Direct line with Vladimir Putin
Putin annual Q&A session 2015
Video and Transcript
During the live broadcast that lasted 3 hours and 57 minutes, the President answered 74 questions out of the almost 3 million that were received.
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.
Putin annual Q&A session 2015
Video and Transcript
During the live broadcast that lasted 3 hours and 57 minutes, the President answered 74 questions out of the almost 3 million that were received.
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.
Posted April 16, 2015
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, Valeria 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-knownconflicts, 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.
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