TRANSCRIPT: [Putin at] Meeting of the Russian Popular Front’s (ONF) interregional forum

(Kremlin.ru – January 25, 2016)

(transcript continued)

Vladimir Putin took part in a plenary session of the Russian Popular Front public movement’s interregional forum.

Vladimir Putin: With regard to inflation: we must watch carefully to ensure people’s living standards stay at a high enough level, because in modern conditions, in today’s economic conditions, this is probably the most important thing that should be at the centre of attention at all levels of government. Incidentally, we all know about the ruble exchange rate and the inflation you just mentioned. According to the final calculations, it will even be slightly lower, I believe, than what we initially said. But indexing, especially for retirees, should be observed in accordance with the decisions made and the laws that have been passed.

Of course, we must work with our budget’s revenues. And how are the expenditures paid? From the revenues. Plus, of course, in the conditions we are experiencing today, we must use our reserve funds – carefully, but use them nevertheless – first and foremost, the Government reserve funds. That is why reserve funds are created, to finance social obligations during times of economic decline. We will certainly do all of this.

At the same time, I want to point out that the difficulties we are experiencing – and agricultural producers know this better than anyone else – give us certain opportunities, but not just in agriculture, where we have partially but significantly cleared our own market for Russian producers, but in manufacturing as well.

Incidentally, we had a 3.3 percent decline in manufacturing, while experiencing nearly 3 percent growth in agriculture. But we will certainly see growth in manufacturing as well, including due to import substitution programmes, because they are aimed at more than just replacing something we do not have. They are aimed towards ensuring modern technological development for our economy, creating a new innovation economy, not just in the defence sectors but in civilian industries as well. It is just that there is more of a lag there than in agriculture; it takes longer to see returns than in agriculture, but there, too, it will happen with 100 percent certainty.

In addition to everything else, the main foundations for the functioning of the economy give us reason to be cautiously optimistic. Why? Because, you see, our inflation grew, and our budget deficit is lower than we expected. The Finance Ministry reported to me that it would be about 2.6 percent instead of over 3 percent, but at the same time, we have a trade balance surplus, which means we earn more than we consume, so we have sufficiently large reserve funds and low national debt.

You see, when we have low inflation and low debt, it is one of the fundamental, basic conditions for future development. Naturally, we must maintain this and proceed very carefully in the social sphere, without increasing these expenditures, but certainly ensuring people’s living standards.

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Aslan Shafiyev: On January 1, 2016, the Russian Federation imposed sanctions on Turkish companies, including construction companies. An enormous number of job vacancies were created. Question: why can’t we fill these vacancies ourselves with the help of our construction companies? Especially since we have proven our abilities, and our guys have known how to build well and work hard since Soviet times.

In modern Russia, too, we are showing good results, participating in major infrastructure projects such as the Vostochny Space Centre, Peaceful Atom in Rostov Region, the Novovoronezh nuclear power plant and many others, including Olympic facilities. Why can’t we fill these vacancies with our workers, including workers from the North Caucasus regions and the Southern Federal District?

And another suggestion. In order for this work to be even better and for us to move forward, we need to make another breakthrough towards improving vocational training, basic vocational training. Because we cannot move forward without welders, for example, and other highly trained workers. This should include great emphasis on career-oriented activities in the working and construction trades.

Vladimir Putin: As far as personnel training, this is absolutely right, because just as you said, back in Soviet times, people from the south, from the Caucasus, worked well. This is true. We need them to work well today, too. And we need them to work better, not worse, than Turkish workers, and for our construction companies to also work better, not worse, than Turkish companies.

Today, we have about 300 Turkish companies working on the Russian construction market. They signed contracts worth about $50 billion in total. This is a very substantial figure. I will not talk now about why and when we enacted these limitations. It is clear, I have already spoken about this many times, we feel that the Turkish leadership made an enormous mistake when they downed our jet, as well as the people on the ground whom they were supposedly protecting, when they shot our pilot. Our reaction has been more than restrained in response to this war crime.

We made the decision not to break existing contracts, because not only would this be a clear response to the Turkish authorities, but it could cause us a certain amount of damage. Thus, the existing contracts remain in effect; nevertheless, the restrictions in this sector will expand.

The Government has made the decision not to conclude new contracts with Turkish contractors. Naturally, this will create an opportunity for our construction sector to expand its work and will require new skilled personnel. According to our initial assessments, our companies will soon be able to replace about 87,000 jobs, but we need them to be prepared for this work – prepared, first and foremost, in terms of professional training.

I fully agree with you; we are essentially doing everything to work towards this goal. When we respond to the destructive actions of certain European nations and the United States by limiting food products brought into our market, this is first and foremost aimed at liberating the market from foreign domination. Our actions in this area are quite justified in terms of the WTO rules, because we are acting in response to the destructive actions of our partners. We are doing the same with regard to Turkey. But our builders must be aware of this, they must analyse the situation and be ready to cover part of the demand in the domestic market with their services.

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Vladimir Putin: The cost of a barrel of oil reflects the decreasing global economic volumes. This has resulted in the overproduction of this fuel; it is not used in today’s economy the way that economists had predicted earlier. This is one of the reasons for today’s difficulties. But you are certainly right in that we need to develop domestic resources, and we have enough of them. I fully agree with you.

Loans are cheap there and expensive in Russia. The economy there is different. They are experiencing deflation, but we have inflation. There, manufacturers produce goods, often at such a cost that they cannot sell them at a price that would cover production, so there are all sorts of incentives to avoid that situation. They have nearly zero percent interest rates, and in some countries, they are already saying, “Take the money, we will pay you just to take it.” It is an entirely different frame of reference. With our inflation levels, if we follow the path of lowering the cost of loans, we can drive it so hard that the business community will not thank us for it. This inflation will simply turn the whole economy on its head and kill incomes for the public and for businesses.

So we must act very carefully, based on the reality of the current situation. But one thing we can do – and here, I also agree with you – we must broaden economic freedoms, free our economy of corruption and nepotism. That is why we have forums like the Russian Popular Front. And I very much hope that we will clear these Augean stables together.

Naturally, we must also expand the freedom of enterprise. This is absolutely right. But this does not mean that we cannot or should not provide individual support to specific sectors, certain areas facing particular difficulties, including through the provision of soft financing. This concerns small and midsize businesses. I am not going to list everything now, we have a whole set of support measures for small and midsize enterprises. These measures are working better or worse – in some places they work, and in others they do not, but we have this set of measures.

The Government is currently preparing an automotive industry support programme. We are also drafting a programme for a sector of particular concern: construction. Incidentally, two years ago, I believe we built 83 million square metres of residential housing, one of our records. Last year, in 2014, the figure was 80 million. This is a very good indicator.

In other words, overall, our economy is surviving and is fairly confident. Of course, we need targeted support for individual sectors of the economy and individual industries. We have many more problems, but we will resolve them together.

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Vladimir Putin: Friends,

Thank you very much. I understand that there are many questions, and you discussed all these matters actively yesterday. As I already said, I will certainly gather the heads of Russia’s southern regions in Moscow, we will summarise all your suggestions and ideas and strive to implement as many as possible – perhaps it will not be possible to realise all of them, but as many as we can.

I very much hope that we will continue our joint efforts to resolve problems that are important for our society, our state and our people.

Our shared task is to resolve the problems standing before us. But without careful attention towards these problems by members of the public, without establishing this feedback loop at all levels of government and with all organisations and structures that hold government powers, we will not be able to do effective work for the good of our nation. So I want to thank you for our work together and express my hope that it will continue.

Thank you very much.

[featured image is file photo]