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Old October 2nd, 2015 #1
Alex Him
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Post Putin's speech at the 70th session of the UN General Assembly

Russian President Vladimir Putin is due to address the 70th UN General Assembly session in New York City on Monday, September 28.





 
Old December 2nd, 2015 #2
Alex Him
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July 8, 2000 - Annual Address to the Federal Assembly of the Russian Federation





President Vladimir Putin:




Dear Yegor Semyonovich,

Dear Gennady Nikolaevich,

Dear State Duma deputies and members of the Federation Council,

Dear citizens of Russia,

In accordance with the Constitution, I present you with the Address to the Federal Assembly of Russia. It will concern priorities in state work. A great deal has already been started and is being done collectively. But there are also long-term tasks which will require intensive efforts.

We agreed with the leadership of both chambers to meet after my speech and discuss the main parameters of the Address which I am making to you. I very much hope that this discussion will help effective organization of future work.

This time, the Address is being made in the middle of the year, rather than at the beginning. And, as you know, this is because of objective circumstances – primarily the Russian Presidential elections. Only the current head of state has the right to present programme tasks to bodies of power, and only he has the real ability to organize their effective implementation.

The last half year showed that there is already quite a high level of agreement in society on fundamental issues of the country’s development. Constructive, if difficult, work has begun for legislative and executive power. The newly formed federal government is showing that it is capable of systematic and planned work. Programme documents on the socio-economic development of the country have in general been approved. The state approach to the matter is in many ways clear.

I am grateful to both the Federal Assembly and the Government for the fact that without losing any time, we have begun to prepare and implement important decisions for the country. I want to thank all citizens, everyone who supported us in these undertakings. And in the future, I count on the active participation of everyone in affairs of the Russian state.

A major event of recent months was the examination of laws that improve federal relations and change the state of affairs in the social and tax spheres. Their introduction will become a reference point of a new era in building the state, and in the rules of behaviour in the economy.

A period is beginning in Russia when the authorities have the moral right to demand that norms established by the state are observed. Perhaps the most serious problem in recent years was the unreasonable level of taxation, or one of the most serious problems. This was discussed a great deal, but nothing was done. The discussion went in a vicious circle, and few believed that the situation could change. Today the first steps have been made. New legislative parameters are established – and thus new rules are established. But work in this area, and we just discussed it with the Prime Minister, is still proceeding with great difficulty.

Introducing a single rate for income tax, reducing deductions to social off-budget funds will help to bring income out of the shadows. The weakening of the tax burden will make it possible for conscientious entrepreneurs to develop their business confidently in their own country.

It must be admitted: the dictates of the shadow economy and “grey” schemes, the wave of corruption and mass flow of capital abroad has in many ways been helped by the state itself. It has been helped by the vagueness of rules and by unjustified restrictions.

For a long time we have been trying to make the choice: to rely on others’ advice, aid and loans, or to develop relying on our own distinctive character, and own efforts. Many countries have also faced this choice.

If Russia remains weak, we really will have to make the former choice. And it will be the choice of a weak state. It will be the choice of the weak. The only real choice for Russia is the choice of a strong country. A country that is strong and confident of itself. Strong not in defiance of the international community, not against other strong nations, but together with them.

Now that we are moving forward, it is more important not to remember the past, but to look to the future. We must insure that all of us – entrepreneurs, power structures, all citizens – strongly feel their responsibility to the country. So that strict fulfilment of the law becomes the deliberate choice of all citizens of Russia.

Policies built on the basis of open and honest relations of the state with society will protect us from repeating past mistakes, and are the basic conditions of a new “social contract”.

Dear colleagues,

Before I speak of priorities and set tasks, I will mention the most serious problems that the country faces.

We have become accustomed to regard Russia as a system of bodies of power, or as an economic organism. But Russia is above all the people who consider this country to be their home. Their prosperity and good standard of living is the government’s main task. It is the task of any government! However, our home is a long way from comfort. It is still hard for many people to raise children, and to ensure a worthy old age for their parents. It is difficult to live.

We, the citizens of Russia, are becoming fewer and fewer with each passing year. For several years now, the population has dropped by an average of 750,000 people every year. And if we are to believe the predictions, and these predictions are based on real work, the real work of people who understand this and have devoted their entire lives to this, in 15 years, the number of Russian citizens may drop by 22 million.

I would ask you to think this figure over: it is one seventh of the country’s population. If the current tendency continues, the survival of the nation will be threatened. We really do face the threat of becoming an enfeebled nation. Today the demographic situation is one of the most alarming that the country faces.

The economic weakness of Russia continues to be another serious problem. The growing gap between leading nations and Russia pushes us towards becoming a third world country. The figures of current economic growth should not be any cause for comfort: we continue to live in conditions of progressing economic lag. I would ask you to pay special attention to this.

At first glance, the country’s economy does not look bad at the moment. GDP, industrial production, investment and tax collection are growing. However, economic growth, as in the recovery period of 1997, is at risk. Two year ago the apparent prosperity, which was based on large-scale state borrowing, collapsed under a massive financial crisis.

The current economic figures only look optimistic when compared with earlier ones. I want to stress this, only when compared with earlier ones! But they are very modest in comparison with other countries, which are developing, and much more quickly and more stable than we are. The current growth is only to a small extent connected to the renewal of the economic mechanism. In many ways, it is the result of a favourable external economic situation.

To digress from the text, I would like once more to return to what I said at the beginning: tax reform. I would ask the State Duma deputies to carefully look at what the Government offers in the context of what I just said earlier.

We cannot be happy with this situation. And this is not just because of our national pride, although this is also important. The issue is far more serious and dramatic. Can we hold out as a nation, as a civilization, if our prosperity continually depends on international loans and on the benevolence of leaders of the world economy?

Russia needs an economic system which is competitive, effective and socially just, which ensures stable political development. A stable economy is the main guarantor of a democratic society, and the very foundation of a strong nation that is respected in the world.

Russia also faces serious external problems. Our country is involved in all international processes, including economic globalization. We do not have the right to “sleep through” the information revolution that is underway in the world.

We cannot and must not lose out strategically. This is why the Conception of foreign policy was recently ratified, an updated Conception of foreign policy. It acknowledges the supremacy of domestic goals over foreign ones.

The independence of our foreign policy is in no doubt. The foundation of this policy is pragmatism, economic effectiveness, and the priority of national tasks. But we still need to work on making these principles the norm of state life.

The cold war is a thing of the past, but to this day there is a need to overcome its difficult consequences. These are attempts to infringe on the sovereign rights of nations in the guise of “humanitarian” operations, or as they say nowadays, “humanitarian” intervention, and difficulties in finding a common language in issues which represent a regional or international threat.

Thus, in the conditions of a new type of external aggression – international terrorism and the direct attempt to bring this threat into the country – Russia has met with a systematic challenge to its state sovereignty and territorial integrity, and found itself face to face with forces that strive towards a geopolitical reorganization of the world.

Our efforts to save Russia from this danger are often interpreted in a subjective and biased manner, and serve as the occasion for various types of speculation. An important area of foreign policy activity should be ensuring objective perception of Russia. Reliable information on the events in our country is a question of its reputation and national security.

A response to this and many other challenges are impossible without strengthening the state. Without this, it is impossible to solve another national task. And although strengthening the state has for some years been proclaimed as the goal of Russian policy, we have not moved beyond declarations and empty talk. Not at all!

Our most important task is to learn to use these tools of state to ensure freedom – freedom of personality, freedom of enterprise, freedom of developing institutions of civil society. The debate about the ratio between force and freedom is as old as the world itself. It continues to cause speculation on the themes of dictatorship and authoritarianism.

But our position is very clear: only a strong, or effective if someone dislikes the word ‘strong’, an effective state and a democratic state is capable of protecting civil, political and economic freedoms, capable of creating conditions for people to lead happy lives and for our country to flourish.

Dear deputies, members of the Federation Council,

The root of many of our misfortunes is in the lack of development of civil society and in the authorities’ inability to talk and work with it. The authorities constantly go to extremes – they either ignore society, or become excessively protective of it.

At the same time, the idea exists that everything in Russia depends on the regime. The regime really does answer for everything. But a great deal also depends on Russian citizens themselves. The development of the country is in many ways determined by the level of their responsibility, the maturity of political parties, social organizations, and the civic position of the media.

Over the past decade, fundamental changes have taken place in the country – rights and freedoms of the individual are guaranteed by the Constitution, a democratic political system has formed, and a multi-party system has become reality. Russian citizens vote for the President, State Duma deputies, governors, mayors, and bodies of self-administration.

However, the letter of the law and real life are often quite different things. Only the framework of a civil society has been formed in Russia. Collective, patient work is now required for it to become a full partner of the state. We are not always able to combine patriotic responsibility for the destiny of our country with what Stolypin once called “civil liberties”. So it is still hard to find a way out of a false conflict between the values of personal freedom and the interests of the state.

At the same time, a strong state is unthinkable without respect for people’s rights and freedom. Only a democratic state can ensure a balance of interests of personality and society, and combine private initiative with national tasks.

In a democratic society, a constant link between the people and government is provided by political parties. Thanks to elections, this important tool has today received the greatest possibilities for development. Without parties, it is impossible to carry out the policies of the majority, or protect the position of the minority.

Against the background of centuries-old traditions of parliamentarianism and multi-party systems in other countries, the shortcomings of our party system are particularly noticeable. A weak government benefits from having weak parties. It is easier and more comfortable for it to live by the rules of political bargaining. But a strong government is interested in strong rivals. Only in conditions of political competition is serious dialogue possible on the development of our state.

