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President of Russia VLADIMIR PUTIN: Good afternoon, colleagues.

Today we will discuss the issues we did not have time for last time – primarily, measures to enhance the mobility of labour resources. This is a very important issue, and a very complicated one. Besides, we will hear the Finance Minister on de-offshoring the economy – something we have frequently spoken of, something mentioned in the President’s Address.

First, however, I would like to ask my colleagues [to consider] a few current matters, maybe not exactly current, but important ones. The first one has to do with the current events and a simplified procedure for obtaining Russian citizenship by speakers of Russian.

We have invited Mr Romodanovsky today to hear about their progress and their plans for the near term.

Konstantin Romodanovsky: Thank you.

Mr Putin, meeting participants,

In line with your instructions, Mr President, we drafted the law on reduced terms of obtaining Russian citizenship by compatriots, which came into effect on May 2. Now those of our compatriots who meet the 4 criteria can apply for and obtain Russian citizenship within only a year instead of the usual eight.

They have to meet the following criteria. Permanent residence of direct ascendants or the compatriots themselves on the territory of the Russian Federation or within its limits, I mean the Soviet Union or the Russian Empire. Moving to the Russian Federation for permanent residence. Renunciation of their previous citizenship. The most important new criterion is the status of a speaker of the Russian language.

The status of a speaker of the Russian language is established by a commission that is set up by the Federal Migration Service and includes linguists, among others. The requirements correspond to the Education Ministry fourth level, which means the ability to orally narrate the contents of some written text, which is a relatively high level. Given the Russian language speaker status and confirmation of application to renounce citizenship, we provide resident status within two months. After the citizenship renunciation documents are supplied, we accept the citizenship application documents. Thus, instead of the usual 8 years, it can take within one year for a person to become a citizen of the Russian Federation.

As of today, two of the four substatutory acts have come into effect, the other two will become effective as of July 31, as established by the Government. This is the Presidential Executive Order amending the Regulation on Citizenship, which lists the documents that are to be presented to obtain Russian language speaker status, and a new type of visa – a visa to obtain citizenship. I believe that as of August 1 the law will come into effect in full. We are already setting up commissions and making certain first steps.

As for citizens of Ukraine, we see certain complications and risks linked to renouncing their Ukrainian citizenship and with obtaining documents testifying to this. I believe people who were forced to leave Ukraine because of the developments there will have serious problems. We suggest taking this up at the Presidential Commission for Citizenship to develop recommendations for the Federal Migration Service.

Thus, we find it possible to present both the application for renouncing citizenship and a declaration stating the inability to renounce citizenship for reasons beyond a person’s control.

Vladimir Putin: Do you find this sufficient for obtaining Russian citizenship?

Konstantin Romodanovsky: We see it as sufficient replacement of the document testifying to renunciation of Ukrainian citizenship.

Vladimir Putin: To be followed by the granting of Russian citizenship?

Konstantin Romodanovsky: After all those documents are handed in, we, naturally, accept applications for citizenship and the person receives citizenship.

Vladimir Putin: I see.

Konstantin Romodanovsky: Mr Putin, at the same time we have made some amendments to the corresponding draft Presidential Executive Order, which is almost ready, and which states the principles of the national program for the relocation of compatriots. We suggest including the people who have received temporary asylum into the group eligible for this national program. This is clearly an additional channel, helping the people who were forced to leave Ukraine because of these events. We have also drafted a resolution to be issued shortly that would reduce the time required to obtain a temporary refugee status.

These are the three things that will help resolve the situation in Ukraine and help both the people who were forced to leave and all other categories whom we view as compatriots.

This is the end of my report.

Vladimir Putin: Only not in Ukraine – there is hardly anything we can do there, but for those who have come from Ukraine.

Konstantin Romodanovsky: Yes, of course, those who were forced to leave Ukraine.

Vladimir Putin: Yes, thank you. 

I know that the Government has adopted a draft plan to create additional high-tech jobs and to resolve one of the key issues of the economy – that of raising labour productivity. I would like to ask the Minister of Economic Development to say a few words about this.

Alexei Ulyukayev: Thank you.

Mr Putin,

It is true that the Government issued an order confirming the plan to increase labour production, and we have already begun to implement it. I will not go into detail about the plan’s positions. I will state what we are currently working on, for the 2014 period.

First, this is an investment project, a project-financing programme. We must provide a full regulatory framework by October 1. In other words, the criteria and demands for selecting the projects that are presented to their participants – this is a more simple and transparent guarantee mechanism that should lower risks for participants in the project, as well as the acts of the Bank of Russia that determine requirements for participating banks and the regulatory settlement of this process.

In order to apply the best available technologies, we propose combining the conditions of presenting manufacturing guarantees and support measures with carrying out measures to implement the best available technologies. In 2014, we plan to move forward on a special assessment of jobs, regulating legislation on this issue and developing necessary professional standards. I am referring to about 400 sets of professional standards and 120 federal government educational standards that must be adopted by the end of this year.

The topic of increasing labour resource mobility will be addressed separately by the Minister; I will merely say that we plan to create a rented housing programme and supporting legislation, and to implement that programme in 30 federal constituent entities.

Regarding the creation of modern jobs within small and midsize businesses. First of all, as I reported earlier, the Credit Guarantee Agency launched operations in July. By the end of the year, we must ensure an output of 50 billion rubles’ worth of guarantees and counter-guarantees that will allow for the corresponding job creation. I am referring to projects with a volume of 100 to 300 million rubles, first and foremost for midsize businesses, lasting 7 to 10 years, to ensure the creation of modern, up-to-date jobs in this segment of the economy.

