3 Dec 2009 17:42

SUMMARY: Putin fields 80 questions during four-hour televised Q&A show

MOSCOW. (Interfax) - Russian Prime Minister Vladimir Putin gave his annual TV call-in question and answer session on December 3. Putin fielded a record 80 questions from the studio audience and around the country in a show lasting four hours and one minute. Topics ranged from overcoming the crisis, including government support for various industries, to tackling crime, and offering support to Belarus.


The peak of the global financial and economic crisis has passed, but some turbulence in both the global and Russian economy is still in place, Putin said.

"You can say quite confidently that the crisis peak has been overcome, although turbulent trends in the global and, as a result, the Russian economy are still in place. It will take time and effort to overcome the crisis," Putin said.

"Basically positive trends are transpiring clearly," Putin said.

Russian GDP will shrink 8.5%-8.7% in 2009, Putin said.

He said GDP had grown 0.5% a month on average (seasonally adjusted) in the last five months. "I very much hope that this positive development will be even more marked by the middle of next year," he said.

"But we will of course still feel the crisis's slowdown effect in the first quarter and maybe the second quarter of 2010," he said.

Putin said some experts had predicted GDP would plummet 10% this year.

"It [the drop] is considerable, but less than some experts thought. It will be approximately 8.5%-8.7%. That's a lot. Industrial output has fallen more than 10% and year-on-year it'll be about 13%, probably," he said.

The Russian Economic Development Ministry estimates that GDP fell 9.6% year-on-year in January-October. Industry fell 13.3% in the period.

Russia will have inflation of approximately 9% this year, Putin said.

"We had a good figure [9%] in 2006 and this year [will also be good] also. We'll not only be down to single figures, but to 9%. Inflation will be minimal, about 9%," he said.

Russia had zero inflation in the last week of November and 0.3% inflation last month as a whole, compared with 0.8% in November 2008. Inflation was 8.4% in January-November 2009. It was 12.3% in the same period of last year.

The Russian Economic Development Ministry expects inflation to be 9% in 2009. Russia had 13.3% inflation in 2008, the highest yearly rate since the 15.1% recorded in 2002.

The official 2010 inflation forecast is so far 9%-10%, but the Econ Ministry says this may be lowered.


Some countries, among them the United States, are obstructing Russia's accession to the World Trade Organization (WTO), Putin said.

"Accession to the WTO is our strategic goal. We have an impression that certain countries, among them the U.S., are impeding our admission for no apparent reason," he said.

Integration between post-Soviet territories is also a Russian priority, Putin said.

"We welcome the formation of the Customs Union of Russia, Kazakhstan and Belarus," he said. "This Customs Union adds a new level of relations."

"We will enter into the WTO as a Customs Union member or individually, coordinating our position with Customs Union partners," he said.

Putin described the fact that the U.S. Congress has still not lifted the Jackson-Vanik Amendment restricting U.S. companies' trade with Russian ones as an obvious anachronism.

"This is an obvious anachronism, which members of various lobbying groups in the U.S. Congress are trying to use to solve quite narrow selfish and sectoral economic problems," Putin said.

These lobbyists "are tying this either to the need to increase quotas on poultry imports from the United States, or some other issues," he said.

"By the way, this evokes a negative response from the people who once suffered from the Soviet Union's policy and were imprisoned for anti-Soviet activities. They, who have emigrated to Israel and have made a political career there, also cannot understand why the U.S. political establishment is tying the Jackson-Vanik Amendment to the current economic situation and the resolution of narrow selfish sectoral economic problems," he said.

"This is reality, and we have to live with it today," he said.

Putin recalled that the Jackson-Vanik Amendment was imposed on the Soviet Union for obstructing Jews from emigrating to Israel.

"As we all understand, there are no restrictions now, and there is no Soviet Union, either, but the amendment is still in place, he said.


Russia needs to commission 10,000 megawatts of new power generating capacity in the next two years, Putin said.

