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Vladimir Putin: Our meeting today is devoted to the current situation in the Chechen Republic, the state of its economy and the political sphere. I think you will agree with me that along with some positive results there are still many problems.

One problem is, of course, the terrorist threat. The terrorists are staging attacks trying to intimidate civilians. Despite their cruelty, they have failed to do so and I hope they will never succeed. But this raises many questions, especially the gradual handover, as we said earlier, of more and more powers to the law enforcement bodies in the republic to maintain law and order in Chechnya. We will discuss that topic.

Naturally, the most solid basis for peace in Chechnya is the successful solution of political and socio-economic issues in the republic. So of course we will touch upon the theme of reconstructing the economy and look at the way the mechanism of interaction between the federal and republican government bodies is functioning.

Grozny is a special topic, including the progress of its restoration and any other positive developments. Before embarking on actual restoration, the most elementary things must be done and at least the debris must be cleared.

As for the political component, you know that the process of amnesty is underway. The State Duma deputies have made up their minds. We need to discuss with you how the process will proceed in the practical way.

Of course we need to discuss the progress of the treaty on the delimitation of powers between the federal centre and the republic in line with the Constitution of the Republic and the Constitution of the Russian Federation.

In general, we are going to discuss a whole range of issues that you confront on a daily basis.

Akhmad Kadyrov: Grozny is the capital of the Chechen Republic and I would like to say a couple of words about it. Currently the debris is being cleared away. Two hundred machines work on any given day. At the same time, we are about to complete the construction of 11 municipal residential blocks. Three health centres are to be opened by late June or early July, and we will open 11 schools by September.

As you have rightly said, despite all the efforts of the enemies to disrupt our work, it is moving ahead. The people in the republic have reacted in a very positive way to the amnesty process. Once again we are meeting the wishes of the people who want to return to normal life half-way. We are contributing to this work.

Speaking about political developments, we are working actively to form the State Council of the Republic. That new body should be able to start its work by June 10. It is formed in the following way: the heads of communities, the strongest leaders, gather in all the regions, and one representative from each district of the republic is elected. They will be joined by the heads of all the districts according to our laws.

Vladimir Putin: What about the payment of compensations to the citizens of Chechnya for their lost houses and property?

Akhmad Kadyrov: All the work has been done. On May 23 the Russian Prime Minister chaired a meeting where we discussed the topic in detail. We are awaiting a decree of the Russian Government. Otherwise all the preparatory work has been completed. We have formed a commission. The former Committee for Refugees has been charged with the task of drawing up statements and the list of those affected.

Vladimir Putin: (a question to Stanislav Ilyasov): What does the federal Government have to do? What needs to be done to issue the decree?

Stanislav Ilyasov: Everything is fine. The decree is being worked on and I hope it will be issued next week.

Vladimir Putin: So, it is a purely technical matter? When will the payments be made?

Stanislav Ilyasov: In September.

Vladimir Putin: So, payments will begin to be made in September.

Akhmad Kadyrov: We have counted the number those affected, but the figures are constantly being updated. At the moment there are 39,000 families.

Vladimir Putin: We have spoken about Grozny and other major projects. What about the development of small and medium businesses? Chechnya traditionally has small family businesses. Can the Russian Government help you in that area?

Anatoly Popov: Small and medium businesses are developing quite well. Cafes and diners are working, and there are even restaurants and privately owned hotels. I think that the Russian Government could help through the existing federal agencies: the Fund in Support of Small and Medium Businesses and the Agency for the Development of Small and Medium Businesses. If they could help our entrepreneurs, that would be a substantial plus.

I would like to say a bit more about Grozny. This year we finally launched a comprehensive restoration plan. We are focusing on housing and utilities. Four water pumps will become operational in the first half of the year, which will meet Grozny’s need for water. And that includes the Staropromyslovsky District, which is one of the most difficult ones. The same is true of sewage. We will open six sewage stations. The only problem this year is electricity. Only 40–45% of these targets will be met because of lack of financing.

We would also like to keep in place the federal targeted programme for 2004, along with the payment of compensation for lost and municipal housing in order to keep the process of reconstruction under control and preserve its integral structure.

As for clearing away the debris, that is a priority. We have made a submission to the Russian Government: when adjusting the federal targeted programme of reconstructing Chechnya in the second half of the year, use part of the unspent money to restore Grozny because the funds earmarked for that purpose will run out in June.

Vladimir Putin (a question to Stanislav Ilyasov): Do you have any problems?

Stanislav Ilyasov: No problems. We will make adjustments for the second half of the year, and we will add about a billion roubles for the reconstruction of Grozny. Financing under the federal targeted programme will start in the middle of March. The programme is being funded in full and without delays, but we have pointed out that the sum earmarked is not very large.

Vladimir Putin: It is more a question of making use of the money allocated.

Stanislav Ilyasov: We will use the money. There were some real problems in 2001–2002, travelling across the republic was difficult. Now these problems have been removed. Unnecessary road blocks have been removed and traffic flows unimpeded. You can now work normally. Danger is there, but not on the same scale as before. The barriers that stood in the way of reconstruction have been practically removed.

Vladimir Putin: Do traffic police in the republic work?

Stanislav Ilyasov: Yes, traffic police officers even salute you. You drive through Grozny and you are saluted.

Akhmad Kadyrov: The traffic police are the only uniformed people you see in the city streets.

Stanislav Ilyasov: Yes, previously they all wore military uniforms but now the military wear their own uniforms, civilians wear civilian clothes and the police have their own uniforms. When I first came to work in the republic only a few of us wore civilian clothes. All the rest were in military uniforms.

Vladimir Putin: How is the work to create a group on the delimitation of powers between the federal and republican governments proceeding?

Akhmad Kadyrov: The group has been created. We already have 2–3 finished drafts.

Vladimir Putin: But it should be the subject of discussion inside Chechnya. People must see this treaty, know its content and have a chance to contribute to the drafting of some of its provisions.

Akhmad Kadyrov: After drafting the Constitution of Chechnya, we have some experience in bringing in the public to do this kind of work and we intend to draw on that experience.

Vladimir Putin: Let us discuss everything in more detail.