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President of Russia Dmitry Medvedev: Colleagues,

We agreed a while ago to examine the social and economic development outlook for the Urals Federal District. This kind of meeting, with the governors of the federal district’s regions taking part, has become our traditional format for discussions. We are here to look at the programmes we already have and the programmes we have yet to implement, and we also need to examine the issues taking into account the social and economic situation that has emerged in the country today.

But before beginning our discussions, I would like to introduce my new plenipotentiary envoy to the Urals Federal District, Nikolai Alexandrovich Vinnichenko. Many of you know him already. He worked in the St Petersburg Prosecutor’s Office and also on the staff of the plenipotentiary envoy, and most recently he headed the Federal Bailiffs’ Service. I hope that you will find a common language and will be able to continue working with as much intensity and commitment as Pyotr Mikhailovich Latyshev did. He worked very hard indeed on all of the Urals Federal District’s affairs from the moment the district first appeared on the map. He had the biggest social and economic programmes under his control. I hope that Nikolai Alexandrovich will not only maintain but also build on all of these positive results.

Turning now to the actual subject of today’s meeting, I will not give a lengthy overview of the state of affairs in the Urals Federal District and its potential for growth – we all know the situation well. One of the clear achievements of the district’s economy is that almost a third of all budget revenue comes from the district itself, and this is something we always take into account in our discussions. Over the first three quarters of this year, going by the figures I have in any case, the results look good – almost 550 billion roubles in total revenue for the regions of the Urals Federal District, and this is up by 42 percent compared to the same period last year. But we realise that it will be very difficult to maintain these figures next year, and so we need to decide how to continue our work.

Regarding the specific industries in the different regions, we know that the Northern Urals and Western Siberia are home to our country’s energy resources base. Two thirds of Russia’s oil and more than 90 percent of its gas are produced here. The Southern Urals, meanwhile, has traditionally been an industrial region and produces almost a quarter of the country’s entire industrial output. This is a region of great importance.

What do we need to do and what do I propose concentrating on? Our task today of course is to maintain all the positive results we have achieved of late. We need to continue with our earlier plans, resolve the infrastructure and resource bottlenecks that still exist in individual regions and in the district as a whole. In this way we can create a more solid social foundation for development (this is probably the most important thing of all, and I will add a few words on this later), and of course take swift action to address the negative changes taking place on commodities and financial markets and the labour market, make use of the advantages we have and minimise the problems.

As I have already said, the financial crisis that has created upheaval throughout the entire world economic system must not be an excuse for winding up the programmes and projects we have developed over these last years.

In this respect I want to draw your attention to several important points.

First, we need to set about full-scale implementation of regional anti-crisis programmes that aim to save the biggest possible number of jobs and ensure that basic social obligations are met. Our key task is to hold onto the highly qualified personnel, which in a number of cases was built up and put together with such effort. In some cases whole industrial production lines, design bureaus and research departments were rebuilt piece by piece, and their staffs form the industrial production elite that is such an important factor in ensuring industrial growth.

Second, we need to work very attentively on optimising the processes taking place on the labour market, and here, we need to act carefully and rationally, and take into account the future demand for specialists in this or that region. We need to act not just on the basis of economic criteria but realise too that keeping this or that big company afloat can be achieved not just by cutting jobs but through other means too.

Third and probably most difficult of all are the social support measures for people who lose their jobs. It is the regional authorities’ task to organise re-training programmes for these people, opportunities to learn new skills, and (perhaps even more important) simply help people to organise their own business. If people are laid off, if they lose their jobs, the state’s first priority is to help them find a new job, including through opening their own business. These are certainly complex and in many ways unfamiliar processes, but we need to be prepared for this work.

But the financial and economic crisis will have not just negative consequences. It will also create some new opportunities, especially in developing new markets, new clusters, new niches that will enable us to make serious progress in increasing labour productivity, which is one of the main objectives we have all set. We all know how important this is, but we are still far from achieving the kind of results we would like in this area. Overall, we are not effective and our economy in this respect is not developing in the right direction. The current situation therefore gives us the chance to bring some order here and take steps in the right direction. And of course we need to optimise production itself.

