The Strategy of Social-economic Development of the North Caucasus Federal District until 2025

I. General information

The Strategy of Social-economic Development of the North Caucasus Federal District (NCFD) until 2025 determines the main trends, measures and means to achieve stable development and national security in Kabardino-Balkaria, Karachay-Cherkessia, Dagestan, Ingushetia, North Ossetia-Alaniya, Chechnya and Stavropol Territory - part of the NCFD.

The strategy was developed according to the concept of long-term social-economic development of Russia until 2020, the concept of demographic policy of Russia until 2025, the strategy of national security until 2020, the transport strategy until 2030, railroad development until 2030, Russian energy strategy until 2030, water strategy until 2020.

The strategy of developing the NCFD until 2025 includes economic aspects. The North Caucasus Federal District has rich resources for the development of agriculture, tourism, power industry, mining industry, and transport. However, these natural advantages of the region are not used properly, as the region is still not of interest to investors, due to economic instability. Some subjects of the region have the lowest level in the economic and social sphere, high unemployment, unrest and inter-ethnic tensions. The North Caucasus Federal District is a region of low income and low foreign-economic activity. The region is less developed than other subjects of the Federation and is subsidized by the Federal Center. These subsidies are used mainly to support the system of social insurance and are not invested in production.

The main aim of the Strategy is to improve the development of production in the region and to improve the quality of life of its residents. The strategy will also switch from a policy of stability support to economic boost. The government will increase the number of work places and invest in economic development. It will assist in integrating the economy of the NCFD with the national and global economy.

II. Social and economic situation in the North Caucasus Federal District

1. Macroeconomic situation

Many subjects of the Federation that are now parts of the North Caucasus Federal District were heavily affected by the crisis of the 1990s due to the objective reasons. The production decrease in the 90s was 17 – 24%. The tempo of economic growth in 2005 – 2009 has shown that the local authorities managed to elaborate a sufficient economic plan. The leaders of the economic development are Dagestan, Kabardino-Balkaria and North Ossetia – Alania. However the region is still developing rather slowly.

The sector of agriculture forms 22% of the gross regional product (in Russia in general this figure is 5%). The manufacturing sector forms 15% of the gross regional product (in Russia – 19%).The biggest part of the gross regional product is formed by the sphere of governing and social insurance – 55% (in Russian Federation – 15%). The level of unemployment in the North Caucasus Federal District is high – from 8 to 55%. All subjects of the Federation in the North Caucasus Federal District provide a low quality of life.


2. Population and labour resources

—Demographics, labour resources, and migration

Demographics of the North Caucasus Federal District differ from that of Russia in general. Now the demographic situation in the region is stable to the increase of birth and decrease of death rate, as well as mass migration to the region. The population of the region increased from 1990 to 2009 by 1.68 million people and is now 13.437 million people. In the year 2009 the natural increase of the population in the North Caucasus Federal District was 75.6 thousand people.

The distinguishing feature of the demographics of the region is that the percentage of the Russian population is reducing due to the low birth rate among Russians and migration of the Russians to other regions of the Federation. At the same time the number of the representatives of the titular ethnic groups is on the increase due to the high birth rate and low death rate.

These processes affect the demographics of the region. The most obvious it is in the Republic of Chechnya, where the number of non-Chechen population in the last decade has reduced in several times. That is why one may admit that Chechnya is now a mono-ethnic republic. Almost the same is the situation in Ingushetia.

The birth rate in the North Caucasus Federal District is the highest in the Russian Federation. Especially high is the birth rate in Chechnya (29 new-born children per 1000 residents) and Dagestan (19 new-born children per 1000 residents). That is why the percentage of the young people in the North Caucasus Federal District is higher than in other regions of the Federation. Especially high is the percentage of the youth in such subjects of the Federation as Chechnya (32.9%), Ingushetia (28.9%), and Dagestan (25.4%).

The death rate in the region is lower than in other regions of Russia. The average death rate in the North Caucasus Federal District is 8.7 deaths per 1000 people (in Russian Federation in general - 14.6). The lowest death rate in 2009 was in Ingushetia (3.7), Chechen Republic (5.3) and the Republic of Dagestan (6.1).

One of the most acute problems still is the high death rate among babies, even though in the last decades the situation has begun to change for the better due to the success of the public healthcare. In the same time the average life expectancy in the North Caucasus is the longest in Russia.

The level of urbanization is rather low due to the traditional agricultural specialization of the region. The percentage of rural population in 2009 was 51.2%, in 2010 51.1% (in Russia this number is 26.9), that means that 4729.1 thousand people live in rural area. In the Republic of Dagestan, in the Republic of Ingushetia, and in the Republic of Karachay-Cherkessia the percentage of the rural population is 56 – 57%. In the Chechen Republic the figure is 64.7 percent. The infrastructure in the rural areas is rather poor and that prevents labour migration and determines low quality of life of the local residents.

The forces migration is another acute problem. Various ethnic and international conflicts force people to migrate to other regions of the Federation. In 2008 population loss due to migration formed 11.9 thousand people. In Dagestan this figure was 9.8 thousand people, in Kabardino-Balkaria 2.9 thousand, in North Ossetia 2.7 thousand, in Karachay-Cherkessia 1.9 thousand, and in the Chechen Republic 1 thousand people. Population increase due to migration was registered in Stavropol Territory.

The problem of migration is to be solved by the Federal Center together with local authorities. This will require a series of political, social, economic and cultural measures. The average annual labour migration from the region to the other regions of Russia should be on the level of 30 – 40 thousand people. This will stabilize the demographic situation in the region and lower unemployment level.

One third of the population of the North Caucasus Federal District is young people. This means that the Government should adopt a sufficient youth policy. Such a policy should focus on the development of youth organizations, trade union and labour market. The Federal Government together with local authorities should support young entrepreneurs and young families, support education and healthcare system, popularize sports and national traditions of the Caucasian people, and tolerance.


—Quality of life

One of the most acute problems of the region is a low level of public healthcare development. In all subjects of the North Caucasus Federal District the lack of hospitals and policlinics as well as qualified doctors and nurses is evident. The situation is worsening due to the migration of the qualified specialists from the region.

In 2009 the North Caucasus Medical Center of the Ministry of Public Healthcare and Social development of the Russian Federation was established. The Center is a modern, well-equipped medical institution, its future seems promising.

Public healthcare in the North Caucasus Federal Center needs immediate measures. The death rate in the last four months has increased. More people are now dying from infections, cancer, and heart deceases. More and more people are dying from tuberculosis, especially in Kabardino-Balkaria and Ingushetia. Cancer is a a great problem in the Chechen Republic and in Stavropol Territory.

There are less qualified doctors in the region than in Russia in general (38 doctors per 10,000 people and 44.1 doctors per 10,000). Medical staff is also less numerous (81.6 per 10,000 people and 94.1 per 10,000 people).

Public education is also inappropriate. The level of education in the North Caucasus is lower than in other regions of Russia. Employed population having higher education forms only 26.2 per cent of total population (in Russian Federation in general the figure is 27.1 per cent), specialized secondary education – 22.2 per cent (in Russia – 26.7 per cent).

That means that the education level is still rather low. Many children are unable to enter a kinder garden and achieve pre-school education. The qualification of teacher isn’t high enough. The number of teacher also isn’t enough. Material support of schools is inappropriate. The number of the school children is reducing. The number of secondary schools in Kabardino-Balkaria, Ingushetia, Chechnya, North Ossetia – Alania, Dagestan and the Stavropol Territory is 1.8 – 2.3 times smaller than in the Russian Federation in general.

The number of higher educational institutions in several the subjects of the North Caucasus Federal District is lower than in Russia in general. Only in the Republic of North Ossetia – Alania and in Kabardino-Balkaria this figure is greater than in Russia in general.

The lack of qualified staff in all spheres of economy is obvious. This problem occurs in tourism, governing, food industry, agriculture, building, and public healthcare. That’s necessary to elaborate special educational programs for staff.

All over the region population is facing one more problem. That’s the lack of accommodation. The most favourable is the situation in the Republic of North Ossetia – Alania, there the level of housing in 2008 was 26.1 square metres, while the average number in Russia in general is 22 square metres. In the Stavropol Territory this number is 21.2 square metres and in Karachay-Cherkessia 20.1 square metres. In spite of low housing level the quality of living places is higher than in Russia in general.

Infrastructure in the region is developed heterogeneously. In Russia in general only 76% of the living places have running water, in the North Caucasus this figure is 90%. However is Dagestan the figure is 54% and 57%.

Home construction activity in the North Caucasus Federal District is less dynamic than in other regions of Russia. In 2009 only 302 square metres of accommodation were built per 1000 people. In the Central Federal District the figure is two times greater. The reasons of low home construction activity are as follows: low paying capacity of the local population, the fact that credit system isn’t developed enough, high prices on accommodation. High accommodation prices are explained by the fact that home construction is rather costly for high prices on land and building materials.

At the same time the demand for accommodation is going to increase due to the population increase. 60 million square metres of accommodation are to be built in order to provide the population with 22 square metres per person. If the present day tempo is preserved, only 7 million will be built.

At the present time several governmental programs are already being realized in the North Caucasus Federal District. The federal special-purpose program “Accommodation” for 2002 – 2010 several measures were taken, as well as in the framework of the federal special-purpose program “Social development of rural areas”. However the amount of money spent on these programs doesn’t allow to solve the existing problems.

The cultural development of the region still isn’t brought up to standard. The region is suffering from the lack of cultural institutions such as libraries, arts schools, theatres, concert halls. The material and technical basis of the existing institutions is rather poor. Many historic monuments have to be repaired. Cultural institutions also suffer from the lack of experienced staff.


—Labour market

The situation on the labour market in all subjects of the North Caucasus Federal District is a problem one. The total number of unemployed people in the region in 2010 is 766.6 thousand people or 18% of the economically active population, while in Russia in general this figure is 8.2 %. The highest level of unemployment was registered in Ingushetia (53%), Chechnya (42%), and Dagestan (17.2%). The problem is especially acute in the rural areas. More than one half of all unemployed people are young.

The problem is so grand that it can be solved only by a prolonged state policy. The main measures that are to be taken are as follows:
- the government should stimulate the opening of the new work places in region;
- the government should improve the system of education in order to provide the enterprises with well-qualified staff;
- the government should pay special attention to young people, support youth educational program;
- the government should favour the development of labour migration; the government should support the special secondary.


—Interethnic relations

The North Caucasus Federal District has a complicated ethnic structure of its population. Numerous ethnic groups live on a rather small territory, and this factor affects the political life of the region. Political stability in the Caucasus depends on the interethnic relations.