Russia needs parties which have mass support and stable authority. And they do not need parties of officials which are attached to the government, let alone which replace it. Experience has shown, and we have known this for the past several years, that formations like this perish immediately, as soon as they leave their incubator for a competitive environment.

Today, the time has come to prepare a law on parties and party activity, and in fact I believe this topic is already under discussion at the Duma. It seems to me that we need to work on this more actively. Perhaps only social and political associations should put forward candidates for President. I understand that this is a serious issue, and it needs separate wide discussion.

The current state of the trade union movement is another matter. Tendencies of formalism and bureaucratization have also affected these groups of citizens. In new conditions, trade unions should not take on state functions in the social sphere. This should not be done. Citizens of Russia do not need more intermediaries in distributing social welfare, they need professional control of fair labour contracts and observing their conditions.

This means that the tasks of trade unions is to protect the rights of hired employees in the state and private sectors, study the structure of the market, organise legal study and search for priorities in the sphere of training personnel. The field of work here is enormous, and the state alone cannot deal with it. And the state should not work alone here. This is where it should work together with trade unions.

In the establishment of civil society, the media plays an exclusive role. We talk about this problem a great deal. By standing up for the right to freedom, Russian journalists have often risked their own career – they have even risked their lives! Many of them have perished.

Nevertheless, a free press has been established in Russia. However, the Russian media, like society as a whole, is still in the process of being established. This needs to be said directly. This is where all the problems and the “growing pains” of the country are reflected, as in a mirror. Because they are working here, in the country, and not observing the events from an island somewhere. The way society is, the way the government is – this is the way journalism is here. So when people tell me: “Deal with the media, do this and that,” I reply: let us deal with society as a whole, and then the media will change. But without a truly free media, Russian democracy cannot survive, and a civil society cannot be created.

Unfortunately, we have not yet been able to develop clear democratic rules that guarantee true independence of the “fourth column”. I want to stress this – true independence. Journalistic freedom has become a coveted item for politicians and major financial groups, and a convenient tool for war between clans.

As the President of the country, I consider it my duty to point this out to society.

Censorship and inference with media activity is prohibited by law. The government strictly keeps to this principle. But censorship can come elsewhere than from the state, and inference is not just always administrative. The economic ineffectiveness of a significant part of the media makes it dependent on the commercial and political interests of its owners and sponsors. It makes it possible to use the media as a way to score points off rivals, and sometimes even to turn it into a means of mass disinformation, a means of fighting the state.

Therefore, we are obliged to guarantee journalists real, not illusory, freedom, and create legal and economic conditions in the country for civilized information business.

Freedom of speech was and remains a firm value of Russian democracy. This is our fundamental position.

I would also like to discuss another important topic.

I am certain that the development of society is unthinkable without agreement on common goals. And these goals are not just material ones. Spiritual and moral goals are no less important.

The unity of Russia is strengthened by the patriotism inherent in our people, by cultural traditions and common historic memory. And today in Russian art, in theatre and the cinema, there is a growth of interest in Russian history, in our roots and what is dear to us all. This, without doubt – I, at any rate, am certain of this – is the beginning of new spiritual development.

The democratic organization of the country and the new Russia’s openness to the world, do not contradict our uniqueness or patriotism, and do not hinder us from finding our own answers to issues of spirituality and morals. And we do not need to look for a national idea specially. It is already ripening in our society. The most important thing is to understand the kind of Russia that we believe in and the kind of Russia we want to see.

With all the abundance of views, opinions and the diversity of party platforms, we have had and continue to have common values. Values which join us and allow us to call ourselves a single people.

Dear colleagues,

Moving to priorities in economic policy, we must first of all examine what has caused the current economic growth, and whether it is stable, and how vulnerable to external influences. I talked about this at the very beginning, and now I would like to go into more detail.

On the one hand, current figures are partially the result of the favourable foreign trade situation. Everyone in this hall understands what I am talking about. On the other hand, the behaviour of enterprises and market subjects is beginning to change, and they are increasingly guided by effective demand, and reduce the costs of production. This also cannot be ignored, it is a fact.

At the same time, there is the danger that these tendencies cannot be consolidated here. The deeper reasons for the instability of our economic development remain the same, and the basic principles by which the economy works change slowly here. These problems lie in excessive intervention by the state in spheres where it should not be present, and in its absence where it is necessary. Today, the state’s involvement is unnecessary in property, enterprise and consumption to a certain extent. But on the other hand, the state remains passive in creating a common economic space for the country, in compulsory implementation of the law, and protecting property rights.

The main obstacles to economic growth are high taxes, corruption among officials and extensive crime. Solving these problems depends on the state. However, an expensive and wasteful state cannot lower taxes. A state prone to corruption, with unclear limits of jurisdiction, will not save entrepreneurs from corrupt officials and the influence of crime. An ineffective state is the main reason for the long and deep economic crisis – I am absolutely sure of this – and we know well the manifestations of this crisis.

Very many national enterprises remain uncompetitive. They have survived mainly thanks to the devaluation of the rouble, reduced tariffs on energy resources, non-payment and barter. The raw-material orientation of the market remains. Budget revenues depend to a large extent on the dynamic of world prices on energy resources. We are losing out in competition on the international market, which focuses more and more on innovation sectors, on a new economy of knowledge and technology. A significant part of the Russian economy remains in the shadows.

One of the signs of the state’s weakness, its inconsistency in carrying out necessary changes, is the excessive accumulation of state debt, particularly foreign debt. Despite being reconstructed several times, the burden of state debt represents a threat to the country’s development. Accumulated debts force us to spend not less than a third of budget revenues on servicing them and paying them off. The problem is that the debt is not getting any smaller. Reconstruction is such that the debt does not get smaller, it only grows.

We have become hostage to an economic model based on populist policies. We tried to treat diseases by covering them up. We constantly delayed passing systematic and fundamental decisions designed to have long-term consequences.

It is necessary to learn lessons from our experience and admit that the state’s key role in the economy is undoubtedly the protection of economic freedom. Our strategic line is as follows: less administration, and more entrepreneurial freedom – freedom to produce, trade and invest.

The essence of state regulation in the economy is not in increasing administrative tools, not in state expansion in individual industries (we have already gone through this, and it was ineffective), and not in supporting selected enterprises and market participants, but in protecting private initiatives and all forms of property.

The government’s tasks are to fine-tune the work of state institutions that ensure the work of the market. We will not be able to achieve stable development without a truly independent legal system and an effective system of law-enforcement bodies.

I want to particularly stress this: no national programme will be successful if we do not ensure a single economic and legal space. This is an axiom for a federal nation. But even now, there are restrictions on economic activity in the county, and we see them coming from everywhere – from federal, regional and local power bodies.

Federal power is responsible for common conditions of economic activity in the country. But territorial bodies still often introduce bans on export of grain, restrict trade of alcohol, and hinder banks that are not “theirs” from opening branches. Barriers are created to free circulation of capital, goods and services. This is an absolute disgrace! It seems to be profitable. In fact, it leads to catastrophe. In Europe, many nations agreed in Rome in 1957 on free movement of goods, people and services. This all works well. But we cannot achieve this within a single country.

Any actions by regional powers directed to limiting economic freedom must be stopped as unconstitutional. Officials responsible for this should be punished. Regions should not compete for authority, but for attracting investment and labour resources. This can only be done by improving, not by worsening conditions of economic activity.

It must be admitted that the state will not be able to stop participation in several sectors of our economy for some time yet. I mean direct participation by the state. It will not be able to, and should not stop – in sectors such as the defence and industrial complex, for example. Strategically important industries will remain under the constant attention of the state.

Dear deputies, members of the Federation Council,

Unfortunately, the business climate in our country is improving too slowly, and remains unfavourable. Taxes and entrepreneurial risks are high. Mechanisms of registering enterprises are complex, and checks are endless. The functions of bodies of state administration have in a number of cases been combined with the functions of commercial organizations. This situation is intolerable and must be changed. More active work is needed from the Government, and the Prime Minister. We know that in some central departments there is a direct combination of economic and administrative functions. This is absolutely unacceptable. It goes against common sense and the existing legislation.

Firstly, protection of property rights needs to be ensured. The state will guarantee shareholders access to information about the activity of enterprises, and restrict the possibility of “laundering” their capital, and asset withdrawal. Citizens’ property rights need to be protected, and their guarantees ensured of ownership of housing, land, bank holdings, and other movable and immovable property. It is important to establish the legal bases of the right to private property in areas where it has not yet been confirmed, above all on land and real-estate. These issues are serious ones. They need to be approached carefully, and we need to move towards solutions. These issues are an area of joint work between the Government and the Federal Assembly.

The second area is ensuring equality of conditions of competition. Today the state puts some enterprises in a profitable position – tariffs on energy resources are lower for them, they are allowed not to pay debts, and they enjoy numerous privileges. But other enterprises, working in formally equal conditions, are discriminated against, and essentially pay for the privileges of the former. Therefore, all unjustified privileges and preferences should be cancelled, direct and indirect subsidies to enterprises. Whatever the justifications for them are. Justifications will always be found. It is necessary to ensure an equal approach in distributing state funds, licenses, quotas, and do away with the selective use of bankruptcy procedure. This is an extremely important and very painful sphere of state activity. In some regions, it has simply become a tool for squaring accounts with political and economic rivals.

The third area is freeing entrepreneurs from administrative pressure. The state should gradually stop the practice of excessive interference in business.

The ability of officials to act as they see fit, and arbitrarily interpret legislative norms in both the centre and the regions oppresses entrepreneurs and creates an environment for corruption. We need to ensure that laws of direct action are applied, to reduce department instructions to a minimum, and remove ambiguity in interpreting normative documents. And furthermore, to simplify the procedure of registering enterprises, expert examination, coordinating investment projects and so on. Many people here today probably know what this entails, and have done this themselves or observed how these issues are solved in this country.

