Direct Line with Vladimir Putin

The Saker

April 19, 2015

Direct Line with Vladimir Putin was broadcast live on Channel One, Rossiya-1 and Rossiya-24 TV channels, and Mayak, Vesti FM and Radio Rossii radio stations.

During the live broadcast that lasted 3 hours and 57 minutes, the President answered 74 questions out of the over 3 million that were received.

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Direct Line programme host Kirill Kleymenov: Good afternoon. You are watching Direct Line with President Vladimir Putin. Here in the studio today are Maria Sittel and Kirill Kleymenov.

Direct Line programme host Maria Sittel: Good afternoon. Exactly a year has passed since we last met in this studio. This has been a year of serious trials for Russia: the sanctions, the drop in oil prices and the cold war atmosphere. This has been a year for us to comprehend the great tragedy that befell a fraternal people, a year when our country faced many new challenges.

At the same time, our society has become more consolidated. The Russian people’s self-assessment has grown. What is especially interesting is that the level of happiness – or the ‘happiness index’ as sociologists call it – has not gone down as one could have expected.

So, today in this studio we will discuss how we will respond to those challenges and where we are heading. We are live with Vladimir Putin.

Kirill Kleymenov: Our colleagues Olga Ushakova, Valeriya Korableva, Dmitry Shchugorev and Yekaterina Mironova will assist us during today’s broadcast on Channel One and Rossiya TV channels, while Tatyana Remizova and Natalya Yuryeva are working in the call and SMS processing centre. I would like to remind you that you can also watch us live on Rossiya-24 TV channel and hear us on Mayak, Vesti FM and Radio Rossii radio stations.

We are live with President Vladimir Putin.

Tatyana Remizova: Good afternoon, colleagues! Hello, Mr President.

Our call centre has been working for a week, and we will continue to take calls during the Direct Line broadcast. Our operators are getting ready for a peak in your calls.

I would like to remind you that you can call us at the toll-free number 8 (800) 200–4040 or send text messages to 04040. People from other countries can call at the number you see on the screen.

Over the past seven days that our call centre has been operating, we have received a record number of calls. We have already received more questions than by the end of the live broadcast last year.

We now have a total of 2.486 million messages, of which over 1.7 million are phone calls and over 400,000 are SMS messages.

Natalya Yuryeva: Good afternoon. For the first time this year, you can send your questions to the President with photos and MMS messages to 04040. A picture is worth a thousand words and will be the best illustration to your problem. Our operators continue receiving your video messages that can be sent using the website www.moskva-putinu.ru or the free app on your smartphones and tablets. Just as last year, we provide live interpretation into sign language for people with impaired hearing. We will be receiving your questions throughout the live broadcast, so there is still time to record and send in your questions. Who knows, maybe the President will answer yours.

Yekaterina Mironova: Here in the studio we have people we featured in our reports, people representing all of Russia: doctors, teachers, farmers, entrepreneurs, rescue workers and service members. They all have questions for the President.

Maria Sittel: Shall we begin?

Vladimir Putin: Good afternoon.

Maria Sittel: Good afternoon, Mr President. This has been a year when you had to take on a lot. You might say this has been a year of personal decisions for you. You had to make them quickly and accurately, and nobody could do it for you. This applies to the counter-sanctions, the diplomatic marathon in Minsk, and Crimea, of course.

The economic situation is also complicated. Given the external pressure, it also required your direct personal decisions. What are the results of the year? What have you managed to add up, what has been brought down maybe?

Vladimir Putin: This is a traditional question. I proceeded from the idea that you would ask this and this is something I would have to mention in any case. So I made some notes to make sure I do not invent things or get confused in the numbers. Actually, a lot of this has already been made public, but some figures are new and I am happy to share them with you and with the entire country.

You have already mentioned some of the results. This is the accession of Crimea and Sevastopol and the complicated foreign economic situation. Something we have said a lot about, but is worth mentioning now again, although it happened last year is our victory in the 2014 Olympics, the successful Sochi Winter Olympic Games. All this happened last year.

I would also mention the fact that we have come across certain external limitations, which in one way or another have had an impact on our growth rates, on our development, though on the whole we can now see that the ruble is gaining strength and the stock markets are on the rise. We have managed to avoid spiralling inflation.

Let us look at some specific figures. By the end of last year, Russia’s GDP has grown by 0.6 percent – a small growth, but it is growth nevertheless. Industrial production has gone up slightly more – by 1.7 percent, while the processing industry – by 2.1 percent. We have set a new record in oil production – 525 million tons, which is the highest in recent history. We also took in the largest grain crop in recent history – 105.3 million tons. Overall, agriculture demonstrated very good results with a 3.7 percent growth. We are also observing growth in the first quarter of this year, and this is good news.

There are positive dynamics in a number of other industries as well. Thus, the chemical industry has grown by 4.1 percent, the production of mineral fertilizers by 4.2, and so forth. At the same time, as you have justly noted, we do have some problems. The reduction of capital investment from small businesses was a negative signal. Thus, overall capital investment last year went down by 2.5 percent.

At the same time, housing construction has been doing very well. Our construction workers can be proud that they have also demonstrated record achievements in the entire history of the Russian state. Never before, neither in Soviet nor in post-Soviet times, and not in pre-Soviet either, I am sure, have we built so much housing – around 81 or even 82 million square meters.

We also managed to avoid a sharp hike in unemployment. It did grow last year, from about 5.3–5.4 in the middle of last year to 5.8 now, but we have managed to hold it back. I am certain we will get back to this today.

Meanwhile, the results of last year show an 11.4 percent growth in consumer prices. There is nothing good about this, of course, because this affects people’s living standards. However, in March the inflation rate has dropped. The population’s disposable income has gone down by 1 percent, while wages and salaries grew by 1.3 percent. As you may know, we have indexed pensions – both social and old age ones. Meanwhile economic uncertainty has led to a capital outflow. This is also something we need to keep in mind, but if there are questions about this, we can discuss it in greater detail. I see nothing disastrous here.

Despite the significant fluctuations on the financial market, Russia’s banking sector has demonstrated good dynamics. The portfolio of loans to the real sector of the economy has grown, and what is especially good is that the overall assets of Russian banks have grown to reach 77 trillion rubles and for the first time they exceed the nation’s GDP. This is a very good index, demonstrating the stability and reliability of the Russian banking system.

I have to say that both individuals and legal entities are now returning the money they withdrew or exchanged into hard currency at the end of last year. Thus, citizens’ deposits grew by 9.4 percent last year, while those of economic entities – by 40.6 percent, and they continue growing this year. In January, citizens’ deposits have added another 2.8 percent to reach over 19 trillion rubles, while those of organisations grew by 5.1 percent to a total of over 26 trillion rubles.

Overall, if we move on to budget issues, we concluded last year with a slight deficit of 0.5 percent and managed to prevent a spiralling into a major deficit. In other words, there is a deficit, and we envisaged a somewhat greater one this year of 3.7 percent, but it is quite reasonable.

One of the positive outcomes of 2014 was undoubtedly the positive demographics. The birth rate has gone up against a drop in the death rate. The average life span continues growing and this speaks of an overall positive tendency and public sentiment in general.

These, briefly, are the results of 2014 and the beginning of 2015.

Kirill Kleymenov: Mr President, the numbers you have provided mainly deal with macroeconomics and they are quite positive. However, if we consider the viewpoint of an ordinary person and judge by the questions we continue receiving on this live broadcast, the picture is not as rosy and there are quite a few problems. Let us consider the economy in detail, as this is the basis of everything.

I would like to begin with a question that was brought about by a recent publication. A participant in your meeting with entrepreneurs said you warned the businessmen at this meeting that the sanctions would not be lifted soon; that they should not expect this. First, let us set the record straight – did you have this conversation or not, and if you did, how do you see the situation.

Vladimir Putin: You did not listen to me attentively after all; you were thinking of the question you were going to ask and missed a few of the things I mentioned. I spoke of a number of positive developments, including those on a macroeconomic level, which are very important for further development. However, I also said the population’s incomes have gone down. Salaries have grown a little, but the overall incomes have dropped due to inflation of about 11.4 percent. I mentioned this as well.

As for sanctions, this conversation with entrepreneurs did take place, and I told them they should hardly expect a lifting of the sanctions because these are purely political matters, and for some of our partners I believe they have to do with their strategic interaction with Russia and with hindering our development.

Actually, I do not think this issue directly concerns Ukraine any longer, because the current goal is the implementation of the Minsk Agreements. We are doing everything possible toward this goal, but Kiev is taking its time, while the sanctions have not been lifted.

The point at issue is not the sanctions. What did I tell the business people? I told them that the issue is not limited to the sanctions, that we must find better ways to manage these processes at home, in our country and economy. And that very much depends on what we do.

We have talked about prices and wages, but what is the reason? It is clear that the reason is the pressure on the ruble, its depreciation. In turn, it is connected to oil prices. We know very well that, unfortunately, our economic development has been lop-sided for a long time, and this will be very difficult to change.

What have we been doing for the past years? Wages were growing at a priority pace, much faster than labour efficiency. And the currency rate adjustment was unavoidable – unavoidable – even in the absence of the sanctions.

In fact, the sanctions came in handy for the Government and the Central Bank, which can now blame the situation on the sanctions. But the sanctions are not the only reason. We must adjust our economic policy more professionally, consistently and quickly. It has now been adjusted.

Believe me, this is a very important decision, and both the markets and investors have responded to it. It will help improve our economy and create basic conditions for further development. So the sanctions, which are definitely contributing to our current problems, and which we will possibly discuss here if there are questions, the sanctions are not our biggest problem.

Kirill Kleymenov: But still, how long will all this last, meaning the sanctions? As long as in Iran? We know that Tehran has been living under sanctions for several decades.

Vladimir Putin: After all, Russia is not Iran. Russia is bigger; its economy is bigger and by the way much more diversified than Iran’s. Moreover, our energy policy is different from that of the Iranian authorities, and this is for a number of reasons, which I will not analyse or asses here. After all, Russia’s energy industry is much more market-based than in a number of oil and gas producing countries. So you cannot really compare the two countries.

As for how long we will have to endure the sanctions, I would put the question differently. This should not be about enduring anything – we must benefit from the situation with the sanctions to reach new development frontiers. Otherwise, we probably would not have done it. This goes for import substitution policies, which we are now forced to implement. We will move in this direction, and I hope that these efforts will foster the development of the high-tech sectors of the economy with higher growth rates than previously seen.

The Russian market was too crowded for domestic agricultural producers, especially after our country joined the WTO. But now we are able to clear it up. It is true that this had a negative impact in terms of food price inflation. So in this respect we will have to put up with it for some time, but domestic agricultural output will inevitably grow, and it will grow, especially on the back of the government support measures that are in place.

I am aware of the discontent among agricultural producers. They are probably in the studio and will have an opportunity to ask some questions. We will discuss it, but it should be noted that the support is there. Domestic production and food security are extremely important, and we will seek to ensure them. Would we have taken these counter actions or not without the sanctions? The answer is no. But now we are doing it.

Maria Sittel: It is true that Russia is a strong nation, and we can endure. Many text messages from the regions are coming to mind, in which farmers and producers are all saying that the key thing is to ensure that the sanctions are not lifted, because we are beginning to step up local production. So removing the sanctions now would be a disaster.

We will come back to this issue later. At the same time there are other questions. People are recalling your press conference from six months ago, during which you said that it would take two years for the economy to recover. Maybe it is time for you to adjust your forecast?

Vladimir Putin: Perhaps we will do it sooner. Given what we see right now – the strengthening of the ruble, market growth and other things – I think that perhaps this could happen sooner, but still, I believe, it will take about two years. Considering all the factors, we are forecasting a certain production decline later this year. But then, we assumed that the start of this year would see a considerable drop in production, but it did not.

I would like to tell you that industrial production in March of this year was 99.4 percent of what it was in March 2014, and in the first quarter of this year, 99.6 percent of the level recorded in the first quarter of 2014.

In practical terms, there has been no decline in production during the start of this year. Some growth is possible but it will be contingent on the key rate, the Government’s and the state’s economic policy, and many other factors. Still, we must do our best to keep up the positive dynamics that we are witnessing right now. It should be maintained and accelerated.

Kirill Kleymenov: We are living in an environment of sanctions and counter-sanctions. Don’t you feel that something could have been done differently?

Vladimir Putin: Perhaps there is always a chance to do something differently. I do not know if something would have been better. I think we took the best approach.

Kirill Kleymenov: Mr President, a very important question is whether we will have enough strength and resources?

Vladimir Putin: You know it is not even the matter of strength. As for resources, we certainly have a lot. The most important thing is human resources, people’s skills and willingness to work. I have had a lot of contact with people, and I know how they feel, particularly about the sanctions. But I do not want to show you the gestures – you can imagine what gestures come from ordinary people.

Our task – the task facing the President, the Government, the Central Bank, and the heads of the regions – is to get through this time with minimal loss. Can we make it or not? Yes we can, and it is not about being patient. We must use the situation to our benefit. And we can do this.

Maria Sittel: What other threats could Russia be faced with this year?

Vladimir Putin: You know, there are lots of unpredictable threats out there, but if we manage to maintain a stable political situation in the country and keep our people as united as we are now, we will be immune to any threats.

Kirill Kleymenov: Mr President, I would still like to focus on some negative issues. The crisis is still here. The Government came up with an action plan to overcome it, but frankly we have not seen any results so far. Sometimes, it seems that the key strategy boils down to our expecting oil prices to improve, and the oil money to start flowing into the budget, thus resolving all the problems.

Vladimir Putin: This is an overly critical assessment of the Government’s work. Of course, the Government should always be criticised, just like the President and the governors. Everyone needs critical feedback as a matter of fact. Generally, criticism helps to look at things from a different perspective, which is always good.

Still, adopting a socioeconomic stabilisation plan for our country under such circumstances is not an easy task and requires a highly professional approach. These things cannot be dealt with in an offhanded manner. You cannot just throw money at the problem thinking that we have an infinite supply of it.

So, it took the Government some time to sort things out and see what needed to be done and what it takes to accomplish it. However, the plan that I mentioned was adopted in late December, and it is now being implemented gradually.

Could it have been done faster? Probably yes, we could have moved faster. Nevertheless, this action plan has been thoroughly thought out, and I believe it adequately reflects the current state of our economy. What I mean is that, first, this is an ambitious plan with a budget of 2.3 trillion rubles, which is a lot. Of this amount, 900 billion rubles were used to directly support the banking system, which is, according to some experts, the lifeblood of our economy. No matter who criticises the Government or the Central Bank, it must be admitted that these actions are correct and justified, which can be corroborated by the previous 2008–2009 crisis.

Moreover, 250 billion has been allocated to the goods-and-services sector, also via banks, but in effect straight into the real sector of the economy. A decision has been made to boost the capitalisation of the United Aircraft Corporation, i.e., to inject 100 billion rubles into the aircraft manufacturing sector. Over 82 billion will be provided to support the labour market and 200 billion plus 30 billion in guarantees to the real sector and for the specific project.

The Central Bank has provided for an entire package of what I regard as timely and economically vital measures. As I said earlier, we indexed pensions at the beginning of the year. In other words, a number of decisions were made in the tax sphere that we will probably discuss later. There is a separate programme to support the agricultural sector. Also, in the domestic transit sector − say, rail transit – things have not been finalised there yet, but nevertheless, a decision has been made to introduce zero VAT on commuter rail services, reduce VAT on domestic air services by 10 percent, and so on. In other words, there is a package, a comprehensive set of measures, and they are beginning to work.

It is probably not quite fair to say that we are not seeing the results. I understand that prices are still what they are, although they started falling in March. This is also a fact – perhaps not in all regions, but it is evident on a countrywide level. The ruble has also stabilised and strengthened. So it would be unfair to say that there are no results. Perhaps there were greater expectations, but this is exactly why I say that we should face up to reality and choose the right direction to move in. I believe that the Government has made the right choice and we are moving down this path.

Kirill Kleymenov: But by all accounts, the strengthening of the ruble has different causes.

Vladimir Putin: Do you think so? What causes?

Kirill Kleymenov: First of all, oil prices have grown slightly and stabilised. And then there is also an element of speculation because funds are simply being converted into rubles, since ruble interest rates have significantly increased.

Vladimir Putin: But why have they increased? (Laughs)

Oil prices indeed have gone up a little, but this is directly connected – and experts are already seeing this – the strengthening of the ruble is connected to oil prices, but this strengthening is not directly related to this increase.

There are other factors involved, and I have already mentioned the main one. Experts see that we have passed the peak of the problems with the repayment of external loans by our banking and other enterprises in the real sector, and we have adjusted the national currency exchange rate. And nothing went bust, everything works.

Yes, we have some problems: inflation has gone up, unemployment has increased slightly, but not like in the Euro zone: it is over 11percent there and here it is, so far, just 5.8 percent. So, all this contributes to the shoring up of our national currency.

Maria Sittel: Let us bring the citizens into our conversation. We will, in one way or another, chip in on various topics. So, while the Government is working on the anti-crisis plan, ordinary people are worried about prices: the prices of housing, medicines, and food.

Vladimir Putin: Pardon me, I would like to make a minor correction if I may. The Government has completed work on the anti-crisis plan. The task now is to put it into practice.

Maria Sittel: Very well.

Primorye Territory, Natalya Vorontsova: “Prices here have already gone up dramatically, the wages are the same and even lower than before, and there are massive lay-offs. We are not living – we are surviving. How long will this go on?”

Vladimir Putin: We have actually already begun to talk about this. It is true – and I said it at the very beginning – that people’s real incomes have dropped somewhat because of the inflation, which leapt to 11.4 percent last year. We will have to take that into account in our social policy by assisting, above all, the vulnerable social groups, the citizens who experience the most hardship.

The second most important task is to preserve jobs. I have already said that certain resources — and that is over 82 billion rubles — have been set aside to preserve jobs. If necessary, that money will be used. I also hope that the downward inflationary trend, in any case its rate of reduction, will remain the same, partly due to the strengthening of the national currency.

Maria Sittel: Thank you.

Let’s give the guests in our studio the opportunity to ask some questions.

Olga Ushakova: Mr President, we have many small business representatives here in the studio, and they certainly have a lot of questions. I would like to give a businessman from Nizhny Tagil, Sergei Partin, an opportunity to ask his question. He is the owner of a mobile confectionary company.

