing the current negative trend in the industry. In 2011, housing construction isexpected to increase by two million square metres in this federal district and by five millionsquare metres across the country. So these regions will account for almost a half of the total

growth. On the whole, in 2011 we plan to build 63 million square metres of housing. We haveeverything we need to meet this target. The demand is rising, and the state is continuing its large-scale housing programmes.

By May 2010, we provided housing to all veterans of the Great Patriotic War in the CentralFederal District that had been put on the waiting list before March 1, 2005. A total of 5,222veterans benefited from this programme. After that, an additional 34,000 veterans registered fornew housing. Id like to underscore the fact that we received 34,000 applications after providinghousing to 5,222 veterans. Im sure you understand the scale of this challenge. Last year, 25,000people took advantage of this programme, and I expect that in the next few months, we willfulfill this commitment to the letter. Id like to reiterate that we will not set any excessive

requirements for such applications.

I would like to say a few words about one important and, to put it bluntly, very painful problem the so-called defrauded real estate investors. There are over 74,000 such people in Russia,including 6,000 in Moscow alone and almost 18,000 across the Central Federal District. Theirrights and interests have been wantonly violated. Many lost their money and savings and foundthemselves in debt, but didnt receive new flats. Of course, its understood that one must be verycareful on the housing market and not enter into dodgy agreements. But clearly, the state alsobears responsibility for this problem. It failed to protect people from crooks and scammers,overlooking flaws in legislation.

As a follow-up to a government resolution, federal authorities are taking an inventory ofabandoned and frozen construction sites and developing proposals on financing constructionprojects in the final stage and attracting investors to the industry. This issue was raised at a recentgovernment meeting. I would like the regions to join us in our efforts. We understand where andhow the responsibility is to be met, so that by July 1, 2012, we will have resolved the problemsof the majority of defrauded investors, completely settling them by the end of next year. Theissue is complex and requires substantial funds, but the Ministry of Regional Development saysthat we have the necessary resources, so we need to move forward with it.

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I have already said that higher education standards are rising. This is also the case inkindergarten and secondary education. Over the past three years, more than 1,000 kindergartensfor 131,000 children were built and opened in the Central Federal District. Meanwhile, thenumber of children on the kindergartens waiting list increased from 113,000 to 320,000. We arefailing to keep up with demographic trends, in particular growing birth rates. It is very good thatthey are on the rise, but its bad that there are not enough kindergartens. Regions andmunicipalities must pay special attention to this problem. We must support early education,including corporate and private kindergartens and preschool education centres. Kindergartensshould reclaim the facilities that were transferred to firms, companies, and municipal authoritiesand currently serve as office buildings. It is difficult to do so in case ownership rights were

transferred irretrievably to a scrupulous acquirer. But many such buildings house the offices ofmunicipal agencies. There are quite a few such buildings. And this property must be reclaimed.The federal government will certainly support the regions that address this socially importantissue.

Through the national project 'Education,' we have provided new equipment to schools andintroduced advanced educational programmes and new forms of long-distance learning forchildren with disabilities. All schools of the Central Federal District have been connected to theinternet. The share of students taking advantage of modern education benefits has increased to70%. This work must certainly be continued.

In moving towards new education standards, however, we must avoid making rash decisionsbehind closed doors or inside government agencies. And we will not allow this to occur becausewe understand that this issue affects the interests of all Russian society. There is no room formistakes. We must work in close contact with the public and parents, and primarily with studentsand teachers. This work must be absolutely transparent.

Next, as we agreed, governors and branches of federal parties must place particular emphasis andcontrol on regional programmes in healthcare modernisation. The regions of the Central FederalDistrict will receive 114 billion roubles through these programmes. Id like to stress that one ofthe main priorities of regional programmes should be better salaries in the industry. We havereviewed most proposals submitted by the regions of the Central Federal District. I am asking

federal authorities to expedite the adoption of these programmes and the signing of agreementswith the regions. Their coordination must be finished as soon as possible so that we can embarkon their execution and provide the funds. Id like to add that one of the main priorities for thisfederal district must be healthcare in rural areas, where death rates are higher than in urban areas.

