OREANDA-NEWS. March 25, 2010. Vladimir Putin: Good afternoon, colleagues.  I suggest we exchange information. Mr Zubkov (First Deputy Prime Minister Viktor Zubkov), we recently held a conference call on preparations for spring sowing and other elements of spring farming. That meeting focused on several problems, notably fuels and lubricants, and fertiliser. The problem of fuel and lubricants has been resolved, but what about fertiliser?

Viktor Zubkov: Mr Putin, colleagues. You issued instructions during the conference call to come to terms on fertiliser supplies to farmers.

I held a meeting with regional representatives and the companies producing mineral fertiliser to discuss the prices of some fertilisers.

Vladimir Putin: And?

Viktor Zubkov: We said during the conference call you held that the volumes of fertiliser supplies and prices mostly correspond to the terms and conditions stipulated in the agreement between fertiliser producers and Russia's Agro-Industrial Union. The agreement was signed in October 2008 until 2012. As I have said, the parties are honouring these terms and conditions. However, it has been established that the main reason for a rise in mineral fertiliser prices in some regions is the lack of an agreement between the given region and the producer. There are currently 11 such regions.

At this point we have resolved all the fertiliser price issues, including potash fertiliser. Prices now conform to the agreement.
Supply volumes and prices have been coordinated, as the heads of agribusiness agencies who attended the government meeting have confirmed. They said they have no complaints regarding the suppliers of mineral fertiliser.

I would also like to say that, in an effort to prevent a repetition of this situation in future, fertiliser producers and regional representatives have decided to use exchange mechanisms more widely for the purchase and supply of mineral fertilisers to farms. The use of forward and futures contracts will allow farms to buy fertiliser through the year at off season prices in deals signed without brokers.

Apart from the above-mentioned agreement which will be effective until 2012, the use of the exchange mechanism will allow farms to save at least 20% on mineral fertiliser purchases.

The Agriculture Ministry has also been instructed to submit proposals for the allocation of federal assistance funds for fertiliser purchases, provided the regions and fertiliser producers sign direct agreements specifying the volume, prices and delivery schedules. These are the instructions we have issued; the process can be monitored in the weekly schedule.

Vladimir Putin: So, you think the situation is good, in general, and farms will be able to buy the required amount of fertiliser at affordable prices during the spring sowing campaign, right?

Viktor Zubkov: More than that, it is mostly ammonium nitrate that is used in spring. During the five winter months last year (November through March), which was a good year for us, we supplied 1.74 million tons of the fertiliser, but this year we have already supplied 1.9 million tons, or 160,000 tons more than in the 2009 winter season. So, volumes are growing. As for prices, I have said that there are no complaints to fertiliser producers.

Vladimir Putin: This is good, but we should continue to monitor the situation. Mr Zhukov (Deputy Prime Minister Alexander Zhukov), I'd like you to report on conditions in the labour market, in particular the number of unemployed and registered unemployed.

Alexander Zhukov: Mr Putin, colleagues.

The total number of unemployed increased in October 2009. Before that, April 2009 was the peak in recorded growth, after which the number of unemployed (including registered unemployed) was dropping until October, when it started up again. The overall figure grew by one million, from 5.8 million people in October to 6.8 million in January. In February, the figure decreased by 400,000 people, to 6.4 million unemployed or 8.6% of the workforce.

A weekly increase in the number of registered unemployed people was recorded from early 2010 and through late February. At the same time, the increases were considerably lower than those posted during the same period of 2009. The number of the registered unemployed has been on the decline in the past three weeks. As I mentioned, the 2009 increase ran through late April.

Moreover, the total number of employees working mandatory part-time hours, on mandatory holiday or remaining idle is a very important part of the picture. In the past seven days, the numbers of these employees have declined by 90,000 nationwide. Technically, this is a positive trend. It appears that the number of unemployed people will continue to decline.

The Federal Service for Labour and Employment (Rostrud) has concluded 82 agreements with the constituent entities to date. Over 13 billion roubles worth of funding and federal-budget subsidies have already been transferred. The Primorye Territory is the only constituent entity that has not received these subsidies due to its failure to fulfill certain requirements in an agreement signed with Rostrud.

At present, 408,000 people are involved in additional-employment programmes, including public works, retraining, small businesses, etc.

