OREANDA-NEWS. October 9, 2009. Transcript of the beginning of the session: Vladimir Putin: Good afternoon, esteemed colleagues. Let's first exchange current information. Mr Kudrin has been in Istanbul, and has called in regularly from there and related how things were going. Please tell us about the discussions that took place there and the agreements you were able to reach.

Alexei Kudrin: Mr Putin, the results of the work in Istanbul may be divided into several aspects. But the list of events that took place includes meetings of the finance ministers from the BRIC countries, the finance ministers from the G8 countries, and the International Monetary Fund's Board of Governors and Development Committee, which is also the board of directors of the World Bank.

All of these events took place over a period of three days. A set of issues connected with bringing the global economy out of crisis and providing aid to disadvantaged countries was discussed at the meetings.

On the subject of the most important results of the meeting: the primary result was an in-depth analysis of the current stage of the global economic crisis and countries' actions in the context of this crisis. Resolutions from the G20 meeting in Pittsburgh have been adopted and are being supported. The necessity of continuing the implementation of a set of measures to stimulate the global economy was discussed. Demand is very unstable so far and investment is not growing consistently, so it was proposed to continue implementing these measures.

In addition, countries must come up with crisis exit strategies. Nobody is talking about carrying out these strategies yet; but when the time is ripe to switch over to these measures, they must be applied without delay since there will be no time for a build-up. Both central banks and governments will have to implement these measures.

One of the key measures is obtaining the necessary funding from the IMF and World Bank in order to support certain countries. Accordingly, the G20 resolution of raising USD500 billion to support the balances of payment of various countries has been fulfilled. As late as September, during the meeting in Pittsburgh, this plan was not fulfilled. At present, more than USD500 billion has been raised - to be exact, USD550 billion, and there are plans for another round of collections to follow - almost USD600 million will be collected into temporary funds for an instrument called a temporary loan agreement. This amount includes the USD80-billion contribution from the BRIC countries, USD10 billion of which is from Russia, and we will use this amount to buy bonds.

Thanks to the Central Bank's gold and foreign exchange reserves, we have the opportunity to invest USD10 billion in these bonds during both the crisis and recovery periods.

Vladimir Putin: Why do we need this? What is attractive about this arrangement?

Alexei Kudrin: It is one of the most reliable instruments in the world and it has a yield that is no lower than the market yield.

Furthermore, this is the collective effort of countries, and so it involves our participation as an IMF and World Bank shareholder in supporting other countries. These efforts also include supporting our immediate neighbours and our trade and economic partners - Ukraine, Belarus, Tajikistan, Kyrgyzstan and other CIS countries, and this in turn supports their ability to continue trade with Russia, buy equipment from us, and buy customary export goods from Russia.

Vladimir Putin: In other words, we are, in essence, sending money to the IMF, and we can withdraw this money at any time if we need to, but the IMF itself funds the foreign trade turnover of our neighbouring countries and our main partners?

Alexei Kudrin: Yes, that is its main function and responsibility - supporting the stability of the economic situation of foreign balances of payment.

In addition, we also discussed reform of the World Bank and replenishment of its capital. This work is still going on, and quotas are being specified, new quotas - reformed and rectified quotas for countries in the bank's capital - and capital growth of the World Bank, in order for it to continue operations in a different segment of the market. It supports development programmes rather than balances of payment, such as those facilitating access to food, energy, and other infrastructure, as well as promoting access to education and health care - generally in the poorest countries.

Of course, the World Bank also funds middle-income countries. By so doing it gets a source in the form of interest to cover the costs of lending on easy terms to poorer countries. Therefore, such countries as Russia, which is a middle-income country in per-capita terms, can also borrow from the World Bank at lower-than-market rates. But this is bearing in mind that some countries - poor or poorest - will be granted loans on even more favourable terms.

Therefore, Russia considered and took part in negotiations with the World Bank on borrowing from the bank according to general market terms next year, when we will have greater borrowing needs. I repeat, the bank's terms are a little better than on the market as a whole.

Furthermore, Russia has signed an agreement with the World Bank on providing USD50 million during three years for a trust fund to support the most vulnerable countries during this crisis period. This is our own measure, which Russia announced at the G20 meeting - participating in a trust fund for the countries with significant increases in the disadvantaged segments of their populations.

