Russia: Meeting minutes of the Council for Strategic Development and National Projects

In 2017, people facing this situation accounted for 12.9 percent of Russian citizens. In late 2021, their share decreased to 11 percent. Of course, we have made some headway here. However, its pace and speed are obviously not enough. Even during this year’s high inflation, which, thank God, is gradually subsiding, I set the task of reducing the level of poverty and inequality, a no less important matter.

For this purpose, we are implementing an entire package of measures. From June 1, 2022, we have indexed pensions and subsistence-minimum wage levels by an additional ten percent. They now exceed 2021 levels by 19.5 percent. Our system for supporting families with children now covers much more people than before. From now on, needy families can request monthly payments, that is, after mothers become pregnant and until their children reach 17.

Of course, social contracts play a major role in reducing the level of poverty and inequality, and we have been addressing this matter for a long time. Last year, these programmes involved almost one million people. It is important that social contracts should provide people with real employment opportunities in the future, and that they help them launch their own businesses, no matter how small and modest. The regions should work in this direction. I am asking our colleagues from the Accounts Chamber and the Russian Popular Front to analyse the efficiency of this tool and to submit proposals on developing it even further.

We have done a lot to build and equip kindergartens and nurseries. We have now virtually accomplished this task. These institutions cater for over 99 percent of children; however, some regions are still facing a shortage of accommodation, especially in new housing developments where the necessary infrastructure was not put in place on time. Of course, it is necessary to continue building, we have discussed this issue many times, but these construction projects should proceed in such a way as to create comfortable living conditions. In some cases, though, parents have to take their children to different city districts.

I ask regional leaders to pay special attention to this, because many young families, families with children, live in new neighbourhoods and their plans to have children often depend largely on the infrastructure in their neighbourhood.

A great deal of attention is going towards school repairs and the construction of new schools. Out of the planned 1,300 schools, 674 have been completed. Next year 3,000 school buildings will undergo major repairs. Sixty-four percent of them are located in rural areas and small towns. As a matter of fact, we agreed that work in rural areas should be a priority in this project. Over the past three years, by the way, 2,967 teachers have come to work in rural schools under the County Teacher programme.

At the St Petersburg Forum, we announced the expansion of programmes to overhaul rural libraries and cultural centres – people are always asking about that – as well as regional theatres and museums, which is also very important. All of this is very much in demand among our citizens. I repeat, these issues are constantly raised at different levels.

Today, every fourth young person aged from 14 to 22 visits cultural institutions using the Pushkin Card – this is also good progress. Culture has also become more accessible in digital format, in the digital space: virtual museums and concert halls, and a national electronic library are available.

I would like to mention once again the high professionalism and dedication of our medical staff in the fight against a major pandemic. We see the fruits of their work, which is very important – I would also like to say this now. In the second quarter of this year, mortality in Russia, thank God, fell to the level of 2019, the year before the pandemic, and life expectancy, according to preliminary estimates, exceeded 73 years in that same quarter.

In general, this is a good result, but it is important to move steadily towards the goal of increasing life expectancy in Russia to 78 years by 2030. This indicator is largely integral to all our efforts to create comfortable living conditions for our citizens and improve their health.

In that regard, I once again draw my colleagues’ attention to speeding up the adoption and implementation of programmes to combat diabetes and hepatitis C. As you know, the Government has been instructed to do so, but – and I would like to emphasise this to my colleagues – such programmes have not been launched yet.

Last year was the most successful in another area: housing construction, with 92.6 million sq m commissioned, which is 18.7 percent more than planned. Mortgage lending has reached a record level: almost two million loans have been approved, including under government mortgage lending programmes.

The number of completed projects to create a comfortable urban environment is increasing. Overall, more than 17,000 public spaces have been improved over the past four years. Such projects are very important for small and historical towns. I announced the expansion of this programme recently at the St Petersburg Forum. We will, of course, speed up such work, because it is also very popular with our people.

A lot has also been done in the sphere of ecology. Unauthorised landfills are being reclaimed in Tatarstan, Chuvashia, the Stavropol Territory, Omsk, Ryazan, Tula and other regions. This year, 17 more such landfills will be cleared, and by the end of 2023, at least 111 landfills will have been removed. You know how it all began during a Direct Line: people brought this landfill issue into sharp relief. It would be desirable, of course, to do this even faster, but still work is underway.

