Interview with Kommersant

19 May 2014

Kommersant: When you became mayor, Moscow was already far ahead of the other Russian regions in terms of socioeconomic development. Over the past two years, this divide has not diminished, to say the least. Is this a major problem for the Moscow Government?

Sergei Sobyanin: Problem? It’s not Moscow’s problem but one of its advantages. Higher economic development standards make the city more attractive. But it is a problem for the country as a whole.

To resolve it, [the federal government] should focus on large cities. This would have the biggest possible effect on the country’s development and on the creation of new growth centres. This is what we see happening in other countries, especially in the emerging economies. Urbanisation is still a global development trend.

Kommersant: Will the divide increase because of the Ukrainian crisis? Considering the growing investment risks, those who decide to invest in Russia nevertheless are more likely to invest in Moscow, or am I wrong?

Sergei Sobyanin: We can’t say that all investments will be channelled into Moscow. Moscow is among the groups of Russian cities that hold 30th to 40th place in terms of per capita investment. Of course, the benchmark may be different outside Moscow. But it is a fact that after years of investment Moscow cannot report the same dynamics as the other regions that have not yet attracted enough investment. Over the past few years, investment in trade, real estate and industry is moving ever further away from Moscow and towards the other regions in the Central Federal District. Remember how global retail chains became established in Russia? They first came to Moscow and then moved on to other cities with a population of over a million. Now they are opening outlets in cities with populations ranging between 200,000 and 100,000. The Moscow Region is doing all right in this respect.

Kommersant: The same issues are now being considered by the Russian Government as part of its
development strategy for the Far East, North Caucasus and Crimea. Incidentally, what role did Moscow, which has traditionally maintained special relations with Crimea, play in recent events on the peninsula?

Sergei Sobyanin: My predecessor was actively involved in promoting integration between Sevastopol and Russia and ensured that houses for Navy veterans and amenities were built there on a large scale. Connections between Moscow and Sevastopol have never been severed and our cooperation with Sevastopol was closer than with any other Russian city. Local residents knew this and they always felt that Moscow had not abandoned them — it stood by them.

We have rolled out an ambitious programme to provide Sevastopol with new medical equipment, school and utilities equipment, and trolleybuses under the new agreement that we have signed with the city. We are going to draw up an action plan for the future within the next two months. Now Sevastopol has to align its budget with Russia’s national budget. As soon as the city has its own budget, we will know what else it needs.

Kommersant: Does Moscow have commercial, economic projects, property interests in Crimea?

Sergei Sobyanin: We have no economic projects in Sevastopol. We have three health resorts in Crimea, which have to be renovated, so we need to attract investors. That’s all.

The mere fact that Moscow has thrown its weight behind Sevastopol seems to give added confidence to potential investors.

Kommersant: Do you believe that this approach — concentrating efforts (on one part of a region) rather than ensuring the even development of the whole area — can be applied to other regions, for example, the Far East?

Sergei Sobyanin: As for the Far East, one should consider the administrative and economic aspects of the issue. Fragmentation into small economic entities — please remember that the Far East, for example, incorporates autonomous Birobijan — is not good. All federal and regional resources have to be concentrated in two or three centres, such as Khabarovsk, Vladivostok, Petropavlovsk-Kamchatsky or Sakhalin Island. It is impossible to develop everything simultaneously. Concentrating efforts is likely to lead to greater economic growth and positive dynamics in general.

Kommersant: Do you expect the population of Moscow and the Moscow Region to keep growing?

Sergei Sobyanin: Yes. We see that the population of Moscow — even without counting in the newly incorporated areas — is growing by 50,000 to 80,000 people a year. Due to the addition of these new areas, the figures will be even higher. This does not mean that people from other parts of Russia will start coming in droves to these newly incorporated areas. Our priority is to help residents of Moscow and its immediate environs to resettle, to relocate to better housing.

Kommersant: Two years ago, you said that the Moscow budget was short of 300 billion roubles following Yury Luzhkov’s resignation. Have you resolved this problem?

Sergei Sobyanin: Yes, it was an unpleasant debt: 300 billion roubles is a large sum and besides, the money was borrowed for current expenditures, which is unacceptable. If it had been borrowed to build the metro, it would have been a completely different matter. We continue working to resolve this issue.