Sergei Partin: Good afternoon, Mr President. Hello Russia. I have the right to ask the first question, thank you. First, I would like to say that the measures to support young businesspeople and those who have only started their business are efficient. Ours is a good example of this. Two years ago, we launched a production company, and this year we have become Russia’s best youth business project. So we keep on working and doing it efficiently, and we wish the same to everyone.

We are experiencing a problem with youth personnel, and we are solving it at the local level. The point is that young people leaving school and even graduating from universities are unaware of what their talents are, how they can benefit Russia, and what they want to do in life. So my question is, how is the problem of early career guidance of young people going to be resolved at the state level? Thank you.

Olga Ushakova: As I understand it, you are ready to share your experience with us.

Sergei Partin: Yes, I have mentioned that we have some experience, and it helps a lot.

Vladimir Putin: What do you produce?

Sergei Partin: At the moment, we are making candies and expanding the business through franchising. We are teaching people excellent cooking skills, both children and adults.

Vladimir Putin: See? This is a perfect example of what can be done and in what way. Training professional personnel, particularly in production, is a key element for growth in the near term as production itself is becoming more complicated and we really need highly skilled workers in the first place.

We work closely in this area with business associations – those representing small, medium-sized and large businesses. We have agreed with them on a variety of cooperative measures. These include competences in many areas, the joint organisation of in-production practice and so on. Without this, it is simply impossible to move forward – this is obvious. The Government has a comprehensive programme for action in this area.

But of course, you are absolutely right: it would be better to start this career guidance at an early stage, in school. Yesterday, I had a discussion with my colleagues. In large cities like Moscow, almost 100 percent [of young people] want to move on with higher education. Striving for knowledge is, incidentally, a very good thing of course, but it shows, among other things, that career guidance at school, which you mentioned, is still poorly organised here. We’ll work with you on this.

Kirill Kleimenov: Let’s give our guests an opportunity to ask questions. Valeriya, please.

Valeriya Korableva: I would like to give the floor to Alexei Kudrin, the former finance minister, an eminent expert who has twice been recognised by the international community as the best finance minister in the world.

Mr Kudrin, your question please.

Alexei Kudrin: Good afternoon, Mr President.

Vladimir Putin: Good afternoon.

Alexei Kudrin: This is also about the economy.

Vladimir Putin: I see.

Alexei Kudrin: During your first presidential term, the economy grew by about 7 percent on average, even though oil cost approximately $30 per barrel. But during your current term, the average economic growth rate will be about 1.5 percent even if the price of oil goes to $65-$70. That is, there will be negative growth years and positive growth years, but the average rate will be about 1.5 percent, which is lower than the world’s average.

The global share of the Russian economy will decrease. There will be insufficient investment in technical progress and modernisation. We will lag behind the [industrialised] world technologically. Unfortunately, this will affect our defence capability, which depends on the economy and technological standards. No matter if we say we can manage, the figures I have provided are almost hard facts for the period until 2018. It is unfortunate, but we will be lagging behind the world.

You also said that the Government is adjusting its policy. But I do not think that adjustments can save the day. The old economic system has exhausted its potential, and nothing new has been proposed so far.

What can you do to help us create a new growth model?

Vladimir Putin: Mr Kudrin, we have worked together for many years, and we have very good and nearly friendly relations. I know your views on this matter. And you have presented your forecast very clearly, and it is very close to what can indeed happen.

To begin with, you were among the authors of the programme of the development of our country and its economy through 2020. “2020” is a well-known programme and it has not changed in any significant way. If you and I overlooked something, this has to be our fault, including your fault.

But we have to proceed from the realities of today and – you are right – to look at what is happening in the world and in our economy. The blueprints are known: we have to provide better conditions for business, we have to provide better conditions for private investment, we have to improve our monetary policy, and of course we must greatly improve the system of running the country as a whole, the Government and individual sectors, we must improve the work of law enforcement agencies and the justice system. This is a complex task. It is easier said than done, but of course we have to do it. As they say, “don’t dwell on it, deal with it.” We must do it.

Of course there are things that are well known, but, as they say, this requires political will. You know that in spite of the fairly difficult conditions, we are exerting certain efforts in the direction you and the people who share your views on the development of the economy have recommended.

For example, this year, the Government has not adjusted for inflation certain social benefits. I am aware that your colleagues, those who share your point of view, say this is not enough and that perhaps we should make more reductions and freeze more expenses, and reduce incomes because wages are growing too fast, that the retirement age should be raised as soon as possible if we are to balance the pension system in which we have to funnel huge resources out of the budget and the reserve funds. All this impedes our development. Theoretically, this is true, of course. To shape economic policy competently, a brain is definitely needed. But if we want people to trust us, we need a heart, too. And feel how ordinary people live and how this affects them.

If we keep people’s trust, they will support everything we do and even will be willing to put up with this situation, as our colleagues have assured us. But if we act while disregarding the people, then we will quickly roll back to the early 1990s, as I see it, when we will lose people’s trust and will have to spend much more money on social issues than is stipulated for onward movement, even if at a slow pace, like it was when we decided to convert from benefits in kind to cash payments, a sharp move that ultimately cost huge amounts of public funds. To prevent this, we will do what the Government and the Central Bank have proposed. I think this will suffice.

We will see if our lag will be really serious. Just look at the level of the US national debt, which is now higher than its GDP. This is an alarming sign, a red flag for the entire global economy. And we do not know which turn the events will take there.

The Euro zone has a huge amount of problems. It is coming apart. What will the debtor countries, whose debts have reached 174 percent of GDP, do? What will happen in Europe? Will the Euro zone leaders be able to help the underperformers? We do not know this either. So we will above all focus on ensuring high growth rates, but in doing so we will try to avoid putting an excessive burden on the people. Everybody knows this very well. Well, maybe not everybody, but Mr Kudrin knows enough as a member of the Presidential Expert Council. You know that we highly respect your opinion, and I personally respect it, honestly, and we will definitely listen to what you have to say.

Alexei Kudrin: Mr Putin, may I explain one detail?

Vladimir Putin: Yes, certainly.

Alexei Kudrin: The fact is that reform in the social sphere is part of structural reform. It is not entirely accurate to presume that my colleagues or I propose reducing incomes or freezing salaries. Targeted social assistance is one of our ideas. That is, the way things are now, someone needs to be paid more based on considerations other than average wage or benefit increase ratios. However, others may have to get by with smaller salary adjustments. Different approaches depending on household income are more efficient even before a crisis or in-between crises, all the more so during a crisis. This is my first point.

My second point is that, after all, our proposals are designed to curb inflation. Current inflation as of early April is up 17 percent compared to April 2014. This jump may not have happened if other reasonable measures had been taken, and the standard of living and real income would not have declined so much in that case. Remember when I said earlier that salary increases should not outpace labour efficiency? But that adjustment has now happened. If wage growth had stayed with labour efficiency growth, this adjustment would have been less pronounced. I wanted to clarify this.

Also, I believe that the Presidential Council, its Presidium, is too sluggish. It should work harder.

Also, Mr President, one more point: Strategy 2020 was developed, but it was not adopted by the Government. It remains a draft. About 25 percent of it was used for drafting various Government measures, but the strategy itself is not working. That is why I am saying that under the current circumstances we need a programme that can clearly identify the goals that we can reach despite the sanctions imposed on our country.

Thank you.

Vladimir Putin: Programme 2020 is a guideline for our development and it is still in effect. As for the targeted nature of social assistance, I completely agree with you, and the Government has been instructed to work on this.

Regarding the issue of wages rising out of proportion to the rise in labour efficiency, I have already expressed my position on the issue and I believe that you are also right. Simply put, it is always more difficult to do this on the practical level than in conversation, even during direct lines, directly with the people, because the level of wages, the level of income, especially in such a sphere as school education, is too low to count on real results.

Granted, this leads to imbalances, like those that we have today. Yes, this happens, but on the whole we should seek to ensure that – as this is the case in some sectors – wage rises should follow productivity, not vice versa. This is true.

Maria Sittel: It is very important to preserve people’s trust, as you said a few minutes ago, and Russian people are willing to help you here by drawing your attention to the fact that the authorities, with their ill-considered actions, for example, provoke uncalled-for price hikes. I am now talking about the counter-sanctions and the fact that they have been successfully bypassed. For example, here are two short text messages: “Why is it that we were promised import substitution [programmes] but in reality we are buying the same things, only through ‘friends’?” The word “friends” is used here in quotation marks, meaning that imports are coming through intermediaries. The other message: “Despite the embargo, we continue eating Polish apples and cabbage. They have never disappeared from the shelves. In September, we had them at 35 rubles [per kilo] and in the winter they were 85. The deception is simply outrageous: They arrive in the same containers, but without the stickers or with stickers from other countries, and sales assistants know that these are Polish apples.”

Vladimir Putin: It would also be good to know who provides customs clearance for these shipments. If this is true, and it could actually be the case, we will try to eradicate such practices. Honestly, this actually makes the situation on the food market somewhat less dire. As I’ve already said, the counter-measures we have taken led to an increase in food prices, driving up inflation. Still, this is an issue of being dishonest about what you do. Please, let me know where such things are happening.

The main thing now is not to fight simply such negative developments, but to focus on fostering growth in the domestic agriculture industry. This way we will be able to free our shelves of foreign goods by economic means, coupled with a dose of administrative pressure based on counter-sanctions, so that domestic producers can have the place they deserve on store shelves.

Kirill Kleymenov: Let’s continue with agriculture.

Here is a text message confirming what Maria has just said. It comes from Yury Lang from the Novosibirsk Region, who works in agriculture. He writes: “Mr President, agricultural producers are asking you to refrain from lifting sanctions against foreign producers, give us a chance to flood the market with our own organic products. I’m afraid that foreign goods could invade our markets.” We have an opportunity to understand whether Yury’s colleagues in other parts of the country share this sentiment. The Stepanovo village in the Kostroma Region, where our colleague Pavel Krasnov is working, joins us now.

Pavel Krasnov: Hello, Moscow. This is the village of Stepanovo in Kostroma Region. We are now on a farm; there are perhaps thousands of similar farms in Russia. This cattle-breeding farm – you can see its structures around us – is the work of local farmers. Three farmers here in Stepanovo have formed a company to produce beef and milk. This farm is the result of their efforts. It is not big compared to others but, I repeat, it is like many others in this country. And the issues that concern the local farmers are certainly the same as those that interest their colleagues in other regions of Russia. These issues, of course, have to do with agriculture and support for it. But the professionals themselves can state their case much better than I. I’ll give it over to them.

Mikhail Rumyantsev: Good afternoon, Mr President. My name is Mikhail Rumyantsev, and I am a dairy farmer. I would like to ask you about state support. We have many agricultural programmes, perhaps even too many. But for some reason the money that comes to this region is shared mostly among major producers, big farms, and investors, while we, ordinary farmers, are left with crumbs. We would like this injustice to be rectified. Thank you.

Vladimir Putin: Let me report in general on what is being done in the agricultural sector and in terms of its support. The host has just read a question asked by one of your colleagues, an agricultural producer. He said that we should keep the market free of foreign goods. But there is the other side of the coin, the consumers, who want quality goods at acceptable prices. This is why the state has developed a system of measures to support agriculture as a whole. This system includes two tax support options: a simplified tax system and a second system. Which one do you use?

Mikhail Rumyantsev: I pay agricultural tax.

Vladimir Putin: Unified agricultural tax, right? But this year we have introduced additional support measures. What are they? One of them – and I think it is the most significant one – is the increased subsidies for bank interest on loans that entrepreneurs use to increase their working capital. It used to be that the government only subsidised 5.5 percent of the bank’s interest rate on loans; now it is 14.7 percent. This means that if you, for example, borrow at 20 percent, you pay an interest of 20 percent minus 14.7 percent. However, if you borrow at 25 percent, your resulting interest will be 10.3 percent. But I hope that, once the Bank of Russia takes some steps to cut its key rate, borrowers’ lives will be easier.

We have allocated an additional 50 billion rubles to support agriculture this year, and approved another 4 billion to subsidise equipment leasing. Two of the four billion, I think, went to Rosagroleasing. Other government measures involve increasing the “per-hectare” support by 8.5 billion from the former 14-something – probably 14.5 billion rubles.

Now, regarding the support for small agricultural businesses such as yours. Our recommendation to regional governments is to provide two million each to start-up farms. The money comes from the federal budget.

You were right to say that there is a whole package of support measures. It is difficult to say why the support never reaches the small businesses it is meant for. To find out, we might need to explore the situation in your region specifically. The area you are working in is certainly a challenging segment of agriculture, so the government will need to think of more ways to support dairy producers. Right now, purchasing prices are often below your production costs, I know that. We understand your problems and will try to help you.

As for the problems your farm is facing, specifically, and the situation in your region, we’ll have to take a closer look and maybe talk to your governor. Which region is that?

Maria Sittel: Stepanovo in Kostroma Region.

There are more farmers here with us in the studio today, so let’s give them a chance to ask their questions.

Dmitry Shchugorev: In fact, every time I speak to farmers I see that these people carry endless optimism, despite everything – and there are many “despites.” For instance, here we have an ordinary Russian farmer who goes by the simple Russian name John. He arrived in Russia 23 year ago, and he’s been a citizen of Russia since 1997. I spoke to him – and to my surprise, I have learnt that throughout all these years, his farm hasn’t yielded a penny of profit.

Mr Kopiski, you have the floor.

John Kopiski: Good afternoon, Mr President.

Vladimir Putin: Good afternoon.

John Kopiski: Today we have 3,700 cows, of which 1,700 are milking cows. Each cow produces 10,000 litres of milk a year. We sell milk below cost, and we have no money in reserve. Now, after the well-known conflicts, the cost has increased. Today we have to sell our milking herd as we have absolutely no money.

I cannot develop my farm and build new farms because I have no profit. I have been in this business for 15 years. I cannot develop my farm if I can’t get a long-term loan not only for 15 but for 20 years, provided that a bank agrees to provide this money. You do a lot of good things, but banks are a different story.

So I cannot develop my farm if a bank demands collateral of at least 120 percent. A colleague of mine has collateral of 200 percent. To get the loan, my own contribution should sit at 30 percent. Even, as you have just mentioned, with a 26 percent interest rate. I can only hope that we’ll have to actually pay a 13 percent interest rate… If so, then when? Two years ago, I had to wait for 11 months. And we can be out of business any day.

You have the statistics. Everything looks fine, but, forgive me, this is not so. Please forgive me if I ask you a tough question, but I have five children and I love Russia. Russia is their homeland. I want their future in Russia to be secure. My son has been working in England for two years and he wants to return, but he doesn’t want to run a dairy farm. He told me: “Dad, I’m not a fool.” The future can only be built with the truth. Problems can be solved only if you know the real facts.

I am sorry, here’s my question: do you believe the statistics they show you, or are they lying because they are afraid to tell you the truth? I don’t like statistics.

Vladimir Putin: How did you end up here (in Russia)? Was it a case ofcherchez la femme? It means “look for the woman involved.”

D. Shchugorev: John has a Russian wife.

John Kopiski: I’ve been married to a Russian woman for 23 years, my whole family is Russian.

Vladimir Putin: Regarding trusting or not trusting statistics. Every country has some complaints about its statistics, but I do trust the figures they give me. If you noticed, answering the man who is in fact your colleague, the man from Kostroma who was just asking a question and who also produces milk, I told him right off that the procurement prices for milk are below cost, and this creates problems. These are statistical data. So I have no reason to mistrust these statistics.

The question is what to do to improve the situation? I have already mentioned one step. The Government has decided to increase subsidies on loans to replenish working capital. Anyway, you have been a farmer for so long and you continue to do it, which means that if things were really so bad, your business would have gone under, but in fact it exists.

There is also the issue of dried milk, which is imported in huge quantities, and we keep saying that dried milk imports, for example from Belarus, are ultimately decreasing the prices of Russian goods. As in any other economic association, we will talk it out with our partners in a frank manner to coordinate the methods and the level of subsidies for the agriculture industry as a whole and for individual sectors, including the dairy sector. This is first.

Second, we will certainly have to increase support. I think the Government will have to increase support, including in this particular sector, if we want to preserve dairy production.

However, there is one more component here. You mentioned milk yields. I do not know if milk yields are high at your farm, but I do know that the Russian average is low. Compared to other countries, our dairy industry is ineffective. What is the average for our country? What is the figure at your farm?

John Kopiski: The [annual] yield is above 10,000 litres, or 29 litres per day. I think that if we consider statistics, if we have honest statistics for forage-fed cows, we cannot say that the average annual yield in Russia is below 5,000 litres. The yield at my farm is higher.

Vladimir Putin: Twice as high.

John Kopiski: But that is because we do not have so many forage-fed cows. This is not right, because you need to manage your business, especially the dairy business. Pardon me, but this is very important.

Vladimir Putin: It is important indeed.

John Kopiski: So where is the reality?

Vladimir Putin: It is important, I agree. We are aware of the reality. You may think that this is not the case for me or the Government. But we do know how things are, and I hope that the Government will make relevant decisions to this effect, as I have already said.

Maybe what has been done so far is not enough. That said, quite a bit has been done on the back of some restrictions, including budget constraints. We have to balance the interests of a number of industries, although agriculture is currently among the priority areas. What I mean is that we are freeing up the market for domestic producers. We will keep working with you on this. Let’s wait and see.

As for statistics, I am inclined to trust rather than distrust them.

Kirill Kleymenov: Thank you. Let’s hear another question from Kostroma Region. Pavel, go ahead.

Pavel Krasnov: Here’s another question. We have set up a special display to illustrate it: a bottle of locally produced milk from the Stepanovo village. This isn’t a coincidence. So, what is your question?

S. Smirnov: Hello, Mr Putin, greetings to you from our staff. Hello to the people of Russia.

We are a small company, but still we are contributing to some extent to the wellbeing of our country. We produce milk and meat. Unfortunately, we now find it very challenging to sell our products, to get it to the customers. So I would like to ask two brief questions.

The first question has to do with what is known by the blanket term “social sphere”: kindergartens, schools, specialised boarding schools and so on. I would like our products to go directly to these institutions because we produce high-quality milk. Milk powder is good, but it needs to be rehydrated before it can be used. We provide real full-cream milk, and we find it difficult to compete with those who buy and resell. We don’t do this; we just need to sell what we produce. This means agricultural producers like us need some quota in this market niche, even a small one. This is my first point.