Nowadays the region is inhabited by:
2,743,000 Russians (29.9% of total population of the Federal District)
1,485,200 Chechens (16.2%)
785,300 Avars (8.5%)
511,700 Kabardinians (5.6%)
488,800 Dargins (5.3%)
476,500 Ossetians (5.2%)
462,200 Ingushes (5%)
399,100 Kumyks (4.3%)
59,500 [sic. — A.B.] Lezghins (3.9%)
187,600 Karachays (2%)
148,000 Laks (1.6%)
106,800 Balkars (1.2%)

Today some certain negatives tendencies are evident in the sphere of interethnic relations. Religious and ethnic extremism is one of the most acute problems of the region. Ethnic conflicts are the greatest threat for the public security and well-being of the population of the North Caucasus.

The situation in the North Caucasus is affected by the international terrorism. Terrorists are trying to aggravate the situation and supported the separatist movements. Religious radicalism imported from abroad is a great danger for this region of Russia. In addition to these international factors some internal factors do also affect the situation in the region, among them are ethnic tension and corruption.

The Federal Government together with the local authorities should do its best to prevent ethnic and religious conflicts in the region, to stop the dangerous process of mass migration of the Russians from the region.


3. Potential of natural resources

The North Caucasian Federal District has a unique complex of balneological resources - mineral, thermal waters and therapeutic mud. It has about 30% of all Russian mineral waters, which is close to the resources of the central regions of the European part of the Russian Federation. There are also about 70% of the thermal waters on this territory. Bearing in mind that the amount of minerals is limited, the regions of the North Caucasian Federal District haven’t a high potential for increasing the contribution of extractive industries to the economy. Although developing some hydrocarbons and mineral ore deposits is important for developing the economies of some of the mentioned regions.

In the structure of the explored natural resources of the Russian Federation the North Caucasus Federal District has 41% of the tungsten, 11% of the molybdenum, up to 2% of the copper, zinc, lead and titanium, 4.8% of the oil and 2.1% of the gas. The Republic of Karachay-Cherkessia and the Republic of Kabardino-Balkaria have the largest amount of tungsten, while Kabardino-Balkaria has the most molybdenum. The biggest copper deposit in the North Caucasus Federal District is in Kizil-Dere in the Republic of Dagestan, which has 1.4% of all Russian reserves. The biggest zinc deposits are in the Republic of North Ossetia-Alania (the Dzhimidonskoye, Kadat-Khampaldanskoye, Kakadur-Kanikomskoye ones), the Republic of Karachay-Cherkessia (the Urupskoye and Bykovskoye ones) and in the Republic of Dagestan (Kizil-Dere). At the level of remaining reserves all these deposits are small, as the largest part of the resources is being developed. All lead deposits of the North Caucasian Federal District are concentrated in the Republic of North Ossetia-Alania. The largest part of these is located in the Dzhimidonskoye deposit.

In spite of the developed infrastructure, the North Caucasian Federal District's contribution to hydrocarbon production of the Russian Federation is insignificant. The main obstacles to hydrocarbon production are the development of a large part of the deposits and a reduction in developed fuel and energy resources. The main oil reserves of the North Caucasian Federal District are located in the Republic of Chechnya. The important deposits of the district are the Starogroznenskoye, Goryacheistochninskoye, Goyt-Kortovskoye, Severo-Bragunskoye, Velichayevsko-Koldeznoye, Zhuravskoye, Zimne-Stavkinskoyep-Pravoberezhnoye and Malgobek-Voznesenskoye-Alkhazovo deposits.

The best potential deposits of titanium and zirconium are the Beshpagirskoye and Pravoberezhnoye fields in the Stavropol region of 1700 square meters in total. Titanium and zirconium are highly rare strategic minerals. The Russian Federation does not produce them and only imports ilmenite, rutile and zircon concentrates. Demand for the minerals is 2-3 times higher than consumption.

Geological prospecting works are conducted in the North Caucasian Federal District according to the long-term programme of subsoil research and reproduction of the mineral reserves of Russia, based on the balance of consumption and production of the minerals. The financing of the geological exploration works in 2009 from the federal budget is 309 million rubles, including hydrocarbons - 54.1 million rubles and for minerals - 254.9 million rubles. In 2010 geological prospecting works (titanium, zirconium, ore gold, nonmetals) are planned to decrease depressing tendencies in the economy and to provide building materials for the construction of facilities for the XXII Winter Olympic Games in Sochi.

Water resources of the North Caucasus Federal district meet the requirements of the population and branches of economy. Various water resources are located here - The Caspian Sea, the Kuban reservoir, the Dovsun Lake in the Stavropol region; the Blue Lakes and Chegen waterfalls in Kabardino-Balkaria; the Kuban, Terek, Zelenchuk, Sulak, Bolshaya Laba, Ardon, Fiagdon, Sunzha and other rivers. Various types of superficial waters give an opportunity to develop tourism (health-improving, recreation, sports, ecological, fishing, beach) and hydro power energy.

The Kuban, Terek, Sulak and Sunzha rivers are the water mains. The basin of the Kuban is characterized by tense water balance with water deficit even in medium draught-afflicted years which cause problems in municipal, industrial and agricultural water supplies. Hundreds of living places and over 600 000 hectares of planted area are in a risk zone of flooding and dangerous processes on riverbed. The main problems of the basin of the Terek are flooding, lack of regulating reservoirs and unsatisfying conditions of protective hydro technical facilities, as well as polluting of water resources by oil products and sewage. Erosive processes can be observed in the channels of the Kuban, Terek and Cherek rivers, along the tributaries of the Andiyskoye Koisu, Avarskoye Koisu, and Samur. Erosive processes in the territory of the Republic of North Ossetia-Alaniya reach high level in springs when mud flows and avalanches happen. In the Stavropol region such processes in the protected resorts area (the Caucasus Mineral waters) are erosion of unprotected banks and earth dykes caused by flooding and intensive melting of glaciers.

In the North Caucasus Federal District there are over 300 reservoirs of season and day regulation. Regulated flow is used mostly for irrigation and fish farming. The regulated flow is most developed in the Stavropol region where about 100 reservoirs with total useful capacity of 2,15 cubic kilometers are used. Many off-stream storage reservoirs are located in the channels of flow redistribution. They are the Sengileyevskoye reservoir working from the Kuban water coming via the Nevinnomsyk channel; the Kuban reservoir located in the Big Stavropol Channel redistributing water of the Kuban River to the waterless parts of the Caspian Sea's basin; and the Yegorlykskoye reservoir partly working from the Kuban river water and redistributing flow of the Yegorlyk River. The other reservoirs are smaller and used for irrigation, water supply, fish farming and hydro power energy. The Chograi reservoir located on the border of Kalmykia and the Stavropol region is used for irrigation, water storage, drinking water supply and fish farming. The quality of water deteriorated because of bad hydrological regime increasing mineralization of water. The Big Stavropol channel is a channel of complex use, intaking water from the Kuban River and supplying water for 4 hydro power plants and several towns of the Caucasus Mineral waters. In the territory of the Stavropol region also there is the Nevinnomysk channel intaking water from the Kuban River and the Tersko-Kumsky channel intaking water from the Terek River. Kabardino-Balkaria, Chechnya and Ingushetia are located in upper and middle course of the Terek River. Regulated flow is not high here - the useful capacity of the reservoirs is of 12 million cubic meters. Mostly it is small reservoirs used for irrigation. Regulated flow in Dagestan is not high as well - total useful capacity of 11 reservoirs is 1,44 cubic meters. The other reservoirs are used for energy, water supply or irrigation and are mostly located in the basin of the Sudak River. In the territory of Karachay-Cherkessia there are the Kuban and the Ust-Dzhegutinskiye reservoirs used for fish farming or land improving works. There are three water systems - the Big Stavropol channel, the Zelenchuk hydro power station and the regulating reservoir at the Eshkakon River. The hydro technical facilities located in the North Caucasus Federal District are mostly depreciated and need major repairs or re-equipment, or part or full reconstruction of main buildings.


4. Production potential

The main kinds of well-developed industry in the North Caucasus Federal District are extractive and manufacturing. Extractive industry and manufacturing provide the local population with employment and the local budget with taxes. Industry forms 11% of the gross regional product and 11% of the population are working in this sphere of production. In the period 2009 – 2010 industry provided 22% of all taxes. In the Republic of Chechnya that figure is 69%.

Among the most successful spheres of production one should name the production of oil products (29% of the income of extractive industry and manufacturing) as well as chemicals, the food industry, machinery building, and production of construction materials. 6% of the income of extractive industry and manufacturing are formed by the extraction of natural resources.

The North Caucasus Federal District doesn’t play an important role in the production of hydrocarbons in the Russian Federation. The share of the region in the total income in this sphere of production is 1%. Oil production is especially well-developed in Stavropol Territory, Chechnya, and Dagestan. These three subjects of the Federation provide 97% of the region’s income in the sphere of oil production. 0.6% of the total amount of the oil and 0.2% of the gas produced in Russia are produced in the North Caucasus.

The hydrocarbons produced in the North Caucasus are generally highly-enriched but the absence of systematic geological research has brought this sphere of oil industry to stagnation, while the production of gas has even decreased. Gas resources are located mainly in Stavropol Territory, Chechnya, and Dagestan. These three subjects of the region produce 1.3 billion cubic meters of gas. Chechnya and Dagestan are the most capable of developing hydrocarbon production. In addition to this, the deposits of the Caspian shore seem promising. The deposits of the Russian sector of the Caspian shore are now being developed by such public corporations as “Gazprom”, “Rosneft” and “Lukoil”. Oil refining is concentrated in the Republic of Dagestan and in the Republic of Ingushetia; production in Chechnya was almost destroyed.

The territory of the North Caucasus Federal District has rich deposits of non-ferrous, noble and rare metals such as gold, silver, copper, zinc, lead, tungsten, cobalt, molybdenum, and platinum. There are several enterprises of non-ferrous metallurgy in the region, for instance in Nalchik and in Vladikavkaz.

Noble metals production seems promising. According to the data provided by geologists, rich resources of noble metals make it possible to start mass production in the region. This would provide the local population with new jobs and improve the economic situation in the region in general. Among the biggest deposits of noble metals are the Raduzhnoye gold and silver deposit and some others. Centralized production of noble metals may be profitable, in spite of the fact that local deposits are not rich. However, this production will be possible only if a strategic investor is found.

The prospects for local light industry seem promising enough that in future it could potentially replace imports. The development of this sphere of production is quite profitable for comparatively small expenditure and quick recouping of costs. Every rouble invested in the light industry of the region soon brings 6-8 roubles of income. The development of this sphere would create new workplaces and provide the local population with all necessary products.

In the sphere of the shipbuilding industry it’s reasonable to modernize production, in the sphere of radio electronics it’s necessary to improve production, in the sphere of the motor industry and machine building it’s enough to support existing enterprises. The high-tech sector is to be developed as well. The production of light-emitting diodes and the means of remote control should be supported.

The timber processing complex in the North Caucasus Federal District is not developed well enough. At the moment the region produces 0.2-1% of the total amount of timber produced in the Russian Federation. 67% of the timber produced in the region is produced in Stavropol Territory. The reason why the timber production industry is poorly-developed is that the region hasn’t got enough resources for the development of this industry, as forests are rare.

