PRESIDENT VLADIMIR PUTIN: I know that you do not have much time. Tomorrow events will be held in Chechnya to celebrate Akhmat-hajji Kadyrov’s birthday, but I think it would be right nonetheless, to use today’s meeting to discuss all the different issues regarding Chechnya’s development. First of all, of course, we should look at the economic issues. There have been some changes for the better, but not all of our objectives have been reached yet. Let’s discuss this in more detail now.

I would like to hear your evaluation of how work is progressing on the economic and social objectives we set, and of how relations between the republic’s president and government and the federal authorities are developing, especially in the area of finances. According to my information, support has increased considerably. Overall, going by the documents I have seen, our previous agreements are being fulfilled. I know that the Chechen President and Prime Minister think we could do more.

Let’s discuss this in more detail. I would also like to hear from you about the oil and gas sector’s development. There are a good many different options for developing relations between the Rosneft oil company and the Chechen oil companies, including with regard to production activities and ownership issues. Let’s talk about this separately.

The final and perhaps the most important question is the political situation’s development. We set ourselves the goal of preparing for a parliamentary election and I would like to hear your views as to whether or not we will hold this election this year. And if it does take place, then when? I would like to hear about how ready Chechnya is for holding such an important political event.

I very much hope that this election will be a serious step towards political settlement because I think that all the political forces who make rebuilding the republic their goal should be represented and should work in Chechnya’s future parliament. All of these forces, no matter what their political colours, no matter whether so and so likes them or not, have the right to be represented in the republic’s parliament.

CHECHEN PRESIDENT ALU ALKHANOV: First of all, as head of the republic, I would like to thank you for meeting with Aimani Mesiyevna [Kadyrova] and Ramzan Akhmatovich Kadyrov on the eve of Akhmat-hajji Kadyrov’s birthday, thus showing respect for his family and for the multiethnic people of Chechnya, whose president he was.

Regarding Chechnya’s economy, above all the question of its economic development, I would like to thank you for your support for the new construction programme. Following your instructions, the question of allocations for carrying out this programme has been settled and we have received a sum of around 1.977 billion roubles.

Regarding the oil and gas sector and the oil sector in particular, you know our proposals – we outlined them at our meeting. Today we would like to ask you help us settle one problem.

Grozneftegaz, a subsidiary company of Rosneft, does not currently have a licence to extract oil. Rosneft would not lose anything by transferring the licence to Grozneftegaz. We are not talking about a national company here, but only about transferring the licence. Operator services and oil currently generate some 250 million roubles in revenue for us in the form of profit tax. If the licence were transferred, we would be able to raise additional revenue of more than 2 billion roubles, and I think this is an objective we can reach.

VLADIMIR PUTIN: Increasing budget revenue is our common goal.

ALU ALKHANOV: Increasing the Chechen budget’s revenue.

VLADIMIR PUTIN: Yes, increasing the Chechen budget’s revenue. We will think about the licence transfer proposal. I will discuss it with the Prime Minister. In any case, I agree with you. We need to address this problem in one way or another, and the simplest solution would be to increase revenue from operator services. But as for how to go about this, I will consult with the Prime Minister and we will decide.

ALU ALKHANOV: Also, it’s not exactly pleasant when the media say that Chechnya receives more federal budget subsidies than any other region. Our mineral resources provide us with solid enough revenue not to be seen as the region getting the most handouts. Our oil sector, whatever its successes or problems, can generate around 10 billion-12 billion roubles in revenue for the republic’s budget. This is taking into account all payments made to the federal budget and so on. This also includes payroll and other costs. Nonetheless, taking into account compensation payments, our budget comes to around 23 billion roubles. So, when we are called the region that gets the most subsidies, it is not exactly pleasant.

VLADIMIR PUTIN: We are agreed then. We will decide the issue of raising payment for operator services. I will need to think about how to go about this, but we will do it.

ALU ALKHANOV: If we do not end up being able to sort out the licence issue, then, under the current legislation, the profit tax gets paid where Rosneft is registered.

VLADIMIR PUTIN: I know. This is a problem not just for Chechnya but for other regions too. Many companies are operating in the regions but pay their taxes in an entirely different place. This is a general problem. But we will think about what we can do specifically regarding Chechnya. What about the parliamentary election?

ALU ALKHANOV: Regarding the parliamentary election, I can say in full responsibility that we think the social and political situation in the republic is such that we can propose to you a date for the election to take place. I would ask you, therefore, to settle the question of the date so that we can complete the process of forming the institutions of the different branches of power in the republic this year. We think this would bring a certain political stability and create certain conditions for the republic’s economic development. I do not think that there is any need to explain to and convince people that we need this parliament and that we think the election should be held this year.

VLADIMIR PUTIN: When? What date do you propose?

ALU ALKHANOV: I think it could be in the last ten days of November. We looked at the Sundays and we think that the election could be held on November 27 of this year. There are organisational issues to settle regarding buildings and so on. By next year we would have definitely settled the question of a building for the parliament. But we think that the political act itself, the election, should take place this November.

VLADIMIR PUTIN: Good, we are agreed then. I will sign the corresponding decree.