We will carry on with the national project 'Healthcare,' allocating 488 billion roubles towards itbetween 2011 and 2013. The Central Federal District will receive about 110 billion roubles. Thisis in addition to funds to be provided through the healthcare modernisation programme. In 2011,

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the Lipetsk, Belgorod, Tula, Yaroslavl, and Moscow regions will join the 'Blood Service'programme, for which they will receive 900 million roubles this year. Last year, high-techservices were provided to 100,000 people in this federal district, which is 15% more than in2009. By 2013 this rate must be increased to 86%. Currently, it stands at 76%.

We must meet the demand for such services to the letter, and they should of course be providedfree of charge. Im sure we all understand that behind these seemingly dry figures are the livesand health of ordinary people. If we have met the demand by only 76%, then obviously there issomeone who still cant afford an operation. Some such patients have to borrow money, but noteveryone has even this opportunity. This is why our project for healthcare modernisation is

critically important for the country for the nations health.

In 2011, we also plan to open the Federal Centre of High Medical Technology in Smolensk (itwill specialise in orthopedics and traumatology), and we will build five perinatal centres. Thecentres in Tver, Kursk and Ryazan have already become operational, and the centres in theVoronezh and Yaroslavl regions will open their doors for patients in the coming months.

We have allocated substantial funds for these projects and created the necessary infrastructure.Regions must provide all necessary support and assistance to these centres. First of all, it isnecessary to create strong professional teams and attract good specialists, providing them withhousing and organising their training in leading clinics, both here and abroad. As you know, this

programme is well underway. I have toured several clinics in remote regions, and I can tell youthat strong teams have been created even there. But this is possible only when regionalauthorities address this issue with full responsibility and rationality. Doctors themselves areusually so dedicated to their profession that they can go to any place where they have anopportunity to work effectively and take advantage of modern technology. And we do providethe most advanced equipment to our new centres. However, we need to create the necessaryconditions for a high-class specialist to come and work in a remote region. And first andforemost, he or she needs a flat.

We must also continue to develop the infrastructure for public athletics in cooperation withregions and municipalities. We should focus on the construction and modernisation of sports

facilities and create the necessary conditions for playing sports in schools, universities, andpublic areas. Over the past four years, 242 sporting facilities were built or reconstructed in theCentral Federal District using federal allocations alone. United Russia helped equip 60 fitnessand recreation complexes. Local stadiums received 25 new turf fields through our project topromote football. Thirteen more fields have been planned for 2011.

We must take advantage of our preparations for the Olympics and the FIFA World Cup in orderto promote the values of athletics and a healthy lifestyle. This can foster the construction of new

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training centres, stadiums, and, significantly, hotels, tourist centres, and other serviceinfrastructure. The facilities that will be used during these major competitions, including theFIFA World Cup, should be made available to ordinary people after the events are over.

As a major international event, the World Cup gives us an excellent opportunity to promote ourcountry to tourists. And we must take full advantage of this chance and use it in the mosteffective manner.

Currently, about 10 million tourists visit the central regions of European Russia each year. Takenat face value, this number is quite high. But still, it does not really match the regions capacity.

We have unique potential, but we fall behind in quality and promotion. If we tackle this issue inearnest, we will certainly create a strong tourism industry and increase the number of tourists inthe coming years.

There are a great deal of places in this region that are familiar and dear to each of us and to everyRussian. Borodino, Prokhorovka Field, Suzdal, Vladimir, the Moscow and Smolensk Kremlins these sites are part of our common legacy, our roots, which make us a truly united nation.

I suggest that United Russia should propose and execute a special, socially important project tosupport Russian museums and contribute to restoring sites of historical or cultural interest. Warmemorials should receive special attention. While moving forward, we must always rememberthat we are building our future on a strong foundation the 1,000-year history of Russia, itsaccomplishments, the courage and patience of our fathers. They succeeded in creating a mightystate. Today its future depends on us.

