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The meeting continues a series of consultations the President is holding with top Government officials and key ministers to discuss implementation of the priority tasks that Mr Putin set out in his Presidential Address to the Federal Assembly, in follow-up to the May 2012 presidential executive orders. The first meeting took place on January 15.

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Excerpts from transcript of meeting with Government members

President of Russia Vladimir Putin: Good afternoon, colleagues.

We will discuss two issues today. The first and most important is land relations. We all know very well that this plays a fundamental part in developing the construction sector, and housing construction in particular. Unless we find effective and civilised solutions to these land relations issues, we will not be able to develop the construction sector and thus resolve the housing issues. 

In this respect, I ask Mr Shuvalov [First Deputy Prime Minister] to say a few words about mortgage loan development, and then I would ask Ms Golikova [Chairwoman of the Accounts Chamber] to brief us on the Accounts Chamber’s assessment of the results in reaching social sector targets. After that, I would like Labour Minister Mr Topilin to give his assessment of the current situation and upcoming plans. 

However, I want to start with another issue, namely, the substantial talks with our European colleagues, which took place in Brussels yesterday. We discussed a broad range of issues concerning cooperation between Russia and the European Union, and we talked too about developing our relations with the countries that our European colleagues have included in the Eastern Partnership programme. Naturally, we discussed Ukraine too.

In this respect, I want to draw your attention to a matter that is worrying our Ukrainian colleagues and friends, namely, the fulfilment of our financial agreements. I am referring to our loan agreements and our energy sector agreements. I ask the Government to carry out these agreements in full.

First Deputy Prime Minister Igor Shuvalov: Can I go ahead, Mr President?

Vladimir Putin: Please.

Igor SHUVALOV: We received the instruction from you in Brussels yesterday that all of the agreements reached between the Ukrainian Government and the Government of the Russian Federation must be carried out in full. 

We discussed the situation yesterday with our colleagues in the Government and the Presidential Executive Office. I briefed Prime Minister Dmitry Medvedev on this today. Of course, we will work to carry out your instructions in full.

But for us to be able to carry out these instructions and implement in full the programmes that we briefed you on at the end of last year and the start of this year – the Joint Action Plan with the Government of Ukraine – we think that it would be best to wait first for a new government to be formed in Ukraine.

The Ukrainian Prime Minister resigned yesterday, and this has changed the situation completely. We are continuing our working contacts with our colleagues in the Ukrainian Government, but we realise that further changes can take place. 

In order to ensure that these plans are carried out in full, we should probably wait first for a new government to be formed, and then we will immediately hold consultations with them and will carry out in full your instructions and make sure that all of our plans and agreements are indeed implemented.

Prime MINISTER DMITRY MEDVEDEV: Mr President, I want to lend my overall support to what Mr Shuvalov said just now in the sense that we certainly realise the need to carry out all of our agreements, but we need to do this with awareness of the situation, and we will have this awareness only when we know what economic policies the new government will implement, who will be working there, and what rules they will follow.

I say this because I, for example, had reached direct and unambiguous agreements on energy with Prime Minister Mykola Azarov regarding how gas debts would be paid. 

Vladimir Putin: Debts from last year?

Dmitry Medvedev: The old gas debts that had built up over time.

How will the current payments be made? What was the ultimate objective of these agreements? The idea was that the support measures for Ukraine’s economy and increased cooperation and intensification of trade and economic relations between our countries would give our Ukrainian colleagues advantages that they would then turn into new economic achievements. By the way, I would like to remind you that even the recent loan decision boosted Ukraine’s rating as a borrower for a while. This is a positive thing and something we are happy to see.

However, our idea was that these positive developments would ultimately create the base Ukraine needs to be able to pay off its debts, including its gas debts. The country has built up a huge amount of debt. They have paid hardly anything for six months now. There was a single payment made for one month, September 2013. The debt came to around $2.7 billion at the end of last year. They have asked us several times to let them defer these payments. Acting on my direct instruction, Gazprom agreed to this, even though Gazprom has problems of its own, as we know.

Unfortunately, although we agreed to let them defer the payments, they have not begun paying off the debts this year either. What’s more, they are again asking to be allowed to defer the latest payment on the old debts. What’s worse, they are not making their current payments either. Rather, they are ready to do so, but not in full, taking into account that the agreements you reached substantially lower the gas price for them.

Vladimir Putin: Even with the lower price, they are not making the current payments?

Dmitry Medvedev: They say that they cannot meet the payments even at the lower price. This changes the situation substantially and must be taken into account in organising our relations with the new government. At the same time, of course we will continue to implement the agreements that the two presidents reached, as well as the agreements discussed and concluded at government level.

Vladimir Putin: Well, that’s reasonable.

Let’s wait for the Ukrainian Government to form; however, I ask you not to lose contact with your colleagues, even in today’s situation. In addition to financial relations and energy agreements, we have other plans: namely, cooperation in manufacturing, aircraft manufacturing, shipbuilding, and nuclear energy.

We have a whole set of joint steps for developing our cooperation. I assume the Government of the Russian Federation will continue to carry out all of this work with their colleagues, even before the formation of the new Ukrainian Government.

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Vladimir Putin: Before we move on to discussing these key topics, I want to hear from the Finance Minister and return to the beginning of our discussion.

Does the actual volume of assistance we have provided Ukraine so far correspond to our agreements? What is it now? How much money have we given to them so far, since these agreements were made?

Finance Minister Anton Siluanov: Mr President,

In December of last year, we invested $3 billion from the National Welfare Fund into Eurobonds issued by Ukraine.

Vladimir Putin: That is a lot of money. Are you in contact with the Finance Minister of Ukraine?

Anton Siluanov: We communicate every day.

Vladimir Putin: Will he remain minister? Although he probably doesn’t know.

Anton Siluanov: It is hard to say, but according to the latest information, it seems there should be no major changes in the Government’s economic bloc.

Vladimir Putin: No major changes?

Anton Siluanov: Correct.

Vladimir Putin: Very well.

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