The fourth area is reducing the tax burden. Today, the tax system is conducive to mass tax avoidance, moving the economy into the shadows, reducing investment activity, and ultimately causing a drop in the competitiveness of Russian business. This means a drop in the competitiveness of the Russian state. The first step to reform the tax system has been made: Let us move further along this path. If you have noticed, I am returning to this problem for the third time.

The current customs system can also not be called effective. There is a myth that by manipulating tariffs, you can protect Russian commodity producers. To be quite honest, I also used to think this myself. However, with the current level of customs administration, and I want to stress this, this system to a large degree only protects and encourages corruption. So the customs system needs to be simplified fundamentally, and tariffs need to be unified.

The fifth area is the development of the financial infrastructure. The bank system should be freed of ineffective organizations. There should be transparency of banking activity. The stock market should become an effective mechanism for mobilizing investments, and directing them to the most promising sectors of the economy.

The sixth area is a realistic social policy. I say the sixth area, although in its importance it could of course have been put in first place. A policy of general state paternalism is economically impossible and politically inadvisable today. Rejecting this is dictated by the need for the most effective use of financial resources, and to create stimuli for development, to liberate human potential, and make people responsible for themselves and for the welfare of their families.

Social policy is not just aid for the needy, but also investment in the future of people, in their health, and in their professional, cultural, and personal development. This is why we will give priority to developing the spheres of health, education and culture.

The current system of social welfare, which is founded on non-specific social benefits and privileges, is organized in such a way that it scatters state funds, and allows rich people to enjoy social benefits at the expense of the poor. Formally, free education and health is actually paid for, and often inaccessible for the poor, child benefits are low and not paid for years, and pensions are meagre and not tied to real incomes.

The state lie has become firmly established, and it will probably be appropriate to talk of this now that we have all gathered here: we pass numerous laws, knowing in advance that they are not provided for by real financing. We make various decisions simply because of the political situation. We have no other choice but to reduce excessive social obligations and strictly follow the ones we keep. Only this way can we restore the people’s trust in the state.

A very important national task is to ensure the financial stability of the pension system. The state is obliged to prevent a crisis caused by the swift ageing of Russia’s population. To achieve this, it is necessary to introduce mechanisms of accumulative financing of pensions. We need to move to this system, carefully, step by step, but we definitely need to move in this direction.

Social policies will be conducted on the principles of accessibility and acceptable quality of basic social benefits. And they will above all provide help to those whose incomes are significantly lower than the subsistence level. Ministers’ children can do without children’s benefits, and bankers’ wives can do without unemployment benefits.

Dear colleagues,

We have convinced ourselves: the authorities’ indecision and the weakness of the state will bring economic and other reforms to nothing. The authorities must be guided by the law and the single executive power vertical that is formed in accordance with it.

We have created separate “islands” of power, but have not built reliable bridges between them. We have yet to build effective cooperation between different levels of power. We have talked a great deal about this. The centre and the territories, regional and local authorities are still competing among each other, competing for power. And their often mutually destructive fight is observed by those for whom disorder and corruption is advantageous, who make use of the lack of an effective state for their own goals. And some would like to keep this situation in the future.

The power vacuum has led to state functions being seized by private corporations and clans. They have acquired their own shadowy groups, groups of influence, dubious security services which use illegal means to receive information.

At the same time, state functions and state institutions differ from entrepreneurial ones in that they should not be bought or sold, privatized or transferred for use or lease. Professionals are needed in state service, for whom the only criterion of activity is the law. Otherwise, the state is opening the path of corruption. And the moment may come when it is simply transformed, and ceases to be democratic.

This is why we insist on a single dictatorship – the dictatorship of the Law. Although I know that many people do not like this expression. This is why it is so important to indicate the limits of the area where the state is the full and only owner. To clearly say where it is the final arbiter and to indicate the spheres where it should not become involved.

The engine of our policy should become enterprising and responsible federal bodies of executive power. The basis of their authority is the constitutional obligation to ensure the transparency of the executive power vertical, a state mandate of trust that is gained as a result of democratic Presidential elections, and a common strategy of domestic and foreign policy.

But without coordinated work with regional and local authorities, the federal bodies of power will not achieve anything. Local power should also become effective. Essentially, this involves gathering all state resources to implement a common strategy for the country’s development.

It must be admitted – federal relations in Russia are incomplete and undeveloped. Regional independence is often interpreted as a sanction for disintegration of the state. We talk about the federation and its consolidation all the time, and have been talking about this for years. However, it must be admitted: we still do not have a full federal state. I want to stress this: we do have a decentralized state.

When the Russia Constitution was passed in 1993, federal statehood was seen as a worthy goal, which it was necessary to work on thoroughly. At the beginning of the 1990s, the centre gave the regions a great deal. It was a conscious policy, although to a certain extent made without any choice. But it helped the Russian leadership to achieve the most important thing, and I think it was justified: it helped to keep the Federation within its borders. This must be admitted. It is always easier to criticize what happened before us.

However, the authorities in certain subjects of the Federation soon began to feel the stability of central power. And they quickly made a response. But I want to draw your attention to the fact that the reaction came not from the centre, not from Moscow, but from cities and villages. Bodies of local self-administration also began to take powers on themselves, mainly the powers of Federation subjects this time. Now all levels of power suffer from this disease. To break this vicious circle is our common, sacred task.

An extreme example of unsolved federal problems is Chechnya. The situation in the republic has become so difficult that its territory has become a platform for the expansion of terrorism into Russia. The initial reason here was also the lack of state unity. And Chechnya in 1999 reminded us of mistakes made in the past. And only an anti-terrorist operation could overcome the threat of the collapse of Russia, and professional military helped to maintain the state’s dignity and integrity. They deserve our deepest respect. But at what price…

Dear members of the Federation Council,

Dear State Duma deputies,

One of our first steps in strengthening federalism was the creation of federal districts and the appointment of representatives of the Russian President to them. The essence of this decision was not in consolidating the regions, as this is sometimes perceived or portrayed, but in consolidating the structures of the Presidential vertical of power in the territories. It was not designed to change administrative and territorial borders, but to increase the effectiveness of power. Not to weaken regional power, but to create conditions to consolidate federalism.

I want to particularly stress: with the creation of districts, federal power did not get further away from the territories, it got closer.

Public opinion ascribes dangerous intentions to the President’s federal representatives. They are supposed to be both “swords of vengeance” and bureaucratic intermediaries between the centre and the regions. In fact, by reducing the staff of federal officials in the regions, we want to ensure they are mobile and competent. By clearly defining the limits of jurisdiction of the federal representatives, we make their work transparent for regional administrations and the population of territories. By reducing doubled-up functions, we personify responsibility. This decision undoubtedly reinforces the unity of the country.

Federal representatives will of course assist in effectively solving the problems of their districts. But they do not have the right to intrude on the sphere of competence of the elected heads of regions. In their work, representatives will be guided by the law alone and the powers given by the law.

Our second step determines the possibility of federal intervention in situations when local bodies of power infringe the Russian Constitution and federal laws, and violate the common rights and freedoms of Russian citizens.

In the territories today, a state body of official can refuse to carry out a court decision that declares a law or another normative legal document to be unconstitutional or contrary to federal legislation. It can continue to use documents that a court declared to be invalid. This is the practice of our lives, all around. This abasement of the Russian legal system as one of the federal authorities that acts on the basis of the Constitution is intolerable. This is in fact the external manifestation of what I have been talking about. The state here is not federal, but decentralized.

Federal power and the Russian President should have the legal ability to establish order here. And regional leaders should have the right to influence local power bodies if they make unconstitutional decisions and infringe on citizens’ rights. We must not weaken the powers of regional authorities. This is the link on which federal power must rely.

But these institutions of intervention exist in many federal states. They are used very rarely, but their existence is a reliable guarantee of precise implementation of the Constitution and federal laws. In fact, even now, at the discussion stage of this problem, the Russian regions have already begun to establish order. We can see clear results in certain territories.

Our next step is reform of the Federation Council. And this is also a step towards the development of democracy, and professional foundations of parliamentary activity.

Changing the principles of forming the Federation Council poses the question of organizing permanent dialogue between leaders of subjects of the Russian Federation and heads of state on the main problems of state life, on a form of regional participation in preparing and passing important national decisions. This form may become the State Council under the Russian President, which has been discussed by some governors, and as the President, I am prepared to support it.

I would also like to mention another problem – the war of mayors and heads of municipal formations with regional leaders, which we can see everywhere. Only in rare cases can this war be seen as an assertion of the interests of local self-administration as an institution of power. Local self-administration still begin too often with mayors and ends with them. And thus, personal ambitions and attempts to gain more power should not be confused with protecting people’s real interests.

Increasing the responsibility of leaders of Federation subjects and legislative assemblies should be accompanied by an increase of responsibility among heads of municipal formations. Of course, this does not deny the necessity of further development of local self-administration. It is under the protection of the Federal Constitution and is one of the fundamental bases of Russian sovereignty of the people.

Dear colleagues,

Today, above all we set ourselves the task of establishing order in bodies of power. But this is not the final goal, only the first stage in state modernization. Unifying the resources of federal, regional and local authorities is necessary for solving other complex tasks. The main tasks are:

Improving the political system and building an effective state as the guarantor of stable social development and observance of human rights;

Bringing the capabilities of Federation subjects into line to ensure that citizens of the country have a full range of political and socio-economic rights;

Creating legal guarantees of development of the Russian economy as an economy of free enterprise and business initiative for citizens, and ensuring precise and effective implementation of economic strategic throughout the territory of Russia.