The extractive industry and manufacturing form 4-17% of the gross regional product of the regions of the North Caucasus Federal District. In Russia this figure is 29%. This shows that industrialization of the North Caucasus has not yet been completed. The increase of imports and the decrease of exports are caused by the low competitiveness of the local enterprises and the low quality of the final products. Stavropol Territory is the most developed subject of the region. It provides 42% of the total income of the extractive industry and manufacturing in the region. In all subjects of the Federal District industry is developing in one or two industrial zones, other areas are agricultural. Capital resources all over the region are of a very low quality, especially in Chechnya, Dagestan, and Ingushetia.

At the same time the region has several advantages. Among them are rich natural resources (noble metals deposits, hydrocarbons), proximity to world markets and a fairly adequate infrastructure. All this makes the successful industrial development of the region possible. The priority spheres of production seem to be production of construction materials, light industry (production of fabric and shoes), the chemical industry, motor building, electro-technology and radio electronics, extraction of minerals and metallurgy and oil production.

In the Republic of Dagestan the priority spheres are light industry, the food industry, production of construction materials and the extractive and oil industries. In the Republic of Ingushetia - light industry, production of construction materials and the oil industry. In the Republic of Kabardino-Balkaria - light industry, extractive industry and metallurgy. In the Republic of Karachay-Cherkessia – production of construction materials, light industry, extractive industry and metallurgy. In the Republic of North Ossetia-Alania – the chemical industry, production of construction materials, light industry, extractive industry and metallurgy. In the Republic of Chechnya – the oil industry, the food and light industries and production of construction materials. In Stavropol Territory – almost all of the named spheres of production, the most promising seem production of construction materials, the chemical industry, and motor building.

The agricultural sector of the economy of the North Caucasus Federal District is the most important one. The sector’s share of gross regional product in 2008 was 18% (15% - agriculture and 3% - food industry). In Kabardino-Balkaria and Karachay-Cherkessia the share of the agricultural sector in the gross regional product is 26%. 24% of the population of the North Caucasus Federal District work in the sphere of agriculture. In several subjects of the region the main taxes come from the agricultural complex (37% of all taxes collected in Kabardino-Balkaria). The North Caucasus plays an important role in the agricultural complex of the whole country, providing 45% of the grapes, 10% of the grain and 5% of the sugar beet grown in Russia. Among the features of the agricultural complex of the North Caucasus is that private farms are the main type of enterprises.

The development of agriculture in the North Caucasus Federal District would help to replace imports of meat, milk and vegetables and improve the situation on the inter-regional market. This makes the development of the agricultural complex one of the main priorities of all subjects of the Federal District. The most promising spheres are production of meat (pork, beef, and poultry), milk and milk products (cheese, sour cream, and yogurt), grapes and wine, vegetables, mineral water, and sugar.


5. Prospects for tourism

The climate of the North Caucasus makes the region a place for tourism. The climate of the North Caucasus Federal District is the warmest in Russia. The average temperature in January is - 3.2° С, in July it is +20.4°C. The region is famous for its mountains (Elbrus is the highest mountain in Russia) and so can attract tourists interested in mountaineering. 490 km of the Caspian shore in the Republic of Dagestan can be used to establish new resorts. The International Tourism Organization approves the development of tourism in Dagestan; many experts believe that the republic is most promising region of Russia from this point of view.

The region may be used for health-improving tourism, mountaineering, practicing extreme sports, pilgrimage, and other kinds of activities. Kavkazkiye Mineralnyye Vody is the most popular region of the North Caucasus. In addition health-improving tourism is now developing in Dagestan, Karachay-Cherkessia, Kabardino-Balkaria, North Ossetia-Alania, Ingushetia, and Chechnya.

In spite of the big potential tourism of the region, it still is not developed enough. The North Caucasus Federal District brings only 6% of the total income of the Russian Federation in the sphere of tourism; that constitutes only 2% of the gross regional product. The reason is that the number of tourists coming to the region is rather small and that the private sector still dominates the market. The percentage of international tourists coming to the North Caucasus is smaller than in Russia in general. The tourism infrastructure is underdeveloped and service is usually rather poor. In addition to this, the North Caucasus has a bad image and so is unpopular even in other regions of Russia.

One of the most acute problems preventing the successful development of tourism in the region is the absence of investment. Investors are not ready to invest in the development of the Caucasian resorts due to the constant menace to public security. This is the main reason for the low competitiveness of the Caucasian resorts. The government should encourage investment, establish new resorts and improve the infrastructure of the region.


6. Transport

Transport is one of the most prominent spheres of the economy of the North Caucasus Federal District. It provides 10% of the gross regional product. The region is situated at the intersection of numerous trade routes and so is capable of profiting from transit. The most successful enterprise in the transport sphere is the “Russian Railways” public corporation. The total length of the railways in the region is 3,000 km, the total length of the highways is 24,788 km (2,577 km of federal highways and 22,211 km of regional ones). The main junctions are Stavropol, Mineralnyye Vody, Nalchik, Grozny, and Makhachkala. Makhachkala also has a port. This port is one of the main objects of the infrastructure of the Caspian region with a chance of becoming part of the “North-South” international transit system.

However, the transport sector still faces several problems. The regional infrastructure is not developed enough, service is often poor, the population’s mobility is insufficient and so the potential of the region is not used in the right way. Air transport needs serious modernization. The absence of an adequate air transport system in the region prevents its successful economic development. The federal highways are in very poor condition. The mass transit systems of the cities of the region are also in a bad state. Transport is often insecure.

The region is situated at the intersection of several international trade routes. Among them are the “North-South” trade route connecting Moscow with Iran and the countries of the Gulf, its turn-off that connects Russia with Georgia, and the “Trans-Caspian” route. The “North-South” trade route is an international project aimed at helping Russia’s integration into the global economy. The operation of the route requires certain measures to improve the infrastructure of the region, cooperation between government and individuals, inter-regional and international collaboration.


7. Power industry

The North Caucasus Federal District is profitable from the point of view of the power industry. In 2008 the power capacity of the region was 1 billion kilowatt-hours. The power system of the North Caucasus Federal District is stable due to the connections with the power systems of the Urals, the South Federal District and Volga territories. However, a decrease in the production of energy is now evident. The amount of energy produced has reduced from 3,189 kilowatt-hours in 2005 to 1,029 kilowatt-hours in 2008 (or by 31%).

The main problems of the power industry in the region are the abuse of its rich resources, misappropriation of energy, mass arrears of payment for delivered energy (3.3 billion rubles in 2010), poor condition of the infrastructure and absence of serious investment in the power industry sector. In order to lower prices for individuals, the power industry sector makes prices for businesses extremely high, as this money is necessary to improve the infrastructure and to repair transmission facilities and power stations that are in very bad condition nowadays. This makes the business of many companies unprofitable.


8. Nets and communications

The share of the telecommunications sector in the gross regional product (GRP) of the North Caucasus Federal District is not very significant. In 2008 the share of the sector was estimated as 0.2 % of GRP (7.1 billion roubles). The total volume of communication services in the North Caucasus Federal District is less than 0.2% of the all-Russian rate. Stavropol Territory and the Republic of Dagestan have the most significant share of this sector in GRP, of 0.32%. Major communication service markets are Stavropol Territory and Dagestan, with 4.4 billion roubles and 1.9 billion roubles respectively, making up 90% of the market.

The level of development of the communications market in the North Caucasus Federal District is lower than the average Russian rates. The index of communications service volume per capita is three times smaller in the North Caucasus Federal District than in the Central Federal District and half that of the average Russian index. The telecommunications sector is quite promising in the North Caucasus Federal District. An index of the communications service volume per capita amounts to between 2,500 and 4,200 roubles. The North Caucasus Federal District fixed-line telephone system is less developed than the Russian average. In 2009 there were 135.4 fixed-line phones per thousand people. The level of mobile phone communication development is quite low in the North Caucasus Federal District, with only 987 numbers of mobile phone communication per thousand people. The North Caucasus Federal District is characterized by heavy differentiation in the penetration rate of mobile phone communication.

The penetration rate of the internet in the North Caucasus Federal District is one of the highest in Russia. The highest penetration rate is in the Republic of Ingushetia and in the Republic of Karachay-Cherkessia.

The penetration rate of central channel broadcasting in the constituents of the Russian Federation in North Caucasus Federal District is high, about 95% of the population (the average rate in Russia is 97%). The broadcasting level of regional television and radio companies amounts to between 90.2% and 97.8% (the average level in the Russian Federation is 90.6%) except for the Republic of Ingushetia, the Chechen Republic and Stavropol Territory, where this level doesn’t reach 50%. The level of broadcasting such channels as “NTV”, “Kultura” and ”Sport” is lower than that of central channels’ broadcasting. Radio broadcasting varies greatly. Broadcasting of “Radio Rossii” covers a significant part of the population, from 90 to 98% (the average Russian level is 97%). The coverage of other radio companies is much poorer than average in Russia.


9. Small and medium-scale business

316,698 small and medium-scale business entities operate in the North Caucasus Federal District. A significant part of small and medium-size business entities are focused on trade and the priority sectors of the North Caucasus Federal District’s economy, such as building, the agricultural sector and tourism. The North Caucasus Federal district is characterized by the high number of individual entrepreneurs. Whereas the number of individual entrepreneurs corresponds to the average Russian rate, 280 people for every 10,000 citizens, the number of small and medium-size enterprises in the constituents of the Russian Federation included in North Caucasus Federal District is 2-7 times less than the average in Russia.

Poor reserves of production and office space, the poor quality of the transport and logistic infrastructures, impeded access to energy capacities, lack of qualified engineers and technical experts, and also administrative restrictions are the main deterrent factors to small business development in North Caucasus Federal District. In addition, there is the problem of a high rate of illegal business.

To boost population employment and provide small and medium-scale businesses in every constituent of the Russian Federation included in North Caucasus Federal District with equal and profitable conditions, a corresponding dedicated program "Development and support of small and medium-size business" was developed and approved. The average level of expenditure obligations co-financing in constituents of the Russian Federation included in North Caucasus Federal District amounts to 80%. In 2009 federal funding of the program arrangements in the North Caucasus Federal District grew six-fold, from 182.4 million roubles to 1,125 million roubles. In 2010 the total volume of the program arrangements financing amounts to 1,295 million roubles (15.1% growth).

To provide small and medium-size businesses with access to financing it is necessary to envisage:
- Support for first-time entrepreneurs with grants (grants for establishing one’s own business, carrying out education programs for applicants);
- Development of a micro-financing system (loaning for replenishment of funds to enterprises as well as to credit unions);
- Foundation of guarantee funds (regional funds for guarantees of payments for small and medium-size business);
- Support of small and medium-size business entities, including farm enterprises, by subsidizing a part of the interest rate on obtaining credits;
- Establishment and development of infrastructural interregional elements for small and medium-size business support and development.

