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President of Russia Dmitry Medvedev: Mr Khloponin, we have been working on developing the North Caucasus over the last few years, including by developing tourism and other areas in which the region has potential opportunities. Along with the financing decisions made at the Government level, this work requires us to put in place a complete modern legal framework for these projects. We have now drawn up this framework and already passed a number of laws and bylaws. I have signed several documents related to these matters in the last few days. 

I would like to hear from you in more detail now on the work currently underway and the steps needed for the project’s practical implementation.

Deputy Prime Minister and Plenipotentiary Presidential Envoy To the North Caucasus Federal District Alexander Khloponin: Mr President, the tourism cluster development project that was drawn up under your direct oversight and is now being implemented in the North Caucasus district is one of our priorities. This is because, firstly, it concerns infrastructure development in almost every region in the North Caucasus, and will see the creation of more than 300,000 new jobs in a part of the country where unemployment is one of the biggest issues at the moment. Total investment in the special zones that will be developed comes to more than 600 billion rubles [$20 billion].

As the project has been conceived, the plans are to build more than 1,100 kilometres of ski tracks, around 227 ski lifts, and hotels with capacity of more than 100,000 beds. Under the plans, the cluster will be designed to handle more than 175,000 visitors daily, and receive a total of more than 10 million visitors a year. This is a truly large-scale infrastructure project and one of our biggest undertakings.

The experts estimate that along with the 300,000 new jobs created by the cluster itself, the project will also create more than 200,000 other jobs in related sectors – small and medium-sized businesses of various kinds and agricultural cooperatives supplying produce and creating the whole service infrastructure. The project will therefore draw a huge number of people into its infrastructure and thus create real conditions for job creation and resolving the unemployment problem.

The project involves the establishment of six special economic zones. The decision was made, again, thanks to you, to also develop a coastal cluster in the Republic of Daghestan. Now, following your instruction, the concept is being drafted for a project to develop the spa centre based around the Kavkazskiye Mineralniye Vody area (Caucasian Mineral Waters) as a tourism centre of particular value for the country. This is also one of our priorities and we are working on it now.

As for what has been done so far over this time, the six new special economic zones have been established. Agreements have been signed with all of the regions involved in the cluster’s development, and with all of the municipalities involved. We are now in the process of sorting out the technical matters related to land valuation and valuation of the assets and facilities already in place there. This work will be completed very soon. 

Under your oversight, the North Caucasus Resorts joint-stock company has been set up with charter capital of 5.350 billion rubles, and the budget has allocated funds for topping up the company’s capital this year, bringing it up to 12 billion rubles. The company has already signed an agreement on establishing a joint venture with French partners, which they plan to register this month. The joint venture’s charter capital will be around 1 billion euros, of which 51 percent will come from Russia, and the other 49 percent from the French investors.

Furthermore, at the end of 2011, a federal law was passed, introducing amendments to federal regulations on special economic zones. The law gives residents of these zones additional economic benefits such as profit and property tax breaks, some preferential conditions for insurance payments, and a simplified entry visa system for foreign citizens taking part in the project’s development. These are big incentives that will help to attract more investors to the project.

Along with this, the Government has decided to provide government guarantees of up to 70 percent of the total sum invested. The federal budget has made provisions for these guarantees, which we will use as an effective mechanism for developing the special economic zones. 

We already have agreements and memorandums of understanding with specific participants in the project. They include Anglo-German and Korean companies ready to take direct part in developing energy facilities in the zones, and also Russian companies such as Arkhyz-Sinara, Nafta Moskva and others that have already signed memorandums of understanding and are ready to take part in the project’s active development. 

Everything is going ahead completely in accordance with the project timetable and we will keep you updated on every new decision.

Mr President, there are two other matters that we and the experts think need particular attention. First is the human resources issue. Our main goal is to create new jobs, but we want these highly-skilled jobs to go above all to the people living in the North Caucasus. Together with the North Caucasus Resorts company, we therefore plan to carry out a special programme to establish vocational education schools and centres in the regions to give students the basic skills and professional training they will need so as to be able to then work in the tourism cluster project.

”For a long time foreigners perceived the North Caucasus as a problem region, including in terms of security. But if foreign investors, and Russian investors too, are willing to put money into the region it means that they have confidence in the North Caucasus’ development today and in the plans to develop these modern tourism zones.“

The main institutions that will take part in drawing up these training programmes’ content and standards will be the Olympic University that is to open in Sochi, and the North Caucasus Federal University, under your patronage, which will train specialists at the higher education level. 

The second issue that requires further work – and in this respect I turn to you – is the question of ensuring security in the zones. This is an issue today, after all. We therefore ask you to hold a meeting on these tourism zones. 

Dmitry Medvedev: Good. If we want the North Caucasus to have a stable life and not be any worse than any other part of the country, we need to ensure that it develops according to normal and clear modern laws. This was why I initiated this idea and why we passed the various laws you mentioned. This work continues now at the Government level.

I hope that the various investment proposals that have been made will indeed be carried out. I am pleased to see that our foreign partners have confidence in our ideas and proposals, because it is no secret that for a long time foreigners perceived the North Caucasus as a problem region, including in terms of security. But if foreign investors, and Russian investors too, are willing to put money into the region it means that they have confidence in the North Caucasus’ development today and in the plans to develop these modern tourism zones.

On the human resources issue, I agree with you completely. Jobs should go first and foremost to the people in the regions, to people currently with or without employment in the regions of the North Caucasus and Southern Federal Districts. The new jobs should be created for them above all, but they also need to be ready to fill these jobs and develop the skills they will need to be able to take part in developing modern tourism clusters and ski resorts. This isn’t just grilling shish kebabs, after all, but is something that requires serious skills of the kind used at similar resorts all around the world.

We therefore do need to develop training within the universities we already have and also establish intermediate vocational education schools to train people to work in this tourism cluster and provide a level of service as close as possible to world standards. Anything lower and our own people will not go there, not to mention foreign tourists, and so we have to make sure that everything is of the highest standard.

Overall, I think this is the right road and a positive project. A lot of our attention is concentrated on Sochi at the moment, but southern Russia and the North Caucasus do not begin and end with Sochi. Of course, Sochi is a big and very important resort centre, and will be hosting the Olympics, but we also have many other very interesting places in which we need to invest money and effort and put our minds to work developing modern resorts there. Keep me updated about developments. As for holding a meeting on these matters, I am willing to do so.

Thank you.