Kommersant: Which assets does the city plan to sell this year?

Sergei Sobyanin: The situation is not so bad as to consider asset disposal. We plan to gradually privatise noncore companies. We’ve put the Olimpiysky Sports Complex and several other companies up for sale.

I’d like to remind you that we sold ZIL territories at about 32,000-34,000 per square metre of housing that will be built there, which is the highest price for such deals.

We do not plan to sell large land areas, at least not in the near future. We still have assets that can be considered attractive for privatisation. But we are not in a hurry to sell. The situation is not critical, and so we’ll carefully analyse offers and prices.

Kommersant: Are you considering new borrowing as an alternative to privatisation?

Sergei Sobyanin: The 2014 budget includes borrowing about 140 billion to cover the budget deficit. We try to avoid borrowing more money than necessary. Moscow’s debt has decreased from 20% to 12%-16% of revenue, which is an acceptable level.

Kommersant: You could easily increase it to 25%. Have you been tempted?

Sergei Sobyanin: Not really. Borrowing so much money in the market cannot be done quickly. Last year we marketed assets worth 29 billion roubles, which was not easy. Attracting more than 100 billion roubles in a lump sum is very challenging task even for Moscow. You can do this, but at a very high interest rate. We’ll do our best not to borrow in this situation. We don’t plan to increase current expenses, and we keep our investment spending the same, or even less than in the previous years. The physical amount of investment has not decreased, but project efficiency has grown.

Kommersant: Moscow seems to be the only Russian Federation’s region without any problems with the implementation of the President’s May executive orders.

Sergei Sobyanin: This is not quite true. First of all, an increase in responsibilities has not been accompanied an adequate increase in revenue. Second, Moscow has the biggest network of public sector institutions and the highest average salary in the country. Nevertheless, the executive orders will be implemented.

Kommersant: The overpopulation of Moscow is clearly felt in hospitals and healthcare centres. Are you planning to build new healthcare facilities in the city?

Sergei Sobyanin: First of all, we are going to expand the Morozovskaya Hospital, which is one of the biggest children’s clinics in Russia. This project will be implemented jointly with the federal Government. For the city, this is a megaproject.

We have approved a programme to build additional health centres in the districts that have a shortage of medical facilities.

We are implementing new medical and information technologies, including electronic doctor appointments and electronic ambulatory cards, which free doctors from paperwork and give them more time to treat patients.

In addition to municipal facilities, we are seeing an increase in private clinics that are funded by private investments or donations.

In the New Moscow, we have mounted four modular outpatient clinics financed by Transneft donations.

We have signed a concession to build an ultramodern multidisciplinary healthcare centre based at City Clinical Hospital No. 63. The Neighbourhood Doctor programme (setting up mini-clinics in close vicinity to residential buildings, educational institutions and businesses) has also been implemented great success.

What all of these projects have in common is that investors will provide some services in accordance with mandatory medical insurance programmes, i.e. free of charge for Moscow residents, and work in a single processing chain with city institutions.

Kommersant: Will teachers’ salaries ever become equal with those of doctors?

Sergei Sobyanin: This is not our goal: we plan to maintain teachers’ salaries at the level of the average regional wage. This means that teachers’ salaries in particular will exceed the average by 20%, while doctors’ salaries are double the average.

Kommersant: Has the school merger programme brought about the desired effect?

Sergei Sobyanin: Here are some facts and figures for you to judge. Teachers’ salaries have been growing for two years now without any increase in funding. They have reached the 70,000 roubles per month mark, while some teachers make even more. Not a single Moscow school is understaffed. On the contrary, there is tight competition for vacancies. Education is visibly improving. The number of good students has doubled. Two thirds of Moscow schools regularly take part in national Academic Olympics, and Moscow children make up a third of winners.

Kommersant: But wasn’t there massive resistance to the project?

Sergei Sobyanin: What do you expect of a project that provides for the dismissal of 2,000 school principals? But then, such massive dismissals were inevitable, project or no project. What did the city want, with the bloated number of school principals and heads of kindergarten? The dismissals allow for improvement in instruction and for raising teacher salaries, so we shrug off objections, however bitter they might be.

