Q&A with Prime Minister Putin, Part II

Q&A with Prime Minister Putin, Part II

S. Kochanovskaya: Moscow Aviation Institute. My question is about health insurance. Russia’s healthcare system includes a compulsory medical insurance. This means that every Russian has a health insurance policy and is theoretically entitled to free medical assistance in any region. But this is not the case in reality.

Consider this example. My mother has a bad heart. She goes to her local outpatient clinic where they tell her they have no cardiologist and send her to the city (the region’s administrative centre). We go to the city and show her insurance policy, but clinics there refuse to serve her saying that she is not a resident of the city and has to go to her local clinic.

Is this legitimate? If so, then what do we need this insurance policy for?

Vladimir Putin: The problem is that, unfortunately, the system of medical insurance in Russia is at the embryonic stage of development. To cut a long story short and make it clear to everyone – the key problem is insufficient funding for the system. There are shortfalls in funding from every source, including the federal and regional governments.

We have plans to reform this system. But at the moment we are embarking on a major project to improve the pension system, which will require between 500 and 700 billion roubles in 2010, according to our estimates. Our next effort will be to reform the compulsory medical insurance system gradually.

As for the specific case you are talking about, despite the problems I mentioned, they certainly have no right to refuse to help your mother. If the problem really is that bad, we could discuss it in more detail and find a solution.

Ernest Mackevicius: Another videoconference is planned with Komsomolsk on Amur in Russia’s Far East. It is getting late there, Mr Putin, so why don’t we move to the Far East now and hear from our special correspondent Olga Skabeyeva.

Olga Skabeyeva: Hello, Moscow! Good afternoon, Mr Putin. This is Komsomolsk on Amur here, the third largest city in Russia’s Far East and an important industrial centre. Forty major industrial companies operate here. This city is forever young, because it was built by young enthusiasts who once came here to conquer the left bank of the Amur River. This took a lot of courage.

Incidentally, the temperature is minus 25 Celsius here now, which is not too cold – temperatures here are often as low as minus 35 or minus 40 in early December. But we are all warm and comfortable in this makeshift conference room, and we are ready to ask you questions.

We are on the production floor at a local aircraft plant that assembles the famous Sukhoi Superjet-100, the most important aircraft of Russian civil aviation.

We have a lot of questions, but first I will give the floor to representatives of this plant, which is hosting this videoconference.

D. Loshchinsky: Good afternoon Mr Putin.

First of all, I would like to thank you for having fulfilled our requests. You promised us in May that the direct rail service between Moscow and Komsomolsk on Amur would be restored, and so it was. It is difficult to appreciate the benefits of travelling by train across our vast country, but thank you very much.

Now for my question. The aircraft industry in Komsomolsk has indeed stabilized. We have received orders from the Defence Ministry, and additional financing has been allocated for the Sukhoi Superjet programme. However, we are still facing a number of problems that we are unable to resolve without government help. One of them is training qualified personnel for the industry.

The Sukhoi Superjet programme is an innovation project involving technologies that are new for Russia. There is an extreme shortage of qualified professionals such as aircraft designers, technicians and plant workers who can operate the cutting-edge, high-precision equipment.

The reasons for this shortage are obvious – the falling prestige of engineering in general as well as the local schools’ inability to supply as many qualified professionals as local companies need. These schools also have problems and need support. Unfortunately, graduates of Moscow colleges and universities are reluctant to come to the Far East.

Mr Putin, does the government have any plans to develop programmes for training engineers for the Far East and other remote regions?

Thank you.

Vladimir Putin: Dmitry, you have raised an extremely important issue, that of the aircraft industry in general and of personnel training programmes.

As far as the aircraft industry is concerned, we have established the sizable United Aircraft Corporation (UAC). You probably know this. Unfortunately, the UAC has inherited all problems from previous years, including massive debt. We have just adopted a decision to provide additional support to the UAC. We will allocate several billion roubles for its authorised capital and will start restructuring its debt worth another 46 billion roubles in the next few years. This will enable the company to clear its balance sheet and will create conditions for normal economic performance and will also help attract the required resources for corporate development and that of the aircraft industry in general.

I have also recently signed documents stipulating additional support for the Sukhoi Corporation itself. As you know, we capitalised the company some time ago, and have made yet another similar decision recently. I am confident that the national aircraft industry, primarily the civilian segment, has a good future despite all problems, and that the industry will be operating to capacity in the next few years.

And now a few words about personnel training programmes. This is, doubtless, a high priority. Although this high-tech sector has a very good tradition, there have been certain problems in personnel training in previous years, and such problems persist. At the same time, I would like to tell you that we have held a tender for 14 higher educational and research schools this September, and that, according to the commission, three specialised schools have submitted quite competitive and interesting programmes. Three of them, namely, the Moscow Aviation Institute, the Kazan Institute and probably the Saratov higher aviation school, have been listed among federal higher research schools. All of them will receive additional funding and resources totalling 1.8 billion roubles over the next five years and will use it to modernise their material-and-technical base and to improve personnel training.

A substantial number of students pay for their training in economics and general specialisations, while not more than 15% of future engineers pay for their courses. On the whole, this shows that the state prioritises the training of top-grade aircraft industry specialists. But the problem persists, and we will follow through on a solution together.

Why should we do this together with you? Because enterprises must take a direct part in training specialists they will need in the future.

Ernest Mackevicius: Mr, Putin, quite a few students have been invited to our studio. I’ll now ask technical school students to raise their hands. Wow! Is there anyone here who would volunteer to work in Komsomolsk-on-Amur? The number of volunteers is smaller, but they are here.

Farida Kurbangaleyeva: I think it would be logical to ask an aviation institute student this question. Moscow Aviation Institute students, our future aircraft manufacturers, are sitting in my sector.

This young man is among those few who did not lower their hands. Are you really ready to leave Moscow, to go to the Far East and to work there?

Nikita Kubrikov: Good afternoon. I am a five-year student from the Moscow Aviation Institute’s aircraft design department.

