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The cabinet discussed the situation in the North Caucasus and measures to restore infrastructure in the regions subjected to terrorist attacks.

The government approved a special federal programme for the economic, social and political development of the North Caucasus region in 2000–2005, whose main purpose is to tap the region’s integration potential. Objectives set out in the programme include the development of inter- and intra-regional industrial ties, a new regional division of labour, securing transport and telecommunications links with central Russia and South Caucasian countries, and reducing the region’s dependence on [imported] fuel and energy by establishing its own base of energy resources.

The programme’s main political goals are to establish and maintain inter-ethnic accord, to overcome conflict and crisis situations and separatist feelings, to ensure the safety of citizens and integrity of Russia, and to solve problems relating to external borders of the region.

The overall volume of projected spending to implement this programme is estimated at 153.9 billion roubles. To finance investment projects and special federal programme measures, it is planned to draw both on budget funds of all levels and on extra-budgetary sources. Every rouble of budget funds invested in the implementation of the programme is expected to bring two roubles in additional payments to the budgets of all levels, including 1.4 roubles to the federal budget, 1.8 roubles to the budgets of the regional constituent members, and 4.8 roubles to local budgets.

The implementation of the programme will help to increase output in key industrial and agricultural production areas. Much more food, medicines, specialised farming equipment, and certain types of hi tech goods will be produced.

A major upshot of the special federal programme must be a reduction in social tension in the region due to increased employment. The programme envisages that the total number of people employed in investment projects will be about 750,000, including around 350,000 new jobs and more than 400,000 old jobs kept at modernised plants. The implementation of the programme will provide work for most of the region’s unemployed, who now number more than 1.2 million.

At the same time, the acting president pointed to a number of the programme’s shortcomings, among which he singled out the lack of attention to science and education in the North Caucasus.

The meeting participants also focused on ways of financing and building the Baltic Pipeline System (BTS), which will help the country to dispense with the costly transit services of foreign contractors and cut transportation costs in supplying Russian energy sources to Western European markets. Vladimir Putin urged the government to speed up the process of determining participants in a BTS consortium. The key principle of project implementation, Mr Putin said, was the primacy of the interests of the state.