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Attending the meeting were Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, First Deputy Chief of Staff of the Presidential Executive Office Sergei Kiriyenko, deputy prime ministers Viktoria Abramchenko, Yury Borisov, Tatyana Golikova, Alexander Novak, Marat Khusnullin and Dmitry Chernyshenko, Deputy Prime Minister and Chief of the Government Staff Dmitry Grigorenko, Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev, Presidential Aide Maxim Oreshkin, Minister of Economic Development Maxim Reshetnikov and Minister of Finance Anton Siluanov. A number of other ministers, heads of the Accounts Chamber and Rospotrebnadzor, and heads of Russian regions were also invited to attend.

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Excerpts from transcript of meeting with Government members

President of Russia Vladimir Putin: Good afternoon, colleagues,

You and I discuss this problem almost every day, and we are focusing on it. Unfortunately, the entire world is still dealing with it. I am talking about the COVID-19 infection and its spread.

Colleagues have reported yesterday and the day before yesterday, and I just had a look at the latest numbers both for our country and certain regions, and for our foreign neighbours. The overall picture is clear. Nevertheless, I would like to ask Ms Golikova to start with this issue and to report on the current situation with the COVID-19 pandemic and vaccination, including the anti-flu vaccination campaign. We know that, unfortunately, this problem is also escalating, and that it is impossible to overlook it.

Ms Golikova, go ahead, please.

Deputy Prime Minister Tatyana Golikova: Mr President,

Colleagues,

Good afternoon.

The epidemiological situation caused by the spread of the novel coronavirus infection and other seasonal viruses is becoming more complicated. For over a month, we have seen a steady growth in the incidence and today, the number of new COVID-19 cases reported is approaching 35,000 a day. Today’s high figures are because of the spread of the infection throughout the entire Russian Federation. This is a peculiarity of this increase in cases compared to the previous season. At the same time, this is a difficulty that is putting a very heavy burden on the healthcare system.

In addition, the upsurge in the incidence started with high daily figures, which were caused by a failure to observe restrictions and insufficient vaccination rates. Based on figures for the 41^st week of 2021, the case rate in Russia stands at 151.4 people per 100,000 of the population. This is 15.5 percent more than the previous week. Today, the disease rates in 35 regions are above the national average.

Incidence rates are increasing in all age groups, but we are primarily concerned, of course, about people aged 60+.

There are currently 276,500 beds deployed in the Russian Federation, of which 66.1 percent are equipped with oxygen. As of yesterday morning, 86.6 percent of all beds in the country were occupied.

We are particularly worried about the growing death rates from COVID-19. Recently, we have been losing over 1,000 people every day. These are terrible figures because they mean lost lives among our close ones. Unfortunately, they have been irretrievably lost. <…>

I would like to emphasise that the grievous course of the disease and the high death rates are being observed in unvaccinated people. We are seeing a gradual increase in the vaccination rates, but it is still insufficient. Today, this figure is a little over 45 percent. <…>

At the last meeting, we reported on a package of measures that we deemed necessary to take. We implemented them but they are not enough for overcoming the negative trends in current developments.

In cooperation with the regions, the Government of the Russian Federation held consultations last week and early this week to draft additional measures that we want to submit for your consideration.

In conformity with a decision made at yesterday’s meeting of the Government Coordination Council led by the Prime Minister, I would like to address you, Mr President, with a proposal to introduce non-working on all of Russia’s territory from October 30 to November 7, 2021. We suggest introducing non-working days earlier, for instance, from October 23, in the regions with the most complicated epidemiological situation.

(Further, Tatyana Golikova reviewed specific issues concerning testing the population for the new coronavirus infection, vaccinating and isolating contact persons and persons with a confirmed diagnosis or those suspected of the new coronavirus infection, and toughening sanitary and epidemiological measures.)

In turn, for the purpose of supporting the healthcare system, the Prime Minister resolved to help the regions.

