OREANDA-NEWS. March 6, 2009. Vladimir Putin: Good afternoon, Let's start by exchanging the latest updates. Mr Kudrin, we continue to reimburse people this year for deposits frozen by Sberbank a long time ago. What is the amount of this reimbursement, and how will these payments be made?

Alexei Kudrin: Mr Putin, the Government has been reimbursing savers whose deposits were frozen by Sberbank on June 20, 1991, since 1996.

We have been able to reimburse new categories of savers each year. This year, the budget provides for paying what's left to those savers who have not been fully reimbursed. In addition, they will receive the same payment on top of that. Thus, all savers born before 1966 will receive double compensation for their deposits frozen on June 20, 1991. This year, we'll need 70 billion roubles for this purpose.

For reference: Since 1996, the Government has paid 254 billion roubles to reimburse savers. It is planning to pay 70 billion roubles, 85 billion roubles, and another 85 billion roubles in 2009, 2010, and 2011, respectively. All savers will be reimbursed twice during these years. Thus, this task will be largely resolved.

Vladimir Putin: All right. And what about next year?

Alexei Kudrin: As I've said, next year we'll reimburse savers who were born after 1966. In 2011, we'll cover all categories of savers.

Vladimir Putin: All right. Thank you.

As we agreed, we'll continue national projects, including the Health Project. In fact, we are even somewhat expanding it.

Two programmes were launched last year. One of them, Traffic Accident, provides aid to people recovering from car accidents. We have earmarked 2.4 billion roubles for this purpose.

On March 2, I signed the Government resolution on this year's federal budget allocations to improve medical aid to vascular patients. They now slightly exceed three billion roubles.

This year, we'll launch one more programme under the Health Project, notably, to improve medical aid to cancer patients. More than six billion roubles have been earmarked to this end. I signed the relevant Government resolution on March 3. Mrs Golikova, could you please comment on these programmes?

Tatyana Golikova: Mr Putin,

These are three key socially important areas that yield the highest death toll in Russia. As you quite rightly noted, we started work on two areas last year - improving medical aid to vascular patients and to victims of road accidents - and have already achieved certain results.

Almost a million people die of cardiovascular diseases every year. Out of this million, 100,000 are economically active people. Every year, 374,000 people become incapacitated by these diseases. This is in fact why we opted for this programme last year.

It was carried out in 12 regions. During the last year, 12 regional vascular and 36 primary vascular centres were established. They have a common ideology and identical methods of treatment. During this time, 420 medical specialists were trained. We spent 3.6 billion roubles from the federal budget to this end, and the regions involved spent almost as much. According to preliminary estimates, the death rate from strokes and heart attacks went down by 4.6% last year.

This year, another 12 regions will take part in this work. The appropriations are somewhat smaller, but will be sufficient for us to continue this work.

As for the victims of traffic accidents, this key area under the National Health Project has been chosen because the main causes of death are heavy injuries and delayed transportation of victims to hospitals. The death rate stands at 10.8% in hospitals and 13% in out-patient clinics.

In the leading European countries, the relevant figures are two to three percent. We have about 200,000 road accidents per year, in which some 290,000 are injured and around 32,000 die.

Major accidents usually occur on federal roads. In effect, the choice of federal motor roads and medical institutions located on them was a key element in implementing this programme.

Last year, 14 regions located on five federal roads took part in this programme. We received tangible results, but the Ministry of Healthcare and Social Development was not working alone. We carried out some undertakings together with the Ministry of Internal Affairs. Late last year, we held joint exercises on the Moscow-Don road in the Rostov region. This was a good opportunity to check the ability of the traffic police and medical services to render first aid and treat patients in hospitals.

During the last year, the death rate from road accidents decreased by 7.8%. This year, three federal roads will take part in these exercises. The budget appropriations are a slightly smaller than last year, but still enough to pay for them.