"We commissioned 13,000 MW in the last ten years and have another 10,000 MW to do in the next two years. That's a very decent pace, and it also applies to the Boguchany hydro plant," he said.

He said the new owners of power capacity must honor their investment commitments. "Arguments that new capacity won't be needed due to a drop in demand are unfounded," he said.

Demand for electricity in Russia has indeed fallen during the crisis, Putin said.

"There is the view that it doesn't make sense to invest money [in generating] right now because we'll have oversupply to contend with. But I think those arguments are unfounded in view of the pace at which our own economy and the global economy are going to develop," he said.

"We can't afford to be late with the development of our power industry. We need to deliver these plans," he said.

"When working with new shareholders [in Russian power companies] I'd like to say that plans to develop generating capacity will definitely be fulfilled," Putin said.

In addition, Putin said there were proposals to expand the functions of System Operator UES to controlling. "Systems Operator has a department that collects information on technical regulations and there is a proposal to increase those functions to ones of control," he said.

Also, Putin said all power industry installations in Russia were being inspected and that the relevant proposals were being drafted. "But that's not enough. We need to think about controlling the technological aspects," he said.

"Equipment manufacturers need to provide support [for that equipment] at all stages of its service life," he said.

To a questioner from Khakassia, scene of an accident at the Sayano-Shushenskaya Hydropower Plant in August, who noted the lack of expected outcomes from reform of the Russian electricity system, Putin said, "When we conceptualized the reform, we thought that selling assets would provide funds for expanding and upgrading energy capacity. The new owners were burdened by these obligations."

These are set down in the associated documents, Putin said. In crisis conditions, economic indicators suffered and thus did electric power consumption. "There is an idea that it does not make sense to put that promised money in, as we face the overproduction of electric power. I think that these arguments are unfounded, and that we cannot allow ourselves to delay the development of energy, in order that we may enter a period of economic revival with the full provision of electrical power," he said.

"We have very big plans, and I have no doubt they will be met," Putin said.

The Turkmen-Chinese gas pipeline will not endanger energy cooperation between Moscow and Beijing, he said.

A Chinese journalist asked the question.

"We are aware of the Chinese gas needs and have close contact with our Chinese colleagues. We also offer them to expand cooperation. We do not think that the prospective gas pipeline from Turkmenistan to China will damage our plans," he said.


Russian assistance to Belarus should be synchronized with Union State integration, Putin said.

"There are various cooperation areas, but Belarusian authorities want more. That is possible, but, in my opinion, cooperation should be synchronized with Union State integration," he said.

"The more profound this integration is, the more opportunities we will have to apply Russian domestic prices and standards, including those in energy resources," he said.

Belarus has asked Gazprom not to raise its gas price in 2010, Putin said.

"The price must go up by contract. The rise is minimal, but it is still a rise," he said.

Belarus has received a sufficient amount of Russian loans, Putin said.

"In the opinion of our experts, we have assigned sufficient loans," he said.

Belarus also receives assistance from the International Monetary Fund (IMF), "which we constantly supply with funds and ask to transfer them primarily to our neighbors and allies," Putin said.

Belarus received a $1.5 billion loan from Russia in 2007, a $1 billion loan in 2008, and a $500 million loan in 2009, Putin said.

"Gazprom paid $650 million. In fact, Belarus received over $1 billion from Russia [in 2009]," he said.

Russia may approve a loan to building the first nuclear power plant in Belarus within several months, Deputy Prime Minister and Finance Minister Alexei Kudrin said earlier.

In addition, the Russian Finance Ministry is considering the Belarusian application for a $500 million loan within the $2 billion credit line, $1.5 million of which has already been transferred to Belarus.

Belarusian manufacturers cannot be granted participation in Russian programs subsidizing the purchases of agricultural machinery amid the crisis, Putin said.