First, 56 billion rubles will be allocated to support the mandatory health insurance system.

Second, in addition to this, we will make a centralised purchase and deliver certain expensive inpatient treatment medications to the regions, some that certain regions choose not to purchase citing the lack of financial resources. However, these medications are absolutely essential, particularly during the first few days of treatment. We will purchase 4.1 billion rubles worth of these medications, and help the regions stock up on oxygen. There are instructions from the Prime Minister on this.

In addition to the recently allocated 5.1 billion rubles, additional funds from the federal budget will be sent to the regions before the end of the year to purchase medications for patients who are receiving outpatient treatment, in order to provide them with adequate supplies to last through the end of the year.

Let me close with this: a heat map has been posted on the Стопкоронавирус.рф website that provides a weekly overview of the epidemiological situation in the regions. Among other things, it helps people understand the state of affairs in their specific region and make informed decisions when planning trips to other regions.

Now, and during the upcoming week-long workplace shutdown, we ask our citizens to refrain from traveling to other regions, so as not to further aggravate the epidemiological situation and not to overstretch the public health system in particular regions.

Mr President,

We are fully aware of the complex nature of these measures, but we are proposing them with our full responsibility for the life and health of our people in mind, and because we realise perfectly well that there is nothing more precious than a human life. So, please support them.

Vladimir Putin: Thank you.

No doubt, proposals and actions of that kind will be burdensome for businesses. I am aware of this, and you just mentioned that the Government is drafting a decision to support businesses in these circumstances.

(Next, at the President’s request, First Deputy Prime Minister Andrei Belousov reported on specific measures to support businesses. The first measure is a one-time payment of grants to small and medium-sized businesses that operate in fitness and sport, hospitality businesses, catering, additional education, consumer services, culture, leisure and entertainment, and other sectors, like in spring 2020. The second group of measures involves the resumption of the lending support programme, that is, the provision of inexpensive instalment loans with long-term repayment plans subject to certain conditions. According to Mr Belousov, the Government believes these two measures will be enough to mitigate the situation. The Government is monitoring the situation in each region and, if necessary, will come up with additional measures.)

Vladimir Putin: Indeed, the domestic situation linked with the coronavirus infection is complicated. The disease has been recently spreading at much higher rates in many regions. You have quoted statistics, colleagues.

In the meantime, the vaccination level remains low, unfortunately, which largely predetermines the rate at which the infection spreads. Obviously, the authorities must take adequate and prompt response measures under the circumstances.

Our main task is to protect the life and health of our people as best we can and to minimise the negative consequences of this dangerous infection as much as possible. To achieve this it is primarily necessary to slow down the spread of the disease and, of course, to further mobilise the reserves and capacities of the public healthcare system, which is now working under extreme pressure.

Let me repeat what I have said at the beginning: I took a look at the situation unfolding in neighbouring countries. We must prevent developments similar to those that we are witnessing with great regret and concern in some European countries, such as when people are unable to enter hospitals for several hours and sometimes several days, when they are put on ventilators even inside ambulances. Some of them never make it to the hospital due to a shortage of beds. I am asking you to do everything possible so that this country does not face anything like that.

What must be done in this regard?

First, it is necessary to expand testing in order to identify infected persons in a timely manner. Ms Popova and I talked to each other a couple of days ago, and we noted that the testing process was still rather slow. A person who has been tested walks away and comes in contact with others as he or she doesn’t know that they are already ill since many show no symptoms in the beginning. They have contact with other people, and then they seek medical attention too late. It is necessary to improve and expand testing, which will make it possible to ensure that infected persons and people who had contact with them self-isolate. It will therefore be possible to break the chain and to prevent the virus from spreading.

I would like to draw the attention of our regional colleagues to the fact that they should not make any understatements or paint a glossy picture. This is dangerous and irresponsible in the current situation.