Oncologic diseases are the third-leading cause of death in Russia. Every year, 480 000 new cancers are diagnosed but 60% of them have already reached the third and fourth stages, when the chances for a cure are much less than if they had been identified before. Our programme is aimed at cancer prevention, earlier diagnosis, and faster aid to cancer patients.

We expect 11 regions and 2 federal oncological institutions to take part in the programme in 2009.

Since the programme was developed in 2008, the regions have placed their requests proceeding from the favourable economic situation at the time. However, when we suggested that the number of regions taking part in the programme might be reduced, not a single one pulled out. In fact, knowing that they would be involved in it in 2009, they had already launched preparatory measures at the end of 2008.

We estimate that by 2012, as a result of the measures we are taking (if everything goes well by 2012, 47 regions will join the programme), cancer deaths could be cut to 4%. What is important is that we will begin treating patients at stages I and II. We will substantially cut the cost of providing these people with medicines, since most of the costly drugs are used during cancer stages III and IV.

Vladimir Putin: At a conference in Naberezhiye Chelny in December 2008, we agreed to introduce reduced rates for transporting cars made in Russia, especially in its European part, to the Far Eastern region. The goal of this rate reduction is enabling people living in the Far East to buy Russian-made cars on the same terms as all other Russian citizens.

I signed a Government decree to the effect yesterday. Mr Ivanov (addressing Sergei Ivanov), would you like to comment on it?

Sergei Ivanov: Pursuant to your instructions, a draft decree was prepared and the procedure for granting such subsidies to our car makers has been mapped out. The main thrust of the decision is that in 2009, Russian Railways will be subsidized 2 billion roubles out of the federal budget to carry cars - I stress, new cars made on the territory of the Russian Federation - from the European part to the Far East of Russia.

In accordance with the procedure, the main administrator of the budgetary allocations will be the Federal Railway Transport Agency, which will get all the documents from the Russian Railways confirming the costs incurred. They will be properly examined and compensation will be paid if the money has been used for these stated purposes.

I would like to stress that the decree covers not only cars produced by established Russian companies such as VAZ, GAZ, and UAZ, but also a wide range of cars produced by companies with global brands that have their cars assembled by Russian enterprises. I can enumerate these companies; there are quite a few of them.

Vladimir Putin: Name them, please.

Sergei Ivanov: They include Chevrolet, Korea's Kia Motors, FIAT, Ford, Renault, Opel, Skoda, Korea's Ssang Yong, Toyota, and Volkswagen - in fact, all the major world producers with established production facilities in Russia. They will all be in equal conditions, the same as domestic producers, when delivering their products by rail to the Far East.

In effect, the delivery of new cars to the Far East by rail will be free.

Vladimir Putin: It means that the final price...

Sergei Ivanov: It means that there will be no mark-ups on the final price incurred by the high cost of transporting them.

Vladimir Putin: So, everyone who lives in the Far Eastern region will be in the same situation as those living in the European part of the country.

Sergei Ivanov: Yes, the price of a car will be practically the same for people who live in Moscow, St Petersburg, Kaliningrad or Vladivostok.

Vladimir Putin: We should see to it that it is implemented decently so that neither companies nor customers encounter unreasonable administrative obstacles.

A decree on federal budget support of small businesses was signed in late February. Ms. Nabiullina, please get us up to speed.

Elvira Nabiullina: The Government Executive Decree signed on February 27 lays down the rules for distributing and delivering subsidies from the federal budget to the budgets of the Russian regions for the support of small and medium-sized businesses. The decree introduces important changes to the procedure. First of all, the rules of co-financing by the federal budget and the regional budgets change. While last year the co-financing was on a fifty-fifty basis, this year the ratio will be 70/30 - that is, the federal budget assumes the greater load. The amount of co-financing will of course depend on the state of the regional budget, and the regions that are well-off financially will continue co-financing on a fifty-fifty basis. For the other regions, co-financing may be diminished to 20% according to the formula. In exceptional cases when additional support measures are prompted by the situation in the labour markets, the level of co-financing may be reduced to 5% with the consent of the Ministry of Healthcare and Development. That is the first innovation.