"Belarusian agricultural machinery can enter the Russian market without any restrictions, but given the crisis in our own economy and the global economy, Russia cannot grant Belarusian manufacturers access to the programs of subsidization of machinery purchases," Putin said.

Otherwise, "our own factories will come to a halt," he said.

The Russian government in fact subsidizes the purchases of Russian-made machinery by domestic agricultural businesses, he said.

At the same time, "these are current problems, which could cause certain frictions," he said.


Russian car maker Avtovaz must not reduce the level of localization below 60%-70%, Putin said.

"We will never agree to a 'screwdriver' operation. Lada must be a self-sufficient enterprise with a high level of Russian localization, no less than 60%-70%," Putin said.

"Of course one thing or another can be taken for our partners' new line. That's quite natural," he said.

"The enterprise can still be saved today because it can move to a new model line, one meeting global standards. It has the manufacturing capacity, experienced, well-trained people, and developed infrastructure and a developed brand. To this day Lada remains Russia's best-selling brand. If nothing is done, then Lada will lose its position on economic grounds, and Avtovaz will quit the market, and that might set irreversible processes into motion. People won't buy the plant's production and we aren't going to force them to. Everything will come to a standstill. We can't fence off the market, as in Soviet times. Our consumers want quality products and will demand access to the most up-to-date auto technology. Lada must rise to the challenge, and it has the ability to do that," Putin said.

Speaking of Avtovaz's partnership with Renault, Putin said: "Renault was already here. It had purchased 25% plus one share at the top of the market, just before the crisis. We are very careful with our partner. When we provided the first tranche of state support, we did it through Rostekhnologii, so that Renault's stake wouldn't be diluted. But after that we told our partner: we consider that we have met our commitments to you. Now let's think about the way forward together. And make our contribution in a consolidated fashion, in proportion to our stakes in the enterprise," he said.

Prior to and during Putin's recent visit to France, the two sides managed to "reach agreement and the French partners confirmed their desire to continue the work," he said.

"For now their stake has not expanded to controlling. And the state in the form of Rostekhnologii remains the leading shareholder. An investment company also owns a stake," he said. Putin recalled that Renault will contribute 300 million euro in technology and equipment in order to raise Avtovaz up to global standards in its market segment.

"It will be a new car on a new platform under the Lada brand. We mustn't waste that brand, even if there are changes in the foreign partners' stake," he said.

The Russian government will allocate 10 billion rubles for a program in support for the disposal of old cars, Putin said.

"We will allocate 10 billion rubles to buy old vehicles that have been in use for at least ten years," Putin said.

The government will also continue financing programs on renovating the fleets of cars for municipal and federal needs in 2010 as a measure to support the domestic automotive industry, he said.

"There was a temptation to slightly cut the program of purchases of automobiles for municipal needs, but the heads of municipalities persuaded me that this program should be extended through 2010 as well. We will think what sources this should be financed from," he said.

The Industry and Trade Ministry forwarded a package of proposals to other agencies in late November to hold an experiment on disposing of used cars, which is to last from January 1, 2010 to January 1, 2011.

The government is ready to finance KAMAZ investment projects through VEB, said Putin.

"We are ready to support [the company's investment projects] through VEB," he said.

The implementation of investment projects for renewing the plant's model range will require about 10 billion rubles. These funds could be divided in four areas: a new engine, a new gearbox, a new cab, and a new four-wheeled vehicle, KAMAZ said in mid-November. These funds are expected to be raised through lending, presumably, by VEB, it added.

KAMAZ plans to receive a state-guaranteed 2.5 billion ruble loan from Vnesheconombank before the end of 2009, the company also said.

In 2010 the company expects to produce and sell 1,500-2,000 more cars compared to the expected 2009 indicator, according to the company's preliminary production plan. In 2009 KAMAZ plans to produce 24,500 cars and to sell 26,500-27,000 vehicles.

Machine building

The government has approved the rescheduling of debts of 46 billion rubles for United Aircraft Corporation (UAC), Putin said

"The company's debts of 46 billion rubles will be rescheduled within several years," he said.