I plan to defend my PhD thesis and a graduation paper on civilian aviation. I would like to work at the Komsomolsk-on-Amur Aircraft Production Association (KnAAPO) and to help design civilian aircraft at the company developing the advanced Sukhoi SuperJet airliner family. I underwent advanced training at KnAAPO several years ago. I have some idea of what this company is like, and I would be happy to work there.

Farida Kurbangaleyeva: I have noticed that the girl sitting next to you lowered her hand. Why?

K. Chernyshova: Hello, I am also from the Moscow Aviation Institute.

I would like to say that there are more career opportunities and aircraft companies in Moscow. We can work more, earn more and introduce our own innovations and designs. Moscow is also my home town, and we currently lack the motivation to leave for other places.

Farida Kurbangaliyeva: There are different opinions.

Vladimir Putin: I support Nikita’s choice because I have visited that enterprise in Komsomolsk-on-Amur. That enterprise is really interesting and promising in terms of warplane and civilian aircraft production. The Sukhoi SuperJet he mentioned is not just any plane that will be manufactured in Russia. This is the first Russian aircraft designed completely with digital technology. The SJJ programme is also noteworthy for the high cooperation levels with our foreign partners. For instance, our French partners share is 30%.

Russia and Italy have established a joint venture that will market this aircraft in Europe. European carriers have already ordered the first 10 planes. Russia is also cooperating with Boeing on this programme. Overall, this interesting and promising work provides a very good experience.

I support Nikita’s choice. If you don’t mind, I’ll talk to the general director, so that he can help you to get there.

Ernest Mackevicius: We still have a link-up with Komsomolsk-on-Amur.

Pavel Popov from Omsk has just posted the following question on our website. “The police are not very popular today. Each day, we learn about police officers attacking people. Police officers are filming their exploits on video cameras. You understand what I mean. Maybe we should disband the police force and establish a new force from scratch?” This has now become an important issue.

Vladimir Putin: Ukraine, which is our neighbour and friend, recently disbanded the national traffic police force. But nothing good came of it. Bribes soared and traffic safety declined when their functions were delegated to other divisions unprepared for such work.

Today, a lady took part in our conversation and asked a question about the refusal of doctors to treat her mother. I believe that, unfortunately, this is primarily linked with extortion. Also, law enforcement faces many other problems.

Unfortunately, we are also dealing with those violating the law in this area. Instead of protecting citizens and their property, they inflict irreparable damage on their lives and health. This is, of course, unacceptable. Society as a whole and the Ministry of Interior must actively combat this abuse. Police officers violating the law must be severely punished.

At the same time, I would like to draw your attention to the fact that the Ministry of Interior now employs over a million officers. To the best of my knowledge, their number stands at 1.4 million and exceeds the strength of the Russian Armed Forces. These people are fulfilling an important function. Many of them risk their lives in emergencies and during routine missions, too. Consequently, I don’t think it’s fair to describe all police officers negatively. But I want to repeat that a sharp, prompt and tough reaction to abuse in law enforcement is essential.

Ernest Mackevicius: I remind you that we still have a link-up with the Far East and Komsomolsk-on-Amur.

Your questions please.

O. Skobeyeva: We have a lot of questions, and we are ready to ask them.

Alexander Astrakhantsev: I represent the Amur Shipbuilding Plant.

We have already met, Mr Putin. You visited our company in Komsomolsk-on-Amur, chaired a meeting and invited me to attend. Thanks to your invitation, they are now calling me “Putin’s friend”. But this is not the most important thing. We have so far failed to receive the 1.9 billion roubles allocated by the Government for completing the Project 971 Shchuka-B (Akula II) class nuclear-powered attack submarine, now sitting at the Bolshoi Kamen delivery station.

Mr Putin, I would like to know whether our plant will be awarded these defence contracts. You see, the plant simply cannot exist without such contracts because it is the only enterprise manufacturing warships for the entire Pacific Fleet. When will the 1.9 billion roubles, on which the wages of corporate workers depend, be transferred?

Thank you.

Vladimir Putin: Mr Astrakhantsev, I’m also happy that the number of my friends, including those in Russia’s Far East, is increasing.

I recall our meeting and your involvement in the meeting. At that time, you heard and saw everything for yourself. I think you came to realise that, owing to the former owners, the enterprise had found itself in an extremely difficult financial situation. Basically, the plant was facing bankruptcy.

We are now implementing the relevant debt restructuring measures and are replacing the plant’s owner. Its assets are being transferred to the United Shipbuilding Corporation (USC) via Sberbank. 60% will be transferred to the USC. This process is now underway.

Contracts are a key issue. We are monitoring this and maintain contacts with the Russian Defence Ministry. The Defence Ministry will cooperate with the concerned Government department and the United Shipbuilding Corporation and will have to decide what orders it will place at your enterprise, as well as the deadlines.

There were plans to build corvettes at your plant. Instead of merely occupying the stocks, we must allocate 1.5 billion or 1.2 billion roubles, rather than the 300 million as planned, for this project, to avoid the stocks being used by just an empty or idle hull because this won’t help pay anyone’s salary. The Defence Minister realises this. We have repeatedly discussed this issue with him.

If the Defence Ministry is not prepared to award such contracts, then the hulls must be removed and the Ministry of Industry must have an opportunity to place other orders, including chemical tankers and some other types of vessels, at the plant. Such orders can be placed by our shipping companies with our direct involvement. Although they have become accustomed to ordering ships in South Korea and elsewhere, they have agreed to do this at your enterprise after a friendly conversation. The concerned departments are to reach an agreement in the near future.

And now a few words about funding. To the best of my knowledge, they have started paying wages more actively after the conversation you were invited to. But this is not linked with the billions mentioned by me during my visit to your enterprise. I will now explain my point.

All wages must be paid, no matter what. As far as I know, the delivery team has already been paid. Although the funding is available, other corporate workers are not being paid in full. But this will happen in the next few days.

