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Vladimir Putin: Good afternoon, distinguished colleagues,

I have made a point of inviting not only the Government Ministers in charge of the economy, but also the representatives and heads of the security and military agencies to this meeting because the problem of national security and the security of the citizens is particularly acute in the south of Russia. What happened in Kaspiisk is proof of that.

A year and a half ago we had a thorough discussion of the problems in Southern Russia, and we identified ways to solve them. However, one has to admit that most of the issues we discussed then are still relevant. Unemployment is still high, industrial output is not growing or is growing too slowly. The size of the shadow economy is not decreasing.

Neither federal targeted programmes nor, as in the case of Ingushetia, free economic zones, can provide the answer. Your region has many economic advantages: it has the shortest transport corridors from Asia to Europe, fertile soil, considerable labour resources and a mild climate. But unfortunately, one has to admit that some regions within the district are not paying enough attention to promoting economic initiatives and as a result they ask for aid from the federal centre year in and year out.

No consistent work is done to promote small businesses nor restore the production base nor build a market infrastructure. As for small businesses, they are particularly important for some regions and especially for the southern regions. Next week I will meet with the top Government officials to discuss this issue because the business community is worried about what the final version of the law on small businesses and their taxation may turn out to be.

Going back to the actual situation in Southern Russia, it can be said that because of these developments and negative phenomena, the manpower and natural resources of the region are not being used and are sometimes exploited by criminal groups. The grave economic situation is a breeding ground for growing crime, as we know all too well. Such a situation gives a free hand not only to ordinary thieves, but also to drug dealers, arms smugglers and terrorists.

Let me stress that if all the Government bodies display due competence and society displays solidarity in the fight against crime, I am sure it will become much calmer in Southern Russia.

That also applies to the problem of international terrorism to which I have referred. As the recent tragedy in Kaspiisk has shown, the security structures must be on constant high alert. Any negligence is fraught with major casualties.

We have just been discussing this with the leader of Dagestan. The region will receive massive investments if it restores order and drastically reduces the criminal threat. And he noted with regret that the terrorist attack in Kaspiisk occurred just as the signs of rising investment activity had begun to show themselves in Dagestan, and now everything has ground to a halt. And indeed, who would invest in a troubled region?

We should build an effective system of regional interaction together. The staff of the Plenipotentiary Representative, the heads of the district security structures, the Interior Ministry, the FSB, the prosecutor offices of the republics, territories and regions must coordinate their work more closely.

I pin great hopes on the Deputy Prosecutor General for the Southern Federal District. Under the law, the Prosecutor Office is the coordinating body in the fight against crime, and the Deputy Prosecutor General is an experienced and competent worker and we count on him.

One of the key tasks is the economic reconstruction of Chechnya. It is our common challenge. If we meet it successfully, we will have improved the economic situation in the whole region and stabilised the situation in the district and in Southern Russia as a whole.

I think the time has come to broaden the powers of the head of the Administration of the Chechen Republic. Today I signed a decree granting him the right to independently appoint members of the Government, the heads of regions and communities in Chechnya. As for the Government Chairman, according to current practice that issue is solved by the approval of the representative body in practically all Russian regions. Chechnya does not yet have such a body. So as regards the Chairman of the Government, let us leave the issue to be resolved with the President’s Plenipotentiary Representative.

Distinguished colleagues,

I am sure that many of the problems that have accumulated can be solved by using internal resources, above all by strengthening links between the regions within the district. The economy of Southern Russia was initially created on the basis of broad production cooperation which needs to be restored. But we are not always able to solve problems together and very often behave as if our neighbours’ problems do not concern us.

The districts were created not only for the purpose of effective management. They are called upon to unite efforts, not only to combat crisis phenomena (including those connected with migration and crime), but to plan for the future. There must be joint programmes to create jobs and common social projects.

In conclusion, I think I must stress that not only the prestige of government in the region, but the world’s attitude to Russia greatly depend on the validity of our assessments, the effectiveness of political decisions and our ability to work with people efficiently and in a focused way. I urge you to also keep that in mind.