Of course, the landfill in Chelyabinsk, which was the largest city landfill, is the most colourful example. Since reclamation, it has become an urban space, where sports events were held in September 2021, which is very good. Let me repeat that there is still a lot to be done.

Colleagues,

As you know, it is not just that restrictions are being deliberately and specifically used against Russia today, but the near total closure of access to foreign high-tech products, something that has already acquired a global character, forming the basis of the progressive development of any state in the modern world. This is exactly where they are trying to put up obstacles for us in order to restrain the development of Russia. It is clear that this is a big challenge for our country.

However, we are not going to give up, feel at a loss or, as some of our well-wishers predict, fall back decades. Of course not. On the contrary, realising the enormous pile of difficulties we are facing, we will intensively and competently look for new solutions, effectively use the existing sovereign technological reserves, and develop domestic innovative companies.

I understand that this is a difficult task; we can all see this. It is clear that we cannot develop while being cut from the entire world, but this won’t happen either: it is impossible to draw a circle and put up a huge fence like this in today’s world; this is simply impossible. Nevertheless, I will outline tasks on which we must now focus most, to which we must pay special attention.

One of the main goals is to further develop end-to-end technologies and we will speak about this today. As they say in such cases, it is, of course, difficult to overrate its influence on structural economic changes, the creation of new production lines and businesses, and the manufacture of breakthrough products and services.

As you know, large domestic corporations have become key participants in such projects. The Government and companies started actively working in this regard in 2020. Of course, there are positive results. I would like to specifically mention the progress achieved by Sberbank in artificial intelligence, the achievements of Russian Railways in quantum communications, and the successes of Rosatom in composite materials.

However, overall, it would be a mistake to declare this work as particularly successful either – nothing has been done in five out of 13 areas; at least 20 percent of targeted indicators have not been achieved, and there is no way these indicators will be achieved in 2022, either.

Rostec has shown modest results in its areas of responsibility. I know, my colleagues will start talking about lack of funds or something but I am simply stating the facts about what is happening today with the projects on creating the fifth generation networks and the development of equipment for large-scale implementation of the Internet of Things. As for the project on developing microelectronics, it had to be completely reloaded last year.

I consider it sensible to make a deputy prime minister responsible for every area. Mr Belousov is responsible for everything here, in all areas, but it seems to me that it would be wise if every Deputy Prime Minister was put in charge of a particular area under his supervision, and I would like to ask Prime Minister Mikhail Mishustin to follow up on what is happening there later on.

Considering the current requirements of our economy, we must set forth more ambitious targets. As I have already said, I would like to ask the Prime Minister to take special responsibility for the implementation of high-tech areas – as has already happened in the case of microelectronics. The first steps have been made and I hope the work will soon become more intensive.

An exclusive reliance on public companies does not always produce the desired effect, as always happens, of course, in a market economy. I consider it important to involve private businesses in the projects on developing end-to-end technology.

The second direction is large-scale digital transformation. It must permeate every industry, company, the social sphere and the system of government and municipal administration. It must become part of life of every person and every family.

Last year, the Government adopted 11 strategies for digital transformation. It is important to orient all of them to specific results stemming from the broad introduction of digital technology. Every industry is simply obliged to reach them in the near future and beyond – until 2030. I would like to emphasise that now their implementation must be accompanied by the development of domestic technology and software.

Third, many rapidly growing Russian technology companies, like Ozon or Yandex, for example, funded their development by attracting resources from Western financial markets. Let’s put it straight – the Russian financial system was not ready to provide resources to companies without assets or big profits even when they had good prospects for development. Thus, according to available information, Ozon has sustained losses for almost 20 years, but during the past year its sales have approached half a trillion rubles and are bound to exceed one trillion next year.

As I said, these domestic companies actively used Western financial institutions with which there are well-known difficulties now – we no longer have access to them.

We need to quickly create mechanisms in the Russian financial system that can allow rapidly growing Russian companies to attract domestic capital for development. I am hoping to hear substantive proposals from the Finance Ministry and the Bank of Russia that oversee financial market operations.

The fourth area is to improve the quality of education for engineers and IT specialists. A new level of quality in training personnel is a priority; we will have no technological future without resolving this.

It is necessary to do this at schools. At any rate, it should start at schools. Incidentally, international academic competitions have just ended and our students, as you probably know, saw impressive success there. They won all five medals in physics and three gold and three silver medals in maths. My heartfelt congratulations to the winners. Well done!