Nonetheless, there are problems. Mr Astrakhantsev, the enterprise is deeply in debt, and creditors and banks could unconditionally write off funding, wages included, as soon as they are transferred to corporate accounts. The company therefore has to find other ways to pay the workers. This will be done in the next few days, and all wages will be paid through December 1, 2009 inclusive. The second part will be paid somewhere starting around December 20, and all wages will be paid by December 31, 2009.

And now a few words about the other substantial resources you mentioned. This decision has been made, and the Government’s executive order on allocating an additional 17 billion roubles to the Amur Shipbuilding Plant in several instalments signed. The first 1.9 billion roubles will be allocated by late December 2009. Another 1.6 billion will be allocated next year. The enterprise will receive 3.2 billion roubles in 2011, 2012 and 2013, respectively, as well as another 3.4 billion roubles in 2014. We hope very much that the funding, as well as current efforts to place orders at the enterprise, will facilitate its recovery and stable performance.

Ernest Mackevicius: Thank you, Mr Putin. We are ending our link-up with Komsomolsk-on-Amur.

I remind you that our text message processing centre continues to receive your messages, including email. Maria Sittel sums them up.

Maria Sittel: The centre is not just working, it is working very actively.

We are approaching a psychologically important, very serious and weighty number – 2 million, telephone calls, texts and emails.

We have received 250,000 telephone calls and messages in the first 60 minutes. Such a beautiful figure. Over 2,000 people are trying to reach us by telephone simultaneously. These loads should not be envied.

As far as parity is concerned, peak-load volumes and the number of telephone calls, text and emails are growing steadily. A review of all the data shows that questions about welfare and social security account for 40% of the total, followed by questions on housing and municipal utilities. Work-and-wage related questions are in third place. In the past 30 minutes, the number of healthcare-related questions has increased sharply and is catching up with the three leading categories.

We have the following text message: “Who is standing behind the Arbidol medication? Instead of 125 roubles, ten pills now cost 275 roubles. 20 Remantadin pills which cost 50 roubles are not being advertised. There is no pressure either. Who is profiting from the healthcare sector? The list of skyrocketing medicine prices is long and not confined to Arbidol. Who controls the prices? Who is profiting from the healthcare sector? Mr Putin, please stop this robbery. You can do it.”

Vladimir Putin: What can I say? Who is behind these developments? Of course, this is done by incompetent businessmen and people who have no idea of social responsibility. They want to pocket as much money as possible from every project.

Can we do anything? And what can be accomplished in this sphere in order to prevent medication prices from skyrocketing?

Government experts have submitted the following proposals.

The prices for companies making vitally important medications will be registered. This is the first thing.

Second, the Federal Tariff Service will draft procedures for the constituent entities limiting their authority to regulate mark-ups. On the one hand, maker’s prices will be fixed, and, on the other, mark-ups will be limited.

These regulations will be effective from January 1, 2010.

I spoke to the Prosecutor-General a while ago. Both he and I believe that it is necessary to step up our efforts to bring those officials who are guilty of violations to account. There are violations today even despite high retail mark-ups. In some cases a number of business people exceed even these high retail mark-ups, sometimes many times over. They are liable to tough administrative penalties. They may be fined doubly the amount of illegally obtained revenues, removed from their position and disqualified for several years. In other words, a ban will be imposed on certain types of activities. It is possible to apply articles of criminal law as well. I hope that a combination of all these measures should stabilise the situation to a certain extent next year.

Maria Sittel: Excellent, all the more so since the prosecutor’s office has already called the actions of some businessmen, as well as local and regional authorities, as asocial. Indeed, we must not tolerate such a difference in prices on a simple facemask – one rouble versus 60 roubles closer to the Ural Mountains, or 30 and 40 roubles, as is the case with us here in the middle of the Volga region. This is an enormous difference, and the result of tremendous corruption in the pharmaceutical market. Mr Putin, there are very many reports on this subject.

Vladimir Putin: It is exactly as you say.

Ernest Mackevicius: Let’s take a few questions from the studio in Moscow, although most people here are not from Moscow.

Alexander, there is a question in your sector.

Alexander Khristenko: Yes, we have a question from Yelena Romanova from the Moscow suburbs. We were in touch with her before. Yelena, you were very recently unemployed. Could you please tell your story briefly and repeat your question?

Yelena Romanova: Good afternoon, Mr Putin. You visited us in Podolsk on March 4 of this year and I met you at an employment office. Now I have a job…

Vladimir Putin: I also have a job, so we are both doing fine.

Yelena Romanova: I would like to ask you a question about small- and medium-sized businesses. Much is being said about support for them. But the shutdown of the Cherkizovsky market has shown something different. When it was finally closed down, the Chinese authorities and business people, later followed by the Moscow government, helped Chinese businesspeople get back their confiscated goods and take them to other markets. Meanwhile, our businesses had to face this tragedy without help. It is very difficult for them to grow, and they need support. Taxes on medium- and small-sized businesses are very high.

I have one more example. A man has been working for a whole year, his business is doing well, but he cannot expand it because he cannot get a loan. Not a single bank will issue a loan to him because he is registered in the Krasnodar Territory or the Republic of Adygeya, but conducts business in Moscow.

What could be done to help our businesses develop, and thus be useful for the state?

Vladimir Putin: First, I would like to congratulate you on finding a job. So your visit to the employment office produced results. It means people there are not just sitting around wearing the seat of their trousers and receiving salaries. They have achieved something after all.

As for the Cherkizovsky market and small businesses, we have a public association of small business, OPORA. We maintain constant contact with them and have not yet heard a single complaint.

What was happening at the market? It goes without saying and I’d like to start answering your question with this. Government and management bodies should by all means observe the lawful rights of entrepreneurs, including small businesses. If there were some violations there, they should be sorted out.

At the same time, allow me to draw your attention to the regrettable fact that for the most part markets sell fake or smuggled goods, and if this is the case, nothing can or should be done. Such goods must be destroyed. There is no other way of protecting the interests of domestic producers.

