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The President instructed the meeting participants to determine the scope of decisions to be made in the nearest future. The more controversial decisions are to be discussed within the Government and at the December 26 session of the State Council with participation by the governors of all regions.

Participants of the meeting included Chief of Staff of the Presidential Executive Office Sergei Naryshkin and his first deputy Vladislav Surkov, First Deputy Prime Minister Igor Shuvalov, Deputy Prime Ministers Dmitry Kozak and Alexander Khloponin, Presidential Aides Arkady Dvorkovich and Larisa Brychyova, Economic Development Minister Elvira Nabiullina and Finance Minister Anton Siluanov.

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President of Russia Dmitry Medvedev: Colleagues,

We have gathered today to discuss the delineation of powers, decentralisation, and the improvement of inter-budgetary relations. One week ago, I met with our colleagues, the deputy prime ministers, who are overseeing these issues, and we agreed to talk about it in more detail and look into the two working groups’ suggestions.

I suspect that this meeting will not be the last on this topic, because this is not an easy matter. Represented here are major agencies and the heads of corresponding bodies. We should design a finalised configuration.

Before the heads of the agencies make their statements and we discuss them, I would like to make a few preliminary remarks.

First, there are concerns about the issues of powers delineation and corresponding financial allocations at nearly every level of state governance. This truly is a resonant issue. During my trips to the regions, it was brought up by governors, mayors, and regular people who may not fully know what the corresponding powers look like and how they are established by law, but at a general level, they feel there is not enough money going to the municipalities to address particular challenges, and they talk about it.

We must understand the most important aspect, which is the interests of the people who require financing for daily needs, their vital needs. Therefore these issues must, to a greater extent, be addressed locally, which is quite obvious. This is a broad idea, but I believe it is fully clear to everyone.

The second issue is the territories’ fiscal capacity which influences development prospects in each territory. When delineating powers, it is imperative to offer incentives for broadening their own income base. This is also a difficult challenge.

Third, by redistributing powers and reducing the number of federal units operating at a local level (there are too many of them, and unfortunately, they often generate work for the sake of itself), we must thereby decrease the administrative burden on businesses. Ultimately, this should lead to the expansion of entrepreneurial activity and to strengthening local budgets.

These are my three preliminary remarks.

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