We also discussed reform of the IMF. This issue, in essence, has come up in earnest. The BRIC countries raised the issue of equitable, fair participation of both developed and developing countries in managing these institutions - the World Bank and the IMF. This is very complex work because, in essence, a number of countries, primarily those in Europe, will have to reduce their shares of capital and diminish their influence on making decisions. But the discussion was held, and we found certain compromises within the context of which we will continue to work.

So as a result, I can say that there are proposals not to diminish the role of these institutions in preventing global crises and supporting certain countries, and not only during this recession, but in the future, too. Accordingly, there are more long-term strategies for developing these institutions - first of all, with regard to tightening international monitoring of the markets, primarily on the part of the IMF, along with the timely warning of the world's economy and governments of the risks for specific countries.

What is more, countries such as the US and China have signed documents stating that they will undergo inspection and the international community will issue recommendations on the results of inspections and monitoring with respect to these countries. In this case, monitoring will be voluntary and recommendations will be of advisory nature. But this is the first step towards developing international regulations in which leading countries will have to participate on equal terms.

I also met with the deputy prime ministers or finance ministers from ten countries - the US, Serbia, Ukraine, Bulgaria, France and others - in other words, with most of our main partners. We met on bilateral terms and discussed a number of current issues in our bilateral relations.

Vladimir Putin: Regarding the loans - as I understand it, the Finance Ministry does not plan to borrow from any international financial organisations. You just hypothetically worked out such an option, correct?

Alexei Kudrin: We do not plan such borrowing from the IMF. Our balance of payments is stable, and we do not even anticipate having to resort to borrowing even in such a difficult crisis as this one.

With regard to the World Bank, we are considering this possibility, but we have not made any decisions yet. If terms for such a loan were to be more favourable than on the markets, we would not rule out this possibility.

Vladimir Putin: But the World Bank usually grants such loans for specific projects?

Alexei Kudrin: Yes.

Vladimir Putin: All right. Good.

Mr Shchegolev, at the Russian-Italian meeting, you discussed issues connected with the high-tech sector and, more specifically, telecommunications. How did this work go?


Igor Shchegolev: A large group of Italian business leaders visited Russia last spring. A decision was made at that time to give special attention to cooperation in telecommunications, digital TV, and information technologies.

Companies from the two countries had worked closely together in the past. We discussed the development of Russian telecommunications networks, including fixed-line and mobile services, as well as using IT in providing public services to the population. We also discussed joint projects to develop digital television, and launching a new generation of satellites as a part of projects already underway.

Our Italian colleagues also told us about their experience in setting up information and communications network for the Turin Winter Olympics in 2006. All of the projects were carried out by Italian companies, although international IT giants took part in the public bidding. Our Italian colleagues are willing to participate in similar projects in the preparations for the 2014 Sochi Olympics.

We have thoroughly studied the Italian postal reform. The system was very inefficient in the early 2000s, but became profitable in a matter of three years. They introduced cutting-edge technologies, IT, and a high degree of automation.

We already have joint projects underway. A major automated sorting-out office will open in the Moscow Region in late October, built jointly with our Italian partners. Russia has not seen this kind of project in 30 years. The last time the technology of the Russian postal service was upgraded was in the run-up to the Moscow Olympics in 1980.

The new office will process over 3 million postal items per day. Labour productivity and energy efficiency will be very high. It is a very interesting project. We are certainly interested in further cooperation in this area.

Vladimir Putin: Good. Now that you mention the Olympics - Mr Kozak is just back from Copenhagen where he informed the International Olympic Committee on the progress of our Olympic preparations. (To Dmitry Kozak) Tell us about that discussion, please.

Dmitry Kozak: Yes, Mr Putin. We heard a report on the progress of the preparations for the 2014 Winter Olympics in Sochi at the 21st session at the IOC yesterday.

In fact, the audience heard two reports, one from the traditional IOC commission that supervises preparation for the Olympics, and the other from Russia.

I would like to tell you that we received very high ratings for our efforts. Even other IOC members said that no other country had such high ratings recently. The approval was mainly due to our progress in designing and constructing Olympic facilities, which is our main concern at this stage.