These three tasks will be solved consecutively to strengthen our state system. And to achieve this, we must already begin to consolidate efforts at all levels and branches of power.

To conclude my speech, I would like to remind you that everyone in state service has a responsibility to the state and to all of Russian society. This responsibility is specified by mandate for deputies, governors and members of Government. Despite the difference in their positions, they all have a common debt. It is a debt to the people, a debt to our country.

In Russia today, promises are not enough. Promises have been made many times, and they have all passed their expiry date. Decades of difficult and unstable life are a long enough time to demand real changes for the better. The Russian government must achieve changes soon.

We all understand how difficult it is to achieve this goal. But I am certain that we have enough sense and will.

If this is so, there will be a result.

And then we will have stability and national progress.

Russia will have success and prosperity.

Thank you very much for your attention.




The source of information - July 8, 2000 - Presidential Address to the Federal Assembly

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April 3, 2001 - Annual Address to the Federal Assembly of the Russian Federation





President Vladimir PUTIN:




Esteemed State Duma deputies,

Esteemed members of the Federation Council,

Esteemed citizens of Russia,

In presenting the Annual Address for 2001, I would first like to say a few words about the past year.

Our strategic task over the last year was to strengthen the state in the form of its institutions and all the levels of power. It was clear that without resolving this key issue we would not achieve success either in the economy or in the social sphere.

We set ourselves the objective of building an effectively functioning executive vertical power structure, ensuring legal discipline and creating an effectively functioning judicial system. We must continue to work towards this objective because it is this that will create the mechanism we need for implementing state decisions and for effectively protecting the rights of our citizens.

If we are to have a genuinely strong state we need a solid federation. We can now say today that the period of erosion of the state is over. A stop has been put to the disintegration of the state that I spoke of in last year’s address. Last year, we made a great effort together to achieve this. We drafted and adopted a federal legislation package and carried out reform of the Federation Council. The work of the presidential plenipotentiaries in the federal districts is now starting to bring results. The State Council has been created and has begun active work and Russia now finally has state symbols approved by law.

All of this took place as the economic situation remained favourable. The Russian economy experienced growth rates unseen in almost 30 years in 2000. Growth continues in some industrial sectors today. Investment activity is on the rise, more taxes are being collected and people are finally being paid their wages and pensions on time for the first time in years.

But this is all still not enough and these results cannot leave us satisfied. Our people continue to have very low living standards, Russian businesspeople are still cautious about investing money in their own country, and civil servants, unfortunately, continue putting pressure on business and holding back business initiative and activity.

We still have serious economic and social risks to deal with. This can be seen from the Russian towns left without heating and light during the winter, the numerous breakdowns and accidents in the worn out housing and utilities sector infrastructure and the serious technological disasters that have plagued us over this last year.

A cause for concern over recent months is the worsening of a number of key economic indicators coinciding with unstable development in the world economy.

For now, we are in a situation of only relative economic stability. Whether we can maintain this situation and create favourable conditions for our development and increased prosperity for our people depends on us alone. We have a unique chance and it is up to us to use it or to lose it. If we fail to make use of this opportunity we will still end up having to take the necessary decisions, but no longer in such favourable conditions for our country.

The situation requires once more analysing the situation in the country and the objectives that were set earlier, including those announced here in this hall last summer.

A year ago it was clear that in order to ensure the success of the strategic transformations we wished to undertake, we would have to bring order to relations between the federal and regional authorities, and that not having clearly delimited powers and effective mechanisms for cooperation between the different levels of power would result in greater economic and social losses. We need a consolidated and effective state power system in order to act on urgent social and economic problems and security issues. I will name just a few of these priorities.

The first task is to clearly define the specific powers of the federal centre and the country’s regions. This requires having federal laws, and I emphasise this point, federal laws that divide the powers and responsibilities between the federal and regional authorities. We need to minimise the potential for conflict in this area today by clearly defining the respective powers of the federal and regional authorities, otherwise this situation could give rise to new disputes and will be used by those who oppose this policy of strengthening the federation.

The second task is to bring order to the system of regional branches of the federal executive authorities. At the moment they are financially and organisationally weak, duplicate the work of the regional authorities and sometimes are not even up to performing control and supervision functions. The government is to define new procedures for the establishment and work of the regional branches of federal ministries and agencies over the coming months.

Finally, the third task, also technical in nature, is to bring order to inter-budgetary relations. Clear distribution of resources and tax revenue is essential for the different levels of power to be able to assume their responsibilities and effectively fulfil their mutual commitments.

We carried out a redistribution of tax revenue between the centre and the regions last year. This aroused plenty of debate but it did go some way towards giving regions more equal opportunities and gave them increased possibilities for economic development. New procedures for allocation of budget transfers are already working in practice but still have to be cemented in law, and this will require a review of the current regional support funds’ activities. We are in urgent need of a transparent mechanism for allocation of budget subsidies and transfer payments to the regions.

The municipal budgets are a crucial part of the country’s budget system. It is at this level, above all at local government level, that the different state management agencies carry out their functions. It is here that battles take place between regional and local authorities, between mayors and regional governors, usually over budget funds. As a result, budget money at all levels is not always used effectively and for its assigned purpose. This is at the root of much of the economic and political instability in the country’s regions.

Finally, the country’s heavily subsidised regions are also in need of particular attention. The government is to complete work on the relevant documents and present draft legislation regarding procedures, if necessary, for putting these regions under special financial management.

I would like to say a few words separately about the situation in Chechnya. Today I call above all on all the country’s political forces – all represented here in this hall – to show a sense of responsibility regarding the issue of resolving the problems in this republic. So far, we have managed to avoid speculating on blood and tragedy and using it to earn political dividends and score points.

Only recently we were being told that our army is in a state of disintegration and that we should not hope for any shadow of military success. And in the political sphere too, we were told, nothing positive awaited because not a single Chechen would support the federal centre’s attempts to fight terrorists and restore constitutional order. Life itself has shown that these arguments are not founded. Having fulfilled its main missions, the army is withdrawing. This is a serious result and it is has been achieved at a high price. I think therefore, breaking with the tradition of the annual addresses, that it would be a fitting moment to remember our servicemen, the Dagestani home guard, the Chechen policemen and everyone who stopped the collapse of the state at the cost of their lives. The national TV channels are broadcasting this address live to the whole country today. I ask you, not only those here in this hall, but also all those watching us and listening to us today, to stand and honour the memory of our heroes with a minute of silence.

I also want to say that, while we are making progress in Chechnya, we should guard against letting euphoria at our successes overtake us. We must not allow unfounded optimism and unrealistic expectations to take hold in society. Yes, our missions in the North Caucasus are changing today. Along with the essential task of liquidating the final hotbeds of terrorism, the emphasis should now shift to creating and strengthening the power system in Chechnya. We must take serious and responsible steps to ensure citizens’ rights, organise social rehabilitation for the people and resolve the economic problems in Chechnya. This demands from us professionalism and courage, both in preventing terrorist attacks and in overcoming the consequences of the crimes we have not managed to prevent. I must say, too, that there is still a great threat that new crimes will be committed.

No less courage, determination and patience is required of us in the social and economic sphere. Achieving change will require time, at least as much time as it took to put Chechnya in this extreme situation in which it finds itself now, and we need to be aware of this.

Dear colleagues,

One of last year’s most important decisions was the creation of the federal districts. The work of the presidential plenipotentiaries has brought federal power closer to the regions. The presidential plenipotentiaries have worked actively to help bring regional legislation into line with federal legislation. They, together with the Prosecutor General’s Office and its branches in the regions, play a key part in this process. More than 3,500 laws passed in the regions contradicted the Russian Constitution and federal laws. Today, four fifths of these laws are now in harmony with federal laws.

But we should remember that this kind of rush job, no matter how justified it may be, is not a normal way to work. Ensuring that federal laws are observed, therefore, should be work carried out in a planned fashion and in close contact with the justice authorities, the prosecutors and the courts.

I would also like to remind those who pass the laws and those who enforce them that we need to not only ensure that the regions do not infringe on what comes under federal authority, but also that the federal authorities do not make unjustified attempts to intervene in what is exclusively under the regions’ jurisdiction. This is an important point and in this I fully agree with the regional leaders.

A key issue for any state authorities is how much the country’s people trust the state. The extent to which people trust the state depends directly on how well the state protects them from the arbitrary actions of racketeers, bandits and bribe takers. But the legislative and executive branches, the courts and the law enforcement agencies all still have shortcomings in their work here and this leads to violations of people’s rights and interests and undermines state authority in general. This, therefore, is a political problem.

We are in urgent need today of court reform. The country’s judicial system is lagging behind life and in practice is of little help in carrying out economic transformations. For businesspeople and for many others, the courts are not speedy, just, or fair. This is not always the case, but unfortunately, it is often this way.

Arbitration practice also often runs up against a contradictory and unclear legislative base. The setting of rules and regulations by the state ministries and agencies is one of the biggest brakes on developing business. Officials are used to acting according to instructions that, once new laws have come into force, contradict these laws and yet remain unchanged for years. This problem has been noted hundreds of times but practically nothing changes. The government and the ministries and agencies must take radical measures to improve the setting of rules and regulations by ministries and agencies, including abolishing ministry and agency rules and regulations in cases where direct federal laws have already been passed. Today we have a regulation and legislative base – and I will speak later about how this is linked to the work of the civil service – that is superfluous on the one hand and incomplete on the other. We have too many laws, many of which duplicate each other, but in numerous cases these laws do not resolve the issues they are supposed to as they were passed under pressure from narrow group or ministerial interests.