The second is that we need to reach our customers directly, to be close to them. We need to organise our own retail business, even a small one, small shops maybe or trailers, but we want to be able to offer customers our products bypassing large grocery chains, intermediaries and so on.

The math is quite simple really: we can supply our milk to a dairy plant which pays us 16–17 rubles a litre, while in a store, the kind of full-cream milk I have here costs 72 rubles or more. So who earns more per litre of milk: we, who produce it, or those who buy and resell?

So that is why farmers are so keen to have a channel to sell their products directly to customers, so that customers would be able to buy directly from their farmers.

Thank you.

Vladimir Putin: About the cost and purchase prices – we have already agreed that this is an issue we certainly need to address.

With regard to selling your product, milk. We have talked about this many times, and even adopted special legislation to protect agricultural producers and help them get their produce to grocery stores. If that is not enough, we can come back to this again and review this issue one more time.

Regarding the use of milk in social institutions, such as kindergartens, schools, etc., these issues should be addressed at the regional and local levels. I hope that your governor and other governors hear us and will act upon this.

However, in this case, you will still need to look at the price level, because if a region buys something, milk in this particular case, then of course, the regional authorities will be thinking about how much they can afford to spend on a particular product (it involves budget funds, which are limited).

And, finally, your last proposal, or rather idea, to operate through your own outlets. You are talking about large urban areas, right?

S. Smirnov: Yes.

Vladimir Putin: That’s what I thought. Does it have to do with purchasing some retail space or setting up temporary selling spots? Is that what we are talking about?

S. Smirnov: I am not talking about the markets, because first, milk is a perishable product, and second, we want to be closer to our customers. We want to establish a presence in residential areas. There are clean water programmes with small outlets selling clean water. We need municipal authorities to give us five to six square metres in a city and hook us up to a power line. We will build a stall, which will be part of the urban development plan. So, everything will look good and neat and will be consistent with the sanitary-epidemiological regulations.

Vladimir Putin: I am sure it will. You know, there are misgivings, in particular among local authorities, because of the negative experience with outdoor markets, even very small ones. There is a problem here, that retail chains and individual stores sell expiring or expired goods to these small markets.

But you are speaking about very practical issues related to the marketing of particular goods, and I fully agree with you. We will send a signal to the heads of regions, who will in their turn get to the municipal authorities. I see nothing bad in this; the idea is very good because it will reduce the distance between the producers and their buyers. Indeed, we sell kvass and water at outdoor facilities, so why not sell milk too?

I fully agree with you. I will certainly discuss this idea with governors.

Thank you, and good luck.

Kirill Kleymenov: We thank the village of Stepanovo for taking part in this Direct Line.

We can also take questions from the audience. Valeriya, go ahead please.

Valeriya Korableva: We have a question on foreign policy. We have here MGIMO Rector Anatoly Torkunov, a diplomat, historian and political scientist.

Anatoly Torkunov: Thank you.

Mr President, we know that our prosperity and economic development largely depend on foreign developments, the global political agenda and international relations.

My question is specific rather than global. This week the media carried dozens and even hundreds of comments on Monday’s statement about removing obstacles to sending S-300 air defence systems to Iran. At one point we signed this agreement with Iran but then suspended it later.

In commenting on this issue, both journalists and politicians expressed many apprehensions over sending the S-300 missiles, that it would impede the completion of our six-way talks on Iran’s nuclear programme. Moreover, some of them even claimed the air defence systems would aggravate the situation in the Middle East.

This morning I also read Angela Merkel’s statement that the sanctions should have been cancelled simultaneously rather than one by one. Meanwhile, some people in Israel are saying, as you may have heard, that if the S-300 systems are sent to Iran, Israel would take its own measures, including arms sales to Ukraine. I would like to know what you think about this.

Thank you.

Vladimir Putin: Indeed, we signed this contract way back in 2007. In 2010 it was suspended by a presidential executive order because of the problems over the Iranian nuclear programme. This was really the case, but today we can clearly see – and you understand it well, as an experienced person – that our Iranian partners are demonstrating a lot of flexibility and an obvious desire to reach a compromise on their nuclear programme.

In effect, all participants in the process have announced that an agreement has been reached. Now they only have the technical details to deal with, and they will complete this before June. This is why we made this decision.

I have not read or heard the statement by the German Federal Chancellor and cannot comment on it for this reason. But if someone fears that we have started cancelling the sanctions, apparently our colleagues do not know that the supply of these systems is not on the UN list of sanctions. We suspended this contract absolutely unilaterally. Now that there is obvious progress on the Iranian track, we do not see why we should continue imposing this ban unilaterally – I would like to emphasise this again.

As for the list of sanctions envisaged by the UN resolutions, we will of course act in unison with our partners. We have always cooperated with this, and I would like to stress that we have made a large contribution to the settlement of the Iranian nuclear issue.

Moreover, our companies made this equipment. It is expensive – worth about a billion dollars ($900 million). Nobody is paying our companies for these systems. There was a hint that they could be bought, but nobody buys. So we have to ask: why should we take the loss?

But the situation is improving and this equipment is not on the sanctions list. I think that on the contrary, our Iranian partners should be encouraged to continue in the same vein. In addition, there is one more aspect to this problem.

You mentioned the position of our Israeli partners. I must say, in our military arms exports we have always focused on the situation in the region in question – most importantly, in the Middle East. Speaking of which, we are not the Middle East’s largest arms supplier. The United States provides many more arms to the region and takes a much greater profit.

Well, just recently, Israel expressed concern over our exports of the same S-300 missiles to another country in the region. They stressed that if successful, this arrangement could result in big changes, even geopolitical changes, in the region because the S-300 can reach Israel from that country’s territory even though it is not an aggressive weapon. But as one of my counterparts said, none of Israel’s planes will be able to take off. And this is a serious problem.

We consulted with our buyers. Our partners in one of the Arab countries were quite understanding about the issue. So we cancelled the contract altogether and returned the advance payment of $400 million. We are trying to be very careful.

As far as Iran is concerned, it is a completely different story that does not pose any threat to Israel whatsoever. It is a solely defensive weapon. Moreover, we believe that under the current circumstances in the region, especially in view of the events in Yemen, supplies of this kind of weapon could be a restraining factor.

Maria Sittel: Mr President, we will get back to foreign policy later. I would like to steer the conversation back to Russia. Many people are complaining about high interest rates. I have two messages here.

Larisa Kim from Sverdlovsk Region: “Sberbank raised interest rates for small business loans that had already been extended by three percentage points, effective April 2015, and this despite the fact that the Central Bank is cutting its interest rates. New loans are now offered at an interest rate of 23–25 percent. Is there a way to influence how Sberbank provides financing to small businesses?”

Here’s a follow-up question. Sergei Yermachenko from Irkutsk: “When will loans become more affordable and reasonable in Russia? Interest rates at 35–55 percent kill the appetite and opportunities for business development.”

Vladimir Putin: Regarding small and medium-sized enterprises, support programmes are in place. I will not name them all. I think that those involved in SMEs should be aware of them. This information is public, you can find it online or through relevant business associations.

Just as with agriculture, it may seem that initiatives targeted at SMEs are underfunded. This is the way people should actually feel, because small and medium-size enterprises account for a smaller share of GDP in Russia compared to developed economies. Without a doubt, this is not the way it should be.

One of the main vectors is to create clusters of small enterprises serving major corporations. This is a project for the future. That said, we already have SME quotas in state and municipal procurement. A decision to provide a two-year tax holiday for people starting a business has already been made. This measure is especially relevant for entrepreneurs in rural areas, since they can also benefit from programmes offered by the state loan guarantee agency. The Central Bank of the Russian Federation maintains its interest rate for commercial banks at 6.5 percent. It is true that only one bank, a subsidiary of Vnesheconombank, currently offers such loans. Just recently, I was told by the Central Bank Governor that they intend to increase the number of banks offering such transactions. A bank with SME loan contracts will be able to benefit from a 6.5 percent interest rate from the Central Bank, which means that borrowing costs will be lower compared to market rates.

However, what you have said is, of course, over the top. Naturally, it is important to see what kind of client the bank is dealing with. If there is no collateral, if there is no credit history, then of course, the bank will increase the interest rate. But 35 or 55 percent is an unrealistic figure. Sberbank’s principal shareholder is the Central Bank of the Russian Federation: the Bank of Russia. I will certainly ask Elvira Nabiullina to look into what is going on there. Leave me this information.

Maria Sittel: 35, 55 [percent] – this is not Sberbank.

Vladimir Putin: And the previous one – what was it?

Maria Sittel: 23–25 – Sberbank.

Vladimir Putin: 23–25, maybe that was before the key interest rate was reduced? Well, anyway, this needs to be looked into. Please, give me this information later as well, okay?

Maria Sittel: Right, we will give it to you after the programme. This seems to be a good time for questions about the civil service, because there really are a lot of them. It seems that in turbulent times people pin special hopes on the civil service, with a lot of them asking questions like these: “How professional, in your opinion, is the civil service?” “Is it not the time to bring professionals back into the civil service?” and “Maybe a professional banker should be appointed to head the Central Bank?” These are the kinds of questions being asked.

Vladimir Putin: What “bring professionals back to the civil service” mean? There should always be professionals in the civil service. If there aren’t, this is sad. In fact, we are short of professionals. Incidentally, we seek to provide appropriate wages to attract the most proficient and best-qualified people from the labour market to the civil service. To reiterate, it is always better to have professionals in the civil service to prevent crises. However, if a crisis has struck for objective reasons, then we should find our way out of it with gains, not losses.

Speaking of the Central Bank, I have no major claims concerning its work. By the way, what do you mean by “returning a banker to head the Central Bank”? The Central Bank is not just a commercial bank; actually, it is not a commercial bank at all, it is the main regulator of the Russian monetary and credit sector. Now it also has been vested with larger authorities. That is why a person is needed who has a good knowledge of the work and functions of a banking system, but it has to be a specialist with specific knowledge, economic knowledge, in the first place. One can criticise the Central Bank – and here is a hidden criticism of the Central Bank – for its delay in taking a decision on raising the key interest rate. If they had done it earlier, then probably it wouldn’t be 17 percent. But I would like to stress that overall, all experts – both Russian and foreign – consider the Central Bank’s actions to be professional and efficient, with the necessary results achieved.

Kirill Kleymenov: Now it is time for us to link with the centre for processing phone calls and messages. But first, I would like to ask a question that comes up frequently. “Mr President, foreign currency mortgage borrowers are in trouble. I am appealing to you concerning the currency mortgage issue. We are aware of the Government’s negative attitude to this problem. We are not asking for our debts to be waived, we are asking to re-evaluate, on a legislative basis, the exchange rate in effect until devaluation and thus to make us equal with ruble mortgage borrowers. A law is needed here, as banks will not reject excess profit voluntarily. We are ready to continue paying the mortgage loan to the bank, but on adequate and reasonable terms.” And so on. Mr President, what do you think of this issue?

Vladimir Putin: My overall opinion on people’s problems is that one must always aspire to help them. The reason the state exists is to help people.

What is this particular case about? Not the one that you just read, I do not know who wrote it, but in general, how did the problem arise? No, let me approach it from a different angle. You know, mortgage loans in foreign currency are worthwhile for those who get paid in foreign currency. Assume someone lives in London, New York, Paris or Berlin and is paid in euros or dollars, but plans to live in Russia, as our friend from the United Kingdom and his children, who want to move to Russia. They get paid in foreign currency. His son lives abroad and is paid in foreign currency. He can take out a mortgage loan in foreign currency, because he does not expose himself to the exchange rate risk. However, if someone gets paid in rubles, but takes a loan in foreign currency, he or she would assume this risk. If the rate changes unfavourably, he or she will get in trouble. We should look into that. I am not familiar with the details, but when people take mortgage loans, banks do not assume the exchange rate risk. That way, customers assume this risk on their own accord.

With regard to those who took a mortgage in rubles and found themselves in a tough spot, the Government decided to help these people out. Some money, about 4.5 billion rubles, has been allocated from the budget to this end.

Kirill Kleymenov: Are you talking about the people who took out loans in rubles?

Vladimir Putin: Yes. But this applies only to people who found themselves in a tough spot, such as having lost their jobs. Perhaps the Government can think of ways to help those who took out a mortgage loan in foreign currency due to an unfavourable exchange rate, but this assistance should not be greater than the one provided to the people who took mortgage loans in rubles. In any case, the approach should be uniform.

Kirill Kleymenov: I just wanted to make a small clarification in defence of those people. The fact is that often mortgage loans in foreign currency were taken by customers who bought housing on the secondary market, and they had no choice. The banks did not extend ruble mortgage loans to buy pre-owned real estate.

Vladimir Putin: No, banks are required to extend mortgage loans in rubles. We do live in the ruble zone. But this is a different story. If they refused, you should have insisted, because the interest was as high as 12%. As I said, last year we reached a record volume of housing construction at 12% interest rate. That was for the first time in Russia’s history. The 12% interest rate actually turned out fine enough. Now, the Government also plans to support mortgage and has already approved financing for this.

Kirill Kleymenov: You mean new housing.

Vladimir Putin: Yes. I mean new development projects, and yes, our goal is not only to help people get new housing at affordable prices but also to support the construction market, which, in turn, creates a great number of jobs and encourages employment in related industries, such as building materials and so on, in power engineering and road construction. It is an important sector of any economy – the Russian economy as well.

This is another reason for our decision to subsidise mortgage loans. Mortgage interest has increased to 14%, and we aim to cut it to last year’s level of 12% to revive and support the growth of the construction sector. I think this is achievable.

As for foreign currency mortgages, we should help there too, but let me repeat that the approach and philosophy of that assistance should be comparable to our support for people who have found themselves in a difficult situation, but who had taken their loans in rubles.

Maria Sittel: We have been on air for almost an hour and a half, so let’s look at what’s happening at our message-processing centre. Let’s hear from Tatyana Remizova.

Tatyana Remizova: Thank you, colleagues.

In an hour and a half of this call-in, the number of questions has exceeded 2.8 million, including 2 million submitted by phone.

The Rostelecom lines are overloaded. Our operators are processing almost 4,000 calls a minute. There are a lot of questions about the ruble exchange rate. However, an even more popular theme is the commuter railway service. We are getting calls from the Lipetsk, Yaroslavl, Nizhny Novgorod, Penza, Vologda and Smolensk regions – I will not go through them all. We all remember how commuter trains were cancelled in January and then you, Mr President, personally and firmly demanded that the trains be restored. I suggest we take a call on the issue from the city of Balashov, from Alexei.

Good afternoon, Alexei, you are on the air. Go ahead with your question.

Question: Good afternoon, Mr President! This is Alexei calling. You have pledged to bring back commuter trains. This is not happening in Balashov. Tell me, please, how our rural economy can be restored if we used to have a regular train service between Balashov and Saratov, but then it was cancelled a year ago and now people are unable to go anywhere. How are young people who live in villages supposed to study if there is no train service? How is this possible? On the one hand, we want to develop, but on the other, we deny young people access to studies and make it impossible for rural residents to move around.

Thank you.

Vladimir Putin: Alexei, what can I say? I can only say that I share your opinion that this is unacceptable. I will not get into the details of this problem now. You may not be very interested in them, but in a nutshell, the problem is that commuter rail services are unprofitable for the carrier. They became even more lossmaking when the tariffs were raised for the maintenance and upkeep of everything having to do with rail services: tracks, infrastructure, etc.

The costs went up several times. It is for this reason that my response to this decision was so negative. When costs were increased several-fold, the regions were unable to pay. They simply lack the resources. So they just cancelled the commuter train service. Poor coordination and the inability to foresee the implications of such a decision led me to respond in such a harsh manner. Service resumed on many commuter train lines, but not everywhere. Your line is evidently among those that are still idle. You have said that you are from Balashov? Balashov-Saratov? We will definitely review this issue. Moving forward, we will strive to find the best economic solutions for the carries, for the regions, and of course, for the people.

The region and the state will have to assume some responsibility, especially where there is no alternative for people, who should be able to live normal lives. In this case, children should still be able to learn, and people in general should have an opportunity to commute to major cities for personal, family business, and so on and so forth.

I have taken note of what you have said. We will certainly explore this issue.

Maria Sittel: In some regions demand for commuter rail service is high, while in others it is not. There are lines where people really need commuter service, but it is not available, while on others empty carriages and trains are running.

Vladimir Putin: Such trains were launched out of fear, just to show that the trains are running. But this is not a solution. It should be said that a number of serious decisions have been passed on the government level. First, subsidies for Russian Railways have been fully restored to prevent losses for the company, since a monopoly should not have losses. If memory serves me, the government reimbursed Russian Railways 25 billion rubles. Costs related to engineering infrastructure, which Russian Railways had to assume when the subsidies were dropped, were also reduced. The fact that a zero-rate VAT was introduced is of special importance. The Ministry of Finance always opposes such measures, doesn’t it, Mr Kudrin? Introducing a zero-rate VAT on commuter train service was a wrong thing to do from the perspective of our financial block, it was a forced measure, but we had to do it.

Kirill Kleymenov: And here is a result of the measures you mentioned: a positive signal from Sochi about the Lastochka train. It is a commuter train that started running in time for the 2014 Winter Olympics. Ticket prices have been cut to one-third, and now a ride to Rosa Khutor costs 119 rubles instead of previous 350 rubles. In the future, commuter trains to Adler Airport will resume service, and there is a rumour that Lastochka trains may run to Rostov-on-Don. This would be great.

Maria Sittel: I would like to remind you about video questions. I am giving the floor to Natalya Yuryeva.

Natalya Yuryeva: In addition to video questions, we also receive MMS messages, which turned out to be very popular. We have received 43,000 MMS messages. This is a very popular format with messages coming from people of absolutely different ages – from five-year-olds to 80-year-old seniors. Mr President, people from around the country are inviting you to tea.

They also have requests, as in this message from Yelena: “Mr President, I do not have a question but a very serious request. My friend will be celebrating her 40th birthday on April 25. She has set her mind on a dog, and we her friends are willing to chip in, but her husband is firmly against this. He is a retired colonel with an iron will, like all our military. But he will be unable to refuse his Commander-in-Chief. Just tell him: Boris, you’re wrong! Let your wife have a dog!”