I want to stress once again that all of the strategic social and economic development projects in the Urals Federal District must continue, including those concerning the development of the Arctic and sub-Arctic Urals. One of the most well-known of the projects already prepared is the Industrial Urals-Arctic Urals project, one of the projects that Pyotr Mikhailovich Latyshev was very actively involved in. This is a very forward-looking project that aims at streamlining the relations between the main links in the industrial production chain in the Urals, developing the minerals and raw materials resources of the eastern slopes of the Urals, supplying raw materials to the metals and machine-building enterprises of the mid and southern Urals, and increasing the entire region’s economic and social stability in general. This is a huge project. We all realise that this is a long-term undertaking. The estimates were made for 10 years, 20 years, even through to 2050. But this does not mean that we should set it aside for now or abandon it because of the difficulties that have arisen. I think this would be the wrong course of action.

Finally, social issues are the other point I specifically wanted to mention today, and in this area I address the governors primarily. Of course, the Urals Federal District has quite a high level of economic development, and this means that people’s incomes are at a decent level. Overall, wages here have been 30 percent higher than the national average over recent years, though there are differences between the district’s regions. Kurgan Region, for example, is one of the regions facing more difficulties in this respect. But overall, the Urals Federal District has always been one of the fastest developing parts of the country and poverty and unemployment levels have been among the lowest here.

Furthermore, practically all of you here have taken good strides towards developing housing construction over recent years. I have discussed this issue on more than one occasion with practically all of the governors present. We have visited new sites and examined economically justified legal and organisational schemes for work. Overall, housing construction has shown decent growth.

I bring this up because I think it is of principle importance for the authorities at this difficult time to ensure the level of social protection set by the law and continue carrying out all of the most important social programmes. We can save money in other areas and will probably have to cut costs here or there, but we do not have the right to save on social issues. We worked hard to develop the country’s economy over these last 17 years, and especially so over the last eight years. We know that crises come sooner or later in world finances, and they affect life in practically every country. We are more prepared for this situation today and we now have the chance to show what we are capable of.

In conclusion I want to say a few more words on this subject. In difficult times like those we face now, the authorities need to be more attentive than ever to the daily problems of citizens. It is the sacred obligation of any government to address the problems of ordinary people. But in difficult times, any government, any boss, should provide maximum care and attention. I therefore want all of you here to keep the situation firmly under control, keep your fingers on the pulse. If need be, we are ready to discuss any issue at federal level and make targeted decisions, including on support for this or that company or enterprise. The main thing is to stay attentive to ordinary people’s needs. This is absolutely crucial. Only in this way can we hope to minimise the consequences of these latest economic problems.

In this situation we need to work together as a single organism, work the way the executive authorities should work, starting at the village level, municipal level, and right up to the decisions taken in Moscow.

The Urals has all the possibilities it needs for carrying out big programmes. I am sure that you will have proposals to make now, and I am sure that this work will make it possible to carry out these programmes even in these complicated conditions and achieve the primary goal of improving our people’s lives.

That is what I wanted to say at the start of this discussion.

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I would like to say a few words at the conclusion of our conversation, which in my view has been very detailed and productive.

Let me begin with a subject that in one form or another was raised by those at the meeting, the problem of getting funds to major producers and companies. Let’s face it, everything is happening very slowly and we seem to have trouble coordinating. I understand that there are genuine reasons for this and we talked about them as well: reasons related to banking regulations, the debt load of some enterprises and a number of other reasons. Nevertheless, I still believe that the Central Bank should resolve this problem with the full support of the government cabinet, because all the decisions related to this subject have been made. That said, of course the emphasis should be on the provision of money over the long term, because in my meetings with large and very large enterprises the managers and owners representing them in many cases said ”We don't need short-term loans at all“ – they turned them down. When we say to them ”Here's five billion for a month“, they say ”We don't want it“. And this is completely understandable.

