Saturday, November 1, 2014

President of Russia

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News conference of Vladimir Putin

News conference of Vladimir Putin.

1/38 Photo: the Presidential Press and Information Office Full captionFull caption|||Minimise

Vladimir Putin held a news conference at the World Trade Centre on Krasnopresnenskaya Embankment. Over 1,300 Russian and foreign journalists have been accredited to cover the news conference.

The news conference covered a wide range of issues. As regards Russia's national economy and domestic policy, Vladimir Putin answered questions related, in particular, to the development of the Far East and Siberia, spoke about the traditional moral values, human rights, the amnesty declared by the State Duma in connection with the 20th anniversary of the Russian Federation Constitution, and specific problems facing different regions of Russia.

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The President also answered foreign policy questions, in particular, about the recent agreements with Ukraine, the Russian-US relations, development of relations with China, Iran and Georgia. In particular, Mr Putin stated that there is yet no decision to deploy Russia’s Iskander missile systems. The President underlined that progress in resolving the pressing longstanding problems related to Syria and Iran’s nuclear problem would have been impossible without the joint work carried out together with the United States, Europe and China. Vladimir Putin also said that it is possible to return to a visa-free regime with Georgia.

Answering the questions from journalists after the news conference, the President said that ex-Yukos CEO Mikhail Khodorkovsky has submitted his petition for pardon, and a relevant executive order will be signed soon.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, ladies and gentlemen, colleagues,

It feels as if we never parted. We met here last year and have barely blinked since then and already a whole year has gone by. 

It has been a year of much hard work. You know all the main figures and results of course, above all on the economic side of Russia’s life, but let me nonetheless give you a few of the latest statistics. Then, as is tradition, we will have a free exchange of views and a direct discussion, which will be more interesting for everyone I think. 

Anyway, the latest figures show an increase of 1.4 percent in real GDP this year compared to last year. The final figure will probably be 1.5 percent. Inflation currently stands at 6.1 percent, which is slightly lower than last year’s figure of 6.6 percent. Overall these are not bad results.

Agricultural production is up by 6.8 percent. I must say that our agriculture sector and our farmers have made a big contribution to our economy. Last year, as you know, agricultural production was down almost 5 percent, but this year we have an increase of 6.8 percent. This growth in the agriculture sector is helping to push up the overall GDP and offsets some of the difficulties the industrial sector has been facing.

Housing construction is up by 12.1 percent.

Wages have gone up by 5.5 percent, and we are talking about real wages, not the nominal pay but the actual earnings adjusted for inflation.

There has been a change in real disposable incomes. The growth was 0.5 percent in 2011, 4.6 percent in 2012, and 3.6 percent this year. I think that’s a good figure.

Let’s look at the retirement pension. Last year, more precisely, on January 1, 2013, it was 9,790 rubles, and now it is 10,742.

This year we will have a significant trade surplus: $146.8 billion.

That’s the general picture in figures.

Let's begin our discussion and give Mr Peskov the opportunity to do some work. He will invite your questions and then, as usual, we will move on to free communication.

Mr Peskov, go ahead, please.

DEPUTY CHIEF OF STAFF OF THE PRESIDENTIAL EXECUTIVE OFFICE AND PRESIDENTIAL PRESS SECRETARY DMITRY PESKOV: Hello again, everyone,

Let’s start. Naturally, I will give the word to the Kremlin press corps first. These reporters accompanied the head of state on all trips, at all events, so let's hear your questions. Please.

QUESTION: Alexander Chudodeyev, Itogi magazine.

Mr President, you have said many times in the past that “we should stop subsidising Ukraine’s economy.” So how can you explain such generosity towards Ukraine now?

And one more question. Do you expect to get something in return from Ukraine, i.e. under what economic or perhaps political guarantees has Russia provided such substantial financial help? Do these guarantees include Ukraine's accession to the Customs Union? Thank you.

VLADIMIR PUTIN: I saw a sign that someone raised earlier, which said “Ukraine”. Who was that? Could you ask your question as well, since it will probably be formulated in the same vein. I will try to answer both.

QUESTION: Roman Tsymbalyuk, Ukrainian Information Agency UNIAN. Thank you for starting with Ukraine.

VLADIMIR PUTIN: I didn’t start with Ukraine. To be honest, I expected questions on this issue, but I thought they will come up somewhere towards the middle of our discussion.

ROMAN TSYMBALYUK: Still, it was your press corps that raised this issue.

I just wanted to clarify something regarding the discount on gas. How can you explain this: you choked Ukraine with high gas prices for three years and then suddenly reduced it. Does this mean that the price was not “fraternal” before but inflated and unfair for Ukraine? You said that even now we have only a temporary arrangement and must move forward. What does that mean?

Also, could you please clarify if these $15 billion are the price for Ukraine’s rejection of the EU association agreement? How much would you be willing to pay to...

VLADIMIR PUTIN: Right, the discussion is getting serious. Well, how much do you need?

ROMAN TSYMBALYUK: One second. …to permanently discourage the official Kiev from looking in Europe’s direction?

Thank you very much. Ukrainian Information Agency UNIAN.

VLADIMIR PUTIN: Well, I’m very glad you have asked this question.

I will start by answering the question asked by your colleague, who brought up this matter first. In fact, as I suspected, your questions boil down to almost the same thing.

Why did we make this decision to extend this loan and to reduce the gas price? Let me comment on that. You know, let me tell you absolutely seriously and without any irony that we often use the phrases “fraternal country” or “fraternal nation.”

Today we can see that Ukraine is experiencing serious economic, social and political problems. There are a number of reasons why this situation has arisen, but this is how the situation stands objectively. And if we really say that it is a fraternal nation and a fraternal country, then we should act the way close family members do and support the Ukrainian people in this difficult situation.

I can assure you that this was the main reason why we made this decision. Let me note that we worked actively with Ukraine’s previous government, headed by [Yulia] Timoshenko. We worked very hard with them in all areas.

Incidentally, it was the government that she headed that signed the gas contract back then. It was my view then and now that this contract was absolutely justified from the economic point of view and is totally in keeping with our practical work with partners abroad. The gas pricing formula was exactly the same as the one we use for all of our consumers in Europe. That really is all there is to the situation and there is no point reading anything else into it.

No one was trying to strangle anyone here. It was said from the start, including in Ukraine itself, and quite fairly too, that, “if we want to be independent, we have to pay for it, behave like an independent country and follow the norms of European and global practice.” The contract that we signed back then was based on precisely these norms.

So, why have we decided to make changes to the contract now? Why have we decided to offer Ukraine these loans? We did say after all, that if someone wants to subsidise Ukraine’s economy, let them do so, but not at our expense.

We said those words when we were debating the energy issue, and I still hold to those views now. There is no point in coming to us, especially other countries, with proposals to lower prices or suchlike. If someone wants to go ahead with that sort of thing, let them do so. 

Let me say again now that today’s decisions, which you all know, were taken in response to the difficulties the Ukrainian economy currently faces. These difficulties, as I said, are due to a number of different reasons.

I will not analyse the internal reasons. They have their domestic problems too, like Russia, as I said in my Address [to the Federal Assembly]. We have domestic reasons for our economic difficulties, and so does Ukraine. There are objective external circumstances too.

What is the cause of these external problems? They are due to the situation on the markets for Ukraine’s main export products. Ukraine sells a roughly equal amount of goods to Russia and the European Union countries, for a value of around $17 billion in each case if I recall correctly. But the types and amounts of particular goods sold on each market are different. Of the $17 billion worth of Ukrainian goods exported to the Russian market, machinery and equipment account for $7 billion or more, but these particular goods account for only around $2 billion of Ukrainian exports to the EU, while agricultural goods and produce account for more than $5 billion. You see the situation? As an amateur athlete I know: one only has to make a little bit of effort for everything to become clear. 

And what is it that will become clear? It is clear that if… You were talking about the association agreement. You think we are against this? We are not against association, but are simply saying that we will have to protect our own economy because we have a free trade zone with Ukraine, and we will not be able to leave those doors wide open in the present situation if Ukraine opens its doors wide to the European Union. We will have no choice but to close our doors. What will this mean in terms of trade flows? It will mean that output in Ukraine’s machine-building sector will continue to fall, because these goods are mostly sold on the Russian market, but it is unlikely that Ukraine’s agricultural and produce exports to Europe will increase because they have all kinds of non-tariff restrictions in place there, phytosanitary restrictions and so on. They have learned how to use these kinds of measures. And the documents that were proposed for signing did not offer Ukrainian goods any preferential treatment. You try telling farmers in France, Germany, Spain, Greece, Portugal and the south of Europe that they need to tighten their belts a little for Ukraine’s sake. I’d like to see their reaction. I’m not talking about bureaucrats, but about the people actually out there working the land. In any case, there is no money.    

It was in this situation that we made our decision, which is linked to our particular relationship with Ukraine. Let me say again that this decision is not about the interests of Ukraine’s current government, but is about the interests of Ukraine’s people.

Secondly, it was based on pragmatic considerations. After all, this is not the first decision of this kind. I think you've forgotten some things here. Gazprom signed supplements to the existing contract twice before, postponing the first payment until October, and then again until November. Now it has deferred payment once again. We fully realise that there are problems with Ukraine’s ability to meet these payments. So why should we finish off our main partner? Therefore, this is a pragmatic solution. And yes, this supplement is a temporary measure.

We expect that we will be able to find some long-term solutions that will allow us to keep this price and work closer together in the future. A long time ago, under President Kuchma, we offered Ukraine the option of using the Ukrainian gas transit network jointly. We were not going to buy it, to make it our property; it would have remained the property of the Ukrainian state. What we were proposing was to create a consortium of Russian, European and Ukrainian companies that would manage the network, service it, and so on. Everyone agreed, but then it fell through. And what is the result? The result is that we have built the Nord Stream gas pipeline and started the construction of the South Stream. The cost of the Ukrainian gas transport network is approaching the bottom line. Do you understand?

The same thing is happening with industry. As you probably know, and if some of you don’t I will tell you, for example, that we bought almost 100 percent of helicopter engines for our Armed Forces from Ukraine until now. Almost 100 percent. We offered various cooperation options many times, but we have failed to reach agreement. What is the result? We have started to build the second plant for the production of aircraft engines near St Petersburg. The first one has already started production, it is manufacturing the engines, and these are the next generation engines. Where will the Ukrainian manufacturers turn to with what they produce at home? Are they going to export to Europe? I very much doubt it. It might be possible, but it will be very difficult.

Next. I’ve told you about the structure of trade flows in Ukraine. Out of the 17 billion worth of their exports, Russia buys 7 billion worth of machinery and equipment, whereas Europe buys 5 billion worth of agricultural products. But if Ukraine adopts EU commercial standards, they won’t be able to sell to us anything at all. Do you see? So, Ukraine will immediately become – and this is just by definition, you don’t need to think about it too hard, just read the documents – an agricultural appendage [to the EU]. But keep in mind that appendages can be different too: some of them are healthy and others aren’t. And a lot of work will have to be done to get Ukrainian goods to the European market. Where are these trade preferences? The documents say nothing about any preferences.

I think that’s what concerns the Ukrainian leadership today. After all, it is easy to say, yes, let's shut down a plant for a while, that's okay, but then we’ll have everything like they do in Europe. But you need to survive until then. And many businesses will close down forever; they won’t survive at all. That’s the point. At the same time, is it possible to adopt these standards and trade rules? Yes, it is possible and it is necessary; they are good rules. But it takes time and investment. You need money, and not just 15 billion. You need hundreds of billions to modernise industrial enterprises. These 15 billion are to support the budget, to be able to pay salaries, pensions and social security benefits.

We believe that this part is also quite pragmatic. Why? Because yes, it is support for the Ukrainian economy and Ukrainian people, without a doubt, but this money comes from the National Welfare Fund, as you know, our reserve funds. Today we have $175 billion in Government reserves, and another $515 billion in the Central Bank’s gold and foreign currency reserves. These $15 billion came out of the Government reserves, from the National Welfare Fund, and we have extended this loan on commercial terms, at 5 percent. At the request of the Ukrainian side, these bonds will be posted on the Irish Stock Exchange and VTB Capital will be the manager of this transaction, again, at Ukraine’s request. This suggestion did not come from us; we would have accepted any manager. That is the essence of our proposals and agreements. It has nothing to do with Maidan or Ukraine’s negotiations with Europe. We just saw that Ukraine is in a difficult situation, and it should receive our support. We have such an opportunity, and we have used it. I reiterate, we are doing it because of our special relationship with Ukraine and because we want to continue our cooperation, which we are also interested in.

Incidentally, the machine-building industry products that we export from Ukraine are part of our cooperation heritage from the Soviet Union. There is a lot that is archaic there, but on the whole, it gives us huge joint advantages, which we must use well and develop further. And we can do it for the benefit of both the Ukrainian and Russian economies.

Ultimately, as I have said many times, the Ukrainian politicians, economists and experts should make these calculations for themselves and adopt a pragmatic solution. Which option is more profitable? We make no demands. But these 15 billion are a loan that will be paid back. I want to remind you once again that we will earn 5 percent, and the bonds will be placed on the Irish Stock Exchange. I think the transaction will be done in line with British law, so it is protected. I do not see it as wasting money on our part. And, of course, it will be tangible support for our Ukrainian friends.

As for gas, it is a temporary solution. It can be extended in line with the partners’ agreement. I hope very much that in the end we will agree on some form of long-term collaboration. I think that is quite possible.

QUESTION: Interfax news agency.

My question is on domestic finances. The Central Bank recently revoked the licences of several fairly large banks. In each case this was linked to systematic violations of the law by these banks. Why has this sudden purge taken place only now though? Was the Central Bank not supervising banks so carefully before?

Doesn’t it give the impression that these banks had some kind of administrative resource that they were using before? Why were they able to systematically violate the laws and have it all come to light only later? And does this not all mean now that the Central Bank will be simply unable to revoke other banks’ licences when it catches them breaking the law because the Deposit Insurance Agency will not be able to cover all the deposit insurance payments? 

VLADIMIR PUTIN: You have practically answered the question.

First, insolvent banks had their licences revoked before too. True, we have seen a series of such decisions recently, difficult decisions for the Central Bank and for the financial institutions. These decisions aim to clean up the Russian financial system. I don’t think there’s really anything more to comment in this regard.

It is obvious that banks that cannot guarantee their depositors’ funds are incapable of working effectively with the resources at their disposal and create a risk for this whole very vital sector of our economy. It is only natural that these banks should have to leave the market. At the same time, the Central Bank must act very carefully of course, above all so as to protect depositors’ interests.

You mentioned the Deposit Insurance Agency. I remind you that in accordance with the law, the agency guarantees compensation for deposits of up to 700,000 rubles. Deposits over and above that figure must be compensated too, but are put in a queue that is dealt with as the rehabilitation or final liquidation procedures are carried out at the bank in question. As you know, deposits of up to 700,000 rubles comprise the bulk of all deposits. Most depositors, around 85-95 percent, (in some banks) do not have more than 700,000 rubles in their accounts.

With regard to the Deposit Insurance Agency, I might be not quite right in the exact details, but the agency currently has funds of 250-270 billion rubles, and past payments come to around 108-110 billion rubles. In other words, these kinds of decisions were taken in the past, payments are made to depositors, and this will continue of course.

Everyone who by law is entitled to these insurance payments will get their money. But the Central Bank must be very careful in its work in order to protect depositors’ interests and keep the Deposit Insurance Agency’s resources in mind. The agency currently has 250-270 billion rubles, and it has already paid out more than 100 billion rubles. Its resources are not infinite, therefore we must be careful so as not to end up with no funds left.

True, a decision was made recently to allow the Deposit Insurance Agency to borrow the needed funds as five-year loans from the Central Bank, so as to make the deposit insurance system more robust, stable and reliable.

QUESTION: Alexander Kolesnichenko, Argumenty i Fakty

Mr President, until recently, Russian senior civil servants’ wages were pegged to those of the President and Prime Minister. They were unpegged recently. I would like to know why you did not raise wages for yourselves but raised ministers’ and deputies’ wages considerably? Starting next year, they will receive 450,000 rubles a month. Isn’t that a lot when you look at the average wages and pensions that you mentioned in your opening remarks?

Will this be followed by tougher new anti-corruption rules, demands on openness, effectiveness, and greater modesty too, when you look at state procurement, state contracts for cars and so on?

Thank you.

VLADIMIR PUTIN: I am enjoying working with you today: you ask questions and immediately answer them yourselves. I am talking about you and the colleague who spoke just before.

So, what is the whole issue here? I quoted some figures before, some of the results of our work. There are some problem areas, but on the whole I am satisfied with the Government’s work because this has not been an easy year for the global economy.   The European economy, which accounts for more than half of our foreign trade, has been in decline and many European countries are going through economic stagnation. We managed to maintain quite a high level even so, but now we too are starting to feel the effects of these difficulties. Overall though, I think the Government has worked quite professionally. 

The point I am getting at here is that at the highest government level and in the key State Duma committees we need to have professionals of the highest quality. It is hard to find such people on the job market. If they are already earning high wages in the banking or energy sectors say, it is not easy in today’s conditions to attract them into the civil service. You can’t force people after all, can’t make them stay here.

At the same time – and you already practically answered the second part of your question yourself – you know the measures we are taking to fight corruption, especially in public administration. These measures include compulsory income declarations and disclosure of purchases, bans on holding bank accounts and real estate abroad, and a whole arsenal of other measures. I will not repeat them all now, you are familiar with them. Of course we will continue to toughen the requirements in this area. But if we do not pay people good money to attract good professionals and top-class experts – and we need this kind of people in our state agencies – we will not achieve the results we want in our work. If we have problems here, it is ordinary people who suffer, people in industry, people who receive social welfare benefits and pensions, because the quality of these people’s work is crucial for the economy’s success in general.   

As for my own wage and that of the Prime Minister, we have enough. There are some problems of course related to the fact that the wages of a large group of officials were pegged to our wages, but we will sort this out. This is not the biggest issue.