To promote access to infrastructure it is necessary to develop and boost the effectiveness of business incubators and small business development centers. Through the dedicated program "Development and support of small and medium-size business" it is expected to provide first-time enterprises with different consulting services and help in searching for premises.

Solving the sales problem (access to external markets) can be addressed by supporting exports of small and medium-size business products.

Possible arrangements are:
- Providing first-time enterprises with consulting services to fulfill their export potential;
- Subsidizing exhibition activities of enterprises;
- Subsidizing part of the interest rate on equipment purchase for fulfilling export potential.

A commission on administrative barriers will improve the situation with regard to administrative restrictions for business. Within the fulfillment of the particular program it is reasonable to carry out annual investigations of the situation regarding administrative barriers for entrepreneurs at regional and city levels, as well as holding roundtable conferences on the reduction of administrative barriers with the participation of representatives of Federal State governmental authority and the state governmental authority of constituents of the Russian Federation.


10. Banking activities

In 2010, 58 credit companies operated on the territory of the North Caucasus Federal District, 52 of which were registered in constituents of the Russian Federation included in North Caucasus Federal District.

In the amount of savings the North Caucasus Federal District doesn’t reach the average Russian level. The individual savings market is most developed in Stavropol Territory and in the Republic of North Ossetia - Alania. The total volume of deposits of credit companies in the North Caucasus Federal District amounts to 119.8 billion roubles, less than 1% of the all-Russian volume.

The major share of individual and corporation credits is provided in Stavropol Territory. The total volume of credits amounts to 1.2% of the all-Russian market. As of May 2010 the largest number of credit companies is registered in the Republic of Dagestan, 32 entities, most of them in Makhachkala. The Republic of Dagestan and the Republic of Karachay-Cherkessia have the largest numbers of people per credit company. As of the 1st of June 2010 the total volume of assets of credit companies in the North Caucasus Federal District amounts to 266 billion roubles, which is less than 1% of the total volume of assets of credit companies in the Russian Federation.

The level of credit companies’ development in the North Caucasus Federal District is low. An asset share of the GRP of constituents of the Russian Federation included in the North Caucasus Federal District amounts to no more than 10%, which restricts their external credit accommodation. Moreover, credit companies of these constituents of the Russian Federation are developing differently.


11. Foreign economic activities

Total external turnover (exports and imports) of products amounts to $73.5 billion in the Russian Federation in 2008. The share of the North Caucasus Federal District in this turnover was 0.4%. In 2005-2008 North Caucasus Federal District product exports grew on average by 7.7% a year and reached $1.7 billion.

In 2005 in monetary terms the most significant share in North Caucasus Federal District exports was made up of products from the fuel and energy complex (38%), the chemical industry (33%), and the agricultural complex (17%). In 2008 the share of the agricultural complex grew to 29%, and the share of the chemical sectorgrew to 44%. Meanwhile, the share of the fuel and energy complex decreased from 38% to 4%.

Within the framework of exports Stavropol Territory commands the largest share with 72%; 17.1% for the Republic of Dagestan; 5.9% for the Republic of North Ossetia - Alania. The share of the other republics is less than 5%. Stavropol Territory exports a significant part of products of the chemical industry and the agricultural complex. The Republic of Dagestan exports machinery and products of the metallurgical industry. The Republic of North Ossetia - Alania, exports mainly metals and metal products. The Republic of Ingushetia and the Republic of Karachay-Cherkessia are developing exports of agricultural products, and the Republic of Kabardino-Balkaria exports products of the chemical industry. The Chechen Republic exports mainly wood and cellulose and paper products.

About 70% of the North Caucasus Federal District’s exported products go to non-CIS countries, mostly from the Republic of Ingushetia, the Republic of Dagestan, Stavropol Territory and the Republic of North Ossetia - Alania. Exports from the Chechen Republic and the Republic of Kabardino-Balkaria go to CIS countries. Export flows are most important for Stavropol Territory. 10.7% of its GRP is from exports. On average this rate amounts to 5.7% in North Caucasus Federal District. Except for Stavropol Territory the relation of exports to the GRP is less than 5% in other regions of the District. Exports are least important for the economy of the Republic of Kabardino-Balkaria and the Chechen Republic. The North Caucasus Federal District is characterized by the low competitive ability of products.


12. Exhibitions

Exhibitions and fairs are to be organized in the District to boost investments in various branches of industry and to support local enterprises and producers. The activities are also aimed at the promotion of sport, healthy lifestyles, motherhood and childhood protection as well as at the development of economic ties between the North Caucasus and other Russian districts and foreign countries. Exhibitions and fairs are to be organized by special co-coordinating exhibition committees and commissions under the governments of the North Caucasian republics. Trade and Industry Departments are to head the operations of these commissions. Practical experience in the sphere of exhibition and fair organization is already being accumulated. However, the District lacks the accommodation and modern equipment for organizing the activities in question, so further investment is required.


13. Investment

Over the last few years the volume of investment into the District has grown considerably. However, the indicator of private investments per capita is the lowest in the Russian Federation, falling behind the average figures by 4.7%.

The reasons for the low private investment indicator are:
- high level of risk, insufficient level of infrastructure development and lack of stimuli for private investors;
- absence of potential major investors on the internal market;
- lack of finance capabilities of local producers;
- low level of enterprise sector development;
- further attraction of private investment demands offering additional economic stimuli for investors (tax and customs privileges, guarantees, etc.), development of infrastructure and efficient co-operation with future investors.


14. Regional finances

The average indicator of the federal portion of budget income for all the republics of the District exceeds 50% (except Stavropol Territory where the figure is 38%). The index for the Chechen and Ingush republics is 91%. Tax income to the District’s budget is insignificant. The North Caucasian Federal District contributes only 0.9% to the tax budget of the Russian Federation.

The District’s budget expenditure in 2009 reached 283.8 billion roubles. The structure of the District’s expenses is similar to that of all other districts of the Russian Federation. The share of expenditure for social and cultural projects is 53% in the District (45.2% is the average indicator for the whole Federation). Charges for remuneration of labour reached 41% in 2009 (30% in other districts of the Federation). National economic development amounted to 17% of the budget expenditure.


15. Environmental protection and ecology security

The ecological situation in the North Caucasus Federal District is one of the most favourable in the whole Federation. The low level of industrial development of the District has contributed to this status. Tourism and agriculture were cited as the priorities of the District’s development by this Strategy, therefore protection and conservation of the unique ecology of the region are on the list of top priority tasks.

However, a certain number of ecological problems demanding immediate solutions exist in the District. Some zones in the North Caucasus suffer from an accumulation of oil production and storage waste. The level of oil pollution in Chechnya and Dagestan depends not only on the volume of production, but on the age of oil-fields and the number of wells.

The Chechen Republic suffers from severe soil cover disruption due to oil and gas processing and there is a risk of ecological catastrophe if no measures for modernization of oil field development are taken.

Kabardino-Balkaria lacks air control systems, while its industry and transport present some danger of air pollution.

The main sources of water pollution in the District are:
- alcohol producing plants located in North Ossetia and Kabardino-Balkaria;
- housing and communal services;
- oil waste dumping on the territories of the Chechen Republic.

Ongoing deforestation leads to soil erosion and spring flooding. In its turn, this creates the danger of avalanches and mudslides in the mountainous areas.

For now, no efficient structure for the elimination of the products of human activity exists in the District.

III. North Caucasus Federal District development scenario

The elaboration of the District’s development scenarios requires an assessment of long and short-term economic priorities. Short term priorities for all the republics of the District lie in the area of agriculture. Therefore, the most important branches of industry are the light and food industries, as well as the tourism and recreation sector, which could offer a great number of new jobsites. The major part of investments should be provided by the federal government.


1. Definition of parameters for scenario realization results

The economic situation in the District is affected by inner processes as well as by global tendencies of economic development of the Russian Federation. Therefore it is possible to describe three development scenarios: inertial, general and optimal scenarios.

The main factors affecting long-term social and economic development are:
- the level of development of the relative advantages of the Russian Federation in the fields of energy and high technology;
- intensification and modernization of labour;
- the dynamics of infrastructure and energy network development;
- the growth of the population’s wealth and development of a middle class;
- the integration of the Eurasian economic space;
- the development of law and protection of consumers and producers rights;
- promotion of investments.

The inertial and general scenarios are based on the assumption that these conditions will not change considerably, while the optimal scenario is based on a more optimistic prognosis.


2. Inertial development scenario

The inertial scenario of the North Caucasus Federal District development stipulates fulfilment of all Federal projects and strategies provided for the North Caucasus Federal District:
- Creation of a new tourist zone in Stavropol Territory;
- Advancing average growth rates of the Russian Federation;
- Renunciation of major new long-term projects;
- Growth in economic inequalities of the population;
- Growth of imports and reduction of competitive abilities of local enterprises;
- Unfavourable conditions for private enterprises;
- Growth of inter-ethnic tensions, terrorism and religious conflicts.

The share of the engineering industry and high-tech in the District’s economy drops. Following changes in social and economic development, indicators will be introduced as the result of the inertial scenario:
- gross domestic product will grow by 0.4% in 2025 as compared to 2008;
- the speed of gross domestic product growth in the period of 2008-2025 will be 5.7% per year;
- gross domestic product per capita will increase from 79,000 roubles in 2008 to 133,000 roubles in 2025;
- the average salary will increase from 9,600 to 14,000 roubles
- the unemployment will shrink by 2%;
- budget income per capita will increase from 5,100 to 14,600 roubles;
- average annual industrial development growth will be 7.3%;
- no cardinal changes in the level of living standards.


3. General scenario of the development of the North Caucasus Federal District

It was estimated that the public security problem can be solved only in 5-10 years. This means that a constant threat to public security will restrain the development of tourism and investment for at least another decade. That is why it's reasonable to focus on the development of agriculture, the extractive and oil industries, manufacturing, and machine building.

The general scenario includes modernization of technology, further development of the agricultural sector, the power industry and machine building, development of the transport system, tourism, and measures aimed at providing public security and preventing ethnic and religious conflicts. The average annual growth of the gross regional product in 2010 - 2025 is planned at 6.7%, with production growth of 8.7%.

The realization of the general scenario will bring the following changes to the economic and social life of the North Caucasus:
- gross regional product will rise from 79 to 172,000 roubles per capita;
- the average salary will rise from 9.6 to 18.6 roubles per month;
- the official level of unemployment will go down from 16% to 9%;
- the percentage of the population whose income is less than the estimated living minimum will go down from 16.5% to 10.9%;
- budget income will rise from 5,100 to 17,500 roubles per capita.

The realization of the general scenario will affect the quality of life of the population in the following ways:
- housing area will rise from 17.1 to 20 square metres per head of population;
- the complement of hospital beds will rise from 79 to 80 beds per 1,000 people;
- the number of qualified doctors will rise from 41 to 43 per 10,000 people;
- the numbers of people living in accomodation with a telephone will rise from 1,042,000 to 3,131,000;
- the numbers of those with mobile phones will rise from 9,038,000 to 21,173,000;
- the number of small and medium-sized enterprises will go up from 3.4 to 17 per 1,000 people by 2025.