All the decisions on medium-term financing have also been made. We must not be afraid to do everything we can. I understand the motives of the Central Bank; I know that in some cases it does not want to tell commercial banks and strategic sector banks what to do. But unfortunately in certain situations this has to be done.

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Now, insofar as support for the domestic market is concerned, we really must deal with this without fail. We all know that countries that were originally dependent on their domestic markets are suffering to a much lesser extent from the crisis than those that were obsessed with exports and have thus suffered much greater losses. I am thinking of our country of course. We cannot change the structure of our economy in one year, in two years, or even five. And it is understandable that primary resources will remain the crucial means of ensuring our economic security and filling our coffers, but of course we need to think about the future. For this reason and in regards to the situation in our own market, we must obviously develop our market and concern ourselves now with diversifying production. We have to do what we should have done before and what is still required. Therefore, mechanisms for support are certainly needed. These must be sensible arrangements so that our market stays open, but at the same time, under certain conditions, everything being equal, we will give our manufacturers preferential treatment. This doesn’t mean competitiveness has to suffer. We will not engage in oafish protectionism; however, we will defend our capabilities, we will help our producers.

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Concerning the situation in road construction, we are looking forward to the long-awaited emergence of a company that will deal with this. I hope that in the near future the documents needed to establish this corporation will be introduced. At the very least this will provide employment opportunities, particularly in crisis situations.

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Concerning a fund to help industry, I am generally in favour of it, at least the idea of it. I think the idea is workable, in the present situation perhaps even necessary, especially because other states have tried this. Countries that have never been suspected of being passionately in love with the idea of state regulation are nonetheless creating such funds.

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But what I would like to talk about concerns the bailout of construction companies. We need to come up with some sort of mechanism for two reasons. This really was our fastest growing sector, a very important one for the social well-being of our citizens. There is a lot of money in this industry and there are very high expectations for housing, and thus the risk of some very negative social consequences. Therefore, we need a system that will enable us to restore equilibrium to the current situation and perhaps permit a soft landing, so that the situation in the housing market stays under control. As a start we should finish building all the homes that have been started, provide housing for all those involved with mortgage schemes and other similar legal proceedings. Then we can look at how the situation is developing: if the situation in the financial markets straightens itself out — thank goodness — it will restore momentum, and we can build new housing developments and new facilities. If the situation remains difficult for a while longer, at least we will have dealt with the principal issues. And in this sense, I think you need to order the cabinet to come up with a plan for the bailout of construction companies.

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Another issue that has been raised is taking a more active position on oil prices. This is not the subject of our meeting, but I can simply tell you this as President. Our partners, our colleagues in the Petroleum Club so to speak, have asked us quite aggressively about this. Everyone I have met with has suggested that we coordinate our policies with theirs. I would like to say that we are ready to do so, we must defend ourselves and our revenue base in both the oil and gas sectors. And this sort of protective measure can be linked to a decrease in oil production and with the participation in existing organizations of suppliers, and the participation in new organizations, if we can agree on this. I believe that we should consider all the options before us. Let me say once again, this is a matter of the revenue base of our country and how it is going to be developed. And here we should not be guided by any abstract criteria, or by the recommendations of other sorts of international organisations and so on. Our national interests are at stake. We will continue to do what we consider necessary.

Dear colleagues, I would simply like to say once again at the end of our meeting that we must obviously prepare for difficult times ahead. At the same time we have a great opportunity, not only to overcome the crisis but also to proceed with our own development. That is why in effect I would like to end where I began: all the major programmes for social and economic development in the Urals Federal District must be preserved, and we have every chance of doing this, even as we recognise certain nuances that we must naturally take into account from today’s perspective. Let us help our businesses and work to establish efficient companies, raise productivity and control the situation in the banking sector — and then all the plans that that we made will be executed.

Thank you very much. Good-bye for now.