We intend to establish a system for monitoring this work. The Economic Development Ministry will provide corresponding information while the Government Commission on Economic Development will pass judgment on the forecast for carrying out those measures, as well as existing risks, in order to prevent them ahead of time, in addition to the current status in achieving targets and development indicators. Moreover, in accordance with the Government order, we plan to compile a report twice yearly on the state of the work to create modern jobs and increase labour productivity.

That, in summary, is what we are working on.

Vladimir Putin: Thank you.

Ms Golikova, the Accounts Chamber has audited the work of heavily subsidized Russian regions and looked into how the budget is formed, how the revenues and expense accounts are being implemented.

Could you please say a few words about this?

Tatyana Golikova: Thank you.

Mr Putin, colleagues,

Given the relevance of this topic – balancing budgets in the regions – we conducted a comprehensive audit assessing the work of highly subsidised regions for the 2011–2013 period. This includes seven regions of the Russian Federation, with which the Finance Ministry has signed corresponding agreements in accordance with budgetary legislation. They are the Republic of Altai, the Republic of Tuva, Dagestan, Ingushetia, Chechnya, the Karachayevo-Circassian Republic and Kamchatka Territory. During the 2011–2013 period, these highly subsidised regions remained constant. The volume of expenditures for those budgets was, in execution, 288 billion rubles.

What has the audit shown? The auditing activities showed that for regions with which the Finance Ministry has signed agreements, these agreements are highly formal. And a significant number of indicators that are stipulated in these agreements are either not fulfilled by the regions or are not fulfilled on time.

Vladimir Putin: Excuse me, I have an immediate question. Are the problems with formal requirements related to the fact that the requirements were, in fact, not properly presented?

Tatyana Golikova: Partially, yes, I was just going to say that it is hard for the Finance Ministry to require something, in part because these regulations do not exist in the budget legislation – in other words, they cannot be penalised with any sanctions.

And moreover, if financial sanctions are imposed, it is unclear how the socioeconomic situation of these regions will develop, because for these seven regions, the share of government grants, in other words, money not allocated toward specific goals which we are providing for fulfilling the budget, accounts for an average of 75% of those budgets.

But in this regard, it does not mean we should not do anything. Because the indicators stipulated in the agreements by the Finance Ministry, which the regions fail to adhere to, traditionally include the following: non-adherence to budget deficit limits, reduction of the state deficit level, not ensuring the elimination of overdue debt for dates that are specified in the agreements, untimely and low-quality confirmation of programmes for the efficacy in using budgetary funds and corresponding programmes to mobilise their own income to their budgets.

What I am saying is that some of the measures could certainly be carried out with the appropriate level of administration, including on the part of these regions’ leadership – measures that are included in these agreements. Indeed, there may be specificities in each region, and it does not mean that they should be standard.

But there is another aspect to this problem. Given that about 75% comes from government grants and 25% comes from subsidies – in other words, targeted money – we have a problem from our end as well. In order to provide subsidies, these regions must direct their funds toward the specific spending powers that are being financed. At the same time, they cannot do so, because up to 75% of their budgets depend on how quickly they receive the financial assistance coming in the form of government grants. This results in a vicious circle.

But there is a problem from our side. Unfortunately, the agreements on providing targeted subsidies made by our federal executive agencies generally are being completed through the whole year, even though the Government would have issued a corresponding resolution by the due date. In general, the subsidies are provided in the fourth quarter, and even worse, it’s usually in December or even the end of December. As a result, what happens? Tuva is a typical example: 4.5 billion in subsidies were transferred in the fourth quarter of 2013, with 2.3 provided in December and 700 million after December 20.

Who were the worst culprits? The State Committee for Housing Policy, the Healthcare Ministry, the Sports Ministry, the Federal Road Agency, which transferred most of their funding at the end of 2013. What ended up happening? Well, 1.5 billion rubles of the funding remained unused, 800 million rubles ended up in bills receivable, the funds were returned on January 1, 2014 and had to once again be reconfirmed in order to be retransferred to the regions.

Unfortunately, this situation was the same in nearly all the regions, and not just those regions but nearly all regions that received subsidies. On January 1, 2014, a fairly significant volume comes up that needs to be reconfirmed, but the new year arrives, and in the new year, new agreements must be signed on receiving subsidies.

What is my point? It is very simple.

First of all, even though these regions are heavily subsidised, in my opinion, we still need to make changes to the Budget Code so that, perhaps, rather than taking financial measures, we take some sort of administrative measures for not abiding by the signed agreements. Perhaps we should not stop all financial assistance, but limit it to suspending some fraction of the financial assistance until the conditions they themselves signed are met.

Finally, the Budget Code and budget legislation allow for signing medium-term contracts. We can confirm subsidies, particularly when we are talking about providing subsidies not for one year but for three years at once. Then, there won’t be a need to return it each year and re-sign the agreements. In this regard, the financing and fulfilment of requirements will occur more rhythmically and we will not see the problems that are occurring today – again, I repeat, not just in these seven regions (which are simply the most sensitive in terms of their financial situation) but in nearly all regions.

Unfortunately, today, we still have a situation with the main disbursers of funds wherein subsidies are confirmed via the Law on the Budget and one-year agreements. And every time this administrative procedure is repeated represents wasted human and administrative resources, and, as a result, the inefficient use of funds.

Vladimir Putin: We are well aware of the pressure in the regional budgets; we often discuss them and address these problems. It is true that certain issues require our additional attention. But it is entirely clear that we need to move forward in areas where we can resolve issues by improving administration and increasing financial discipline.

So I have a request to Dmitry Kozak based on the results of the Accounts Chamber’s audit of these regions: please gather the heads of these regions together with the Finance Ministry – and if necessary, you can get others involved – to analyse the situation and make appropriate suggestions and report to the Prime Minister.

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