4. The optimal scenario

The optimal scenario, presupposing the full realization of this strategy, includes:
- dynamic development of the tourism sector;
- improvement of the social infrastructure;
- development of education;
- modernization of the public health care system;
- improvement of the quality of life of the local population;
- integration into the global economy;
- development of transport;
- provision of public security and social stability.

The average annual growth of the gross regional product in this case will be 7.7 per cent, with an average growth in production of 10.1 per cent. This will bring the following social and economic changes:
- gross regional product will rise from 79,000 to 219,000 roubles per capita;
- the average monthly salary will rise from 9,600 to 23,800 roubles per capita;
- the official level of unemployment will go down from 16 to 5%;
- the percentage of the population having an income of less than the estimated living minimum will go down from 16.5 to 9.2;
- budget income will go up from 5,100 to 20,400 roubles per capita.

The realization of this scenario will cause certain changes in the life of the population:
- housing area will rise from 17.1 to 24.4 square metres per capita;
- bed complement in hospitals will rise from 79 to 81 beds per 1,000 people;
- the number of qualified doctors will rise from 41 to 44 per 100 people;
- the numbers of people whose living places have phones will rise from 1,042,000 to 3,632,000;
- the numbers of those who have mobile phones will rise from 9,038,000 to 24,560,000;
- by 2025 the number of small and medium-sized enterprises will go up from 3.4 to 17 per 1000 people.

IV. The mechanism of the realization of the optimal development scenario

The realization of the optimal development scenario will include two major steps. At the first stage the necessary conditions for the successful development of the region will be provided, including legislative support, investment and public security. The main priorities will be improvement of the investment climate and elaboration of special governmental programs. At the second stage elaborated mechanisms will be used in order to raise funds from individual investors and develop a system of social insurance, public healthcare and education.


1. Major areas of development

As a result of the realization of the optimal development scenario, the North Caucasus Federal District will become the most popular tourist center of Russia and the countries of the Commonwealth of Independent States, a region interesting for investors, a region providing high living standards.

The main achievements by 2025 will be as follows:
- the level of unemployment will drop to 5%;
- economic growth will be 8-10%;
- the economy will become more diversified due to the further development of agriculture;
- tourism and construction and the quality of life of the local population will improve.

The main results of the development of the social insurance system will be as follows:
- a decrease in the death rate;
- development of human resources;
- improvement of education;
- public security guarantees;
- a drop in the corruption level;
- greater investment;
- development of small and medium-sized enterprises;
- an adequate environmental policy;
- improvement of the infrastructure of the region and interregional cooperation.

In the sphere of employment management, the Strategy stipulates first-priority importance for resource and employment centers development as well as for co-ordination of their efforts with establishments of other districts of Russian Federation. It also states the task of creating a labor migration agency that would help unemployed residents of North Caucasus Federal District to find jobs in other districts of Russian Federation.

Prior importance is also attributed to the task of improving the level of education for North Caucasus residents within the District as well as in other regions, adapting the educational system to the needs of the region’s economy, and creating conditions for permanent residence of Russian population on the territory of the District.

Efficient environmental monitoring will provide necessary level of protection for the environment and nature resources and strict control over casual, agricultural and industrial waste. Special attention will be paid to the mineral water, forest and oil-production areas.

Lists of higher-priority investment social projects for the period of 2010-2013 and Strategy realization projects are presented in the Annexes.


—Industrial and agricultural sector development

Industry and agriculture are the most important economy sectors for realization of the Strategy.

Existing conditions permit the creation of ecologically-friendly food production and farming, agricultural waste re-cycling in the District that has a potential to become Russia’s leading producer of meat, wool, wine, mineral water and grain.

The priorities of agricultural and industrial development are:
- promotion and advertising of North Caucasian producers;
- granting access the common market of Russian Federation as well as foreign markets to the North Caucasian producers;
- attraction of investments and favoring modernization;
- amelioration infrastructure development;
- upgrade of technical capacities of the region’s industry;
- incorporation of smaller enterprises in a common production and sale chain.

To grant access for North Caucasus producers to Russian marked creation of special centers is planned. The centers would co-ordinate the sales of grain. Government orders will favor local producers and ensure their protection.

The promotion of North Caucasian producers implies creating a common North Caucasian brand and support of Caucasian enterprises' participation in Federal and international production exhibition.

The modernization implies development of technical fleet of the region as well as promoting the level of insurance and co-operation in the District, investment attraction and efficient regulation of electricity and water payments for the producers.

Reconstruction of the amelioration system requires special attention. Low technological level of the agricultural production requires creation of special educational centers for farmers in each subject of the District.

Such centers should be created on the basis of current most efficient farms with the help of Russian Agricultural Academy and other scientific establishments. The co-operation of smaller farms into production-sale chains is also necessary.


— Industry development

One of the most important tasks of the Strategy is the development of industry and technology base of the District.

Higher-priority tasks of the Strategy in the area of industry are:
- stimulation of joint manufacturing ventures' modernization and development;
- granting access to Russian and foreign markets to North Caucasian producers;
- efficient nature resources development;
- creation of staff resource.

Basic measures insuring modernization and development of manufacturing enterprises are:
- creation of industrial machinery fleet in the District (first priority is attributed to the light industry);
- creation of additional financial stimulation for small and medium enterprises.

Efficient development of natural resources implies allocation of funds to the infrastructure and roads, necessary for the development of promising fields by the government as well as by private individuals and companies. The procedure of obtaining a license for making an investment should be simplified.

Staff resource creation implies development of special programs in institutions of special education and grants for education in other Russian districts and abroad. Assistance in gaining access to markets implies Federal encouragement of local producers of the District to tender for manufacturing supplies and support of their participation in Russian and International exhibitions.


— Tourism development

Tourism is one of the most promising branches of social development of the District, able to create more than 100,000 new jobs.

Main tasks of tourism sector development are:
- creation of modern infrastructure;
- improvement of District's image and active promotion of its tourist advantages;
- insurance of tourists' safety;
- staff base creation;
- encouragement of smaller and medium enterprises in the sphere of tourism;
- efficient protection and restoration of objects of cultural interest.

Development of modern heath and ski resorts requires major investments in infrastructure. State joint-stock company "Special economic zones" and Investment Fund of Russian Federation will provide support for investment projects. The management and selection of more suitable projects will be conducted by the newly-created North Caucasus Development Institute. Special attention will be attributed to the improvement of North Caucasus image and promotion of region's tourist attractions in Russia and abroad by creating a common brand for the region.

The development of tourist centers will require boosting the network capacity of current transport system. Higher priority is attributed to the development of air transportation (development of airports' infrastructure in main spa centers Miniralniye Vodi, Stavropol, Nalchik, Makhachkala, Vladikavkaz). Highway network joining resorts of the District to tourist centers of Krasnodar Krai and Abkhazia is also scheduled for construction.

To improve the security level creation of District-wide network of security systems and tourist police as well as modernization of rescue services equipment and careful environment monitoring are planned.

To improve the level of service and create a regular staff basis special training programs including international experience exchange are being worked out. International tourist companies will be invited to work in the region. The State will support private initiative in the field of hotel networks creation and tourism services development.

History and culture monuments restoration and protection as well as nature parks and reserves form important part of tourism development program. Special attention will be paid to recreation zones, parks development. Massive construction activities in the resort zones may damage the unique microclimate necessary for medication, so smaller forms of construction will be favored.

The Strategy stipulates regular activities for protection and improvement of the environment and sanitary conditions of parks and settlements.


—Transport network development

Strategic orientations and key projects:

Transport network is the key sector for the realization of the District’s potential. High-priority tasks in this area are:
- creation of available and efficient network;
- improvement of the quality of transport services and reduction of transport expenditures;
- efficient realization of the District’s transit potential;
- improvement of the technical condition of District’s transport fleet;
- formation of competitive transport-logistic product providing efficient transportation of goods;
- increasing the mobility of the District’s population;
- increasing the level of transport environmental control;
- attraction of investments to the District’s transport system;
- promoting joint state-individual ventures in the field.

Road network:

The development of road network of the District implies several important tasks:
- completion of the construction of road network connecting the District to international road system, improvement of the technological level of the North Caucasian road system;
- further development of the transit ‘North-South’ transportation route, necessary for future development of trade relations between Russian Federation and Near East;
- creation of necessary roads for the resort projects fulfillment;
- guaranteeing the clock round duration of the roads’ operation.

Road construction activities imply formulation of objects’ reconstruction and building lists based on following priorities:
- reconstruction of the most loaded highways and construction of major cities bypasses in correspondence to the State’s geopolitical interests;
- completion of almost fulfilled projects and realization of commercial road construction projects;
- reconstruction of Federal roads and their modernization;
- connection of smaller settlements with regular Federal road network.

Several infrastructure projects are planned within the framework of the transit ‘North-South’ route project:
- modernization and reconstruction of M-29 “Caucasus’ highway;
- reconstruction of Dagestani sector of the Astrakhan-Kochubei-Makhachkala highway;
- reconstruction of the M-29 highway on the border with Georgia to insure transport communication with South Ossetia.

One of the most important roles in the region’s road network is attributed to the roads leading to resort areas. Following projects will be realized in the framework of the ‘South of Russia (2008-2013) program:
- construction of Nijniy Zaramg – ‘Manison’ resort road;
- construction of Kislovodsk – Dolina Narzanov – Djili Su – Elbrus road;
- reconstruction of the Chikola – Matsuta – Kolin Art road;
- construction of Arkhiz – Dukka road.

The new network project should take into account creation of new recreational zones. The possibilities of Mineralniye Vodi – Cherkessk – Adler road construction will also be investigated in the period covered by the Strategy. Transit turnover will be boosted by construction of international Cherkessk – Sukhumi highway, connecting Russian Federation to Abkhazia.

Construction of Mineralniye Vody, Nevinnomissk and Beslan bypasses is also planned. Following Federal highways need reconstruction and modernization:
- Kislovodsk – Karachaevsk road;
- Grozny – Botlikh – Arakany – Levashi – Buynaksk – Makhachkala highway;
- Svetlograd – Blagodarniy – Budennovsk road.

Motor transport network:

High-priority tasks in the District’s motor transport network development are the following:
- development of the car parks network;
- implication of modern technologies in traffic control;
- providing higher traffic security level.

Motor transport network also implies following tasks:
- financial stimulation of environment-friendly transport, usage of alternative fuels (like nature gas) in public transport;
- transport technology development;
- restriction of personal vehicles use in overloaded city areas;

All these tasks require creation of special law basis to insure favorable conditions for Russian haulers. The security level of Federal roads will be boosted by creating additional pedestrian crossings and security and noise-protection barriers construction. All border checkpoints should be provided with modern equipment in the framework of the national program "State border of Russian Federation (2003 – 2011)". Several projects for increasing road service level are also being worked out. Counter-terrorist protection measures are included in the project.