"The corporate balance will be improved, a normal functioning will be ensured, and funds will be drawn for the development of the corporation and the aviation industry at large," he said.

"Alas, the UAC inherited past problems and large debts," Putin said. "The government decided to donate several billions of rubles to the corporation charter fund [the government share in the UAC by-issue is 23 billion rubles]."

Support to the Sukhoi Company was approved earlier, Putin said.

"Despite problems in the civilian segment of the domestic aircraft industry, I believe it has a good future and will work steadily in the coming years," he said.

The Russian government has ordered 17 billion rubles to be allocated to the Amur Shipbuilding Plant over several installments between 2009-2014, Putin said.

The plant should receive 1.9 billion rubles by the end of 2009, 1.6 billion rubles in 2010, 3.2 billion rubles in 2011, 2012, and 2013, and 3.4 billion rubles in 2014, he said.

"We really expect that this money, along with the efforts being made to load the enterprise, will promote its recovery and stable work," he said.


A long-term contract on supplying raw materials to plants in Pikalyovo in the Leningrad region should be agreed upon in the near future, Putin said.

"As for the problems at the Pikalyovo plants, it is important to conclude a long-term contract for 2010 entirely," Putin said.

"Information that I have indicates that such a contract should be concluded between all the participants in the process in the near future," he said.

"I think this should take a load off the workers' minds, and the enterprises will start working steadily. I think the most pressing problems will be resolved in the near future," he said.

Putin, however, said that it is wrong that the federal government should address the problem of the plants in that region and called for its economic activities to be diversified.

New plants will be built to possibly supply raw materials to Pikalyovo, Putin said.

Chemical raw materials should be processed at 90 percent or more, Putin said.

This demand will force processing companies to reach agreements with raw material suppliers, he said.


The state will continue to invest in agriculture programs, Putin said.

Putin praised agricultural workers and said Russia's economic performance was better than expected thanks to their efforts. "In some areas they are impressive, particularly livestock production," he said.

A trade regulating law which is being prepared for the second reading in the State Duma will resolve many problems in relations between farmers and trading networks, Putin said.

"Agricultural producers highlighted relations with trading networks. The State Duma is hearing the law. It will resolve many problems important to farmers," Putin said.

For instance, the law will reduce the time of payment for delivered products. Shops will have to pay for bread within 72 hours, for perishables within ten days, for other foods within 30 days, and for alcoholic beverages within 45 days, Putin said.

"Some other provisions will harmonize relations between producers, processing companies and shops in the interests of buyers and producers," Putin said.

Russian agricultural production will grow 0.5% this year, Putin said.

"Agriculture, which used to be called 'a black hole', will grow 0.5% this year," he said. The growth will be larger in certain agricultural sectors, including 10% in cattle breeding.

The growth could have been larger if wasn't for a decline in grain harvest, Putin said.

Russia will produce 93 million tonnes of grain in 2009, compared to 108 million tonnes in 2008, Putin said.

"Nevertheless, agricultural production will grow 0.5% on average this year," he said.


New regulations limiting prices for vital medicines will take effect in Russia on January 1, 2010, Putin said.

Putin listed proposals that government experts have made to prevent hikes in prices for vital medicines.

One of these proposals is the registration of manufacturers' prices for vital medicines, he said.

"The second measure is the following: the Federal Tariff Service should develop a methodology restricting regional authorities' powers to set retail markups," Putin said.

These measures, on the one hand, will set fixed manufacturers' prices, and on the other, will restrict retail markups, he said.

Putin called for tougher punishments for officials and businesses who set unreasonably high prices for medicines.

"We need to more actively hold liable those officials who tolerate surpassing the retail markups, and there are such violations today, despite the fact that these markups are already quite high," Putin said.

Such people "are subject to administrative liability - this could be financial liability, including a fine equal to a double size of unlawfully gained profits, or their discharge from their duties and disqualification for several years," he said.

