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President of Russia Dmitry Medvedev: Recently we took up this question with you and work has continued on it. I am referring to the assessment of the effectiveness of the executive branch in the Federation's regions. We have worked out the criteria and the procedures. I would like you to tell me how this work is going, what results were achieved last year and this year, and just in general give me a sense of where we are now.

Let me ask another question while I'm at it. Since you joined the Executive Office we have also been working on creating a pool of human resources and we recently met to discuss this. Now we need results: what about this personnel reserve?

Deputy Prime Minister and Government Chief of Staff Sergei Sobyanin: If you don't mind, I'll start with the second question.

Dmitry Medvedev: Go ahead.

Sergei Sobyanin: As you say, in July we were instructed to prepare a programme for the creation of a reserve pool of management personnel. This order has been carried out. Such a programme has been prepared and reviewed by the Presidential Commission for Establishing and Training a Management Personnel Reserve. The commission has approved it and it is ready to be implemented once you have examined it and given it your approval.

What are the main parameters of this programme? It was put together with a number of principles in mind. First, the main principle which you and I discussed is the minimal involvement of the bureaucracy, the minimal participation of all kinds of civil service commissions, the principle of letting the best choose the best. This meant that those in the country with managerial skills, those generally referred to as the country's leaders, would choose the country's best managers, who would in turn determine the core of the personnel reserve pool.

Dmitry Medvedev: So as not to do the whole thing in some sort of secret meeting, but according to principles that have been clearly laid out.

Sergei Sobyanin: Yes. Information is given to a commission of experts, and each of them chooses those who in their opinion possess the best managerial skills. In this way we set up a rating system which enables us to determine the country's thousand best managers, the ones who form the basis of the presidential reserve pool.

The next principle was that we bring in a wide range of social management experts: managers at the regional level, mayors of major cities, leaders working in the federal executive agencies, business and social organisations – that is, all the major groups that have to be included.

The next principle involves an annual rotation and update, and giving the opportunity to participate in this programme to not only experienced managers but also to those who are just beginning management activities but have nevertheless proved that they know how to manage the sectors entrusted to them.

Those were the principles we laid down at the outset. And there are several main features.

The first is the creation of a roster of top management personnel at the presidential level, the presidential thousand; this involved putting together a compilation of the country's management skills, a federal collection, consisting of about five thousand managers, second level managers. We also made recommendations for the formation of a reserve pool at the level of regional and local self-government.

All of these measures will help create a system that will ensure the formation of reserve pool different from the one that we used to have, when personnel departments ran themselves. The system will enable people whom we encounter in everyday life to work at the public level and become part of the personnel pool. This will enable people from different managerial levels and social groups to make up the foundation of the personnel reserve pool and to carry out the tasks now facing the country.

Dmitry Medvedev: That is the biggest challenge, precisely because we know that the effective implementation of very different programmes depends on our policy concerning staffing.

We have a difficult situation on our hands, which is all the more reason for arranging an influx of young but well-trained management personnel at every level, from municipal to presidential. That is why I would like you to keep all this under the government cabinet's control. I'll come back to this issue in other contexts and will probably say a few words about it in my Annual Address [to the Federal Assembly].

Sergei Sobyanin: The problem of the efficiency of existing managerial personnel is closely linked to this problem. According to presidential decree, the government cabinet must report annually on the effectiveness of governance in the Russian Federation. This report has been prepared and sent to you.

What are the main conclusions contained in the report? Generally speaking, the socio-economic development of the regions in key areas has been positive over the past year. We have witnessed a growth in the gross regional product of about 20 percent, an increase in investment per capita of about 20 percent, growth in real wages of approximately 16 percent, improvement in the agricultural sector, in housing and so on. In health care all the indicators show that the health of the general population is improving: the mortality level for the working population, mothers and infants are 9, 8 and 6 percent respectively.

Dmitry Medvedev: Are they coming down?

Sergei Sobyanin: That's right, they are. So this is a positive trend which is continuing this year. Overall, it certainly suggests that the efforts carried out under the auspices of the national projects were not in vain, but rather effective. And in general, socio-economic development in Russia has resulted in improvements in a wide range of indicators.

At the same time we are witnessing a large amount of inefficient spending in the regions. Despite the relative reduction, in absolute terms we nonetheless have a 14 percent increase in inefficient spending. In general, this amount is about 400 billion rubles in the regions of the Russian Federation: about 12 percent in health care, 20 percent in education, and 13 percent in housing and communal services. This shows that institutional reforms in these industries are still moving quite slowly. This suggests that institutions financed by the budget have increased their numbers of employees, costs and the quality of the work has not kept up. According to these figures there is, of course, serious work still to be done.

The same applies to the cost of management. We see in the media, in a series of recent publications, that administration in the regions is reducing the number of managers. This is only reasonable because in a number of regions management costs exceed 7 percent of total expenditures, while we consider the best proportion to be about three percent. In general, we believe that inefficient spending in management represents about 100 billion rubles and of course there is a great scope for further activity in this field.

In the near future the cabinet will announce the results of a report on the effectiveness of the activities of the Russian Federation regions, determine the 20 best among them, regions which will, in turn, receive grants.

But in fact in the first instance this report should be of use to regional leaders and provide them with evidence so that they can make their own conclusions and look for opportunities to increase the efficiency of their work.

Dmitry Medvedev: I cannot but support your efforts to reduce the total amount of inefficient expenditures from year to year. This is particularly true today, because in Russia some opportunities are increasing, whereas others are now facing problems. This part of the report should really serve as a basis for our colleagues in the regions to optimise their management costs.

As for the social and economic programmes, regardless of what difficulties there are in international financial markets, we will carry out everything that we have planned; this is the sacred task incumbent on both of us.

Sergei Sobyanin: Absolutely.