The work of the organising committee also received a high rating, especially for its success in attracting sponsors. The organising committee has been successful in this respect even despite the recession.

Overall, I would like to repeat that our efforts were praised. But this is still no reason to relax. We need to continue along the same lines. We have established an effective procedure for supervision and control, which primarily ensures that construction deadlines are met. The schedule is tight, but this is all we have.

Let me also tell you about some of my observations while monitoring the construction schedule. The contractors responsible for specific facilities make sure that the deadlines are met... We can be safe there.

Back to yesterday's report from the IOC members, and the organising committee. It was not entirely based on our own reports. Members of the IOC and the organising commission visited our Olympic construction sites during the September 19 Economic Forum in Sochi. They saw the progress in construction personally, and could therefore be objective.

As for meeting the deadlines stipulated by the schedule, we have found that those responsible are making every effort to meet these deadlines, even intermediate ones.

Nevertheless, the big problem we have is the excessive number of administrative bodies which must give their approval, but which often step aside and just watch. Let me draw the federal government's attention to the fact that if some deadline is not met because these administrative bodies take too long to coordinate issues... they will have to bear the same responsibility as contractors. It is important that we work as a team.

Other than that, we have no serious concerns about the Olympic preparations, and neither does the IOC.

Vladimir Putin: So we'll follow your schedule and visit all of the facilities under construction in Sochi in the second half of November, and see which of the deadlines have been met and which have not, if there are any. And, if so, why haven't they been met. I will ask you to inform all of your contractors in late November. I will arrive on site and see for myself.

Dmitry Kozak: Good. We have inspections every week.

Vladimir Putin: Yes, I am aware of that, but it wouldn't hurt to inspect the facilities on location. I have signed a number of Government executive orders that concern various aspects of our activities. One of the executive orders provides government guarantees worth 36 billion roubles to the Agency for Housing Mortgage Lending. Mr Kozak, how do you plan to use these funds?

Dmitry Kozak: This indeed is a very important executive order. It provides additional opportunities to the Agency for Housing Mortgage Lending to support and encourage mortgage lending in the Russian Federation.

The Agency will borrow 36 billion roubles on the market by means of issuing certified coupon bonds against the guarantees of the Russian Federation, which are to be paid off between 2017 and 2027. This will allow the Agency for Housing Mortgage Lending to increase the amount of credit it gives out.

At the same time, the money that will be brought in by the Government guarantees has a specific purpose. This money will be used to ensure low interest rates to middle-income borrowers. Currently, the maximum interest rate is 12% per year, and the maximum amount one person can take out in a loan in large cities is up to four million roubles, and two million roubles in medium-sized and small cities. This will encourage the construction of less-expensive residential housing and help resolve an important social problem. 

Simultaneously, it will boost our construction industry by stimulating demand. Currently, the main problem faced by the construction industry is decreased demand. This morning, I attended the fifth All-Russian Construction Workers' Assembly. They, too, are looking forward to these decisions, which will help them achieve this important goal.     

Vladimir Putin: Good. We have consistently stressed the importance of supporting high-tech industries. The words, however, should be followed by real action and funding.

I have signed executive orders allocating one billion, 982 million roubles worth of money from the budget to increase the registered capital of the Oboronprom United Industrial Corporation. Mr Khristenko, please comment on this. The executive orders mention helicopter engineering and manufacturing motors, with reference to the high-tech areas of manufacturing these products.  

And the second decision is the executive order to grant subsidies for the VSMPO-AVISMA State Corporation, which manufactures products with a sufficiently high level of processing. Please comment on this, too.

Viktor Khristenko: Mr Putin, these two decisions are interrelated, as they represent major elements in implementing the national strategy for developing our aircraft industry.

As you have mentioned, this first decision is directed at the aircraft industry first of all. But it will also benefit producers of titanium and titanium-based products. Titanium is the most important metal in manufacturing airplanes and helicopters, and Russia currently remains the world leader in titanium production.

As part of implementing this strategy, we have been consolidating assets in these sectors of our economy. As of today, this process has almost been completed. We have adopted a corporate development strategy, which is being implemented. This year, despite the difficult conditions and the economic downturn, these sectors will see a positive rate of growth and continue to modernise their production facilities.