Thank you.

QUESTION: Good afternoon, Mr President.

I have a question about the Iskander [missile system].

There has been a lot of fuss in Europe of late about the Iskander missiles that are being deployed in Kaliningrad. Defence Minister Sergei Shoigu said that this is Russian soil and we have the right to station what we want there, but the hysteria continues to grow nevertheless. The Americans have already made the rather odd statement that they are ready to defend their European allies. The whole situation is looking a bit like a farce.

In whose interests is all this fuss, in your opinion? Why accuse Russia of flexing its muscles when at the same time in Europe there are around 200 nuclear weapons deployed, which the Europeans do not even control?

VLADIMIR PUTIN: This is a good day today. You just said everything. I don’t even really know what to add here.

Yes, there are indeed US tactical nuclear weapons stationed in Europe, and the Europeans do not have control over these weapons. And then there are the missile defence systems being installed around Europe’s periphery now. They form another component of America’s strategic weapons.

We have stated on many occasions that these missile defence systems create a threat for us because they threaten our nuclear capability, and we have to take some kind of measures in response. It was my predecessor who first said that one of possible responses would be to deploy Iskander missile systems in Kaliningrad Region. This is all nothing new.

But let me draw to your attention that we have not actually taken such a decision yet. I hope that will calm everyone down.

Second, there is no need to protect anyone. It is important not to provoke anyone into taking countermeasures. 

The Iskander missiles are not the only means we have at our defence however, and not the only possible response to the threats we see around us. They are just one possible response and certainly not the most effective, though in their particular class they are the most effective weapons system in the world.

QUESTION: Good afternoon, Mr President,

Guberniya television company, Khabarovsk. My name is Daniil Zaitsev.

Mr President, as you know, three regions in Russia’s Far East – Khabarovsk Territory, Amur Region, and Jewish Autonomous Area – were hit by devastating floods. You were there and saw the situation for yourself.

It is now more than 100 days since the floodwaters began to recede, but we still don’t know what happened exactly. Was this just freak weather, or was it a case of the gates being opened at the hydro power stations at the wrong time?

In this respect, I have a second question. Are there plans to build any more hydroelectric stations on the Amur and its tributaries? The Far East will soon need electricity; after all, it is one of the priorities in the twenty-first century.

Thank you.

VLADIMIR PUTIN: There is no doubt at all that what happened was due to freak weather conditions. We can debate the quality of the HPP staff’s work and whether everything was done on time or not, but not a single expert among those who checked the whole situation has so far found any serious problems in the hydroelectricity people’s work, and we have had the prosecutors, the Investigative Committee, and experts all conducting these investigations. Anything can always be a subject for debate. 

As you know, I went to the Far East and we discussed this situation. Some people think, and not without reason, that if the hydroelectricity people had taken such and such a measure intended to make things better, on the contrary, it could have been worse. Overall they acted quite professionally.

There is no question that this was an unusual weather situation. What we can say for sure is that we will continue to develop the Far East’s energy sector, including hydroelectricity. 

I draw to your attention that the situation is good now at the Boguchanskaya hydroelectric power station too. A sizeable part of the electricity generated can be exported, since there are no domestic consumers for it as yet. We need to synchronise our domestic energy consumption and generation capacity growth together with the grid networks. This is complicated work that involves many different aspects. It is not enough to simply build more hydroelectric power stations that could and will be needed. I stress the point again that we also need the networks and consumers. We will do this together and it will go ahead, all the more, I hope, after the recent decisions on incentives for greenfield projects and new production facilities in the Far East. These incentives concern above all profit tax and land tax. And there are the measures that must be taken following the Address [to the Federal Assembly], and which I hope will be implemented throughout the whole country.  These new decisions on zones of advanced economic growth concern not just the breaks I just mentioned, but also additional incentives involving deductions from contributions to the social welfare funds. All of this together should provide the conditions for rapid growth. The energy sector in general and hydroelectricity in particular are among our priorities of course.

QUESTION: Alexander Gamov, Komsomolskaya Pravda.

My newspaper has a section called Hardball Question. So, unlike some of my colleagues here, I won’t feed you the answers, Mr President, if you don’t mind.

You are the number one politician in our country. In your opinion, who can be called the politician number two in terms of influence? And do you have a successor already? Thank you.

VLADIMIR PUTIN: You have really put me in an awkward position.

You know, we have a lot of politicians, and they’re very experienced people. I’ll name them, but you know these names well already.

Communist leader Gennady Zyuganov. (Applause.) There’s nothing funny here. Millions of people vote for the Communists. He is a popular politician. He has his own views on things, and I don’t agree with many of them, I don’t share them, though some of them seem quite realistic to me, especially in international affairs and on some social issues too.

Vladimir Zhirinovsky is also well known. Yes, he enjoys a good row but he is a very talented man. I can say that he has a lot of sensible proposals, very sound ideas.

Some time ago I invited Sergei Mironov to come work in Moscow. I think many will agree with me that he has become a very serious and independent politician of national stature.

We have a leading political force, the leading political party headed by Dmitry Medvedev. He has extensive experience in government work. Now he is involved in managing the national economy.

You know, I’m familiar with all the popularity ratings and so on. But what can I say? These ratings are drawn up by educated people, by experts, but real life is far more complicated than ratings. So I wouldn’t treat this with too much indifference. New people appear on the political spectrum, some of them are in opposition to the government, other are not. Those who oppose us, try to take a bite out of those at the top, because it always raises their own rating. This is a general rule of conduct for all opposition parties in the world, it is a well-known, trivial trick, and, in principle, it is the right move for people who want to make themselves known. They jump out of their skin and get into fights, but they must be careful about it because, as they say in the country, you can lose your pants if you’re not careful. It’s all right if they have something to show off, but if there’s nothing to brag about, they can just embarrass themselves and put an end to their political career.

So, what am I trying to say? All in all, this is a very good process and it is right that we have more and more people who not only consider themselves to be politicians, but think that they are in fact number one, so you should be careful about what you say. We don’t know who is number one. Maybe it’s them who are number one.

I didn’t say anything about a successor because there is nothing to talk about.

QUESTION: Kira Latukhina, Rossiiskaya Gazeta.

I want to come back to the economy. The experts’ economic forecasts are not the brightest for Russia. They are talking about stagnation and about a possible slide into a crisis, and they say that the raw-materials economy is about to outlive its usefulness, while we have still not managed to build an innovative one. What do you think we can do to get out of this dead end? 

Also, on the National Wealth Fund, what part will it play if the economy does go into a protracted crisis? It has already been decided to dip into its resources and invest part of the funds in long-term infrastructure projects, and now with Ukraine, in securities too.

VLADIMIR PUTIN: What do you mean by saying “now with Ukraine”?

KIRA LATUKHINA: I mean the decision to spend money on securities.

VLADIMIR PUTIN: That is not the case.

KIRA LATUKHINA: To invest.

VLADIMIR PUTIN: Not to spend money, but to invest it.

You see the issue here? I realise that at the moment Ukraine is a ‘tasty’ subject arousing a lot of interest, following our decision. Yes, it is true that we have so far invested money from our reserve funds in highly liquid securities. What kind of liquid securities? In American government securities and some other assets. First of all, if you look at the state of the American economy, not everything there is going so well. It is recovering, and this is good and makes us truly happy, and I say that without any irony, but there are plenty of problems nonetheless. Just look at the debt situation – this alone is a big enough problem. We do not know how things will develop with the world’s biggest reserve currency. So, there are risks there too.

As for Ukraine, its rating is not high at the moment, but we have confidence in the Ukraine’s basic competitive advantages. We believe in Ukraine. This is not about the fraternal ties between our peoples and countries, but because we have a very high level of cooperation. We are aware of how much part of our industry depends on the situation in Ukraine in the companies they work with there. Our decision was therefore political, pragmatic, and economic all at once. If someone wants to raise the issue from yet another angle again, I will try to further clarify our position.

Now, on the subject of investing the National Wealth Fund’s money inside Russia, you know what I want to come back to? First of all, I’m grateful to you for asking this question because it really is a fundamental issue. One of the key subjects of discussion, if not the main subject, at the G20 was how to get the global economy out of this clearly protracted crisis. There are two roads here.

The first is the Anglo-American road, or rather the American road, which involves soft-line financial regulation and cheap or even free money for the economy. Look at their interest rates – I think it is something like 0.25 or 0.50 percent, in other words, practically free. This is the road that Britain and the USA are taking. 

Then there is the other road, which the European Union, the European Commission and Germany are proposing. The proposed solution to the crisis here is budget consolidation, cutting ineffective costs (social costs in other words) and levelling out macroeconomic indicators.  

It was no easy task for us to find some way of making these two positions mutually compatible at the G20 summit in St Petersburg. We did manage to work out a formula that makes everyone happy, and this concerns the issues that you raised just now too.

What is using the National Wealth Fund’s resources inside the country all about after all? It is essentially an easing up in the money policy. It amounts to much the same thing as an issue. This is because these are funds that were not earned by the country. After all, when we introduced the budget rule, we continued the policy of withdrawing from the economy windfall earnings from our foreign trade. These oil and gas revenues were as if not actually earned by us. You could have oil at $95 a barrel, or at $107 like now. We withdraw all the windfall revenue. And what we are investing into the economy now are these funds that were as if not actually earned as such. Essentially, this is more like an issue.

By doing this, first, we make it possible to follow a more cautious social sector policy that some of the European Union countries are doing. We are not forced to make drastic social spending cuts and we can use these funds to raise pensions and benefits. Our non-oil and gas deficit is still very big, unfortunately, at 10 percent, but inflation is normal overall, and we have hardly any deficit. The deficit will be around 0.5 this year, and last year it was close to zero, also around 0.5. 

Europe is in a different situation. They are forced to make drastic social spending cuts, especially in the problem countries. We do not have these problems. We built up this safety cushion over the past years and we can now use it to be more moderate in our social policy and also invest part of the money in development.

When we withdraw these oil and gas revenues from circulation we are following the European road: consolidating budget funds and strengthening macroeconomic indicators. But when we withdraw them and then release them back into the economy what we are doing looks more like what the American financial authorities are doing. The difference is that we are not just releasing this money back into the economy in general, but are channelling it into specific projects, above all infrastructure projects, and it is underdeveloped infrastructure that is one of the obstacles hampering our economic growth.

Look at where we are investing the money: in the BAM [Baikal-Amur Railway], Trans-Siberian Railway and the third ring road around Moscow. We have held several meetings with business community representatives now and have done all the calculations. They said directly that if we develop the Trans-Siberian’s capacity, they will use it to carry such and such an amount of freight. But for them to be able to increase production and freight transport, they first need to invest in developing mineral resources. So you see, there is an instant multiplying effect. Private investment goes into mineral resource development, and then the trains start carrying the freight and all of this money starts making a return.

Having this safety cushion therefore allows us to carry out quite a shrewd and balanced economic policy. I hope it will produce the expected results.

QUESTION: Jill Dougherty, CNN.

Mr Putin, I worked in Russia in the late 1990s and early 2000s, and when I came back, I noticed that a lot of attention is being given to religion and moral values. I don’t remember it being like that. I would like to ask why this has become so important, and why is it so important for you to criticise Western values?

Thank you.

VLADIMIR PUTIN: Let's start with the second part of your question. What’s important for me is not to criticise Western values but to protect Russians from certain quasi-values that are very hard for our people to accept.

The issue is not to criticise someone but to shield us from the rather aggressive behaviour of certain social groups, which, in my opinion, not just live the way they like, but also aggressively impose their views on other people and other countries. That is the only thing behind my position on certain issues that you alluded to.

As for our traditional values, I believe that we should pay more attention to them for a very simple reason.

A certain ideology dominated in the Soviet Union, and regardless of our feelings about it, it was based on some clear, in fact, quasi-religious, values. The Moral Code of the Builder of Communism, if you read it, is just a pathetic copy of the Bible: Thou shalt not kill, thou shalt not steal, thou shalt not covet thy neighbour’s wife. The Code of the Builder of Communism has the same commandments, just that they are written in a simple language shortened drastically.

This code has passed on, it does not exist any more. A new generation of Russian citizens, young people don’t even know what it is. But the only thing that can replace it is those traditional values that you mentioned. Society falls apart without these values. Clearly, we must come back to them, understand their importance and move forward on the basis of these values.

I want to reiterate something I said in the Address to the Federal Assembly: yes, this is a conservative approach, but let me remind you of Berdyaev’s words that the point of conservatism is not that it obstructs movement forward and upward, but that it prevents the movement backward and downward. That, in my opinion, is a very good formula, and it is the formula that I propose. There’s nothing unusual for us here. Russia is a country with a very profound ancient culture, and if we want to feel strong and grow with confidence, we must draw on this culture and these traditions, and not just focus on the future.

QUESTION: Pavel Zarubin, Rossia television channel.

They asked us to be brief, so I will be brief. Have you met personally with [Edward] Snowden? If so, what did you talk about? If not, is such a meeting possible in principle? What would you talk to him about? Perhaps you would want to ask him about something in more detail?

VLADIMIR PUTIN: No, I have never met Mr Snowden personally. I have a busy schedule. He has his own ideas about life and about what to do, how to live.

I won’t pretend that he doesn’t interest me. I think that he did a lot to change the way people look at things, including among the major political figures of our times (as people used to refer to Leonid Brezhnev during the Soviet time), among my colleagues much has changed, and he can certainly take the credit for that. This is true. 

When all of this happened, I was curious as to how he came to his decision, because he is quite a young man still. What has he gained from it? He has nothing now. Where is he going to live? He is only just over 30, I think. But this is the choice he made. It’s a noble choice but a difficult one. He is an interesting person, but he has his affairs and I have mine.

We gave him the chance to live here, as I already said, on condition that he will not engage in any kind of anti-American propaganda while on Russian Federation soil. Whatever leaks are coming from somewhere, they are coming from whatever he left elsewhere around the world. We do not know what he left and where. 

As I said before and say again now, to use the professional language, our intelligence agencies are not working with him and never did. We are not questioning him either about anything that involved Russia in his former work.

He ended up on our territory as a result of the circumstances you know. I have already explained everything regarding this point. He has to decide his future life for himself. We will neither help him nor hinder him. All we have done is gave him asylum.

QUESTION: Natalya Seldemirova, AvtoRadio.

My sign says: 50 days left. I think that many have already guessed that I am referring to the Olympics: 50 days before they begin.

Since such a big event is awaiting our entire country, naturally we hope for success. Incidentally, AvtoRadio station will be working right alongside the events, in the Olympic Park. We would also invite you to support our athletes.

My question is as follows: how would you evaluate the results our country can expect at the Olympic Games? And what means is the government currently using to motivate our athletes? Are they sufficient? 

VLADIMIR PUTIN: You know, by asking this question you’re helping motivate them, because any person or athlete, especially high-level athlete, is well-aware that when performing at the Olympics, an entire country will be watching him or her. And if the Olympics are taking place at home, then of course the athletes compete in special conditions, and receive special attention.

I would like to draw attention to two circumstances. The first is that we are the host country. And for us the main issue is that this competition be well organised, that we create equal conditions for all athletes. So that all of them, each athlete, regardless of the country they represent, can show their best qualities, give pleasure to our fans and those of their country of origin, and make a significant contribution to the development of Olympism, of the Olympic Movement. In my opinion, that is our primary mission during these Games. I hope you agree with me that it’s an important one.

Second. Of course we all expect our athletes to win. But I would refrain from trying to predict a specific number of medals, from counting seconds and points. The most important thing, and what I expect from our athletes, is that they demonstrate skill and character, so that we can be pleased for them and with their results.

And sport is certainly something that is connected with circumstance. For that reason it is quite difficult to predict with absolute certainty the performance of even the most famous, well-known athletes. Anything can happen: a sprained ankle, a fall, a slip – and it all does happen in real life.

I think that our fans will understand all this. And if there are any failures, they will forgive. Most important, let me repeat, is to demonstrate skill and character. Of course the best will win, and we will be happy for them.

QUESTION: Hello!

Channel Four, Yekaterinburg.

Mr President, in your Address to the Federal Assembly, you said that the municipal reform needs to be adjusted, but did not give any specific instructions. Now, various foundations and organisations are suggesting different options, including the abolition of mayoral elections. I would like to ask, should we elect mayors, appoint them, or get rid of them altogether?

VLADIMIR PUTIN: Mayors must be elected, of course.

Russia is a member of the European Charter. But that’s not the only reason. The municipal level is the level of government that is closest to the people. Therefore, municipal leaders should be the people that voters know personally and can come to them, talk to them, express their opinions on the development of their village or town. They must have the opportunity to pursue the implementation of their ideas. Incidentally, it is not necessary to go out into the streets. We need direct communication between people and municipal leaders. This is extremely important.

The fact is that we have a two-tier system, which is cumbersome and inefficient. Take a city of half a million people. How can an ordinary person come into contact with any of the top officials? This is quasi-municipal government. That is the first point.

Second. As I mentioned earlier, the reason for the recent decisions is that we took education and healthcare away from municipal authorities. They lost a lot of their powers. This was not done to punish them; they simply have no sources of revenue to achieve the objectives they were responsible for before.

We are still to make the decision regarding this situation. Should they get additional sources of revenue or should we just accept the fact that such tasks cannot be performed at the municipal level? A whole set of issues is involved here. I asked to get back to these problems and resolve them once and for all.

But I deliberately did not offer any solutions; on the contrary, I asked municipal associations to make their own proposals, jointly with regional authorities, the federal Government and the State Duma. We cannot postpone this any more. That's why I drew attention to it.

I don’t want to voice my opinion now either, because I am afraid that it will be accepted as something final and will prevent free discussion. I want people to talk about it openly and make their arguments for or against certain decisions.

But there’s another aspect that is very important. I recently met with the heads of municipalities from across the country, excellent professionals. I know that they come under a lot of criticism, and rightly so, because, they represent the frontline in the drive for a better future. Their work is very hard. This is a very complicated, difficult and dangerous trial for the authorities. If people pass through it, it means that they are very good professionals.