The second innovation is that the federal budget may make advance payments. Previously, there were no advance payments, but now the regional budgets will get the money immediately as a matter of high priority. Our programme this year has more than doubled. We announced that we were open for applications in early February. As of the beginning of March, 76 regions have filed applications. For comparison, last year there were 66 regions. The regions are ready to co-finance to the tune of about 9 billion, which works out to exactly 30%. The regions have requested 21.4 billion in federal subsidies. The requests are larger than we had planned, so we will urgently select ready projects in four main areas.

Let me remind you what these areas are. Subsidies to start-up enterprises in the amount of up to 300,000 roubles, including compensation of initial costs: renting an office, basic equipment for starting the business. We believe that in 2009 we will be able to support at least 15,000 start-up enterprises through this grant system. Secondly, the system of micro-loans of up to 1 million roubles for a term of up to 1 year. In 2009, as many as 20,000 such loans will be issued. The third area is the development of guarantee funds. These funds will act as guarantors of banks that issue loans to small enterprises, and there is in fact a tangible need for such funds in all regions, as almost all regions have been setting them up.

Finally, the fourth important area is subsidising interest rates, because interest rates are quite tough on small businesses. This last measure is aimed at making loans more easily available to small businesses. Of course, we do not limit the regions in terms of the small business support measures they suggest; they have presented them in their programmes.

We currently have a commission that examines all these programmes. It includes representatives from Opora Rossii and Business Russia, the RUIE, the Chamber of Commerce and Industry, and representatives from the Ministry of Healthcare and Social Development and the Ministry of Finance. Early decisions on the support of such programmes are to be adopted soon. Considering the possibility of advanced payment, we believe that the first disbursements for small enterprises may be made in April.

Vladimir Putin: Tatyana Golikova and I visited an employment centre in the Moscow Region yesterday. My overall impression was that the work is well-organised: it is structured by areas, offering a range of services to those who have temporarily lost their jobs. In general, I think the information side is working properly.

They have professional psychologists and other specialists who help people in a predicament, and work has been organised with employers. All this is gathered in a single database, which makes it possible to provide real help.

However, there are problems that merit another close look. One of the problems is long queues. This is an obvious problem that must be admitted. In order to resolve this, the network of employment centres has to be expanded and more specialists should be hired. I don't think the cost of these measures would be exorbitant, but it is an important element of our work and I urge you to consider it and come up with your proposals.

Mr Sechin, have you found out anything about what has been going on with Naftogas in Ukraine? I am referring to the sensitive issues connected with the supply of our energy - is there any new information?

Igor Sechin: We get most of our information from the mass media. Gazprom's attempts to obtain official data about the actions taken with regard to Naftogaz by the security agencies have failed; no official information has come out.

Vladimir Putin: I see. That is sad, very sad. In connection with this information and the actions of the Ukrainian security agencies with regard to Naftogaz and its officials, including the threats to arrest gas on the territory of Ukraine, we cannot but express our deep concern about the possible consequences of such actions.

We hear that the attempts of Russian authorities, including Gazprom, to obtain any official information, have been futile. We regard what is happening in Ukraine as strictly the internal affairs of Ukraine. At the same time, we cannot help but note the possible negative consequences of the ongoing events both for energy supplies to consumers in Ukraine and for consumers in Europe.

Why am I talking about this? Another payment for the supply of Russian gas to Ukraine is due on March 7. If that payment is not made as a result of the security actions and the arrests of some officials, the supply of our energy both to consumers in Ukraine and probably to our consumers in Europe could stop, since we are hearing that attempts have been made to seize the transit contract. Not a copy of it, but the original transit contract. We would like both the European Commission and all our European consumers to make note of that.

Of course, what is going on in Ukraine reopens the question about their reliability as a partner in dealing with energy problems.

We believe that the contracts signed earlier fully meet the interests of our countries, both Ukraine and the Russian Federation. We call on the Ukrainian authorities to proceed from these considerations, from the deep strategic interests of our peoples, and not from considerations of expediency in the fight for control of cash flows.