Kommersant: Moscow intended last year to sell off its United Energy Company plus Energocomplex, which it had bought from Vneshtorgbank. What has become of the sale?

Sergei Sobyanin: We have not announced the prospective transaction officially, though it was much talked about. We are currently preparing the privatisation of United Energy, because the city economy doesn’t need such companies as this. It makes more sense to transfer them into private hands. Besides, the tentative new holder isn’t wholly private: the state has a block of the Moscow United Energy Grid Company (part of the Rossiiskie Seti holding — Kommersant). It isn’t worth it for a city to have two grid companies. The situation hits users harder than the municipal economy, with skyrocketing charges due to parallel investment projects, and so on. A certain synergy will be achieved for the companies if we pool them together. That was the case with the amalgamation of the Moscow United Energy Grid Company (the city sold it to GazpromEnergo Holding in 2013 — Kommersant) and Mosenergo (part of GazpromEnergo Holding — Kommersant).

Kommersant: How much are Moscow energy grids estimated to be worth?

Sergei Sobyanin: Preliminary estimations approach 100 billion roubles.

Kommersant: Have you approved the final concept of the Moscow transport hub?

Sergei Sobyanin: The concept has been drafted and coordinated with all the parties involved. It’s been approved
at a meeting of the Coordinating Council of the Ministry of Transport and submitted to the Government for consideration. But it hasn’t been approved yet at the government level for technical reasons. There have been no fundamental changes, and we are talking about an adjusted investment timeframe. Investment in the metro and regional and federal motorways makes up the largest volumes. The Russian Railways programme is the second largest in terms of its value, including expanded commuter rail services, and it’s estimated at 280 billion roubles. The Moscow air hub comes third.

Private investment continues to increase each year, and it is to reach about 700 billion roubles in the next three years. This includes financing the development of transport hubs, rolling stock purchases, construction of private roads, etc.

Kommersant: Can Russian Railways scale down its Moscow programmes?

Sergei Sobyanin: Russian Railways has not announced any changes yet. To the best of my knowledge, they are streamlining investment in freight traffic. In any case, they are developing it not in line with the desired volumes. As for commuter trains, the timeframe is still being developed. Currently, we’re talking about expediting this programme still further and obtaining additional federal funding. This is what we’re all trying to achieve, although not very successfully at this point. But at least some of the latest decisions, passed at a meeting chaired by First Deputy Prime Minister Igor Shuvalov, on increasing Russian Railways capitalisation using National Welfare Fund assets on a payback basis will make it possible to spend an additional 80 billion roubles on commuter trains linking Moscow with the Sheremetyevo, Domodedovo and Vnukovo airports.

Kommersant: And what about rebuilding the Smaller Moscow Belt Railway?

Sergei Sobyanin: We are implementing this project on schedule, but there are some problems. We need an additional 20 billion roubles or so for viaducts and overpasses. And some other expenses were stipulated during the designing of the SMBR. Nevertheless, I believe that all the main work will be completed by 2015, and that regular passenger service will be launched in 2016.

Kommersant: But Russian Railways has no funding either...

Sergei Sobyanin: The federal budget stipulates all the main funding. Russian Railways is to contribute 40 billion roubles for the entire commuter railway project, and Moscow will provide about 50 billion. 150-180 billion roubles will come from the federal budget, plus whatever extra allocations.

Kommersant: You worked together with Presidential Executive Office head Vladimir Kozhin on a construction project for a Government building cluster next to the Kremlin. What will become of the project now that Mr Kozhin has been dismissed?

Sergei Sobyanin: It’s hard to say. Such projects largely depend on officials’ personal judgements. We’ll see whether the new office head takes an interest in the project. Theoretically, it might remain afloat, though it has no critical importance to the city and to Government offices.

Kommersant: Mr Mayor, you and Mr Kozhin also discussed the prospect to transfer Government offices to New Moscow. Does his dismissal torpedo this project?

Sergei Sobyanin: The Presidential Executive Office has nothing to do with New Moscow. We are improving the area on our own. We often use our influence not to speed up but, quite the contrary, slow down its development, because current investments in it are larger than the local infrastructure is able to cope with.