Some regions, including Tatarstan, the Chelyabinsk, Ulyanovsk and Sverdlovsk Regions, are currently pursuing such programmes this year. At the same time, some regions, including the Krasnodar Territory, the Volgograd Region and, unfortunately, Ingushetia and Kabardino-Balkaria are obviously lagging behind. For instance, subsidies were transferred to Ingushetia and the Krasnodar Territory as recently as March 11 due to their failure to abide by the agreement's terms. Consequently, programme-implementation agreements have not been concluded to date.

Although the funding was transferred in February, some constituent entities are, unfortunately, lagging behind in terms of signing these agreements. St Petersburg, the Irkutsk Region and the Chukotka Autonomous Area have also failed to organise work on these programmes.

Generally, we can say that the unemployment statistics this year are better than last year. But why did I point out the regions which are slow to implement these programs? There is no reason to believe we have overcome all of the difficulties and problems in this field. We must continue to work just as actively and purposefully as we did last year.

Vladimir Putin: Good. Mr Khloponin, the employment situation in the Caucasus is rather complicated, and the situation will get even worse unless federal allocations are disbursed and used on time. I would like to ask you to pay attention to this, to work with your colleagues and to help them, in case they lack experience or in case of any other setbacks. Frankly speaking, we must expedite this work.

Today is March 24, or World Tuberculosis Day. Russia has posted modest improvements. The number of tuberculosis cases has declined 3%.

Ms Golikova, what is your view regarding tuberculosis prevention?

Tatyana Golikova: Mr Putin, colleagues, I would like to say that, despite your justified remarks, these modest results are, nonetheless, quite substantial for our country because three years ago, according to statistical records, 100 people used to die from tuberculosis each day.

In 2009, we coordinated and adopted the decision to include this medical issue in the National Priority Project Health. We are increasing the allocations for these purposes by a considerable amount, primarily the so-called second-line medications for tuberculosis victims.

We have already attained 2015 targets under the specific guidelines and parameters of the Government directive. Consequently, it is our opinion that a 2.9% and 7.8% decline in the sickness and mortality rates is a substantial result. It means that we have saved the lives of 2,000 Russians in 2009.

What's also important is that 2.5% more tuberculosis cases were detected during medical check-ups over 2008. Consequently, we received an opportunity to register these people and to treat them accordingly.

Vladimir Putin: This is the result of financing prevention and medical check-ups.

Tatyana Golikova: Here is another important item on the agenda. The incidence of tuberculosis cases in prisons and penitentiaries has stabilised and did not increase in 2009. As far as respiratory-organ tuberculosis is concerned, we have managed to treat an additional 6,000 patients, while another 8,000 patients no longer spread the tuberculosis virus.

Speaking of absolute statistics, 262,700 people, or 7,800 less than in 2008, were registered by late 2009. As far as this year is concerned, you signed the relevant Government resolution as regards our cooperation with the regions in late 2009. In 2010, we have started signing agreements with the regions on this subject. Federal-budget allocations total 4 billion roubles. And we hope that 2009's positive trend will continue.

Vladimir Putin: As you know, a resolution to fund radiopharmaceutical preparations and medical-equipment production has been signed. We are allocating over 500 million roubles for these purposes. How will this work be organised?

Tatyana Golikova: This innovation project, part of developing the pharmaceutical industry, will launch the production of new radiopharmaceutical medications and medical products.

We are cooperating with the Rosatom Nuclear Energy State Corporation. The same concerns the construction of the Dimitrovgrad centre, we talked about at the previous meeting. I would like to stress once again that radioisotopes are a highly effective method for diagnosing and treating various health disorders, particularly cancer.

As far as this project is concerned, Rosatom manufactures generators for obtaining the technetium-99 isotope, required in 80% of tomography studies at hospitals and clinics.

This preparation is already listed among vitally important medications in a Government bill that was also passed in late 2009.
Moreover, there are plans to manufacture gallium-68 and rubidium-82 isotope generators. Such isotopes can also diagnose health disorders and cancer at early stages.

The creation of new-generation direct-tumor protein-carrier radiopharmaceutical medications will become a promising venue. Technically speaking, the implementation of this project and other aspects of the anti-cancer programme will bring national diagnostic facilities up to Western European standards.

The creation of these medications will mean a breakthrough in the field of high-tech pharmaceutical production. MedRadioPreparat, who directly ordered this project, will launch production and will receive the funding under the above-mentioned resolution. As I mentioned, this is only part of the allocation.