I very much hope that the Government of the Russian Federation and Gazprom will manage to establish operational contact with our Ukrainian partners very soon. You know that we are all living through difficult times. It sufficed to visit the employment centre yesterday to see that there are many problems and difficulties in Russia, as well.

At the same time there is one country in the post-Soviet space with which we have been forging a special relationship in recent years. That country is Belarus. Although there are problems there, too, we are moving toward creating a real Union State. We constantly help our Belarusian partners to the best of our ability.

Let me remind you that in late 2007, in December, we extended a \\$1.5 billion easy-term loan to Belarus. Last year, we issued a \\$1 billion loan. During this time, Gazprom has paid more than \\$1.2 billion for a 50% share of Beltansgaz. Just recently, at the request of the Belarusian side, we decided (I signed the relevant Government decree today) to grant Belarus another loan in the amount of \\$500 million. I urge the Ministry of Finance to execute the Government decree promptly.

Let us now move on to the business of the day. However, before we address current issues, I would like to extend words of thanks to Alexei Gordeyev for our joint work over the last ten years.

He has been in charge of agricultural area of Government activity since August 1999. For four years, he was simultaneously Deputy Prime Minister. I believe that during that period, the Ministry of Agriculture has accomplished a great deal. The sector has switched to a normal market mode of operation and for this, the credit is due to the Ministry's head. A Comprehensive National Programme of Agriculture Development was adopted. I would like once again to thank Alexei Gordeyev for what he has done and wish him success in his governorship.

And now for our current affairs.

The previous meeting was already briefed on measures to ensure the start of the spring sowing campaign.

Today we will consider these issues in greater detail.

Let me say right away that preparation for the sowing season is going according to plan. The farms have been better provided with machinery, fertilizer, fuel, and lubricants than last year.

Rosselkhozbank and Sberbank have confirmed that they are ready to issue the necessary loans to the agricultural sector. They are prepared to give even slightly more than planned.

The key question now is whether the farms will be able to afford buying fertilizer and fuel at these prices.

You will recall that we recently abolished export customs duties for mineral fertilizer to support our industry and give our enterprises an extra chance to sell their products in the world markets, and thus sustain production and employment levels at these enterprises.

At the same time, however, fertilizer producers promised to meet the needs of Russian agriculture fully and at affordable prices.

I think the Federal Anti-Monopoly Service must keep a close eye on how these obligations are complied with and thwart any attempts to raise prices unreasonably.

A similar demand - to resist the temptation of price collusion - must be presented to the suppliers of fuel and lubricants.

We had a meeting with oilmen just recently at Kirishy in the Leningrad Region and this was one of the topics we discussed. We have seen wholesale prices rising between January and February of this year. I think that to some extent this has been done in anticipation of the spring sowing campaign so as to use this is a springboard for further rises. However, I believe that even the rise in January and February has been unjustified. Moreover, because world prices are falling, oilmen should revert to the 2008 prices or even to a lower level.

The Federal Anti-Monopoly Service has filed several court cases over unreasonable price rises; these cases are now facing courts. The prices rose even as the tax burden on that sector was eased and other benefits were offered, which makes it all the more inexplicable.

I would like the representatives from that sector to lend me an ear. Of course, one should pursue a sound economic policy without undermining the economy of our oil companies, but the current world market situation, and the benefits provided by the state, including tax breaks, do make it possible not to hike prices inside the country, especially with the spring farming season approaching. I am asking Government officials to take note of this. The relevant ministries and agencies should work closely with producers on this issue.

This year we will regularly discuss the implementation of anti-crisis measures at Government meetings. Today we will review the outcomes of our work in February.

On the whole, I can say that the economic stabilisation measures we have taken are yielding results. Still, all ministries and agencies should dramatically accelerate the pace of their work and learn to make the necessary decisions more quickly.

If a measure has been announced, delaying its introduction is inadmissible, and each instance of failure to meet the deadline in carrying out these directives must be carefully examined.