This is also related to the fact that consolidating assets required attracting substantial credit resources in order to complete the consolidation process, and subsequently enter into the market and attract investors. The goal of finding effective investors in the market has not been abandoned due to the crisis, but only postponed.

For the time being, the funds that have been allocated - three billion roubles to VSMPO-AVISMA and almost two billion to Oboronprom's United Engine-Building Corporation - should be sufficient to support both the development of these sectors of the economy, as well as their consolidation and subsequent increase in efficiency.

As a result, this year we will not only see growth, but we will also manage to implement the Corporate Development Strategy. By 2012, both companies will increase their production outputs by 50%. Therefore, this is an important, necessary, and very significant decision.

Vladimir Putin: Very good. Hopefully, the allocated funds will be used efficiently.

I would like to go back to my meetings in Vladimir. I have already mentioned that people came to the Reception Office of the Chairman of the United Russia Party with specific issues. Some were private matters, but others, as I mentioned during our last meeting, were systemic issues. The first issue concerned extending loans that had been issued to agricultural producers for specific cattle-breeding projects. The second issue was about the regulation of milk and milk products.

With regard to the first issue, our colleagues, and they are in fact our colleagues, as they are involved in real projects and are doing real jobs, are worried because they are having difficulties paying off the loans. Their inability to pay back their loans is probably related to the current financial situation, as well as to the state of the economy on the whole. But this needs to be examined, of course. No concrete promises have been made. We have agreed that we would explore the issue in detail. 

And secondly, the issue of regulating milk products. There are very specific complaints, which, to put it bluntly, have to do with the fact that these regulations are either inefficient or not working at all.

Ms Skrynnik, please explain the situation.

Yelena Skrynnik: As far as the first issue is concerned, we have been taking the following measures to support milk producers.

First, this year, the government support for milk producers amounted to 27 billion 200 million roubles. Of that amount, 21 billion 200 million roubles were allocated to subsidise interest rates. As a part of the government anti-crisis measures, interest rates are being subsidised at 100%, as opposed to 80%.

In addition, loans have been extended. Short-term loans have been extended by six months, and loans for investment from eight to 11 years, which is by more than three years. These loans are worth 30 billion roubles, 71 million of which has gone to the Vladimir Region. So, we have been taking measures to support the producers.

The total amount of loans for the industry is 250 billion roubles over a period of three years. On top of that, we have also enacted some well thought-out customs duty and tariff regulation measures. This includes the agreement with Belarus on powdered milk. All of these measures support the producers and are conducive to increasing the purchase price of milk for the producers.

Currently, the prices are increasing, though insignificantly. They have reached 10 roubles per litre. This is not much, of course, but we are expecting additional 10%-15% increase in November.

Vladimir Putin: I understand, but what about the technical regulations, are they working?

Yelena Skrynnik: Unfortunately, the technical regulations have not achieved the goals they were intended to, and the number of marked somatic cells that currently exist certainly do reduce the quality of milk sold by the producers.

Therefore, we have introduced modifications to the regulations. They will provide for the more effective sale of milk. We are working on this.

Vladimir Putin: Remember, when we discussed these regulations, we said that after their introduction, real whole milk as well as a milk beverage should become available. 

The consumers I have spoken with say that there is no such product in the stores as a milk beverage. This means that your regulations are not working.

Yelena Skrynnik: Amendments have been made. We are working on this and will make the regulations work in the near future.

Vladimir Putin: Let us agree as follows. Let us examine things. We can discuss things, make some technical changes, but in practice everything will remain the same as today. Therefore, in a certain period of time we should return to this issue and carefully examine it again. 

Mr Zubkov, could you comment on the issue of loan extensions for specific cattle breeding projects?


Viktor Zubkov: Mr Putin, members of the Presidium.

In line with your instruction, I held a meeting on Monday with the participation of the Ministry of Finance, Ministry of Economic Development and leading banks, where we examined these issues. There are no obstacles today to extending the term of loans obtained in 2006-2009 for the development of livestock breeding. What is more, the resolution adopted by the Government is working today. It allows farm producers, who took out these loans for eight years to build, upgrade or modernise dairy farms and other livestock facilities, now to apply to banks, and the banks are obliged to prolong the loans for another three years, that is to 11 years.