I’d like to say a few words about our light industry after the shutdown of the Cherkizovsky market. Small-scale wholesale traders have begun to focus on domestic producers. The production of knitted goods has grown by almost 3%. The production of trousers and suites has increased by 16% and 13%, respectively. This happened because trade in fake or smuggled goods was discontinued.

Indeed, our foreign partners, including our Chinese friends, drew our attention to the on-the-ground problems at the Cherkizovsky market. Why do you think they did this? This does not require an answer. Yelena understands this. But we must protect the interests of our producers, of the men and women employed by our companies, for instance in the Ivanovo Region, where the economic situation is very grave. If fake and smuggled goods gain the upper hand, our producers will never make it.

One Chinese province was fully devoted to the Russian market, producing commodities specifically for the Cherkizovsky market. We must build relations with our partners, including our Chinese partners. We have developed very good relations with them recently. But these relations must be civilised and based on law, including as far as customs. Nevertheless, we should focus our support on domestic producers.

Ernest Mackevicius: Now for a question we received on our programme’s website. It is also on this issue. As with many other questions, we received it in advance. Our television viewers had time to read and even comment on it.

The question is as follows: “The grandiose Mardan Palace, which was built in Turkey by the owner of the Cherkizovsky market, is a monument to corruption in Russia. Smuggled goods worth millions of dollars could not pass through there without assistance from customs and police officers and the Moscow government. The brother of the market’s owner was a prefect. Here’s an example of successful public-private partnership – the market has been shut down but partnership is prospering elsewhere.”

Vladimir Putin: I don’t know what is prospering there. We will look into this issue.

As for the construction of this hotel in Turkey, I don’t see this as criminal. The question remains whether all this was done legally. This is the first point.

Now the second point. If there are investment resources, it would be good to use them in Russia. For instance, it is possible to invest into the construction of hotels for the 2014 Winter Olympics in Sochi. There is no law against that.

All other evidence, if violations of law are suspected, should be proven in court. I don’t need to comment on my own opinion on smuggling and corruption. The consistency with which we are putting things in order at the Cherkizovsky market speaks for itself.

I would like to emphasise once again that we will continue fighting corruption. The President has spoken more than once about this, and the Government will do all we can on this issue, although this is a very complicated process. Corruption is a huge problem in this country, but we are not the only ones. Corruption is worst in countries with transitional economies, because they have numerous grey zones which are not regulated by law. However, we will achieve success if all of us, if our entire society works on this issue.

I often hear that our efforts to combat corruption are insufficiently effective. Yes, this is true, but we have achieved results. If we continue to move in this direction, our efforts will be more effective. On the contrary, if we do not do anything about corruption and do not speak about it, it will get worse.

Ernest Mackevicius: Our information processing centre is receiving hundreds and even thousands of calls every second. We are awaiting the latest information from Maria Sittel.

Maria Sittel: Let me repeat that more than 2,000 people are calling us simultaneously. If you are interested in more accurate figures, here they are: By now we have received 1.2 million calls, 97,000 text messages and 612 emails on our website. Women were the most frequent callers, accounting for 65% of all callers. We have also received a lot of questions from Moscow and the Moscow Region. They are followed by the Rostov Region, the Krasnodar Territory, St Petersburg, and the Sverdlovsk, Nizhny Novgorod, Volgograd and Saratov regions. These are the most active seven regions.

The question of justice is asked very often. For Russia, it is one of the most important and urgent issues. Now we have Tatarstan on the hotline. You are in the air, please go ahead and ask your question.

Oleg Danilov: Good afternoon, Mr Putin. I have a question prompted by the recent car crash in Switzerland after races between very expensive cars, such as Lamborghinis. How can we teach our wealthy and arrogant to behave decently? This is a question of justice. Why is it okay to grow rich by someone else’s suffering and to steal and cheat? Why isn’t it fashionable to bring things into our house and spend money here in Russia, and not the other way round?

Thank you.

Vladimir Putin: Oleg, I have just spoken about this. If someone wants to invest, it would be good to do so in Russia, because investment means more taxes and more jobs.

As for people who have become wealthy recently or during the chaotic period, they cannot be put on one and the same footing. Far from all entrepreneurs acquired their money legally. If fact, for the majority, the reverse is true. But there were certainly those who used loopholes in laws, especially during privatisation in the early and middle 1990s.

But your question is on a somewhat different issue. As you said, it is about “decency”. We have a word – nouveau rich – that describes people who have quickly and suddenly become rich, do not know how to behave, cannot use their money properly and show off their wealth. Yes, regrettably, we have this problem. Judging by your voice you are a young man, but even in Soviet times some tried to show off their wealth. Some people would put golden caps on their teeth, preferably the front teeth, to show their level of their prosperity. Lamborghinis and other expensive bric-a-brac are the same as golden teeth. People who are showing off their wealth against a background of millions of Russians living modestly do not differ in any way from those who had golden teeth.

Ernest Mackevicius: Now we move on to the next segment of our programme today. Our correspondent Igor Kozhevin is reporting live from AvtoVAZ in Togliatti.

Igor, we’re looking forward to questions from auto workers.

Igor Kozhevin: Good afternoon, Mr Putin. Good afternoon, everyone. Togliatti sends greetings to Moscow. We are now at the city’s key company, AvtoVAZ, at the assembly line for Kalina cars. I want to explain straight away that the people standing behind me are also from other AvtoVAZ production lines.

I probably should remind you that as of December 1, AvtoVAZ is undergoing a rather important step in its development – the short work week has been cancelled, and as of December 1 everyone who wants to, can apply for a transfer to the newly established joint venture. I very much hope that the content of the questions will touch upon this crucially important step in the company’s development.

Now we only have to find someone who wants to ask a question. Introduce yourself, please.