I am confident, in considering our responsibility and our power, that we are capable andobligated to succeed. Thank you very much for your attention.

* * *

Vladimir Putin: Ladies and gentlemen, lets see what the experts have to say about how work intheir respective fields is organised in regions across the Central Federal District.

Lets hear first from Vladimr Kononov, director general of the investment and constructioncompany Konkor, specializing in high-tech medicine and plasma filtration. Please go ahead, MrKononov.

Vladimir Kononov: Ladies and gentlemen, Id like to tell you about a unique project in high-tech medicine. Its about the production of equipment for plasma filtration or, in a laymansterms, for the purification of blood.

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Our enterprise is fairly young by European standards, but not so young by Russias. The grouptraces its history back to 1991. In 1998, with a financial crisis in full swing, we began to buildour research and production compound Alpha in Dubna, outside Moscow. But we went aheadwith our investment, and were happy we took the risk.

Vladimir Putin: How much have you put in?

Vladimir Kononov: 2.7 billion roubles so far. Weve built one plant already, and are in theprocess of building a second one. You can see the operational enterprise in the screenshots.

Vladimir Putin: Those responsible for the display have a fear of blood. Do we have such peoplehere? Theres nothing to be afraid of, is there?

Youre accustomed [to seeing blood], and have no fear, whereas we may find the sight of itsomewhat frightening

Vladimir Kononov: In 1998, when we were launching this project, the word blood made meshiver, but its not a problem for me any longer, as I perform plasmapheresis on myself once ayear.

Vladimir Putin: Why do you do that? Because its free for you or because theres a need? Whydont we, too, take up the practice if its so good for you?

Vladimir Kononov: Well, its normal for an engineer to go under a bridge he or she hasdesigned when a train crosses it. And if youve built a plant producing blood filtration devices,you should be the first to test them.

Vladimir Putin: People with infectious diseases can benefit from this device, right?

Vladimir Kononov: Yes, but not only people with diseases. It can be used preventively, as well.In fact, each and every one of us in Russia should undergo the procedure of plasmapheresis atleast once a year people will become healthier; theyll live longer; and they wont lose moneyby taking time off work.

Vladimir Putin: Theyll be paying you instead?

Vladimir Kononov: We share our revenues with the state.Vladimir Putin: Mr Kononov, whats the price of the procedure?

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Vladimir Kononov: The cost of the expendables around 1,000-1,200 roubles plus a doctorssalary, which adds up to 1,500-2,500 roubles. At the moment, there are about 700 such devices inuse in Russia.

Vladimir Putin: Okay, but how much will an ordinary person have to pay for the full procedure?

Vladimir Kononov: Were manufacturers, you see; we produce equipment and supply it tohealthcare institutions. Im not responsible for these institutions, nor for the prices they set. Butas far as we know, clinics charge between 2,000 and 5,000 roubles. I admit that its not verycheap.

Vladimir Putin: Is this the price of the full procedure?

Vladimir Kononov: Yes.

Vladimir Putin: But one will be able to save money on medication later on, right?

Vladimir Kononov: Of course. And the persons life expectancy will be higher. As I said, ourenterprise is pretty young by European standards whereas by Russian standards, its already seenas a seasoned enterprise.

We began to build our Alpha compound in 1998, with a financial crisis in full swing. In those

days, Dubna wasnt a research centre yet, and there was no special economic zone there. Yet itoffered qualified personnel and favourable conditions for doing business. From day one, we feltthe support of the region and the town. The worlds first industrial accelerator was designed andbuilt for us here, in Dubna. You can see it in this screenshot something of a miniature collider.All over the world, cyclotrons are used for scientific research, whereas our accelerator operatesfor the benefit of the public. It now operates as an industrial facility, a factory of some sort.

