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Russian President Vladimir Putin in Magadan
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Nov. 23, 2005
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Magadan Still a Zone after Putin Visits
// Agenda
Russian President Vladimir Putin visited Magadan along the way from Tokyo to Moscow. He met the people, looked at an exhibit of precious metals and held a meeting with the regional administration. Kommersant special correspondent Andrey Kolesnikov what job former presidential representative for the Far Eastern Federal District Konstantin Pulikovsky has been offered and who will be the next governor of Tyumen Region.
It was already night when Putin's plane landed in Magadan. It was the polar night, and it started a few months ago.

On his way to the administrative headquarters of Magadan Region governor Nikolay Dudov, the president saw people bravely facing the polar night (it's not as frightening when you stick together) and waiting to greet him. They were not far from the administration building. He got out to meet them. There was a girl about 12 standing on a concrete parapet. She had climbed up there to get a better view of him

Putin helped her down.

Aren't you cold? he asked.

No, answered the girl through numb lips.

That's good, the president said with satisfaction. He moved on.

He had a quick look at an exhibit of precious metals before the meeting. The exhibit consisted of objects from goldminers' daily life. Putin looked impassively at gold nuggets until he came to several weighty ingots and a 51-kg. iron meteorite that fell on Magadan region may years ago. It had been dug up by the tireless miners. Putin picked up one of the ingots and admired it.

Can you believe that? he said, laying it back down carefully. It crushed my finger.

Not hearing any reaction, he turned around and repeated pointedly It crushed my finger!

I had to answer for everyone present.

It's a good thing you didn't pick up the meteorite.

Putin thought for a moment, then nodded, pain in his eyes (because he crushed his finger).

When he was shown a piece of ore a few minutes later, he didn't even get close to it.

At the meeting with the administration, Putin called everyone's attention to the fact that Russia si one of the world's leading gold producers. Unfortunately, he couldn't say exactly what place Russia held, since the Natural Resources Ministry says it is in second place, but the Finance Ministry doesn't even think Russia takes third place. But Russia holds no less than fifth place in the world.

Putin opened the floor to the others.

This place was not chosen for the meeting by chance, said Governor Dudov.

He was right. Magadan was the most convenient stopover to refuel the president's plane.

The governor continued that, on the one hand, the pace of gold production saw its first significant increase in 2004 in many years but, on the other hand, none of the new goldmines planned had been opened.

He pulled a chart out of the folder that very person at the meeting had been given and pointed at the development of events for the last two years. The same slide was flashed on the wall at the same time. I noticed that even the folders were designed to look like ingots.

Kamil Iskhakov, the new presidential representative for the Far Eastern Federal District, tensely observed the proceedings from behind the president and governor. He seemed to be quite tense, and was progressively turning purple. It was hard to say whether he was having trouble following the conversation or afraid he would be called on to speak.

The governor was talking about how private enterprise had to be introduced in goldmining. Digging for gold is prohibited by law in the villages around the mines, but people do it any way. They have to be allowed to do it legally so pensioners can live better!

Finance Minister Alexey Kudrin was not moved by the touching image of the pensioners surviving by digging gold. At the beginning of his presentation, he unexpectedly agreed that Russia was indeed in second place in gold reserves, saying that he had just received new data on that subject. (It looked as though those data had been updated right after the president commented on them.) He continued that the question of allowing private parties access to gold production had been raised long ago. It was opposed by several organizations, including the FSB and Interior Ministry.

When private parties begin bringing gold to collection points, it won't be clear whether or not it was stolen, he explained. He also thought that there were too few of those collection points.

The president glanced at his papers. We have written in the schedule to talk about customs benefits for free economic zones to export precious metals. But we have only two kinds of zones, IT parks and industrial. You propose to export gold from there? I would like to know why. To reduce the tax base of the export?

Kudrin answered mysteriously, Magadan Region here is a free economic zone. We were planning to close down that zone and so we wrote that exports had to be made from other zones.

His words made a great impression on Dudov.

It is still economic ally expedient to export from Magadan, he said. Sending batches of precious metals that have come from here out from Moscow costs a lot of money. The thing is the unregulated customs post we have here in Magadan.

So all that has to be done is set a schedule for the customs post? the president asked.

Yes! Dudov answered delightedly.

No, Kudrin said decisively.

They argued about it for 20 minutes. Kudrin insisted that Magadan did not deserve the status of special economic zone and that the expiration of that status was approaching minute by minute. The governor insisted that the beneficial procedure was worth extending to 2014.

Putin eventually became visibly tired of the argument and announced that the special status of Magadan Region would be extended by at least a year.

And we won't mix apples and oranges. There is no need to combine the problems of gold production with the special economic zone.

Evgeny Ivanov, head of the Polyus goldmining company complained to the president for a long time about life.

How is your profitability? Putin asked.

We decided to put everything we earn into development, Ivanov explained.

Great! the president exclaimed, impressed. That's your policy. And your profitability?

Thirty percent, Ivanov answered unhappily. But that only because of the Olympic [goldmine]. Profitability won't be like that in 2007.

Ivanov said that he had found a good alternative to the euro and the dollar. People can keep their savings in gold ingots if they don't trust the ruble and don't like the dollar. But they have to pay VAT on the purchase of ingots, and not on the purchase of euros and dollars. Ivanov suggested that they all think about ways of remedying that situation.

Putin was faced with a choice: impose the value-added tax on euros and dollars, or remove it from gold. Pinned down, he chose the second.

After the meeting, Putin came up to the journalists and told them about his recent tour (Moscow Turkey Korea Japan Magadan) in happy terms.

He commented on the recent personnel changes in his administration. The prime minister was the driving force in the story. He asked the president to give him one more deputy from this staff because he was overloaded. Former presidential representative for the Volga Region Sergey Kirienko went to Rosatom not just to manage it.

That wouldn't be enough for him, Putin explained. That industry is on the brink of a serious reorganization.

The president said nothing about what would become of his former Far Eastern Federal District representative Pulikovsky. According to my information, he had long been asking to be released from his hectic job. He had to fly too much around the vast spaces of the district, he was tired and wanted to serve the homeland in a business capacity. The president gave him a choice of two oil companies, then a third. It is still not clear which one of them he will turn up in.

But we learned who would be the next governor of Tyumen Region. That is former mayor of the City of Tyumen Vladimir Yakushev. He was suggested by the president's new chief of staff Sergey Sobyanin and the president agreed. Sometimes you get the impression that there's nothing else he can do.
Andrey Kolesnikov

All the Article in Russian as of Nov. 23, 2005

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