What’s more, it has been said many times that all laws should be backed up both organisationally and financially. What we see in practice, however, is a very different picture. The Federal Assembly continues, unfortunately, to pass laws that, to be enforced, would require reviewing the federal budget and the Pension Fund budget, also approved by them. I think that even if motivated by the best intentions, these kinds of decisions are politically irresponsible.

We have long been in need of systematised legislation that enables us to take into account new economic realities and also preserve the traditional areas of law that have been dangerously eroded over recent years. The huge number of declarative laws already passed and their contradictory nature creates opportunities for arbitrariness that is unacceptable in an area such as the law. We have practically reached the dangerous point when judges or other law enforcers can choose the particular law they think most suitable. Along with a shadow economy then, this creates a kind of “shadow justice”. Practice shows that when people lose hope of seeing justice done in the courts, they look for other, far from legal, solutions and ways around their problems and sometimes come to the conclusion that taking the illegal road has a greater chance of success than does turning to the courts. This undermines confidence in the state.

The situation with procedural legislation is no better, neither for civil nor criminal procedural legislation. There are a huge number of complaints about unjustified violence and arbitrary action when opening criminal cases, carrying out investigations and during court proceedings. Investigations can drag on for years. We have more than a million people sitting in our prisons and pre-trial detention centres. Just think about this figure. A large number of these people are cut off from society, having been sentenced under articles of the Criminal Code that provide for other forms of punishment and not just imprisonment. This is all the more serious as the state is not able to provide these people with normal prison conditions nor to ensure they get the social rehabilitation they need afterwards. The result is families destroyed and a worsening public health situation and moral climate in society. This problem has stopped being just a legal problem and now affects the whole of society.

This kind of law enforcement clearly also creates huge opportunities for abuses of citizens’ rights and freedoms and forms a breeding ground for corruption amongst civil servants. The root of this problem lies in ineffective law enforcement instruments and in the structure of our legislation itself. In this respect, we must resolve several tasks in the near future. This includes issues concerning the status of judges and the procedures for their appointment. I think that the qualification colleges should include among their members not just judges but also other authoritative representatives of the legal community. Also, we must ensure that the constitutional principles of equality of the parties and controversy are respected during criminal and civil trials.

The legislation on enforcement of court decisions also needs to be considerably improved because at the moment it is far from all court decisions that are actually enforced.

It is high time that we brought order to municipal legislation. This legislation is closest of all to people’s daily lives but it is poor quality, overburdened and often illogical. I think that local government practitioners and specialists and public councils in towns and cities that have a wealth of theoretical and practical experience should be involved in this work. We have enough people who could make a contribution here.

Finally, it is essential for the state that we improve the work of the law enforcement agencies and the prosecutor’s office.

Dear State Duma deputies and members of the Federation Council,

In last year’s address I spoke of the danger of a growing lag in the economy. This danger remains with us today. Yes, the results for 2000 show impressive economic growth, a certain increase in labour productivity and reduction in production costs. But high growth rates over just one year are not enough, and what’s more, the growth rate slowed down at the end of last year. Conditions for ensuring a sustainable high growth rate have unfortunately still not been created.

The country still has an unfavourable business climate and capital outflow of more than $20 billion a year. Total capitalisation of the Russian stock market comes to around $50 billion, while the biggest companies in our closest neighbour, Finland, have a total value five times higher. Compare the examples – Russia’s biggest companies, its blue chips, are worth several times less than their counterparts abroad.

It is clear that if we do not start taking action today, including by carrying out structural reforms, we could end up going into a lengthy period of economic stagnation tomorrow. Our economy is still based primarily on natural resources rather than on manufacturing. Our economic system has changed little in essence. Where does most of our money come from? From oil, gas, metals and other raw materials. The additional revenue we receive from exports is either eaten up, feeds the capital outflow or, at best, gets reinvested in the same raw materials sector. The fuel and energy sector accounted for more than 60 percent of all industrial investment last year. This happened partly because no effective use was found for export revenue in other sectors of the Russian economy.

Inflow of capital is hindered by high risks linked to contracts not being fulfilled and an undeveloped financial market infrastructure. Incentives are limited, there is no trust, and as a result, our economy is not modernising, it is staying stuck where it is and is even coming to rely even more on raw materials exports, and thus is even more dependent on cyclical factors.

Another tried and tested way of making money well-known in Russia through the centuries, that of making money out of state assets, be they state property or budget funds, remains popular today. In other words, a greater profit is made from distributing and redistributing wealth than is made through creating this wealth. This is what explains the protracted battles over reforming the monopolies.

It is no coincidence that we see enthusiasm, both in the government and in the Federation Council, only when budget money is being divided up, and this enthusiasm wanes when it comes to taking the decisions on collecting this budget revenue. A sort of consensus has formed: many are happy with the status quo, this state of inaction, in which some ensure they get financial benefits while others collect the political dividends. Many confuse this status quo with stability, but no one needs this kind of stability, for it is nothing more than maintaining a flawed tradition based on frittering away national resources and it is a road to economic and social stagnation. We can avoid this situation if we ensure that attempts to carry out structural reforms go beyond merely drawing up concepts and programmes, and the government must finally prove that this practice will no longer exist.

I am convinced that the cause of this state of affairs lies not only in resistance to reforms from the civil servants, though examples of this abound. I think the cause lies also in the way the legislative and executive authorities themselves work. This system of work is currently organised in such a way that it hampers and often simply halts reforms. The system looks after its own rights to receive a sort of payment for status, in other words, bribes and compensation. This form of existence of the state authorities constitutes a threat for society and for the state itself.

We must begin preparing administrative reform, above all of the government, the ministries and agencies and their branches in the regions, and we need to review not so much their structure and staff as the functions for which they are responsible. Previous repeated attempts to streamline the management apparatus and merge or separate agencies have made the government and its agencies neither more compact nor more effective. It is enough to say that the number of people working in the state agencies and apparatuses has risen from 882,000 in 1993 to more than a million today.

This year, the government has prepared a package of legislation on de-bureaucratisation and minimisation of state intervention in business. We need to work on further reducing the number of activities requiring licenses, because even though it has already been shortened, this list is still far too long.

We must make energetic efforts to bring order also to other sectors that suffer from excessive state intervention. I emphasise that we are talking here of excessive intervention. I have in mind above all at the moment compulsory certification of goods and various permits, registrations, accreditations and other norms and rules not provided for by legislation but introduced with determination by all kinds of instructions. We should have no illusions: only transparent relations between business and the state, relations that are fixed in direct legislation, will give the Russian economy the development impulse it needs.

Dear colleagues,

Last year we began reform of the budget. We passed a deficit-free budget, but the procedure by which the budget went through, or rather, was pushed through the State Duma, was more reminiscent of a round of haggling between the government and the deputies. This kind of haggling is inevitable with budget approval procedures as they are today. I call on you to examine together ways for moving away from this now familiar practice. I think it is time we looked at forming a budget that would consist of two parts.

The first part should ensure that all the state’s commitments are fulfilled. The parliament should have the right to either accept or reject the government’s proposals concerning this part, but not to change its parameters.

The second part of the budget should be based on revenue sources linked to the favourable foreign economic situation. It can build up a reserve that can be used to ensure stable development during less favourable years and also for financing large-scale strategic objectives. There can and should be discussion and debate on amendments concerning this part. I think that this kind of budget based on two parts will enable us to avoid eating up these additional revenues.

Going further. One of the points in my election campaign programme was far-reaching tax reform. We have taken the first steps in this direction and now need to move further.

Running a little ahead here, I would like to remind you of my attitude concerning the results of privatisation. I am against a new carve-up of assets. Although I do not doubt the aims and objectives that were behind these transformations in the 1990s, I think that we should listen to the questions raised regarding the way they were carried out. These questions are coming not only from supporters of a planned economy but also from liberals. Carving up assets again, however, could prove even more harmful and dangerous for the economy and social sphere, so, going on the situation we have today, what we need to do now is ensure these resources are used effectively and contribute as they should to state revenue, and the only way to do this is through tax instruments.

Our strategic priority today is to ensure fair and rational taxation of natural resources (Russia’s main source of wealth) and real estate, and also to lower taxes on non-rent income and completely phase out turnover taxes. The government will very soon complete its examination of these problems and, as the Prime Minister has just informed me, the relevant draft laws will be introduced to the parliament within three, maximum four weeks.

We must also continue customs reform. Measures have already been taken to simplify and reduce import duties but this is still not enough. We need to make radical change to the system of customs administration. The main task in this area this year is to adopt the new draft Customs Code as a direct law. Of course, this code should be in line with the standards set by the World Trade Organisation. Joining the WTO remains a priority for Russia. We need to reach basic agreements with the WTO member states by the end of this year. The parliament’s task is to bring Russian legislation into line with the World Trade Organisation’s norms and provisions.

Russia’s integration into the world economy requires us to take a civilised approach to settling the debt problem. We have to learn lessons for the future from today’s situation and only borrow when we know exactly how to spend the money effectively and how to pay it back without creating a debt burden for our children and grandchildren. The government, therefore, must be very careful in making any decisions on new borrowing.

In this respect, I want to say a few words about the government’s decision not to sign an agreement with the International Monetary Fund. The government has reached a general agreement on budget, monetary and structural policy, but has taken on the responsibility of carrying out this programme without signing a formal agreement with the IMF. I think the government is able to control its own actions and should prove that it is able to do this without supervision from the international financial organisations, but within the framework of the programme that was prepared.