What is Alpha like today? Its a modern plant turning out products up to European qualitystandards. Our enterprise, employing 250 people, produces high-precision medical devices forblood filtration. The production is based on nanotechnology, which has been talked about somuch these days. The particular technology that we use saves human lives on a daily basis.

In our case, it is nanotechnology. It works every day to save human lives. We have not rested onour laurels after building the Alpha centre and developing the business. On the contrary, we willsoon establish another research and production centre, the Beta, to employ 450 people, with amanufacturing capacity of 1.6 million modified plasma filtration devices and 1,500HemoPhoenix units. So we have two plants now one operating and the other underconstruction, and we intend to invest 2.7 billion roubles in both. So much on the matter youinquired about.

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You see the Beta construction site in this photo. We drove the first pile into the ground fivemonths ago, and the work is progressing at a good pace. The project has government support,and the Rosnano state corporation, our strategic partner, has purchased 48% of our shares to fundthe project.

Our products are highly in demand in Russia and other countries, and compete with foreignbrands such as Baxter and Haemonetics. As you see in the graph, we charge a mere 20% of theirprices and use cheaper materials, so treatment costs less. One session of plasma filtration, whichentirely purifies the blood, costs a staggering 60,000 roubles with foreign equipment, comparedto the 6,000 roubles we charge, which makes the treatment accessible to a greater number of

patients. This technology promises to save at least 12 to 15 billion roubles for the federal budgetwithin three years.

This slide shows the new unit, exhibited at the Russian pavilion of the Shanghai Expo inSeptember 2010.

Our technology is indispensable in all kinds of emergencies, even the gravest, whether its anindustrial or natural disaster or any other situation endangering human lives.

It is significant that our devices can be used not only in hospitals but also in field conditionsaway from power sources, and even at the epicentre of a disaster. More than that, there are noforeign analogues that can be used on babies. This slide shows Dr Valery Voinov of StPetersburg filtering an eight-month-old girls blood.

We think this project, launched in the late 1990s, is of tremendous social significance. There areabout four million cardiovascular patients in Russia now, and more than a million of them dieevery year. In other words, this country is annually losing 1% of its population, which isshrinking as it is. These are startling, unsettling statistics.

Our devices and plasma filters cannot save millions of lives, but they can rescue tens and evenhundreds of thousands, as practice has proved.

There is another unique project we intend to launch quite soon the manufacture of dialysis

units and kidney machines. We will build another research and production centre for it. We havea remarkable partner for the endeavour Fresenius Medical Care, one of the worlds leadingcompanies. The name of our joint venture is Frerus, abbreviated from Fresenius for Russia. Itextends our teams noble social mission, with many people suffering from kidney disease inRussia.

I would like to say in conclusion that it might appear from what I said that everything is just fineand that we have no problems at all. That would be the wrong impression. There are always

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problems involved in high-tech industries. You know this better than I do. Now, what assistancedo we need from the state and the government?

Mr Putin, we are certainly doing business (you noticed this, or you wouldnt have said that wewill be making more money now). So, naturally, we want to step up production and make greaterprofits. Though we are active exporters, we are also domestic manufacturers. The benefits thatour work brings Russians matter most to me, so I cherish the hope that ordinary Russian clinicsand hospitals will possess our equipment. Thank you for your attention. I look forward to yoursupport in this.

Vladimir Putin: Mr Kononov, I would like to clear up just one point. I have seen your slides. Isyour equipment for people with blood diseases?

Vladimir Kononov: Yes, blood and its circulation.

Vladimir Putin: What are these diseases?

Vladimir Kononov: There are about 70 nosological forms for example, atherosclerosis.

Vladimir Putin: But good old leeches are cheaper.

Vladimir Kononov: Using leeches for medicinal purposes is sheer shamanism

Vladimir Putin: Now you are talking nonsense! A leech is a leech, and a shaman is a shamanUsing leeches costs much less.

Vladimir Kononov: No! No! Thats a completely archaic method.

Vladimir Putin: They say leeches excrete some substance into the blood, and so thin it.