The second part has been transferred to Rosatom for generator production. That's why I hope that we will be able to make serious headway in this area through 2010, with due account of decision-making deadlines.

Vladimir Putin: Will production also be launched there?

Tatyana Golikova: In Moscow, plus another laboratory in Obninsk.

Vladimir Putin: All right. Let's discuss the main items on the agenda.

First, we will prioritise the drafted guidelines of the 2011-2013 customs-tariffs policy. The approval of this document is an essential part of passing the budget. Suffice it to say that customs proceeds totaled 2.5 trillion roubles last year despite unfavourable foreign-economic conditions, or 34% of the federal treasury's proceeds. This alone highlights the importance of the issue.

Naturally, the customs-tariffs policy does not boil down to the appropriation of budgetary assets alone. It is also an extremely important instrument for making the Russian economy more competitive and promoting our integration into the global economy.
Our stance on this issue is both consistent and predictable. We oppose excessive protectionism. Even during the global crisis, Russia did not completely close access to national markets. We confined ourselves to pinpoint measures and restricted access only where, in our opinion, it was impossible to do without such measures.

Moreover, the average rate of Russian import duties was 11.5% in 2008, dropping to 10.6% in 2009. This year, we expect it to be about 10.15%.

In 2009-2010, we initiated an ambitious intra-CIS integration project, namely, the creation of the Customs Union comprising Russia, Belarus and Kazakhstan.

We must accomplish several tasks stage by stage at a time when the acute phase of the crisis has, at large, passed. I want to emphasise the word "at large."

First, we must clarify specific deadlines for modifying anti-crisis measures within the customs-tariffs context. Naturally, we must not hurry here. At the same time, it would be incorrect to preserve high duties when they are no longer required, because this may lead to technical stagnation, the misuse of monopoly status in the market and higher prices.

On the contrary, we will have to continue using the available tools of the customs-tariffs policy to facilitate the sustained development of the Russian economy and its diversification. We will establish new and modern production facilities, including those using Western technology and state-of-the-art global technology.

Second, we must focus on the quality of customs regulation. This is the main problem now confronting those involved in foreign-economic activity. High-tech product manufacturers face the greatest problems in this respect.

Ms Nabiullina and I spent the day before yesterday meeting with Finnish business leaders in St Petersburg. Overall, their assessment of our work is very positive: there is a desire to develop cooperation along traditional lines - in trade - and also to invest in production, including high tech production.

So what's the problem? Simply put the problem is that it is difficult to bring in components or raw materials and to send out finished products. For some companies this - I will go into this more later - has become a limiting factor in deciding whether to expand or not.

In Vsevolozhsk, Nokian manufactures tyres. They say they are willing to invest and produce more but there are technical snags. We should give this our closest attention.

It is, of course, possible to continue promoting our companies on foreign markets. But unless most favoured status is given to real exporters, the steps taken will be of little use.

Mind you, we will have to address all these matters while keeping the Customs Union in mind. That is to say, we should tie our plans in with the interests of our Belarusian and Kazakh colleagues.

There is another point on the agenda I would like to talk about. It is causing a lively response and interest everywhere - I am referring to our bid to host the Football World Cup in 2018.

Some of the problems are purely fiscal: FIFA is asking for government guarantees as a condition for the competitions.

The guarantees concern security, tax and customs breaks, entry rules for athletes, referees and fans, intellectual property and its protection, as well as the construction of new stadiums.

I think our country has a fair chance to host the Cup, although our co-bidders are a serious lot, too.

Football is the number one sport in the world: it is popular here and almost everywhere else. We understand that our Cup preparations will not only require a large number of new sports facilities. They will also mean that we must develop - and are certain to do so if our bid is accepted - additional infrastructure: airports, roads, hotels and other tourist facilities in many Russian cities, not fewer than ten.

This would include Moscow, the region around it, and St Petersburg, as well as Kazan, Sochi, Samara, Yaroslavl, Nizhny Novgorod, Rostov-on-Don and Krasnodar. Perhaps we might take a look at Volgograd, Saransk, Yekaterinburg and even Kaliningrad. These would all be candidate cities for the ten competition venues.

All of that would remain to be used by our people for decades to come. And even if we fail to win the bid, we should do it all the same. We should do it anyway.

Now let us move to our agenda. Ms Nabiullina (Economic Development Minister), you have the floor.