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Feb. 07, 2007 - Kommersant - by Andrey Kolesnikov - Russian President Vladimir Putin met with members of the Russian Union of Industrialists and Entrepreneurs. Kommersant special correspondent Andrey Kolesnikov thinks that the president forgave them for all that they did for themselves, and for him and for the people of the country. The president's meeting with the businessmen took place in Katherine's Hall again this years, after being held in the add-on 14th Building for the Kremlin for several years. That annoying relocation took place after a lively conversation took place between the president and YUKOS head Mikhail Khodorkovsky in Katherine's Hall in 2002. At the last meeting, the RUIE members were diluted among members of the less august professional groups OPOR and Business Russia. The topics under discussion were chosen to show business its place (as was last year's meeting, devoted to “the social responsibility of business before society”). That was not difficult. The businessmen have been selfless for several years in a row now and are getting more selfless every year. The list of those present was impressive. The presidential administration was well represented. Chief of the presidential executive staff Sergey Sobyanin sat to the president's left, and deputy chief of the presidential executive staff Vladislav Surkov and presidential assistant Igor Shuvalov sat on his right. It had been announced that head of the president's expert department Arkady Dvorkovich would be present, but he was not in evidence. Beyond the members of the presidential staff sat Minister of Economic Development and Trade German Gref, Finance Minister Alexey Kudrin and Natural resources Minister Yury Trutnev. There was a space between the ministers and the businessmen, who sat beyond them. First Putin congratulated RUIE on its 15th anniversary. Then he continued, “We must take qualitative steps to change from simply exploiting natural resources to fully processing these resources... We are talking about increasing the processing of raw materials and developing high-value added industries... Russia is the world's biggest producer of gas and can potentially become the world's largest producer of oil. Truth to tell, I am not sure whether we need this but Russia and our companies certainly have this opportunity.” It was already clear that this year's meeting would be more serious than the last one. “We need significantly to increase the share of high value-added processing industries,” he said. “We need to learn not only how to profitably export crude oil, gas, ore minerals and wood, we also need to process natural resources within Russia and to produce full-value high-tech products for foreign markets.” The president was clearly diverging from his written text and seemed highly involved in what he was saying. “We need new processing companies in petrochemistry, the wood industry, and in the coal and mining industries,” he said. “I think that our production companies are directly interested in this. As such they can make their business more stable even if at a given time it simply seems more favorable to sell raw materials in view of today's market conditions.” Putin's wishes for business are partially an ultimatum, if only because that is they way the businessmen take them. He probably understood too that he had to offer something in return for huge investments in processing plants. He thanked them in advance and told them that the state was fulfilling their request to improve the quality of technical education. Then RUIE chairman Alexander Shokhin spoke. He told the president in detail why it is simpler for business. State protectionism an obstacle in other countries, and the lack of it in Russia is as well. Furthermore, Shokhin said that “the greater the degree of processing, the more problems there will be with VAT refunds, because every new degree will require a new refund. That is not profitable for companies because most refunds are obtained through the court. The RUIE will not demand a reduction of the VAT to 13 percent, Alexey Leonidovich [Kudrin], as was proposed to us two years ago, but to 10 percent.” Such active lobbying right in Katherine's Hall had to be respected, although Kudrin did not give the impression of being particularly concerned by it. “Therefore, it would be good to show some improvement in the administration of VAT refunding in the near future,” Shokhin concluded before moving on to demanding more tax holidays for enterprises as they are being set up and that import duties be cancelled on equipment that Russia does not produce. “At previous meetings, we spoke about forming an agreement on the right to the land under enterprises and no one was against it, but no law has been sent to you for signing yet,” the RUIE head continued. “Nor is it being prepared. Now the law has to be introduced later than planned so that future owners will have time to dispute in court incorrect estimates of the values of their land that municipal organizations will try to dictate to them.” Putin listened carefully to Shokhin, taking notes from time to time. Minister of Industry and Energy Viktor Khristenko took very full notes and Gref did not take any. Shokhin was followed by LUKOIL head Vagit Alekperov. He was concerned about European standards. “It will take 30 billion to convert to the Euro 5 standard by 2015,” he said, without specifying whether he was talking about dollars or euros. Evraz Group head Alexander Abramov proposed that the government set the fees for state services several years in advance, since the investment cycle in big business is lengthy. He urges the state monopolies to follow the example of Gazprom, which has set its prices through 2011. When the president asked him for more detail, it became clear that he was interested in the prices of rail transit. “We are on the way to founding transatlantic companies!” chairman of the board of SUAL Viktor Vekselberg stated. He spoke of the country's need for “global rebranding.” The president interrupted him to suggest, “Let's give up the usual terminology. Conquer' a market, expansion' – our colleagues are afraid already, even though it's not clear what they are afraid of… Some sort of incomprehensible fear comes over our foreign partners and the issue of Russian business developing foreign markets becomes very politicized. They have compelling motivation to come to work here – reducing production costs.” The meeting ended abruptly when the president announced that it was time for him to visit Mstislav Rostropovich in the hospital. He promised to say hello to him from the businessmen.