So Mr President, what should Boris do?

Vladimir Putin: Oh, you have put me in a fix. Of course, people in Russia have a special attitude towards military personnel, which is absolutely correct. Women love officers. There have been various songs to this effect — about women who love servicemen because they are big and handsome. Of course, we love our servicemen not only because they are big and handsome, but because they are real men who are always here to help you, and so on and so forth. The military are susceptible to female charms too, as we remember from the jokes about hussars.

Still, though, I can’t order anyone to do anything. Boris would be right to tell me to mind my own business. And, besides, he is a retired officer. So, I don’t know what to do, how to get out of this fix. What’s the woman’s name, Irina?

Natalya Yuryeva: It’s Yelena.

Vladimir Putin: We can try to work out some action plan. For example, we could ask Boris together to compromise with his wife, Yelena, while Yelena could say, “No, I do not want a dog. I will do as you like.” After that, sure enough, he will not just give her a dog. He will give her an elephant, especially if she asks for it at the right time in the right place. He might even promise her a fur coat. I do not know if he will buy her a fur coat, but he may buy a dog. So, let’s just ask him: Boris, please, be so kind as to let your wife have a dog. It is a good thing and I’m sure pets bring families closer.

Kirill Kleymenov: Mr President, one of the crucial issues that we cannot avoid today is, of course, Ukraine. Before discussing Russian-Ukrainian relations, I would like to get back to the article that you mentioned at the very beginning. The same media outlet has leaked one more rumour.

At a meeting with business people you said, according to this media outlet, that, during the long night-time talks with Petro Poroshenko, Angela Merkel and Francois Hollande in Minsk, at some point Poroshenko literally said the following: “Take Donbass. I don’t need it.” Did this really happen?

Vladimir Putin: No, it never happened. We discussed measures to recover economic and social welfare in Donbass. There are many problems there. And we see that the current leaders in Kiev are not willing to recover either the social welfare system or the economy of Donbass. This is true, and we talked a lot about this. This is included in the Minsk Agreements; the papers that were signed by Ukrainian authorities are legally binding.

Unfortunately, nothing has been done. As we know, Donbass is completely blocked up. The banking system is not operating. Social benefits and pensions are not being paid. We talked a lot about this, including with Mr Poroshenko.

I have also said in public that, okay, there are people there who are upholding their rights with arms in hand. Whether they are right or wrong in doing this is another matter but right now I do not even want to qualify this. Of course, I have my own opinion on this score. I can qualify this and have done so more than once.

But there are also people who have nothing to do with all this. They have earned a pension, in part, by working in independent Ukraine for 20 years and they have a right to it. They have nothing to do with the hostilities or struggle of these armed people for their rights. What do they have to do with all this? Why don’t you pay them? You are obliged to do this by law. But they are not being paid. To sum up, there are grounds to say that the current Kiev authorities are cutting Donbass from Ukraine themselves. This is the gist of the grief and tragedy and this is what we spoke about.

Maria Sittel: Mr President, one more question on the subject. If Kiev has already devalued the Minsk Agreements, and if it is actually pressing for war, how can a dialogue with Mr Poroshenko continue at all? He is telling you one thing, then another thing to his compatriots and still another thing to his Western partners. How can any dialogue be conducted in this case?

Vladimir Putin: Well, we do not choose our partners, but we should not be guided by likes or dislikes in our work. We must be guided by the interests of our country and we will proceed from this.

Maria Sittel: Here’s a text message — from Vladimir Vladimirovich as well: “Petro Poroshenko is a real criminal, considering how many people died because of his actions. Mr President, were you uncomfortable or reluctant to deal with him?”

Vladimir Putin: Certainly not and I have just said this. I think that the current Ukrainian leaders are making many mistakes and they will see negative results, but this is the choice of the President and the Government.

For a long time, I have been trying to talk them into not resuming hostilities. It was Mr Turchinov who first started hostilities in Donbass. Then Mr Poroshenko got elected. He had a chance to resolve things peacefully with the people of Donbass through negotiations.

So we tried to persuade him. I say “we” meaning the Normandy format participants. To be sure, I certainly tried to persuade him not to begin hostilities and to at least try to agree on things, but to no avail, as they resumed military operations.

It ended badly the first time and the second time. They tried again a third time, and it ended tragically for the Ukrainians again, particularly, for the Ukrainian army. I believe it was a huge mistake.

Such actions drive the situation into a dead end. But there can be a way out. The one and only way out of this is to comply with the Minsk Agreements, conduct constitutional reform, and resolve the social and economic problems facing Ukraine and Donbass, in particular.

Certainly, we are not going to intervene. It is not our business to impose a particular behaviour on Ukraine. But we have the right to express our opinion. Moreover, we have the right to draw attention to the need to implement the Minsk Agreements. We want them to be implemented and we are waiting for all our partners, including the Ukrainian leaders, to do so.

Kirill Kleymenov: There are lots of similarly harsh questions. People are asking why Russia offers discounts on gas to Ukraine, why it supplies cheap electricity and cheap coal to Ukraine and extends loans to it, but is not treated the same way in return? How do you respond to that?

Vladimir Putin: You know, the political situation in any country can change, but the people remain. The Ukrainians, as I mentioned earlier, are very close to us. I see no difference between Ukrainians and Russians, I believe we are one people. Someone may have a different opinion on this, and we can discuss it. Perhaps, this is not the right place to go into this issue now. But we are helping the Ukrainian people, first and foremost. This is my first point.

Second. We are interested in the Ukrainian economy recovering from the crisis, because they are our neighbours and partners, and we are interested in order and stability along our borders, and want to build and develop economic contacts with a partner that is well-off.

Suppose we give them gas discounts, if we know that their economy cannot afford to pay full price under the contract – we don’t have to do this of course, but we still think it is the right thing to do, and we can accommodate. The same holds true for electricity, coal and other deals.

Incidentally, look, we agreed with the Ukrainian leadership in November or December 2013 to provide a loan to that country. We planned to buy $15 billion worth of their bonds, but technically, it was a loan, that is, we were to lend $15 billion, plus a $5 billion discounted loan for road construction through commercial banks.

Now look what Ukraine has negotiated from its partners: $17.5 billion for four years.

We offered price cuts on gas, and we did reduce the price on the condition of regular payments and settlement of prior debts. We cut the gas price dramatically, and now they increased it by over 300 percent.

Our past cooperation, all the ties that remained, have been broken. We have difficulties here [in Russia], but their situation is beyond difficult. Major industrial companies halt production, they lose competence in high-tech industries such as rocket engineering, aircraft manufacturing, shipbuilding and nuclear power. I think these are really hard consequences. I do not understand why they did this.

But events are unfolding the way they are, and we will make every effort to restore relations with Ukraine. This is in our interests.

Kirill Kleymenov: We suggest discussing this issue with the guests in our studio.

Valeriya Korableva: Continuing the Ukrainian theme, here is a question from writer Sergei Shargunov.

Sergei Shargunov: Good afternoon, Mr President. In 1994, poet Joseph Brodsky wrote a poignant poem on Ukraine’s independence in which, with bitterness and sarcasm, he wrote about Ukrainian nationalists, and even lamented about Ukraine: “Gone is the love that was between us.”

But, apart from nationalists, there are also many millions of people living there, as you rightfully said. I think that today they are at risk. Unfortunately, you don’t have to go far to find examples. There are banners that read, “A separatist next door awaits ‘Russian peace,’ call the Ukrainian Security Service (SBU) hotline” – this means people are being encouraged to rat on their neighbours. A vast number of people who simply have their own opinion are being persecuted, and there are even victims. Yesterday, former Party of Regions deputy Oleg Kalashnikov was gunned down. Prior to his death, he had received numerous threats from neo-Nazis.

And, of course, I cannot but mention those laws adopted by the Verkhovnaya Rada ahead of May 9 – so-called “anti-Communist” laws that ban Soviet symbols, but in fact offend all those who treasure historical memory of our common Victory. I think these laws just legalise a policy of apartheid towards Russians and those who are attracted to Russia.

So here is my question. Ukraine believes that Russia is its archenemy, but at the same time consistently demands natural gas discounts and other benefits. Under what conditions, realistically speaking, is normalisation of relations between Moscow and Kiev possible?

Vladimir Putin: This is not an easy question although we could elaborate on the unity and brotherhood of the Russian and Ukrainian peoples. I often do this. I have to.

The conditions are simple. At this point, Russia is not expecting anything from Kiev officials except one thing. They must see us as equal partners in all aspects of cooperation. It is also very important that they observe the legitimate rights and interests of Russians living in Ukraine and those who consider themselves Russian regardless of what their passports say. People who consider Russian their mother tongue and Russian culture their native culture. People who feel an inextricable bond with Russia. Of course, any country cares about people who treat it as their motherland (in this case, Russia). This is nothing extraordinary.

Let me repeat, we are willing to fully improve relations with Ukraine and will do what we can on our side. Of course, the Donbass issue is high on the agenda. As I said, we are expecting the Ukrainian authorities to fully comply with the Minsk Agreements. First of all, and the process is already being talked about, it is necessary to create working groups within the framework of the Minsk negotiations and begin working on certain areas. These include political reform, its constitutional part, the economy and the country’s borders. The work must begin now. There is no time for discussion. Practical implementation is necessary.

Unfortunately, so far, we only see continuing attempts to influence and pressure instead of a genuine willingness to resolve the issue by political means.

But I believe there is no other way but a political resolution. And everybody must realise this. We will be working hard on this.

Kirill Kleymenov: I suggest we hear one more question from the audience on this subject.

Katya, please.

Yekaterina Mironova: Thank you, Kirill.

There is no need to introduce our next guest. This is Irina Khakamada who is well-known. She also has a question, including one on Ukraine.

Irina, go ahead.

Irina Khakamada: Mr President, I have been promised two questions.

The first question is of course about Boris Nemtsov’s tragic death, which has shaken me, not only as a citizen. You can understand this. We worked together. The pain is still terrible. So I have this question: what do you think about the way the investigation is moving along and is there a chance that we will learn who ordered this heinous murder, which is more reminiscent of a terrorist act? Considering that his associates are in opposition, including in opposition to you personally, are you prepared to ensure that they, including Navalny and Khodorkovsky, can in the future run for parliament on equal footing? Because it is easy to criticize, but it is a more responsible task to conduct opposition activity on the state level in parliament. Perhaps this would stabilise the situation and stimulate private business and private investment.

The second question. At Boris’ funeral, Western journalists approached me and said – this information is also available on the internet – that Boris Nemtsov had received certain information about the presence of Russian troops during the events in southeastern Ukraine. At the funeral, the Western journalists kept asking me the same question. Can you finally say, can you say it in so many words whether or not our troops have been there?

Vladimir Putin: Let’s begin with the opposition, which has a right and an opportunity to participate in [the country’s] political life officially and legally: A) of course, it can and should; B) if they get into parliament in the upcoming elections, this will mean that they have received popular support and then their activity will acquire a definitive official status, and of course they will bear responsibility for whatever they propose. However, you are experienced, you have worked in government agencies, and you know that it is one thing to be a State Duma deputy in opposition and criticise just about everything. The responsibility here is not very great but it provides some sort of a platform and allows people to come out of the shadows. I believe that this is a positive thing.

However, in the end, the people decide, the people vote on whether a particular person should be in parliament. I believe that this is a good thing.

Let’s now talk about the murder of Boris Nemtsov. You were friends with him, maintained contact. He was a harsh critic of the Government in general and me personally. That said, our relations were quite good at the time when we talked to each other. I have already made a statement regarding this issue. I believe a killing of this kind is a shame and a tragedy.

How’s the investigation going? I can tell you that it took the investigators from the Federal Security Service and the Interior Ministry a day or maybe a day and a half at most to uncover the names of the perpetrators. The only question was where and how they should be arrested. We should give credit to our special agencies, who provided objective data by using not only surveillance cameras, but also extensive possibilities that they recently acquired. I am afraid I have to be careful not to disclose the cutting-edge solutions and methods our special agencies use, but generally, as I have said, the issue was settled in just a few hours. In this respect, they worked efficiently and promptly through a number of channels. The same results were obtained by different services.

The question of whether those behind the murder will be found remains open. Of course, we will find out in the course of the work that is currently being done.

Finally, the question of whether Russian troops are present in Ukraine… I can tell you outright and unequivocally that there are no Russian troops in Ukraine. By the way, during the last conflict in southeastern Ukraine, in Donbass, it was the Chief of Ukraine’s General Staff who put it best by stating in public at a meeting with his foreign colleagues: “We are not fighting against the Russian army.” What more can be said?

Kirill Kleymenov: I have a follow-up question that was submitted online to our programme. What has caused the failure of Russia’s Ukraine policy given, first, that Russia had such a huge edge compared to other countries due to historical ties with Ukraine? Second, Russia invested about $32–33 billion in Ukraine, while the United States invested only $5 billion, which Victoria Nuland acknowledged. Why did we fail on the Ukrainian track?

Vladimir Putin: You know, we were not the ones who failed; it was Ukraine’s domestic policy. That is where the problem lies. It is true that Russia helped Ukraine even when we were going through challenging times. How? By supplying hydrocarbons, primarily gas and oil, for a protracted period with a huge discount compared to world prices. This went on for years. It is true that this assistance — this tangible economic support — is without exaggeration worth billions of dollars. We were actively cooperating, to say the least. I hope that in some areas cooperation can still resume. Apart from cooperation projects, we have had broad and diversified trade and economic ties.

What happened? People simply got sick and tired of poverty, stealing and the impudence of the authorities, their relentless greed and corruption, from oligarchs who climbed to power. People got fed up with all this. When society and a country slide into this position, people try to look for ways out of the situation and, regrettably, sometimes address those who offer simple solutions exploiting current difficulties. Some of the latter are nationalists. Didn’t we have the same in the 1990s? Didn’t we have this “parade of sovereignties” or nationalism that flared up so brightly?

We have had all this. We have been through all this! And this takes place everywhere, so it happened in Ukraine. These nationalistic elements exploited the situation and brought it to the state that we are witnessing now. So, it is not our failure. This is a failure within Ukraine itself.

Kirill Kleymenov: But haven’t we missed the start of the process of Ukraine’s alienation from Russia? I am asking this question as such processes might also take place in Kyrgyzstan, Armenia and other post-Soviet countries where our Western partners are very active, as you said. There are more than a thousand – 1,200 NGOs funded by the Americans in Kyrgyzstan. These NGOs are involved exclusively in political activities. And how much is Russia spending on this aim? A lot less.

Vladimir Putin: You have made a Freudian slip.You said we missed Ukraine’s alienation from Russia but there was no alienation. Ukraine is an independent state and we must respect this.

We alienated all this ourselves at one time when we made a decision on the sovereignty of the Russian Federation in the early 1990s. We made this decision, didn’t we? We freed them from us but we took this step. It was our decision. And since we did this, we should treat their independence with respect. It is up to the Ukrainian people to decide how to develop relations.

When Ukraine had a previous crisis, also fairly acute, Mr Yushchenko and Ms Tymoshenko came to power after a third round of presidential elections that was not envisaged by the Constitution. This was a quasi-coup. But at least they did it without arms and without bloodshed. By and large, we accepted this and worked with them but this time it came to a coup d’état. This is something that we cannot accept. Such a growth of extreme nationalism is inadmissible.

We must respect other countries and develop relations with them accordingly. As for what happens in these countries, this is not something we can control because these are sovereign countries and we cannot become involved – interfere in their affairs, which would be wrong.

For example, we are developing relations with Kazakhstan and Belarus within the Eurasian Economic Union. What is the idea of such associations? It is not to drag them over to us – not at all. The idea is that the people in our countries should live better and our mutual borders should be open.

What does it matter where ethnic Russians live, here or in a neighbouring state, over a state border, if they can freely visit their relatives, if their living standards are improving, if their rights are not infringed upon, if they can speak their native tongue, and so on. It doesn’t matter where they live if all of these requirements are honoured. If we see that people have a decent life there and are treated accordingly.

This is the type of relations that we are developing with Kazakhstan and Belarus, as well as with Armenia and Kyrgyzstan. We really want this to continue. This is the main thing, and not trying to keep [your neighbour] in your sphere of influence. We are not going to revive an empire; we don’t have this goal in mind, contrary to what some people claim. This is a normal integration process. The world is moving along the integration path, including Latin America and North America – Canada, the United States and Mexico – as well as Europe. And this process is underway in Asia as well. Yet we are being accused of trying to revive the empire. It is unclear why? Why are they denying us this right?

I want to say that we have no plans to revive an empire. We have no imperial ambitions. However, we can ensure a befitting life for Russians who live outside Russia – in friendly CIS countries – by promoting interaction and cooperation.

Maria Sittel: Russia is now home to hundreds of thousands of Ukrainian refugees who came to Russia fleeing the horrors of civil war. The town of Gukovo in Rostov Region on the border with Ukraine is one such place. Let’s bring it on. Our correspondent Pavel Zarubin reports from Gukovo.

Pavel Zarubin: Hello, Moscow! We are at a hotel in Gukovo near the Ukrainian border, where refugees from Ukraine live now. Most of these people came here two weeks ago and are now contemplating their next moves, such as where to move next and how to find a job, if that’s possible at all. There are 19 people, including seven children, in the hotel. They have all they need. The older children go to school. The younger ones are taken care of by a psychologist who plays a variety of games with them.

We met everyone over the several days that we are here. I would like to introduce some of the children to you. We have here a very lively, grownup boy named Seva. How old are you, Seva?

Seva: Four.

Pavel Zarubin: Where are you from?

Seva: Lugansk.

Pavel Zarubin: Tell us about Lugansk. What kind of place is it?

Seva: Lugansk was bombed when we were in Sevastopol, and then we came to Lugansk.

Pavel Zarubin: Is Lugansk destroyed now?

Seva: Yes.

Pavel Zarubin: I see. Come on, guys, let’s go to the living room to your parents. We can talk some more on our way there. Where are you from, Danila?

Danila: Lugansk.

Pavel Zarubin: Also Lugansk?

Danila: Yes.

Pavel Zarubin: Do you have friends or family in Lugansk?

Danila: Yes, my grandma.

Pavel Zarubin: What about your friends and classmates?

Danila: Of course, they are there.