Kommersant: Does the Moscow Government still intend to sell its share of the United Electronic Trading Facility?

Sergei Sobyanin: It’s unlikely we will sell it in the near future, though we have formal grounds to do so. However, the sale might undermine the efficiency of government contract placement. The facility does not cost more than 3 billion roubles, while its auctions save 150 billion roubles a year, which are incomparable sums. That’s why we are in no hurry to sell it, though our other trading facilities make it theoretically redundant. Be that as it may, we make it a point to monitor the United Electronic Trading Facility.

Kommersant: How do you intend to develop Muscovites’ Social Card? The Bank of Moscow still remains the provider of such cards even after the Universal Electronic Card Company announced that it will provide 500,000 cards for Moscow within the year. Does the bank project clash with that of the federal company?

Sergei Sobyanin: The Social Card and the Universal Electronic Card have similar functions. The whole problem is that the latter is a federal project. Tough demands are made of it, and it has to be coordinated with a great many offices. So its smooth and flexible progress is very difficult. The matter is even more complicated with the recent idea of a Universal ID Card based on the Universal Electronic Card. That is why Moscow will make do with the announced 500,000 UECs and will produce social cards as before.

Kommersant: Close attention was paid last year to banks reporting private taxation and fining to the Public Information System for Regional and Local Payments. Are bankers providing timely reports now? Are there still complaints of belated reports to the relevant state offices about tax, fine and other payments?

Sergei Sobyanin: We have settled the main problems. Now, we have smooth contacts with bankers and all payments get through on time with just a few exceptions which we address separately. Such instances account for less than 1% of the total.

Kommersant: As of recently, the Mayor’s Office is the sole owner of the All-Russia Exhibition Centre. Will the Department of Culture take over its management?

Sergei Sobyanin: No. It’s mainly an exhibition site. Entertainment comes next. The centre also has problems (with the wear and tear of its engineering infrastructure and with tenants — Kommersant). That’s too much for the Department of Culture to cope with — it’s a challenge for all municipal services.

Kommersant: What does the Mayor’s Office intend to do to develop mobile phone communication in the Moscow metro?

Sergei Sobyanin: The metro is planning a contest for a united mobile communication grid. There are problems with contacts between operators, and we will address them.

“If primaries were held by United Russia, they would be behind closed doors”

Kommersant: At the Moscow City Duma elections your predecessor Yury Luzhkov actively supported United Russia candidates. He was photographed with them for agitprop, conducted joint meetings and spoke about a united team. Are you going to help politicians whom you’d like to see in the Moscow Duma?

Sergei Sobyanin: I’ll support United Russia, at the very least, because I’m a member of its Supreme Council Bureau. I’m bound to support it by definition, not only as a formality. I want to make sure that the Moscow Duma takes pragmatic and constructive decisions. This is very important because if we face endless debates, not to mention confrontation, it will be bad for Moscow and Muscovites. Of course, I’ll support United Russia; the Moscow Duma should have a backbone of delegates that effectively cooperate with the executive authorities.

Kommersant: Should we expect a list of Sobyanin’s team?

Sergei Sobyanin: Let’s wait and see. It’s too early to speak about this; the election campaign hasn’t even started.

Kommersant: Will the Moscow Duma receive many new deputies?

Sergei Sobyanin: I’ve always actively supported elections by single member electoral districts rather than party lists. In this case we won’t have deputies whom nobody knows or has seen in their districts for many years. I believe that those who’ve been deputies for two or three years without visiting their constituencies should not take part in the Duma elections, at the very least, those who haven’t done anything to make their voters remember them. I think there will be many new deputies in the Moscow Duma.

Kommersant: On 8 June Moscow will host the so-called My Moscow people’s primaries. Their organising committee includes members of your public election headquarters and the Moscow Civic Chamber. Are the city authorities involved in their organisation?

Sergei Sobyanin: Primaries go well in Moscow — they promote the elections and enhance the activity of Muscovites. This is a good idea that was carried out by members of the Moscow Civic Chamber and other active citizens. This is the first time this mechanism is being used in Moscow. Nothing like this was done before. Usually primaries were held by United Russia or other parties, whereas now they are a supra-party platform for everyone — both party nominees and independent candidates can take part in them.

