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Meeting with Government members

October 29, 2014, Novo-Ogaryovo, Moscow Region

Vladimir Putin met with Government members to discuss socioeconomic development in Kaliningrad Region. The housing and utilities sector, developing the Arctic and improving Russia’s investment climate were also discussed.

Excerpts from transcript of meeting with Government members

President of Russia Vladimir Putin: I met recently with representatives of various human rights organisations and civil society representatives. Some of them raised the issue of pollution problems in the Arctic.

We decided several years ago to clean up the Arctic and allocated federal budget money specifically for this purpose. This work is underway, but people say that new problems have come up. I asked the Defence Minister to look into this matter. They have done so and their findings do not confirm any problems. We do have specialised services and agencies to deal with such matters, your agency too, Mr Donskoy. What is your view on the situation?

Minister of Natural Resources and the Environment Sergei Donskoy: Mr President, our information does not confirm pollution problems. I also met with the Defence Minister and we discussed together the programme for cleaning up the Arctic, not just at the sites where we are working together with our colleagues, but also on other islands where there is rubbish to clear. We will carry out a clean-up together with the Defence Ministry next year. In fact, we already started this year on Wrangel Island, which is the place the rights activists mentioned. We have joint work already underway there. Overall though, we have no evidence of a pollution problem.

Vladimir Putin: You mean, there is a pollution problem, but there are no new trouble spots appearing?

Sergei Donskoy: That’s right. There is no new pollution.

Vladimir Putin: What about the Arctic clean-up work?

Sergei Donskoy: It is continuing. We are still working on Franz Josef Land (there are many islands in this archipelago). We have finished work on Alexander Island and continued work on Graham Bell Island. Several thousand tons of rubbish that had accumulated there was removed this year. Next year, we will clean up Franz Josef Land. As I said, we agreed with the Defence Ministry to continue work on Wrangel Island too.

Vladimir Putin: Franz Josef Land must be completely cleaned up. The work needs to be done properly.

Sergei Donskoy: Of course.

Vladimir Putin: The same goes for the other islands. Is that agreed?

Sergei Donskoy: Yes, of course.

Vladimir Putin: Since we are on the subject of the Arctic, scientific expeditions took place to update our bid to extend Russia’s territory by just over a million square kilometres. How is this work going? What is the situation now?

Sergei Donskoy: Mr President, just yesterday, a high latitude expedition returned to St Petersburg on board the research ship Akademik Fyodorov. They successfully completed all of the geophysical research and did even a bit more than what we planned. I will say some more about the weather conditions.

This was the tenth and final expedition to gather additional information for Russia’s bid to extend the external borders of our continental shelf. The first expedition took place back in 2002. We organised it after our first bid in 2001 was rejected on the basis that there was insufficient data regarding the Lomonosov Ridge and the Mendeleev Rise. The bathymetric and geophysical information that we provided back then was not tied to navigation points. Now this work has been completed.

Since 2002, working in icy conditions, a lot of study has been carried out. Over these last years, we have carried out deep seismic probing over a distance more than 4,000 kilometres in length, seismic exploration over 23,000 kilometres, and bathymetric profiling of an area of 35,000 kilometres.

Most interesting is that this year, on August 15, while carrying out its geophysical research, the expedition crossed the North Pole and carried out geophysical work there too for the first time in world history. We thus now also have data for the North Pole. This will help us to draw up our final draft of the bid and include the geodynamic model that summarises all of the data we have collected over this period. Now incorporating the completed studies, the Government will send our bid in accordance with the deadlines to the Commission on the Limits of the Continental Shelf.

Let me say that if our bid is approved, Russia will obtain sovereign rights to additional territory covering around 1.2 million square kilometres in the Arctic Sea. This also enables us to increase our estimates of hydrocarbon resources by more than 5 billion tons of conventional fuel. It will of course also give us a greater launching pad for protecting our geopolitical interests in the Arctic by establishing our jurisdiction and control over activity on the seabed and waters above.

Vladimir Putin: We have more than enough territory for launching pads. The main thing is that whatever launching pads we develop, this must be done in accordance with environmental demands. You need to monitor this closely.

