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From The Kremlin - transcript of Putin's cabinet meeting & response to Western sanctions

Putin:

The same goes for higher oil and petroleum product prices in the United States. They announced that they were shutting down imports of Russian oil to the US market. Prices there are high, and inflation rates are unprecedentedly high, too, probably an all-time high. Still, they are trying to blame us for the consequences of their own mistakes.

This is obvious to the analysts, because Russian oil distribution to the US does not exceed 3 percent. This is a negligible amount, but their prices are up. They are simply hiding behind these decisions in order to once again deceive their own people.

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The meeting was attended by Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, First Deputy Chief of Staff of the Presidential Executive Office Sergei Kiriyenko, deputy prime ministers Viktoria Abramchenko, Yury Borisov, Tatyana Golikova, Alexander Novak, Marat Khusnullin, Dmitry Chernyshenko, Deputy Prime Minister – Chief of the Government Staff Dmitry Grigorenko, Deputy Prime Minister – Presidential Plenipotentiary Envoy to the Far Eastern Federal District Yury Trutnev, Presidential Aide Maxim Oreshkin, Economic Development Minister Maxim Reshetnikov and Finance Minister Anton Siluanov. The heads of a number of ministries, the Accounts Chamber and the Central Bank were also invited to attend.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

Today, we will discuss a set of measures to minimise the consequences of sanctions on the Russian economy and the people of our country.

We communicate on these issues almost every day. I just discussed a number of them with the Prime Minister.

Let’s get to work. I would like Mr Mishustin to start the discussion.

Please go ahead, Mr Mishustin.

Prime Minister Mikhail Mishustin: Mr President, colleagues,

Mr President, under your instructions, the Government is working to increase the stability of the economy amid the unprecedented increase in external pressure.

A special headquarters has been formed, which coordinates the activities of all departments, including at the regional level. We are monitoring the situation practically 24 hours a day, 7 days a week with the assistance from business leaders and expert community associations. Steps to protect the most vulnerable areas are being worked through sector by sector so that all aspects of operations in specific sectors and enterprises are taken into account as fully as possible when preparing decisions.

Our core goals include protecting the domestic market and ensuring uninterrupted functioning of enterprises by eliminating disruptions in logistics and production chains and, of course, maintaining employment. It is important to help the people and businesses quickly adapt to the changing circumstances.

Two sets of draft laws with anti-sanction measures as the top priority, that’s about 20 draft laws in all, and the Government acts that are necessary to implement them, have been promptly prepared. They include specific proposals for stabilising financial markets, supporting a number of industries, ensuring sustainability of the domestic private sector, and also proposals for the return of capital to Russia’s jurisdiction.

A draft law to prevent manufacturing shutdowns has been prepared. If foreign owners shut down their facilities without reasonable grounds, the Government is proposing the introduction of external management. Depending on the owner’s decision, this will determine the future of the company. In the process, the key goal will be to maintain profile corporate activities and jobs. Most companies are announcing temporary suspension of operations while preserving jobs and salaries. We will carefully monitor this situation.

As for industry-specific decisions, we have prepared a package of measures to help the IT industry on your approval, Mr President. Thus, all relevant companies will be relieved of profit tax liability and inspections by regulatory bodies. Of course, we will continue creating conditions to attract specialists into this sector of the economy.

We have proposals on supporting the construction industry as well. We will simplify the drafting of urban development plans and the procedure for holding public hearings on them, as well as registration of rights to facilities already built. We will expedite the allocation of land plots and extend existing lease contracts if necessary. This will allow the industry to maintain a consistent pace.

Regarding the interests of transport companies, we will assist airlines in maintaining their fleets of foreign aircraft. We will introduce restrictions on countries that ban our ships from entering their ports. We will try to level out the influence of international companies on the operations of Russian railway transport.

The tourist industry will also receive preferences. We will suspend the VAT for companies that build and lease tourist facilities or that subcontract operations to other companies. This will be valid for five years after hotels or other accommodation facilities are put into service, including after a rebuilding. The owners of existing hotels will also be entitled to these benefits. This is how we will support this industry and give it new opportunities for development.

A number of provisions will apply not only to small and medium-sized businesses but also to large companies, including backbone companies.

At this point, companies will need to adjust their production and logistics chains. This is why a ban was introduced on re-export to countries that joined the sanctions restrictions on equipment and parts that had previously been brought into Russia.

We are particularly focusing on agriculture workers’ needs. Agriculture is not only about jobs, but also about ensuring the country’s food security. It is extremely important to avoid a disruption in the sowing season, which is now underway in some regions. Agricultural producers will be able to postpone, by six months, their principal debt payments under low-cost investment loans, which they were to transfer to the banks within the next three months, and to renew short-term loans for another year to reduce the financial burden. In both cases, we are talking about loans with term expiring this year.

To cut business costs, we suggest minimising the number of redundant procedures. Pursuant to the law you signed, a resolution was prepared to renew the validity of licenses and other types of permits and to introduce a simplified procedure for obtaining and re-issuing them. This measure will apply to over 120 types of such permits; this is over 2.5 million permits in all.

We have also simplified the requirements for compliance with certain technical regulation measures. A moratorium has already been imposed on almost all scheduled and unscheduled measures of control, unless they involve a threat to life or health. We propose eliminating over 150,000 scheduled inspections.

Another solution is to postpone the entry into force of a number of mandatory requirements concerning businesses. Under the current circumstances, they cannot be met due to technical restrictions and the need to re-equip Russian enterprises.

We understand the scale of the transformation that our economy will have to go through to become even stronger. Maximum freedom of economic activity in the country, minimal regulation and control and, of course, support for the labour market will remain the basis for our economic response. The Government will expand import substitution and help domestic producers replace foreign products in supply chains.

