OREANDA-NEWS. June 23, 2009. Vladimir Putin: Good afternoon,  Today is a very special day: 68 years ago, the Great Patriotic War of the Soviet people against the Nazi occupiers began.

I think there is a symbolism about the fact that a terrorist attack was perpetrated in the Caucasus today. In fact, those who committed it have ranged themselves with the Nazis. Because it means that they hold nothing sacred and the day of the start of the Great Patriotic War does not mean anything to them.

Unfortunately, there are people who shoot "from behind a cover" and think that this can change something in Russia. But there are also people like President Yevkurov of Ingushetia, a brilliant Russian officer and a patriot of Russia and his small homeland, Ingushetia. Our country has always relied on such people, gaining confidence and winning thanks to such people.

I would like to express my condolences to the families of the dead and to wish a speedy recovery to all the victims.

Let us get down to business.

The first thing I would like to draw your attention to and to discuss is economic issues in the energy sphere. The heads of state and Government of the CIS countries, which are the main consumers of our energy resources, had a meeting recently. The topic of discussion was one of the most acute ones for us and it is connected with the transit of our gas through Ukraine.

Mr Sechin, what is the situation regarding Ukraine's compliance with contractual obligations?

Igor Sechin: In accordance with your instructions we have been monitoring gas supplies to our European partners. At the same time Gazprom, unfortunately, often has to work in a situation of uncertainty, especially in the segment you have referred to, in Ukraine. The contracted amounts of gas have not been met in any of the quarters of this year.

Payments for gas are so far coming through, and the last payment of \\$643,789,000 was made in early June. The date of the next payment is July 7. It has to be noted that so far the amounts of gas to be supplied in June have not been agreed between the parties.

There is one more limitation because Gazprom can no longer pay for transit in advance. It has already paid Naftogaz for services until February-March of next year.

Vladimir Putin: All right. Mr Kudrin, I have asked you to hold consultations with our partners in international financial institutions - the World Bank and the IMF and the European partners - about possible assistance to Ukraine considering the country's difficult financial and economic situation, especially in the time of crisis. This is no reason to rejoice or be gleeful. We should think about ways to help our partners. 

Alexei Kudrin: Two weeks ago I met with the European Commissioner for Economic and Monetary Affairs and we discussed this issue. I was given to understand that the European Union does not have the resources for that at present. The last meeting of the European Union heads of state and Government brought no results either. The European Commission President, Mr Barroso, said that the European Commission is currently not in a position to lend money to Ukraine.

In addition, a week ago I met with the Managing Director of the International Monetary Fund, Dominique Strauss-Kahn, and we discussed the results of the Ukrainian mission and the assistance the IMF is giving Ukraine, and we also raised the issue of Ukraine's payment for gas.

According to IMF data, as a result of loans extended to Ukraine it has enough currency reserves to pay for gas. So, according to the IMF, no additional resources would be required in the coming months. But the IMF has found out that Naftogaz has a problem because it does not have enough local currency resources to buy the necessary amount of currency to pay. It is the problem of the balance books of Naftogaz itself.

At the same time we have agreed that the next IMF mission will continue to study the issue and Ukraine's potential to make these payments. So far no solution has been found.

I have also met with the Finance Ministers of Germany, France and Italy, the countries known to be the biggest consumers of transit gas. We discussed the idea of crediting, jointly with Russia, of pumping gas into underground reservoirs and the preparation for the autumn and winter period, as well as of transporting gas to meet the national needs.

The ministers indicated that it would be highly difficult for them to address this issue considering the budget deficit problem. They may be able to continue this discussion under certain circumstances, but for the moment no decision has been made. I should also note that the European Commission is ready to initiate a meeting with private companies, typically consumers and gas transit countries, or with creditors, but so far no meeting has been held to discuss commercial support or commercial loans. The European Commission has not yet held such meetings.

Vladimir Putin: That is extremely regrettable, to say the least.
The latest instalment was made on June 7, and the next is due on July 7. We have been receiving signals from our Ukrainian partners that they cannot pay.

That puts us and our European clients in an extremely awkward position. We have appealed to practically every international financial agency, including the World Bank and the International Monetary Fund. We have addressed our European partners in bilateral negotiations, as well as the European Commission. Everyone has refused to help. The answer is always the same: They have no money to spare for Ukraine.

I want the Russian nation and Ukrainians to know that Russia is doing its best to prevent a crisis similar to what we had at the end of last year and the beginning of this year.