Sergei Donskoy: Yes, we are responsible for this and will certainly do this.

Vladimir Putin: Thank you.

Mr Ulyukayev, the World Bank changed its methodology for its Doing Business rankings. And our positions have improved. Did this happen only because of the change in methodology, or because something positive is happening in Russia in this area?

Economic Development Minister Alexei Ulyukayev: No, certainly, it’s not just the change in methodology, although that is also important. First of all, I will say that we are now in 62nd place out of 189 nations. Let me remind you of our trajectory: in 2010, we were in 124th place; in 2011, we were 120th; in 2012, we were 112th; in 2013, we were 92nd; and now, in 2014, we are in 62nd place. We were at the end of the second third, and now we have almost entered the top third of the nations on this list.

Indeed, the change in methodology did help us in some way. What is that change? First and foremost, it is the inclusion for big nations (with population of over 100 million people) of the second city. Before, we only had Moscow, but now we have Moscow and St Petersburg. Across many indicators, St Petersburg really helped us advance; in some ways, it turned out to be better than Moscow.

In reality, I think this is very good, because for all the talk about how our investment climate ends beyond Moscow’s MKAD [Moscow Automobile Ring Road] or the Garden Ring, we are clearly showing that this is not true, that the situation in Russia’s regions and in our second capital are no worse, and perhaps even better.

Moreover, the methodology changed with the introduction of a Distance to Frontier criterion. According to this indicator, we are looking good in terms of our distance to the frontier of best practice, and better than many of our competitors.

If the methodology had not changed, we would still have moved forward, although not by 30 points, as we did.

And incidentally, our advancement in other rankings where the methodology did not change proves that this is not just the question of methodology. In particular, we moved 11 places up in the World Economic Forum’s global competitiveness ranking, from 64 to 53. We are also up 13 positions in the Bloomberg’s Best Countries for Doing Business rankings, from 56 to 43. The methodology was not changed for these rankings.

What is important is that we look much better now than our friends in BRICS – China, India and Brazil. This year, we surpassed our friends in the Customs Union – Kazakhstan, which was better than us in all the previous years. This year, we came out on top.

In some areas, we are among the top 50: these include business registration and tax administration. And we are in the Top 20 for two indicators: registering property rights and contract execution.

I will talk briefly about why we progressed so much this year: it was because we simplified procedures for creating new businesses. We removed the requirement to introduce authorised capital prior to company registration. We cancelled the requirement to notify tax authorities about opening a bank account. We cancelled the requirement to go to a notary public for applications filed by applicants personally. We simplified the property registration procedure and reduced the time needed for that by four days: from 22 to 18. We introduced an option when applications to register the rights to real estate and notify the land registry thereof can be done electronically. We introduced a notification procedure for permission to operate energy supply facilities, and many other factors.

I want to note that we have some reserves, because in many positions where we already have progress, we just technically did not have time to fully work out those matters with the World Bank, for example, such positions as the number of procedures necessary to receive a construction permit; in reality, we decreased it from 36 to 11, but we were able to work out only 21 of those positions with our colleagues at the World Bank. We have a fairly significant reserve to move forward, like, for example, our positions on electronic documentation in such areas as taxation and customs control. These are also positions that we have implemented in practice, but we have not yet finished working them out with the World Bank for assessing competitiveness.

In addition, we have laid some serious groundwork for our National Business Initiative road maps. And I think that by next year, we can also ensure further progress here

Vladimir Putin: Well then, that’s very good. Thank you very much. I think that these are the concrete results of work by the Cabinet and the Strategic Initiatives Agency. It certainly seems we did not create it in vain; we already have the positive results of its work, as well as close contact with the business community overall.

But we understand that this is still not enough, we still have much work to do, particularly in today’s conditions. We need to ensure that we continue moving forward significantly – not just for the rankings but also for businesses. So people can feel that it is comfortable and convenient to work in Russia, and you can therefore quickly achieve effectiveness. But overall, this is good work.

Thank you.


October 29, 2014, Novo-Ogaryovo, Moscow Region