G. Pivovarov: Mr Putin, I’ve been working for AvtoVAZ since 2006 as a foreman in the mechanical assembly production department. Everybody knows that you visited Paris recently and signed an agreement with Renault. In conjunction with this, we have some slight apprehensions; namely, when will Renault get here, and will this lead to the loss of the Lada brand and conversion of the plant into a screwdriver assembly facility? As a worker in mechanical assembly production, I am worried about this and I’m not the only one. And won’t we have layoffs when Renault comes, just like they have at Opel now?

Vladimir Putin: Everybody knows that I was in Paris, but apparently not everyone knows that I have been to AvtoVAZ several times. I want to remind you that before I went to Paris, I still considered it my duty to visit you and talk with the workforce and management. We formed a special commission essentially on AvtoVAZ’s problems and Togliatti’s problems as a single-industry town. This is a very important point for us – it’s a major city and a single-industry town at the same time.

Almost all the people who live in Togliatti are connected with AvtoVAZ in one way or another. The company was founded back in the Soviet era and lost its competitiveness in the conditions of a closed market. Today, the company can still be saved because it can come out with a new line of models that meet global standards. It has the necessary production capacities for this, but the main thing is that it has trained and experienced people who love their work, developed infrastructure and a brand. Lada is still the best-selling car in Russia.

If we don’t do anything, Lada will move down in the rankings for economic reasons and AvtoVAZ will leave the market. Then irreversible processes may come into play – people will just not buy the plant’s products, and that’s it. Everything will stop dead in its tracks. We won’t force people to do this. We cannot revert to a closed market, as in the Soviet times, because our consumer wants to use a quality product and will demand – and rightly so – the opportunity for Russian people to drive modern cars.

Lada must meet this challenge and it is capable of doing so.

You asked whether there would be problems when Renault comes. Renault already arrived a long time ago. Renault bought a 25% plus one share stake, in other words a blocking stake on the wider market. It paid a lot of money for it and was “shafted” because of the crisis.

We treated our partners with a lot of care, and when the first tranche of financial aid for AvtoVAZ was issued, we did this through the state corporation Russian Technology, in order for Renault not to lose its stake. But after that, we told our partners: We consider our debt to you to be paid. Now, let’s work with you as with shareholders who hold a large stake – 25% plus one share is a large stake – and let’s think about development, and then we can contribute in a consolidated manner in accordance with our stake in the company.

During preparations for the visit to France and during our consultations in Paris we came to an agreement and our French partners confirmed their willingness to continue joint operations. For the time being, their stake will not be expanded to a controlling stake. The state, as represented by Russian Technology, remains the principal shareholder. There is also a private stake that is owned by a Russian investment company. I am not sure, I think it’s Renaissance Capital.

But we will make a considerably larger investment – I mean the state – 50 billion roubles, and Renault has undertaken to invest the necessary amount of 300 million euros in the form of technology, in the form of equipment, and in the form of its know-how, in order for AvtoVAZ products to reach global standards in the passenger car sector. Indeed, the new platform should be able to launch an absolutely new car under the Lada brand. A considerably larger number of cars will be released under this brand. I am in full agreement with you, we cannot lose this brand, even if the stake of our foreign partners were to change in the general shareholding. That’s the first thing.

The second thing is that we will never agree to the “screwdriver”. Lada must be an independent company. The level of localisation, in other words the production of all the components for this car, must be high, not less than 60%-70%. Something could, of course, be taken onto a new production line from our foreign partners; that would be only natural. And even now, Lada buys a lot from abroad.

And now let us move on social issues. Renault itself has good experience in reorganising its companies without mass layoffs. Small and mid-sized subsidiaries are set up around these companies that work with the head firm. People that are made redundant because of new technology go to work for these companies. Pouring in money for no particular reason and generating losses is pointless.

Therefore, the shareholders and the management have developed a gradual and orderly plan for restructuring the company that is not tied to any markets during the crisis. It will be a natural progress, which will also involve Renault. A special board of shareholder representatives has been set up and will meet regularly to monitor the restructuring and make additional investments.

Finally, as you know, we have reached an agreement with Renault-Nissan whereby the Japanese division of the company will build a new production facility in Russia’s Far East. This might not affect you directly, but this also has to do with the auto industry, and is therefore in our common sphere of interest in a more general sense.

Ernest Mackevicius: Mr Putin, many people asked the same questions on our website even before your Q&A session began, such as the question about the old lady who was one of the victims of the Nevsky Express tragedy and about arrogance of the rich.

One of these frequently asked questions is related to this issue: “Why make huge investments in AvtoVAZ when they are unable to produce good cars?”

Vladimir Putin: I believe I have just spoken about the AvtoVAZ issue in sufficient detail. In this case, I am speaking as the company’s ardent advocate. I believe AvtoVAZ does have a future, and the future is good. It is worth fighting for.

You must know that General Motors, one of the world’s largest automakers, is also facing problems these days. The US Government is making every effort to keep it afloat. We do not even know how much their Government is doing and how much else it is planning to do, or how much money it invested and from what sources. GM employs hundreds of people. Russia’s auto industry, including suppliers and other related companies, employs 1.5 million. Are you telling me we should just ignore these people and their families?

Yet, right now, I am not talking about the social aspect of the problem, which should be our top priority. I’d like to draw your attention to the technological aspect. We are trying to encourage innovation-based development. Engineering is the sector of the economy where innovations should be introduced. Our policy should not be to shut down all our companies and import everything from now on. Our policy should be to move our industry to a higher technologic level through evolution and not revolution. I am confident that we will be able to do that.

Ernest Mackevicius: I think someone in Togliatti wants to add something. Please, Igor.

Igor Kozhevin: Thank you Ernest. You know, when you were reading the question, I could guess by the low murmur from the audience that many here would have liked to say a few words to those who suggest that AvtoVAZ will never be able to make good cars.

You were the first to raise your hand, please introduce yourself.

T. Kokareva: Good afternoon, Mr Putin.

I am a test driver. I have worked at the plant for 26 years, and I would certainly join you in defending the plant.

Despite significant criticism, we in fact manufacture very good cars. They are manoeuvrable and practical, especially for Russian roads. And they are suitable for our customers who cannot afford foreign models. In my opinion, we don’t buy them because we are loyal to our company and because their price is reasonable and their maintenance affordable.