Now coming to the business climate in the country. Unfortunately, ownership rights are still not well protected. The level of corporate governance is still low. Battles over ownership rights continue even after court decisions have been taken, and these decisions themselves are often not based on laws so much as on pressure from the parties involved.

We must protect the rights of honest buyers of real estate and securities or any other property. Of course, this includes not just the property of large corporations – we have to protect the property rights of all, big and small property owners, Russian and foreign investors. I think the government and the Federal Assembly should draft the relevant legislation in this area this year.

Moreover, we need to speed up the adoption of a new law on privatisation, a law that will set clear and transparent rules for the sale and acquisition of state assets and that will put an end to the political speculation on the subject of “selling Russia”. Unfortunately, this kind of talk continues today with occasional calls to take back assets, confiscate property and so on. We already lived through a time when the state owned everything, and we all know well how this ended.

I am convinced that the state’s effectiveness is not measured by how many assets it owns but rather by how effective are the political, legal and administrative mechanisms it uses to uphold public interests in the country. It was precisely this that I was talking about when I spoke about tax reform.

This same principle applies to the military-industrial complex, a sector of major importance for our country. Private entrepreneurs already supply half of our defence requirements, including through joint-stock companies with state participation. I think we should expand the private sector’s involvement in defence research and production. This should be done, of course, only in clear respect of the set requirements and through a public procurement system.

Now a few words about the land question. This is an issue that has dragged on a very long time. A solution could be to abandon attempts to cover all aspects of state regulation of land relations in the Land Code. The main thing today is not to hinder development of a land market in areas where it is already established and to make the Land Code reflect the most modern ideas about ways and methods of regulating land relations and recognise that non-agricultural land should now be able to be bought and sold without restriction. Regulating the purchase and sale of agricultural land will obviously require passing a special federal law and it should be perhaps up to the regions to decide for themselves the timetable for introducing a market for agricultural land.

An accessible and developed transport and energy infrastructure that is transparent in its functioning is extremely important for the country. We have already begun reforms in the electricity sector, gas supplies, railways and communications. It is clear for everyone that we can no longer tolerate the lack of financial transparency in these sectors, rising costs and ineffective management. The practice of large-scale cross subsidies also cannot continue. But as we begin real transformations in these infrastructure monopolies, we must take great care to calculate the economic and social consequences and also to respect owners’ and investors’ rights. This is of great importance because it is precisely these monopolies that form the foundation of our economy, today at least.

Another question of importance is capital export. I am sure that if we create an acceptable business climate in the country, capital will stop fleeing abroad. You can’t keep capital under lock and key – it has to have the legal freedom to go wherever it sees the biggest advantage and greatest effectiveness. Strategically, capital can only be kept in place by giving it the right conditions and ensuring free enterprise, within the framework of the law, of course. So I don’t think it makes sense to cling to currency restrictions that do not work anyway, and I already gave you the figures. It is time to review the very principles of currency regulation and bring them closer into line with world practice. I think that the current restrictions on capital and real estate operations discriminate against Russian citizens compared with the citizens of other countries, restrict their freedom and undermine the competitiveness of Russian business.

We should keep strictly to the principle of most-favoured treatment of our own citizens in all our actions. Russian citizens should not be banned from doing what foreign citizens have the right to do here.

Esteemed Assembly,

Our country’s development is not measured only by economic successes but also, and not in the least, by its level of spiritual and physical health, although, of course, all of these things are interlinked. The nation’s health today is directly linked not only to the state of the public health system but also to people’s way of life, to the environment and the development of medical science. In the modern world, health protection is a state-level issue. The government approves every year a programme of state-guaranteed free medical treatment, but this programme is not backed up the necessary state funds in the absolute majority of the country’s regions. The deficit of funds for this programme comes to 30–40 percent of the requirements and this gap is filled, and let us be direct and honest about this, by patients themselves, who end up having to pay for their medicines and treatment.

Restructuring in the medical system is going ahead slowly. The increase in paid services is leading to a hidden commercialisation of state and municipal hospitals and treatment centres. Meanwhile, the medical insurance system, which is supposed to compensate patients for their healthcare costs, is working ineffectively. What we now have, essentially, is a hidden but almost legalised system of paying healthcare based on the network of budget-funded medical centres, and within this system we often see arbitrariness and no real social justice at all.

Our objective this year is to create the legislative base for a transition to a healthcare system based on medical insurance. This must be done within the framework of the common medical-social insurance system and the funds for its implementation must be guaranteed. We must use this as a foundation for overcoming the chronic shortage of financial resources and ensure that the population has access to a full range of state-guaranteed basic healthcare services. We must make these services genuinely accessible and increase the quality of free healthcare for the population, and regarding paying healthcare, we must develop a clear legal and economic base for its work.

Just as important a priority for the state is to ensure that our people have a decent old age. Population decline is continuing in our country, the share of old people will increase over time and so will the burden on the working-age population. We know the forecasts in this area. But unfortunately, the state does not have great possibilities for ensuring that current and future pensioners get a decent old age. The funds available today are enough only for paying minimal pensions.

Yes, we did manage to improve a little the lives of elderly people last year. Pensions were paid on time and increased by around 28 percent in real terms. This was the biggest increase over the last few years. This year we must take another step forward and bring the average pension up to the subsistence level. These are still just modest goals. We cannot guarantee decent lives for our pensioners under the current system, and so we need to move quickly to introduce a new, more effective pension system. People are ready for this change. Surveys show that more than 60 percent of Russians think we need to radically change the way the country’s pension system works.

We have set up a National Council for Pension Reform to discuss the basic mechanisms for moving over to a new system. This council should become an effective policy-forming instrument in this sector that is of such importance for society, and it will be the body that works out the new principles for pension legislation.

No one working today knows exactly what kind of pension they will receive. No one knows because pensions are not calculated on the basis of what each individual has contributed, but depend upon future generations of workers, and we cannot predict how effectively they will work and contribute to the pension system. We need to move over to a comprehensible individual pension savings system. People should be sure that each rouble they earn will have an impact on the size of the pension they receive later. This will serve as an additional incentive and will help bring wages into the open.

Successful pension reform is directly linked to labour relations. Many people today have only limited opportunities to legally earn their wages and are forced to resort to all sorts of cunning schemes, bypassing labour and administrative legislation that just does not work in practice.

The archaic Labour Code adopted in 1971 is still in force today. The gap is growing all the time between modern market-based civil legislation and the old labour legislation, and this is preventing labour relations to be above board, and is also keeping trade unions from having any say.

The deputies, the government and the trade unions have very different views on the Labour Code. What we need are labour laws that protect workers’ rights and interests not on paper but in practice. We need laws that ensure labour resource mobility and that open the way for structural changes in companies. I very much hope that the parliament will speed up work on and approval of the Labour Code based on the government proposal.

In the social services provision sector what we especially need are effectiveness, transparency and clarity. Each citizen should know clearly what they are entitled to receive free from the federal authorities and what they should pay for themselves. The authorities at every level of power should have their responsibilities clearly set out. In accordance with this principle, we should move away from public sector financing based on estimated financing requirements to a system of financing based on set public procurement, and just as importantly, we should create the conditions for competition at all levels – between state and private organisations for the opportunity to provide social services.

Education is one sector where we should expand opportunities for economic mechanisms to work. More than a quarter of our country’s population is involved in education at any one time. On the one hand this is a lot, but on the other hand it is not enough at all. The rate at which the modern economy, science and information technologies are developing mean that education should become an ongoing part of life.

I think we should change our very approach to education. In the era of globalisation and new technologies, education is more than just part of the social sphere, it represents an investment in the country’s future and should involve companies, public organisations and citizens, everyone without exception who has an interest in quality education for our children.

Education cannot depend solely on budget distribution of resources. Extra-budgetary funding of educational institutions, fees, in other words, to call it what it really is, have in many cases become the norm. but this market is not transparent and it is not legal. School directors adopt it at their own risk. An education system that remains officially free while being fee-paying in practice corrupts both pupils and teachers. We must clearly set out the limits for free education, ensure fair and guaranteed access to this education and also create an adequate legal foundation for fee-paying education.

Our task this year is to develop state education standards that should become the foundation for later introducing norms for per-capita financing of education services. At the same time, we should create an independent attestation and education quality control system in the interests of improving the quality of education. No less important is the task of improving access to education for people from low-income families through targeted allowances.

We often hear that science in our country is in a miserable state. I would like to say a few words about this. We hear that the main reason for this bad state of affairs is the meagre funding the state provides. This is partly true, but only partly. Contrary to widespread belief, Russian science is not only very much alive but is developing, though not as fast as we would like.

Extra-budgetary financing sources have come to play a big part in financing science, increasing as a share of total financing from 5 percent to 50 percent over the last decade. Russian science has begun to work for the market and to develop intensive cooperation with Russian and foreign business. Many developments by Russian scientists are fully competitive on world markets.

The state, of course, can and should support fundamental science. But the state should act as a client for research and development only within the limits of its economic possibilities. Today then, we need to clearly define state priorities for financing scientific work and also change financing mechanisms, including by borrowing the experience of Russian scientific funds that have been financing particular research, and not entire research institutions, on a tender basis for quite a while now.

We should also remedy the incomplete and extremely contradictory nature of the legislative base for science. Legislation for managing this sector is very unwieldy, complex and confused. The Russian Academy of Sciences’ charter and legal basis for its work are archaic. The system of intellectual property protection and use is inadequate. These problems must all be resolved.

Dear colleagues,

In working towards our economic and social objectives we must take into account not only the domestic political situation but also the strength of our international positions. Foreign policy is an indicator and a major component of domestic affairs. We should have no illusions here. Not only our authority on the international stage but also the political and economic situation in Russia itself depend on how competently and effectively we use our diplomatic possibilities.