"Criminal punishment can also be applied," Putin said.

He said these and other measures being taken by the government should stabilize prices for medicines in 2010.


The state will allocate 250 billion rubles in 2010 to reduce mortgage loan interest rates to 10%-11% annually, Putin said.

According to the Central Bank of Russia the average weighted rate on home loans provided in rubles came to 14.4% in September.

According to the Agency for Home Mortgage Lending (AHML) mortgages are being provided at 10%-11% in line with its standards, which is creating more access for home loans and equals the figures set in state policy for housing construction.

State support for home lending is implemented through the provision of additional funds to the AHML. In 2009, the agency has already received 20 billion rubles from the state for increasing in its charter capital. In addition, in accordance with law until June 1, 2010, the AHML has the right to receive loans from Vnesheconombank (VEB) worth up to 40 billion rubles at 9.5%.

Putin also said that returns of the sale of Yukos Oil Company were invested in the Housing and Public Utility Fund.

"The proceeds were transferred to the budget," he said.

"We invested 240 billion rubles in the Housing and Public Utility Fund. Ten million people have had their homes repaired, and 150,000 will be resettled from slums with this money," he said.


Putin said he would think about possible participation in the presidential election in 2012.

"I will think about it. There is still time," he said.

President Dmitry Medvedev does not rule out his participation in the presidential election in 2012.

After Putin's call-in, a journalist asked Medvedev whether he might compete with Putin in that election.

"Prime Minister Putin said he did not rule out that possibility. I do not rule that out [my participation in the election] either," he said after Russian-Italian interstate consultations.

"Like both of us have said, we are close to each other, understand each other and work together. We can avoid pushing elbows and make a reasonable decision for the sake of this country," he said.

The decision will be made only in case "Mr. Medvedev and Mr. Putin have any chance to win the election. We cannot foresee the future and cannot say what may happen in several years," he said.

"Anyway, we will act like responsible politicians should," Medvedev said.


It is unnecessary to reshuffle the Russian government, Putin said.

"Why should we do that?" he said.

The Russian Interior Ministry should not be dismissed, Putin said.

We must tackle police crimes hard, but "it is impermissible to blacken all police officers," he said.

"Ukraine, our friend and neighbor, has had a similar situation. They dismissed the traffic police but that did not work well: bribes enlarged and road safety declined with the transfer of traffic police functions to unprepared agencies," he said.

"There are many problems in the provision of law and order. Unfortunately, some lawmakers breach laws. They cause irreparable damage to health and life of our citizens instead of protecting them," Putin said.

"Whenever a law enforcer breaches law, he must be punished severely," he said.

"The reaction to such a negative phenomena must be firm, unsympathetic and rapid," he said.


Reforms of the Russian armed forces aim to improve their mobility and efficiency, Putin said.

"The army needs new weaponry, military hardware and combat techniques to be efficient under modern circumstances," he said.

"The General Staff and the Defense Ministry target for the reform of the army and military security in general," Putin said.

Brigades are being formed "to make the army more mobile and enlarge it with personnel and military hardware in case of hostilities," he said.

"If we achieve the goal, we will provide national security," Putin said.

No decision has been made thus far to purchase a Mistral-class French helicopter carrier for the Russian Navy, Putin said.

"The decision has not been made yet. I think that before making such a decision, we will, of course, think well, and assess our defense industry's capabilities, including in military shipbuilding," Putin said.

Russia does not need to buy arms and hardware from abroad to maintain its defensive capabilities, he said.

"Of course, to maintain our defensive capabilities we do not need to buy arms from abroad," said Putin.

Russia ranks second in the world by arms exports, the prime minister said.

Many models of Russian weapons and military hardware "for operation on external markets" are produced under NATO standards, he said.

"It is easier to sell," Putin said.

Despite the crisis in the Russian defense industry, there has been a 3.7% output growth, he said.