Railroad network:

The perspectives of railroad network development are tightly connected to the terms of realization of previously-mentioned network and resort development projects.

Further projects enjoy higher priority:
- construction of new railroad branch Miniralniye Vodi – airport;
- development of Makhachkala harbor railroad branch to boost the output of "North-South" transit route;
- construction of railroad border checkpoint "Derbent" to boost the output of "North-South" transit route;
- construction of Soldatskaya – Tyrnyauz railroad branch to organize railroad communication with the resort and mineral rich zone;
- construction of Budennovsk – Neftekumsk – Kizlyar railroad branch to boost the output of transit cargo shipping via Stavropol Krai and Dagestan.

There are several other railroad construction projects important for social development:
- construction of Stavropol – Nevinnomissk railroad to improve travelling conditions from Stavropol to Miniralniye Vodi resort zone;
- construction of rail bypass of Beslan to free the city from heavy railway traffic;
- construction of Kotlyrevskaya – Galashki railroad to promote social and economic development of Ingush Republic;
- reconstruction of railroad network in Chechen Republic.

Marine transportation:

Higher priority in the marine transportation area in Caspian region is attributed to the development of deepwater harbors, Makhachkala marine port, integral part of Makhachkala region transport network and of transit route "North–South", being one of them. This port is connected with all Caspian states via sea and with all districts of Russian Federation via land.

The perspectives of Makhachkala port development are closely connected to expected increase in cargo overturn in the frame of international transit route "North-South", prolonged by international transport corridor №3 (Dresden – Lvov – Rostov-on-Don – Makhachkala).

The development of Makhachkala trade port is stipulated by Federal Transport Strategy (2030), and Federal program "Russian Transport System Development 2010 – 2015". The port development plan stipulates increase in cargo overturn to 20 million tons by 2020 by constructing to docks №14 and 15, railroad and highway communications. Systems coordinating interaction between different means of transportation will be created to boost the efficiency of Makhachkala transport network. Modern equipment for customs control will be installed in the port’s checkpoint as stipulated by the "Russian Federation State Border (2003-2011)" Federal program. Measures providing port’s security from natural disasters will also be undertaken. Passenger terminals on the route from Makhachkala to Derbent are scheduled for construction to boost the passenger and tourist turnover of Makhachkala maritime transport.

The following measures are necessary for the successful development of maritime transport in the Caspian region:
- ship-owners are to be provided with preferential credits and tax-free certificates for the period of improvement;
- abolition of the vessels import duties;
- renovation of the objects of the sea transport system (port facilities, ship-building plants, vessels);
- struggle against piracy and other crimes that threaten sea transportation security;
- improvement of the rescue services.

Air transport:

In order to intensify the population's mobility, attract investors and tourists it is necessary to start modernization of the present day air transport system of the North Caucasus Federal District. Among the priority projects are construction of new airports, reconstruction of the existing ones in Makhachkala, Magas, Nalchik, Grozny, Stavropol, and Cherkessk. It is also very important to establish a system of terminals.

The improvement of the air transport system will make it possible to deliver more goods by planes and so relieve highways from heavy-load lorries. Such towns as Budennovsk, Kizlyar, Beslan, and Buynaksk are going to become big transit centres. These centres will be important links in the interregional and international transit systems, such as "North-South" project.

Development of the energy infrastructure:

The main aims of the governmental program in the sphere of energy infrastructure development are as follows:
- realization of the losses reduction plan;
- implementation of the infrastructural objects' reconstruction program;
- stimulation of the development of the alternative sources of energy with the help of the preferential credits and governmental guarantees.

The stimulation of the small power stations' development will include:
- governmental subsidies;
- establishment of the special foundations for energy industry development;
- state support in reconstruction of the infrastructural objects.

Development of communication:

In 2010 - 2025 in the North Caucasus Federal District the following projects are going to be realized:
- development of communication in the Republic of Ingushetia in the framework of the federal target program "Social and economic development of Ingushetia in 2010 - 2016";
- development of infrastructure in the Republic of Chechnya in the framework of the federal target program "Social and economic development of Chechnya in 2008 - 2012" that includes some certain measures to improve different communication systems such as post, radio and others;
- improvement of the broadcast in the framework of the federal target system "Development of the broadcast in Russia in 2009 - 2015";
- construction of a new post terminal in Mineralnyye Vody that will improve the quality of the post service;
- provide the phone operators with governmental subsidies.

Development of the water-economic complex:

In order to solve the problem of development of the water-economic complex several measures are going to be taken. Among them are:
- building and reconstruction of objects of infrastructure of the water-economic complex;
- series of measures aiming to secure water communications;
- realization of the projects aiming to rationalize the exploitation of water resources and protect the environment;
- development of the system of governmental control in the sphere;
- elaboration of the regional projects of water-complex development in the Stavropol Territory, Kabardino-Balkaria, North Ossetia-Alania, and Dagestan;
- formation of a single state operation system of the water-economic complex.

A new long-term regional target system is going to be elaborated in the framework of the Water Strategy of the Russian Federation.


2. Development of social insurance system

— Development of public healthcare

The main aim of development of the public healthcare system in the North Caucasus Federal District is to provide the local population with qualified medical assistance. This includes development of hospitals network. Another area of development of the public healthcare is development of specialized clinics for therapy such diseases as cancer, cardiovascular diseases, and others.

In addition to this, it is planned to take some certain measures in order to intensify development of high-technology medical assistance. Such projects are already realized in the Stavropol Territory and in the Krasnodar Territory.

A new prenatal medical centre is going to be established in the North Caucasus Federal District, the centre will provide pregnant women with highly qualified medical aid. A new hospital for children is going to be built in the Republics of Chechnya, Karachay-Cherkessia, and Ingushetia. In Kabardino-Balkaria and Dagestan local hospitals are going to be reconstructed.


— Education and science development

The District needs more developed material, a technical base and infrastructure in the fields of education and science to grant its residents education corresponding to modern requirements. The Strategy poses construction and re-construction of educational facilities as one of the key tacks in the area. Special attention should be paid to the development of the educational system for disabled children. A special preferential educational credit program for young people should be launched to boost the level of professional education. Taking the fact that after graduation specialists do not usually stay in the District, one of the conditions for offering a preferential educational credit might be an obligation to work for several years in the District. A Federal institute that would combine research and educational activity should also be created to boost the technology level of the District. Special education should be developed not only on the higher level, but also colleges and other institutions of high education.


— Housing development

The priority aspects of housing area development politics in the framework of the Strategy are:
- creation of conditions for rapid housing construction by launching special credit programs;
- increase of social housing construction volume;
- development of housing and communal services in Grozny;
- integrated development of Prigorny district of North Osseti republic.

One of the key factors of the housing problem settlement are further investments in multi-story houses construction and favorable credit policy for individual housing construction. To that end, a special mortgage fund should be created.

Traditions of the North Caucasus stipulate more common demand for individual housing construction (93% in Kabardino-Balkaria and 88% in Ingushetia and some 50% in other republics), so it is important to attract additional recourses for its special support and development.

Another vital aspect of the housing problem is the creation of efficient infrastructure. The modernization of housing and communal services requires:
- development of a regulation mechanism under governmental control that would incorporate investment expenses into municipal services prices;
- stimulation of investments into housing and communal services on local level.


— Sport development

Physical education and sports development in the District requires:
- development of mass-sport by construction of public sport facilities, organization of sport clubs;
- construction of professional sport centers;
- sport promotion.


— Culture development

Priority aspects of cultural development are:
- cultural heritage conservation and development of innovative cultural spheres;
- conservation and popularization of folklore;
- support of performers willing to participate on the Sochi Olympics 2014 concert program;
- launching of federal TV-channel covering region’s political, cultural and economic events;
- restoration of objects of historical and cultural value.

Other important lines of cultural development are:
- support of professional art;
- creation of equal possibilities of access to objects of cultural value for all ethnic groups;
- development of common cultural space;
- support of youth subculture;
- fight against cultural and religious extremism and intolerance;
- attraction of investments into North Caucasus culture.

The Strategy stipulates creation of NCFD Inter-ethnic Cultural Communication Center that would create North Caucasian Cultural unity contributing to the region’s economic development.


— Local initiative support

Nowadays Federal subsidies and programs are the main source for increasing live standards in the region. However, Federal programs can not control and support current tasks on local level. Therefore other instruments of current affairs regulation on the local level are due to be found. The program of local initiative support could become one of these instruments. This program is based on competition of projects created by local administrations and financial support of the most promising ones. The projects should be elaborated with the participation of local population and should be aimed at solution of specific local problems.

The main spheres of this local activity are housing and communal services, transport and social network. To boost the interest of local administrations to the project following measures are to be undertaken:
- co-investment to the projects by federal government (not more than 5-10%);
- allocation of funds on the basis of inter-ministry commission (the Ministry of Regional Development, Ministry and representatives of local administration) of Finance, decision;
- allocation of funds to local administration according to the results of project competition;
- simple and unified forms of documents necessary for participation in the competition;
- active informational support of the program;
- organization of workshops and special trainings necessary to create competent projects;
- monitoring of the efficiency of selected projects fulfillment.


— Strengthening of common civic identity, interethnic relations and help with the ethnic and cultural development of nations

Realization of the interethnic relations development scenario in the North Caucasus Federal District presupposes activities in the following priority directions in the public and information spheres:
- strengthening of a common Russian civic identity, prevention of ethnic and religious conflicts and of ethnic or religious-political extremism;
- a long-term information campaign aimed at forming a common civic identity and interethnic tolerance in the North Caucasus Federal District;
- forming of a positive image of the North Caucasus Federal District in the Russian and foreign media;
- popularizing the idea of lack of financial benefit from instability (terrorism, extremism and ethnic conflicts deter investment from the North Caucasus Federal District) for the local population;
- monitoring of the social and political situation, including the ethnic and religious-political situation in the North Caucasus Federal District.

To support the institutions of civic society, in order to prevent ethno-political and religious extremism, the main activities are:
- organization of cooperation with representatives of ethnic communities and local populations in the most problematic districts of certain regions of the Russian Federation in the North Caucasus Federal District by creating appropriate consultation services with the participation of the federal and regional government services, municipalities and non-governmental organizations;
- development of activities aimed at effective struggle against ethnic and political and religious and political extremism, strengthening of ethnic and religious cooperation.

To prevent the emigration and return of the Russian population to the regions of the Russian Federation that are parts of the North Caucasus Federal District a complex of activities is necessary:
- the social and economic development of places where the Russian population live, realization of investment projects, creating an infrastructure of Russian culture in the North Caucasus Federal District (constructing cultural centers, supporting of companies, libraries of Russian literature, historical museums and so on);
- comprehensive social support of return and prevention of the emigration of the Russian population (providing accomodation, compensation of travel costs and job placements);
- creating social privileges for the Russian population in the sphere of education and science;
- a quota for Russian youth in the universities of the republic;
- possibilities of state and municipal service.