I would very much like for the municipal level of government to become a real talent foundry, as they say, so that local officials went on to work in the regional and federal government. All of this needs to be combined. There are problems in this area, but we mustn’t get ahead of ourselves.

QUESTION: Yekaterina Kotrikadze, Russian Television International (RTVi), New York, USA.

Mr President, we’ve already heard Edward Snowden’s name, but I would like to ask a follow-up question about Russian-American relations.

It is well known that after Snowden’s revelations, relations between the US and its strategic partners such as Germany deteriorated or at least became significantly strained. We know that Angela Merkel was shocked to learn that her cell phone was tapped.

VLADIMIR PUTIN: But she’s feeling ok now; don’t worry, everything is fine.

YEKATERINA KOTRIKADZE: In fact, according to Western, including German, media, she was shocked. But be that as it may, relations have soured.

Russian-American relations have never been particularly warm, but they are nevertheless very influential for global processes. Now I would like to ask how your personal relationship with Barack Obama is developing? How do you feel about him, and do you communicate? And in general, what prospects are there for US–Russian relations following these leaks?

VLADIMIR PUTIN: How do I feel about Obama after Snowden’s revelations?

YEKATERINA KOTRIKADZE: Yes, among other things.

VLADIMIR PUTIN: I envy him, because he can do this without incurring any consequences.

But of course there is nothing to be particularly pleased about, nor is there anything to be particularly upset about. First of all, spying has always existed and it is one of the oldest professions, along with some others that I will not name here. There are not so many professions that are as old as mankind.

And then you know it is impossible to analyse this amount of data, and it is useless to read excerpts. It is useless to look at the analyses conducted by intelligence services, because they reflect analysts’ opinions, and not facts. I myself have worked at this, and I know what I'm talking about. It is always a very delicate thing.

Or you have to absolutely trust these analysts and know them personally, know the opinions and views of those who are writing. I did this myself and to be perfectly honest, it’s a serious thing. Or you have to read the original documents. But it’s not possible to read the billions of originals of these interceptions; that much is obvious.

Therefore, no matter how much our American friends are criticised, at the end of the day I think that their work was mainly directed at fighting terrorism. Certainly, this has some negative aspects, and on a political level, it’s necessary to control the appetites of special services by introducing certain rules. But you must understand that overall, it’s a necessity.

After all, why so much data? Because you have to monitor not only a specific terrorist suspect, but rather his whole network of relationships. Keeping in mind modern means of communication, almost nothing can be done by surveying a lone suspect.

Let me repeat that I am not going to justify anyone, God forbid. But it is fair to say that overall this is primarily directed at the fight against terrorism, and that these are anti-terrorist measures. But along with this there should be more or less clear rules and agreements, including morally informed ones.

QUESTION: Natalya Galimova, gazeta.ru.

Mr President, recently, Vladimir Ryzhkov gave you the results of a public investigation of the May 6, 2012 events at Bolotnaya Square.

According to the results of this investigation, which questioned over 600 witnesses of the event, there were no mass riots at Bolotnaya; what did occur, in short, was the unlawful use of force by the police and self-defence by individual protestors. In other words, essentially, people are currently being tried for things they did not do.

Nevertheless, in the amnesty project that you have submitted to the State Duma and which the Duma approved yesterday, you suggested granting amnesty to only a tiny number of persons involved in the Bolotnaya case. Why? Don’t you trust the results of the public investigation?

VLADIMIR PUTIN: You know, when I was a university student, I had a class on logic. I imagine they teach it today as well. And they gave the following example as a logical fallacy. A train is on its way from Moscow to Leningrad, and it stops at, say, Bologoye station. An American gets off the train to smoke a cigarette. Meanwhile, another American – dark-skinned – gets out of the same train to buy some water. And a third American, also dark-skinned, gets out of a third car in the same train. The first American looks at the other two and concludes that people in Bologoye have dark skin. This is one example of a disruption in the logical chain that leads to incorrect conclusions.

You began with the fact that Ryzhkov believes the use of force by law enforcement was wrong, and the protestors were not guilty of any wrongdoing. And based on this, you conclude that we are offering very limited measures with regard to amnesty. If we decide that everyone can make their own assessments and this will be recognised as the ultimate truth, then we will get completely confused about everything.

Only the courts can determine whether there were any infractions, regardless of what side they may originate from, and from whom, specifically. I am asking you to seriously think about this. If the courts feel that somebody committed an infraction pertaining to the organisation of mass riots, and somebody else engaged in violence against the authorities, first and foremost, law enforcement officers, then we are using that data. We are making decisions based on that information – including whether to grant amnesty.

Now, concerning the heart of the matter. I have already said this many times, and I’ll repeat it if necessary. This is certainly not about somebody ripping a police officer’s epaulet or hitting him; although that, in and of itself, is unacceptable and bad.

The danger to our society is that if we allow anybody to treat law enforcement officers this way (it’s mostly representatives of the so-called liberal spectrum of our society who are now talking about this), then it is quite easy to imagine a situation wherein members of other political groups take to the streets – nationalists, for example – and begin to beat up this liberal intelligentsia.

At that point, they will call to us and the police: “Help! Save us!” And the police will say, “No, now you’ll have to save yourselves, because the law does not protect us.” And we will descend into complete chaos. The government’s responsibility, if it has that responsibility, must be to ensure that nobody is allowed to flagrantly violate the law.

That is precisely why we have made this decision on amnesty – not to grant amnesty to people whose infractions relate to violence against the authorities, first and foremost law enforcement officers, and those who committed grievous crimes that are dangerous to our society: organising mass riots.

Incidentally, in other nations – we won’t name them – raising your hand against a police officer is enough to get shot between the eyes straightaway. Sometimes, they don’t even have time to raise a hand against the police officer before they are shot – and this includes women and children.

QUESTION: Hello, Ivan Zakharchenko, Realnaya shkola Internet portal, Moscow. Mr President, I have two questions.

The first: do you think it was worth it to cause such a big fuss about the Greenpeace affair? After all, people started calling representatives of that NGO pirates. But now they are being released on bail. And why was it necessary to make such a big scandal involving many famous people from around the world? Is it justified in this case to tone down legislation, as in the case of legislation that allows us to put young participants of flash mobs in jail? And what are your personal views of this organisation?

VLADIMIR PUTIN: I have positive views of all those who are working to protect the environment. Of all of them without exception. However, I consider it unacceptable when people instrumentalise environmental protection, and use it for their own PR and personal enrichment.

I do not want to cite examples to substantiate this now, but that is not because I don’t have any. Unfortunately, it is often the case that environmental activities are used for these ignoble purposes, namely blackmail, extorting money from companies, and so on.

As for the hype, no one created it. Government authorities certainly did not. It was your colleagues who did. And who was behind that? The very people who broke the law. Why did this happen? Either to put pressure on a company and receive compensation from them, or interfere on someone’s orders to prevent offshore development, in this case that of the Russian Federation.

This is a serious matter for us, and we do not intend to soften our stance. On the contrary, we will only be toughening it. But I want to make it very clear to everyone: we are ready to engage in debate and are open. Moreover, if needed, and if we hear serious, valid arguments, we are even ready to make adjustments to our work, despite the financial implications.

We just mentioned, and at the very beginning talked about our Olympic project. With regards to one facility, where we had already spent 30 million rubles, environmentalists (both Russian and international) showed up and made a complaint about the facilities’ proximity to protected natural areas. And we said to them: “Where were you earlier? This is what happened.” Nevertheless we agreed with them, and despite the money spent, we transferred and moved these facilities, and took on the necessary costs.

As you know, we did the same thing while working on laying the oil pipeline system from Western Siberia to the Pacific Ocean. At that time a question arose – and Valentin Rasputin spoke out about this with particular vigour – of whether we should move its route farther away from Lake Baikal’s water-intake area.

We spent an additional $400 million to do so. You see, we agree to such steps, and are always ready to listen. But this was a completely different situation. The [Arctic Sunrise] ship entered our exclusive economic zone, turned off all identification signals, and didn’t answer any signals from our side, from our border guards, like a ghost ship.

Moreover, they tried to land on our Prirazlomnaya oil rig, and when we tried to stop them, their second boat began to ram into our border guards. What is that? Is it a normal discussion about environmental protection?

It was either an attempt at getting PR or, let me repeat once again, an attempt at blackmail and extortion, or they were carrying out someone else’s order to stop us from developing hydrocarbons offshore. All of these variants are very bad. We hope that this will not happen again.

As for the fact that they can now receive amnesty, and I understand that they will, we are not doing this for them. But if they benefit from it, fine. I think that what happened must serve as a lesson and should, I hope, dispose both us and Greenpeace to working positively together.

Not to create empty noise, but to minimise environmental risks should they occur. We are ready for such joint work, including with Greenpeace.

QUESTION: Ivan Prytyka, Kubanskiye Novosti (Kuban News) newspaper, Krasnodar Territory.

Mr President, I have a question concerning Cossacks. The Cossack community is developing very actively in our territory, and Cossack brigades help maintain public order.

My question is as follows: how do you feel about this initiative and about Cossacks in general? Do you think it’s something archaic, or it’s a true force?

VLADIMIR PUTIN: They are a part of our Russian culture – a very bright part of our culture. I am not just referring to the Cossack songs and dances, but, among other things, their well-known traditional patriotism.

And there is nothing at all archaic about that. Today’s patriotism is very important for promoting the ideas of nationhood in our people’s consciousness in general. In this respect, the Cossacks play a unique and rather positive role.

As for the Cossacks’ self-organisation, we support it. We have a corresponding legal framework, including Presidential executive orders. We will continue to do so in the future. Of course, as with anything, there are excesses, some violations or abuses. We simply need to fight them and respond to them. I know that the Cossacks are doing so themselves.

As for the brigades, there is nothing really new about them. Didn’t we have public brigades during Soviet times? Incidentally, such public brigades are appearing in other regions of the Russian Federation as well. And I feel that what the Cossacks are doing is entirely natural.

What’s important is for all this work to be conducted within the framework of existing laws, in close contact with law enforcement agencies. But in my view, the Cossacks sometimes operate much more effectively than the law enforcement agencies. And this has to do with the fact that they represent the overwhelming majority of the people who live in those territories where these authorities are operating.

What’s truly important is earning people’s trust. They are not really working for themselves personally but for the citizens who are delegating them to do this. I repeat: what’s important is for all this to be within the framework of existing laws and common sense. And I want to wish them success.

QUESTION: Sergei Brilev, Rossiya-1 TV channel.

Mr President, I wanted to build on the amnesty issue, but put the question a little bit broader.

When this issue was discussed, the extra-parliamentary opposition appealed to you, then the State Duma waited for the president’s draft bill. On the eve of the 20th anniversary of Russia’s Constitution, one gets the feeling that as head of state you are not only its main guarantor, but also its reader, because so many of the broadest powers it contains – those of parliament and the Government – are not often used.

For example, your Address to the Federal Assembly. A year ago you spoke about stopping offshore activities. A year later, the Presidential Address contains concrete steps to this effect. What were the others doing? It’s a question about homework and so on. Is this situation, in which every issue is your issue, more flattering or more worrying for you?

VLADIMIR PUTIN: You’re mistaken. You’re mistaken that the majority of management issues are eventually referred to the head of state. There are issues that are to some extent in the public eye. So, it seems that everything that is happening in Russia occurs exclusively manually. But that is not the case.

I worked as Prime Minister for four years. You cannot even imagine the tremendous amount of work the Government does. Even the Prime Minister doesn’t know everything that is going on in the ministries. This is simply impossible.

The nastiest work we have is that of Prime Minister. It’s hard daily work, like being under a waterfall that is just falling constantly, incessantly. And you can’t control everything that happens, you simply have to create a mechanism that works. Such a mechanism exists, and it’s up and running.

But there are questions that take on a crucial role in the public consciousness. And naturally very often it’s up to either the Prime Minister or President to resolve them. And at that point it seems that everything is being managed manually. This is not so.

As for the amnesty, I myself, when meeting with State Duma deputies, suggested doing it directly, that the deputies submit the legislation themselves. They suggested that I do so. It was their suggestion. It was easier that way to hold discussions within parliament itself.

I think it is also quite natural. Do not forget that after all I myself established United Russia, and until recently I acted as its head both de jure and de facto. It remains the leading political force in parliament, so this is a natural process. That is first thing.

And the second. We still need to develop and not to destroy the business-like atmosphere that governs our cooperation, an atmosphere that has already been created, for I sign the laws eventually. Therefore even in this case, even when an issue is being resolved through a parliamentary resolution, we must agree with and understand each other. I think it’s actually a good sign.

QUESTION: Rustavi-2, Tamara Nutsubidze.

Mr President, yesterday, Foreign Minister Sergei Lavrov made a statement that Russia is not ready to have a visa-free regime with Georgia.

The new Prime Minister of Georgia made a statement in turn: “The Government of Georgia has done everything to normalise relations with Russia. We have changed our rhetoric. We have actively begun to renew economic and cultural ties. We have done everything in order to ease the tension that existed in our relations. And I think that we were able to achieve this. However, we are disappointed by Russia’s actions along the occupation line. Our government has shown with both words and actions that we want to normalise our relations with our neighbour, Russia.”

These are the words that the Prime Minister said yesterday.

What political steps is Russia prepared to take in order to normalise relations with Georgia? And have you personally changed your position after regime change in Georgia?

VLADIMIR PUTIN: You have asked an all-embracing question. I don’t know if I will be able to answer it as exhaustively.

I will say what is most important. My personal attitude toward Georgia’s current leadership has changed. But my attitude toward the Georgian people has not changed. They remain kind and big-hearted, just as they have always been. Even during the most difficult times, when there were hostilities in the Caucasus in connection with the events you are well aware of, even then, my feelings about the Georgian people were very positive.

It was confirmed even during those difficult days and hours, confirmed by the Georgians’ own attitude toward Russia. I do not remember whether I said this publicly or not, but in one of the cities, an elderly man approached our troops and said, “What do you want here? What have you found here, what are you looking for? Go to Tbilisi and get Mishka [former President of Georgia Mikheil Saakashvili]. What are you doing here, looking at me?”

As you know, there were losses among our service members. A plane was shot down; the pilot ejected and landed. An old Georgian lady approached him and said, “Come here, my son.” She took him in and fed him. Then they sent him to where the Russian troops were stationed.

When I say that my feelings toward the Georgian people are kind, I am not joking or being ironic. We have very deep cultural relations and spiritual ties – I mean the similarity in our religions. There are problems that have occurred through no fault of our own; we did not start these hostilities. This has been recognised by everyone. What happened has happened. We said a thousand times: do not allow bloodshed under any circumstances, do not take it that far. But they did, nevertheless. Now we have to live with a certain reality. We cannot fail to acknowledge it. But nevertheless, we see the signals being sent by Georgia’s new leadership.

I do not know what our Foreign Minister meant; maybe there are certain formal issues in connection with the Ministry’s work. But, understanding the development of the situation in Georgia the way we see it, I think it would be entirely feasible for us to return to a visa-free regime. We will need to think it through at the expert level.

I think this would be a very good step toward normalising the relations between our nations, in that it would help people communicate, it would help Georgian companies work on the Russian market and generally create the conditions for a fundamental, final normalisation of our relations.

QUESTION: Natalya Smolyaninova, Kray Ryazansky TV company, Ryazan Region.

I would like to take this opportunity to thank you. This year, we saw the launch of the northern bypass road. We have waited for this highway for over a decade. It opened this year, connecting distant areas of the city and making life easier for drivers. Now, the transit flows no longer pass through the city centre. Thank you for this, because if it weren’t for your help, I think we would still be waiting for this road for a long time.

And now, the question. Last year, our nation joined the WTO. Now, all the related rules have gone into effect. Has accession to the WTO benefited our nation? And what should be done by agricultural sectors that are not making it in these conditions?

VLADIMIR PUTIN: As far as the WTO is concerned, nobody expected to get any immediate benefits, as soon as we signed the agreement. The point was entirely different. You see, joining this international economic club gives us many benefits in protecting our markets – in particular, protecting out metal products and chemical products markets. We have not yet begun to fully use all these options, but we intend to do so.

For example, the chemical products market, the fertilizer market. Despite our full-fledged accession to the WTO, our European partners are still limiting access to our chemical products and fertilisers in their markets under various pretences, including the pretence that gas prices supposedly aren’t market-based in Russia, and it is the main raw material for producing fertilisers. And because gas prices within the nation are not market-based, our chemical producers supposedly have unjustified competitive advantages in supplying foreign markets.

We are certain this is not the case; this is purely an excuse. But in entering the WTO, we have the option and the right to dispute these decisions with corresponding WTO authorities, which we did not have before. I do not yet know how this dispute will end, we have not started it yet, but overall, we now have such options.

The same is true of supplying our metal products to global markets, including the United States. All this gives us certain rights and opportunities.

But what’s most important is that in joining the WTO, there will be more trust in the Russian economy. We are starting to work in accordance with global rules. This imposes certain responsibilities on us, but also creates certainty for our partners, which have worked before and intend to work in the future. These are long-term factors of economic development.

As for negative consequences, yes, we see them, they are possible, but they are not significant.

In terms of agriculture, this mainly concerns only pork, but here, we have the right and even opportunities, discussed during our accession to the WTO, to protect this market and to create trade preferences. Let’s say agricultural engineering is facing difficulties. But this is not only because we have joined the WTO, and perhaps not for that reason at all. It was not in an ideal state anyway. There are many other internal factors; it is our own fault that we cannot create the same equal conditions for agricultural producers, for working within the nation, the way other states do. And, incidentally, this should push us, push the Government, toward creating those conditions.

Unfavourable or complicated conditions for the agricultural engineering sector are due to our transition to subsidising agriculture by hectare. This allows our agricultural producers to choose to buy the best equipment at the best price. It fuels competition. There are downsides to this, as well as certain positive aspects, because it should provide incentives for modernisation. But we must also think about supporting such sectors.

