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Vladimir Putin: Good morning,

We have gathered here in this Far Eastern town in order to discuss the problems of the region, in order to analyse everything that hinders its development and to identify the main issues that have to be addressed as a matter of priority.

I would very much like the outcome of today’s conversation to form the basis of a large-scale national programme for the development of this region.

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The processes taking place in the Asia-Pacific region make us try and rise above the daily problems in which we are constantly mired and to look at the place of the region where we are meeting, its role for Russia in global terms and in terms of long-term national interests.

I don’t want to dramatise the situation, but unless we make real efforts soon, then even the indigenous population will in several decades from now be speaking mainly Japanese, Chinese and Korean.

So the question of the future development of the Far East and the Trans-Baikal region is very acute, I would say even dramatic. In fact, the existence of the region as an inseparable part of Russia is at stake. We cannot afford to lose the momentum of development and allow the area to fall behind. From what we have today, it is clear that this is precisely the direction in which we have been drifting.

The main reason for this is well known. It lies on the surface: it is the huge distance from the industrialised regions, from the centre of the country. You know better than I do the demographic situation and the recent outflow of the population. After the main work on the Baikal-Amur Railway (BAM) was completed and after the break-up of the Soviet Union, people left for their native republics. That was to be expected. But the outflow continues, and this is alarming.

I think many people who live here have often asked a legitimate question: what kind of a Far East does Russia need considering all its daunting problems? Does it need the Far East only as a source of raw materials or as a “window” to Asia for integration with the Asia-Pacific region? No concrete problem can be solved any longer without answering this fundamental question.

I am convinced that there can be only one answer: for the Far East, Russia is not the “mainland”. Russia is here under our feet.

The Far East and the Trans-Baikal region account for 40% of the country’s territory. This fact alone speaks volumes. So it is our duty to revise our policy in the Far East. It should not be a policy of individual regions of the Russian Federation, it should be the policy of the Russian state.

Compounding the situation is the lack of internal cohesion of the territories and economic ties, good partnership contacts, even sometimes between the leaders. So the primary task is to turn the region from a loose conglomerate of territories into a single organism. And in that, the work of the Presidential Envoy, Konstantin Pulikovsky, has an immense role to play.

The lack of a clear position (a systemic vision, to use the current term) hinders all your efforts and disrupts any economic programme. The region’s development is too slow. Resources are invested here, even though I have mentioned that they are not sufficient and that they have not been disbursed. But the returns on the inputs are nevertheless insignificant.

Goods produced by local manufacturers are often uncompetitive. Yet this land has rich subsoil resources, rivers and seas. There is every opportunity to turn the area into a zone of prosperity, as our neighbours have managed to do. Otherwise we will forever be watching wistfully new houses going up on the other shore.

Today the region is implementing the presidential programme I have mentioned. And yet there are no noticeable changes, no tangible results. Obviously, if the programme does not work, it has to be revised.

The Government must seek to concentrate all the resources directed to the regions on priority tasks and not to scatter them. I think the new administrative resources of the federal districts should be used.

Now let me quickly go through the most important current issues. Poor power supply in the region is due to failure to pay for electricity, and this is the number one problem. It is imperative to ensure payment discipline.

The number two issue is a balanced tariff policy. The region has every opportunity for that: it has hydro-energy resources, oil, gas and coal. The way to solve the problem is to speed up the introduction of the Bureiskaya Hydropower Plant. That issue calls for our constant attention.

The next challenge is gasification of the Sakhalin, the Khabarovsk and Primorye regions. We should also give thought to oil refineries and to how they work and where the resources from these refineries go. I am referring to Khabarovsk and Komsomolsk-on-Amur.

Most of the region’s problems hinge on the issue of energy tariffs. The Federal Energy Commission and the Russian Energy Ministry must take another hard look at the issue and decide what can really be done about it.

The infrastructure of the region is not an integrated whole. Hence the colossal importance of the development of all kinds of communication. The fact that transportation routes are wide apart is a real scourge for the region, considering its vast territory. In this situation, major transportation lines lie idle.

The loading of railway transport is an acute problem. Frankly, one sometimes wonders why the country devoted such huge resources, so much effort and time to building the BAM? And we have to know precisely the benefits that would accrue from the implementation of the Transeco project. Some experts believe it would only complicate the railways situation in the area. The Government of course should study this issue more carefully.

We pin great hopes on completing the building of the roads Chita–Khabarovsk and Bolshoi Niver–Yakutsk–Magadan. I think it will relieve transportation flows and help to optimise the arrangements for bringing supplies to the north. At present, it remains to complete just 500 km out of the 6,000 km of the new roads. I think they should be put into operation sooner so that the whole network can start working.

The Transportation Ministry and the Federal Road Fund need to find the resources to complete these stretches of the road immediately. The resources are there, but they must not be scattered.

Informatisation of the country as a whole and the huge region of the Far East in particular is a very important issue. It is not our agenda today, which is a pity because this is an area where we are lagging behind.

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Another big problem of your region, also linked with transportation, is the long distance from the Russian fish market. We are aware that fishermen have to look for partners in the external market and have to pay for supplies of materials, funds, fuel and containers with valuable species of seafood, and do so at dumping prices. So an important challenge is to reduce the share of the products that are processed abroad. The answer to the problem lies not only in the area of finance and economics. Ports need to be modernised, the fleet of vessels needs to be renewed and processing enterprises retooled. It is incumbent upon the Transport Ministry, the State Fisheries Committee and the Federal Border Service to draw up proposals on how to change the situation.

The Kuril Islands merit special attention. Let me report to you that the Government is planning to discuss the social and economic problems of the Kurils at an early meeting.

A similar situation prevails in the forestry and logging complex. We need deeper processing inside the country. We need our own finished products and we cannot tolerate a situation when, like in the case with fish, valuable species of timber go abroad to return as foot stools.

The remoteness of the Far Eastern region dictates the need for it to become actively involved in the markets in the Asia-Pacific region. In this, the economic interests of the region and the geopolitical interests of the Russian state coincide. Only, we must make sure in what capacity local companies enter the Asia-Pacific markets. They should act as Russian companies, as part of the Russian economy. You understand what I mean. When our fishermen stay away from our ports for years (incidentally, this tells us something about their quality of life here), when ships fly foreign flags, that is a different story altogether. At present, Russia’s position in the region is weak. Its share in the trade here is just 3%-4%, not to speak about the primitive structure of our exports.

Thank you for your attention.