This is not a bad indicator, given the many problems in the industry, in particular the need to re-equip the leading defense enterprises, Putin said.

"All these problems are solvable. And we are and will be solving them," he added.

The events in Ingushetia and Dagestan will not develop into a new Caucasian war, Putin said.

"That won't happen. A Caucasian war cannot start there," he said.


Terrorism has not yet been fully eliminated in Russia, and everyone needs to be aware of the threat to fight it, Putin said.

"We have done a lot to break terrorism's backbone, but the threat has not yet been eliminated," Putin said.

The first question addressed to Putin concerned the recent explosion of the Nevsky Express train.

Putin said "the entire society, each of us, should understand this threat and be vigilant."

Speaking about the possibility of preventing such crimes, Putin said, "This is very difficult, especially at infrastructural facilities. But it is possible to act efficiently. It's necessary to act in a forestalling mode," he said.

"The FSB [Federal Security Service] and the Interior Ministry should be given credit for often being successful in this," Putin said.

"However, the tragedy shows that work in this area should be stepped up," he said.

Three rear railcars of the Nevsky Express train en route from Moscow to St. Petersburg were derailed on the evening of October 27. The accident killed 26 people and injured more than a hundred.

The derailment is believed to have been caused by an explosion of a remote-controlled improvised explosive device equivalent to some seven kilos of TNT.

Corporate raids should be punished more severely, Putin said.

"In my view, sanctions for these crimes need to be strengthened," he said.

"[This is] a sore spot, a result of poor regulation and insufficient attention paid by the government to these problems," he said.

"Today there is a proposal to bring various problems existing in this area and scattered around various crime categories, as a whole and form one category of corporate raiding," the prime minister said.

Law enforcement representatives, including the prosecutor general and the chief investigator, believe that this will make "work easier and more efficient," Putin said.


A government monopoly on alcohol products would not solve the problems facing the state and its citizens in this area, Putin said.

"Experts think that a government monopoly on alcohol products will not resolve all the problems facing the state and citizens," Putin said.

"A decision is being worked out regarding the main tax - excise [tax] - being shifted to alcohol, to alcohol plants," Putin said. "The idea is that the government would thereby collect all the resources due to it immediately, at the first stage of alcohol production."

This step would also make it possible to avoid [illegally produced] alcohol product that endangers public health, Putin said.

The birthrate is growing in Russia at a record speed, Putin said.

"We have the birthrate growing at a record pace - it will be more than 3% - and the mortality rate is declining," Putin said.

This signals that "the people believe in the country's positive development, and this belief is among the most important and significant things in the current situation," he said.

The growing birthrate is also producing a positive economic effect, as demand in the country is growing as well, Putin said.

"By the way, demand is growing slightly as well," he said.


Putin has denied supporting his Ukrainian counterpart Yulia Tymoshenko in January's presidential elections in Ukraine.

It is not a question of supporting Yulia Tymoshenko in the Ukrainian presidential elections. "I cooperate with Yulia Volodymyrivna [Tymoshenko] as the prime minister of the Ukrainian government," Putin said.

Russia and Ukraine enjoy "a great amount of cooperation" and are implementing a joint action plan, he said.

"As you know, at the party level, we have special relations with the Party of Regions" of Ukraine, Putin said.

The Party of Regions of Ukraine is considered a key opponent of the Batkivshchyna party led by Tymoshenko.

Some individual personalities in the Ukrainian leadership, who speculate on problems facing the country, will fail to ruin friendly relations between Ukraine and Russia, Putin said.

"Individual figures, who have crept into that country's leadership, speculate on problems and on difficulties of the past and present. And they are doing this - let me stress this - for their own personal egoistic political interests. They will fail to ruin the centuries-old tie between Ukraine and Russia," Putin said.

Regarding relations with other states, Putin said Russia has no information about Iran working to create a nuclear weapon.

"We have no information about Iran working to create a nuclear weapon," he said.