I have said before that Russia should build its foreign policy on the basis of clearly defined national priorities, pragmatism and economic effectiveness.

Our country is becoming more and more integrated into the world economy today and this is why we must act in the foreign policy sphere to protect our country’s economic interests and the interests of Russian business and Russian citizens. It is our duty to ensure and to serve, if you will, the interests of the Russian economy, and this means that we must fight discrimination against our producers, preserve and ensure optimum use of Russian assets abroad, speed up the work on Russia’s accession to the WTO on conditions that are acceptable to us and generally work to make Russia competitive in all senses of the word.

Having a good reputation is important not only in the economy but also in politics, and this is why we must fulfil all our long-term commitments and agreements and uphold the principles upon which our ties with other countries are based – a balance of interests, mutually beneficial cooperation and respect and trust. This approach is far more productive than rigid ideological dogma. Those who share this approach can always be sure that they will find an interested and predictable partner in Russia.

But it is a matter of principle for us that our international partners also respect and consider our national interests. This applies completely also to discussion of questions regarding strategic stability, disarmament, NATO expansion and forming the foundations of the world order in the twenty-first century.

Our efforts to activate work within the CIS are dictated not only by our historic closeness but also by obvious practical considerations. Russia is the nucleus of integration processes in the CIS, and as Russia’s economy experiences an upturn, this opens up new opportunities. We will continue the hard work on building a union state with Belarus and we will continue to encourage further integration in the CIS as a whole. The signature of the treaty setting up the Eurasian Economic Community is just a first significant step and we are ready to go further in this direction.

We must breathe new life into our relations with European and other international structures, while at the same time maintaining and developing all that is positive that has built up over the previous years. Dynamic processes are now at work in Europe and the role of large European organisations and regional forums is changing. In this respect, our efforts to build up a partnership with the European Union will become even more important. Integration with Europe is one of the key areas of our foreign policy.

We are consistent also in our relations with NATO. These relations are regulated by the Founding Act on mutual relations, cooperation and security that was signed in 1997. We think that this organisation often ignores the opinion of the international community and the provisions of international legal documents in its decision-making process, and this is the biggest problem. The future of our relations with NATO therefore depends on how closely the basic principles and norms of international law will be respected in questions of use of force and threat of the use of force. Our position is clear: the only organisation with the right to authorise the use of force in international relations is the United Nations Security Council.

Another problem that it is my duty to mention here at this tribune is the defence of the rights and interests of Russians abroad, our compatriots in other countries. The hundreds of thousands of Russians living and working outside this country must be sure that Russia will not abandon them should they find themselves in a difficult situation, that we will protect their personal rights, protect their families from possible violations of the law and from unlawful pressure and help uphold their human dignity. No one should be allowed to apply a selective version of human rights and freedoms based on people’s passports, and our diplomats should be not only active in such cases, but should show professional firmness and take effective action.

I wish to emphasise particularly that all the state authorities should view foreign policy today as a very sensitive and important affair. We should keep in mind that the prosperity of our country and our citizens, the situation of our compatriots abroad and, last but not least, our success in domestic affairs, depends on how intelligently, sensitively and effectively we pursue our foreign policy.

Esteemed members of the Federation Council and State Duma deputies,

The last decade has been a stormy, even revolutionary time for Russia. Last year and the beginning of this year seem rather calm compared to the past years. For many people, now used to constant crises, the lack of political upheavals have given rise to predictions of structural and personnel changes.

I want to be quite clear in saying that we do not and should not fear change. But any change, whether political or administrative, should be justified by the circumstances. Of course, public expectations and fears do not arise out of nowhere. They are based on the well-known logic that after revolution comes counter-revolution, and this is followed by a search for those guilty of revolutionary excesses and their punishment, all the more so as Russian history abounds in such examples. But it is time to say firmly that this period is over and there will be neither revolution nor counter-revolution. State stability built on a solid economic foundation is a blessing for Russia and for its people. It is high time now to start living according to normal human logic and realise that we have long and hard work ahead of us. Our main problems are too far-reaching and require not a policy of jumps forward here and there but qualified, daily work. Stability, however, is not bureaucratic stagnation. We need bold and carefully prepared decisions, competent and well-qualified specialists, both in the business community and in the civil service.

In conclusion, I would like to say once more that after a stormy decade of reform we are now entering a period where our long-term success depends on our will, our qualifications and our determination. We have exhausted the potential of transition period measures, but in order to ensure that today’s political stability becomes tomorrow’s economic prosperity, we must put in a lot more effort and this will take more than one year. The authorities must ensure that there can be no backing away from democratic freedoms and that the economic course we have chosen cannot be reversed. The authorities must work in order to guarantee this policy of improving the lives of all groups of our population and take a consistent and law-based approach to improving the country’s business climate.

In addressing today the Federal Assembly, the government and the regional and local authorities, I ask you to remember that we will not achieve tangible results of we do not remove people’s fears and cautious attitude towards the state. The cause of many of our problems lies in this ingrained lack of trust in a state that has deceived citizens on many occasions in the past, and in this inherited suspicion people feel towards the state given the lack of authentic civil equality and business partnership.

I deliberately kept your attention on problems today, on shortcomings, because I think that an objective analysis of our own shortcomings is a lot more useful than soothing speeches, though I could have chosen to develop this theme. Last year showed clearly that we can work together and that we now need to learn to work together effectively. I ask all who work for the state to treat this as their main and most important mission, I repeat, their most important mission.

Thank you for your attention.




The source of information - April 3, 2001 - Presidential Address to the Federal Assembly

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April 18, 2002 - Annual Address to the Federal Assembly of the Russian Federation





President Vladimir Putin:




Good afternoon, dear friends,

Respected chairmen of the chambers of the Federal Assembly,

Respected deputies of the State Duma, members of the Federation Council,

We have gathered in this hall once more to sum up the results of the past year, and set tasks for the period ahead. Our goals are unchanged: the democratic development of Russia, the establishment of a civilized market and state of law. And most importantly, to raise the living standard of our people.

There are achievements here, albeit small ones. Last year, economic growth continued. We were able to create new jobs. The number of unemployed dropped by 700,000. Citizens’ real income increased by almost 6%.

A year ago, we set a modest but extremely important task – to ensure that the average pension in the country finally exceeded the minimum subsistence level for pensioners. Today we can say that this task has been solved.

People look to the future with more confidence – many are beginning to make long-term personal plans, to receive education and new professions. And evidently, it is no coincidence that last year saw a record number of students in Russia.

After a whole epoch of deficit budgets – when we spent more than we earned – the budget has made a profit for the second year in a row.

There is progress in the development of market infrastructure, in consolidating guarantees of private property. This is mainly thanks to improvements in the legislative base. I note the passing of the Land and Labour codes, packages on pension and legal reform, the debureaucratisation of the economy, and the improvement of the tax system. New sections, and that of real importance for people, have appeared in the Civil code, such as the section on inheritance.

And today, I want to thank the Federal Assembly and the Government of Russia, which cooperated constructively throughout this intensive period, and were often effective partners.

As political stability increases, the business climate in the country is gradually improving. Horizons for state and corporate planning have moved. Entrepreneurs make their plans for years in advance, rather than months.

We are paying off foreign debt in time, and sometimes even in advance. The summary capitalization of Russian companies has more than doubled. Export of non-raw materials has begun to increase. Supply of machines and equipment abroad has increased by a quarter over the last year. After a ten-year break, we have returned to the second place in the world in volumes of oil production, and to first place in the world in trade of energy resources. And we must intelligently make use of the country’s new position in the international economic community.

All this is gradually changing the international attitude towards us. The improvement in the economic situation is noted by international ratings agencies, which raise Russia’s credit rating. Foreign banks increase the Russian share in their investment portfolios. Our country is gradually becoming a solid and predictable business partner.

However, another thing should also be admitted: political stability and a favourable economic situation are not fully made use of to improve the standard of living for the citizens of our country, and to gain Russia a worthy place in the international economic system.

Are we satisfied with what has been achieved?

Our answer is no, of course not, not at all. There are no grounds to be “dizzy with success”. Russia’s economic problems, which built up over previous decades, decades of stagnation and crises, have not gone away. Poverty has dropped – only slightly – but continues to affect 40 million of our citizens. In the recent years of economic growth, we have only been able to avoid increasing the lag behind other countries.

On this matter, I should say that for quite some time, many politicians and citizens in the country were certain, or lived under the illusion, that the end of the period of military and political confrontation in the world would almost automatically open Russia’s path to the international economic system, and that the world would “economically embrace us”. The reality proved to be much more complicated.

Yes, the period of confrontation has ended. We are building constructive, normal relations with all the world’s nations – I want to emphasise, with all the world’s nations. However, I want to note something else: the norm in the international community, in the world today, is also harsh competition – for markets, for investment, for political and economic influence. And in this fight, Russia needs to be strong and competitive.

Today, the countries of the world compete with each other in all economic and political parameters: in the size of the tax burden, in the security level of the country and its citizens, in guarantees for protecting property rights. They compete in the attractiveness of the business climate, in the development of economic freedoms, in the quality of state institutions and the effectiveness of the legal system.

Competition has indeed become global. In the period of weakness – of our weakness – we had to give up many niches on the international market. And they were immediately occupied by others. No one wants to give them up just like that, and no one is going to, which is shown by the situation on the markets for oil, steel, air transport and other goods and services.

The conclusion is obvious: in the world today, no one intends to be hostile towards us – no one wants this or needs it. But no one is particularly waiting for us either. No one is going to help us especially. We need to fight for a place in the “economic sun” ourselves.