We have instruments like this even within the WTO framework. With engineering, for example, there was and is a whole set of protective measures, and we will use them, without breaking WTO rules. Overall, I feel there are no negative consequences expected, whereas a potential positive influence on the development of the economy generally remains.

QUESTION: Alexander Yunashev, Life News.

While answering a previous question you said that you were satisfied with the Government’s work, and gave them at least a C grade. And you also said that you will raise officials’ salaries...

VLADIMIR PUTIN: We have “satisfactory” or “unsatisfactory.” We don’t have an A+ to F- system; there is only satisfactory or unsatisfactory. I am satisfied with the Government’s work.

ALEXANDER YUNASHEV: But you talked about raising officials’ wages, to attract professionals from the job market.

Any criticism of ministers immediately leads to rumours about the Government’s resignation. Is it already time for ministers to pack their things? Or can someone stay in their position?

And since you did not answer Alexander Gamov's question about a successor: does Medvedev have no chance at all then?

VLADIMIR PUTIN: You work for which publication? Life News?

ALEXANDER YUNASHEV: Yes.

VLADIMIR PUTIN: You are asking me a loaded question, just in the style of your publication.

I said that I am satisfied with the Government’s work. And in general I think that a personnel shuffle is the worst thing ever. Of course, with regards to this work there are some things that I think can and should be done more energetically, more effectively, and in a more timely fashion. Some things are being drawn out for too long. But I already described what it means to work in the Government. It’s hard work. And the potential of the current Government is far from being realised.

QUESTION: Ilona Rudneva, RIA Novosti.

Mr President, in recent years Russian proposals concerning a number of global problems have been particularly called for. In particular, I am referring to Syria’s chemical weapons and the Iranian nuclear problem. Please tell me whether you think this positive trend will continue in 2014? Does Russia still have some interesting initiatives? And if so, what are they?

VLADIMIR PUTIN: I consider that we really have made a significant contribution to solving the acute and long-standing problems associated with both Syria and Iran’s nuclear programme. But we are far from the only ones whose work has helped the international community make progress in addressing these challenges. Without joint work with the Americans, the Europeans, and our Chinese friends, it would have been impossible to achieve these results.

Of course you and I are in Russia, we are Russian citizens, and we can be proud of what we do and how we do it in the international arena. I think we are justifiably proud of our principled positions on all these issues. We did not waver, as they say, we did not wander from one side to the other; we took a principled approach to these problems, based on the fundamental principles of international law. But let me repeat, without joint work with our partners it would not have been possible to achieve these results.

Therefore, we are grateful to our colleagues from the US State Department, the European Commission, and the Ministry of Foreign Affairs of the People’s Republic of China, grateful to their political leaders for their cooperation. You know, to be honest, these decisions were composed of something we suggested, and something the Americans, Chinese, and Europeans suggested. This is all the result of teamwork, and must be considered as such.

But I hope we will continue to work just as hard with our partners. As you know, next year we will host the G8 summit. Our work in the G8 will be based on continuity with the previous host country’s agenda, and our agenda will be the result of teamwork. This is a tradition that has developed within both the G8 and G20. At the expert level, sherpas seek out the most important and pressing issues, and jointly produce formulations that are acceptable to all.

It is precisely the crucial role played by the United Nations, whose authority I see as having significantly increased following the teamwork and joint decision, that will structure our work in 2014.

VLADIMIR PUTIN: Dozhd TV channel, please, go ahead.

QUESTION: Anton Zhelnov, Dozhd TV channel. A question about Ukraine.

If the protests similar to Maidan events – unsanctioned and lasting many weeks – were to occur on Cathedral Square in the Kremlin or on Red Square, how would you react? What political decision would you make?

And a little clarification later.

VLADIMIR PUTIN: I would not make any political decisions; I would act in accordance with the Russian Federation laws. Every citizen, political party or association has the right to express their opinion on any decision made in our country, including through mass street actions, but any such protest must remain within the framework of the law. If anybody goes beyond that framework, the government has – I want to stress this, it is not some sort of political will, but the responsibility of the authorities – to bring about order, because otherwise, this turn of events can lead to chaos, which will negatively affect the economy, society, and the political state of the entire nation.

ANTON ZHELNOV: And another clarification. You have spoken many times about the brotherly people of Ukraine. But if we go to Kiev right now, you will hear many negative words and a lack of love toward our nation, especially from the young people who are gathering at Maidan. How do you react to the emotional side of what is happening there?

VLADIMIR PUTIN: I think this is a question of being informed. I suspect we also have nationalist-minded people, who could speak out loud about their position regarding Ukraine, and if we start counting them one by one, we would feel there are many of them. But the overwhelming majority of Russian citizens have a positive attitude toward Ukraine. This is 100% certain; there’s no need to ask a fortune-teller about it.

I think the same is true in Ukraine. Within a nation of 45 million, you can always find people who initially have negative attitudes toward us. It is their right. But I think this is largely due to insufficient information, in part concerning the European integration process in Ukraine.

Some people are saying that the Ukrainian people have been robbed of their “European dream.” First of all, we have nothing to do with this. It is the choice of the Ukrainian people themselves and their legitimate authorities, whether or not to enter into any kind of union or to sign any documents, as I have already said many times. And this is our fundamental position. We do not have anything to do with this.

Second, when I talk about being insufficiently informed, I mean that people must read the documents. After all, why is the opposition, which is fighting against the current authorities, constantly turning to European issues? It is very easy to speculate on these things. “Do you want to live the way they do in Paris?” “Yes!” “Then let’s sign!” But is there anyone who would encourage people to read the documents?

Have you read what is written there? No. And our colleagues here, who raised the Ukraine sign, I want to ask them: did you read this paper? No. Nobody reads anything! Do you know how to read? Look at what is written in it: open the markets, get no money, introduce European trade and technical regulations. That means that the production sector has to be shut down, and agriculture will not develop. I already said, this is very clearly tilting Ukraine toward becoming Europe’s agricultural appendage, but this is someone’s choice. Okay, very well, it’s their choice.

But look at what is happening here. After all, we are not dragging Ukraine anywhere; we have a free trade zone with Ukraine. We are not saying we will discriminate against Ukrainian goods. On the contrary, we are saying that if Ukraine signs this document, will we be forced to cancel all preferences. We cannot maintain them, that will undermine our own economy. But as I already said, the Ukrainian goods will enjoy the most-favoured nation treatment. It’s just that there will be no incentives.

Who can force us to provide incentives? That is just an entirely unreasonable demand. If all this is considered and taken into account, then even the young people can easily figure things out and say, “Yes, we want European standards, but let’s do it so that the machine builders are not shut down tomorrow, so that shipbuilding remains afloat, so that the aircraft manufacturing does not collapse, so that the space industry does not flop, and so that engineering in general remains alive.” All these markets and cooperation are linked to Russia.

I used helicopter technology, engines as an example.  We were unable to achieve what we wanted there. We have already launched the construction of the second plant in St Petersburg. And yet, we still have a great deal there, where we can work together. The Antonov design bureau is in good shape, and we can continue to develop cooperation. In shipbuilding, we can arrange a great deal, and we can do much joint work in space and rocket technology, as well as in nuclear industry.

At one point, Ukraine took American fuel and used it at Ukrainian nuclear power stations. All the rods got deformed. You see what happens? These are serious things. Later, our experts had to return and resolve difficult technical issues, remove it all and load Russian fuel again. The plant was initially designed to use Russian fuel.

And another question occurs to me. You said that some people have negative attitudes toward Russia. But here is what we need to consider. After all, the people who actively promote the idea of signing EU integration documents are mainly those who were in power just recently. Mr Yatsenyuk, I believe, was Foreign Minister, Verkhovna Rada speaker. Tymoshenko was Prime Minister. Yushchenko also held the same views and was President. Why didn’t they sign documents on joining the European Union when they were in power? Why didn’t they do it then? They were in power, nobody was in their way, they could have signed all the papers, and there would not be any questions today. Why didn’t they do it? I have a reasonable suspicion that this affair is not related to joining the EU. This is a domestic political battle, in which the signing of this document with the EU is used as a pretext to aggravate the situation, but it’s only a pretext.

We proceed from the fact that whoever wins this battle and however the situation unfolds in the future, we will still work with Ukraine and cooperate with it in such a way and such format that is the most interesting and acceptable for the Ukrainian people.

QUESTION: Nikolai Zusik, Channel 12, Omsk.

I watched your Address to the Federal Assembly very carefully, and you talked about certain zones in Siberia, which will be developed more vigorously. I do not remember the exact wording, but you mentioned Krasnoyarsk.

VLADIMIR PUTIN: Advanced economic development zones.

NIKOLAI ZUSIK: Advanced economic development zones, thanks. You referred to Krasnoyarsk Territory, the Far East, and Khakassia, if I remember correctly, but Siberia is very big, and you didn’t say anything about Western Siberia. Maybe I missed it, or you just did not mention it, or you have some other plans for the region.

Also, I would like to take this opportunity to invite you to celebrate the 300th anniversary of the city of Omsk, even though it takes place in 2016.

VLADIMIR PUTIN: Of course one has to prepare in advance.

NIKOLAI ZUSIK: Yes, please take note of it. Last year, we were promised a metro system; we have very big transport problems.

VLADIMIR PUTIN: And who promised this?

NIKOLAI ZUSIK: You will remember that earlier today we spoke about the officials’ rating. He was among them. The promise was made, but in the end things are still not moving forward very quickly. At this point I should probably ask for money, but I won’t. It is the regional authorities that do so. So if you come and visit us you would see for yourself.

VLADIMIR PUTIN: And there’s no money.

NIKOLAI ZUSIK: No money, that’s right. Come to our city. I think it will be a great celebration. And we can discuss many other topics as well.

DMITRY PESKOV: Colleagues, if possible, let’s respect each other and formulate our questions clearly.

NIKOLAI ZUSIK: I am interested in the question about Siberia.

VLADIMIR PUTIN: You know why I didn’t talk about Western Siberia? In terms of its technology and infrastructure, Western Siberia is quite a highly developed region. There is, of course, no limit to perfection, and there are still a lot of things to do, including in cities with over a million people. In a stylish and what I consider to be very nice Siberian city such as Omsk, of course we have to think about developing infrastructure, and work accordingly.

As to why I talked about the Far East and Krasnoyarsk in particular, let me tell you: because we have taken a number of decisions about subsidising work and economic activity in the Far East and these discounts – first and foremost they concern reduced income and property taxes – weren’t initially applied to a number of regions in Eastern Siberia, including Krasnoyarsk and the Republic of Khakassia.

We did not do this at the insistence of some government agencies, based on the fact that, say, Krasnoyarsk Territory is sufficiently developed and financially stable. But when I said “developed,” first of all I was referring to the second component: in fiscal terms it is quite a stable region. However, it is a) very large and b) a substantial part of its prosperity is literally based on a few companies you can list on the fingers of one hand: Norilsk Nickel, aluminium enterprises and some others. And for such a huge territory this is insufficient. Khakassia should also develop more rapidly.

It was for precisely this reason that we decided to extend these benefits, which were previously intended for the Far East, to all of Eastern Siberia, including Krasnoyarsk Territory and Khakassia. That was the innovation, and that’s actually all there is to it.

But this certainly does not mean that we’ve forgotten about Western Siberia. I’ll repeat again, the only decisive issue is that it’s already in a much better position than its Eastern half. Firstly, it’s closer to Russia’s European part, its infrastructure makes it easier to work with, and transportation costs there are totally different.

So of course Western Siberia will also be developed. But bearing in mind the complex economic situation in the Far East and Eastern Siberia, we consider them our priorities, and paid them more attention. When I say ‘we’, I mean the Government’s team, and that of the Presidential Executive Office, with whom we formulated all the proposals stated in the Address.

As for Eastern Siberia and the Far East, as you know we have a special programme in the Far East. I do not remember exactly how much, but I think that more than 300 billion rubles of hard cash have been allocated for this in the near future.

But other proposals contained in my Address can and should be extended to Western Siberia, namely those concerning the establishment of advanced economic development zones, and the creation of industrial parks and free zones.

And the innovative aspect is that we are proposing to reimburse the money that the regions will spend on building infrastructure in these areas, by transferring federal budgetary funds to those regions that pay priority attention to developing production. And I’m sure we will do this. Naturally, this will affect Western Siberia too.

VLADIMIR PUTIN: There is a girl with a bear over there. What is that? The bear looks very nice.

REPLY: Thank you very much, Mr President. But it’s not a bear, it’s a Bigfoot, a Yeti, the tourist mascot of Kuzbass. Tourism is developing very well there. If I may, I would like to give you this Yeti.

VLADIMIR PUTIN: To me? Thank you very much.

REPLY: Yes. But he’ll sit with me for now, then I’ll give him to a member of your Executive Office.

VLADIMIR PUTIN: Very good.

QUESTION: My question is linked to the main economic sector in our region, the coal industry.

You have come to our region more than once, and chaired a truly historic meeting there, which gave the development of this industry a new impetus. This year we will extract 203 million tonnes of coal. But now a situation has arisen that is out of our control, a problem that requires your personal attention.

16 million tonnes of coal – three times the norm – are being stored in the warehouses of Kuzbass coal companies. First of all, this is very dangerous: it can ignite spontaneously. Second, it loses quality and decays. And most importantly, this has a negative psychological effect on miners who work in difficult conditions, and who observe that their work is of no use to anyone.

The reason for this is that the Russian Railways company isn’t able to transport all the coal; there are problems with transport capacities, and sometimes in order to struggle to various ports, these trains loaded with coal get dumped on the Trans-Baikal section of the Trans-Siberian Railway. In other words, the problem faces east.

Can you see a solution to this problem? The thing is that the price of coal fell by 40 percent, and even with such bargain prices, we still cannot sell it because it is waiting to reach the ports.

Thank you. Olga Frolova, State Television and Radio Broadcasting Company (STRC).

VLADIMIR PUTIN: During the first part of our today’s meeting a colleague – I do not remember who – asked a question about the National Wealth Fund. And I answered that one of the priorities for investing resources from the National Welfare Fund and the Government’s Reserve Fund is to increase the capacities of the Trans-Siberian and BAM railways, primarily towards the east. Without this, we certainly cannot expect to develop the country’s eastern regions, which is why we’re spending the money there. There is a related problem: insufficient infrastructure, which acts as a natural constraint on economic growth.

The second problem – one you mentioned yourself – is that markets have fallen. There are problems with implementation, because a significant portion of the product our miners produce is sold in international markets. And as soon as demand decreases, it immediately affects production.

As for possible technical problems, naturally I would draw the attention of the Ministry of Transport and Russian Railways to them. There are a lot of internal issues, including those linked to the fact that decisions to modernise car stock are being taken very slowly. And even though old railway cars are theoretically undergoing renovations, they nevertheless clog the network and give rise to specific technological problems. There are probably other problems as well. I promise you that we will discuss this transport problem.

As for sales, including in international markets, as you know, this has an objective component and it is virtually impossible for even the Russian government to influence this. But we will do everything we can to help the miners.

Miners are a special caste, but not a closed one, and of course the people themselves are open. I use the word caste in the sense that these are people with a special character – I  really have been there a great many times; these people deserve all our respect and support. We will think about what we can do to ameliorate this situation.

QUESTION: Alexander Zhestkov, REN TV channel.

I would like to ask about the Moscow mayoral elections. I have here an interview with Sergei Sobyanin in which he admitted that he discussed with you the question of allowing Alexei Navalny to participate in these elections. And you were in favour.

Is it really the affair of the President to decide who will participate in elections and who won’t? In general, why did such consultations take place, about Navalny for example? Does he represent a threat to the authorities?

VLADIMIR PUTIN: If he were, he wouldn’t have been allowed to take part. And that would have been done not by some administrative means, but in accordance with legal and political principles. But the issue at hand has absolutely no link to specific candidates. I don’t know what was written in the interview, but Mr Sobyanin did not consult with me about specific people.

I think the fact that the capital’s mayor discusses political matters with the President is a normal thing, and there is absolutely no cause for alarm. But I believe that all those who have even a slim chance to really compete for the position of mayor should be able to do so, and should receive assistance.

Of course, it’s sometimes hard for people who are not well known at the municipal level to overcome so-called municipal filters. And this is not linked to the fact that people criticise the authorities or not, but simply that municipalities (after all we are talking about municipal government) are closest to the people. People understand what a person can do and what they can’t, what he or she is able to actually achieve and what they can’t. They make an assessment and render their verdict by supporting such a person or not.

But I believe that if people have at least some real chances, you have to help them come forward and declare themselves. Maybe this will help solve certain problems.

Firstly, when people take part in politics at this level, they begin to understand the realities of everyday life, where we live and where we need to go, and what exactly must be achieved. Then they can do more than simply shout: “Help, stop thief!” I’m sorry to say it but, as a rule, it’s people who have stolen things themselves who usually shout like that. Is that clear? But these people must feel real voter demands, and the problems that some Russian regions – or in this case Moscow – face.

And in general, I believe it is useful for candidates themselves, useful in that it allows them to become more serious and consistent. And also for people to see what a candidate is really offering; not just to hear him criticize the current government, but to see what he really offers, and how he wants to achieve his goals. Are these really serious proposals or not?

So I consider this a positive process for both candidates and voters. But when we talk about a “municipal filter” yes, I agree that it is a filter. But it is nevertheless not an empty tool to remove those the authorities don’t like; I would never agree to this. It is a filter that makes the candidate think hard about the real needs of the community or the country in which he is planning to run. In my opinion, this is a good thing, at least today.

QUESTION: Yekaterina Vyskrebentseva, TV Centr.

This year, Russia made it into the top 100 economies in the Doing Business rankings. One of your objectives, one of the goals you set, was for Russia to be one of the top 20 in this ranking by 2018. Overall, on paper, it seems that everything is going smoothly; in particular, the Agency for Strategic Initiatives recently reported that, if I recall, nearly half of all the steps from the roadmaps have already been implemented. But when my colleagues and I go to the regions and talk with entrepreneurs, they tell us something entirely different.