Bearing in mind the variety of possible scenarios, the Russians will be an important ethnic component in Kabardino-Balkaria, Karachay-Cherkessia and North Ossetia-Alania until the years 2025-30.

In the educational sphere:
- revision of teaching at schools and universities of the North Caucasus Federal District to organize a common approach to the teaching of Russian history and to prevent the formation among the students of constant negative ethnic stereotypes;
- development of interactive teaching courses on the history and culture of the North Caucasus, tolerance and interethnic communication culture and use of it in education;
- organizing an annual peace forum "Children of the Caucasus for Peace in the Caucasus".

To preserve the unique ethnic and cultural potential of the North Caucasus and make it one of the main reasons for growth in investments and economic attractiveness the following measures should be taken:
- development of ethnographic tourism, promotion of already existing tourist brands - Kubachin handicrafts, pilgrimage and others;
- organizing inter-regional, pan-Russian and international ethnic and cultural activities aimed at developing tolerance, mutual understanding between nations and prevention of ethnic conflicts;
- forming an ethnic and cultural infrastructure (regional and local ethnic and cultural centers, houses of friendship, centers of national cultures etc.);
- organizing an annual fair of social and cultural initiatives to select and support youth grants, forming additional social privileges for talented and active young people;
- support of interreligious and intercultural dialogue.


3. Development of the banking sector

The current situation of the banking sector in the North Caucasus Federal District does not meet the requirements of the Strategy. The main problems of the banking industry are lack of banking institutions and a low level of competition between credit organizations, as well as an undeveloped credit industry for physical and legal individuals with low deposits.

Bearing in mind the problems mentioned, the priority tasks of the banking sector are:
- increasing credit organizations and bank service points up to the average Russian rate;
- increasing competitiveness between credit organizations;
- increasing the popularity of banking services and the local population's confidence in the banking system, also through stronger requirements for bank control and educational work with the population;
- development of consumer and organizational lending and its liberalization.

At the moment it is not high rates, but strict credit requirements, lack of credit histories and clear business-plans of organizations that impede it, reduction of cash turnover in the North Caucasus Federal District by transition of budget organizations to salary payment using bank cards.


4. Ecological security provision

Provision of ecological security in the North Caucasus Federal District is a high priority, as it influences the quality of life and gives tourism, healthcare and agricultural development a competitive advantage.

To provide high-level ecological security the following measures should be taken:
- development of recycling, primarily in resort areas, including construction of waste-to-energy facilities;
- construction of medical waste processing facilities;
- construction of landfills and animal refuse dumps;
- support and construction of secondary raw material processing facilities;
- stricter control over industrial emissions, financial stimulation of enterprises to improve technologies and clarifiers;
- solving problems of industrial pollution of oil territories in the republic of Chechnya and the Republic of Dagestan, including the Caspian Sea, in which the main problem to solve is to prevention of ecological disaster in the Northern and Western parts of the Caspian Sea as a result of emissions produced while developing oil deposits;
- improving forest use and planting, precautions to reduce loss of forest as a result of fires, forest diseases and vermin, better control of forest resources, reforestation, increasing forest profitability and preservation of suburban forests.


5. Stimulation of investment activities and mechanisms of the strategy's realization

Compared to other federal districts, the situation in the North Caucasus Federal District requires special methods of governing. The peculiarities of the district are:
- A weak economic base and high level of unemployment;
- A big share of the "shadow" economy, even in legal industries (agriculture, light industry, the food industry, tourism);
- High terrorism and criminal risks, ethnic and religious conflicts;
- Low level of basic and social infrastructure;
- High level of corruption, nepotism and low level of governance.

Access for private investments is really bad; regional budgets are limited and cannot finance development; large-scale federal financing does not provide adequate results, most regional business plans are of low quality and cannot be realized.

Thus, even growth of budget financing does not provide for any positive results in these conditions. That is why, in order to maintain sustainable growth, the effectiveness of governing should also be improved by creating new mechanisms helping to reach the necessary level of governance and control.

One of the mechanisms is the creation of a development institute as a stock-company with the 100% participation of the state corporation "Bank of Development and Foreign Economic Activity (Vneshekonombank)" with the possibility of being a co-investor in big state and private banks.

The development institute will work in several directions: industry, agriculture, tourism, infrastructure and attracting development investment. The development institute must be the centre systemizing the programmes, projects and activities being held in the North Caucasus Federal District and support the realization of investment projects.

The main functions of the development institute could be:
- Searching for, financing and coordinating business projects in priority sectors;
- Planning of key inter-regional projects with a view to strategic priorities;
- Co-financing of major infrastructure projects and coordination of their realization;
- Promoting the brand of the North Caucasus Federal District in general and in some particular priority sectors.

An important area of the development institute's activities is preparing and financing projects. Traditionally one of the daunting problems of the North Caucasus Federal District is lack of well-planned investment projects, money for project stages, sufficient structures and specialists. Work in this area could be financed from the development institute's budget. That is why its structures should have the right to develop projects independently and participate in their realization.


— Work migration agencies

There could be over 400,000 unemployed people in the North Caucasus Federal District by 2015. Possibilities of providing work for the people in the North Caucasus Federal District are very limited at the moment.

One of the ways to solve the problem could be establishment of work migration agencies. Such an agency might be founded as a part of the institute, as well as an independent organization.

The main functions of an agency should be distributed in the following directions:
- Negotiations with employers;
- Attracting of people;
- Organization of transport and lodging for workers.

In terms of the first area an agency could have the following functions:
- Search for potential employers in the North Caucasus Federal district (primarily large state and state-private building companies);
- Negotiating the conditions of work;
- Signing a common labour contract with an employer.

To attract people an agency could:
- Propose vacancies to the population of the North Caucasus Federal District, first of all to the unemployed;
- Sign contracts with workers to search for positions.

To control observance of workers' rights an agency could:
- Control observance of workers' rights during work, including living conditions, food, safety and salary conditions;
- Reaction to workers' complaints.

As a result of the activities of an agency it is planned to reduce unemployment and take 10% of the foreign migrant workers' market (about 250,000 people).

While creating an agency it is necessary to examine the suitability of workers' obligations to return to the North Caucasus Federal District after a certain time and, while organizing the agency's work, to examine the possibility of shift work.

Investment funds are one of the most important factors for attracting investment to the district, and improving its investment climate would create the means to invest in good projects compliant with the Strategy's priorities.

One of the means could be creating state-private investment funds for development. For instance, such funds might be established in the sphere of tourism, agriculture, building, small and middle-scale business. Each of them will be ruled by a special company assessing the validity of investment projects and the parameters of expected profitability. Shareholders of funds can be big financial institutions and private companies with a business interest in these territories.

The best scheme for the funds' organization presupposes several amendments to the law on ability of the state (the Russian Federation) to participate in authorized capital. In this case the Russian Federation, by participating in the funds, can monitor and control the work of the funds, particularly by investing in more priority spheres and projects in the region. The funds will receive administrative support and access to the most promising projects of high investment attractiveness. In addition, the participation of the state in capital funds will attract other investors and fund partners, including foreign ones, to participate in the work of the funds and be responsible for risks among other investors.

The effect of the funds' activities will be characterized by the most important results for the district:
- Creating effective mechanism for attracting and using investments which would allow all the works related to pre-project preparation and realization of investment projects;
- Creating a base of projects analyzed by professional experts;
- Attracting Russian and international investment in the real sector of the economy;
- Forming capital for future reinvestment in promising projects on the territory of the regions.

APPENDIX 1
The list of priority investment and social projects (activities) for 2010-2013 to realize the Strategy

I. Energy

1. Reconstruction of the Zelenchuk hydroelectric power plant, the Republic of Karachay-Cherkessia
2. Reconstruction of the Verkhni-Krasnogorskoi hydroelectric power plant, the Republic of Karachay-Cherkessia
3. Construction of oil-refining complex, the Republic of Chechnya

II. Education

4. Construction of a school for 264 students, Ali-Berdukovsky aul, the Habezsky district, the Republic of Karachay-Cherkessia (the Federal Target programme "South of Russia (2008-2013)")
5. Construction of a school for 1320 students in District #21 in the town of Cherkessk, the Republic of Karachay-Cherkessia (the Federal Target programme "South of Russia (2008-2013)")

III. Industry

6. Construction of wool-processing enterprise in the town of Cherkessk, the Republic of Karachay-Cherkessia
7. Development of photoelectron and nano-microtechnologies and products, the Republic of North Ossetia-Alania
8. Creation of the regional industrial park "Budennovsk", Stavropol Territory
9. Creation of regional industrial park "Nevinnomysk", Stavropol Territory
10. Development of building materials cluster, including organization and processing of gypseous raw materials (the Buinaksk district), construction of a steam-cured gas concrete plant (the Buinaksk district), construction of an agglomerate tine plant (the Kumtorlinsk district), the Republic of Dagestan
11. Construction of an factory to develop industrial production in the Republic of Dagestan with use of advanced world technologies
12. Construction of an industrial wood-processing complex on the basis of existing infrastructure, the Republic of Ingushetia
13. Construction of a polyethylene terephtalate of food and textile use plant, the Republic of Kabardino-Balkaria

IV. Agriculture

14. Construction of an agriculture milk and its processing holding, the Republic of North Ossetia-Alania
15. Reconstruction of a complex of buildings "Habezsky raipo" for poultry yards, the Republic of Karachay-Cherkessia
16. Development of grain logistical infrastructure (5 load junctions), Stavropol Territory
17. Reconstruction of livestock complex of the "Urozhainoye" company, Stavropol Territory
18. Construction, reconstruction and modernization of the livestock complex "Stavropolsky broiler" (the Shpakovsky district), Stavropol Territory
19. Construction of modern storage and transfer grain reloading system - grain elevator "Agromarket", Stavropol Territory
20. Reconstruction and modernization of livestock objects (pigsties) of the "Bekon" company (the Blagodarnensky district), Stavropol Territory
21. Reconstruction and expansion of production at the poultry factory of the Grachevskaya" company, Stavropol Territory
22. Development of poultry production at the enterprises of the "Megaferma 2" company (the Isobilnensky district), Stavropol Territory
23. Reconstruction of the production buildings of the "Ptitsekombinat" company, Stavropol Territory

V. Housing sector

24. Move and provision of the necessary facilities for families living in the landslide area of the town of Malgobek and the Malgobek district, the Republic of Ingushetia (over and above part of the federal target investment programme)
25. Restoration of infrastructure in the town of Grozny, the Republic of Chechnya (the Federal Target programme "Social and economic development of the Republic of Chechnya for 2008-2012")

VI. Tourism

26. Development of all-season mountain resort "Prielbrusye", the Republic of Kabardino-Balkaria (the Federal target programme "South of Russia (2008-2012)")