Pavel Zarubin: When did you talk to them last time?

Danila: A while ago. On social networks.

Pavel Zarubin: Do you miss them?

Danila: A lot.

Pavel Zarubin: You can now say what you want to your friends and family. They will see you on TV.

Danila: I just want to say hi to everyone, my friends, grandma, grandpa and dad.

Pavel Zarubin: Good boy! Sure, they will see you!

Take your seats. I will remind you that there are now 38,000 refugees from Ukraine in Rostov Region alone and, of course, they have many questions. Let’s move on. The first question please.

Question: Hello! My name is Alexander. I am from Donbass. Residents of Donbass are deeply worried over the further destiny of our regions – Donetsk and Lugansk. Even though many people love Ukraine, yet it’s utterly impossible to coexist with these conflicts.

Pavel Zarubin: You mean the future status of those regions?

Remark: Yes, the unification of Donetsk and Lugansk as a future Novorossiya.

Vladimir Putin: You know, above all, it is necessary, of course, for life to return to normal both in Lugansk and Donetsk, on these territories that are called the LPR [Lugansk People’s Republic] and the DPR [Donetsk People’s Republic], that people stop fleeing their homeland and that those who have already fled could live normally in their native home.

I know that residents of Donbass, as we commonly refer to all these populated centres – both large cities and small towns, are great patriots of their small motherland. Many refuse to leave despite bombing and shelling, as they love their homeland. It is necessary to do everything possible to create conditions for normal life in their own land, so that people can raise children, work and make money.

What should be done in this regard? Above all, during the first stage, the Kiev authorities themselves, it seems, should be interested in this. It is necessary to restore economic ties. The overwhelming majority of power-generating facilities, say, in Ukraine, use coal produced in Donbass. It is absurd and silly, or it is being done on purpose to steal money from the Ukrainian people, to buy coal somewhere in South Africa or Australia. It is sheer nonsense. And yet, such attempts do occur.

But other things occur as well: at least elementary, first steps towards restoring the economy and economic ties are made as well. I believe that – provided that the Minsk Agreements are implemented [I already spoke about that] – it is possible to find some elements for restoring a sort of common political field with Ukraine. However, in the long run, of course, ultimately, the final say about how and with whom to live and on what terms should belong to the people who live in those territories. To a significant extent, this will depend on the flexibility and political wisdom of the Kiev leadership.

Kirill Kleymenov: Gukovo, please, you have one more question.

Pavel Zarubin: We have this hotel’s staff here with us, that is, the residents of Gukovo, a border town between Russia and Ukraine, and they definitely have a lot of difficult questions to ask. Please go ahead.

Question: Good afternoon, Mr President. My name is Tatyana. We live in Gukovo, which is right on the border, and we fear for our children and grandchildren. When we had fighting in the area, it was so very close. We kept our things packed for days. Will there be a full-scale war?

Vladimir Putin: No, I think this would be impossible, so you can rest easy. There have been incidents, I know, where stray projectiles indeed reached your town but I still firmly believe those were accidents, not attempts to harm our people or facilities from the neighbouring region.

Kirill Kleymenov: Thank you, Gukovo.

The call and SMS processing centre continues its work in our studio. Now let’s find out what is happening with video calls for the President. Natalya, go ahead please.

Natalya Yuryeva: Thank you, Kirill. We have a lot of video calls from the Siberian regions of Khakassia and the Transbaikal Territory, which were hit by wildfires. The video calls from people who have been hit by this tragedy, who lost all of their possessions in an instant, sound more like distress calls, like pleas for help. Let’s watch a video we received from Nadezhda Makarova from Bidzha in Khakassia.

Nadezhda Makarova: Good afternoon, Mr Putin. We have a question. My name is Nadezhda Makarova. In our village, eight houses burned down, and we only managed to save one. This is our question: will the Government give any assistance to the people, because those people have lost everything, they are going through tough times. We believe that you will help us. Please help us. It’s Bidzha, a village in Khakassia.

Vladimir Putin: Now first of all I have to explain what the law says and what the Government will do for certain. First, all victims are entitled to a one-off payment of 10,000 roubles. Second, the families of people who died will receive compensations of 1 million roubles. Third, those who lost all their property will be paid compensations of 100,000 roubles.

Kirill Kleymenov: Per family member, Mr Putin?

Vladimir Putin: Yes. Fourth, 50,000 roubles is given to those who have lost part of their property. However, in Khakassia and the Transbaikal Territory this, most cases involve the complete loss of property, because everything there was destroyed by fire. The next payment is in the event of minor or moderate bodily harm or injury: 200,000 roubles. For serious injury: 400,000 roubles.

Moreover, I spoke to the Governor today. Indeed, a large number of homes have been destroyed by fire. About 2,400 houses will have to be built. This will require approximately 5–6 billion roubles from the federal budget, plus 1–1.5 billion in aid.

However, all of this requires thorough calculations. The first payments will be made in the near future. As far as I know, the Government should make an appropriate decision if they have not done so already. I am acting on the assumption that these decisions may have already been made.

Then everything will need to be calculated and all the people who have been affected will receive the support I have told you about. The Governor has been tasked with restoring all infrastructure elements and building all homes by September 1.

Kirill Kleymenov: Thank you. This kind of situation has evolved in several regions.

Vladimir Putin: There are two main regions, two hot spots now.

Kirill Kleymenov: The Transbaikal Territory and Khakassia.

Mr President, I suggest we return to our studio and give our guests an opportunity to ask questions. Valeriya, over to you.

Valeriya Korableva: Our studio guests include Nezavisimaya Gazeta editor in chief Konstantin Remchukov. Mr Remchukov, go ahead.

Konstantin Remchukov: Mr President, I am one of those Russians who believe that good relations with the West benefit Russia. Unfortunately, during the last year these relations rapidly soured, degraded. You have repeatedly said that the West has for centuries been pursuing a policy of containing Russia, thus, as it were, putting the age-old historical confrontation and the current confrontation in the same context. The higher the level of confrontation, the higher the ratings and patriotism are, and unfortunately, the more radical nationalism. Sometimes it seems that the more you love your Motherland, the more intensely you will hate somebody. I call this “patriotism cum xenophobia”.

Here are my questions to you. Could you specify the conditions under which it will be possible to normalise the relations with the West as a whole and with the United States in particular? Second, what policy measures to counter radical nationalism do you consider effective? And third, do you admit the issue of xenophobic patriotism exists in our country?

Thank you.

Vladimir Putin: I’ll start with the last question. You are placing patriotism and xenophobia on the same shelf. But I think these are two different things. Patriotism means to love your homeland, while xenophobia is to hate other nations. These are worlds apart. I wouldn’t mix apples and oranges.

As for radical nationalism, we have always fought it and will continue to fight it. I always say that nationalism is a very dangerous phenomenon that can have a destructive effect on the integrity of the Russian state, which has developed as a multinational and multi-confessional society.

And lastly, on the conditions for normalising relations with the West. It was not Russia who soured these relations. We have always advocated maintaining normal relations will all states, both in the East and in the West. The main condition for restoring normal relations is respect for Russia and its interests.

I said at one of the previous Direct Lines that some large powers, superpowers that have laid claim to exceptionalism and see themselves as the only centre of power in the world, do not need allies. What they need is vassals. I am referring to the United States. Russia cannot live in this system of relations. It not only cannot maintain these relations, it can’t live like that. Everyone must understand this. We are always open to cooperation. We have never stopped our cooperation. Isn’t it a fact that in the 1990s we opened up [to the West] and expected the same attitude towards us? But we received a harsh response when we tried to assert ourselves and to uphold our interests and views.

Remember what happened in the early 1990s, how the West applauded Boris Yeltsin. But when he announced our stance on Yugoslavia, they set the dogs on him. I won’t repeat here the obscenities that were hurled at him then. When we uphold our interests and take an independent stance, all the real intentions [of the West] reveal themselves.

But this doesn’t mean we should sulk or take offence, or move back and keep aloof. I have always said, and I will say again: we want to cooperate, we are ready to cooperate, and we will do this despite the stance taken by the leaders of some countries. But if they refuse, we’ll cooperate with those who want to work with us, with those businesses that are not afraid of political bark, the people working in culture and education, because this cooperation doesn’t end. As for the attempts to harm us through sanctions, they are being made but they are not very effective.

What has happened in reality? We just discussed the rouble exchange rate. Look, last year we had to repay $130 billion worth of loans. These $130 billion were taken out by Russian banks and corporations, not the Government. All of a sudden, we lost the ability to refinance these loans on the Western financial markets. I think that the hope behind this move was that it would create unsurmountable challenges for Russia’s financial institutions and the real economy.

This did not happen; they handled it, though not without Government support. That said, it was nothing like the assistance we provided in 2008–2009 when the Government had to take over payments when margin calls started coming in, take over assets and later return them with a profit. This time we didn’t even need to use such measures, since these companies had already put it behind them.

This year, another $60 billion in foreign debt is due, and a substantial share has already been paid out in the first quarter. Using such measures to pressure Russia is useless and doesn’t make any sense. I think that our partners will realise this at a certain point. They should at least try to reach a compromise with us instead of imposing clichés that they consider to be right.

Finally, to your first point: the higher the level of confrontation, the higher the rating. I can’t agree with such a vision. Russian people have a very sharp sense of what’s going on. I’m not even talking about experts such as the MGIMO University rector. People understand what is going on with their hearts, souls and, yes, minds. And when people see injustice, they always react. Moreover, there are people who see injustice in Russia and beyond. When someone sees that we are facing injustice, they always respond. If it is apparent that we are protecting our interests, people support us. I would like to thank Russians for this support.

Kirill Kleymenov: Mr Putin, we have been receiving tragic news from Kiev just as we are holding the Direct Line with you. We have just received a report that Oles Buzina, one of Ukraine’s most prominent observers and journalists, has been killed. The Russian audience surely knows him, since he took part in talk shows on Russian TV networks on multiple occasions. This tragedy has just taken place. Former Member of Parliament from the Party of Regions Oleg Kalashnikov was killed yesterday. All in all, this situation is absolutely monstrous.

Vladimir Putin: This is not the first political assassination. In Ukraine, we have seen a whole series of such assassinations.

Irina Khakamada here asked a question about the investigation into Boris Nemtsov’s assassination – an assassination which I consider to be an absolute disgrace for this country. Law enforcement agencies must do all they can to track down the criminals. As we know, the perpetrators have been arrested.

In Ukraine, which is laying claim to the status of a democratic state and is seeking to become part of a democratic Europe, we are seeing none of this. Where are the killers of these people? There is no sign of them – neither the perpetrators nor those who have ordered these killings. Both Europe and North America choose to turn a blind eye to this.

Kirill Kleymenov: Of course, we express our profound condolences, above all, to Oles’s family and all of his colleagues.

Vladimir Putin: I join in completely.

Maria Sittel: Regardless of political views, there is one subject in Russia that arouses no doubts or speculation. It is the Great Victory in the Great Patriotic War. Because every Russian family has its hero and because any attempt, any pernicious action to rewrite the history of the Great Patriotic War arouses unanimous aversion. According to this history, the Soviet Union is put in the same league with Hitler’s Germany, while the Red Army is cast not as a liberator but as an occupier. Mr President, how do you, as the son of a frontline soldier, feel about this?

Vladimir Putin: I have mixed feelings. A great deal can be said about this, but I will try to be brief.

First of all, of course, it is impossible to put Nazism and Stalinismon the same plane because the Nazis directly, openly and publicly proclaimed one of their policy goals: the elimination of entire ethnic groups – Jews, Roma and Slavs.

For all the ugly nature of the Stalin regime, for all the reprisals and even the banishment of entire peoples, the Stalin regime never set the goal of destroying [those] peoples, so the attempt to put an equal sign between the two is absolutely groundless. This is the first thing.

The second may not be very pleasant for us to admit. But in truth, we, or rather our predecessors, gave cause for this. Why? Because after World War II, we tried to impose our own development model on many Eastern European countries, and we did so by force. This has to be admitted. There is nothing good about this and we are feeling the consequences now. Incidentally, this is more or less what the Americans are doing today, as they try to impose their model on practically the entire world, and they will fail as well.

Kirill Kleymenov: A rehearsal of the parade devoted to the great Victory Day is now taking place at the military testing grounds in Alabino near Moscow. Our camera crew and our colleague Anton Vernitsky are working there.

Anton Vernitsky: We have a working atmosphere here in Alabino. Despite the changeable April weather, army servicemen take part in almost daily training sessions 40 kilometres away from Moscow, where the parade will take place on Red Square on May 9. A record 16,000 servicemen will take part in the May 9 parade on Red Square this year. This has never been the case before. There will be about 200 units of the latest military hardware that many of us have never seen.

In keeping with a sound tradition, the Ministry of Defence invites veterans of the Great Patriotic War to attend the parade and its rehearsals. Today, veterans who took part in this war are our guests of honour here. They have every right to be the first to ask a question. Please, introduce yourself.

Vitaly Kolesov: I’m Vitaly Kolesov, a retired colonel.

I fought near Stalingrad as a 19-year-old battery commander. In the first years of the war, the Red Army, our people, were fighting all of Europe single-handedly, but with our Soviet weapons. Yes, we had allies, but they opened the second front too late, although they sided with us.

Mr Putin, do we have allies now, including those in the struggle against reviving Nazism?

Thank you.

Vladimir Putin: I’ll recall in this context the words of Alexander III, our Emperor, – I think you’ll be pleased to hear this – that Russia has only two allies – its army and navy. Later he told his son that everyone was afraid of our vastness. By the way, there are certain grounds for this.

But in today’s context and speaking seriously, we should primarily look at the current threats. What are these threats? They have already been mentioned – terrorism, xenophobia, organised crime and so on and so forth. Naturally, there are many countries and many people in the world who support our efforts to counter these threats.

We have very good relations within various associations, including an association that was created relatively recently and comprises Brazil, Russia, India, China and South Africa. It’s called BRICS, which is an acronym. There’s also the Shanghai Cooperation Organisation. These are not military blocs. These are our friends with whom we maintain close and growing cooperation.

Then, there is the Collective Security Treaty Organisation. It is a military and political alliance comprising former Soviet republics, with which we have very close, confidential allied relations and also mutual obligations, including military ones.

I move forward knowing that we’re not getting ready to fight anyone, but will nevertheless strengthen our combat ability so that no one would even consider attacking Russia.

Maria Sittel: Mr Putin, may I ask a direct but possibly unpleasant question. Who are our enemies?

Vladimir Putin: Enemies?

Maria Sittel: Yes, enemies. You have named allies, challenges and threats. But who are the enemies?

Vladimir Putin: I spoke about the huge size of our country. Russia has a very big territory by European standards and in terms of its population. Russia is also a country with enormous potential for development and is rich in natural resources. And it is certainly a great nuclear power, with one of the world’s largest nuclear arsenals that is comparable to the US arsenal and is actually practically equal to it. So it is equally honourable to be Russia’s friend or enemy.

Speaking seriously, I have already named our enemies: international terrorism, organised crime and so on. We don’t consider anyone as an enemy.

Kirill Kleymenov: We won’t place anyone between the Ebola virus and the Islamic State?

Vladimir Putin: I was referring to members of the international community. We don’t consider any one of them our enemy and wouldn’t recommend that anyone consider Russia an enemy.

Kirill Kleymenov: Mr Putin, let’s talk some more about the Great Victory anniversary with this studio.

Olga, go ahead please.

Olga Ushakova: Of course, ahead of this joyous holiday, we have in our studio a lot of questions on the Great Victory anniversary. I’d like to give the floor to Doctor of History Mikhail Myagkov, the research director of the Military Historical Society.

Mikhail Myagkov: Good afternoon, Mr President. The joyous holiday, the 70th anniversary of Victory is drawing nearer. However, many world leaders will not attend our celebrations, will not come to Moscow. Perhaps we should just disregard this. If they don’t come, so what? When all is said and done, this is our holiday. This is our Victory. After all, by their attitude they insult the memory of the war veterans and the liberation mission of the Red Army. It is we who liberated them. We liberated them of that Nazi plague, or they would still be shouting “Heil!”

Do you think Russia should respond to these less-than-friendly moves against our country in a fitting manner? Should Russia do something in this respect?

Vladimir Putin: You’ve answered your own question. Have I commented on this in any way? Have we responded to this in any way on an official level? This is the choice of each concrete political figure, the choice of the country he or she represents. Some simply do not want to go, but some are not being allowed to go by the “Washington apparatchiks,” who say, “No way.” And they say, “We won’t go.” Although many would like to come. But this is their choice and we will always respect this choice.

If people wish to show, in any form, their respect for the victims of Nazism and pay tribute to the liberators and the victors over Nazism, we will welcome this – to reiterate, in any form, at any time and in any place. Those who want to come can come. Those who don’t want to come are free not to come.

You’ve put it well. I fully agree with you. Some people – let’s put it this way, so as not to offend them – may even be ashamed of themselves. But it is up to them to decide. We are celebrating our holiday. It is our holiday. We pay tribute to the generation of victors, as we say. We do this so that the present generation, both here and abroad, never forgets about this and never allows anything like this to happen again.

Maria Sittel: Let’s go back to Alabino. Direct Line is on air. Anton Vernitsky.

Anton Vernitsky: I have young people standing next to me who will participate in the May 9 parade. These young defenders of our Fatherland have a question for you.

Kirill Bakin: Comrade Supreme Commander-in-Chief, I’m a cadet at the Voronezh Air Force Academy, Kirill Bakin. When I enrolled at the academy, there were five contenders per spot for my specialty. This means that many young men see themselves as defenders of our Fatherland. I’m a second-year cadet, and this is my first parade.

I saw a lot of new military equipment here that I’ve never seen before. Three years from now, I will graduate from the academy and continue to serve in the armed forces. Please tell me if there will be enough equipment for all of us, young officers? When will the re-equipment of our army be completed?

Vladimir Putin: I’m sure you’re aware of the fact that there is a plan to re-equip our army by 2020. We may move this date a little not only because of our economy, but also because of some of our companies are not ready to manufacture certain types of weapons by some deadlines. However, the programme will be implemented in full without a doubt.

Will there be enough modern equipment for all? I am sure there will be. Our aim is to ensure that by 2020 the new weapons and military equipment fielded to our army make up at least 70 percent.