Hospitalisation statistics and mortality rates show the real situation. We have to understand an obvious fact. Please keep in mind that we must deal with the situation in the following manner: If a Russian region records more new cases, this does not mean that the local authorities are doing a bad job. On the contrary, this means that, on the whole, the regional authorities are working effectively and are taking preventive action, and that they are not engaged in window dressing. This reflects the efficiency of regional teams’ work, rather than the other way round.

Today, I am addressing the people of Russia. Friends, if someone in your family falls ill, you have to take a sick leave and stay home, even if you are up to the ears in work, as our people say. Nevertheless, you have to do this. You will prevent the infection from spreading, and you will not endanger your acquaintances, friends and co-workers.

I would like to ask the Healthcare Ministry to closely monitor the granting of these sick leaves in Russian regions, and I am asking regional authorities to monitor the self-isolation of these persons. Please do this naturally and tactfully, and please show respect for them.

Second. Let me repeat, right now it is extremely important to stem the tide of the COVID-19 pandemic. Colleagues, in view of the current developments, I support your proposal to announce a paid non-working week in the entire country between October 30 and November 7, inclusively.

It is also clear that the epidemiological situation in each region is different, with its own dynamic and trends.

Therefore, as we initially agreed when we started fighting this outbreak, the regional heads have the authority to introduce additional measures. In this particular case, it is possible to announce non-working days before October 30, before the stay-at-home period begins for the rest of the country, and extend these non-working days beyond November 7, if it proves necessary.

Besides, Ms Golikova mentioned two days off after vaccination. See if you can expand this practice. Some people do experience a fever after receiving the jab. I myself had a fever after my second jab, just over 37 degrees. It is still a fever even if slight. One can only benefit from two days off. See if you can expand this practice further. Think about it, please.

I want to stress once again that these days off must be paid.

I would like to address specifically the heads of the regions where the morbidity rate is particularly high and healthcare facilities are overwhelmed. Please consult with experts to evaluate the situation, and, if necessary, announce non-working days starting this Saturday, October 23. Once again, you have the authority to do so. Do take charge since you have this authority, and do not wait too long to make the necessary decisions. I will instruct my envoys in the regions to closely monitor this situation and provide support if you need it.

Third. It is important that the entire healthcare system in Russia operates without a hitch in these difficult circumstances. I am asking the Government to monitor the availability of medication and oxygen tanks on a daily basis. The Defence Ministry can help here. As you know, I gave respective instructions to the Defence Minister, and it has been arranged. We need a hands-on approach to solving problems that occur in certain regions. Just like we did before, including last year during the first wave of this epidemic, I am asking the Healthcare Ministry to provide staffing support to the regions most severely affected by the current wave and send top-ranked specialists to the regions, including from our leading healthcare centres and clinics.

Fourth, businesses, primarily SMEs, will obviously incur certain costs due to the non-working days; Mr Belousov has just spoken about this. In this regard, I am asking the Government to ensure that Russian enterprises and companies receive the support that has just been mentioned. It is one thing to outline it, but then you need to actually implement it. I hope that this will be done in the same orderly way as the Government succeeded in doing in previous periods, the last time. We must take into account our experience from last year; as we know, that approach showed high efficiency. We have assessments from the entrepreneurs themselves, we have studied this. Our colleagues today spoke in detail about those measures, and I ask you to implement them.

Next, unfortunately, we are seeing the dangerous consequences of the low vaccination levels in our country. I repeat once again: vaccination really reduces the risks of severe illness or serious complications after, and the threat of death. Therefore, I strongly support the Government’s proposals, and I am urging the heads of the Russian regions to increase their vaccination rates.

I also once again urge all citizens to get vaccinated. This is about protecting yourself, about your safety, even your life, your relatives’ health.