I believe we should not abandon our plant or our auto industry in general. True, our cars’ quality is not very good, but to improve it, we must purchase good parts and design new models.

If you, Mr Putin, really support us, and the government financial assistance helps us survive and improve, we’ll make even better cars and export them. I do not think we’ll have to be ashamed of our products on the market.

Vladimir Putin: I fully agree with you. Absolutely.

As for government support, I have already mentioned the 50 billion. Now let me cite other figures – 4.8 billion roubles will be allocated to create new jobs and 4.5 billion to support anyone who lose their job during the restructuring. This does not include the additional support package that the Government will be ready to provide if restructuring is successful.

In this case we also expect our French partners to support the plant. On the whole, we have come to an agreement with our French partners whereby Renault-Nissan will also contribute financial resources and technologies. Let me repeat that you and I are on the same side, and we will certainly be able to resolve this problem together.

Ernest Mackevicius: Thank you Togliatti, and thank you Igor. Now let’s go back to our information collecting and processing centre in Moscow, because Maria Sittel is signalling to me that she has something for us.

Maria Sittel: Indeed I do. Mr Prime Minister, would you care to answer a series of rapid-fire questions, because we have many questions and we’d like to give a little time to all of them? These are questions we collected as we were preparing for the programme.

First, what is your opinion on international child custody battles? The cases of Irina Belenkaya and Rimma Salonen are neither unique nor the last of the kind. How do you feel about the issue of “pulling children apart”?

Vladimir Putin: The wording of this question is tricky. “Pulling children apart” is not good in any case. Let me draw your attention to the fact that these conflicts do not arise exclusively in international families. Unfortunately, similar problems are common in many Russian families as well. These are private issues, and it would be unwise for the government to interfere. I also think it indecent and unwise of these people to air their family problems in public.

As for the essence of the problem, here is a rational approach: instead of trying to solve their own problems using the children, the focus should be on how to protect the children’s interests.

Maria Sittel: Thank you. Another short question. “What is the Prime Minister’s opinion on teachers and teachers’ education? What will happen to a country where teachers are poorly educated? Smart and gifted students do not choose teaching careers.”

Vladimir Putin: In fact, the “smart and gifted” do choose teaching careers. We have longstanding teaching traditions. President Dmitry Medvedev spoke in his state of the nation address about the New School programme. The government is giving schools and education in general a lot of attention. We have a priority national project in education. We will continue this project, and will make more efforts in this area.

Maria Sittel: Mr Putin, are state-owned corporations good or bad?

Vladimir Putin: They are neither good nor bad. They are a necessity. I would like to stress that national leaders agree on this issue, and that we jointly drafted decisions to set such corporations some time ago.

I would like to emphasise a very important point. State-owned corporations were not established to expand the state’s involvement in the economy. They were established in order to gather the fragments of those industries and enterprises that were scattered in previous decades, primarily during the privatisation of the 1990s, and that are also vital to the interests of the state. This includes the aircraft industry and some areas of the defence industry. Our task is to consolidate these assets and bring them up to the required conditions and levels. In some cases, these corporations will actually be dissolved, as is the case with the housing and public utilities corporation, which was established to operate for a preset period. Some of them must be converted into public shareholding companies, which was initial goal.

Maria Sittel: The crisis is like a godsend to corporate raiders. When will the state effectively thwart illegal property takeovers?

Vladimir Putin: I fully agree that this sore spot is due to a lack of regulation and the state’s inadequate attention to this issue. It is now proposed to merge various formal crime components in this sphere into one single raider-related crime component. Representatives of law enforcement agencies, including the Prosecutor-General’s Office and the Investigation Committee, believe this will make work easier and more effective. In my opinion, there must also be tougher punishment for these crimes.

Maria Sittel: And now the next question. “When will the murderers of the Russian Orthodox priest be found?”

Vladimir Putin: Punishing criminals who perpetrate such outrages is always on the mind of the public and the state. It is not only important that such criminals be found, but that such criminals be found and brought to justice. This is what we will strive to do.

Maria Sittel: “Do you ever want to quit politics with all its problems and to live for yourself, for your children and family, and relax? If the answer is ‘yes,’ then I could be your back-up man. Just call me. Linar, from Krasnodar.”

Vladimir Putin: Don’t hold your breath. But if you want to work, then we will examine your request separately and will offer applicants, you included, a worthy job for realising your potential.

Maria Sittel: Mr Putin, a 12-year-old boy is asking about planned pensions for 2050.

Vladimir Putin: Smart kid. He is 12 years old now, he’ll turn 50 in 2050, he won’t yet be eligible for retirement, but he is already thinking about pensions.

Maria Sittel: He was probably thinking about somebody else.

Vladimir Putin: Technically speaking, it’s always good when people think about the future and pension support.

As you remember, the Dragonfly from Ivan Krylov’s fable danced all summer long and thus had no food in winter. Consequently, we must think about the winter season in summer, so as to avoid problems.

We set before ourselves the goal of achieving such a level of pension support that the average old-age pension would not fall below retirees’ cost of living. We will certainly accomplish this objective in 2010. And we have further plans to raise pensions at a specific pace, although naturally this will depend on the overall state of the Russian economy. If everything proceeds as planned, pensions will exceed retirees’ cost of living by at least 150% by 2050, which is our planning horizon for pension support.

Maria Sittel: Here is one more question, or perhaps even two or three. “What do you think about the Russian language reform? Do you eat yogurt for nutrition and how do you pronounce this word?”

Vladimir Putin: I drink neither yogurt nor yogurt, I prefer kefir [a fermented milk drink].

Frankly speaking, it’s up to specialists to decide. Society has reacted to the well-known decisions concerning punctuation marks, stresses, etc. Such decisions were not merely made by the Ministry of Education and Science. They were made on the basis of findings of a commission of respected specialists.