But our opportunities are limited. We are doing what we can to meet our Ukrainian partners halfway-we are not levying on them sanctions the contracts envisage for non-compliance. We are trying to organise international government and private funding. We have been working with private financial agencies on this issue.

More than that, Russia has paid for oil transits through 2010, which boils down to a \\$2.2 billion loan to Ukraine-this is a point I feel it is essential to emphasise.

I have just visited Siberia and talked to members of the public in Barnaul. They have asked me questions concerning our daily life. We Russians have enough problems due to the crisis-skyrocketing prices and unemployment.

We are planning a social welfare package for the beginning of next year. We feel bound to introduce major and long-intended pension measures, which will be a formidable burden on the budget. It all demands great efforts.

We are also short of money, and we have our own problems to tackle. Bear in mind, the \\$2.2 billion loan is interest-free. There are limits to everything. Why should Russia bear the burden alone?

I remind you once again that there are contracts Gazprom has signed with its Ukrainian partners, and there are gold and currency reserves out of which the last instalment was paid. Open sources estimate the Ukrainian gold and currency reserves at \\$27.8 billion, as of June 1, which is enough to pay for Russian gas. I proceed from the assumption that the contract will be complied with in full, and Russia has reserved the right of action according to the contract if no money comes in. That is what I want to say on the matter. Please keep monitoring the situation closely.

I have mentioned my meetings in Barnaul. One of the questions I was asked right in the street, in the course of our discussion concerned transport-to be precise, subsidising trips from the Russian Far East to Central European Russia-St Petersburg, Moscow, and the south. Some cities remote from European Russia, as, for instance, Norilsk, are not entitled to such subsidies. As far as I know, they have a huge problem as airplanes are the only means to get there and out of there.

I remember us making the decision to subsidise air travel from the Russian Far East to European Russia. We cannot afford to subsidise all domestic air fares. That was what we proceeded from. Such remote localities as Norilsk demand special treatment. Are there any other cities in Russia that can be reached only by air?

Sergei Ivanov: Mr Putin, if I may, I would like to briefly report on the progress with implementing the government resolution on subsidising air fares from the Far East to the western part of the country, in particular Moscow, St Petersburg and Sochi.

We chose three destinations, and have already allotted the first subsidies. This benefit is valid from May 15, 2009 through September 15, 2009 and applies to all regions in the Far East. As of June 20, over 100,000 subsidised tickets were sold, which means that 100,000 Russians took this opportunity. I believe it is a good result. A return airline passenger ticket from the Far East to Moscow or St Petersburg costs 15,000-18,000 roubles, which is almost half of the ticket's actual cost.

You are right when you say that there are a number of remote regions in Russia which are accessible only by air, just like in that song, "You can only get there by plane". Obviously, Norilsk is one of such destinations. Another rather large town which has now occurred to me is Kyzyl in the Republic of Tuva, where there are no railways, and which one can reach only by air. A return ticket from Norilsk to Moscow costs around 40,000 roubles, which almost equals the non-subsidised cost of a ticket to the Far East.

Therefore, I believe that such remote destinations as Norilsk and Kyzyl should get subsidies in the near future. We should make all necessary calculations, and I would like to ask you to give corresponding directives to the Ministry of Transport. We can start allocating subsidies this year and plan them for 2010.

In addition, in my opinion, the validity period, which lasts from May 15 through September 15, which I mentioned earlier, can be extended for people who live in the Far East, and maybe for Norilsk and Tuva residents. For example, it can last from April until November, which totals over half a year.

This period makes the full summer schedule for any airline: Airlines switch to the summer schedule on April 1. In this case everything will be properly managed, and it will be more convenient for people, since, for example, holidays in the Far East are long as a rule, and many people can go on holiday with children, for instance, in late September. As things stand, the benefit and subsidy validity term expires on September 15. Therefore, this initiative will allow more people to take this opportunity and purchase cheaper airline tickets.

Vladimir Putin: All right. Please make all necessary calculations in cooperation with the Ministry of Transport and submit your proposals.

Sergei Ivanov: I will.

Vladimir Putin: Thank you.

Mr Zubkov, what can you say about the work of the commission for protective measures?

Viktor Zubkov: Mr Putin, the Government Commission for Protective Measures in Foreign Trade and Customs Tariff Policy had the latest meeting last week to summarise the first half-year and appoint priorities up to the end of the year.