It is important that these loans should enjoy a subsidised bank interest rate. As you know, this rate is 100%. We have already put this into practice in regional banks.

We have specially asked our leading banks - Rosselkhozbank, Sberbank and VTB - to do this in their regional offices. So that these issues should not be handled here in their head offices in Moscow.

Mr Putin, the banks are interested in prolonging these loans. This is because they see farm producers and agribusinesses as reliable partners. This is why they are doing all this. I do not believe it is necessary to adopt any additional decisions or resolutions on these problems.

Vladimir Putin: If people see this issue as a problem, it means the problem exists. If there were no problem, they would not raise the issue in this way.

Viktor Zubkov: I'll explain, Mr Putin. They asked for such investment loans to be extended to 15 years. This is a very long period, you understand.

If there is a real need to extend them to 15 years, we should look into the matter separately. What is the purpose here? The turnover of funds, especially in dairy farming, is four to five years.

Vladimir Putin: In livestock breeding, it is between five and eight years.

Viktor Zubkov: Yes. The request addressed to you asked for a 15-year extension.

Today, we can extend them to 11 years, as decided by the Government.

Vladimir Putin: Do banks have available funds to prolong them to 11 years? As you know, additional resources are required for this purpose.

Alexei Kudrin: There are enough funds and enough liquidity in the market today. The funds are short-term and medium-term, and provide the resources, the basis for issuing loans.

Usually the banks, as a rule, refinance themselves in this case, somehow obtaining "long" loans. In other words, they have short assets and long loans, which is costly and a bit risky. This is why the proportion of long loans does not grow so quickly in Russia.

Vladimir Putin: I see.

Now about the subsidising of the interest rate. Do we have enough funds to extend the term of loans to 11 years?

Alexei Kudrin:  Yes, the rate is provided for.

Viktor Zubkov: We've taken a look at the situation. More than two billion roubles have been allocated for that purpose in 2010 and most likely this sum will be spent on the prolonged loans. In the context of the funds we have available - 80 billion roubles for subsidising loan interest rates - this sum is sufficient. So we see no particular problems here, Mr Putin.

Vladimir Putin: Good. Thank you.

Ms Nabiullina, you chaired a meeting on October 5 with board members of the Russian Union of Industrialists and Entrepreneurs on improving bankruptcy legislation. How did the debate go, and what proposals were made?

Elvira Nabiullina: I held a meeting with representatives of industrial companies and banks. State Duma deputies also attended. We discussed both the situation with bankruptcies and what needed to be done to update legislation. Our Ministry had drafted amendments to the law, and we discussed them.

The consensus was that the crisis revealed the bankruptcy mechanism had not been up to the mark in settling debts between lenders and borrowers in judicial proceedings, that is to say it did not work as a mechanism for cleansing the economy of defaulted debts. Although we made amendments over the past year, there were several iterations in order to improve the situation slightly. And bank spokesmen admitted that the proposals which protected the collaterised rights of lenders played their positive role, that is to say when the banks issued loans. We enhanced the protection of banks on loans backed by collateral.

In addition, we decided to ease the contesting of deals concluded ahead of a bankruptcy and having all the signs of asset stripping. Such deals often occur when a bankruptcy is pending, and we made these procedures easier.

We also decided to improve the procedure for selling property, including through electronic sales, and increase the responsibility of the so-called shadow directors, or persons that can issue instructions to management bodies of companies and in fact sometimes issue instructions leading to a bankruptcy. We increased their responsibility to make it subsidiary.

However, we are still plagued by problems in financial rehabilitation. I would like to quote a few figures, which are very indicative. In the first six months of 2009, 16,300 bankruptcy cases were filed in Russia, and there were 25 financial rehabilitation rulings. These rulings concerned both the current and previous cases. As for receivership proceedings, there were more than 7,460 of them. We are clearly biased towards receivership. And, of course, financial rehabilitation procedure is very much in demand.