Kirill Kleymenov: Thank you, Alabino.

I believe it is important to give veterans an opportunity to speak up. They are very active: we have received a lot of text and video messages from them. Over to my colleague, Natalya Yuryeva. Please go ahead.

Natalya Yuryeva: Thank you, Kirill.

Indeed, we have received video messages from Great Patriotic War veterans. They are concerned primarily with their pensions and the prices of medicines, as well as housing. Let’s watch a video that we have received from the Yerokhins.

Vasily Yerokhin: My name is Vasily Yerokhin. I’m a Great Patriotic War veteran. My wife, Yelena Yerokhina, is also a war veteran. We now live in an off-limits closed military compound in Vladimir Region. We have been living in service housing for 64 years now.

I am on the Defence Ministry’s waiting list to receive a state-issued housing certificate. They promised to give it to me at least two years from now, which means we might never see it during our lives. Mr Putin, could you please speed up the issuance of this certificate? Please make us a present for the 70thanniversary of Victory.

Vladimir Putin: I will reply to Mr Yerokhin and other veterans of the Great Patriotic War who are entitled to receive housing.

When we started this in 2008, we developed this programme when I was Prime Minister, and then President Dmitry Medvedev also supported it.

We proceeded from the premise that we must provide veterans with housing. Having reviewed tentative applications from the regions we concluded that this concerned about 25,000–35,000 people. Today 281,000 veterans have received flats. We have spent 308 billion roubles from the federal budget for this purpose. This year another 10,000 veterans will receive flats and there will remain another 5,000 people to get them.

Tentative estimates were inaccurate, but despite a sharp increase in the number of those who needed housing we still decided to complete this work, and it will be done during this year and the next. I understand the problem was that you lived in a closed area, correct?

Kirill Kleymenov: Yes, this was a closed city.

Vladimir Putin: Mr Yerokhin, we’ll do everything to resolve your problem as soon as possible.

Kirill Kleymenov: Mr Putin, we have been receiving MMS messages as well. Our veterans sometimes live in houses like this. This is the Trans-Baikal Territory. This woman is 86 years old. Her neighbours took a picture of her house and sent it here.

Vladimir Putin: So we must react. Could you let me have it?

Kirill Kleymenov: I will.

Vladimir Putin: We understand that often our help does not go to a veteran directly but to his or her close family members, but we are still doing this in the belief that veterans are entitled to this.

Kirill Kleymenov: We’ve just been talking about allies and adversaries. But it appears, and here all experts are unanimous, that one of the key global threats today is the Islamic State – a terrorist organisation which is rapidly seizing territories and is strengthening its positions, and which has a colossal, phenomenal budget. In Russia too, we are seeing its first offshoots – at least, people are emerging who are connected with it in one way or another.

There is monstrous footage of public executions. All this is in the news almost daily. Questions about this issue are coming through Direct Line. Our guests [in the studio] also have questions. Olga, go ahead please.

Olga Ushakova: True, it’s a very acute topic that worries many people, including representatives of younger generations. I’d like to give the floor to Oleg Kaesh, a first-year student at Moscow State University.

Oleg Kaesh: Thank you.

Good afternoon, Mr President. I have a question concerning the Islamic State. We know that there are Russians too among this organisation’s ranks. Middle Eastern and Central Asian countries have recruiting centres and we have flows of immigrants from these countries into our territory. Some of them even have Russian passports already.

I’d like to hear your opinion, how serious are the threats posed by this organisation? Is Russia capable of resisting and curbing its activities, preventing it from spreading across our territory?

Olga Ushakova: If I may specify. How serious is the danger for Russia itself? Are we taking any preventive steps?

Vladimir Putin: You know, here is what I’d like to say first. The Islamic State was born and is expanding on the territory of Iraq, and also partly in Syria. So, I’d like to call your attention to the fact that up to a certain point in time, the Iraqi regime was, mildly speaking, far from democratic, in fact, tyrannical, but there was no terrorism there.

After Saddam Hussein was disposed of… In his time he worked with the United States, and benefited from its support in the war against Iran. By the way, Iran hasn’t been at war with anyone for thirty years, perhaps. At least it hasn’t attacked anyone head-on. But after everything went to pieces there, after a smaller portion of the population that was among the elite found itself on the margins, when people were thrown out from their offices, lost jobs and were left destitute, they joined extremist groups. They established the Islamic State, which included a substantial number of former officers of the Iraqi army.

Why are they so effective in battle? They are experts. There are many professionals in their ranks. Like a magnet, they started attracting other extremists of various kinds to the region.

Of course, the Islamic State does not pose a direct threat to Russia. But what you have said is a matter of grave concern for us: the fact that Russian citizens are in their ranks, are trained there and can return to Russian territory. People from the CIS are being trained there, are fighting in the region and can come to Russia with Russian passports. We are aware of this, we are taking it into account and are working to address this issue.

I can’t say that we know all of them by name, but we know approximately how many of them are out there, where they are fighting and training. We already know some names. Special services are very active on this track. By the way, they are working together with colleagues from the other CIS countries.

Kirill Kleymenov: Olga, I see Alexei Venediktov in your section. He always has a tough question to ask. Mr Venediktov, go ahead, please.

Olga Ushakova: Alexei Venediktov, editor-in-chief of the Ekho Moskvy radio station. Your question, please.

Alexei Venediktov: Thank you very much. Good afternoon, Mr Putin.

Vladimir Putin: Good afternoon.

Alexei Venediktov: I would like to return to the topic of political assassinations, especially because Ukraine today saw one more assassination of a journalist. But first I would like to comment on the investigation into the murder of Boris Nemtsov. You knew him well. But you know what makes me wonder? It’s when investigators cannot question eyewitnesses, when an eyewitness is hiding on Russian territory in a Russian region, an army major, and investigators are unable to interrogate him.

I am beginning to wonder, has our state become so weak? When a person is killed within 200 metres of your residence, is this not a challenge to you? It’s an arrogant and brazen murder. An unarmed person walking with a woman is shot in the back and then finished off with two more shots when he tries to lift himself off the ground. The investigators are dawdling. They have caught the killer, but they can’t even find the organisers.

And my final point, Mr Putin. People come to the scene of the murder and lay flowers. Perhaps there are not all that many of them (hundreds, a thousand). They lay flowers and put up Russian flags and they want a memorial plaque to be set up there: “Boris Nemtsov, a politician was killed here.” Like the Olof Palme memorial plaque. You know there is a plaque on the spot there. No, they can’t do that. This is litter. Flowers into the trash bag, Russian flags into the trash bag, icons into the trash bag. The place has to be clean. It’s a “garden city.”

Surely, things will not get moving without your opinion on the matter, if you have an opinion. I would like to hear your view, all the more so because you knew Boris and you spoke well of him.

Here is another thing I would like to say. You know, of course – Mr President, you are a native of St Petersburg and I’m a Muscovite – but you certainly know that there is no Vladimir Vysotsky Street in Moscow. He died 35 years ago but there is no street in Moscow [named after him]. And there is nothing that can be done about this. However, in accordance with Moscow city law, the President can make a proposal and then, say, Marksistskaya Street, which leads to the Taganka Theatre, could be renamed Vladimir Vysotsky Street. Perhaps one day there will be a Nemtsov Bridge as well. Could you comment on this? Thank you.

Vladimir Putin: Regarding the assassination, I have already characterised it and I believe there is no point in repeating myself.

Now about the flowers, memorial plaques and street names. You know that this is the prerogative of local, regional authorities, in this case, the Moscow city authorities. There is a law whereby memorial plaques can be installed at the site where a person was killed 10 years after his or her death. However, to reiterate, in the end, it is up to the Moscow authorities to make a relevant decision.

As for the flowers and other forms of tribute, I absolutely don’t understand what these restrictions are all about and I don’t welcome them. Quite the contrary, I believe that there is nothing terrible about this. What’s wrong with people coming and placing an icon or laying flowers there? If this does not inconvenience anybody I don’t see any problem here. I will talk to the Mayor about this without fail to make sure that there are no impediments here.

Now about Vysotsky Street. I also find it strange – I have never paid attention to it, but without any doubt, Vladimir Vysotsky, with all his creative work, has certainly deserved for his name to be perpetuated, including by giving it to one of Moscow streets. I will also take this up with the Mayor.

Alexei Venediktov: Mr President, surely you realise that I’ve come prepared to this meeting. I’ve studied the Moscow law.

Vladimir Putin: I suppose you have.

Alexei Venediktov: The Moscow law expressly states that the President of the Russian Federation – that’s you – can come up with such a proposal in accordance with the law, and then the decision will be taken fairly quickly. Please, make such a proposal.

Vladimir Putin: All right, I’m not against it. Perhaps I will use this right, but I don’t believe I should use all my rights right away, and there are other tools as well. You can talk to the Mayor in order to use his rights. We will resolve this issue.

Olga Ushakova: Thank you.

Let’s take another question from the audience – from Dmitry Shchugorev’s section this time.

Dmitry Shchugorev: We have Dmitry Abzalov here, the president of the Center for Strategic Communications. Please, go ahead.

Dmitry Abzalov: Good afternoon, Mr Putin. I have this nagging question about Mistral ships. This week, the second ship was tested and left for the French shipyard. What are the prospects? Will we push for having these ships delivered to us? Will we seek financing? In general, what will our military and economic partnership with the European Union and France, in particular, be like after what happened a year ago?

Vladimir Putin: The refusal to deliver ships under the existing contract is, of course, a bad sign. However, frankly speaking, it’s of little consequence for us or our defence capability. We signed these contracts primarily to support our partners and offer work to their shipyard. We planned to use the ships in the Far East. For us, this is not critical.

However, I believe that the leadership of France – and the French people in general – are honourable people and will return the money. We are not even going to demand any penalties or exorbitant fines, but we want all of our costs covered. This certainly means that the reliability of our partners – who, acting as part of the military-political bloc, in this case NATO, have lost some of their sovereignty – has suffered, and is now questionable. Of course, we will keep this in mind as we continue our military and technical cooperation.

Kirill Kleymenov: Our partners may find that it was an easy way for them to get off the hook.

Vladimir Putin: That’s all right, we’ll survive.

Maria Sittel: Be it the United States, the Islamic State or other challenges and threats, to sleep peacefully, we need a strong army and a powerful navy. However, it is no less important for us to have an industrial potential that will ensure the army’s needs in the form of modern weapons, for one, or even more important, that will promote growth in the civilian branches of our economy. A strong economy means social stability, and this is very important. So let’s go live again, this time with the Irkut Corporation, an aircraft manufacturer from Irkutsk, and our correspondent Dmitry Kaistro.

Dmitry Kaistro: Good afternoon, Moscow! This is the Irkutsk aircraft manufacturer with an 80 year-long history. During this time it has produced 7,000 combat aircraft of 26 models. The place we are in now is called the final assembly shop. Next to me is the head of this shop, Igor Ivanov. Mr Ivanov, what aircraft do you assemble here?

Igor Ivanov: Our shop assembles Su-30 heavy fighters and Yak-130 combat trainers. Now we are actively getting ready for the assembly of MS-21 passenger liners.

Dmitry Kaistro: Mr Ivanov, I guess you and your colleagues have questions for the head of state?

Igor Ivanov: Yes, of course.

At present our Irkutsk aircraft manufacturer is working at full capacity. We are producing aircraft both for exports and our Defence Ministry. Naturally, we are very interested in our plant’s prospects. Today we can easily produce 50–60 combat aircraft. Over a thousand jobs have been created at the plant in the past few years, and we work in two shifts. Needless to say, we don’t want to lose the pace of production. Can we hope to get a long-term steady government contract for combat hardware?

Vladimir Putin: Of course. You just said that you manufacture Su-30, Yak-130 and are getting ready to make the MS-21 aircraft. Your order book for the next two or three years is full. I assume that you know this all too well. If not, that’s how things are. Afterwards, new orders will be discussed – this may concern new military aircraft.

As for the MS-21 that you’ve mentioned, this is a very promising aircraft. We already have about 100–120 so-called unconfirmed contracts that are signed until the relevant certificates are issued. However, I hope that by 2017 the certificates will have been issued, the unconfirmed orders will become fixed contracts and the aircraft will have been duly certified.

These aircraft are being ordered by Russian companies, mainly Aeroflot along with some other airlines. That said, foreign companies are also interested, including from Indonesia. I assume that this work will go smoothly. We will not allow any setbacks in the enterprise’s operations.

Kirill Kleymenov: Thank you, Irkutsk.

Now we are joined live by Vostochny Space Launch Centre. This is truly a nationwide construction project. This is not just about building a launch pad, but a whole city with the necessary infrastructure. However, it so happened that a number of high-profile scandals occurred in and around this project in the last few weeks. It started with the Accounts Chamber report revealing that the costs were blown out of proportion, then the scandal with unpaid wages and the workers’ refusal to turn out for work. We have an opportunity to find out what is going on out there on the construction site. Our colleague Yevgeny Rozhkov is there.

Yevgeny Rozhkov: Good afternoon, Mr President, colleagues!

Although, as you can see, I should really say good evening, because we have a six-hour time difference. Nevertheless, it is still the Vostochny Space Centre, the country’s top priority construction project. How can it possibly be otherwise? After the APEC Summit in Vladivostok, the Universiade in Kazan and the Winter Olympic Games in Sochi, this site has, without a doubt, become the number-one construction project. After all, it is from this “fire ring” – this is what it will be called – that a Soyuz-2 carrier rocket will be sent into orbit in December with three satellites on board.

I think you can only appreciate the scale of this construction project when you get here. I was lucky. This is my second visit here and I know that it is not only a huge launch pad from where the rocket will lift off but also a great number of other buildings, including a mobile service tower, a command and control centre, a technical centre, two plants and seven floors below us with utilities and corridors.

As we were told at SpetsStroy – the construction company that is working here – the facilities are 80–90 percent complete. In other words, there’s only a little left to be done, and the rocket should fly in December.

As with any big project, this one has not been problem-free. The last problem came up literally two days ago, when we came here. It turned out that about a dozen people, a dozen construction workers, or even several dozen construction workers, to be precise, have not seen their wages here for about four months now. They contacted our editorial office, they called Moscow – moreover, they wrote their demands on top of their trailers to make their problems known and attract attention. We decided to invite some of these people here so they can go on air.

Good afternoon, tell us about your problems and what caused them. All I know is that your company went belly up and you came from the Primorye Territory, right?

Anton Tyurishev: Yes, that’s correct.

Good afternoon, Mr President, we are the builders of the Golden Bridge. In 2012, we built some of the main facilities at the space launch centre; however, due to some factors, our company ended up facing bankruptcy. We have not been paid for four months and people have started to leave the site. Thirty personnel remained at the site to guard it.

The indifference we encountered has driven us to despair and made us appeal to you directly in this innovative manner, so you can see us and help us resolve our problems. We still want to stay here and go on with our work despite everything. So we have two requests – one is to help us receive our overdue wages and the other is to give us an opportunity to stay here and work.

Yevgeny Rozhkov: All the more so as a greater workforce is required for the space launch centre project.

Anton Tyurishev: Yes, we are professional builders and we built the bulk of the facilities for the summit.

Vladimir Putin: I understand. I would like to ask you a counter-question: Have you been paid your overdue wages? Regarding wages, how do things stand now?

Anton Tyurishev: All 1,123 members of our team were paid 17 percent of their December wages. Earlier today, 70 personnel who guard the site received from 70 to 80 percent of their overdue wages – the amount varies from person to person.

Vladimir Putin: Did you say that they were paid earlier today? This must have been done in anticipation of our talk.

Anton Tyurishev: Yes, and in light of the recent events, I would like to ask you to allow me to report to you personally on the last rouble that will be paid to us.

Vladimir Putin: Agreed. What is your name?

Anton Tyurishev: Anton Tyurishev.

Vladimir Putin: What is your patronymic?

Anton Tyurishev: Anton Ivanovich.

Vladimir Putin: So, Anton Ivanovich, we’ll take it under double control: you on the site and I here from Moscow.

I have to say that it was yours truly who initiated this construction project. I ordered the recent inspections. All the slip-ups in the construction and pay delays are absolutely inadmissible and will certainly not be tolerated. The main reason is that the project is financed entirely from the federal budget.

I’m not going to speak about all the resources committed in recent years, but this year alone the sum is 40 billion. Forty billion once again. Most importantly, the money has been transferred to the general contractor. Why it has not reached the subcontractors and why they are not paid their wages is a big question that requires an answer and a painstaking investigator, not only the Control Directorate and the Accounts Chamber, but also the Investigative Committee. I hope all that is needed will be done. I know that criminal cases have been brought. Make no mistake, we will make sure that what you are talking about will be done: payment of all the wages and your continued employment at what is truly a major and very important project in Russia.

Maria Sittel: Vostochny Space Launch Centre, you can ask President Putin one more question.

Yevgeny Rozhkov: Yes, we have many interesting people here and many interesting questions. There are those who have been working here from day one of the project, they came here three years ago and are still working here.

Mr Ostamchenko, hello. Come over. I know that you poured concrete to make the slab we are standing on. You’ve been here from the start. Please introduce yourself and ask your question.

Vladimir Ostamchenko: My name is Vladimir Ostamchenko and I come from Khabarovsk.

In the film about Crimea you spoke about very important events, about the return of Crimea. You played a major role in this, personally supervising it. I would like to say that the space launch centre we are building is as important for our country as the return of Crimea. So the people who are responsible for the launch centre, I think, ought to know that you are personally holding under constant review all the subsequent stages.

Vladimir Putin: Mr Ostamchenko, when I spoke in the film about the return of Crimea and said that everything was under control, including under my own control, it was not my intention to single out my personal role. The point I wanted to make was to show that where there are authorities that are legitimate and ready to assume responsibility, issues are solved in a way that is in the interests of the people. But when it comes to the collapse of a state and the collapse of the power structures, everything falls to pieces and nothing works, and the results are dire, if not disastrous.

As for the space launch centre and Crimea… I would agree with you that the space launch centre is very important, but with Crimea, the lives of millions of people were at stake. The construction site is of course very important, but still it is a different story. But I agree that it is one of the most important if not the most important construction project in the country, a very large and very necessary one. And we will go ahead, not because I initiated the project at some point, but because the country needs a new space launch centre.