The commission has analysed 57 items since the start of the year, and the Government has made 34 resolutions on those items-mainly to support Russian manufacturers during the crisis, promote particular economic branches and protect the domestic market.

The emphasis has been made on steel, chemical, leather goods, furniture and automotive industries, and agriculture. Our decision-making proceeds from the necessity to preserve competition and promote foreign capital investment.

The commission has taken the Government Anti-Crisis Plan into due account. It has discussed applications by the largest Russian backbone companies and local economic mainstays, with their huge personnel, which have the greatest objective problems with production sale.

Conventional customs tariff regulation does not suffice to support domestic manufacturers and the domestic market in certain instances. That is why we intend to enhance such protective measures as special compensation and anti-dumping measures. Their implementation is transparent, and complies with the Russian legislation and WTO standards.

We can only regret that we have not recurred to such measures, with token exceptions, up to this day. The decision to get them going will be taken proceeding from all-round analyses with due account for all interested parties' opinions.

We regard those measures as response to unfair competition, dumping and open protectionism some of our trade partners are recurring to. Regrettably, the crisis has enhanced such practices drastically.

In this connection, I have ordered ministries and agencies-and certainly the Manufacturers Association-to draw practical proposals. That is what we will be doing next, Mr Putin.

Vladimir Putin: So far so good. Have you coordinated it with the Economic Development Ministry?

Viktor Zubkov: Yes, the Finance and Economic Development ministries,  and all the other ministries and agencies.

Vladimir Putin: Good. Mr Shuvalov, you have participated in the CIS Economic Council meeting in Chisinau. What can you say about it?

Igor Shuvalov: Mr Putin, we supported our Moldovan colleagues on your instruction to have Chisinau appointed as the venue of the Economic Council meeting though it usually meets in Moscow. Moldova chaired the meeting as the country that presides the CIS this year. Our colleagues asked us for support to intensify the dialogue, draw international legal agreements, and have Chisinau appointed as the Economic Council venue.

The meeting gathered on June 19. We were preparing for the meeting of the Heads of Government, which will gather in November on your decision. числа мы такое заседание провели. The agenda of the Economic Council meeting included draft international legal agreements on the development of transnational transport routes, the regulations for determining the country of origin of goods, and the exploitation of transnational electric transmission lines.

The decision was made to establish an ad hoc team for us and our colleagues to draw an interstate programme on science and innovations. As you know, Russia will preside the CIS next year, and Moscow will take up the torch from Chisinau. The year of our presidency has been declared the Science and Innovation Year. We and our CIS partners will draw a relevant programme and adopt it when Russia is presiding the Commonwealth.

All who attended the Council meeting agreed that veterans of World War Two should receive active support in the year of the 65th Victory anniversary. We agreed on measures to be taken in every CIS country. We will submit them for approval during the meetings of the Heads of Government.

Moldovan Prime Minister Zinaida Greceanii attended the Economic Counxil meeting. She called to take the Commonwealth more seriously and said that all its member countries were realizing the need for greater coordination during the economic crisis. The format that might have appeared not too attractive has become more relevant than ever.

Our colleagues paid attention to the Eurasec anti-crisis fund. Though not all CIS countries are involved in it, the Russian delegation stressed once again that it was an open-end affair, and any country was welcome to join and take part in multilateral anti-crisis efforts.

Georgian participation in the Economic Council meeting is also worth mentioning because Georgia had not attended the Council lately. Its delegation said that Georgia regarded the preservation of multilateral contacts as a necessity even after it announced upcoming exit from the CIS. Analyses of the economic situation and pledges connecting Georgia with its partners in the Commonwealth had made it clear that the essential treaties should retain validity. We, in our turn, made relevant instructions to the Ministry of Foreign Affairs, and we must elaborate the relevant legal arrangement.

Mr Putin, it was an interesting job, on the whole. Our Moldovan colleagues presented the anti-crisis plan Moldova was implementing. It had much in common with the Russian anti-crisis plan. The gathering said that regular meetings of Economy and Finance Ministers were extremely topical in the current situation, and our coordination of such activities was of help to many.

Vladimir Putin: Good. We should work on with all our partners, Georgia being no exception. I have recently signed a Government decree for a 7 billion rouble grant to Tatarstan to organise the World Student Games. How are its preparations going?

