OREANDA-NEWS. September 13, 2010. The governor reported to the prime minister on the growth of economic indicators associated primarily with state aid to AvtoVAZ.

“AvtoVAZ may end 2010 with a profit,” said Mr Artyakov. Mr Putin also asked about unemployment in the region (the governor reported that it had been halved) and about the measures used in overcoming the fires and drought. According to Mr Artyakov, the region lost 50% of its harvest and needs help with feed grain.

Transcript of the meeting:

Vladimir Putin: Mr Arytakov, what are the region's economic results for the first half of the year?

Vladimir Artyakov: Mr Putin, today we can say with confidence that this year, especially in the first half, the economy started to grow. Compared to the crisis year of 2009, the figures show evidence of growth. Today we see a significant increase. Of course, the region's economy is directly affected by AvtoVAZ. And the programmes being implemented today at AvtoVAZ, thanks to your support, have resulted in significant growth, and this extends to the region's economy. A few figures - today, for example, we can say that thanks to state support and the automobile scrapping programme, AvtoVAZ is forecasting sales of 580,000 cars this year. You know that we have reduced AvtoVAZ's costs in terms of the social benefits burden...

Vladimir Putin: But how many cars were sold in 2009?

Vladimir Artyakov: In 2009, there were about 320,000. This is, of course, a very small amount considering AvtoVAZ's previous output. Today, we can even say that AvtoVAZ could end 2010 with a profit. And, of course, there's a lot of support for the workers, not only from the city of Togliatti, but the entire region, because there are around 320 AvtoVAZ related companies in the region who employ over 100,000 people, in addition to the city of Togliatti itself.

But we are also seeing growth in other industries. First and foremost, of course, these are the petrochemical industry and mechanical engineering. The defence industry, too, has begun to recover compared with 2009, when we had a 30% decline in our economy. And if today we compare our economic development with the second quarter of 2009, we observe growth of up to 50% in some sectors.

Vladimir Putin: Back to AvtoVAZ ... We agreed that we would not just provide aid to AvtoVAZ, but would provide assistance under development and reconstruction plans. Are you and your organisation tracking these processes?

Vladimir Artyakov: Mr Putin, I can report quite specifically that this year we took on a very serious die-forging operation at AvtoVAZ - the press, a very large press - there are only a handful of them in our country's automobile industry - the firm that supplied it was Komatsu, at a cost of 2.1 billion roubles. This shows that even today, in difficult times, AvtoVAZ is modernising its production. In addition, we understand that this relief, which was given in direct support of the plant, as part of the scrapping programme, is enabling AvtoVAZ, I believe, to start a new model production line in late 2011 and early 2012.

Vladimir Putin: This is what's really important. What about unemployment?

Vladimir Artyakov: Unemployment in our region, Mr Putin, I can quite confidently say, is down sharply. Today, we have a registered unemployment of 2.2%, which is lower than the national average. In addition, there was a serious decline in the city of Togliatti through an integrated investment plan for the development of the city. If before, unemployed reached 4.5%, today it is only 2.7% - a reduction of almost 50%.

For the whole region, we have also cut unemployment in half, in fact, for both untracked and registered unemployment.

Vladimir Putin: What about the construction sector and condemned housing?

Vladimir Artyakov: Construction sector. Here we have an ongoing programme, but this a little more complicated than in the engineering industry, because we understand that the construction sector suffered the most. It is clear that the profitability of the industry has declined considerably, and sales, properly speaking, have halted. But because we have started to employ contractors in work connected with housing modernisation and communal services reform, we have maintained this industry in our region. Today, we have attracted four billion roubles from all forms of financing and our own budget in the housing sector alone, i.e. this is for building repair and includes the resettlement of residents from old and dilapidated housing.

Vladimir Putin: How much did you receive for condemned housing and resettlement?

Vladimir Artyakov: We received around 1.5 billion roubles for resettlement.

Vladimir Putin: From the federal budget?

Vladimir Artyakov: Yes, yes, from the federal budget.

Vladimir Putin: And you added some of your own funds?

Vladimir Artyakov: And we added some of our own. But we added our own to a lesser degree. Why? Because we use a 30-70 funding ratio - so the rest is ours.

Vladimir Putin: Mr Artyakov, how are you preparing for the modernisation of the public health programme?

Vladimir Putin: The first reading of this programme in our region has already passed. We made some adjustments. We still have time to submit this programme to the Health Ministry. Of course, the amount the government allocated today - as I understand, is 300 billion roubles for the whole country -very serious aid, especially for primary care. We will now identify the main facilities that are in a critical state, and we will certainly single out those facilities that have growth potential, I mean the ones which can provide post care treatment, strictly speaking, for people in the territory.

Vladimir Putin: But we're not only talking about repairs - we're talking about modernisation of the very system of service to the public.

Vladimir Artyakov: We have, if we talk about modernisation of the care and treatment of citizens, considered these two aspects. First of all, this is technical modernisation on the one hand. On the other hand, the wage system is, of course, a very important component of operations. And most importantly, what we are still studying is training and re-training of medical personnel. You know what the problem is? We are faced with the fact that abroad, medical personnel undergo re-training about once a year, while we do it once every five years. That is a catastrophic failure, and if we do not start to implement this particular system in the modernisation programme, we might not achieve the desired result.