Vladimir Kononov: I know that they suck blood. But then, possibly they also

excrete something as they suck

Vladimir Putin: Yes, they first excrete, and suck only after that. Thats how they thin the blood.Mind you, leeches cost much less than

Vladimir Kononov: Possibly. But when mushrooms are cultivated they need huge cellars togrow in. So now well need also huge marshes to breed leeches

Vladimir Putin: Why, I was just kidding! But, Mr Kononov, speaking seriously now though Ireally mean it about leeches We are talking a lot about the modernisation of healthcare. As I

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said in my address, 460 billion roubles are earmarked for it nationwide, and the Central FederalDistrict is entitled to a great share of this money.

Almost all the regional governors are here. They have submitted their programmes formodernising healthcare to the Ministry of Healthcare and Social Development. We will call onthem now to take notice of your research and specify the need of healthcare institutions in theCentral Federal District and the whole country for what you are offering. Of course I will explainit to Health Minister Tatyana Golikova.

I think Rosnano has good reason to acquire a 48% share and credit the project. I am sure the

project has been seriously appraised. You are doing a big job if Rosnano is involved. Yourequipment must be in demand. I will surely say so to Ms Golikova, and I would like the regionalgovernors also to pay close attention and consult with your experts in the Central FederalDistrict. Moscow, the region around it and all of Central Russia employ the best professionals or at least some of the best. Let us put it like that before anyone is offended. At any rate, there arepeople to get competent advice from. We should look into the matter.

Vladimir Kononov: Good, thank you.

Vladimir Putin: It is I who should thank you, Mr Kononov. I must say that we need more suchresearch and development. It is our duty at least to guarantee you opportunities in the domesticmarket. We will work on this.

Vladimir Kononov: We really like Philips, Siemens and other foreign machinery but enoughis enough! We should buy Russian! Cant we make good things, after all?

Vladimir Putin: I think you are right. We must team up with foreign companies, we must attractthem and offer them favourable terms if we want them to cooperate provide us withtechnology, above all. But then, we have our own R&D. Believe me, I saw our new medical andpharmaceutical equipment with my own eyes. You know, I travel a lot, and see a lot of people.So I can recognize when something is unique. To ensure that there is a place on the Russianmarket for your products is the least we can do. Well work on it.

Vladimir Kononov: Thank you for your support.

Igor Zorya: My name is Igor Zorya, I am a paediatrician and head physician of the Kurskregional childrens hospital.

Mr Putin, the Kursk Region received considerable grants for healthcare modernisation. Most ofthose funds were spent to upgrade equipment and renovate regional and specialised medicalinstitutions. But the money should not have gone exclusively to central hospitals but also to

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ordinary clinics, which cater for a majority of patients. It is especially important for patients whocome back to the primary healthcare network after treatment in federal and special hospitals. Notall of them can offer the treatments required. We should never forget ordinary outpatient clinicsand district hospitals, which you have just spoken about.

We know that you monitor many issues that concern millions of Russians. Could you please tellus what should be done for funding to reach primary healthcare services, where the majority ofpatients receive treatment. Thank you.

Vladimir Putin: Mr Zorya, this programme is intended for the modernisation of primary

healthcare institutions. That is why we have ceded decision-making on it to regional authorities,the governors and their advisors (they should also consult such experts as you) to draft a regionalsystem and modernisation programme and submit it to the Ministry of Healthcare for approval.The Bryansk Region has received for two years Exactly how much?

Remark: 3.27 billion [roubles].

Vladimir Putin: Yes, 3.27 billion for two years. Its a large amount for the Bryansk Region,believe me. It should be spent carefully, which means that expenses should be prioritisedcorrectly. When I met with colleagues working in agriculture, insistent requests were made topay attention to healthcare in rural areas, particularly village health centres, clinics, etc. I askedthe governors and the Ministry of Healthcare to bear this in mind. I can say it outright that Ireceived a positive response. Rural healthcare grants have increased substantially.