You know, I look at some people I know, at my friends – and sometimes, to be honest, it is strange, our conversations are strange. I remember asking some of my friends, people from my university, back at the start of the vaccine rollout, did you get vaccinated? And they ask me back, did you? I say, not yet, and they said, I would rather wait until you do. Okay, I have now, and I ask them again, did you get vaccinated? No. Why? Well, I don’t know, I’ll still wait. It's strange, I mean, those are educated people, with advanced degrees, I don't even understand what is going on. And we have a reliable and effective vaccine.

So I would like to say this again, we have only two options to get through this period – to get sick or get vaccinated. But it is better to be vaccinated. Why wait for the disease and its severe consequences?

Please, show responsibility; make every effort to protect yourself, your health, and your loved ones.

This concludes this part, let us move on to current issues.

<…>

Vladimir Putin: We are not operating in a vacuum, and global energy market developments do, in one way or another, affect us. In this regard, I would like to ask Mr Novak to update us on the situation on key markets.

Deputy Prime Minister Alexander Novak: Mr President,

The situation on the natural gas market remains quite tense, primarily due to fairly high prices. In Europe, prices average $1,000-$1,100. In the Asia-Pacific region, natural gas prices stand at about $1,200 per 1,000 cubic metres.

Notably, since earlier this year, natural gas prices have increased by about 3.5 times. At the same time, we are seeing steep increases in prices for other energy resources. In particular, coal prices have increased three to four times compared to last year, up to $160-$200 per tonne, depending on the type, and electricity prices are up five to six times. In Europe, the price was $50 per megawatt-hour earlier this year, whereas now it is around $300.

Mr President, you provided an in-depth and clear-cut overview of the reasons for the current situation on the gas market in your speech at Russian Energy Week. No doubt, these issues include the fact that natural gas storage facilities are far below capacity and that the global economy is recovering at a fast pace since the pandemic. As a result, the supplies of Qatari and US liquefied natural gas were reoriented to the Asia-Pacific region.

Notably, natural gas consumption is expected to grow by about 17 percent in China this year and by about 18 percent in South Korea. The Asia-Pacific region as a whole will see the additional demand for natural gas grow by 7 to 8 percent.

Of course, production in Europe, which is declining, is also affecting the situation. The most recent European policy to reorient long-term contracts to the commodity exchange and spot gas prices is the key factor. What we have as a result is an out of balance market. Ineffective policies have unbalanced supply and demand.

Mr President,

I would like to say that our monitoring shows that the current situation is negatively affecting the performance of companies in related industries, primarily in the global chain.

What are we seeing? We are seeing a substantial decline in the production of nitrogenous fertiliser and the closing of petrochemical capacity. As of today, about 40–50 percent of ammoniac capacity has been suspended in Europe. This is a very high level, and it has doubled nitrogenous fertiliser prices today.

In terms of where this is happening, I will mention a considerable reduction in output from Norway’s Yara, one of the biggest fertiliser producers; Achema, a nitrogenous fertiliser producer in Lithuania; Germany’s BASF and the Dutch fertiliser producer OCI. The Odessa Port Plant has been completely shut down. This is Ukraine’s second largest plant producing ammonia and carbamide. Ostchem has also suspended part of its capacity in Ukraine.

As a result of increasing prices and a general decline in production, we are seeing the risk of a new round of soaring prices on agriculture products. This is how the market is already reacting to the current situation.

Regarding the impact of growing prices on electricity on the current economic situation, which I mentioned before, I would like to note that gas and electricity suppliers are going bankrupt in many countries. Price increases have already led to the bankruptcy of 12 suppliers serving about 1.5 million households in Britain. Importantly, this is a persisting trend and we are seeing that industries in addition to what I mentioned are being affected. Metallurgical plants that use a lot of electricity are also suspending production. These include, for example, zinc producers and foundries. Thus, a large zinc producer from Belgium has cut production in half at three plants: in the Netherlands, Belgium and France.

But soaring electricity prices are not just affecting these industries alone. As of today, we see that, for example, in China, about 160 textile and light industry factories have been shut down due to lack of electricity. There are problems in food production, especially at greenhouse facilities. Producers of greenhouse tomatoes and cucumbers are at risk.