I’m afraid that elections to the Moscow Duma will be attended by even fewer people than the mayoral ones. Elections to representative government bodies in other cities had a voter’ turnout of merely 15%-20%. Some 32% took part in the mayoral elections, so the turnout at the Moscow Duma elections is quite likely to be much lower. I don’t wish this to happen. It would be good if voters take an active part in them. I hope primaries will help in this respect.

Kommersant: Who prompted the idea of primaries?

Sergei Sobyanin: It originated in the Moscow Civic Chamber. I think this is a very sound idea. Under its Charter United Russia must hold primaries, but if it does it would be a kind of a party closed-door deal that wouldn’t promote the election campaign. I think the proposal of the Civic Chamber is much more interesting and I’m sure that Moscow’s experience will be used in other regions...

Kommersant: Should the holding of primaries in other regions be given a legal seal?

Sergei Sobyanin: No, I don’t think it’s necessary to do this, thereby increasing budget expenses. Everything should be done on a voluntary basis. We’re even renting polling stations.

Sergei Sobyanin: winning elections provides a certain stability and predictability

Kommersant: You were among the first governors to ask the President for early elections. Many regional leaders have followed your example. Have you felt the actual benefits of being elected rather than appointed, or is there no difference for you?

Sergei Sobyanin: In fact, there’s no difference at all. After being elected, you tend to feel more accountable to Muscovites. In terms of workload or my relations with the federal authorities, I don’t see much change. The only thing is that winning elections provides a certain stability and predictability, which, I think, is important for investors. If a regional head is appointed, he can be replaced at any time. If he’s elected, it means he’ll stay in office for a set period.

Kommersant: What do you think about reforming powers: is the list of authorities delegated by the Government exhaustive, or does Moscow, as a city of federal importance, need more?

Sergei Sobyanin: Today, it is possible to delegate authority based on a decision of the Government as well.

However, the Government has prepared a more comprehensive draft law which outlines areas where authority can be delegated. I don’t think anyone will immediately be granted any authority based on that list. We have discussed this issue many times, but have failed to reach any substantive decision.

Personally, we receive powers on an individual basis in Moscow, such as in the sphere of traffic safety, environmental protection and others. Rostekhnadzor now has ample authority that is not available in other regions.

Kommersant: So, you have sufficient authority?

Sergei Sobyanin: By and large, yes. However, I believe that we should follow the path taken by the legislator that involves a customised approach for different regions. Moscow and St Petersburg have received much more authority in the area of urban construction, regulations, traffic safety and so on, than other regions. I think this was the right thing to do. The problems in Moscow and, say, Kostroma, are different. And the tool sets to address these problems must be different as well.

Kommersant: Is Moscow going to rebuild its government system in connection with the local government reform?

Sergei Sobyanin: The local government reform is irrelevant to us. In Moscow, local government is established by municipal law, and federal legislation has no direct bearing on us.

Kommersant: Moscow State Duma deputy Irina Belykh proposes introducing a special procedure for delegating representatives to the Federation Council from the parliaments that are elected under the majority system. The issue concerns expanding the list of persons who may be delegated to the Federation Council, for example, from among municipal deputies. Do you support this initiative? Does Moscow actually face such difficulties in conducting additional elections to the Moscow State Duma for a seat of a Federation Council member under the current law?

Sergei Sobyanin: The problem exists. Under the current law, we must send a Moscow State Duma representative to the Federation Council, and a vacant seat in the parliament instantly becomes available. So, we have to hold additional elections. We will seek to abolish the need to conduct additional elections.

Kommersant: How much more expensive will the public transit fare become, and when will this happen?

Sergei Sobyanin: On 1 June, fares will go up by about five to seven percent, which corresponds with the level of inflation. We haven’t increased the fare for three years now, so if you consider comparable prices in 2011-2013, you’ll see that the fare has not increased at all. In fact, it has declined by 20%. If you take the share of public transit expenses as a share of the income of Moscow residents, in 2010 the fare amounted to 2.5% of the salary, while today, after the increase, it’s 1.6%.

