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President Vladimir Putin: Good afternoon, dear colleagues.

We are meeting here in Chelyabinsk to discuss the most pressing issues for social and economic development in the Urals regions.

Today’s meeting is the first since the Address to the Federal Assembly was given.

In this respect, I would ask all present to relate the problems that we will analyse and examine here to our national aims and objectives, keeping in mind the significance of the Urals region for the country as a whole, something I will say more on later. I particularly want to emphasise that, for the last two years, the addresses to the Federal Assembly should be seen as an integral programme, an integral, common development strategy for our country in the decade to come.

Historically, the Urals region has always been a powerhouse for Russia’s industrial development. The region is still of vital importance for the country’s economy today.

Just to give a few figures: the Chelyabinsk, Sverdlovsk and Kurgan oblasts today account for around 40 percent of the country’s steel and rolled iron production and produce a similar share of the country’s refined copper and aluminium. This region produces around half of all our steel pipes. Regions such as the Khanty-Mansiisk and Yamalo-Nenets districts account for 97 percent of gas production and 69 percent of oil production.

Industrial production showed an increase of 7.9 percent last year in the Urals Federal District – 1.8 times higher than for the country as a whole. Average incomes in this region are almost 25 percent higher than the national average. In some parts of the region the construction sector is developing rapidly and mortgage schemes are also becoming more widespread.

The Urals Federal District’s combined industrial potential is such that the region simply has to be one of the most fast-growing parts of the country. The region’s advantage is that there is good demand for its products both on the Russian and world markets.

This federal district should, objectively, be a centre for attracting investment, both Russian and foreign.

But I would like to note that the amount of direct investment, direct foreign investment, at any rate, remains not very high and in some parts of the district there has even been a noticeable decrease in investment.

What also stands out is that growth is a lot stronger in some regions that make up the district than in others, and the fact that production capacity is concentrated in a few economic centres. At the same time, some 40 percent of companies in the machine-building sector are operating at a loss and there is a more than 10-fold difference in per capita budget revenue from region to region within the federal district.

Also worrying is that small business development slowed down last year and the figures here are almost twice lower than the national average.

This is strange. This is not the first time that we are analysing the situation in the district, but we are always raising the same problems, which suggests a fundamental problem in the way the authorities here are going about resolving pressing issues and tasks.

The main problem is that the district’s highly integrated and large-scale industrial complex has not become the foundation for real economic growth and a noticeable improvement in people’s living standards.

I am convinced that making full use of the Urals region’s immense potential and achieving rapid development requires principally new approaches and attractive, promising projects that will lay a solid foundation for growth in the decades to come. To do this, we need to expand opportunities and look for new investment areas and additional sources of growth for the regional economy.

The Urals Federal District is practically in the centre of Russia and this offers many advantages, and not just economic but also social and humanitarian advantages. We need to make effective use of this proximity to the central and the eastern parts of the country for the benefit of the economy and the district’s people.

Moreover, in the north you reach the Barents Sea, a very promising region, and in the south you share a border with Kazakhstan, which, as we know, is currently experiencing rapid economic growth and is a good partner for us.

In a word, the district has immense economic and geographical potential and could easily become a model for building a regional development strategy based on the region’s own resources and capabilities and on creating good conditions for attracting investment both at home and abroad.

I would also like to note that the search for a development strategy should not depend only on possibilities for redistributing resources, whether it be transfers from the federal centre to the regions, or from one region to another.

The Urals District’s economic potential should be based on free movement of capital without internal barriers. And not just local capital but, as I said, capital coming in from other regions and countries, too.

I would remind you that at the last meeting on the district’s development we discussed the need to develop transport networks in the Urals. I want to stress that transport infrastructure development is a national priority, as was said in the Address to the Federal Assembly in 2004. Transport infrastructure development has a direct impact on economic growth rates. And we all know, at least all of you who are here today know that the aim of doubling GDP as a state strategy for the coming decade is still on the agenda and no one has cancelled it.

The national economic growth rates for last year and this year and also the growth rate for the Urals District’s regional gross product give us sufficient grounds to work towards our objective with even greater determination and confidence. I particularly want to emphasise this.

I am sure that practically all the regional leaders can give just such confident figures.

Second, transport system development in the district should be in keeping with the strategic long-term interests of the Russian economy as a whole. Having a network of transport highways will give Russia much greater access to world markets and enable us to become part of the global transport corridors.

You should be making the advantages your district offers as attractive as you can for investors. This is a task for the authorities at all levels. Creating a favourable business environment in the district is your direct responsibility.

The district has quite a high concentration of strategic facilities. Unfortunately, decisions on whether or not to allow foreign capital to participate in these facilities are being taken without any systematic approach. This creates uncertainty for potential investors’ plans and creates barriers to bringing capital into the region.

But one of the instructions I have given following the last Address to the Federal Assembly is to draw up an exhaustive list of the sectors of strategic significance in order to be able to provide potential investors with complete and accurate information on the sectors that are open for investment. I ask you to organise this work in your district and inform the government and myself on the results obtained, results that are of importance for the country as a whole given the large number of strategically significant facilities you have in this district.

I expect that all these issues raised will come in for particular attention from the Council of the Plenipotentiary Presidential Representative, a council formed in accordance with the decree you already know.

That is all I wanted to say for a start. Let us now begin the discussion in more detail.