VII. Transport

27. Construction of port railway sorting park of the seaport in Makhachkala, the Republic of Dagestan (the Federal Target programme "Development of transport system of Russia (2010-2015)")
28. Construction of railway border checkpoint "Derbent", the Republic of Dagestan (the Federal Target programme "State border of the Russian Federation (2003-2011)")
29. Reconstruction of engineering work on "Uitash" airport (Makhachkala), the Republic of Dagestan (the Federal Target programme "Development of transport system of Russia (2010-2015)")
30. Reconstruction of "Beslan" airport, Vladikavkaz (2013-2015), the Republic of North Ossetia - Alania (the Federal Target programme "Development of transport system of Russia (2010-2015)")
31. Reconstruction of vehicular road A-153 Astrakhan-Kaspiysky-Kochubei-Kizlyar-Makhachkala, the Republic of Dagestan (the Federal Target programme "Development of transport system of Russia (2010-2015)")
32. Reconstruction of the airport complex in the city of Mineralnye Vody, the Stavropol region, under the Federal Target programme "Development of transport system of Russia (2010-2015)")
33. Reconstruction of the vehicular road M-29 "Kavkaz", the Republic of Dagestan, the Republic of Ingushetia, the Republic of Kabardino-Balkaria, the Republic of Karachai-Cherkessia, the Republic of North Ossetia - Alania, the Republic of Chechnya, Stavropol Territory (the Federal Target programme "Development of transport system of Russia (2010-2015)")
34. Modernization and reconstruction of the vehicular road Alagir (M-29 "Kavkaz") - Nizhny Zarmag to the border with Georgia (Transkam), the Republic of North Ossetia - Alania (the Federal Target programme "Development of transport system of Russia (2010-2015)")
35. Reconstruction of the Grozny - Botlikh - Makhachkala road, the Republic of Chechnya, the Republic of Dagestan (the Federal Target programme "Development of transport system of Russia (2010-2015)")
36. Reconstruction of parts of the A-155 Cherkessk - Dombai road to the border with Georgia, the Republic of Karachai-Cherkessia (the Federal Target programme "Development of transport system of Russia (2010-2015)")
37. Construction of the Nizhny Zarmag road - the recreation complex "Mamison", the Republic of North Ossetia - Alania (the Federal Target programme "South of Russia (2010-2015)")
38. Reconstruction of the Chikola - Matsuta road with approach to the village of Galiat, the Republic of North Ossetia - Alaniya (the Federal Target programme "South of Russia (2008-2015)")
39. Construction of the Kislovodsk - Dolina Narzanov - Dzhily Su - Elbrus road, Stavropol Territory, the Republic of Kabardino-Balkaria (the Federal Target programme "South of Russia (2010-2015)")
40. Construction of the railway Soldatskaya - Tyrnyauz, the Republic of Kabardino-Balkaria (The strategy of rail transport development in the Russian Federation till 2030)
41. Reconstruction of engineering work on the airport complex in the city of Magas, the Republic of Ingushetia (the Federal Target programme "Development of transport system of Russia (2010-2015)")
42. Severny irport (restoration, the second stage, also development of project documentation), Grozny, the Republic of Chechnya (the Federal Target programme "Social and economical development of the Republic of Chechnya (2008-2012)")
43. Linking villages with roads of common use, the Republic of Dagestan, the Republic of Ingushetia, the Republic of Kabardino-Balkaria, the Republic of Karachay-Cherkessia, the Republic of North Ossetia - Alania, the Republic of Chechnya, the Stavropol region

VIII. Communications

Construction of land networks of digital television, the Republic of Dagestan, the Republic of Ingushetia, the Republic of Kabardino-Balkaria, the Republic of Karachay-Cherkessia, the Republic of North Ossetia - Alania, the Republic of Chechnya

APPENDIX 2
The list of prospective projects (activities) to realize the Strategy

I. Industry

1. Development of car production capacities on the basis of existing production, the Republic of Karachay-Cherkessia
2. Creating concrete production on the basis of the Alagirsk marl deposit, the Republic of North Ossetia – Alania
3. Creating gas processing complex, Stavropol Territory
4. Development of building industrial park on gas concrete, mixtures for building, lime, fibrocement plates, the Republic of Chechnya
5. Development of car production, the Republic of Chechnya
6. Construction of shoes factory, the Republic of Chechnya
7. Construction of leather processing factory, the Republic of Chechnya
8. Projecting and construction of the 2nd stage of a car plant in the city of Argun, the Republic of Chechnya

II. Tourism

9. Realization of the "Vysota 5642" project (mountain skiing tourism cluster: "Arkhyz", "Prielbrusye", "Matlas", "Mamison"), the Republic of Dagestan, the Republic of Kabardino-Balkaria, the Republic of Karachay-Cherkessia, the Republic of North Ossetia – Alaniya
10. Development of a tourism center, the village of Uchkeken, the Makokarachayevsky district, the Republic of Karachay-Cherkessia
11. Development of the special economical area of the tourism resort type "Grand Spa Yutsa", Stavropol Territory
12. Development of a tourism complex in the Alagir district, the Republic of North Ossetia – Alania
13. Construction of the mountain skiing complex "Veduchi" (the Itum-Kalinsky district), the Republic of Chechnya
14. Development of a balneotherapeutic health resort in Sernovodsk, the Sunzha district, the Republic of Chechnya
15. Development of health resorts in the Itum-Kalinsky, Vedensky and Shatoisky districts, the Republic of Chechnya
16. Development of tourism complex in the Dzheirakhsky district, the Republic of Ingushetia
17. Development of health resorts on the basis of the Achaluksky geothermal sources, the Republic of Ingushetia

III. Transport

18. Reconstruction of the Nazran - Malgobek - Nizhny Kurp-Terek road, the Republic of Ingushetia, the Republic of Kabardino-Balkaria, the Republic of North Ossetia – Alania
19. Reconstruction of the Prokhladny - Elkhotovo road, the Republic of Kabardino-Balkaria, the Republic of North Ossetia – Alania
20. Construction of the Makhachkala - Kizlyar - Kochubei - Neftekumsk - Budennovsk - Mineralnye Vody toll road, the Republic of Dagestan, Stavropol Territory
21. Construction of the Kotlyarevskaya - Galashki rail line, the Republic of Ingushetia (The Strategy of rail transport development in the Russian Federation till 2030)
22. Construction of the Kislovodsk - Cherkessk - Adler rail line, the Republic of Karachai-Cherkessia, Stavropol Territory, Krasnodar Territory(The Strategy of rail transport development in the Russian Federation till 2030)
23. Restoration of railway service between Grozny - Nazran, the Republic of Ingushetia, the Republic of Chechnya
24. Reconstruction of the Kislovodsk - Karachayevsk road, the Republic of Karachay-Cherkessia, Stavropol Territory
25. Construction of the Budennovsk - Neftekumsk - Kizlyar railway line, the Republic of Dagestan, Stavropol Territory
26. Construction of terminal and logit complexes at interregional level in the cities of Budennovsk, Gudermes, Stavropol Territory, the Republic of Chechnya
27. Construction of terminal and logit complexes at regional level in the cities of Beslan, Buinaksk, Kizlyar, Derbent, Nalchik, Nazran, Cherkessk, the Republic of Dagestan, the Republic of Ingushetia, the Republic of Kabardino-Balkaria, the Republic of Karachai-Cherkessia, the Republic of North Ossetia – Alania
28. Development of the Makhachkala transport junction, the Republic of Dagestan
29. Development of the railway junction at the station "Makhachkala", the Republic of Dagestan
30. Construction of federal level terminal and logit complexes in the city of Makhachkala, the Republic of Dagestan
31. Construction of the road between Makhachkala and Kochubei, the Republic of Dagestan
32. Construction of roundabout way in the city of Khasavyur, the Republic of Dagestan
33. Construction of terminal and logit complexes of federal level in the city of Mineralnye Vody, Stavropol Territory
34. Construction of the railway line between Mineralnye Vody and the airport, Stavropol Territory (Strategy of rail transport development in the Russian Federation till 2030)
35. Reconstruction of the Astrakhan - Elista - Stavropol road, Stavropol Territory, the Republic of Kalmykia, the Astrakhan region
36. Reconstruction of the Svetlograd - Blagodarny - Budennovsk road, Stavropol Territory
37. Construction of roundabouts in the cities of Mineralnye Vody and Pyatigorsk, Stavropol Territory
38. Construction of a roundabout in the city of Budennovsk, Stavropol Territory
39. Construction of a roundabout in the village of Divnoye, Stavropol Territory
40. Stavropol - Mineralnye Vody - Kislovodsk Highway, Stavropol Territory (Strategy of rail transport development in the Russian Federation till 2030)
41. Construction of Stavropol - Nevinnomysk railway line, Stavropol Territory (Strategy of rail transport development in the Russian Federation till 2030)
42. Construction of a goods yard at the station Nazran-Opornaya, the Republic of Ingushetia
43. Construction of a circle road, the city of Nalchik, the Republic of Kabardino-Balkaria
44. Reconstruction of roads in the recreational complex "Prielbrusye", the Republic of Kabardino-Balkaria
45. Construction of the road between Cherkessk and Adler, the Republic of Karachai-Cherkessia
46. Construction of the Arkhyz - Dukka road, the Republic of Karachai-Cherkessia
47. Construction of a railway line in the town of Beslan, the Republic of North Ossetia - Alania (Strategy of rail transport development in the Russian Federation till 2030)
48. Reconstruction of the regional road of common use at the resort of Tsei, the Republic of North Ossetia – Alania
49. Reconstruction of the railway network of the Republic of Chechnya, the Republic of Chechnya
50. Construction of roundabout in Gudermes, the Republic of Chechnya

IV. Energy

51. Decreasing of excess energy losses in the nets of distributive companies in the territory of the North Caucasus, the North Caucasus Federal District
52. Finishing of construction of the Irganai hydroelectric plant, the Republic of Dagestan
53. Construction of the Cherek-Balkarsky series of hydroelectric power plants, the Republic of Kabardino-Balkaria
54. Measures to restore energy facilities of the Republic of Chechnya and finish construction of starting facilities of the "Nurenergo" company, the Republic of Chechnya
55. Construction of series of hydroelectric power plants on the Argun River ("Chiyurtovskaya" and "Dubayurtovskaya"), the Republic of Chechnya
56. Construction of a thermal power plant in Grozny, the Republic of Chechnya

V. Culture

57. Creating a centre of international cultural communication of the North Caucasus Federal district, the North Caucasus Federal District

VI. Nature management

58. Construction of scientific and research centre for the Black, Azov and Caspian Seas
59. Construction of a laboratory building of The Stavropol Regional Centre of epydrometeorology and Monitoring of the Environment, Stavropol Territory
60. Elimination of accident-related wells in mineral water deposits, Stavropol Territory
61. Renewal of state monitoring on conditions of the basins of the Caucasus Mineralnye Vody, Stavropol Territory
62. Activities on rehabilitation of an audit of radon source, Stavropol Territory
63. Recultivation of a tailing dump of uranium mines, Stavropol Territory

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