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Vladimir Putin: One has to admit that the performance of rail transport does not look so bad by comparison with that of other sectors. Beginning from approximately 1997 labour productivity in the sector has been growing at the annual rate of 5%, if I am not mistaken.

At the same time, no incentives have yet been created for improving the quality of services and cutting costs and tariffs. We know, and the Minister knows as well as any of us, that accumulated internal reserves can be quickly frittered away. Individuals and enterprises engaged in economic activities rightly complain about constantly growing costs.

Certainly there are many problems in terms of the cost of services and the quality of these services. The Trans-Siberian Railway is perhaps the most vivid example.

Although the Ministry has invested heavily in its reconstruction, about a billion dollars, and in spite of its competitive advantage for shippers who move their goods from Asia to Europe and back, the railway often cannot hold its own in competition. Carriers prefer alternative corridors between Asia and Europe.

I believe that reform should achieve the following fundamental goals. First, of course, making rail transport more efficient, which is the overarching goal.

Next, there is the need for more effective state regulation in this sphere. Today, as we know, the Ministry of Railways is both a business entity and a government body. Everyone understands that this is not a normal situation.

It is important to make rail transport, its entire structure and individual enterprises transparent. To rule out misspending of money.

Of course we should get rid of cross-subsidies. As it is, either transport sucks resources out of the economy or the economy is subsidized by low tariffs.

Last but not least, is the social safety net for railway workers. We know that all transformations involve restructuring. Railway workers must not suffer, and resources must be ready for retraining personnel, if necessary. The top executives of the industry and the Economics Ministry and the Government should think in advance about how to address the social problems of those who work in rail transport today and will work there tomorrow.

That is what I have to say on the main topic. The State Council is currently discussing some other, equally important problems. The next meeting of the State Council will address the problems of the housing and utilities sector. I very much hope that the issue will be prepared for discussion by May. I think it is no less important for the nation than the question we are discussing today. It affects millions and millions of our citizens. And of course people expect competent and effective moves on our part, on the part of the Government: better services, and more order in this sphere. We know how important it is and we have raised the issue more than once. I hope that the State Council will make a considerable contribution to this work.