OREANDA-NEWS. May 14, 2010. Transcript of the beginning of the meeting:  Vladimir Putin: Let's begin with an overall view of the situation in the region, in particular the operating results in the first quarter, the situation in the labour market, how regional production continues, and the issue of industry and agriculture. And we will certainly emphasize AvtoVAZ.

Vladimir Artyakov: Please, have a look at these slides, which give a good representation of the situation in the Samara Region's industry, the labour market, and all the industrial sectors you have mentioned.

What can I say? At this point, we can report a growth of industrial production in the region as a whole. We have seen considerable growth compared to late 2008 and 2009, notably in mechanical engineering, car manufacturing and, of course, the oil and gas sector. These three elements have helped us form a deficit-free budget. We are working to completely realize the planned programmes, above all the social ones.

Vladimir Putin: I see that industrial production has grown 8.4% in the region.

Vladimir Artyakov: Yes, that's right. Moreover, we also expect growth in the second half of the year and expert predictions support this.

Consequently, our budget will be deficit-free. The Samara Region is still  one of the few remaining donor regions in Russia. This is an encouraging fact and gives us hope that we will implement our short-term plans and programmes.

Vladimir Putin: What is the situation in the labour market?

Vladimir Artyakov: The figures are not bad; unemployment is only 3.7%.

Vladimir Putin: I see it has declined.

Vladimir Artyakov: Yes, it has declined.

Vladimir Putin: What was the previous figure?

Vladimir Artyakov: It was close to 4%, and it is currently 3.7%, or 61,000 people. However, hidden unemployment has decreased by nearly 67%, from approximately 100,000 in the past to 34,000 now. Besides, the number of vacancies has grown. The proportion of the number of unemployed to the number of vacancies gives us hope that we will be able to further reduce unemployment. We have accomplished this above all because of the implementation of the joint programmes recommended by the federal government combined with our own regional programmes.

Vladimir Putin: Last year you focused on housing repairs and the resettlement of people from rundown houses. This allowed you to increase construction and create jobs. But most importantly, homes were repaired and people were resettled from barracks. Next, you followed special measures in the labour market. Can you report on progress in these two spheres? How is it going? Have you received the federal budget allocations for housing and public utilities?

Vladimir Artyakov: We have received all that we were promised in 2009, which is more than 2 billion roubles.

Vladimir Putin: Under that programme?

Vladimir Artyakov: Yes, under that programme.

Vladimir Putin: How many houses have you repaired?

Vladimir Artyakov: We have repaired over 350 houses; we completed major housing repairs in all the municipal districts that filed requests. The effects of this have multiplied across other areas. What am I referring to? We have stimulated construction, which took a severe plunge in late 2008 and in 2009, to fulfil these orders.

What allowed us to provide support to that sector? We tried to allocate as much as possible for building roads. There are about 50,000 people working in construction, out of which 25,000 are building roads. In other words, we tried not to lay off construction workers. We attracted additional funds, took out loans, and started building our own infrastructure, supporting the construction industry.

Vladimir Putin: What about that new measure for supporting the automobile industry - the automobile scrappage programme? Has it succeeded?

Vladimir Artyakov: I'd like to specially thank you for this measure; it has indeed significantly helped AvtoVAZ. Every fifth car made at AvtoVAZ is being sold under this plan devised to help the automobile industry. This is a major help.

We have rolled out more than 120,000 cars, an increase of 40% thanks to that measure. AvtoVAZ is now working in two shifts for some projects. The auto parts division, which has been stagnating, is being revived. This is giving us hope that AvtoVAZ will fully recuperate if we carry on this project, becoming a company that is making a profit.  We can do this if we continue on in the same way.

Vladimir Putin: But this does not rule out the need to carry out the restructuring and rehabilitation plan approved by the company's shareholders.

Vladimir Artyakov: What have we done jointly with the shareholders? We released AvtoVAZ - with your assistance - from more than 1.5 billion roubles of social responsibilities. About 40 social institutions for which AvtoVAZ was responsible have been taken off its balance sheet.

Vladimir Putin: Just a minute, how are these facilities functioning then? Has the quality of their services deteriorated?

Vladimir Artyakov: We have instructed the municipal district and the city mayor to maintain the standards of medical services offered to the people, including children, at the same level as when they were financed by AvtoVAZ.

Vladimir Putin: You made this plan, but have you verified that is will be fulfilled?

Vladimir Artyakov: We receive quarterly reports. Besides, we collect the Togliatti residents' complaints in a separate folder; we know that this is a very sensitive part of our work because we must ensure quality services. We are monitoring this process in real time. That is, should a problem arise, our branch experts will address it immediately. So far, no problems have been reported.

Vladimir Putin: Keep monitoring the situation. You must know everything that is going on and everything that is being done.

We discussed the situation when the company and you personally asked us to help you transfer the financial responsibility for these facilities from AvtoVAZ to the regional and municipal levels, and to provide financial support for that project. We then agreed that you would do everything possible to prevent the quality of services from falling and to ensure that services improve. I am now asking you to continue monitoring this situation closely.