What are the measures you believe must be taken in order for these initiatives to be implemented in real life, not just on paper?

VLADIMIR PUTIN: First of all, I want to tell you that all of us are always dissatisfied with something. And I am always dissatisfied with something that I am doing myself or that my colleagues are doing. I think it is entirely natural that the business community remains dissatisfied with something, because they want everything, and immediately. These are issues that require of long-term, long-running action, and it is very difficult to make any abrupt moves. It is possible, but sometimes the results can be negative. Although I, too, very much want all these processes to happen more quickly, so our competitiveness grows faster and our labour productivity increases more rapidly. I have already said that we are lagging behind the leading economies two- or three-fold in labour productivity, which is a key indicator.

At the same time, I want to point out that the roadmaps for improving the business climate, which you spoke about, were created by the business community itself – after all, we did not come up with them ourselves, we just provided our support. The business community submitted proposals on this topic to the Agency for Strategic Initiatives, which simply summarised and presented them to the Government, and the Government agreed with practically everything.

You can’t say that nothing has happened. There is no doubt that there have been positive changes. When I said that I find the Government’s work satisfactory, I was referring to these changes. And it is not just about ratings; they really are important, but not critical, nor the most important indicator.

This Doing Business ranking is a serious rating, but we need to create our own. That is precisely why we will be doing this in 81 federal constituent entities at the invitation of the business community in those regions, so that they decide what they need locally. But, you see, another important element is what is actually possible. 

When people begin to seriously approach these issues, when they see that, figuratively speaking, there has been no road here for a hundred years, sure, you could say, “Let’s build a road tomorrow!” You know, we have never had a road connecting the Far East and the European part of our country; the Russian Federation has never had such a road. We began to build it in 1962, then abandoned the project, then restarted it and abandoned it again. Then, we took it up and built it in three or four years. There are examples like that in your area and in any other region as well. We always need to balance what we need with what is possible. And the joint work of government agencies and the businesses community has produced a set of objectives that can be fulfilled. I hope it will be the same in your case.

I see a teddy bear. They say I made a mistake earlier, but that’s definitely a teddy bear. Please, go ahead.

QUESTION: Hello, Mr President. Elena Milchanovska, Sobesednik newspaper.

Sobesednik is a Russian national daily, a colour newspaper that has been published since the Soviet times, whose first issue, unfortunately, came out in black and white because Andropov died that day – that’s just how it happened.

First of all, I want to wish you a Happy New Year. I wish you happiness, good health, for all your wishes to come true, and for the Olympics and Paralympics in Sochi to amaze the entire world in a positive way, so that we are a great success in that regard. And the teddy bear I’m holding wishes you the same.

I have a New Year-related question. At the beginning of December, you said it would be nice if the corporate parties held at budget-funded organisations were paid for by the employees themselves. This frightened a lot of people, and some companies even began to cancel their office parties. Unfortunately, nowadays, cancelling a company party – if the restaurant and expensive performers have already been reserved – is often as expensive as holding it. And in general, it’s hard for people to find the money. You said that in the KGB…

VLADIMIR PUTIN: Have a good time.

ELENA MILCHANOVSKA: We can hold the parties, then? Thank you.

And another question.

Unfortunately, although they are mainly commercial organisations, it is often difficult for newspapers and magazines to find the money for office parties. (Laughter in the audience.)

VLADIMIR PUTIN: How much do you need?

ELENA MILCHANOVSKA: Mr President, just join us for our anniversary celebration. Sobesednik turns 30 next year. By the way, that’s me with you on the cover. Do you remember our meeting in May?

VLADIMIR PUTIN: Of course.

ELENA MILCHANOVSKA: After that, my personal life got sorted out and I finally got married.

VLADIMIR PUTIN: Please explain what you mean to everyone.

ELENA MILCHANOVSKA: Not to you, don’t misunderstand me. My love for you is purely platonic.

Mr President, since you brought it up, I would like to invite you to the Sobesednik corporate party on March 6 at the President Hotel.

VLADIMIR PUTIN: Thank you very much.

ELENA MILCHANOVSKA: Those of us in the publishing industry are very concerned that the President is giving more attention to television, traditionally granting interviews every year, but when it comes to print media… incidentally, you promised to give me an interview when you are free, and I am still waiting and hoping that you will find the time, maybe for our publication’s 30th anniversary, which will be in March. Could you give more attention to print media? I don’t mean just in terms of interviews, but in the sense that it’s very hard to find money for distribution. Kiosks do not want to sell newspapers, but Russia is still a traditional nation and many people like the printed word; the older generations are used to reading. Incidentally, our newspaper’s distribution figures confirm that: our circulation has grown by 20 percent over the past five years. In other words, people want to read newspapers, but unfortunately, it’s very hard to survive because of competition with the Internet and television. Perhaps the President could help us somehow.

Thank you very much.

VLADIMIR PUTIN: You know, as far as print media are concerned, I agree, there are certain problems. They are not just related to the development of electronic media, the Internet and so on. Some global publications with century-long traditions and histories are transitioning to an exclusively electronic format, as you know. This is because people are increasingly getting information online. But you are right that we have a certain tradition, and of course, it would be good to maintain it. In this respect, and I’m sure you know about this as well, the government has adopted a series of decisions on tax benefits. In fact, that is direct support for print media.

There is another very serious problem: the problem of distribution. The kiosk network is also a business, but it is its own kind of enterprise. Unfortunately, in 2014, we have reduced support for state media due to budgetary limitations. And none of our main channels, including the National Television and Radio Broadcasting Company, were thrilled to hear this, but it is a necessary measure, again, due to budgetary constraints.

As for print media, let’s think about it some more. It’s true that we should give this some more attention and find additional support measures.

I personally congratulate you on your marriage. Do you have children already? Do you have any questions about maternity capital? Don’t wait too long. I wish you success, in all seriousness, I truly wish you every success. And I will definitely give you an interview.

QUESTION: ITAR-TASS, Veronika Romanenkova

Since I already have children, quite a few in fact, my concern is…

VLADIMIR PUTIN: How many children do you have?

VERONIKA ROMANENKOVA: Three.

VLADIMIR PUTIN: Well done.

VERONIKA ROMANENKOVA: My concern is education. 

For a long time Russia has been trying to find a consensus regarding the National Final School Exam (EGE), but has so far failed.  Schools, universities, parents, the students themselves, governors and ministers all have their opinions, and all have a bone to pick regarding the exam.  The EGE has failed to become a unifying factor for our society, and has also failed to resolve the issue of corruption and social mobility.  However, we are gradually getting used to it. Meanwhile your proposal to introduce an essay in literature has only added uncertainty.

Do you insist that the essay should be introduced as of this academic year?   Can we regard this proposal as some sort of black mark for the EGE, heralding its revocation?  Or will this only be a cosmetic measure?

VLADIMIR PUTIN: You know, it is neither in fact.  Overall, I do not think black marks are a very good idea.  Neither is this meant to be merely cosmetic.  If you belong to EGE critics, I am sure you would agree that the live creative effort young people make as they sit the written exam is something very serious, called upon to enrich both the process of education and the student.

Can we do it this year? I would very much like to, but, frankly speaking, I would not want to get involved in the technical process of implementing this decision.  We have to consider everything; there are specific requirements.  If the students have been prepared to write the essay, that is one thing.  However, if they are not ready yet, it would be best to prepare them and launch the process next year.  This is a decision that the Education Ministry should make jointly with their colleagues in the regions.

This should not be done in a rush.  What’s the hurry?  If it can be done now, it would be better to get it done.  However, generally speaking, it has its pros and cons, and the cons are quite obvious.

As for the issue of whether the exam is a means of social mobility, I wouldn’t agree that it cannot be viewed as an opportunity to get accepted by the country’s leading universities for applicants from remote parts of the Russian Federation.

If we look at the statistics after the EGE was introduced, the number of people from the more remote areas accepted by leading universities has grown significantly.  Therefore, in a sense it is a means of social mobility.

There is also the issue of dormitories.  True, it is a problem.  But what is also true is that the system (and I would agree with you on this as well) definitely needs to be modernised and improved.  And it is possible that exams where students merely tick off answers do not provide enough information about the students’ knowledge. 

That is one thing.

The other, most importantly, is to focus them on acquiring the knowledge.

We shall continue working on it.

QUESTION: Marina Zakharova, REGNUM news agency.

I would like to ask about a topic that has somewhat receded into the background, namely the social norms of energy consumption.   The idea has already been tested in several regions, and practice shows that overall people disapprove of this measure; there have even been some rallies against it.

The decision on the social norms will be made by the regions independently, and this will lead to a situation we are already witnessing: the norms in different areas are different, sometimes radically so.  Could this lead to a decline in living standards in Russia?  Moreover, it should be mentioned here that in Russia household electricity consumption is lower than in Europe or the United States.  In addition, later we will have to deal with water and heat consumption norms.

VLADIMIR PUTIN: This is a very important question, and a very sensitive one for many people.  I fully agree with that.

As you may know, the Government has resolved to apply consumption norms only for electricity and only in a limited number of regions as a pilot project.  What we are witnessing now, and you are absolutely correct in pointing out certain discrepancies here, is a signal calling for greater attention and care in implementing these decisions in the future, if we are to implement them.

The consumption norms should be directed at improving all mechanisms, modernising the industry, at saving electricity and heat, but they should not lead to increased rates.  However, should this happen, the regional authorities and the government agencies involved should react.

I would like to reiterate the point I made when I began answering your question.  No decision has yet been made regarding any norms of heat consumption or any other utilities.  So far, this measure applies only to electricity, and the purpose is to assess what happens in reality.

This is the same situation as the one with growing utilities rates. You are quite right, and I have nothing to add here.  We have to be very careful and increase the rates in a timely fashion by a small fraction.  If this is not done at the right time, we end up with significant spikes in rates, and we cannot let this happen.

The Government should at least develop methodological instructions to make sure that the discrepancies you mentioned do not have a negative impact on people’s living standards.  I fully agree with this.  We will take a better look at it.

QUESTION: Maria Solovyenko, Narodnoye Veche newspaper, Vladivostok.

Words have substance, so I am appealing to you, Mr Lifelong President of the Russian Federation – please do not be offended, I will explain why. Since your amazing, blue-eyed press secretary practically tore the microphone away from me last year, I will be brief; I have one question, but with three parts.

Colleagues, I am asking you not to laugh, because I’m very nervous, and the questions will be serious. Please don’t laugh.

VLADIMIR PUTIN: Go ahead.

MARIA SOLOVYENKO: I will start with the last part, and you don’t have to answer. The girl with the teddy bear congratulated you on the upcoming New Year, but I want to congratulate all my colleagues, from Russia and the entire world, since you have been delegated by different nations. I would like to remind everyone of a story by one of our favourite writers, Chuk and Gek, which was written in 1934, nearly 80 years ago. I think those lines of his are important to remember, they are about Russia: “What is happiness? Everyone understood it their own way, but all together, people understood and knew that they must live honestly, work hard, love deeply and care for this enormous, happy land that is called the Soviet nation.” I will add that it is now called Russia, lest anyone criticise me for saying “Soviet nation,” like they did with Gazmanov.

Now, I will act like a Chechen journalist who always asks you for something. I won’t talk about corruption, I won’t embarrass you. An outstanding medical centre has been built in Vladivostok (you asked about APEC). It has begun to work, and surgeries have started. There is a huge PET scanner – you know what that is, nuclear tomography scanner that diagnoses cancer. We have a grave situation in Primorye when it comes to cancer. We had a nuclear explosion at Chazhma Bay, we still have the nuclear reactors from the submarines, Fukushima is nearby, and they are going to bury waste here, without having asked us. There are many people who are ill, and the treatment is very poor. We had high hopes for the PET scanner, which cost 70 million rubles, but they forgot to add another 20 million – we need a small reactor that to create the isotopes.

I am asking you, Mr President – you don’t even need to use budgetary funds, you only need to make a gesture and all those people like Abramovich, Prokhorov, and Shuvalov’s wife – they often come to visit us, they are rich people. We need 20 million. It doesn’t need to come from the budget. Make the Defence Ministry gang open up their purses, just 2-3 million each. Excuse me for saying it this way (please don’t applaud, colleagues, this is a very painful issue). We have small children who are ill, they are being taken to Singapore; their parents sell their apartments to save them. Please give us this gift for the New Year.

So today, I am a beggar. I think you will resolve this issue. You can answer if you want, or not.

VLADIMIR PUTIN: I want you to finish your question.

MARIA SOLOVYENKO: My last question, you don’t have to answer it, but Russia’s fate depends on it, it’s true. There have been various studies saying that our nation has five to seven years left. It’s very painful to hear. You know what I’m talking about.

VLADIMIR PUTIN: No.

MARIA SOLOVYENKO: No? This public opinion has been expressed online as well, that the nation will fall apart in five to seven years. So this question will be very hard for you. I am asking you not to answer it. You will have a year to make a strategic decision – don’t laugh.

Everyone knows that there is a commercial on television: “Gazprom, the national asset.” According to the Constitution, subsurface resources belong to the people: oil, gas, and all mineral resources. You won’t be able to do it right away, perhaps, you might be scared – but let’s return them to the people, let’s nationalise them all, and then we won’t have this layer of oligarchs, they won’t skin the taxpayers.

If you are afraid, don’t be; everyone would defend you for it, and then we will not have any problems: we will have enough money for PET scanners and for pensions – without any of these “cushions” from the oligarchs. It’s hard. You don’t have to answer. But I am really asking you – I think the entire nation would love you then, and would say, “Be a lifelong president, Mr Putin.”

Thank you.

VLADIMIR PUTIN: We have the Constitution of the Russian Federation. And the government agencies are formed within the framework of the Constitution. In that respect, we are not going to change anything. I think that it would be inexpedient and dangerous for the stability of the Russian state, at least in terms of creating government agencies.

As for the problem with those 20 million rubles… Unfortunately, this happens often in our nation, I agree with you on this, when a great deal of money is spent, and then just a little more is needed, and all the equipment just sits there and does not function. This is sad and this is not a responsible approach. So I want to start by assuring you that we will find these 20 million rubles – if 20 million really is the figure – and buy the necessary equipment. I guarantee it 100%. It’s not even up for discussion.

Next, regarding subsoil resources: according to the Constitution and the law, these resources belong to the nation; the question is, how can they be used most effectively for the good of our people?

Now, concerning Gazprom and the national asset, the idea that this belongs to a group of oligarchs: that is not the case. Gazprom is a state corporation, and the Russian government holds a controlling stake in it.

It is true that there was a time – this was about seven or eight years ago – when Gazprom’s controlling stake fell out of the government’s hands, and we faced a real threat of losing control over this strategically important company.

Overall, this is another area where we could one day move toward privatisation, but only after we have created certain conditions regarding the consumption of primary energy resources, economic conditions in the first place.

I might be somewhat mistaken, but I believe this year we will produce around 620 billion cubic metres of gas. Of these, about 200 will be exported; everything else, most of the volume produced, is domestic consumption within Russia. We maintain fairly low gas prices within the country.

I have already answered your colleague’s question about our accession to the WTO. The European Union is even complaining that our domestic gas prices are, according to them, too low and this creates competitive advantages for our goods at the second or third level of processing, meaning chemical products, in foreign markets. I assure you that this is a focused, purposeful and rather effective policy in the energy sector.

Our goal is not to take everything away from private owners, including, say, Gazprom, where some of the shares belong to private owners, but the controlling stake remains in the hands of the government.

This gives us the opportunity to conduct the policy I just spoke about, and includes providing benefits to domestic consumers, household consumers and commercial consumers of our gas within the nation, providing that right and opportunity, because the controlling stake and governance questions lie in the hands of the state.

Meanwhile, the fact that we gave our foreign and domestic private shareholders the opportunity to acquire and sell Gazprom shares increases the company’s liquidity. It increases the opportunity for it to work in markets, to attract the necessary resources for their investment projects and development.

Maria, I would like you and your readers to understand this: as soon as we take away these opportunities, a company like Gazprom will not have real resources for development, because it will not receive the necessary amount of loans from global financial markets. And it will not receive them at favourable interest rates that it gets today, since the global financial market will react to this as the company’s reduced transparency. And we will immediately worsen the economic state of our leading fuel and energy company – immediately, that very second. For people who work in economics, this is clear and obvious. I am certain there are experts here who specialise in these issues, and they will fully agree with me.

As for other, entirely private companies – and we have many of those, including the private Siberian company Surgutneftegas, LUKOIL, and others – our state’s objective is to protect the interests of the state, and not to nationalise them and seize them. Incidentally, many of their shares belong to labour collectives, at least at Surgutneftegas, and at LUKOIL as well. Our objective is to ensure conditions for their operation so that they work; in working, they can make profits for Russia; pay full taxes in our nation; and stop using offshores, as I said in my Address [to the Federal Assembly]. We will then use these funds to develop the economy and the social sphere.

I agree with you – I’m not sure things are fully in order here. We need to ensure this kind of order, and we can do it within the framework of the market economy; it is not at all necessary to deprive shareholders of their property. Moreover, that would be a very bad signal for the entire Russian economy.

I understand what you mean. You mean increasing returns from these companies to the federal and regional budgets, increasing their input into the nation’s development and resolution of social issues. In this, you are right, but we have many more instruments for this than simply seizing property. But you are absolutely right that we must think about increasing their returns, and we will continue working in this respect.

I suppose that is all.

QUESTION: Alexei Anishchuk, RUETERS.

Mr President, I have two short questions on the same topic, but I would prefer to break them up, if you do not mind. The subject is human rights. Under the amnesty, two participants of the group Pussy Riot are to be set free in the next few days.  The state is setting them free without waiting for the expiration of their two-year sentence. Does this mean that the state, represented by you, is of the opinion that the punishment was excessive for their offence?