Igor Shuvalov: Mr Putin, everything necessary has been done thanks to your support to coordinate the list of construction projects to be terminated by 2013. We and our colleagues from the Finance Ministry, the Sport and Tourism Ministry, and the Economic Development Ministry have taken stock of the matter all together. We have made an extremely detailed analysis because we see how our purse is lean now. We have drawn a general list of regional and federal projects. The overall number is 64, 29 of which will be funded federally. The money Tatarstan is due to receive will be channelled to construction. Many of the projects are being designed, and Tatarstan can start construction urgently.

A majority of the projects will upgrade the campus infrastructure of the Kazan State University. It will have latter-day dorms, sport facilities and suchlike to make the campus one of the world's best-equipped.

The Organising Committee will regard all those matters during its meeting in Kazan on July 10. We will see some projects on which preparatory work is underway.

Vladimir Putin: Good. Ms Golikova, the Pension Fund has started circulating private account reports. Do you want to make any comments?

Tatyana Golikova: Mr Putin, ladies and gentlemen,

The Pension Fund of the Russian Federation has begun circulating reports about private pension accounts. The Fund will have to mail more than 80 million reports before the end of September-that is, 500 to 700 thousand a day.

The report includes information about employers' insurance contributions to the accumulated pension assets for 2008, and about private deposits of accumulated pension assets either in a government-owned managerial company or in private or nongovernment pension funds. Proceeding from this information, every citizen will have the right to apply, before December 31, 2009, for re-channelling the investment to another government or private company or a nongovernment pension fund of his choice.

I want to say also that, despite all problems, we carry on the co-financing of pension accumulations in compliance with the law that came into operation on October 1, 2008, and is known as "12,000 to 12,000". It envisages payments by employees or employers, and government co-funding them out of the National Welfare Fund. 1,390,000 citizens have applied to join the arrangement for today to total 561 million roubles. I repeat that we are making good progress despite all problems.

Vladimir Putin: As you know, I have signed the Government resolution on maternity capital interbudgetary transfers, with total 18 billion roubles earmarked-which means that the recipients will get 12,000 roubles each through 2010.

Tatyana Golikova: It will be a lump sum.

Vladimir Putin: It will be paid before May 1, 2010. Explain it in more details please.

Tatyana Golikova: We expect a part of the money to be paid to the Pension Fund urgently-I mean the basic allocation, of 18 billion roubles. A part of payments will be made next year to benefit persons who have received the right to maternity capital or expect to receive it between January 1, 2007, and October 1, 2009; they should send in applications from January 1, 2007 to October 1, 2009 to receive the right to use these 12,000 roubles before December 2009.

Those citizens who will receive a certificate for the maternity capital from October 1 to the end of 2009, should send in their applications until March 31, 2010. In this way all citizens, including those who applied on December 31, 2009, will have an opportunity to use these funds.

As of today, 1, 200,000 citizens have received maternity capital. We have a forecast for the birth of second and third children for all the three years. Proceeding from this forecast, we have calculated how much funding we need. However, let me repeat that the main financial burden will be shouldered this year.

I would also like to emphasise that in order to receive this benefit, citizens must present to the Pension Fund's territorial departments their passports, maternity capital certificates, and details of the bank accounts for the transfer of funds.

We have prepared all the documents of delegated legislation except for the Government resolution, which you have signed. Today, they should be registered at the Ministry of Justice. I believe that the first payments will be made in July.

Vladimir Putin: I talked with people in the street in Barnaul. One of the questions was about pensions as usual, including a revision of the rights of the pensioners who acquired them in the Soviet Union. The Government has already drafted a package of draft laws on the development of the pension system and submitted it to the State Duma. The deputies promised to consider it by July 3. Will you please summarise the key provisions that everyone should be aware of?

Tatyana Golikova: First of all, I would like to inform you that on July 3 these bills will be considered in the second and third readings. These are the bills of joint competence, distributed before the first and second readings. So far we have been preparing amendments in cooperation with an ad hoc working group and deputies. Our interaction has been very constructive, and the job is almost done. We held a round table meeting with representatives of State Duma parties to discuss the issues brought up during your address in the State Duma and first reading debates.

I would like to remind you - it will probably be better to speak about exact increase rates - when we speak about a revision of pension rights, we proceed from the fact that in 2010 pensioners aged between 61 and 70 will have their pensions increased by 1,313 roubles, pensioners aged between 71 and 80 will have their pensions increased by 1,648 roubles, and pensioners over 80 years old will have their pensions increased by 1,732 roubles. These are average figures. The main thing is that starting from January 1, 2010 there should be no people left whose pensions, coupled with other social benefits, will be lower than the living wage for the corresponding constituent entity of the Russian Federation.