We need it because we practically do not have a normal launch site. We have launching pads in Plesetsk, but that is a military launch site. We do not have a civilian one. We are using Baikonur, but it is in another state, even though it is a friendly state and our closest ally. If any problems crop up they are routine problems, but there are no fundamental problems, and we will continue to use this launch site. But Russia is a major space power and it must have its own space launch centre to be able to orbit every type of spacecraft, and we will of course do this, we have ambitious plans.

We just said that by the end of this year Soyuz-2 must be launched. However, your fellow correspondent mentioned three satellites. I think there are two, one of which is the Moscow University’s satellite. Anyway, the plan is to do the launch in December. Also, there is Angara, a heavy-lift launch vehicle. Lately, we have been planning a super heavy-lift launch vehicle but I agreed with the experts who believe that the deadlines should be moved forward a little. Not for economic but for technology-related reasons. The idea is to develop our own national orbital space station by 2023.

It is a remote but very important prospect. It is important for the national economy because the ISS is widely used for research and in the national economy, but it is only able to see five percent of Russia’s territory. A national space station must see the entire territory of our enormous country. This has a huge significance for the national economy, as well as other uses. Therefore, we will definitely go through with this project. There is no doubt it will be fully under our control.

Kirill Kleymenov: Thank you, Vostochny. Now back to the call centre. Tatyana, please.

Tatyana Remizova: Thank you, Kirill.

We have been on the air for three hours. The total number of messages has exceeded three million, which is an all-time record for Direct Line. We have received two million phone calls, half a million text messages. Now I would like to cover a very common issue that concerns all Russian car owners starting this week.

Blagoveshchensk is on the line. Good afternoon. I should say, good evening for you. Your question please.

Galina Zagorskaya: Good afternoon, Mr President. This is Galina Zagorskaya, a pensioner from the city of Blagoveshchensk.

On 12 April, the cost of the Compulsory Third-Party Liability Insurance (OSAGO) policy increased by 60 percent. That is around 10,000–12,000 rubles. This also includes a driver’s life insurance policy, without which the OSAGO is not issued. My pension is 14,000 rubles a month. The car is our breadwinner. It takes us to our garden plot. My question is this: how can I keep going for a month with what remains of my pension? Thank you. Wish you all the best.

Vladimir Putin: Ms Zagorskaya, this really is a stumper. What can I say? The decision to raise the cost of the OSAGO was made by the Central Bank. It was an economically indispensable measure. First, because the rates have not been reviewed for 11 years. Second, because the cost of car parts has grown due to exchange rate differences. And, third, because the cost of payments related to people’s life and health have increased. These three components have caused such a sharp rise.

The only thing that can be said is that such necessary things should be done in good time, and then there will be no abrupt hikes. Otherwise, insurance companies will simply leave this market segment and then, unfortunately, a situation may evolve that cannot be described other than as chaos.

So, we will consider this issue and I will give relevant instructions to the Central Bank and the Government. My colleagues here have said that if support is to be provided it should be targeted. We will consider how this could be done in this particular case.

Kirill Kleymenov: We still have a lot of questions here in the studio. Let’s hear one of them.

Olga, over to you.

Olga Ushakova: Thank you.

Let’s turn once again to the business community. There are a lot of questions, and I think it would make sense to give the floor to someone who represents the business community as a whole. Boris Titov, Presidential Commissioner for Entrepreneurs’ Rights, go ahead with your question.

Boris Titov: Thank you very much.

Mr President, a lot has been said today about small business. However, since I am receiving so many appeals from small business, I cannot fail to mention this issue.

It is true that these are challenging times for small businesses. It is equally true that a lot is being done in this respect. That said, decisions coming out of nowhere are taken from time to time that frustrate all previous efforts. Today this is about street stalls: war is being waged against them across the country. We are talking about the fact that social insurance contributions have been raised.

You know, I think that the approach to small business should be changed in its entirety. We often say that it generates budget revenue. In fact, the financial institutions are talking a lot about this, while refraining from taking such serious decisions. I do not think that it is the case, and that is for two reasons.

First, small businesses account for a very small share of budget revenues. Small businesses contribute to the budget six times less than Gazprom does. Second, the main purpose of small businesses lies elsewhere: it has a social function, it creates jobs. Small business owners are able to sustain themselves. In addition, they create affordable goods and services that meet the basic needs of the population. This is especially important in times of crisis. Small businesses act as a buffer, a safety cushion for the country’s economy.

What I want to say is that we need to fundamentally change our approach. We must take the second road, understand the importance of small businesses, their social function. Administrative pressure should be reduced dramatically. When we ask for easing the pressure on businesses, we are calling for the emergence of a new cohort of small entrepreneurs called the self-employed, who would be able to operate without having to register.

Olga Ushakova: So, you sooner have a proposal than a question – to revise the attitude towards small business?

Boris Titov: Yes. Mr President, if possible I would like to hear your comment on this score.

Vladimir Putin: If something fails to work, this is your fault as well because after all you are an advisor on these issues, so you should be more meticulous as our famous and favourite satirist used to say.

But speaking about the gist of the matter, you know about the decisions that have been made recently and you said yourself that there are no grounds to assert that nothing is being done. To the contrary, much is being done to support small and medium-sized businesses, but apparently not enough if it is in the condition that we know about. However, saying that this is a strictly social issue is way too much because small business is still business albeit of a special type.

We are expanding the opportunities of the patent system – take a patent and simply get to work. We are saying that some benefits that individual entrepreneurs enjoy could be applied to small business. We discussed this with you at the recent State Council meeting and I think we should follow this road.

Let’s be specific and formulate not just our attitude but also additional measures that should be taken to make people feel confident. I have already spoken about the programme under which the Central Bank provides funds to private banks at an interest rate of 6.5 percent. All in all, it has 50 billion rubles for this purpose and they have not been spent yet.

You understand what the problem is – I think that only 20 or 30 billion were used. Hence, there are no adequate mechanisms for using even available resources and the Central Bank is prepared to increase these funds to 100 billion. This means that we do not have adequate mechanisms for getting these funds and decisions to the end consumer. Let’s think about this. Thank you.

Kirill Kleymenov: I will now give the floor to Natalya Yuryeva. She is literally showered with video questions. Go ahead please.

Natalya Yuryeva: Thank you.

Questions about social security and social protection are the absolute leaders in our video centre, followed by housing and utilities, then salaries. There are many questions about education. Schoolkids have tried to take advantage of this opportunity to lobby for the complete abolition of exams with the President. There are some serious proposals as well. Let’s watch a video sent by three students from St Petersburg.

Question (posed by schoolgirls from St Petersburg): Good afternoon, Mr Putin. On behalf of all Russian school students, we would like to ask you to have the National Final School Exam replaced with the ticket-based exam that was used in the Soviet Union. We believe that ticket-based examination is a very convenient system that allows the student to reveal all his or her knowledge. With the standardised test, even if students try hard and do well in a particular subject, the test does not allow them to show all their knowledge and skills. We may get a small amount of points even if you have good or extensive knowledge.

We would like to ask you to introduce more books that students must read in literature classes, particularly in the 10th and 11th forms.

Thank you very much. Goodbye.

Vladimir Putin: I see.

I don’t think we should open a full-blown debate on the National Final School Exam now. I think that public opinion is always focused on this issue. Anyway, it’s up to the experts who have in-depth knowledge of this issue to make the decision.

It has its downsides and upsides. I will not dwell on this, but the comforting fact remains that more and more talented young people from Russian regions are being admitted to our leading universities based on the results of the National Final School Exam. There are, of course, disadvantages to this system, because it looks like some kind of rote learning when students don’t go deep into a subject but rather train specifically for the test the way they do when they take their driving test.

There are downsides, indeed, but the Education Ministry is trying to compensate for them. Literature essays are back, for example. Also, some universities, such as Moscow State University, are allowed to run additional exams that build on the results achieved at various school contests and competitions. At any rate, I agree that this system needs to be improved.

Kirill Kleymenov: Natasha, you can have your audience ask one more question. Please go ahead.

Natalya Yuryeva: You know, our centre is receiving a lot of unusual videos: someone sings, someone does push-ups in front of the camera and Timur Kochebayev has asked us to persuade his girlfriend to accept his marriage proposal. Yulia Dorokhova, if you’re listening to us, I would think about it if I were you. Many videos have come from children, even very young ones. Let’s look at one of them.

Question: Mr Putin,I come from Nalchik, and I am four years old. I have wanted to become president since I was born. Is it hard to become president? How many hours a day do you sleep? I like sleeping, you know. Thank you.

Vladimir Putin: I didn’t hear him very well.

Kirill Kleymenov: How many hours do you sleep, because he likes sleeping and he has been dreaming of becoming a president since he was born.

Maria Sittel: And is it hard to be president?

Vladimir Putin: Is it hard to be president? I’m sure you’ll succeed if you really want to; judging from your personality, your attitude and drive, you’ll make it. And it’s great that you like sleeping, it shows that you’ll be a healthy president.

Maria Sittel: Let’s take one more question from Yekaterina Mironova’s section.

Yekaterina Mironova: Thank you. I suggest that we get back to serious matters. Let me introduce one more small business representative: Sergei Bakhov from Khabarovsk. Go ahead, Sergei.

Sergei Bakhov: Hello, Mr Putin.

The latest State Council meeting was devoted to small business. They said all the right things there, but very little was said about the fact that small business is in an unequal position compared to big business. Big business has long-term loans on easy terms from the Reserve Fund, which enable it to live comfortably, to pay millions in salaries and if necessary open up their “golden parachutes”.

Just one percent of that money, if distributed fairly and if it finds its way to small businesses, would give a big boost to production development. I can safely say this about the Far East because getting new equipment would enable us to replace imports, which come to us from China. We are working on that.

We have some success to report. Chinese businesses are among the biggest buyers of our products. Question: is there a need and a possibility to redistribute money to small business so that there is more money for to develop production?

Vladimir Putin: You know, Boris Titov already spoke here about high tax payments, social contributions and so on. But let me draw your attention to something that Boris should be aware of, by the way: social contributions have been reduced, and they are significantly lower than payments from other kinds of businesses. Above all, this concerns small and medium-sized businesses engaged in research, the social sphere and production.

As for long money, on the whole there isn’t enough of it in the economy. You said that large enterprises receive so-called long and cheap money. But if you ask the heads of large enterprises, they won’t agree with you.

On the whole, we don’t have enough long money in our economy. And where does it come from? It comes from people’s savings, from the deposits of legal entities, and also from pension money. That’s why we are being told that the accumulative pension system should be brought back. It is true that while it worked, almost no money for economic development was borrowed from it, except in the interests of the Finance Ministry to issue debt securities backed by that money.

I agree that this is a necessary measure. And, frankly, I would very much like for you to discuss this issue together with Boris Titov, regarding what can be done, including additionally, for small and medium-sized businesses in the Far East. It is especially important there.

I already spoke of a possible transition to a patent system. I already said that it’s possible to get subsidised loans through funding from the Central Bank. There could be other ways of benefiting and supporting small and medium-sized businesses. Talk it over. If there are additional constructive proposals, I will gladly support them.

Kirill Kleymenov: Mr Putin, I’d like to ask about money as well, although a different kind of money. The top officials’ income declarations were published yesterday. They were very interesting to look at. So why aren’t the leaders of major state corporations required to disclose their incomes? How is this fair?

Vladimir Putin: I think the Government decided against it because there are quite a few foreign nationals sitting on their management boards and boards of directors. They are not top executives of course – something that is quite common in Ukraine, by the way. What they have is external management. They even have a foreigner serving as finance minister, and other key ministers, for that matter, as if there are no honest, decent and professional Ukrainians to fill these posts. In our corporations, many foreign professionals hold the second or third position, as board members. We cannot require that they disclose their incomes; we can’t just tell them to do so. Neither can we discriminate between Russian and non-Russian board members with regard to their disclosure requirements. It would be wrong to make Russians do so and waive this requirement for their foreign co-workers.

However, in most Western economies, the leaders of large corporations do this voluntarily. Our Government has even adopted a business code. It has been adopted, but it is not actually working. If you ask me, I would suggest that the leadership of large corporations simply declare their incomes – it won’t hurt them.

Maria Sittel: Now is the right time to go to the message processing centre. Tatyana, what are the most popular topics now? Who is calling? What is the level of activity?

Tatyana Remizova: Maria, there is unprecedented activity, as I said earlier. We have already set an all-time record for call-in shows, reaching over 3 million questions. The number of phone calls is continuing to grow exponentially. The most popular topics include social issues and housing and utilities. There are a lot of calls about the healthcare system and especially many questions about medicines. We are ready to put on one such call now. The village of Voronezhskaya in Krasnodar Territory is on the line. Yelena will now ask her question.

Good afternoon, Yelena, go ahead.

Question: Good afternoon, Mr President. My child has acute lymphoblastic leukaemia. Doctors have prescribed medications – five in all. Pharmacies have not been providing them since January, saying they have none in stock. We are on a federal list for free medicine provision. When my child is in hospital, we get the necessary medicines. I am asking you to ensure that we receive life-saving medications. Thank you very much.

Vladimir Putin: I would like you to give me all the contact information on the woman who has just called, and here is why. The fact is that the Russian Government has not only expanded the list of vital medications to 608 (by 52 positions) – it now includes a total of 21,000 trade names, including 317 positions for people with disabilities, veterans and other groups entitled to benefits.

Judging by what we have just heard, these people are entitled to free medicine provision. And, very importantly, according to Healthcare Ministry reports, enough such medications have been purchased to last for almost a quarter of a year, for several months.

The Russian Government has allocated an additional 16 billion [rubles] for these purposes, but according to the healthcare minister, they do not even need to use up this 16 billion now because there is everything there should be, and supplies have been distributed among the regions. If this does not trickle down to the people, then this is simply something criminal. We must get to the bottom of this problem. I will instruct the Healthcare Ministry and the relevant agencies to look into this. I need information on that case.

Kirill Kleymenov: Mr President, this happens in many regions. We have received many similar questions.

Maria Sittel: Yes, not just from one region.

Vladimir Putin: Ok, this is what the Direct Line is for.

Kirill Kleymenov: Moreover, there are currently no free medicines for privileged categories but they are available for money. Here is, for example, a message from Moscow Region, which is not even far away: “My father is a veteran of labour, with a B class disability. He has not been able to get a prescription for free drugs for four months now. He is told there are no supplies. He has to buy them.”

Vladimir Putin: I want information on this case, too. This is what the Direct Line is for.

Maria Sittel: Thank you.

Tatyana, let’s hear one more phone call.

Tatyana Remizova: Yes, Mr President, we will pass all the details of the call from Krasnodar to you. It turns out that there is more to the problem. Let’s take one more call, this time from Yaroslavl.

Good afternoon, you are on air. Your question please.

Question: Good afternoon, Mr President. My name is Yekaterina and here is my question: is it true that the Healthcare Ministry plans to abandon foreign medication imports? I think it’s wrong because our drugs are not of the same high quality. There have been cases when people with kidney transplants died after taking Russian analogues.

Thank you for your answer.

Vladimir Putin: Firstly, the Healthcare Ministry is not going to abandon foreign medication imports.

Secondly, we must develop our own pharmaceutical industry. It is obvious and you should agree with it. That is why several years ago, we developed and are now implementing an upgrade programme for the Russian pharmaceutical industry. If I am correct the cost of the programme is about 180 billion rubles. Russia produces a significant amount of quality medication that meets all international standards.

I think what you described is a situation that may happen every now and then, but such cases need to be examined by experts, by the professional community, and also investigated by law enforcement agencies to evaluate the legal aspect, and relevant conclusions need to be drawn. But I can assure you that the Government has no plans at all to fully denounce pharmaceutical imports.

Incidentally, this question raises a good opportunity to mention the recent price hikes on the pharmaceutical market, including Russian-made drugs. This happens because, although these drugs are manufactured locally, they still use imported ingredients, which went up in price due to exchange rate difference. However, we saw some stabilisation of the pharmaceutical market last month, and even some downward adjustments.

This wasn’t the case everywhere of course – the people listening to me right now might say, we haven’t seen any adjustments, and drugs are as expensive as they were before – but I mean on the whole across Russia, drug prices did go down a little.

Kirill Kleymenov: Let’s continue with calls and text messages and watch one more video call. Please, Natalya.

Natalya Yuryeva: Our video centre has received 13,000 video calls, already 5,000 more than last year. A lot of videos address medicine-related issues. Let’s watch one from Sofya Babich.

Sofya Babich: Good afternoon, Mr President. My name is Sofia Babich. I am from the city of Togliatti and I am fifteen years old. I have been suffering from cerebral palsy since childhood. I would very much like to be able to walk. I am trying hard, but I need a treadmill outfitted with lots of things. We cannot afford to buy one – it costs about 20,000 rubles. We don’t have rehab in our region. My mother is doing all she can, I have been operated on several times, but I need training equipment. Please, help me. I want to be able to walk very much. I love you. Yours, Sonya. Goodbye.

Vladimir Putin: Don’t worry. It is not a question that needs too much effort to solve. We will certainly solve it, don’t worry. Get well soon. I see that you have a strong character – you will fight and achieve results.

Maria Sittel: Thank you, Mr President. Thank you.

As a follow-up to this topic I would like to give the floor to Anna Federmesser who is here in the studio. She deals with many problems, including cancer. Go ahead.

Anna Federmesser: Thank you very much, and good afternoon.

Today I represent the most vulnerable category of patients: they are patients who are incurably ill; you can’t cure them, but you can help them. Which brings me to my two questions, which are really requests.

Number one. Even in this group there are fellow citizens who are even less fortunate. They are people, mainly children and young people, who depend all their lives on artificial lung ventilation. They cannot live without it because they cannot breathe without it.

In our healthcare system they are in intensive care units. Speaking about children, they cannot develop there, they cannot communicate with their mothers and they die early because the environment is far from friendly. Elsewhere in the world such patients are at home, they study and attend school. I have brought some photos: a good many children, including those under the wing of the VERA Hospice Charity Fund, which I head, are already at home with artificial lung ventilation.

But as soon as they are back home they are no longer entitled to state support because the state is not obliged to provide them with expectoration or artificial lung ventilation kits. And medical institutions are also interested in these patients going home because they then vacate a very costly bed, they make room for intensive care people to work with more promising patients.