And a more general question: did you ever feel sorry for the two girls – say, as a father of two daughters of approximately the same age?

VLADIMIR PUTIN: I do feel sorry for them, but not because they found themselves in prison, though this is not good in itself. I feel sorry for them because they have reached a state that led them to such scandalous behaviour, which in my opinion is a disgrace to a woman’s dignity. They went the limit to somehow attract attention, to promote themselves. However, the court ruled to punish them for something else. This is not a revision of the court ruling, but a general decision that has to do with the amnesty that applies to them.

This has nothing to do either with Greenpeace or with this group. This, as I said, is, first of all, not my personal decision, but that of the State Duma, let us not forget this. Besides, this decision is linked to making our criminal policy more humane, and is timed to coincide with the 20th anniversary of our Constitution.

TV ANCHOR ANDREI TUMANOV: I have no reason to complain about lack of attention from the President. This is our seventh conversation. Meanwhile the issue remains the same, and it is not a huge problem really. After the previous presidential press conference, we managed to get a presidential instruction, bearing the real signature. I took this instruction to all the relevant ministries and agencies, and all the ministers and their deputies said: “This instruction actually means nothing for us, we will do nothing”.

VLADIMIR PUTIN: Who exactly said that?

ANDREI TUMANOV: All the ministers, except for the Defence Minister.  He said: “I will be happy to get involved any time.”

VLADIMIR PUTIN: Especially since he has nothing to do with it.

ANDREI TUMANOV: No, this is about fire safety at country houses [dachas].  This is very dangerous. 

VLADIMIR PUTIN: Who exactly said they would not act on the instruction?

ANDREI TUMANOV: The Regional Development Minister.

VLADIMIR PUTIN: Someone who does not have this job anymore, right?

ANDREI TUMANOV: I can give you the list with the names of all the ministers later.

VLADIMIR PUTIN: Why later? Give them now.

ANDREI TUMANOV: I did warn you.

VLADIMIR PUTIN: Let everyone see the foolishness of each one of them.

ANDREI TUMANOV: Mr President, don’t you find it insulting that your instructions are left without action.  Moreover, this is not the first time you and I are discussing this in all these years. The matter itself is not too complicated.  However, if we do not establish order at the country houses, we will not be able to develop our agriculture, where things are much more complicated.

VLADIMIR PUTIN: We will put the squeeze on them, definitely.

ANDREI TUMANOV: How?

VLADIMIR PUTIN: By using three methods. I will tell you about them later.

ANDREI TUMANOV: You will tell me later personally?

VLADIMIR PUTIN: Yes, personally.

ANDREI TUMANOV: Then can I get an appointment?

VLADIMIR PUTIN: Of course.

ANDREI TUMANOV: I would also like to use this opportunity to say that the issue of mass media was raised. I believe that if things continue in the same way, unfortunately, next year there will be only half of the print media. The others will be shut down.

VLADIMIR PUTIN: We will help.

QUESTION: Hello, my name is Elena Kolebakina, Business Online electronic publication in Tatarstan.

Mr President, what was the conclusion made after the plane crash in Kazan?  Will it have any influence on the development of the country’s aviation industry?

In a televised interview, Dmitry Medvedev said this was a strange case, he mentioned some report. Are you of the same opinion? What sort of report can this be? Have you read it?

VLADIMIR PUTIN: No, I have not read those reports yet. It was a terrible accident with so many people getting killed. We should certainly pass additional resolutions to enhance passenger safety. Such resolutions have been passed, though maybe not all yet – they have to do with pilot training, with access to our market of foreign specialists. We have to do this very carefully, without undermining the labour market in this important segment. I know the position of the trade unions on this issue. However, I believe they will be forced to concede that we need to make certain decisions pertaining to personnel training and upgrading the fleet.

Incidentally, the aircraft fleet has nothing to do with this particular case. Nevertheless, we need to develop and expand the fleet of our own aircraft used by our airline companies. We also need to establish normal order at private airlines, things that have to do with pilots’ rest, their professional aptitude tests, with aircraft testing. Some things here are elementary.  This regional airline generally worked well, though there were complaints but they were ignored. I presume that aviation authorities and government agencies, including the Ministry of Transport, will draw serious conclusions from this catastrophe.

Please, go ahead. Your sign says “Vanino Port.”

QUESTION: Thank you very much, Mr President.

Tatyana Sedykh, editor of Moe Poberezhye newspaper, from the town of Vanino, Khabarovsk Territory.

I have long wanted to participate in a news conference, but the trip here is too expensive. I paid two months’ worth of my pension to come here, but I want to help the people in my town.

You know, people have been talking a lot about the Baikal-Amur Mainline and the Far East. Vanino Port is in the Fear East – it is the place where coal is brought, which you also spoke about. Granted, nobody asked whether the local residents need that much of it. The environmental situation leaves something to be desired.

I want to ask a question. Vanino Port, or more accurately, the Vanino Commercial Sea Port, has changed ownership recently. Unfortunately, this resulted in hundreds of people losing their jobs; the company has cut the labour force.

VLADIMIR PUTIN: Who acquired it?

TATYANA SEDYKH: Mechel.

VLADIMIR PUTIN: Also an energy company.

TATYANA SEDYKH: Yes. People have lost their jobs, and ours is a small town in a small district.

Right now, the Arkaim company is also having problems. First, it was simply involved in logging, but it has also been doing timber processing for about three years, and they built a plant. Arkaim employees sent you a letter, as well as posting it online and writing to the Governor of Khabarovsk Territory. People have been demonstrating, they are going hungry, and their children are going hungry as well. The letter addressed to you talks about the many months of unpaid salaries, and that the company is essentially on the brink of shutting down.

A lot has been said about how people are leaving the Far East, but we also have individuals who stay there, who work and want to work, yet they are being deprived of the opportunity to work and to bring up their children.

What is your view of this? Can the government help these companies which are trying to develop something, to do something, to create jobs?

VLADIMIR PUTIN: What is the problem there? What does this company do?

TATYANA SEDYKH: They used to simply harvest timber and export the raw materials. Later, they tried to implement a programme to keep the timber in Russia and got involved in timber processing. The company’s head built a plant, but unfortunately, it seems it was not profitable. When I was on my way here, on the train, I met one of the company’s logging teams heading out. They said that when the plant was built, it immediately started dragging them down, they found themselves without cash reserves, something like that. Would it be possible for the government to provide support for these people? Because nearly 3,000 people could find themselves without jobs.

And I have another question.

VLADIMIR PUTIN: Go ahead.

TATYANA SEDYKH: It is a question about the work of the law enforcement system in Khabarovsk Territory, particularly in Vanino District.

Komsonolskaya Pravda once wrote about the conditions in which I publish my newspaper. After that, I began to receive letters from all around Russia. One individual sent me a letter, and I have even brought it here with me to show it to you directly, since your security service monitors things very vigilantly and told me, “You cannot send it under any circumstances.” Incidentally, they took away my crutches. It is hard for me to get around without my crutches, so I am asking you this question while sitting down. They took away my crutches, saying that they could be used as weapons.

I just raised the sign saying “Vanino Port” on a crutch, and it was hinted to me that I will never be accredited again.

It seems that people stay in certain positions for a long time – for example, the same people have held the posts of the Vanino transport police department head and the transport prosecution office head for decades. It’s got to the point where police and drug control service officers come to the newspaper and say that there is basically a hidden war going on between the transport police and drug control. In other words, they are fighting for oversight territory, where they check passengers for drugs, seeing who surpasses whom, who does or does not allow whom on this territory. Moreover, the head of the Vanino transport police department, Colonel Gasanov, is even capable of starting a brawl with drug control staff members right at the train station. He gets away with anything, no problem. We end up watching these people act like tsars. They are not working for the people’s benefit, but for themselves, doing whatever they want in their domains.

I’m sorry, I am getting emotional, but all of this has been pent up, and there have been attempts by your security service to prevent me from asking this question. I think if we have been allowed in here, they should trust us, instead of trying to prove something and hiding my crutches, so I cannot stand up.

You know, Vanino has a small budget; for example, we cannot even build a recreation centre for children because there is no money for it in the budget. But we had an incident where, following orders from the district head, diesel engines were bought for the town’s heating plant. Ultimately, after some time, it turned out that these diesel engines were basically scrap metal – they were 20 or 30 years old. A contract had been signed, and the money was transferred in full the very next day. After the former district head lost the election, this all came to light. Now, several years later, we cannot get to the bottom of it although we have sent you many letters – but apparently, you do not read our letters. We have also sent letters to the Prosecutor General’s Office and the police, but for some reason, nobody can resolve this issue, to make sure that the money is returned. They cannot even find the supplier of those engines. And the prosecution, which cannot solve this case, demands that the district head and the mayor buy new diesel engines, which will cost 13 million roubles. The central heating plant cannot function without reserve engines.

I have explained it as best I could. Thank you for hearing me out. Maybe these questions will be heard by leaders like [Interior Minister Vladimir] Kolokoltsev and [Chairman of the Investigative Committee Alexander] Bastrykin, and they may resolve something.

As for whether people should stay in the Far East or not: I think we should consider creating humane living conditions for them.

Thank you.

VLADIMIR PUTIN: Yes, you’re absolutely right. This is a very serious set of questions.

First of all, please do not be offended by the security service; their actions are based on long- standing international practice. There are certain rules which are observed in every country around the world, including ours, but that does not prevent us from communicating. I am very grateful to you for the questions you have asked, and for the fact that you have come here.

There are certain problems; that is exactly why I focused attention in the last Address to the Federal Assembly on developing the Far East and Eastern Siberia. As you know, we have a Far East development programme; I already mentioned the figure: I believe we have 345 billion rubles allocated for it, and it is important for that money to be used effectively.

As for the purchases, I hope you have heard that on January 1, 2014, a new law will come into force which will regulate such purchases, including at the government level. I very much count on it to function more effectively than the previous law, law No. 94, where the option of dumping in competitive tenders provided companies which were unable to handle certain objectives the right to simply receive an order, and then to sell that order on. Maybe that’s what happened in this case; I simply do not know the details, so it’s hard for me to say.

In any case, we must certainly demand that officials at all levels of authority – including municipal – carry out their responsibilities. You say the prosecutor demands that new diesel engines be installed. He is obligated to do that; he is obligated to demand that of the authorities. Yes, there is a new head, and he must take all the necessary measures in order for the objectives that are expected by the public to be achieved.

Nobody can say “Things were bad before I came, so I don’t care, I won’t do anything now.” When I became head of state, I couldn’t just say, “You know, the army has fallen apart, so I won’t do anything about it.” No, I don’t have the right to do that.

TATYANA SEDYKH: That’s not the point.

VLADIMIR PUTIN: No, it’s not. He should secure the return of the money, he should go to court and find out why it was not spent correctly; he should find those contractors. Did they just disappear into thin air? No, they didn’t. The authorities should find them: that is their responsibility.

I am going on the assumption that today, you have honest, decent leaders. Yes, they may be having a hard time, but these issues nevertheless need to be resolved. You must then alert the governor and say, “We will be unable to make it through the winter without this equipment, please help.” I am certain that the governor understands the reality of the events taking place – incidentally, your governor is a good, competent individual, a real manager as we like to say in these cases. I do not think that he will turn his back on this problem, and I am confident that he will hear us and react.

As for relations between various law enforcement agencies, I agree with you, there are many problems here. But I cannot say, after listening only to you, who is right and who is at fault: members of the transport police or drug control. What I can certainly promise you is that I will give instructions to the Interior Minister and head of the Federal Drug Control Service to conduct an internal investigation of what is happening in these organisations at the local level. You need not have any doubt about it. We will see what this leads to, but we will certainly give it our attention.

And now, your main question. First of all, as far as this company is concerned, the one that was involved in logging and exporting everything, as you yourself said. It was no accident that we made the decision about the need to transition away from what the whole country or the whole sector was doing – logging and exporting raw timber without any processing. After all, this is the simplest thing that can be done. I think the majority of our citizens hold a different point of view. We need to not only cut down trees and send them abroad – in this case, to China – but to at least reach the next level of processing.

If problems arise after a plant has been built and invested in, and if it does not work as it should, that is a very serious signal. We need to figure out why, what the problem is, when people invested money into timber processing but are having economic issues. I have noted this down, so we will certainly look into it; the corresponding government department will start working on it today. Today – it’s only three o’clock, and they will have time to make a start. But it is clear that we must get away from raw timber in the logging sector and transition to the production of timber products – cut it into boards, at the very least, although it would be even better to build furniture or other goods.

I would like to draw attention to the following, and I will also discuss it with my colleagues today. I think you have touched on a very important topic that does not just concern Vanino Port. I am referring to the fact that a new owner has acquired the port – incidentally, Mechel is not a bad company. Why did they get involved there? Probably because they want to increase transhipment of their product. Overall, this is a good thing, because they specialise in supplying coal to foreign markets and they need transhipment. The fact that they got involved there is good; but it’s wrong that they are not thinking about finding jobs for their employees who have been laid off.

After all, what is the objective of regional and local authorities, as well as businesses? They must modernise production – in this case, of the port – but at the same time, they must certainly address social issues. If it is clear that some members of the workforce will be laid off, they should have thought ahead together with government agencies about how these people will make a living, where they will work and get paid and how they will feed their families. And if what you talked about really is happening there, that is poor management; it means that their approach is too rigid. I will certainly speak with the governor and members of the industry.

And please do not be offended by the security service.

DMITRY PESKOV: Mr President, the news conference has been going on for three hours already.

VLADIMIR PPUTIN: Right, and I don’t think we should be setting any records here; otherwise, some people may not make it home for Christmas.  So let’s start winding it up.

Yes, please.

QUESTION: Natalya Ivanova, Golos Chitatelya newspaper, Vsevolozhsk, Leningrad Region.

I tried to help, even emailed Governor of Khabarovsk Region Vyacheslav Shport.  Here is what this is all about.  Tatyana Sedykh is a real journalist and a very brave individual.  Eight years ago her home and her car were burned down as a retribution for her writing.  She had the entire print run of the newspaper in her car, and they burned it too.

We have a law that says that victims of fires are placed on priority lists for new housing.  It has been eight years now, almost nine, and she still has nowhere to live.  A friend lets her stay in her flat.  Besides, she has plenty of ill-wishers in the village where she used to live.

Could you please protect her, because we still haven’t heard from Mr Shport, and the only response we did get was that the matter had been passed on to someone else. As a result, we have a person with back problems, on crutches, who does so much for her village.  They could have built her a house by now.  Please help her. 

VLADIMIR PUTIN (to Tatyana Sedykh): The fact that you were so brave in raising the issue regarding law enforcement bodies and other matters does you credit.

I will not comment on anything your colleague said now, but we can continue our conversation after this event.

As for what you said about the letters, you see, the number of letters is so great that it’s simply impossible to read them all. Even if I just read the letters and did nothing else I would still not be able to get through them.  We have to find some other arrangement here.

This, by the way, is one of the aims of this meeting. After all, why do you think I am doing this? To be able to hear people like you, to hear about the sore spots that the authorities should pay attention to.  We will do our best to act on all of these things.

NATALYA IVANOVA: This may be a unique occasion.

VLADIMIR PUTIN:  I hear you.

NATALYA IVANOVA: Now for my question.  Mayor of our town Sergei Garmash, a very good man, listened very attentively to your Address to the Federal Assembly.  He wanted to ask you to clarify what you meant when you said that municipal authorities have been “watered down”.  What does it mean?

VLADIMIR PUTIN:  As I already said, this means that their authority over healthcare, education and some other matters they used to be responsible for was taken away from them.  This is what I meant.

NATALYA IVANOVA: That leaves only land, doesn’t it?

VLADIMIR PUTIN: Not only land, there are some other things, but certain important spheres of responsibility have been shifted to the regional level.

NATALYA IVANOVA: This means that the municipal head can only manage land issues.  However in our criminalised Vsevolozhsk District there is no land left – it has all been sold.  In the time of [Defence] Minister Anatoly Serdyukov two large gated communities were built on the land belonging to the Defence Ministry shooting range in Sertolovo, so they have tanks driving by their houses on their way to training.  Even those lands were sold.  I don’t know for sure what land our district head is supposed to manage, and incidentally he was jailed on Tuesday…

VLADIMIR PUTIN: What do you mean – jailed?

NATALYA IVANOVA: Not for the land.

VLADIMIR PUTIN: What do you mean by jailed? Have we switched to slang? Was he arrested?

NATALYA IVANOVA: In April he had seven visitors who wanted to discuss their local affairs.  He…applied force to three of them.

VLADIMIR PUTIN: Quite an efficient municipal head you have there.

NATALYA IVANOVA: He was relieved of his duties for that for three years, put on probation…

VLADIMIR PUTIN: We will have an amnesty shortly, he will probably be included.

NATALYA IVANOVA: And then he set up an attempt on his own life, sort of.  That, in short, is the person who heads the district.

VLADIMIR PUTIN: Sounds just like Santa-Barbara out there.

NATALYA IVANOVA: Yes.

VLADIMIR PUTIN: Did you say it’s Vsevolozhsk District?

NATALYA IVANOVA: That’s right.

VLADIMIR PUTIN: And you say there is nothing for them to do.  There is plenty of work.

NATALIA IVANOVA: The municipal head still has the land that he sold off.

VLADIMIR PUTIN: So he was the one who sold it? The crook!

NATALYA IVANOVA: Two state farms and several smaller private farmsteads.

VLADIMIR PUTIN: All right.  Regarding the first part – I heard you.  As for the second – let them deal with the man.  If he gets included in the amnesty – that’s his luck.

Incidentally, Vsevolozhsk District is one of the best areas in Leningrad Region in terms of natural beauty; they have wonderful forests there, and lakes, a lovely place.

Young lady, you are welcome.

QUESTION: Ekaterina Vinokurova, “Znak.com” publication.

I would like to continue, as you said, the conversation we began last year, at the previous news conference, when you were asked why we currently have a repressive system of justice, as we have only 1% of acquittals, which is even less than in the time of Stalin.