According to the Ministry of Digital Development, by 2024 the IT area could be short of one million people. The demand for modern, highly qualified engineers is also growing. I have to say that we are badly short of them too. Thankfully – I believe the Minister [of Science and Higher Education] will take the floor now – the number of students choosing engineering professions is still rising and it is rising substantially.

Obviously, it is necessary to increase substantially the budget funding for educating such specialists. True, we are already doing this, but judging by the forecasts, we must continue building up these efforts and expanding the programmes for updating academic and laboratory equipment, developing university campuses and repairing dormitories.

Colleagues,

Naturally, I would like to hear today detailed messages and reports on each of the above areas. But, please, do not talk about anything that has only been done on paper. You know that strengthening the regulatory framework, laws, other regulations, resolutions and procedures for coordinating various documents are all very interesting issues but only for us. We need clear, specific, explicit solutions that can be translated into reality quickly.

Let’s be guided by this approach in our current work.

Mr Belousov, please go ahead.

First Deputy Prime Minister Andrei Belousov:

Thank you very much.

Mr President, colleagues,

The strategic challenges that our country is facing today call for major adjustments to the technological agenda. For your information, the technology policy of the past 20 years focused mainly on fulfilling two strategic goals, which I must say, remain highly relevant today.

First, maintaining technological parity with the leading countries and possessing key technologies that make it possible to address strategic, socioeconomic and defence tasks. This is what we call technological sovereignty. In the context of the sanctions, this goal is critically, fundamentally important. How will it be achieved? What mechanisms will be used to get there?

First, this is what I would call the state technological order. It looks like this. The state, usually in cooperation with the business community and the experts, draws up a list of critical technologies. Next, it uses a range of tools to develop them. State technological order tools include the most important innovation projects of national importance, technological programmes of industry-specific ministries and state corporations, programmes to support scientific and research and education centres, and others. There are over 150 such tools in all.

Budget financing, under the state programme Scientific and Technological Development of the Russian Federation in 2022, alone is 464 billion rubles. Usually, all kinds of universities, research institutes, R&D centres work on the state technological order, and the deliverables include scientific papers or, in the best case, prototypes and patents.

Second, it includes agreements which, in accordance with the Presidential decision, are concluded between the Government and the leading companies – this is what we discussed today. As a reminder, developing end-to-end technology that forms the framework of a new technological order is the subject of these agreements. This includes artificial intelligence, microelectronics, quantum communications and quantum computing, innovative materials, genetic technologies, hydrogen energy, wireless communications, distributed intelligent energy systems and energy storage, and a number of other technologies. There are 16 of them in all.

Nine leading companies participate in the agreements, including Sberbank, Rostelecom, Rostec, Rosseti, Russian Railways, Rosatom, RDIF, Gazprom and Rosneft. During the previous and this year, under the agreements, 102.5 billion rubles were put up with a planned number of 187.8 billion, which is 55 percent of the plan, including 49 billion from the budget, 42.6 billion from leading companies and 10.9 billion from other extrabudgetary sources.

There are a number of problems in implementing the agreements. I will get back to them a little later.

Third, these are beacon projects.

What are the “beacon projects”? This is the creation of prototypes for new markets based on breakthrough technology, including end-to-end technology. The goal is to work out clear conditions for business, including regulations, financial models and the initial demand for new high-tech products and then ensure their scaling.

Five beacon projects have been launched – three for commercial drones in three areas: for air, road and waterway freight transport. The other two are electric vehicles and personal digital medical devices known as medical assistants.

To implement these beacon projects, a total of 13.3 billion rubles have been allocated from the budget for 2022–2025, including 46 billion rubles from the NWF [National Welfare Fund] and 81 billion rubles from extra-budgetary sources.

Fourth is the National Technological Initiative (NTI). This consists of several elements. The goal is to develop the regulations, support specific projects, create an infrastructure for centres of competence and development of end-to-end technology, and most importantly, to work with communities of technological entrepreneurs, mainly to establish teams, develop start-ups and eventually take them to market.

Today, the NTI system consists of over 3,300 companies and overall, almost 4 million people are covered by various work formats – those that are registered in the Leader ID system. The NTI framework has made it possible to set up a network of 21 technological competence centres based at universities and in research groups, to educate over 40,000 experts in end-to-end technology and conclude about 2,000 license agreements.