My request is as follows: to devise a mechanism, to give instructions to the relevant agencies to work out a lending mechanism for temporary use – unfortunately, these patients don’t live long – free of charge, funded by the state, of artificial lung ventilators and mucus clearance devices.

And my second question is much more acute and stems from yesterday’s situation, which was actively mulled by the media. It concerns narcotic pain relieving analgesics for cancer patients. Yesterday, we tried to help Aminat, a girl from Daghestan, who is in Moscow now, to get analgesia.

I will say at once that everything went well, she received morphine, and I hope that she is not suffering from pain now, but for that we had to appeal to lots of agencies and dozens of officials. In short, many people tried hard to get morphine for the little girl to relieve her of her pain during her last remaining weeks.

This is, in fact, a systemic problem. Today, Russia has no system of palliative aid and analgesia for people where they live, not where they are registered.

In other words, all of this aid can only be provided locally – where a person is registered. And if relatives took him or her out somewhere, for instance, from a village to a big city, to give better care – in that case, the patient is cut off from aid.

These people have no strength for paperwork – reregister, deregister.

And one more request – to help work out a relevant mechanism.

If I understand it correctly, this should be done together with the Ministry of Finance as this will involve mutual settlements between regions – so as to provide palliative, hospice aid to dying patients where they live, where they need it, and not where they should be staying in accordance with their passports.

Thank you very much for your attention.

Vladimir Putin: As for artificial lung ventilators and the rest, why can’t they be used at home? To be honest, this is the first time I’m hearing about this problem. I will certainly issue instructions to this effect to the Healthcare Ministry and other parties concerned, as they say.

It has to be determined whether this is a purely financial issue, whether additional funding should be allocated for purchasing this equipment and providing it to patients. Or maybe the problem is that our medical personnel believe that this equipment can’t be used at home.

Anna Federmesser: No, not exactly. In fact, the medical personnel are not against sending such patients home, which would allow for better use of intensive care units.

There is no legal mechanism whereby parents would be vested with the necessary rights, so that they feel protected; there is a lack of properly trained doctors in local clinics. Of course, this is a comprehensive issue, and it can’t be solved with a single word. However, I think that the medical community and the patients are ready. And it won’t be a costly option for the country; since these patients are already using these ventilators in hospitals, transferring them home would be cheaper.

Vladimir Putin: I understand, you mean that this is a legal issue. The state is not entitled to put parents in charge of using this equipment?

Anna Federmesser: The issue is more complex, but this is part of it. If you issue an instruction, the problem will be addressed quicker.

Vladimir Putin: You’re right. An instruction will be issued and we will work with you on this problem. I hope that this will pave the way toward a positive solution.

As for other matters, they will also certainly be addressed. You have highlighted an issue to work on, and we will work on it and discuss it. I will hear a report from the Minister and proposals to this effect.

Kirill Kleymenov: Mr President, let’s discuss another very important and somewhat controversial issue: pension reform. Today, everyone is saying our reform is troubled.

Valeriya, over to you.

Valeriya Korableva: Pension reform indeed concerns millions of Russians, both those who are near retirement age and those who are still a long way off. I’d like to give the floor to Irina Kosogorova, an entrepreneur from Tyumen.

Irina, your question, please.

Irina Kosogorova: Good afternoon, Mr President.

First of all, on behalf of the business community, I would like to thank you for supporting the restrictions on tax changes for entrepreneurs. Now, this is the third pension reform in my lifetime. And as a matter of fact, every time it becomes more enigmatic and interesting, and less predictable. Now new indicators have been introduced – points and coefficients – and it is totally incomprehensible what they will add up to in 10, 15 or 20 years, when we retire.

In this context, I have a question for you. Do you think such frequent changes in the rules of the game are justified? As far as I understand, every time such changes get less and less public support. Is this really necessary? Perhaps the rules of the game should be set, allowed to work and produce an effect, including on retirement age?

Vladimir Putin: I don’t think they are changed very often. It is simply that the proposed mechanism is not very comprehensible to the people and requires an explanation. One of the principal motives – but not the main motive – behind this system was to link a retiree’s pension income to his or her previous performance at work. At one point this connection was severed, and the introduction of these points had to do with this basically legitimate goal to link work performance and the level of income during a person’s working life to the level of pension. To reiterate, this requires additional explanation and possibly streamlining.

The retirement age is an important issue. What is the problem from the perspective of the financial and economic bloc? Are there problems at all? Of course, there are.

You see, in 2008, transfers from the federal budget to the pension system (if I make a mistake, Mr Kudrin will correct me) amounted to about 1.49 trillion roubles. In 2016, especially if we return the money to the funded part of the pension system, the transfers should amount to 2.7 trillion roubles, or three percent of the GDP.

This raises a question: where do we get the money? Clearly, we should take it from other types of expenses – defence, healthcare, and other spheres, and, perhaps, it will even lead to a decrease in the amount of pensions. This is the first problem.

The second problem – not a problem, but a factor: life expectancy in Russia is up and now stands at 71.5 years on average for women and men. Life expectancy is increasing even faster than we expected. This is due to healthcare improvements, healthier lifestyles and so on, with a slight decrease in alcohol consumption and tobacco smoking. There are many factors at play.

The number of people who work and make their contributions to the pension system is declining and the number of people who use the resources provided by the pension system is on the rise. At some point, we may come to a situation where direct budget support becomes simply unaffordable for the budget.

Are we ready and willing to sharply raise the retirement age? I believe not. I’ll tell you why. Yes, life expectancy is increasing, but for men it is 65 and a half years, and setting the retirement age for men at 65 means that, pardon me for this straightforward expression: you’ve done your fair share, here’s your wooden overcoat, have a nice ride? That’s impossible.

By the way, in those countries where the retirement age has been increased, such as the vast majority of European countries, the retirement age is set at 65 for both men and women, but life expectancy there is higher. Women’s life expectancy in Russia is 77.5 years, while in Europe it is 81 or higher. As life expectancy increases, we will probably get close to addressing these issues, including the retirement age.

First, this should be done in an open dialogue with society. People need to understand what’s going on, be aware of the underlying reasons, understand the consequences of our inaction and the implications of failure to take timely decisions. People need to know about this and understand this – not the way it is happening now with these points.

Next. Even in Soviet times we did not have those elements that our retirement system has now in plenty and that make it so unwieldy and expensive.

One more point. If some age-related changes are to be made, they should not apply to those who have practically earned their right to a pension. These changes certainly must not affect people approaching retirement age.

A smooth transition to this system should be made by mature – yet still young – people, who will know what is awaiting them in the next 10 or 15 years. These should be deferred decisions. I would like to repeat again that it is very important that all these issues should be openly discussed and, in the end, accepted by the public. This is the way things should be done.

Kirill Kleymenov: Mr Putin, Crimea is on the line. Crimea is waiting to receive holidaymakers, adults and children alike. Our colleague Nikolai Dolgachev is on the line from the Artek International Children’s Centre.

Nikolai Dolgachev: Greetings to Moscow from Crimea! As you can see, we have fine weather here. We are at the Artek Children’s Centre, located on the southern coast of the peninsula. Artek will mark its 90th anniversary this year. In a few days, children from all over Russia will come here for recreation. The whole of Crimea is getting ready for the summer holiday season, which is essential to its prosperity. We have talked to many people living in the republic and in Sevastopol and there were many questions about the economy. Some of these people who are well aware of local problems are present here now and they will introduce themselves.

Ulyana Smirnova: I am Ulyana Smirnova, Chernomor travel agency and management company, Crimea.

Mikhail Kozinets: I am Mikhail Kozinets, a representative of international road haulers.

Valery Khasitashvili: I am Valery Khasitashvili, a manager at the Pravda agricultural enterprise.

Yanina Pavlenko: I am Yanina Pavlenko from the Massandra agrarian production company, the head of the Crimean Grape-Growing and Wine-Making Office.

Elmira Akimova: I am Elmira Akimova, I represent the Chaika sanatorium for children.

Oleg Zubkov: I am Oleg Zubkov, the director of the Skazka Zoo and Taigan Lion Park in Yalta.

Nikolai Dolgachev: The first question from Crimea.

Evelina Emiraliyeva: Hello, I am Evelina Emiraliyeva from the Entrepreneurs Association of the Republic of Crimea and the City of Sevastopol. I represent the private sector and am a student at Kazan University. I bought a return ticket recently to go to take my summer exams. It cost 17,800 roubles, which is a lot of money for an average family. Like many Crimean people, I am worried about the upcoming summer season. Have any measures been envisaged to cut the cost of airfare to encourage and support the summer holiday season in Crimea? Thank you.

Vladimir Putin: I have already said that the value added tax (VAT) on domestic transport in Russia has been cut to a minimum, to 10 percent. But Crimea is a special destination; it’s a place where millions of people go for their holidays. You may or may not have heard about it, but I can tell you that Aeroflot has decided to cut the price of tickets to Crimea from a number of cities, and the list will be expanded to include 50 cities; I think Kazan is among them as well. The price is 7,500 roubles for a return trip. And some airlines are thinking of cutting the prices even more. I hope this will happen. In any case, we’ll keep it under control.

The problem in Crimea is that the infrastructure has been destroyed. The runway is in a very bad state. It hasn’t been repaired since the Soviet era.

It still meets flight safety standards, but basically there is a lot to be done starting with the air terminal and ending with the runway. It is big and basically comfortable – I think it was built with an eye for the Buran space shuttle – but the quality still leaves something to be desired. The equipment is outdated and cannot cope with the required number of flights.

However, I repeat, this is a known problem. I hope that the Russian aviation authorities and the Crimean authorities will do everything to make travel to Crimea affordable and comfortable.

Nikolai Maximenko: Nikolai Maximenko, the Association of Crimean Transport Operators.

We have two questions – regarding the ferry crossing and the registration of transport vehicles. You may not be aware of this, perhaps you have not been informed, but I can tell you that lorries have to queue for 12–14 days at our ferry crossing, which means that the drivers live all this time in the cab of their lorry – no toilets, nothing to eat or drink, nothing at all. We tried to resolve the issue by introducing an electronic queuing system, but it failed and only led to corruption. We have proposed issuing electronic tickets that will resolve the queue issue and we won’t have this congestion of lorries.

The second issue that worries our owners of vehicles is the Ukrainian registration of our lorries and cars. We are Russian citizens and we have Crimean license plates, but the registration is still Ukrainian. To receive Russian license plates, we must take them to Ukraine, which is impossible due to the lack of Ukrainian insurance or technical inspections. And morally too, you can imagine what it’s like taking our cars and lorries to Ukraine. Will we get them back or not? Once we deregister in Ukraine, we have to go through customs procedures to return them to Crimea and this is impossible because our lorries have Euro 2 and Euro 3 standards while the customs agreement allows only Euro 5. Mr Putin, please help us with these issues, so that we can become fully-fledged Russian citizens.

Thank you very much.

Vladimir Putin: All right. As for the ferry crossing, you have plenty of problems there. To be honest, I didn’t know that you have such congestion there. How many lorries and cars are queuing there at the moment?

Nikolai Maximenko: Over 2,000.

Vladimir Putin: Two ferries are currently operating there, if I’m not mistaken.

Nikolai Maximenko: Kavkaz, Temryuk and Novorossiysk.

Vladimir Putin: Five should be in operation in the near future, and there is a plan to purchase additional ferry boats. In all, 10 ferries should operate on this line. Some of them would be quite big. I will certainly speak about the current developments with the Ministry of Transport and Crimean authorities. By the way, much of the powers in this respect have been transferred to the Crimean authorities. But they need help. You can’t just transfer responsibility to them and wait for a collapse to happen. We will work on this issue.

As for the proposal to replace the queue management system with electronic tickets, I can’t comment on this issue. But I promise to explore it along with the issue of reregistering vehicles. I don’t know yet how we’re going to do it, but we will definitely do it. You have my word.

Kirill Kleymenov: Thank you, Artek. Thank you, Crimea.

Mr Putin, with the holiday season approaching, I think that this text message is highly relevant: “Why were local police officers banned from travelling abroad? They can’t possibly disclose any classified information.” Indeed, why adopt such harsh measures against rank-and-file law enforcement officers?

Vladimir Putin: This decision was discussed at a National Security Council meeting. Of course, ordinary police officers do not have access to classified information and at first glance this measure seems to be excessive. We assumed, along with the Interior Ministry, that as long as a person is wearing a law enforcement uniform, he or she should be subject to the same rules as all other people in uniform. It would have been wrong if some employees of the Interior Ministry were allowed to travel abroad, while others weren’t. This general approach is to a large extent due to the stance adopted by the Ministry. At first glance, this doesn’t seem right. But when a person is employed by a law enforcement body or special service, he or she understands what’s going on. This information could be of interest to foreign special services. But I do agree with you, this does seem like an excessive measure.

Maria Sittel: We’ve been on air for nearly four hours now, so I suggest we move over to our traditional blitz Q&A: short question and short answer.

Vladimir Putin: Sure.

Maria Sittel: Mr President, would you like to clone yourself or have an army of look-alikes?

Vladimir Putin: No.

Maria Sittel: You see, Russian officials do not recognise anyone but you.

Vladimir Putin: I’ve already answered. Let’s move on.

Kirill Kleymenov: Mr President, what I have here is not a question but a seriousrequest from a person who has introduced herself, but I will not identify her and I believe you will understand why.

“Mr President, I’m writing from Odessa. My name is Irina, and I will limit myself to this. As I revisit the events of last year, I recall our thousands-strong rallies. Then there was May 2 in Odessa, the Mariupol massacre and finally the war in Donbass. A few days ago the Verkhovna Rada passed legislation prohibiting Soviet symbols and communist ideology. When we were at school, at work and happy in the Soviet Union, our current ‘rulers’ sat in their dens, building up hatred and malice. Now this mob of man-hating psychopaths is trying to rule us. My cherished dream is to live to see the day when you come to Odessa on May 9 and congratulate Odessa and all of Ukraine on Victory Day. If you can’t make it this year, it’s all right, we’ll wait. In the meantime, please send us your holiday greetings from Moscow.”

Vladimir Putin: Best wishes to you. However, we all know about the tragedy in Odessa and of course, I hope that one day the entire Ukrainian people will make a fair assessment of the barbarity that we all witnessed.

Maria Sittel: Why do you choose Thursday for the [Direct Line] programme?

Vladimir Putin: Thursday? I have no idea, it’s just a coincidence.

Maria Sittel: All right. Kirill?

Kirill Kleymenov: Here is another serious question: “At some point, Andrei Sakharov was called our nation’s conscience. Would you give this title to any of the current politicians?” Let me add that it doesn’t have to be a politician.

Vladimir Putin: You know, it was the country and the public that called Sakharov the nation’s conscience. I don’t think I have the right, even as President, the head of state, to award such an honourable title to anyone. There are many decent people in our country. Let me just recall the police officers who shielded buses full of children with their bodies and their cars, or the officer who threw himself on a hand grenade to save young servicemen. There are many people like this in this country, but only the public can nominate someone from among their ranks to be the conscience of our nation.

Maria Sittel: It is a little embarrassing for me to switch from such a serious issue to mine but here is my question: “When will Gazprom start paying decent salaries to its employees?”

Vladimir Putin: Are they going to lower them?

Maria Sittel: I guess so.

Vladimir Putin: I don’t know. I need to ask Mr Miller.

Kirill Kleymenov: Mr Putin, don’t you think that your friends are taking advantage of your kindness?

Vladimir Putin: Why only friends? Everybody is taking advantage of kindness.

Maria Sittel: Have you ever invited any foreign leaders to a Russian sauna? Talks could be much more successful there than at a roundtable.

Vladimir Putin: That’s a tough one. I don’t know if I should tell you but I will. The person I’m talking about is no longer a head of government. Former Chancellor of Germany Mr Schröder met with me at my residence once, many years ago. So we went to a sauna. Suddenly, it was on fire. True story. He just got himself a beer. I come out and say, “Look, Gerhard, we must leave right now. The sauna is on fire.” He says, “I’ll finish my beer first.” I say, “Are you out of your mind? The sauna is on fire, do you understand?” But he finished his beer. He is a stubborn man with an attitude. The sauna burned to the ground. We never went back. But in general I do enjoy a sauna.

Kirill Kleymenov: “A lot is being said now about the Russia of the past or present, but less about the Russia of the future. How do you envision the Russia of your dreams?”

Vladimir Putin: Well, you know, this is a traditional question. I have answered it many times. All I can say is that I see Russia as a prosperous nation and its citizens as happy people who have confidence in their future.

Maria Sittel: “Would Mr Putin like to become UN Secretary-General in the future?”

Vladimir Putin: No, I wouldn’t.

Kirill Kleymenov: Mr Putin, here’s the last question: “What is the purpose of the Direct Line with the President? What do you want to learn?”

Vladimir Putin: You know, first, this is the most representative sociological poll. Millions of questions have arrived though different channels and they offer an opportunity to see what people are really concerned about. A farmer spoke here about his mistrust of statistics. Probably, this is sometimes the case: when you look at people and listen to them, you perceive everything in a different way. This is the first point. Second, this is an opportunity to bring home to people the position of the country’s leaders and my own position on several key issues and to assess what is going on.

We have repeatedly discussed these sanctions and the problems related to our national currency. The rouble is tied up to the price of a barrel of oil. This is still the case to some extent. But the price of a barrel of oil decreased from $100 to $50. It has halved. Our total oil revenues were about $500 billion, but because of the drop in the oil price we received $160 billion less than expected. Plus, there were payments on the debts of our banks, financial institutions and enterprises of the real economy: $130 billion last year and $60 billion this year. At the peak of payments we could not get refinancing on the foreign markets. Of course, a very alarming situation took shape but we have gone through it. This was a substantial element of consolidation that became the foundation of the efforts to enhance our national currency and confirmed the correctness of the course chosen by the Government towards stabilisation. The nation must know it. That is one of the reasons for holding such events as the Direct Line.

Maria Sittel: Thank you, Mr Putin.

Kirill Kleymenov: Well, we have set an absolute record: we received over three million telephone calls and SMS messages during this Direct Line. Interest has been enormous. It only remains to hope that officials and executives at different levels will promptly react to all questions asked during this Direct Line.

Mr Putin, thank you very much.

Maria Sittel: Thank you.

Vladimir Putin: We’ll make sure they react. Thank you

source: http://en.kremlin.ru/events/president/news/49261

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