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President of Russia Dmitry Medvedev: Colleagues, a little while ago, I gave the Government instructions to do some serious work regarding the Kuril Islands, because this is the most distant region of our nation, and the most deprived of our attention. Indeed, none of our nation’s leaders had really ever visited the place before I made a trip there. But this is not even about top-ranking visits, although that, too, is important. It’s a question of attention we give to our territories, our federal constituent entities.

Thus, I have instructed government leaders to go there. First Deputy Prime Minister Igor Shuvalov and Regional Development Minister Viktor Basargin have visited the region.

Mr Basargin, we need to analyse the socioeconomic situation there (after my visit, I issued a whole set of instructions) and what needs to be done in order for the programmes currently in place to reach people living in the South Kuril Islands. What has been done?

Regional Development Minister Viktor Basargin: Mr President,

Our group made up of representatives from the Regional Development Ministry, Economic Development Ministry, Energy Ministry, the Federal Road Agency and several other agencies and bodies, inspected and analysed the implementation of the federal targeted programme of social and economic development of the Kuril Islands for 2007–2015.

We are basically halfway through this programme, which is among those few that have not been sequestered during the financial crisis. In other words, we are talking about 18 billion rubles [over $600 million] of financing, including 14 billion from the federal budget. Today’s volume of financing stands at exactly 9 billion rubles, just as planned. In 2009–2010, 14 facilities were launched, representing basically infrastructure projects, including social infrastructure, a day care centre (including the one you visited), and housing construction. There are also a number of other facilities pertaining to infrastructure development and support, everything that has to do with hydropower industry, the islands’ new competitive advantages, hydrothermal vents, and the development of this entire area.

I will say that overall, the programme is being implemented in full. Today, we clearly see three priorities here.

The first one concerns infrastructure development to offer the economy more support, including airports development, road building, construction of energy facilities, and communication development. We have examined the implementation of all of these programmes and looked at the new areas being developed in this regard, including by regional authorities.

We also analysed the second component, the social one, which concerns the construction of housing. Unfortunately, as you know, there was virtually no housing market there before your visit. In other words, housing was not bought or built. We are just now seeing the very first housing projects being implemented under various social programmes. We looked into how to create a housing market there, how to support the construction today.

”We would certainly like to develop good relations with all of our neighbours, including cooperation in a wide range of areas on the Kuril Islands.“

Mr Serdyukov and I also discussed everything pertaining to lowering [housing] prices. Unfortunately, they are still quite high there – more than 70,000 [rubles] per square metre.

And the third area has to do with competitive advantages, the islands’ specialisation – the development of the fishing industry. We took a look at the construction of new deep-water port areas in Yuzhno-Kurilsk, Kurilsk, on Iturup and Kunashir, which will provide the foundation for creating the entire fish-processing infrastructure, with refrigerating and processing plants and companies, and fish breeding enterprises.

I will say that there are certain projects in all of these areas. I’d like to note that after your visit, the attitude among the residents and investors has changed completely. We met with members of both groups, and they have expectations for things to get better. They understand that today they are in a zone of increased attention on the part of the federal authorities. They see that the investment volumes are increasing, that the islands’ specialisation is being promoted with investors buying ships today. I visited some of the fishing ships there. Investors are putting money into developing coastal infrastructure facilities. And naturally, the government is working to develop infrastructure and social facilities. It has been proposed to keep these programmes running.

There is a certain deficit of funds. The reason is that the programme was developed back in 2006–2007, based on similar projects; there was no draft documentation, and to a great extent, today’s technologies have really changed. For many facilities, particularly all our airport facilities, landing strips are designed for entirely different aircraft. All of this needs to be updated and improved.

We did the calculations and we agree with the Governor of Sakhalin Region who says that this programme needs additional 13 billion rubles for its implementation. My colleagues from other departments and I think that we need some 8 billion rubles in additional funding to develop the entire infrastructure.

But what is perhaps the most complicated thing is that this year we need to find some 1.5 billion rubles in additional funding in order not to stop operations at many facilities, including transport infrastructure, road construction and the fuel complex.

”These islands are part of the Russian Federation, falling fully and wholly under our sovereignty, and we will make all the necessary efforts to strengthen our presence on the Kuril Islands.“

Dmitry Medvedev: All the programmes that were approved must be implemented. At the same time, if additional funding is needed, then we certainly need to assess these needs, analyse the situation, and make the necessary decisions. You can consider this my instruction as President.

At the same time, we must increase these islands’ investment appeal. Indeed, these are unique islands, and they have a good potential not only for developing geothermal energy, fish breeding or processing, although these are their key business lines. These islands also offer some highly interesting tourist opportunities, and to develop them, we need a full-fledged, solid, modern infrastructure. We need to bring in investors, attract them by offering certain terms and conditions, and we should consider creating some additional economic advantages. Incidentally, I suggested this to everyone, including our neighbours, who might make use of these opportunities.

Thus, all of these programmes must be implemented in a timely manner. Please continue your work. I stated our main goal while visiting the islands, which is to make people living there feel just as comfortable as people living on the mainland, and for these islands to have prospects for development. This is the most important thing.

But these islands also serve as our eastern border, and a very important one. We have troops stationed there as well. Mr Serdyukov, I instructed you to visit the corresponding islands. What are your impressions, and what do you plan to do?

Defence Minister Anatoly Serdyukov: Following your instructions, I visited the 18^th Machine Gun-Artillery Division on February 4; the division commander reported to me on combat readiness of the troops and the activities the division was engaged in at that time.

The division is stationed on two islands: Iturup and Kunashir. I inspected the barracks area, social infrastructure facilities, residential buildings, the mess, the bakery, the ration supply depot, and the medical facilities located on the territory of military installations, as well as the park area, the diesel-electric power unit, and the coastal infrastructure. I inspected the weapons and military equipment. There was a rather representative inspection team accompanying me on this mission, which took note of everything.

We will prepare the programme by the end of this month. We already know what weaponry should be located there, what re-equipment is necessary, what actions will be taken to rebuild the entire military infrastructure. And I think that by the end of the month, we will already make decisions and begin this work. We have access to funding under the state armament programme. We understand what needs to be there in terms of technical equipment and its quantity. We have a Burevestnik air base there, and currently we examine the issue of lengthening its runways in order to land larger aircraft. Thus, by the end of the month, we will be ready to offer different options.

Dmitry Medvedev: Very well.

The additional weapons and equipment to be bought must be the ones that are necessary for the troops stationed there; they must come in adequate number and be modern enough to ensure the security of these islands as an integral part of the Russian Federation. So please keep this matter under your personal control in order for all the necessary decisions to be made, so that arms deliveries are made, and so that the necessary reorganisation is carried out, if needed, for the troop unit stationed there.

And there is one more thing I would like to say. We would certainly like to develop good relations with all of our neighbours, including cooperation in a wide range of areas on the Kuril Islands. We invite anyone who isn’t insulted by this kind of cooperation to collaborate with us.

But at the same time, everyone must understand that these islands are part of the Russian Federation, falling fully and wholly under our sovereignty, and we will make all the necessary efforts to strengthen our presence on the Kuril Islands. This is our strategic position in developing positive relations with our neighbours – but only if they understand and accept these facts. I would like the Russian Government and the Sakhalin Region authorities to bear this position in mind.

Thank you.