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Official website of the President of Russia

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Excerpts from a Speech at the Meeting of the Council of the Inter-Regional Association Siberian Agreement

February 18, 2000, Irkutsk

Vladimir Putin: Good afternoon.

The land of Siberia holds more than three-quarters of Russia’s mineral and fuel and energy resources, more than half of which are hydro-energy resources. It also has the main reserves of ferrous and non-ferrous metal ores, and minerals. Siberia accounts for more than 80% of Russia’s reserves of industrial timber. This merits the attention not only of the local authorities, but of the federal government. I understand that you have not yet addressed these issues. Unfortunately, we have to admit that in spite of this natural wealth our economic performance has been modest so far.

Although you have successfully stabilised the economic situation and reported a 6% growth of industrial output, that indicator can be seen as modest and is no more than a pointer to a future trend.

I would very much like to hope that we will consolidate these successes and will build on them. Sustaining positive dynamics is just as much of a challenge as dealing with a crisis.


I would like to say a few words about the strengthening of the border because this region has such a problem, above all, of course, on the border with Mongolia. It is quite a long border. Unfortunately, we are encountering increasing problems are arising, some of them rather difficult for us. In fact, these problems have been taken up by the Mongolian parliament. It has to do with cattle rustling and other problems which stem from the fact that the border is unregulated and unprotected. Clearly, something has to be done about it because it damages our reputation and relations with a friendly state.

Now let’s move on to some issues that have not been discussed yet, and that is just as well, because now I can take part in the discussion. We can start by addressing the problem of forestry and the logging industry in Siberia. We will of course be looking at the problems of the sector, but naturally the ultimate goal in dealing with any issue in this sphere is to improve people’s lives.

The Siberian region, in spite of its natural riches, has one lamentable distinction: people here are poorer than in the country on average. This is a fact that cannot be ignored. We must take into account the lag in terms of living standards and the quality of life. Statistics show that roughly more than 4 million people live in extreme poverty. Their incomes are half or less than half of the living wage. Among them are those who work in the timber industry. Their wages are two or three times lower than in extractive industries.

Moreover, Siberia has hundreds of remote communities where there is a single enterprise that provides jobs for the local people and bears the burden of providing the entire range of social services to a community. There are many more loss-making timbering enterprises in Siberia than in other parts of the country. That is understandable because they are too far away from the western and eastern markets. We discussed it with the governor today. So, transport is certainly an important issue. For every new vehicle there are two which have broken down because they are too old. The fleet of vehicles is obsolete. The owners of most enterprises cannot provide effective management. That problem claims its share of attention too. We should step up our efforts to rehabilitate enterprises and use the whole arsenal of instruments offered by the law.

We have sent to the regions a concept of forming integrated corporate management of the industry called “The Creation of Large Corporations from Raw Material Extraction to Production”, and it envisages compliance with environmental requirements. Some successful enterprises of this kind already exist in Syktyvkar, Bratsk and some other regions. But, unfortunately, they are still few and far between. Let me be honest and say that perhaps we too have not been very forthcoming on the issue, but the regions are “taking their time” and are not active enough, in my opinion.

As far as I know, the association is keeping the problem under review, and if you feel that we should do more, we are ready to pursue that path vigorously. Unfortunately, the workers and managers in this sector so far have been mainly concerned with the issues of trade benefits and lifting of export duties. The tariff policy must certainly be looked at and we turn our attention to it time and again. Favourable conditions should be created for the export of products, but so far we have largely been exporting round timber and not processed timber products. This is the easiest approach for timber exporters. To expand the markets for pulp and paper products, an inter-governmental agreement has to be urgently prepared, including between this region and the People’s Republic of China. As for seeking special terms and lower duties, that approach is not very promising. The last time we touched upon this problem was at a meeting of the coordinating council of the North-West Association (the timber people know what I mean, the problem of pulpwood there is, if anything, more acute than here). We met the requests made by the members of the North-West Association and lifted the tariff on chips and cut it by 50% on pulpwood.

Thank you for your attention. I am looking forward to a very active discussion.

February 18, 2000, Irkutsk