However, decision-making in this field should be the responsibility of experts such as yourselfand regional authorities. We are willing to support you when necessary. It is evident that this verylevel of healthcare is the best field for improvement. Thats why our grants are so generous they aim to provide a smooth shift to medical insurance because there is no room for insurers inan utterly neglected, decaying industry. That is my first point.

Second, the regional healthcare system needs a new basis. Thats our goal.

Yekaterina Melyukova: Good afternoon, Mr Putin. My name is Yekaterina Melyukova. I am the

head nurse at a first aid hospital in Vladimir. Our nurses salary is 4,300 roubles a month, withthe subsistence level at 5,700 roubles. How can we make ends meet with such low salaries?Doctors work is very demanding but make no mistake, nurses work just as hard. They attend topatients daily needs, which requires more than medical care but also compassion and kindness.The psychological stress is tremendous. How can they do their jobs well with their miserableearnings? And now we can see that nurses are voting with their feet. They are leaving their jobsen masse. Our profession is in a crisis. The situation is this bad not only in healthcare but also ineducation and culture. What can be done about our salaries now? Thank you.

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Vladimir Putin: Ms Melyukova, I can repeat what I said in my address. Just now, as I wasdiscussing healthcare development with my colleagues, I said that we were planning tomodernise healthcare. That is the first step in our drive to raise the salaries of healthcarepersonnel. The system will get new standards. I think medical professionals understand what Imean.

For the people not working in healthcare, I would like to explain that changing standards implies,for example, an increase in allocations for drugs. Prescriptions are made for every healthproblem. For instance, the flu is treated with such and such drugs. Their price certainly hikes upwhen they become a standard set for obligatory use. Some other diseases might require blood

purification. It, too, will have a set price. The standards will also include healthcare workersremuneration. Thats the first way to increase their incomes, which the modernisation programmeexplicitly stipulates.

Second, as I said in my address, we will adjust the salaries of all public sector employees, with a6.5% rise on June 1, and another rise in early autumn. Thats a promise.

And, finally, there is a third approach connected with changes in the operating principles ofbudget organisations. In this case, the heads of organisations would have the opportunity tooptimise work and increase salaries.

But the focus remains on social healthcare modernisation programmes. Shall we continue?

Alexander Nikitin, Tambov Region, on the project The Modern Agricultural University: fromScience to Production. Please, go ahead.

Alexander Nikitin: Mr Putin, conference members, I would like to tell you about cooperationbetween university science and agricultural production in the science city of Michurinsk,Tambov Region.

The goal of this project and the goal of these relations in general is to make healthy productsand introduce them on the domestic market. I have in mind berries, vegetables, fruits, and theproducts we make from them, as well as healthy dietary products and baby food. The situation on

these product markets is, to put it mildly, rather bad. For example, I can tell you that the appleswe eat are Polish, Chinese, American And you know quite well that they grow in gardens withsuch a high concentration of pesticides that even flies stay away.

Conversely, inhabitants of Russias only agricultural science city, Michurinsk and inhabitants ofthe Tambov Region have eaten Michurinsk apples and peas (and this is really one of Russiasrecognised agricultural brands). The situation on the vegetable market is also grave: over 60% ofproducts are imported.

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The question that comes to mind is: dont we have our own vegetables? I can prove that we do,taking the example of Michurinsk. Michurinsk scientists have recently developed a new varietyof pumpkin. This new variety has more natural sugar in it than melon. It is sweeter than melon.The positive dietary influence of this traditional Russian vegetable is obvious.

Vladimir Putin: Is it sucrose or fructose?

Alexander Nikitin: It is natural sugar, fructose.

I would like to draw your attention to another novelty: a new variety of cherry tomato hasattracted the attention of the Institute of Nutrition at the Russian Academy of Medical Sciencesand the Institute of Biomedical Problems at the Russian Academy of Sciences These varietieshave the highest amount of carotene and lycopene among any Russian or foreign varieties. Thismeans that they decrease the risk of cancer, as you might have guessed. These results of artificialselection were used as the basis of the diet for our cosmonauts under the Mars-500 project.Seventeen new meal products were made on the basis of these varieties.