Then you said this means that our investigators are doing a good job. This is not so, Mr President, because if you carefully consider such cases, for example, the so-called ‘Bolotnaya' case, the cases of Aksana Panova or Daniil Konstantinov, you would see that the witnesses give confusing evidence, that the prosecution is often based on the words of only one person against a dozen defence witnesses.

Given our system of justice, where for some reason such cases are not returned to investigators, and given the situation with acquittals, the verdicts will soon all be ‘guilty’, and the sentences will be very heavy. Do you think anything about the system should be changed?

My second question is addressed to you as a man. Mr President, if you see a riot policeman hitting a girl, what would you do as a man, given that neither Mr Peskov nor the Federal Security Service is anywhere near?

VLADIMIR PUTIN: I cannot imagine anything like this.

EKATERINA VINOKUROVA: Nevertheless, let us try. I wonder what you would do as a man.

VLADIMIR PUTIN: I do not believe that a riot police officer would beat up a girl just like that. I simply cannot imagine this.  I know the special riot police force quite well; I saw them in action on numerous occasions. These people make a job of risking their lives. They all have families, children, wives, sisters and mothers.

I assure you, all sorts of things happen in any team, and even among them there may be all sorts of people, but overall they are strong guys, they would never beat up a girl. I simply cannot imagine this. However, if this girl says she intends to poke his eyes out, he has to cover himself at the very least.

Therefore, I suggest we shift this discussion from the emotional or emotionally political sphere to the legal one. I completely agree with you that we need to strive for clarity in court rulings and in sentencing. We need to improve the quality of preliminary investigations and judicial inquiry.

However, I would like to assure you that this is not a problem for our country alone. Mistrials happen everywhere; investigators, inquiry officers and courts all make mistakes.  We need to work together to improve this, together with the press as well. I am saying this quite seriously, all jokes aside.

Unfortunately, we often come across negligence, bias and underperformance. This happens, however, and we need to act against it, and shall try.

I would like to draw your attention to the fact that the amnesty resolution is aimed directly at this problem, at turning the page and making it possible for us to move ahead together with representatives of civil society, the judicial and law enforcement systems and other state authorities.

Young lady over there from CCTV, you are welcome. As we know, this is the China TV company.

QUESTION: China Central TV, CCTV.

Mr President, last year when you answered a question about the development of relations between China and Russia you spoke of the need to strengthen cooperation in investment and finance and in high tech sectors.

What progress can we speak of in these areas in the past year?  Are there any new developments that can, in your opinion, help promote what you referred to as an unprecedented level of trust and cooperation between our two countries?

VLADIMIR PUTIN: There is one new development, of course: I celebrated my birthday together with your Chairman.  This was the first time in my life that I celebrated my birthday with another head of state, and it had to be no other than the Chairman of the People’s Republic of China. I do not think this is a mere coincidence.

Speaking to the point of what we have, we maintain this level of cooperation, we continue our cooperation in these high technology spheres. I am happy to note that the Chinese authorities are making every effort to increase our trade turnover in these very segments – in engineering, electronics, and joint work in space exploration.

By the way, I would like to congratulate the Chinese people and experts on the successful experiment currently conducted in China and the successful landing on the Moon of the first Chinese moon rover. We are looking forward to results of these efforts. When I say ‘we’, I am referring to the entire international community and Russia. This is a sign of the development of science and technology in China. Without doubt, we will further promote this tendency on both sides.

Iran, please.

QUESTION: Thank you very much for the opportunity to ask you a question. Yulia Lyubova, Press TV channel.

Mr Putin, talks continue between the six international mediators and Iran at expert level to develop a roadmap based on mutual commitments. However, despite these negotiations the USA has recently added a number of Iranian companies to their black list for evading the sanctions. How seriously do you think the United States treats the negotiations on the Iranian nuclear program? If the United States Congress introduces additional sanctions, how will this affect the talks?

VLADIMIR PUTIN: Your colleague also has a question about Iran.

QUESTION: Mr President, I am Rajab Safarov, editor-in-chief of the Russian Delovoi Iran [Business Iran] magazine. It looks like 2013 has been the most brilliant year for Russia’s foreign policy. A masterfully orchestrated Syrian combination, stage-by-stage and mutually beneficial actions, impeccable dialogues with Ankara, Er-Ryad and Cairo itself. All this made it possible for Russia to regain the place it should occupy in the Middle East. However, lately the United Stated started deviating from the Geneva agreements. President Obama’s words that they should negotiate with Iran in the same way President Reagan negotiated with the Soviet Union – this is in fact a step back, towards the Cold War times, this is actually a call for a new arms race.

In this connection I would like to say that the deployment of a new ballistic missile defence system in the Middle East, the so-called GulfBMD, which is part of the US global missile defence, which includes EuroBMD and the new Israeli Iron Dome system, is actually a new cycle of the regional arms race, but this may have a serious impact on the interests of Russia as well.

In this connection, I have a question for you. Is Russia prepared for this challenge?

My second question. It is obvious that given Russia’s return to the Middle East, relations with Iran are taking on a new dimension, they are becoming strategic in nature. In this connection, do you think it is time to sign a major agreement with Iran, similar to those signed with India or China?

In addition, the very last thing I would like to say today. You have long been promising to come to Iran with an official visit. What are the prospects for this visit? If it does take place, it will truly be a historical visit because not a single Soviet or Russian leader has come to Teheran on an official visit since the Teheran Conference of 1943.

VLADIMIR PUTIN: As you may know, I visited Teheran within the framework of the meeting of heads of the Caspian littoral states. Iran is one of our priority partners in the region; it is our neighbour. We are resolved to develop our relations with Iran in all areas. This is a matter of principle for us.

As for the other part of the question, I believe the progress made regarding Iran has to do not only with our position, but also with the pragmatic position of the US Administration. There would have been no progress without it, it would have been impossible. True, we consistently promoted the position that was adopted, but without a corresponding attitude from the part of our partners, it would have been impossible to reach any agreement.

I do not think that the recent statements by the US President are a deviation from the policy we jointly chose to follow. Let us bear in mind that the US Administration is under the pressure coming from various forces within the American establishment, including a large part of Congress, which, in turn, is aligned with the position of Israel.

Here I believe we should jointly identify what is in the way of normal relations between Iran and Israel. I think that we should not only bear in mind everything that hinders the normalisation of relations between the two states, but we need to analyse all the aspects and minimise the negative side of this process. This is in the interests of Iran, I am sure this is also in the interests of Israel and the entire international community.

When I recently spoke in my Address [to the Federal Assembly] of the progress we have made regarding Iran, you may have noticed that I said we should maintain the security of all the nations in the region, including Israel. This is an important aspect, without which it would be difficult, even impossible to move ahead.

As for sanctions, I am convinced that this is a counter-productive solution. It will not do us any good in terms of agreements to resolve the issue once and for all. I hope these statements and actions in this direction will not stand in our way as we move towards a solution to the Iranian problem.

At the same time, I would like to stress our principled position: the Iranian people and the Iranian state should be given a chance to develop their advanced peaceful technology, including nuclear technology, and the international community has no right to impose any discriminatory limitations.

RAJAB SAFAROV: And what about the visit?

VLADIMIR PUTIN: We will have our foreign ministries discuss the visit. I have an invitation from the Iranian leader, and will gladly make use of it.

RAJAB SAFAROV: And what about the agreement?

VLADIMIR PUTIN: We have to think about it, of course. Generally, we have a very positive attitude to this joint effort.

Let’s return to the Russian regions. Please, go ahead.

QUESTION: Hello! My name is Arevik Safaryan, Inform Polis newspaper, Ulan-Ude, Buryatia.

I do not know whether you’re already aware of this, but we currently have a situation in our region similar to the one we once witnessed in Pikalevo. Do you remember how you got involved two years ago?

VLADIMIR PUTIN: Of course.

AREVIK SAFARYAN: We have the Selenga Pulp & Paper Mill, which is owned by [Oleg] Deripaska, but it has not been operating for a month now. People are not being paid, but that is only part of the problem. The local cogeneration unit belongs to the mill. And today, my editor-in-chief told me that there is only enough coal left for three days. The temperature in Buryatia is currently minus 30 or even lower. People are desperate, they are ready to block federal highways or even go on the rampage at the mill’s administrative building. About two weeks ago, we sent you a letter. I don’t know whether you received it, whether you are aware of this.

VLADIMIR PUTIN: If they destroy something, it won’t make things better, right?

AREVIK SAFARYAN: I completely agree. But how long will the local authorities be able to restrain people?

VLADIMIR PUTIN: What is the name of this town?

AREVIK SAFARYAN: Selenginsk, with a population of 15,000 people. Over two thousand were working at the mill. In other words, it is the backbone of the town’s economy. Also, the mill is the largest raw material supplier to various Russian regions and abroad.

VLADIMIR PUTIN: Frankly speaking, these problems generally originate from the company’s low profitability and the equipment it uses. I do not know all the details, of course, or rather I do not know about this problem at all, but I will find out, and we will certainly work on it. And it is entirely clear that during winter, and in general, nobody – neither the company’s owners nor the local authorities – has the right to leave people without proper support. I cannot say at this point what sorts of solutions are possible here, but I will certainly bring this problem to the Government Cabinet and the governor, so that they can immediately deal with this. Immediately.

QUESTION: Hello, Mr President. My name is Nadezhda Yefremovtseva. I represent a small, subsidised region: Kurgan Region. Please excuse me, I’m a little nervous.

VLADIMIR PUTIN: Please go ahead, I’m listening.

NADEZHDA YEFREMOVTSEVA: Mr President, my first question. Several years ago, our governor made a formal proposal to the federal authorities to give our region special border economic zone status. Is this issue still relevant today, or has it been closed?

And another question. We currently have a serious problem with disproportion of salaries in our region and in neighbouring ones. Our good neighbours – Tyumen, Yekaterinburg, Chelyabinsk – have much higher salaries.

I’ll use just one sector as an example. Our highly trained doctors are leaving for northern Tyumen, to get paid higher salaries. Naturally, you know that doctors’ salaries in the regions correspond to the region’s average salary, but unfortunately, our region’s average is low. Thus, we are losing highly trained professionals, not just in medicine but in all other sectors as well. Do you think this is right, or not?

VLADIMIR PUTIN: Concerning the fact that people are leaving, as you said, to the northern parts of Tyumen Region, let me point out that living conditions there are harsh. It is, after all, the North. And life there is more expensive, so the salaries are higher. And, of course, people are going there to earn some money, despite the harsh conditions in those regions.

But it isn’t right that citizens’ incomes vary so widely from one region to another. In order for this not to be the case, and in order for things not to get any worse, we are working on evening out budgetary sufficiency between Russian regions.

As you know, out of 83 Russian regions only 10 are donor regions. And a significant volume of funds paid to the federal budget is then redistributed in favour of other Russian regions, with precisely the purpose of evening out their budgetary capabilities. But the question is, how adequate is this adjustment for individual regions, including Kurgan? This is, of course, a question pertaining to the Finance Ministry’s policy. We will need to once again look into it carefully.

I also want to point out that regional governors now have more and more tools for developing their regions’ economies. And the latest suggestion is aimed at exactly that: if you want the economy to develop, invest money from the regional budget. I hope that soon, the Government will adopt a decision to compensate for the funds the corresponding territories invest in the development of their infrastructure, which compensations will be in the form of subsidies, meaning that the funds invested by the regions will be returned to them through inter-budget regional transfers. This is not the only mechanism, but in my view, it can also be quite effective.

As for the public sector, you know about our decisions taken several years ago on increasing public sector wages. This concerns both medical workers and teachers. We will continue to do this, we will continue this policy.

QUESTION: Diana Khachatryan, Novaya Gazeta.

Mr President, recently, many officials in the law enforcement agencies have stated that the so-called third Yukos case is currently being prepared: allegedly, the company’s money was used to pay a number of well-known experts who prepared a criminal law liberalisation study. Granted, they were doing this in accordance with instructions from then-President Dmitry Medvedev. As we know, one of the experts was forced to stay in France due to the threat of prosecution.

What do you think about the third Yukos case? And do you think that the situation currently unfolding in the nation – the threat of prosecution, the reform of the Russian Academy of Sciences and other problems – will eventually force bright, talented and patriotically-minded people out of the country?

VLADIMIR PUTIN: I do not think so. You have thrown everything in one pot: the Yukos case and the reform of the Russian Academy of Sciences. What’s the connection between the Russian Academy of Sciences’ reform and Yukos? These are two entirely unrelated issues.

As for the “third case,” I do not want to get into the details. Frankly speaking, as a person who is observing this from the outside, without being heavily involved, I do not see any particular prospects for it, and in general, I do not really understand what the case is based on. I have heard it is being discussed, but for the moment, I do not see any threat to anyone. And the prosecutors’ office is obligated to monitor all these actions; it’s their job. It may see – or, it may feel that it sees – certain law violations. But then, besides the prosecutor’s office, we also have the Investigative Committee, which may or may not conduct the case, and we have the court. So I do not see any particular threats to anyone there.

Moreover, if people decide to stay somewhere, it is not because of that, but because they find some kind of work there, or their family members live there and they want to reunite with their families. I think this is mainly the case. The threat of prosecution has nothing to do with it.

Go ahead.

QUESTION: Hello, Mr President!

Your constant sparring partner Maria Solovyenko asked to nationalise mineral resources. I will not do the same, for two reasons. First of all, we do not have any mineral resources in Mordovia, and I represent the Mordovian mass media – my name is Tamara Tereshina, I am the deputy editor-in-chief of Izvestia Mordovii.

And the second reason is that mineral resources alone are not enough to feed the nation, so to speak; this is a category that will eventually run out in 100 or 200 years. And in your Address to the Federal Assembly, you spoke extensively about additional incentives for economic development, for restoring economic growth that we had in Russia. You even said a very nice thing for governors of those regions that invest their resources – the regions’ own resources – into the development of technoparks and industrial parks. Mordovia just happens to be one of those regions. And naturally, Mr President, as you understand, our technopark in such a small region could not have been created without state support, very powerful support. In particular, its creation was included in the federal programme, which existed and was implemented thanks in part to your personal instruction.

I would like to say that this programme was truly effective. New businesses – innovative businesses – are being created on the basis of our technopark. Just recently, a South Korean corporation created the Nepes RUS joint venture; it is already working, an engineering centre operating in the area of fibre optics, optoelectronics and so on. (Noise in the hall.) Mr President, why are the regions being discriminated? As soon as we start talking about the regions, it’s… Ok, here’s my question.

Mr President, naturally, the infrastructure has already been created, the foundation has been built, and you have already talked about the measures that are being and will be taken.

Our people, who are working on this – and we have engaged academic researchers and research centres from all over Russia as well as foreign corporations, very large foreign firms – are interested to know the following: will the Government develop any sort of additional measures in order to provide even greater incentives for the development of industrial processes and innovative production technology? It is impossible to implement the May presidential executive orders and wage increases for doctors and medical workers without creating a solid economic foundation in regions such as ours.

VLADIMIR PUTIN: Naturally. But, in fact, I have laid out those suggestions. We need them to be implemented, for a start. What has been done already is having its positive effect, including in your territory, where there is no oil, no gas, and no other mineral resources. Everything happening in Mordovia is happening purely thanks to good organisation and improvement within the administrative institutions, it’s true. But I already spoke about this; we will create these technoparks additionally, we will compensate the regional authorities for the expenses they incur to create the infrastructure, and we will continue supporting small and medium-sized businesses in the regions. First and foremost, this pertains to small and midsize manufacturing and socially oriented businesses. The incentives being offered have been defined. And, naturally, we will work together (our colleague raised questions concerning the business community) to improve business environment. I hope that this will produce the desired results.

Los Angeles, please go ahead.

QUESTION: Sergei Loiko, Los Angeles Times. (Speaking in Ukrainian.) Mr President, please allow me to ask… (Speaking in Russian.) Oh, excuse me. It’s that I’ve just returned from Kiev, and the air of freedom has not yet cleared away.

VLADIMIR PUTIN: Great, go ahead with your question. You said the first part well; you prepared it nicely. Now, on to the next part.

SERGEI LOIKO: As everyone knows, a military operation occurred in Georgia in August 2008; as a result, Abkhazia and South Ossetia now host Russian military bases. Western commentators and politicians (many of them) still argue that this served to secure the separation of significant territories from a sovereign state.

My question concerns Ukraine. As is known, you received appeals, not from some sort of village or city madman, but from people in positions of authority, deputies, to send troops to Crimea. They were heard during some very large anti-government rallies, pro-European demonstrations in Kiev.

On the eve of the conflict in Georgia, Russian diplomatic missions were giving out thousands of Russian passports to residents of South Ossetia and Abkhazia. And later, when this conflict occurred, Russia stated that it had to protect the interests of Russian citizens.

I have a question. Is it possible, even hypothetically, that you may protect, in a similar way, the interests of Russian-speaking residents of Crimea, or Russian citizens in Crimea, or the military navy base in Sevastopol, in the event that the situation deteriorates? Is it possible at all that troops will be brought to Ukraine? We need a direct answer. And under what circumstances.

Thank you very much.

VLADIMIR PUTIN: You compared the situation in South Ossetia and Abkhazia to the one in Crimea. I feel this comparison is invalid. Nothing happening in Crimea is similar to what was happening in South Ossetia or Abkhazia. Because at the time, those territories declared their independence, and unfortunately, there was a large-scale (in a regional context), bloody interethnic conflict. This was not the first conflict of this sort, if we take into account the events of 1919 and 1921, when retaliatory operations were carried out after the fall of the Russian Empire, when these territories stated that they wanted to remain a part of Russia, not a part of the independent nation of Georgia. So this is nothing new.

Also, in order to stop the bloodshed, as you know, there were peacekeeping forces in these territories that had international status, consisting mainly of Russian troops, although there were also Georgian troops and representatives from these then-unrecognised republics. In part, our reaction was not about defending Russian citizens, although this was also important, but followed the attack on our peacekeeping forces and the killing of our troops. That was the essence of these events.