I personally think that any language is a living and developing organism. Naturally, we should react appropriately to this and decide what should be formalised. However, we should do this in a very frugal manner. We must also observe fundamental academic rules of the Russian language.

Ernest Mackevicius: Thank you, Maria. I would like to once again discuss cars and the automotive industry issue, because this issue worries and affects many people. Another automotive giant, the KAMAZ Truck Plant, is joining our live discussion. Special correspondent Dmitry Petrov is reporting from Naberezhnye Chelny.

Hello, Dmitry. Your questions please.

Dmitry Petrov: Good afternoon, Mr Putin. Good afternoon, colleagues. The city of Naberezhnye Chelny greets you.

We are standing in a truck cab assembly workshop. These cabs are the face of the KAMAZ Truck Plant. All this year, the enterprise has been trying hard to cope with the consequences of the crisis and to retain its market share.

During your latest visit to the plant, you spoke with workers and promised to send a film crew for the question-and-answer session, and now here we are. Corporate workers may now ask the Prime Minister questions. I suggest they take the floor.

Y. Solonenko: Good afternoon, Mr Putin. I am a forklift operator. Here is my question. You have visited us twice. You have supported and helped us a great deal. Thank you very much for that. We have made it through 2009. We want to know whether next year will be difficult or not. Are you ready to support us in the future?

Vladimir Putin: First of all, I want to say that you have very sensible and effective managers. I can never get your director’s last name right. Is it Kogogin or Kogotin? Anyway, he is an effective manager who realistically assesses the situation. True, we are supporting your enterprise and virtually the entire automotive industry. We also provided support by regulating tariffs. In effect, we have raised customs barriers somewhat on imported cars and buses and have thus protected your market. Analysts say the domestic market has increased by about 70,000 Russian-made vehicles.

We have also supported the industry directly, including by allocating funds. We allocated 12.5 billion roubles at first, and then another 3 billion later, to purchase motor vehicles for the federal government, including for the Ministry of Civil Defence, Emergencies and Disaster Relief, the Defence Ministry and the Ministry of the Interior.

We have also allocated another 20 billion roubles and started working with the regions to buy equipment for municipal needs. Unfortunately, this programme took a long time to get underway, due to the co-financing, which we had to guarantee from the regions. Nonetheless, the programme got underway in the second half of 2009. Corporate directors and heads of municipal agencies are saying that it has started working.

We will continue to implement these programmes in 2010. We were tempted to cut spending on the purchase and modernisation of municipal utility vehicles, but the mayors, with whom we meet regularly – the last meeting was held in Kaliningrad – have convinced us that the programme would be affirmed for 2010. We will think about possible sources of the money for it, and we will implement it.

We have one more programme, although you are not directly connected with it. It concerns car manufacturers. We have just discussed the problem with AvtoVAZ. We will allocate 10 billion roubles ($344 million) for buying from people vehicles that are ten and more years old. This programme does not directly bear on you, but it is important for the automobile industry as a whole.

In other words, the government will provide assistance. But this is not the only assistance KAMAZ is getting. You have good modernisation programmes and projects aimed at increasing the innovation component of production.

I have recently visited your plant, as you know. You have just commissioned a new line for the production of engines jointly with your American partners. These are very good, highly promising engines, which will be in demand in this country and abroad. Such engines are successfully marketed in many countries.

You have allocated the necessary funds for this programme within a credit facility granted by Vnesheconombank. And you also have other projects.

For example, I was shown a new cabin – you probably have not seen it yet. It is still a big secret. I was shown it only after I had promised them not to tell anyone what the cabin looks likes, so I am not going to tell you. But I really liked it.

There are other spheres of investment, which we will be prepared to support through Vnesheconombank, when they are ready for implementation.

Ernest Mackevicius: Thank you, Mr Putin, thank you, KAMAZ.

It looks like people in this hall have many questions.

Please, a question from Tatyana Remezova’s sector.

Tatyana Remezova: I suggest that we move on to the Orenburg Region, where the harvest was badly hit by a drought last summer. Mr Putin, you visited the region at that time and talked with the farmers. Some of them are here in this hall today.

Alexander Khizhnyak, go ahead with your question.

Alexander Khizhnyak: Mr Putin, we remember our meeting in the fields of the Eksperimentalny (Experimental) farm. The farm’s director, Stanislav Moiseyev, is standing next to me. We are grateful to the Government for helping us to overcome the consequences of the drought.

We also like your policy of talking with the people who care and who have the necessary skills in order to find solutions to economic and social problems.

You have mentioned the WTO issue today. [Accession to the WTO] is a difficult trial for Russian agribusiness. It has raised many questions regarding pricing and other issues.

Maybe you will find the time before the spring sowing campaign to meet with the agribusiness leaders to discuss them? You have said today that agriculture has not slowed down its development despite the crisis, which is very important.

Also, the fact that we will compete or are already competing with Belarus under the Union Treaty calls for closing our technical gap as per 100 hectares (247 acres) of farmland. Will the Government allocate additional funds to leasing companies for the expansion of the range of their services to farmers? Last time we supported your initiative regarding farm machinery producer Rosselmash. And will the Government expand the services of state agricultural bank Rosselkhozbank with regard to long-term loans for the purchase of equipment?

And lastly, when you criticised us – I think, absolutely rightly – you also clarified the issue of risk insurance in farming. We have reconsidered the matter and are now insuring our risks commercially, without government support. For example, we have insured 3,300 hectares (8,154 acres) of farmland. Still, my colleagues wonder if we can hope to get government support for such insurance? And what will the government do with the insurance companies that only collect insurance contributions but find reasons not to pay anything in case of the insured events?

Vladimir Putin: I don’t even know where I should start because everything you have said is meaningful and important.

First, I would like to once again thank the farmers for their good work in 2009. They have not only supported us and maintained their prestige, but they have also supported the country’s economy. Thanks to the good work of the agribusinesses, the results of the Russian economy are better than we expected at the beginning of the year. As I have said, they are impressive in some spheres, for example in livestock breeding, which posted considerable growth. And look at the harvest you gathered in, 90 million metric tons. This is a very good result for Russia.