NTI consortiums have incorporated over 750 organisations that have launched more than 200 large projects. Commercialisation at NTI centres produced a profit of 6.5 billion rubles in 2021. In the past two years, 17.2 billion rubles have been allocated from the budget for NTI. The state plans to earmark about 8 billion rubles for NTI every year in 2023–2025.

Fifth, this project supports advanced engineering schools that ensure the education component of technological sovereignty. The plan provides for the creation of at least 30 university-based, advanced engineering schools in partnership with high-tech companies and with co-financing. Importantly, co-financing is based on the personnel requirements of these companies.

Provisions in the budget for 2022 have been set at nearly 3 billion rubles, and in 2023–2025 – at 28.3 billion rubles. So, these five mechanisms are the instruments being used to achieve the first goal – technological sovereignty.

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Vladimir Putin:

Let’s wrap up.Here is what I would like to say in conclusion. These are very important issues. The issues of technological development that we discussed are not only our priority but also a basis, a foundation for implementing our strategic plans, for implementing basically all national projects.

With breakthroughs in technology and a broad digital transformation, and by training experts in these areas, we can overcome any difficulty, both now and in the future and there will always be difficulties. We will overcome all of our challenges. We will set on the advanced development track. There is no other way.

Therefore, I would like to ask the Government and the regional teams to prioritise the issues in technological development. We must focus our attention on this, to repeat a word used today. We must understand how critical and extremely important it is to fulfil our goals in these current difficult conditions.

Let’s sum up some of today’s results very briefly.

First. Of course, the work on developing end-to-end technology must be re-launched, as every speaker said in one way or another. It must be adjusted with consideration for the real requirements of the economy and the new conditions we live in. We must also determine specific mechanisms for monitoring the implementation of the agreements.

Second, we need to update our digital transformation strategies by embracing all economic and social branches and reflecting the depth and importance of the changes planned in them. These strategies must set clear-cut, explicit objectives on developing advanced end-to-end technology for moving the latest software and hardware developments to the market as soon as possible.

Naturally, we need to support the proposals to determine a unified centre for coordinating the digital transformation strategy.

We also need uniform funding mechanisms and should use uniform digital platforms, wherever possible. Our colleagues talked about this as well. I agree with this. I also support the additional proposal to back the development of domestic software products.

Further, sources for funding rapidly growing companies. A lot was said and many proposals were made today in this regard. I agree with the proposals made by some of our colleagues, including the Minister of Finance and the Central Bank Governor. But, as I said during the discussion, some issues obviously require more work. Of course, all this must be done as soon as possible.

At the same time, we can only judge the sufficiency of the proposed measures by the end results, specifically, by the real growth in the number of share placements by rapidly growing, high-tech companies on the stock exchange over the eighteen months.

But I would like to ask you to look at what else can be done. Kirill Dmitriev was just talking about this, how to involve our companies and, probably, pension funds in this work and how to guarantee success in this effort. You understand what I am talking about; we just discussed all this in one way or another.

Eventually, we will have to determine the quality indicators as the key factor in assessing the performance of deputy heads of the relevant agencies, both at the Finance Ministry and the Central Bank, who are in charge of financial market development.

The fourth area is personnel. I certainly consider Mr Falkov’s proposal important, that we increase financial support for training engineers and IT-specialists.

We must also launch a programme to produce domestic academic and research equipment as soon as possible. Minister Falkov talked about this, and it must be done. We must make this work eventually. We need to envision the equipment of the entire chain of training these students, starting from the physics and chemistry classrooms (all the more so, since you can see that our schoolchildren have wonderful results in chemistry), computer science classroom and technical groups at schools. We must certainly prioritise the training of teaching staff at schools in these areas.

Of course, we must pay proper attention to equipping laboratories at universities and production shops in vocational schools, not only for training students but also for upgrading the skills of university professors and technical school teachers, including specialists that are already working. Modern study rooms, laboratories and, of course, campuses and dormitories are crucial for the full development of students.

We must do all we can to accomplish this.

I would like to ask the Government to implement these proposals within the parameters of the federal budget that was approved for 2023.

As proposed, in general, the training of engineers, IT-specialists and researchers must be continuously monitored, and I would like you to organise it with this aim in view. Naturally, we will regularly return to all the issues we discussed today.

I think in general the work on all the issues that require additional attention on your part is satisfactory. I would like to thank you for this.

Thank you.

Source: The Russian Kremlin