Thankfully, nothing similar is happening in Crimea, and I hope never will. We have an agreement on the presence of Russia’s fleet there. As you know, it has been extended – I think, in the interest of both states, both nations. And the presence of the Russian fleet in Sevastopol, in Crimea, is in my view a serious stabilising factor in both international and regional policy – international in a broad sense, in the Black Sea region, and in regional policy.

We are not indifferent to the status of our compatriots. And incidentally, we are constantly raising these issues as they apply to our compatriots’ status in several EU nations, particularly in the Baltic states, which still have the entirely uncivilised concept of a “non-citizen.” This term refers to someone who is neither a citizen, nor a foreigner, nor a stateless person – indeed, it is completely unclear who this kind of individual is, deprived of political and human rights and freedoms. And for some reason, our colleagues in the European Union tolerate this and consider this to be normal. We believe it is not normal, and we will continue fighting for equal rights. This is true for all states. But it does not at all mean we are going to swing our swords and bring in the troops. That is simply nonsense; there is nothing like this now and never will be.

QUESTION: Olga Zonova, Stil. Intellectualny Glyanets [Style. Intellectual Gloss] magazine, Novosibirsk.

I have the following question: could you please describe the three main concepts of your style of running the country and your vision of the state in 2018 in terms of some important internal and external parameters.

VLADIMIR PUTIN: Why three? Why not two, or five?

OLGA ZONOVA: Let us say several.

VLADIMIR PUTIN: I do not know if this is my style or not, but I am convinced that whatever level of administration a person is at, the most important thing is not to shirk responsibility for exercising your powers.

This is definitely the most important thing. The minute the head of a state, or a region, or a municipality begins to dodge responsibility – that is the end of it: everything begins to fall apart. This is a matter of principle. That is the first concept.

The second is that one should never make arbitrary decisions; you should listen to people with differing points of view regarding this or that issue. However, if we fork out, as we tend to say at our meetings, you need to be brave enough to take responsibility for the final decision.

In addition, there is one more thing I would like to draw your attention to. People who for a number of reasons find themselves at such a high level of authority, those who are vested with the trust of their people, should never break away from the life of ordinary citizens of their country.

You need to always be aware of the people’s everyday concerns and the challenges they face; you have to constantly think, day and night, of how to help them overcome those challenges.  Otherwise, your work is of no use.

Let us hear from Sochi. Could you please stand up, the person with the T-shirt that says Sochi? Are you from the media?  OK.

QUESTION: Mr President, there have been no questions on agriculture.

I represent an agricultural region. We are an agricultural region, but at the same time we…

VLADIMIR PUTIN: What region is that?

QUESTION: Kurgan Region. At the same time, we are an area of high-risk farming. This means that it is very difficult for us to grow a good harvest.

Meanwhile, currently the price of third-grade wheat in our area is seven rubles, while the price of diesel fuel is almost five times higher. Such is the imbalance we have to deal with.

Our agricultural workers are of the opinion that they do not need state support. What they need are proper grain prices. What do you think?

VLADIMIR PUTIN: But the maintenance of fixed grain prices is in effect state support. There is actually a number of tools the state has accumulated to support agricultural producers.

I said in my opening remarks that this year agricultural producers have made a significant contribution to the national economy and were a factor of its growth, small as that growth may be.

The country’s GDP has grown mainly through the efforts of those who work in agriculture. Grain prices are set by the market, of course, but the state has always supported agriculture.

I can list all the measures of support right now. These are loans at preferential rates, agricultural lease at preferential rates; these are extensions on loans and other resources obtained earlier, in connection with unfavourable weather conditions, in the case of your region these are droughts and floods.

We intend to continue this policy. As you may know, we have now introduced subsidies per hectare. We can argue whether this is enough or not, producers would probably say it is not enough, but this is also an instrument of support.

The same goes for influencing and maintaining prices. Initially the state gives certain indications of what the price should be. We have certain limits here mainly dealing with the fact that the state can influence the final price, but cannot set it. The Government, however, should monitor this.

Incidentally, the same goes for support in providing fertilizer and fuel. In the past, we did this differently, by somewhat ‘strangling’ fuel producers, so to speak, by reaching agreement with them that they would sell fuel at reduced prices, especially during harvesting or spring fieldwork. Now the Government is adopting a different approach, we are reverting to subsidies.

Of course, we need to closely monitor what is going on in real life and respond accordingly. We have not discussed this in detail with the Government lately, but we will, because there are a few problems here, mainly dealing with the regularity of financial allocations and with subsidies. We shall constantly pay close attention to this.

Mr Kolokoltsev [Interior Minister] here is saying that a group from the Interior Ministry Office has gone to Vanino, and Mr Peskov says we should be wrapping up.

Let us hear from the Urals, a very important region. It says “Urals” over there.

QUESTION: Hello, Mr President.  Anastasia Kolesova.

It says “Urals” because my head office is there, in Yekaterinburg, though I am from Moscow. Nakanune.Ru news agency.

VLADIMIR PUTIN: So you cheated, didn’t you?

ANASTASIA KOLESOVA: Just a tiny bit.

My question is somewhat strange. They said on the news today that they intend to restore monuments to all the leaders of the USSR in Moscow. I would like to know monuments to which Soviet leader would you like to see restored. Do you think this should be done at all? What do you think of the view that we should restore the monuments to Stalin and Dzerzhinsky in Lubyanka square?

VLADIMIR PUTIN: Firstly, this is the prerogative of the Moscow authorities, including the Moscow City Duma.

Secondly, can you tell me what is the big difference between Cromwell and Stalin? There is none. From the point of view of the liberal part of our political establishment, they are both bloody dictators. The former was actually a very cunning man who played a somewhat controversial part in the history of Britain; however, his monument is there, nobody is tearing it down.

It is not about the symbols, you see. It is about respect for every period of our history. I already mentioned that when they toppled the monument to Dzerzhinsky and people would chop off chips, even Anatoly Sobchak, former Mayor of St Petersburg, who was a true democrat, said: “Revolution is a good thing, but why destroy the monuments?” Though I have to admit that Cromwell lived quite some time ago, while for us this is still a very sensitive issue.

We have to treat every period of our history with care. It is best, of course, not to create any commotion, not to blow people’s minds with some untimely actions that could divide society. I believe the city authorities, the Moscow authorities in this case, will take this into consideration. However, it is up to them to decide which monuments to erect, where and when.

There was a sign that said “Estonia”.

QUESTION: Oleg Tesla, Radio Paldiski, Tallinn, Estonia.

My question is not only about Estonia. It is about the thirty million ethnic Russians who found themselves abroad after 1992. This is approximately one in every four ethnic Russians on the planet.

The program to resettle compatriots from other countries back in Russia has been underway for several years now. I did some calculations based on the number of people that resettled in the most successful areas over the past years. It turned out that it would take almost a hundred years to resettle at least half of the people who found themselves abroad.

I would like to ask what the Government of Russia intends to do to make this program more efficient. Thank you.

VLADIMIR PUTIN: I once said, as you may know, that the collapse of the Soviet Union was a tragedy of the 20th century.  Some of my colleagues raised an uproar, accusing me of some sort of hegemonism, of a desire to restore the empire. This is all rubbish!

I was referring to the humanitarian side of the issue first and foremost. You are right: people used to live in a single united country, there was no difference between Ukraine, Russia, Belarus or Kazakhstan – all were equal. There was no difference between them.

This, in fact, was the huge advantage of living together in such a big single state. It had its benefits; it gave us an edge in competition.

However, it so happened that people woke up one day, and the country was gone – and nobody asked them. They suddenly realised they were living abroad. All sorts of things started happening, including ethnic conflicts. People found themselves in a crisis, often without work, without any prospects for the future.

We have quite a few problems with our migration policy, but if there is anyone we need to bring back to Russia – it is, of course, Russians, and all people, generally, who wish to live in our country and be part of the Russian culture, regardless of their ethnic background.

There are many of these people on the post-Soviet space, even those who are not ethnic Russians. I think we should primarily focus on those who wish to be, and are a natural part of our cultural space, our linguistic space.

We are aware of all the problems you mentioned. The only limitations here are those of the labour market, and budget limitations of our fiscal system. We would have allocated more funds and expanded this work if we could. This is the only reason.

However, some other things remain unresolved and require special attention. I am referring to the category of people whom we should attract to the Russian Federation. This has to do with their culture, professional skills, their age and health. We should give priority to young people, who will live here, create families, have children and work in those areas of the economy that matter most.

There are quite a few purely bureaucratic limitations, certain injunctions that are non-discriminatory and inefficient, that cause our country certain damage. However, we should never ignore local residents, people who live on certain territories and whose interests we should support.

The sign saying Reform of the State Traffic Safety Inspectorate. What is your concern?

QUESTION: Alexander Zhikharev, AvtoMir magazine.

Mr President, cars play a big role in the life of any modern person; you own a Volga as well. Naturally, all drivers have to deal with the State Traffic Safety Inspectorate occasionally.

Things change, and the Inspectorate’s functions are also changing. It is no longer responsible for the technical inspection of cars, and it looks like stripping it of such responsibilities as driving tests and car registration is also only a matter of time.

That leaves the Road Patrol Service. However, according to statistics, over half of all traffic violations are caught on camera, and not by traffic inspectors.

Many countries do not have a special traffic police department.  A modern-day police officer can prevent crime both on the road and elsewhere.

How feasible do you think it is now for the Interior Ministry to have a special Traffic Safety Inspectorate? How reasonable is it in a modern metropolitan city to have both the police patrol and the traffic patrol service?

VLADIMIR PUTIN: As a driver, I personally know of all the drawbacks in the work of the Traffic Safety Inspectorate, of which there are plenty.  You said some countries do not have such a service. Some countries do not have a pension system either. Does that mean we should do away with ours?

I believe we should not follow the path of blindly copying what other countries are doing. We should understand what is going on there, analyse the situation, find the best practices and implement them in our country.

However, I don’t think it would be feasible to get rid of a special service that is concerned with road safety when 30,000 people die on the roads every year in this country.

Yamal, please.

QUESTION: Stanislav Tropillo, first Arctic TV channel Yamal-Region.

Mr President, only a week ago Yamal and the Transport Ministry signed a protocol on cooperation. This, among other things, covers such an interesting project as the Northern Latitude Route leading to the Sabetta seaport. There is a lot of discussion of the project, which is viewed as an alternative to the Trans-Siberian railway. It will create new jobs.

However, the project’s opponents are saying things have changed, the economic situation is different, so why don’t we freeze all such projects for a while.

As the number one person in the state, do you support the efforts of the regional authorities to promote such projects, given the current unfavourable economic situation?

VLADIMIR PUTIN: This situation will never get better if we don’t do anything. The development of the transport infrastructure is one of our main priorities. Those who do not want to do this are either missing something or are simply paralysed with fear of large-scale projects.

We need such grand projects, especially in the infrastructure.  The state is investing billions of rubles into the construction of the Sabetta seaport, mainly into the approach channels. What we have here is a situation where state resources are matched by private investment.

Moreover, private investment actually exceeds that of the state, and this is a very good signal that the project will be successful. I am sure it will be efficient.

The Sabetta port has an excellent location for shipping goods to America, Europe and Asia via the Northern Route. This is bound to relieve the load on such important transportation routes as the Trans-Siberian and Baikal-Amur railways, which we have already mentioned today. It will give us a new export route for the delivery of our goods to the world markets.  This is a very promising development and we will support it in every way.

What is that sign saying Debts, Mergers? It looks like the question has to do with the economy. Let us hear it. I wonder what mergers and debts are about?

QUESTION: Mr President,

Sergei Vasilyev, Pskov News Agency.

My question is not exactly about the economy.  As we all know, many Russian regions are now being subsidised.  According to statistics over the past year, their debt is growing, including the debt to the federal budget. Largely this is caused by the need to implement the May Executive Orders. This breeds fear in some regions, especially in the smaller ones, that they may be merged.  Could you comment on this?

VLADIMIR PUTIN: First, these two things are not connected in any way. We do have a problem with the economic self-sustainability of regions, their ability to address their own social problems. These federal regions were created formally after the collapse of the Soviet Union, while prior to that they operated within the economy in a different way.

I have given this example many times; it is something I know very well. The Leningrad Regional Party Committee used to cover both the city of Leningrad and the region. This was a single economic unit. Then one day the Soviet Union falls apart and we get two separate entities: Leningrad Region and the city of Leningrad. However, numerous ties continue to hold them together despite the fact that they have been divided. In some places, like Kamchatka, it was even worse, and the people realised it was a mistake, that the regions had to be merged. In some places this was done.  However, this is the prerogative solely of the regional authorities and the people living of those regions.  This is the first point.

Second, as for the lack of shortage of resources to implement the executive orders issued in May 2012. I said this in the Address to the Federal Assembly, and I will repeat: it is impossible to implement these executive orders, especially using extensive measures, now that the economy has slowed down, when economic growth is 1.5% rather than 5%. We must use a different approach. We have to cut inefficient costs, restructure the social network, the social sphere and the economy, to reach greater efficiency. That will give us the resources to implement all our plans. I have no doubt about it.

However, if some regions continue operating in the old way, they either will fail to implement the executive orders, or will ask for more money. However, this money has often been used inefficiently. The economic slowdown might even be a bonus for us now. This should drive the leaders of economic agencies and regional authorities to work more efficiently, to use methods that are more modern. I hope this is the way it will be.  I said the same in the Address to the Federal Assembly.

All right, time to wrap up. Let us have the final question on offshores.

QUESTION: Ilya Arkhipov, Bloomberg news agency.

In the Address to the Federal Assembly, you mentioned a number of initiatives regarding the elimination of offshore companies. I would like to ask about several specific companies. I found that the main revenue would not be generated in the head offices, which will be registered in Russia now. RUSAL, for example, is a toll smelting operation. Will you abolish it out? Or take Evraz, which is not registered in an offshore zone, but in London; and Russian Railways buy all of its rails. Will Mr Abramovich have to move the business and register it in Russia? Take another example: Mr Usmanov of Metalloinvest makes most of his profit through trading companies. Will he have to transfer all his trading operations to Russia?

And another question, Mr President, if I may. My colleagues have asked quite a few questions today that have to do with Ukraine. For example, my colleague from Dozhd said they do not like us in Ukraine. Russia’s image is in some way linked to the decisions made here, including those regarding Russia’s information policy. Thus, the person who has recently been put at the head of a new propaganda agency causes an allergic reaction in Kiev precisely because they consider Russia’s information campaign regarding their country as hostile. This is like showing news about America in North Korea.

Another issue that is of questionable benefit for Russia’s image concerns some laws that were passed recently, including the so-called Dima Yakovlev law. My colleagues have reported that some of the children that were to be adopted by Americans who had started the proceedings before the law was passed have died in the past year. Don’t you think such things damage Russia’s image?

VLADIMIR PUTIN: I hope you remember that some of the children that were adopted in the United States have also died.

ILYA ARKHIPOV: Of course, I do.

VLADIMIR PUTIN: You have to keep this in mind as well.

I would like to tell you that there should be patriotically minded people at the head of state information resources, people who uphold the interests of the Russian Federation. These are state resources. That is the way it is going to be.

As for the private media, this is normal. We have quite a few private media outlets, and they have the right and the duty to uphold the position held by their target audience, if we use the language of election campaigns. This is normal. This gives us the opportunity and the right to compare different viewpoints, so that when we deliberate some final resolution we can take into account the views of our opponents. This is what we do and how we intend to proceed in the future.

Now over to the main question about offshore companies. I am fully aware of the fact that there are great many loopholes. We spent a lot of time discussing the issue of relinquishing the practice of offshore businesses with our colleagues at the G20 summit, and at the last G8 summit. I assure you, as I already said, that every country in the world without exception supports this process, because taxes should be paid where profits are made. You use the resources of your country of residence, where your assets are, you enjoy the benefits provided by the state when you set up a certain business, and you use our labour resources. In that case, please pay here, so that the people who work for you can benefit from your taxes, which will be spent to pay higher salaries, retirement pensions, compensation for military service members, to upgrade our defence capacity and our law enforcement system.

There is no other way. You cannot make money, make use of everything, and at the same time hoard your profits in some other better place. True, we should create a better business environment in Russia. We still have a number of problems in this area. Therefore, we are working directly with the business community to jointly develop those very roadmaps that are still being criticised, and rightly so I suppose. However, we are moving in this direction and will continue to do so. There are many loopholes in terms of tax evasion, and we know them all.

Another problem here is that some countries do not provide us with the full range of information. That is exactly why we are joining certain international agreements in this area; this is why for the first time ever we held a meeting of all tax services in our country – this was in spring or summer this year, I believe. This is why we agreed to disclose our tax-related information to other countries, provided they do the same. We will continue to take this very seriously.

We have signed many agreements with offshore and quasi-offshore zones to avoid double taxation. If we find out that these countries are holding back some of the information they should be providing to us under these agreements, I wonder what we need such agreements for. We will draw our own conclusions. Though I hope we would never get to that.  I am certain we will be able to resolve all such issues on an intergovernmental level. Meanwhile, we will work with our businesses to make sure that we shift the profit centres to Russia gradually, without any shock or damage to the economy.

I wish you all a Happy New Year!

Thank you.

***

QUESTION: Mr President, there have been two amnesties this year. What about Mr Khodorkovsky: will he stay in prison?

VLADIMIR PUTIN: We had about a dozen amnesties in the recent past. As for Mr Khodorkovsky, I am sure you know, I have already mentioned this: the law requires that he write a special document – a clemency application. He had not done this until now.

However, very recently he did write such an application and appealed to me with a request for clemency. He has already been imprisoned for over 10 years now; this is a serious term.  He refers to circumstances of a humanitarian nature: his mother is ill. I believe that, given all these circumstances, it will be possible to adopt a corresponding resolution and I will shortly sign an executive order granting him pardon.

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