We therefore drafted amendments that promote this procedure. Especially when lenders and debtors agree on a pre-trial settlement, and draw up a financial rehabilitation plan to settle the debt. These agreements have court protection. A contributing factor is the availability of more instruments for financial rehabilitation, for example, a swap of debts for shares, in order to make rehabilitation more thorough.

We also proposed - and all representatives accepted - that lenders be divided into classes. Lenders are different: for example, some offer bankrupt firms additional money but on other terms - such as a repayment schedule for future restructuring. Our legislation did not provide for such an eventuality. It is therefore proposed to introduce such a mechanism to encourage new loans.

Some amendments concern class-action suits. We have a complex corporate holding system when a business is divided into several legal entities, and when it is necessary to deal with them in one case, a single arbitration manager is appointed. We proposed such amendments and they were supported in principle.

Business representatives also made additional proposals, including on the role of tax authorities in bankruptcy proceedings.

Our existing legislation, adopted in 2002, stipulates that our tax bodies and state lenders should have a voting right, but that they are paid the debts owed to them in order of general priority. In many countries, tax authorities enjoy first priority in having their demands met, but do not vote at lenders' meetings.

Businessmen say that our tax authorities find it difficult to accept various rescheduling timelines for tax payment. This is acting as a brake on the introduction of financial rehabilitation procedures. We agreed to address this aspect separately. It is very complex. There are advantages and disadvantages, but these were the issues raised additionally at the meeting.

We are now summing up all these remarks and will submit a draft law in November, as you instructed.

Vladimir Putin:  In November?

Elvira Nabiullina: Yes.

Vladimir Putin: Good. You have mentioned sports in connection with the 2014 Winter Games. I would like to touch upon one more issue related to this.

Athletes participating in the Deaflympic Games have more than once asked government officials, including me, why they do not receive any bonuses from the state for their sports achievements, unlike the Olympic and Paralympic teams.

I have signed instructions to approve financial bonuses for disabled athletes on the basis of their performance at the XXI Deaflympic Games in Taipei in 2009. In accordance with that decision, their achievements will be rewarded in the same way as we reward the victories of our Olympic and Paralympic teams: 100,000 euro for a gold medal, 60,000 euro for a silver medal, and 40,000 euro for a bronze medal.

I believe that this will provide an additional impetus for new sports achievements.

Mr Mutko (Vitaly Mutko, Minister of Sport, Tourism and Youth Policy), do you want to add anything?

Vitaly Mutko: First of all, I would like to thank you for that decision. It will be an additional element in the state's efforts to promote physical fitness and sports among the disabled, in this case deaf people, and will contribute to creating equal opportunities for disabled athletes.

This additional measure will certainly expand the framework of social support. At the same time, several other measures have been taken, allowing us to perform so well at the Deaflympics. I am referring first of all to the establishment of a centre for the country's national teams in adapted physical training. We have created jobs and are paying remuneration to many athletes.

The regions are now following in our footsteps. Two years ago, only 15 regions promoted sports for deaf people and adapted physical training. Now 55 regions are doing this.

Second, we have opened our federal training centres to Deaflympic athletes, who trained for the Taipei Games there.

I believe that next year we will complete the construction of such a centre in Aleksino in the Tula Region. It will be the first specialised federal centre for adapted physical training and for deaf athletes. It will offer training in 12 sports. Aleksino is an excellent centre. I hope we will complete it next year.

Another measure I would like to mention is an increase in allocations for competitions and for training athletes, including for international competitions. This year we have allocated some 170 million roubles and as much as USD1 million for participation in international competitions. This is nearly 30% more (than last year).

One of the positive results you mentioned was the Deaflympic Games, which attracted 2,700 athletes from 80 countries who competed for 560 medals in 20 sports. Our national team competed in 17 sports and won 98 medals, including 29 gold, 41 silver and 28 bronze ones, set 11 world records and took first place among national teams amid very serious competition.

All these measures are bringing the expected results. I would like to thank you again.

Vladimir Putin: Good. I wish success to our athletes, including athletes with disabilities.

Yesterday I held a meeting with a group of top Russian writers. We discussed practical issues, and after the meeting I drafted several proposals for ministries and departments with regard to land and other property of creative unions, including support for literary journals and their supply to libraries, the use of our writers' intellectual potential in the mass media, in particular television, and several other questions. I issued these instructions yesterday.