Vladimir Putin: At the ISS?

Alexander Nikitin: Yes.

Vladimir Putin: That means that foreigners also ate it. They ate our apples.

Alexander Nikitin: Yes.

Vladimir Putin: With fructose.

Alexander Nikitin: As for the new varieties of the black, white, and red current, they containthree times more vitamin C than a lemon.

Vladimir Putin: Yours is a rather mouth-watering speech. You should have brought some here.

Alexander Nikitin: Colleagues, I want to say that we developed this fresh vitamin production

line. For example, the wild strawberry now I'm arousing your senses.

Vladimir Putin: I see that.

Alexander Nikitin: We have created a fresh vitamin production line. People living in the CentralFederal District (the Tambov Region, the Lipetsk Region, etc.) will be able to eat our raspberriesand wild strawberries until late September. We could not even dream of such things beforebecause of our climate and natural environment.

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Of course, this all is the result of cooperation between science and production. A new researchinstitution is now being established under Michurinsk State Agricultural University to worktogether with the institutions of the Russian Academy of Agricultural Sciences. It is here, inMichurinsk, that new technology for intensive orchard production is being developed. This is ourbest resource, I think.

Our Michurinsk orchards have been bringing produce to market for two years already. Theiryield is five times higher than the yield of ordinary orchards, but the recoupment is only half asmuch. It is thus pleasing that the creation of such orchards has become one of this yearsagricultural priorities in the federal budget.

I wish to say that this is the achievement of the innovation infrastructure established at theagricultural university. We have set up 20 small enterprises in recent years. All of them areresearch-oriented.

We have set up a technological transfer centre. However, the volume of production isunfortunately very small. In order to sell these healthy products across the country, we need tocooperate with the industry.

The Tambov Region today has a project to set up an agricultural research and production facilitywhich will become the basis for three new plants. One will be producing processed foods, suchas vitamin-rich juices, jams, fruit mousses and vegetables in fruit sauce.

There is another project for an interested party to produce frozen foods. It goes without sayingthat foods that reach the consumer must be fresh, so storage issues are of key importance here.

It is also planned to build a plant to manufacture packaging materials based on polylactide, abiodegradable polymer. It takes this chemical 40 days to decompose to a non-toxic condition inthe soil.

Today, in order to launch these plants, it is necessary to have extensive primary resources, andsuch resources are already being produced in the Tambov Region.

Since 2009, we have been establishing berry and bush plantations using the most advancedtechnology. And, of course, the personnel issue is also a top priority. I must say our trainingfacilities have been preserved intact. With other regions interested in similar projects, we couldtrain staff for them on a contract basis, too.

What is central to making these projects more effective, better and productive? In the first place,it is innovative higher education agriculture programmes. But today, although we producelimited amounts of pilot products, we do not get any tax exemptions. Our status is not that of an

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agricultural producer, and so we cannot take advantage of state support in its many forms. If wecould, that would be great help indeed.

And my last point. These projects are not only economically efficient, but also sociallybeneficial. If they are included in a state programme of farm development (not only hothousemethods, but also the full range of products fruit, berries and vegetables), and are granted loansat subsidised interest rates, their effect and their economic performance will be much better.

In conclusion, I would like to say that these projects should get special state support andattention because they are concerned with the health of the nation the main ingredient of

national security. Thank you.

Vladimir Putin: Mr Nikitin, all the things you mentioned are very important. But you must beaware that the state has been investing heavily in farming in the recent period. This year alone,we plan to allocate 250 billion roubles for this sector. Last year it was 150 billion. Each year, wesubsidise interest rates and extend previous loans. And this extension requires additional moneyfrom the federal budget, because when you fail to pay off your loans on time, we must do it foryou. We also subsidise leasing rates. Now we have decided to allocate an additional billionroubles for seeds and another billion for seed purchases. We have cut fuel and lubricant prices by10% and not from todays levels, but from the November 1, 2010 benchmark that means, 30%to 37% down from the current levels in some regions. We propose to allocate a further five

billion in support of farms that will not cut down their livestock numbers by this spring. Anotherdecision concerns equipment sales from Rosagroleasing, at a 50% discount. There is a plethoraof other measures and we can see that farming is indeed yielding real and tangible results. It isgrowing perhaps faster than any other branch in our economy.

