Transcript of Putin's Press Conference

[Moderator] Let's have someone there on the eighth or ninth row, we haven't had a question from there.
 

Investment in the North's mineral resources

[Question] Olga Druzyakina, Novosti, Yamal-Region TV company. Vladimir Vladimirovich, you said that the state will now free the economy from bureaucracy and that the state will intervene in the economy only if necessary. What will happen to Yamal's geological industry, which has continued to exist since 1991 only because the regional authorities have tried to do something for it, and how will the country's raw materials base be replenished in the North?

For those present here [I can explain that] 93 per cent of natural gas and 12 per cent of oil are extracted in the Yamal Nenets Autonomous Area. You are keeping warm thanks to our gas workers. [laughter in the audience] Thank you.

[Putin] Thank you. [laughter in the audience]. You know, as for the restoration of the base of raw and other materials - several years ago I studied this question in detail and in depth. What is involved here? Resources cannot be renewed - they are nonrenewable. And the base of raw and other materials is, strictly speaking, equipment, everything to do with extraction. If a private company does the extraction, it is this company that is supposed to invest funds accordingly. The state only has to create conditions that will allow the company to invest in this sphere of activity. What we had until now was the state taking funds from the budget - taking them away from pensioners, doctors, teachers, the army, etcetera - and investing in the restoration of this raw materials base, while afterwards joint-stock companies enjoyed the results of this work. I don't think it is fair.

Of course, the most important thing for us here is not to disturb some technological links which will lead to some unfavourable economic or ecological consequences, but we should think about that. Why, if it is a joint-stock company - let them deal with that. It is a process of reproduction and they should deal with it.

I would like to repeat that our task is to create conditions, including financial and economic conditions, for these companies. Strictly speaking, this is a reply to your question. We will be moving in this direction. However, we will not make any sharp motions. When I spoke about the need to exclude unfounded interference on the part of the state into the economic sphere, I meant, first and foremost, the bureaucratic aspect of the issue - all kind of permits, licences and signatures from various officials. If you take a paper form and look at what should be done to register an enterprise, for example in Germany, you will see three of four lines there to fill out. In Russia - it will be such a mess that you will not even understand where to go to submit your application form. Strictly speaking, this is the point at issue.

Therefore, you should not be worried by my statement on measures against red tape. It is not related to the topic which you have raised. As regards your region, true it is one of the unique regions, and when drafting a law on levying taxes on mineral resources we should, of course, take into account the interests of the regions that are the main producers of these resources.

However, I would like to say straightaway that in the Soviet Union there were more problems than advantages after oil and gas were once found in Samotlor and we began to live on energy resources. At that time, we decided that there was no God for us and that we could do whatever we liked to do, that we could waste billions for various projects and that we could stop developing our economy. Unfortunately, that is what happened.

We started to plug into these resources for our living needs. My compatriot here knows the Red Triangle enterprise, which manufactured galoshes by the billion. And who needed them? But it kept on producing them nevertheless. So, we used oil and gas money in order to finance our needs, buying food and consumer goods in ever increasing quantities. Thus, we let our economy sink to disgustingly low levels. This is, regrettably, how it was – we lived by those reserves. After they were passed on to joint-stock companies, the state retained its obligations. However, the opportunities for implementing these obligations largely disappeared.

So, what are we to do? We can either nationalize everything or force them to pay taxes. The second is surely the most civilized, natural and normal way, and it is in the interest of the market players, including our oil and gas companies. So, we want to follow this route. This was why the new law on taxation of natural resources was proposed. These companies must pay back to the state what belongs to it by right. On our part, we of course must consider the interests of the regions and producers.

Secondly, we must create economic conditions for the companies which would like to invest in prospecting for natural resources and production, as well as necessary material and technical infrastructure.

[Moderator] Another question, please. Der Spiegel in row ten.