Vladimir Putin: Training updates are associated with the introduction of new technology. Let's not forget about that.

Vladimir Artyakov: For one. But we have a new system of treatment coming about, so...

Vladimir Putin: What do the demographic statistics look like in your region?

Vladimir Artyakov: Mr Putin, we have had significant growth in the birth rate in the territory for the last 19 years of our region's history. This year, about 22,000 Samarans were born. We are very happy about this. Support is provided both at the federal and regional levels. And of course, there is the problem of not enough kindergartens. Currently, we are literally working on a program to build preschools. Which way did we go? First of all, we certainly built new kindergartens. The renovation of a kindergarten is rather expensive, since the standards have changed. And we've gone down the path of withdrawing former preschool buildings from commercial use. What do I mean? We had a demographic decline in the 1990's... It is clear that these facilities were converted for commercial use, various facilities and are now used for other purposes. We are ready to buy them out, or return them to their original purpose, to overhaul them and prepare them for the children.

Vladimir Putin: Mr Artyakov, this summer was difficult for the European part of the country, and the Samara region was also affected by wildfires in three nature preserves. Thank god there were no casualties, no loss of homes. Nevertheless, drought and heat have affected agriculture. What will happen here this year?

Vladimir Artyakov: Speaking of agriculture, Mr Putin, you are absolutely right: we, unfortunately, had fires this year, for the second time in a row. Last year, we lost about 30% of the crop yield; this year 50%, or about one million hectares swept clean, as they say. Of course, this is a heavy toll on the rural areas. For the second consecutive time, this is already a precedent. The losses now amount to about 5.6 billion roubles. We harvested everything we could. Our main problem was to feed the cattle, because everything burned - not only wheat and rye and so on, but all the hay fields burned as well.

Still, this year, we can say that we are fully secure in terms of roughage - part of it we bought, and we collected everything, literally mowed down all the chaff and piece-by-piece collected all the straw we could.

We have enough grain since we have remaining inventory from last year.

Fodder is really the problem for us - we need about 500 metric tonnes of fodder grain. What does this mean? This is exactly what we need to save today - for livestock, pigs and poultry, as it is - since one of the components of their feed is in these branches.

Nevertheless, we will continue the winter sowing this year so we don't lose momentum.

Vladimir Putin: You're not simply ploughing under the grain?

Vladimir Artyakov: We held a few meetings with our scientists and professors who have been dealing with this issue for 40 years. It turns out there are three phases of drought and three phases for the possibility of sowing winter wheat of various varieties. Everything depends on the moisture saturation of the soil. Since it is assumed that the autumn will be protracted, this will not be so severe. And because we experienced such an extreme climate shift, we cannot sow all at once, but we can do it in three phases. The scientists say that this is an opportunity to save the crops. But if we don't do it now, Mr Putin we will have a severe drought next year, and the summer grains will not be able to withstand it.

Vladimir Putin: But you and I don't know that.

Vladimir Artyakov: But we're following meteorological forecasts and it appears that things won't be so simple.

We say that winter grains cannot withstand more than summer grains, especially in our climate. Clearly, if we had sown 30% of the winter planting, now we can go to 60%. This costs us more and will give us a different yield, in essence. Before this, we did the opposite, we concentrated on summer varieties. But twice bitten: we are now beginning to anticipate the situation. There was a problem.

Vladimir Putin: We need to build a system of support for agriculture.

Vladimir Artyakov: Mr Putin, this year's fire victims, as we call them, got 300 million roubles from the regional budget. We received 121 million from the federal budget. Of course, this is not enough. So we ask, again, for you to assist us with fodder. If we solve the financial issues - extension of credit with some kind of guarantee - we will save the industry. But the cattle will not survive without feed. Even the wheat we have is our own. But we will get through all of this.

There was a problem because of the fires, of course. If you look at a map of the fires over the summer, specifically an Emergency Ministries map, most of the entire Volga region burned. The Samara region was the green spot in the middle, every time I reviewed the summaries. We did not allow forest fires to take hold in a single area - not even one. We pre-empted the threat. Before that we created our own Samara region government institution "Samarales"...

Vladimir Putin: But the fire still came right up to the cities, yes?

Vladimir Artyakov: There was a problem in Togliatti, in the city centre. Certainly, it was difficult there, but nevertheless, we stood our ground and mobilised everything we had and did not allow the situation to get out of control.

Vladimir Putin: If we go back to the beginning of our conversation, overall, what is your assessment of the anti-crisis measures and the effectiveness of their application in the Samara region?

Vladimir Artyakov: On what do I base my assessment? Of course, primarily on the statistics, which I reported today. And, of course, the government took very important steps to establish a special economic zone in the city of Togliatti, AvtoVAZ support, the scrapping system and, of course, building on our territory, namely in the city of Togliatti, an industrial park, the construction of a new IT park, that is, a complex for IT technology. We estimate that here we will create something on the order of at least 20,000 highly skilled jobs. In addition, all the programmes we have implemented have prevented mass unemployment. This is very effective. Even if we take AvtoVAZ, we had 112,000 at AvtoVAZ, which is now down to 71,000 - that's more than 30,000 people to whom we redistributed jobs across the area.

Vladimir Putin: Let's now talk about our plans for the post-crisis period. What else do we need to do to assure development progress for the near future?