In this context it is very important to know what research centres are doing. We were once verycompetent in this field and had good academic traditions. We may be lagging behind in someareas now, but we are absolutely competitive in certain ways. So what you said deserves everysupport. You said your educational establishment is growing into a practically new institution oflearning a federal research university. Is that right?

Alexander Nikitin: Yes, that is our objective. We are actively collaborating with the researchsystem and incorporating secondary vocational colleges, with the focus on the researchcomponent. We strongly hope that if we obtain the status of a research university

Vladimir Putin: But you havent got it yet, have you?

Alexander Nikitin: No, it has not been granted, but we have taken part in every contest and eachtime made a convincing case for our educational establishment.

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Vladimir Putin: Alright then, we will look at your application once more. Do you fall under theMinistry of Agriculture or in general education?

Alexander Nikitin: The Ministry of Agriculture.

Vladimir Putin: Good, well see to it.

Alexander Nikitin: Mr Putin, we also won a contest among Russian colleges and universitieslast year for a government grant to develop innovation infrastructure. It helped a great deal withthe problems I just described.

Vladimir Putin: We will revisit the issue, agreed? Will you be making a new bid or will it be theold one?

Alexander Nikitin: No, we will be making a new bid.

Vladimir Putin: Good. Well see.

Alexander Nikitin: Thank you.

Vladimir Putin: This was one aspect. But apart from farm products you also spoke about amodern packaging material that is self-decomposing, which is of key importance for the

environment. Our European colleagues value that very highly. The Italians are leading the fieldin that area, I think. You are probably better informed, and can correct me if I am wrong. Ourfriend, Silvio Berlusconi, is not just interested in chasing girls, he also does business. The moststringent standards among European countries are in Italy the country has lots of packagingmaterial. And so will we. And unless we start the production in good time, well be facing a realproblem. It is already a major problem, and we can expect it to deteriorate. The course you areworking in the right area.

Now concerning an issue that, I believe, is key for you. It concerns giving innovation-basededucational institutions like yours the status of a farm producer to qualify for the benefits I justmentioned. I am referring to subsidised rates and lower costs for fertilisers, fuel and lubricants. Is

that what you had in mind?

Alexander Nikitin: Yes, grants to compensate for costs, and such matters.

Vladimir Putin: You see, Mr Nikitin, the point is that you are a higher educational institutionand seek a research status for it. If you get one, it will give you certain privileges as aninnovation-oriented institution of learning. Such privileges will become available to you.

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But the principal objective of educational institutions is to provide teaching services and doresearch, not to make profits by growing potatoes, apples and other products. Where do I see thedanger? It lies in that you may switch over to direct production and give up research altogether.

But do you know what I thought? You said you were planning to build three plants. They wouldbe production facilities and legal entities in their own right. It seems to me we could find someway of extending the benefits to them as well, just as we do with research and high-techenterprises set up by universities. As I said, there are 700 of them across the country, with 200 inthe Central Federal District. Thats quite an army.

Economic Development Minister Nabiullina is sitting there, nodding. This means she agrees. MsNabiullina, have a think about that and submit your proposals. Clearly, colleges and universitiescannot qualify for such benefits. It is logical: their job is to teach. But if they set up affiliateproduction units, why cant these enjoy such benefits? This is a proposal worth considering.Could you calculate the costs and draft a proposal?

Elvira Nabiullina: I will.

Stanislav Obolentsev: Stanislav Obolentsev, general director of Agrotekhnologii, Smolensk. MrPutin, you said in your speech that food security is

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