Kommersant: The city has invested tens of billions of roubles in building road junctions and the transport infrastructure. It appears that a simple solution would be to provide additional funding to the Mosgortrans Transit Authority and the metro in order to avoid increasing the fare. All the more so, the decision to raise fares seems very unusual in the run-up to the elections.

Sergei Sobyanin: We must take balanced decisions. Of course, we can replace capital spending with the current spending, but then we’ll have problems with the metro expansion. The amount of subsidies for passenger transit in Moscow is already about 55 billion roubles, which is more than half of the current spending. This amount of public transport subsidies is unprecedented anywhere in the world. If we hadn’t subsidised it, we’d have to at least double the fare.

Kommersant: Perhaps, increasing efficiency would help?

Sergei Sobyanin: We have held the line on the transit fare for three years now without increasing subsidies precisely by improving the performance of Mosgortrans and the metro. The number of paying passengers has increased by over 10%.

Kommersant: The Moscow authorities had a bicycle project underway in conjunction with the Bank of Moscow. What has become of it?

Sergei Sobyanin: Last year, about 500 bikes were available for rent across Moscow. This year, we plan to increase this number to 2,500. This is a costly and burdensome project for just one bank to handle, so we brought Sberbank aboard as well. So far, there are two banks on the project: the Bank of Moscow, with a 50% share, Sberbank with a 25% share and the municipal authorities with 25%.

However, we are looking into more options and are open to having other businesses join us.

Kommersant: It was recently decided to make parking downtown free on Sundays. Have you ever considered making nighttime parking free as well, as in European cities?

Sergei Sobyanin: We haven’t so far. We have a fairly large number of night parking areas for residents, and adding even more free overnight parking for other motorists doesn’t seem like a good idea. Let’s wait and see how the Sunday parking will work, and then we’ll move on to other options.

Kommersant: Why did it take so long for the authorities to decide on towing vehicles with license plates covered with rags or scraps of paper?

Sergei Sobyanin: If we had been making progress at the current pace 20 years ago, the transport problem in Moscow would be been nonexistent by now. Last year, we announced a paid parking programme within the Boulevard Ring, and now this programme has expanded to include the Garden Ring. Previously, we towed 10-15 vehicles per day, now we tow 800. A short while ago, we couldn’t legally tow vehicles without the traffic police. We didn’t have towing lorries, since they can’t be bought with budget money, so we worked hard to attract investment in this area. Also, as you may remember, towing was free under federal law, which made no sense whatsoever.

Today, the decision has been taken allowing us to tow motor vehicles with covered license plates. This was done as part of the effort to combat terrorism, since we have no way of knowing who is trying to make their license plates unreadable, and why.

Kommersant: Do you plan to expand paid parking areas?

Sergei Sobyanin: Yes, that’s possible. We are holding consultations with the district authorities. The municipal deputies are asking us to expand paid parking, and I think it makes sense. They see that parking in neighbouring districts is only used by local motorists, and 99% of local residents are happy. The parking proceeds go to municipalities which use them to beautify their respective districts.

Kommersant: The programme to build 200 Orthodox churches is being implemented at an accelerated pace. Do you have plans to include other religions in this programme?

Sergei Sobyanin: Orthodox Christians constitute the vast majority of believers in Moscow, but the number of churches is relatively small. As for Muslims, I believe that the number of mosques for them in Moscow is sufficient.

Sourse: The website of the Mayor and the Government of Moscow

See also
Vladimir Efimov
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Minister of the Moscow City Government, the Head of Department of Economic Policy and Development of Moscow
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Natalya Sergunina on why Moscow does not fear the crisis and what the city’s government is betting on
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Deputy Moscow Mayor in the Moscow Government of Economic Policy, Property and Land Relations
S.S. Sobyanin
24 September 2015
Sergei Sobyanin’s interview with Moscow FM radio station
S.S. Sobyanin
Mayor of Moscow
S.S. Sobyanin
07 August 2015
Interview with TV-Centre
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Mayor of Moscow
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Moscow Mayor’s commentary for TV Centre television
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S.S. Sobyanin
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Sobyanin interviewed for Vesti-Moskva on Rossiya-1
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Mayor of Moscow
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An interview to the TV Tsentr network
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Interview with Postscript, a TV-Centre show
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Mayor of Moscow