We are monitoring the situation closely. The situation, of course, is causing concern. Unfortunately, we do not see any chance of supply and demand in Europe regaining balance any time soon. Much will depend on temperatures during autumn and winter and the demand for gas in Europe and on other markets. This is unsettling, as I mentioned earlier, especially for industries related to the production of essential goods and food.

Considering that we are part of the global economy and we maintain economic ties, I believe we need to carefully follow the developments that are unfolding on the energy markets and in other industries in Europe and Asia-Pacific region, that affect production chains and our economy.

We will monitor them every step of the way and report back to you.

Thank you.

Vladimir Putin: Thank you.

I think that monitoring alone is no longer enough. And I will tell you why. As a matter of fact, you have named almost all of the factors. Indeed, even without going into the details of the events that triggered the current developments, clearly the cuts in coal production and nuclear generation in a number of leading global economies, a rather harsh winter last year, and shortages of wind generation have led to deficits and low levels of natural gas reserves in underground storage facilities, all of which makes the market skittish.

Add to that an increase in consumption in Asia, in the wake of which US companies reoriented their liquefied gas flows from Europe to Asia. In fact, what they did is withdraw a significant amount of gas from the European market and ship it first to Latin America and then to Asia which led to the current state of affairs.

But there are even deeper underlying reasons which stem from deeper budget deficits and disruptions in supply chains which sent inflation higher in the leading economies. This is a major factor which negatively affects the final result given the developments I just mentioned.

You are right. I am worried about and, as I understand, the Government is worried as well about the potential consequences. I have in mind here the measures to support consumers being proposed by some of our colleagues in Europe. That is the right thing to do, and people must be supported. A number of European countries are planning measures to support households. How will this play out in real life? The households will not cut consumption, but there will be a further reduction in industrial consumption, primarily, in energy-intensive industries, which you just named – the metallurgical industry, the production of ammonia fertilisers, and so on.

This will have consequences, which, first, will affect people and ultimately increase prices for other goods. The proposed approach to support the people seem fairly straightforward, but, ultimately, we see that these are most likely decisions dictated by the domestic political situation, the campaign season in a number of European countries, among other things.

Ultimately, it will affect the people all the same. If the metallurgical industry consumes less, the prices for its products will rise, which will send prices higher along the entire chain in the same way prices on food markets rise if not enough fertilisers are used, and fertilisers are produced with the use of natural gas.

This has consequences for us as well. I am not talking about energy now. If it leads to a decrease in consumption – and this situation will ultimately lead to a decrease in consumption – it will affect our production companies, including Gazprom. So, we are not interested in seeing prices for energy, including gas, grow endlessly. Nevertheless, what is happening now is beyond our control. These are the things that were largely done by our colleagues, including in Europe. But there may be consequences for us, too. As soon as the prices, which you just mentioned, for the fertilisers produced with natural gas, start growing – and they are already growing, since enterprises are shutting down – our producers will be tempted to sell their products at higher prices as well. We know this from recent events in some industries.

So, we need to not only analyse what will happen in the near future, but also to come up with a set of measures that would certainly protect the interests of our agricultural producers and, accordingly, keep a lid on prices for food.

I want the Government – Mr Mishustin, please organise this work, not just carry out an analysis, as Mr Novak suggested, but also come up with a set of actions aimed at mitigating the negative consequences that may occur on the global markets and affect our economy. These must be calm, well-thought-out, well-prepared and well-calculated decisions, without alarmism.

Prime Minister Mikhail Mishustin: I am on it, Mr President.

Vladimir Putin: Good. Thank you very much.

Colleagues, do you have any other suggestions, comments or thoughts on the current situation? No? Then we will be wrapping up. As I said at the beginning of our meeting, I will sign the necessary regulatory documents later today.

Thank you very much. Good luck.