Mr President,

We are working on anti-sanctions measures on a systemic basis. The existing action plan will be constantly updated based on developments and be adopted in stages and promptly. My deputies and the heads of the key departments will get into more detail about the directions of our activities.

Thank you.

Vladimir Putin: Thank you, Mr Mishustin.

Clearly, in times like this, people tend to have an increased demand for certain groups of goods, but there is no doubt that we will overcome these problems in the regular course of business. Gradually, people will come to realise that there are no issues that we are unable to resolve.

Indeed, there are issues that need special attention, but I will bring them up later myself and ask our colleagues to comment on them.

Mr Siluanov, please go ahead. Tell us about measures to stabilise the domestic financial market.

Finance Minister Anton Siluanov: Mr President.

Over the past two weeks, the Western countries have basically launched a financial and economic war against Russia. The West has announced a default on its financial liabilities to Russia and frozen our gold and currency reserves. They are doing all they can to stop foreign trade and the export of goods, thereby inflicting damage on global trade. Western countries are trying to create a shortage of imported everyday essentials in Russia and compel successful businesses with foreign capital to shut down.

Under the circumstances, our priority is to stabilize the situation in the financial system and ensure uninterrupted operations. We have taken a number of measures to this end.

First, we have taken precautions to control the outflow of capital abroad. This applies to cross-border transactions by companies and individuals. We have established a special procedure for servicing external debt, including our national debt. We will pay off our external liabilities in rubles and carry out the conversion by de-freezing our gold and currency reserves.

We have taken measures to attract capital to this country. To achieve this, we have introduced mandatory surrender of foreign exchange proceeds, increased ruble interest rates, suspended the introduction of taxes on individual interest income for two years, suspended the VAT on the purchase of gold, and launched a large project on capital amnesty.

We have also ensured the uninterrupted operations of financial institutions. Their liquidity is fully guaranteed by the Central Bank, and regulatory requirements have been relaxed. We are ready to adjust our dividend policy to replenish banks with capital.

These measures have already produced results. The situation on the outflow of deposits is being stabilised and the amount of cash withdrawals has been reduced to almost zero even though they were fairly substantial just recently. The situation with the balance of payments is also improving. Current account receipts are balancing out capital flow.

In cooperation with the Bank of Russia, the Government will continue taking measures to ensure the sustainability of the financial system.

Mr President, I would like to say a few words about the budget.

Overall, the situation in the public sector is under control. Non-oil and gas revenue is expected to decrease, but this will be offset by an increase in oil and gas revenue. We will use this revenue to reduce borrowing and public debt in the current circumstances and to fund priority spending. We will coordinate our budgetary activities with the Central Bank. It is important to keep inflation in check.

Meeting our social commitments is a top budget priority. We will ensure the payment of pensions, benefits, salaries and other payments in a timely manner and in full. Medicines are provided as planned as well, including for children with complex diseases. We use the Circle of Kindness Foundation for this. In May, low-income families with children will start receiving new payments. We will earmark additional spending for these purposes in the budget system. The Government has begun to implement anti-crisis measures. Our top priority is to maintain employment and jobs, and to support people who need help under the current circumstances.

Thank you.

Vladimir Putin: Thank you very much.

Here is what I would like to say. We have adopted very elaborate development programmes. Of course, we need to work thoroughly on all these programmes, I mean budget programmes at all levels. I am aware that your ministry, the Ministry of Economic Development, is analysing these matters under the leadership of the Prime Minister, and corresponding decisions are being made. Just yesterday we discussed this with the Prime Minister as well as with you. Nevertheless, it is necessary to develop additional mechanisms to ensure the sustainability of regional budgets. We are all aware of this, and I just want you to pay attention to it.

With regard to the countries that are taking hostile steps towards our country and our economy, we are well aware that they are calling on their citizens to tighten their belts, to dress warmer and are pointing to the sanctions that they are imposing on us as the reason for the deterioration of the situation in their respective countries. This is very strange, especially since we are meeting our commitments. Once again, I want to emphasise that we are respecting all our commitments regarding energy supplies. Deputy Prime Minister [Alexander] Novak talked about this a couple of days ago. Everything that we are supposed to supply, we are supplying to our core consumers in Europe and other regions of the world in full; even the Ukrainian gas transit system is filled to 100 percent under our contracts. This may be surprising, but it is true. We are doing all this. Prices are increasing in these countries, but not because of us. This is the result of their own miscalculations, so they cannot blame us for that.

The same goes for higher oil and petroleum product prices in the United States. They announced that they were shutting down imports of Russian oil to the US market. Prices there are high, and inflation rates are unprecedentedly high, too, probably an all-time high. Still, they are trying to blame us for the consequences of their own mistakes.

This is obvious to the analysts, because Russian oil distribution to the US does not exceed 3 percent. This is a negligible amount, but their prices are up. We have absolutely nothing to do with that. And even the ban on Russian oil imports has absolutely nothing to do with it. They are simply hiding behind these decisions in order to once again deceive their own people. They are already trying to reach agreements with countries they imposed illegitimate restrictions on at some point before. They are now ready to make peace with Iran and sign all the documents right away, and with Venezuela as well. They went to Venezuela to have talks. But of course, they should not have imposed these illegitimate sanctions in the first place.

The same will happen in relations with our country, I have no doubt. However, along with our partners – the ones who do not recognise these illegal actions – we will certainly find a solution to all the problems they are trying to create for us.

Getting back to what I started with, I want you to once again take a closer look at possible additional mechanisms for ensuring the sustainability of regional budgets. In general, things are stable and calm in the regions. I communicate with regional heads every day. I just want you to pay attention to this and support them in a timely manner.

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