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The meeting was dedicated to the development of small and medium-sized businesses in Russia.

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Excerpts from transcript of meeting with heads of Russian industrial companies

President of Russia Vladimir Putin: Good afternoon, friends.

We regularly have meetings with business representatives. However, today the group is special. It is a pleasure to meet with those who are in charge of what they call real production. Moreover, I see here both people who built their businesses from scratch in the new conditions and those who began back in Soviet times and managed to retain their teams and their production facilities. In other words, here we have people of different generations and of various experience, but all of you are successful.

I hope this meeting on the sidelines of the economic forum will be a success because, apart from the general discussions that are typical for forums and seminars, it is always interesting to talk to people who are involved in the work themselves, to hear from them whether the economic support measures proposed by the Government and formulated within the Presidential Executive Office work in real life or not.

Therefore, we would like to begin by thanking the organisers of this meeting – the Russian Popular Front, which is hosting this meeting.

Let us begin our work.

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Vladimir Putin: I have already heard from some liberally minded people of the need to reinstate state planning. This is no joke. Obviously, it is impossible to revive the old, Soviet model in modern conditions. However, we should consider some elements of planning, primarily in developing the infrastructure. If we consider the tasks facing the state, there should be some strategic elements pertaining to providing certain benefits to specific territories – and we have some priority development areas that have been granted certain preferences, as well as free economic zones. We need to consider all of this and discuss it, bearing in mind (as we keep saying over and over again) mandatory compliance with macroeconomic parameters and maintaining a balanced budget policy.

When I say ‘balanced’ I mean (I believe you will understand me) that we need to hold back inflation. We cannot squander our reserves; on the contrary, we must consolidate them and take good care of them, treat them like our safety cushion, if we want to have a stable political and social situation in the country. This is in the interests of businesses, of all the industry leaders who are here today, so that we can retain the populations’ income level. All this needs to be carefully analysed and formulated.

We need to do this together. We have already developed a mechanism for joint work. True, it developed through the entrepreneurs’ union. If you would like to suggest any other mechanism – please, go ahead, everyone will only be grateful, I am sure.

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Vladimir Putin: Regarding the ruble exchange rate. First, of course, we are talking in public, on camera; this is all a market area. However, as you have noticed, as soon as the ruble became stronger and the rate dipped below 50 rubles to the dollar, it started gradually growing. An excessive weakening of the national currency has its negative components, as we all know. However, we will continue supporting it for the real sector, especially for those companies that produce for external markets. We will use all the instruments at our disposal, even though these are somewhat insufficient (funds may also be allocated in amounts that do not reach the level that we would like to support our exporters, especially in industrial and high technology production). However, we will continue to do it and I would like everyone to know this. We will improve and build up these instruments. However, regardless of how much we build them up, the exchange rate is more powerful and efficient than budget support, as we all know.

It is generally clear now how, say, the hydrocarbon market will develop if nothing extraordinary happens. The prices will remain in the current range for at least the next year or two, I believe, but we have no way of knowing what will happen after that. However, overall the budget has adapted to the present situation, as well as the real sector of the economy. This is reflected in the currency exchange rate, the rate of the ruble to the dollar and other currencies. Overall, we are satisfied with the situation.

The Central Bank has numerous instruments to regulate the ruble mass in the country, to increase or decrease it and to buy other currencies to renew reserve funds. This, by the way, is what the Central Bank has been doing, more actively at some stages, less at others. Such regulation within market conditions will continue to ensure the interests of our real sector producers.

Concerning your relations with small and medium-sized businesses, I was happy to hear that you can feel the benefits of such work. If you see any problems here, you have to make them known to the corresponding Government agencies and financial institutions. We should all consider how to support this interaction. We must consider support instruments because this is all of great importance. This is what Russia’s overall economic growth will largely depend on.

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Vladimir Putin (answering a question on environmental standards): You know, this is a well-known issue that has long been under discussion. And I personally have always approached the introduction of such standards very carefully, understanding that they are an extra burden on businesses. But we all live in Russia: this is our country, we have no another. We cannot live in one place and have companies working in another; some are trying to do that, but lately, that does not seem to work for all of them, even for those who want to. However, we must think about ourselves, our children, citizens in general, in the broader sense. And naturally, we need to introduce environmental standards. But not only for that reason.

I think we all understand that modern production methods, modern equipment, including eco-friendly equipment, are more effective and more productive. So if we want to develop, if we want our fleet to remain up-to-date, the standards need to be introduced. If they are not justified – to be honest, I’m hearing what you just said for the first time – if they are absolutely oversized, then we simply need to look into it and think it over with experts and get back to this issue. I do not see anything extreme or scary about this. We should not be more Catholic than the Pope, so to speak. But we can look into it.

I don’t know whether it is worth declaring a moratorium [on certain environmental standards]. We might come under a lot of criticism from the part of our citizens. But that does not mean we need to leave things as they are. If this absurdity exists and these demands are clearly inflated, we need to look at this in a simple way. Only in that case, I ask you to present specific suggestions with specific figures.

It even seems strange that it sounds that way, because it appears that we have examined these issues from all sides, there was a battle between those who demanded the introduction of these special standards and those who felt it was too early to do that. I had understood that a compromise had been reached, but based on what I just heard from you, it seems there may still be imbalances.

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Vladimir Putin: Please don’t be angry with me, but we need to end this meeting. Although I feel it was interesting and useful – useful for me and for my colleagues. I hope that it was useful for you as well, that you got additional information. It’s not even a matter of additional information, because you can get it one way or another from open databases, of which there are now many.

I think that what’s more important was for you yourselves to get a sense of how we intend to work in the real sector, to work with you. I think you were able to see that there is not a single topic – I want to stress this, not a single topic that has truly escaped our attention. In other words, in general, we are constantly seeking answers, thinking and working on everything that you have just raised as problematic issues. But certainly, this kind of live contact is highly important. And I regretfully realised that I am hearing certain things for the first time today. One of them was brought up by a colleague, and it turned out to be an exceedingly important issue – a problem that is systemic in nature.

So I hope that this is not our last meeting in this format. We once again thank the Russian Popular Front for this format and this meeting. I want to ask you to finalise specific issues we discussed today with my colleagues, to give them suggestions, present them in writing and provide contact information. I have already agreed with some speakers that they will work with the corresponding departments. And overall, we will try to maintain this format.

Thank you very much. Goodbye.