Vladimir Putin: You mean the pensioners' living wage?

Tatyana Golikova: I am referring to the pensioners' living wage as determined in a particular constituent entity of the Russian Federation. Also, I would like to remind you that starting from next year the pension value will be uniform, which will be financed by the Pension Fund, including transfers from the federal budget. In 2010 a uniform order of indexation of the basic and insurance pension parts will be phased in. The value of the social pension, which we will bring up to the pensioner's average living wage with this year's final increase on December 1, will be maintained throughout the payment period for every pensioner.

Vladimir Putin: Good. I started today by saying that the Great Patriotic War began 68 years ago. In this context, I would like to emphasise that we should not only cherish the memory of our victory in this war, but should also never forget the price of this victory. The war took a heavy toll on the Soviet people - now people of Russia and other CIS countries - and the participants in the anti-Hitler coalition. The Government, bodies of regional and local self-government should do everything they can to encompass with care and attention the veterans of the Great Patriotic War, members of the families of servicemen killed in action, victims of the siege {of Leningrad}, former inmates of Nazi camps and workers on the home front. The average pension of the persons made disabled in the war already exceeds 15,000 roubles per month. We have just talked about our plans to develop the pension system and increase practically all pensions from January 1, 2010.

In this context, I would like to ask the Minister of Healthcare once again to pay the closest possible attention to the quality of the medical service for war veterans. It is necessary to make sure that they should not have to wait in line again and again, or go to a clinic for a medical document or a prescription. I would like to draw your attention to the fact that now about one million people wait in line in our polyclinics every day. Meanwhile, it is possible to take administrative measures to resolve this, and you know which. The same prescriptions could be filled for a month, and it will not be necessary to go get them every other day.

I would also like to point out that we have fully carried out our commitments on providing persons made disabled in the war with special cars or financial compensations. By May 1, 2010 the war veterans requiring housing should have received it or paid financial compensations if they so wish.

The State Duma has passed the law increasing the housing standard from 22 to 36 square metres per person. The funds for its implementation should be transferred to the regions by July 15. I would like to ask the Finance Ministry to make sure of this.

Today, we should make a decision to allocate funds for the jubilee medal - 65 years of Victory in the Great Patriotic War of 1941-1945.

Now let's turn to the next item on the agenda. The Finance Ministry drafted a bill allowing budget institutions to use leasing for the purchase of the required equipment.

This is one of our anti-crisis measures. Its implementation will allow us to increase the demand for domestic cars, medical engineering, and equipment used in research and education.

At the same time, we will be able to speed up modernisation of our social and other budget institutions, and hence, upgrade the quality of service for the people.

Furthermore, last January, the Government submitted to the Duma a package of bills to improve anti-monopoly legislation. Following the discussion of these bills with deputies and experts, we have decided to supplement them with a number of important provisions. I hope that these supplements will not dramatically alter the proposed decisions but will increase responsibility for compliance with them.

First of all, this applies to the need to enhance responsibility of the officials employed by economic operators for abusing their dominant position in the market. Such actions should be punished not only by huge fines but also by disqualification, that is, prohibition to occupy top positions or engage in business for a period of up to three years, if businessmen are concerned.

We are planning to specify the order of determining the dominant position in the market, and the criteria for qualifying prices as monopoly high, and to introduce responsibility for manipulating electricity prices.

We should approve the relevant amendments and send them to the Duma today. I hope that this will allow deputies to complete the work on these amendments and the law in general in time. This will equip the Federal Anti-Monopoly Service with a better instrument for maintaining honest and fair rules of competition, and help it protect the consumers against dishonest monopoly actions. We know that monopolism is a major, albeit not the only reason for price hikes. It is essential to understand this and act much quicker.

In addition, today we will discuss the draft Strategy for the Development of Physical Fitness and Sports until 2020. I would like to remind you that about 22 million people regularly engage in sports in this country. But this figure should be at least doubled. We should sports and a healthy lifestyle popular and fashionable. At the same time, all children should have an opportunity to visit sports facilities at their school or residence. Physical training should be made more accessible to disabled and elderly people.

If we reach these goals, it will be much easier for us to resolve other urgent problems, for instance, improve health and increase the life span of our main resource, the human capital. This will help us prevent crime, alcoholism, smoking and drug addiction, especially among young people. This will also help our athletes to score sports victories. We will enhance our international prestige, and make Russia a more attractive venue for global sports competitions.

Let us start working on our agenda with this subject.