This result was ensured also – or maybe primarily – thanks to the use of new technology. Look at the situation in livestock breeding – I have already spoken about this – I did not believe this would be possible when we discussed long-term loans, first for five years and then for seven and eight years. But you can see the result in poultry and cattle breeding, and especially in pig breeding. We see them introducing new farming methods, cutting-edge equipment and skilled labour. This is surprising, but this is a fact. The results may be slightly less impressive in cattle breeding, but it has a longer cycle. And if we carry on with these investment programmes – and we intend to – we will certainly get the result. I am confident of this.

We have big support programmes for agriculture, such as tax breaks and subsidies. Last year we issued large subsidies, which covered 60% of spending. Early this year we increased them to 80%, and in livestock breeding to 100%, at the request of farmers and in view of problems due to the economic downturn.

In general, I would like to tell all those present here, including farmers, that in 2009 we have issued 700 billion roubles ($24.1 billion) of loans to agriculture through different channels. This is more than ever before, but then, agriculture has never reported such good results before either. We will continue to implement these programmes.

Of course, this entails spending, and our funds are limited because of the crisis. We must act cautiously, so as not to disrupt the macroeconomic balance.

At the same time, we are working not only in the economy but also in the legal sphere. Agricultural producers and companies that process agricultural raw materials want to settle their relations with retail chains. As you know, a relevant law is being considered in the State Duma. This law covers issues of great importance to farmers.

One of them concerns payment for delivered products. If the lifetime of bread is 72 hours and is even shorter for milk, money for them should be transferred to the producers without delay or else they will have no working capital, no money to produce these products or for their economic operation. But the money was delayed for a month and even longer.

As of now, payment for perishables is to be transferred within ten days, for other products within 30 days, and for spirits within 45 days, but we will reconsider this. We will cancel all bonuses except for those that encourage the chains to develop and to buy products from national producers. There are other clauses in this law which, I think, are designed to improve and harmonise relations in the producer-processor-retailer chain, bearing in mind the interests of both the consumers and producers.

And now I will answer the question you asked first, about the WTO. The automobile industry, and especially steel plants [working for it], have a specific attitude to [the idea of joining the WTO]. Some of our large companies export 60%, and some even 70%, of their output. Planning to export their products, they hired the staff, bought equipment, and made the necessary investments. They were hit very hard when the market slumped. But we cannot change this situation. We cannot buy tens of thousands of tonтуs of metal for the state reserve; we have no storage facilities for this amount. This is an objective process. No one can escape it.

That is why when we consider cooperation with foreign partners, we should take into account the interests of many sectors, for example steelmakers, miners and agricultural producers. Balancing their interests is hard work, but we are always ready for discussion.

By the way, the main issue at the WTO accession talks concerns the amount of [government] support to farmers. We have not yet reached agreement on it. We would like to at least keep such support at the current level, and possibly even increase it.

Of course, we will decide these questions in close cooperation with the unions of agricultural producers.

Ernest Mackevicius: Let us continue. Maria Sittel at the call centre has a few questions we received a minute ago during the programme. Please.

Maria Sittel: We have many questions. Before I read one of them that has to do with current affairs, I would like to talk about the records this programme has set.

First of all, we have exceeded the two-million-message mark, receiving 2.066 million messages by 2:30 pm Moscow time. And we have broken two more records: we received 5,000 more emails and 200,000 more mobile text messages than last year, for a total of 701,000 text messages as of now.

And for the question, here is one of those text messages: “Will the reformed army be ready for conflict?”

Vladimir Putin: The goal of any reform is to update something, be it the economy, society or the military, for contemporary conditions.

Look at what happens in the world if there is a military conflict. We will be celebrating the 65th anniversary of the victory in the Great Patriotic War [World War II] soon. How was war waged at that time? It involved fronts, armies, regiments and battalions. They fought head-on. Recall the Battle of Prokhorovka, where two armies of tanks attacked each other head-on.

The essence of contemporary armed conflicts is different because of the development of high-tech combat machinery. Look at what happened during the so-called Operation Desert Storm and the Iraq war. Powerful, high-precision missiles were launched against communication points, while similar attacks were launched against troops and military hardware. Foot soldiers and armoured vehicles were deployed only after the missile attacks were over and the area had been cleared.

War is now waged in all areas of the enemy’s territory, rather than only along a front. New weapons, equipment and military tactics are required to operate in this modern environment. This is the goal of the reform carried out by the General Staff and the Ministry of Defence in the defence agencies and the Russian military in general.

I know that experts are not unanimous on these reforms, for example on reorganising the military into brigades and other issues. Why is this being done? One can debate this point, but it is done to make these units more mobile and ensure they can be manned and provided with combat equipment when necessary.

If we fulfil the goals we have set, we’ll be able to ensure our security.

Ernest Mackevicius: Mr Prime Minister, we have a few messages that were emailed to our website. I’ll read some of them in turn. One of the most frequently question asked is “How are relations in the Medvedev-Putin tandem?”

Vladimir Putin: They’re good. I have said more than once that we’ve known each other for ages. And we have not simply known each other, but have also worked together. We graduated from the same university, attended lectures by the same professors who not only taught us their subjects but also shaped our outlook on life. These common principles allow us to work together effectively today.

Ernest Mackevicius: Why do you support Yulia Tymoshenko in the Ukrainian presidential campaign?

Vladimir Putin: I do not support Yulia Tymoshenko in the Ukrainian presidential campaign. The two of us work together because she is the Ukrainian Prime Minister and I am the head of the Government of the Russian Federation. There are a lot of issues on our bilateral agenda, including a joint action plan we have been implementing. As you know, we have developed special relations with the Party of Regions at the parliamentary level.

Ernest Mackevicius: When will Khodorkovsky be released?

Vladimir Putin: I’ve just returned from France, where I was asked the same question. This notorious personage is in prison because of a cour

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