Mr Sobyanin (Sergei Sobyanin), please summarise the reports from your colleagues and submit relevant proposals to me within a month, including proposals on financial allocations. I do not think we will need large allocations, whereas the implementation of the proposals we drafted yesterday will benefit society very much.

Let's get down to the agenda.

Today we are going to consider the development of the milk and dairy market, as we have said before. I would like to use this occasion to congratulate farmers on their upcoming holiday, which we traditionally mark on the second Sunday in October. This year we will mark it on October 11.

In the past few years, our agriculture has changed radically despite considerable problems, many of which we have already discussed today and others we will discuss later. It has turned from a losing, depressive and recessive industry into a dynamically developing part of our economy. These results speak louder than words.

I would like to express my wholehearted greetings to farmers and to wish them success, health and new achievements.

Speaking about the dairy sector, I would like to say that we are implementing a package of state support measures for it. The Minister of Agriculture spoke about this today. I am referring to the regional programmes of raising the efficiency of milk production, instruments of tariff and customs regulation and support, and loan interest subsidies.

This year we have allocated over 20 billion roubles to support the dairy sector. The figure has been mentioned today. On the whole, federal budget allocations to agriculture will amount to 187 billion roubles this year, including 45 billion for increasing the value of Rosselkhozbank, 25 billion for Agroleasing, 62 billion for loan interest subsidies, and 16 billion roubles for supporting soil fertility.

Besides, we plan to take a series of additional measures soon.

In particular, the enforcement of the Law On Trade should help us settle relations between agricultural producers and retailers, and to end discrimination in trade that pushed national food produces out of the market.

There are problems in relations between producers and processing companies, which we should consider more thoroughly.

Seasonal changes in production volumes and the balance of purchasing prices are important elements of the dairy market. This problem could be solved through regular purchasing and trade interventions. We plan to approve a Government resolution on this issue today. The state will buy surplus products to prevent a plunge of milk purchasing prices. On the other hand, the sale of previously purchased products will prevent unjustified hikes of retail prices.

I hope very much that these measures will allow our agribusinesses focused on dairy products to break even. I don't think the measures we are discussing today will suffice, but they are only the first step in the right direction.

Of course, for the mechanism of milk interventions to be effective, we should thoroughly consider all issues related to the storage of purchased products and their timely marketing.

The Agriculture Ministry should develop a procedure for interventions on the dairy market. In light of the current situation, this should be done by December 1, 2009. You have more than six weeks.

I also think that regional administrations could be subsequently involved in organising milk purchases and sale. I call on you to discuss this possibility with your colleagues.

State interventions have proved quite successful on the grain market. They have improved the stability and investment attractiveness of crop growing.

This year - I said that agriculture has become modern and has been developing rapidly when I spoke about the upcoming holiday... I'd like to provide one more figure: grain harvest is expected to reach at least 90 million metric tons this year. This is a good result given our difficult climate. I congratulate all farmers and everyone else who contributed to that achievement. It means that our country will not only have enough feed and bread grain this year, but will also be able to affirm its standing as a major [grain] exporter on the global market.

We expect stockbreeding to show comparable results, in time. I believe we have a very good opportunity to do so. We have done much in the past few years to develop stockbreeding.

We have spoken about loan prolongation here, which means that those loans had been issued in the first place. Many farms have been built and many of them have been commissioned, but a considerable number of projects are still under construction. I hope that all of them will produce positive results in the foreseeable future.

One more issue I would like to spotlight today is a social issue; it concerns sport. I propose taking a decision today - we have discussed the issue more than once - to establish an organising committee for the 2018 World Cup bid race.

You know that on October 10 our football national will play the qualifying match of the World Cup 2010 against Germany. We wish our players victory. But no matter what happens, we will continue to do what we have been doing recently, that is, building football fields and other sports facilities, and establishing sports clubs, above all for children and teenagers. We will promote football. Much has been done in this field, and so I think Russia has the right to bid for the honour to host the 2018 World Cup.

To be able to host it, we will have to build requisite facilities in ten Russian cities, which would rapidly boost sports in Russia.