As I said before, Russia today needs more ambitious goals. It needs higher growth rates. And our economic policies, the daily work of our state institutions should be directed towards solving the according tasks. Furthermore, these actions, these policies should be understandable – understood and supported by the people.

I am certain that to ensure a worthy living standard for our citizens, to ensure that Russia remains an important and full member of the international community, a strong competitor, our economy should grow at much faster rates. Otherwise we will keep losing out, and our capabilities in international politics and the world economy will be reduced.

Is Russia ready for this competitive fight? Can it ensure the necessary growth rates for this? The government has predicted rates of 3.5% to 4.6% for the next few years. What does this show?

First, this is essentially an admission that a favourable state of the foreign economy no longer ensures the necessary rates for the development of the economy and its competitiveness.

And second, the Cabinet does not expect higher growth rates.

Such a low assessment of Russia’s capabilities does not help much. What’s more, it does not lend itself to active policies. It does not envisage measures designed to make use of the capabilities of the Russian economy. This primarily concerns the potential possessed by enterprise, the scientific and technical sphere, and in modern administration technology.

I believe that the main thing now is to create conditions under which citizens of Russia can earn money. To earn money and with benefit for themselves to invest in the economy of their own country.

But to achieve this, it is necessary to remove the obstacles that still hinder people from living and working. And primarily, the actual work system of state institutions needs to be changed significantly.

Today, the country’s colossal capabilities are blocked by an unwieldy, clumsy and ineffective mechanism of state. Incidentally, of the almost 500,000 appeals during the television interview, almost three quarters were complaints about various forms of administrative abuse.

Dear Assembly,

We are used to complaining about Russian bureaucracy, which is large and clumsy. And the complaints about it are fully justified. We repeat this very often. At the same time, strangely enough, there are not more bureaucratic structures in Russia than in other countries, and sometimes there are even less. What is the problem then?

The main problem is not in the number of these structures, but that their work is badly organized. The current functions of the state mechanism are not adapted to solving strategic tasks. And it is still very rare for officials to know the modern science of administration.

I have already spoken of the necessity for administrative reform. It should result in a state that is adequate to the time and the goal that our country faces. And the state mechanism should be effective, compact and efficient.

What do we need to do to achieve this?

First, we need to modernize the system of executive power as a whole. Today, divisions of executive power exist as if they were still headquarters for branches of a centralized economy. Enterprises have been privatized to a significant degree, but the old habits of management have remained. Ministries continue to direct their efforts to make enterprises and organizations subordinate to them, financially and administratively. As a result of these administrative problems, it is extremely difficult to do civilized business in this country.

Meanwhile, the state’s direct responsibility is to create conditions for the development of economic freedoms, to set strategic guidelines, to provide high-quality public services for the people, and effectively manage state property.

To achieve this, the structure of executive power should be logically and rationally organized, and the mechanism of state should become an effective tool for implementing state policies. Reforms of state service should be conducted in close coordination with updated principles of work and construction of executive power.

Second, we need an effective and precise technology for developing, passing and implementing decisions. The system that currently exists is directed more towards form than contents.

Third, we need to analyse the current functions of the state, and only keep the necessary ones.

In last year’s Address, I already gave the according instructions to the Government, and asked to prepare for the launch of the administrative reform.

It is clear that revising the functions of the state is a complex and long-term task. There can be no campaigning here. Campaigning which usually ends with officials moving from one structure to another.

But we have been talking about reducing the excessive functions of the state mechanism for two years now. For quite understandable reasons, departments continue to “cling” to these functions. But this, of course, is no excuse to delay reforms.

The Prime Minister should present valid proposals for restructuring the system of executive power.

To conclude this topic, I would like to note that the current organization of the state mechanism’s work, unfortunately, enables corruption. Corruption is not the result of a lack of repression – I want to emphasise this – but the direct results of limiting economic freedoms. Any administrative barriers are overcome with bribes. The higher the barrier, the more bribes there are, and the more officials who take them.

And we should not wait for the stability that has been achieved to turn into administrative stagnation due to the lack of transparency in the state mechanism’s work. For citizens, this remains a “black box”.

We must determine a precise list of information which state bodies are obliged to make publicly accessible. And this list should be ratified by law. This is needed for both the development of civil society, and for forming a civilized entrepreneurial environment.

Dear colleagues,

We have made an important step towards modernizing the legal system. Most of the necessary decrees, documents and laws have already been passed. Means for their implementation have been allocated. Now we need to precisely implement the decisions that have been passed.

I believe it important that the changes have not just affected the organisation and work conditions of courts, but above all the procedures ensuring the protection of individual rights and accessibility of justice.

We need a court system that is respected in the country and outside it. And this is not just a political task, but also an economic task. An effective court system – I talked about this from the beginning – is needed so that Russian and foreign companies do not doubt the authority and effectiveness of this system.

In July this year, the new Criminal procedure code comes into effect. In connection with this, legal and law-enforcement bodies should decide many organizational issues, so that beginning 1st of July this law works to the full. I appeal to the Federal Assembly to examine the necessary changes in the code and in the law on bringing it into effect, including the norms which concern transferring authority for arrests to courts.

The civil and procedural, arbitration codes, and the law on arbitration courts, which are very important for the country’s people and economy, are also in line.

I think that the structure of arbitration courts also needs to be optimized. Today disputes are settled and complaints are examined in the same court. I would ask you to pay attention to this issue.

It is also necessary to clearly share the jurisdiction between arbitration courts and courts of general jurisdiction. The court system is simply discredited – many people know this – by the fact that the same dispute is often examined in different courts, which also often make contradictory decisions. This puts entrepreneurs and citizens at a loss, overburdens courts, and does not help to develop a healthy business climate.

The statutes of the law “On the prosecutor’s office of the Russian Federation” also need to be brought into line with new legislative documents.

And finally, it is very important for us to humanize the criminal legislation and the punishment system. Currently, the same sanctions are basically applied to crimes of minor and medium seriousness as to grave crimes. Crime does not go down because of this, and it only embitters people.

At the same time, according to the existing legislation, courts have the right to apply fines and other more humane measures of punishment instead of imprisonment. However, they use this right rarely. I believe that applying punishments that do not involve imprisonment – where this is justified, where there are grounds for this – should become wide legal practice.

Our main goal – and we have talked about this a great deal, everyone knows about this – is to achieve inevitability of punishment, not its extreme harshness.

One of the factors that ensures the competitiveness of the Russian market is a stable legislative base.

Yes, the national legal system is at the stage of formation. And today we have to pass many laws, to more quickly adapt to the changing economic and social conditions. At the same time, even this cannot justify the fact that laws passed often contradict each other. When they are passed, they are not enforced. They are constantly changed, sometimes even before they come into effect.

Now the Government has prepared a new set of amendments to the Tax code. And many of the proposed changes deserve support. But I want to point out that even the “best intentions” of the authors should not become an excuse for legal carelessness and underestimating the consequences of decisions passed.

Especially as our tax legislation already has examples of norms that have been worked out well. Firstly, let us remember the 13% income tax. By taking this step, we significantly stimulated business activity, replenished the treasury and simplified the tax system. And today I would like to say once more that this rule will not be revised.

One of the factors that makes our country uncomfortable, unfortunately, for our citizens, and inhospitable for foreigners, is crime. The law-enforcement bodies should direct their efforts to protecting citizens’ rights, to fighting rackets, administrative abuse and corruption. They should protect the rights of owners and manufacturers.

The growth of extremism is a serious threat to stability and public safety in this country. This primarily concerns those who adopt fascist and nationalist slogans and symbols, and carry out pogroms, beating and killing people.

At the same time, the police and prosecutor’s office often do not have sufficiently effective tools for charging the organizers and inspirers of these crimes. In many cases only those immediately responsible go to court. In fact, bands of extremists act like organized criminal groups and should be prosecuted in a similar way. A draft law will soon be submitted to the State Duma concerning the war on extremism.

Dear State Duma deputies, members of the Federation Council!

Last year, the process of establishing the federal districts was completed. Federal power has truly become closer to the regions.

I believe that the time has come to bring the implementation of several federal functions to district level, to bring them closer to the territories. Above all, in inspection and personnel work. To be precise, in the spheres of financial control and staffing positions in regional divisions of federal departments, whose number is also subject to reflection..

Our key task is work on delineation of powers between federal, regional and local levels of authority. A year ago I spoke from this tribune of the necessity to establish order here. So far, proposals from the power bodies of Federation subjects and local self-administration have been gathered and summarized. A commission created for this purpose will analyse these proposals scrupulously.

It is clear that the commission’s task is not easy. But we expect results from its work. They are needed to increase the effectiveness of state policies, stabilize international relations, and bring more clarity to the organization of Russian power bodies as a whole.

Now, a few words on the practice of signing agreements on delimitation of authority between the federal centre and Federation subjects. The possibility of signing these agreements is stipulated by the Russian Constitution and is legitimate. At a well-known moment in our history, they were required, and I think they were essential. However, in practice the actual existence of these agreements often leads to virtual inequality in relations between subjects of the Russian Federation. And in the end, this means between citizens who live in different territories of Russia.

And in most cases, the delineation of powers only took place “on paper”. It is no coincidence that of the 42 subjects that had concluded these agreements, 28 have already annulled them.

Of course, in a country like Russia, regional specifics need to be taken into account. And the need for agreements with individual regions may of course arise. But to sign these agreements “behind the backs” of other Federation subjects, without preliminary discussion, without reaching a public consensus, is in my opinion not right.

I think that all agreements on delineation of powers should go through a compulsory procedure of ratification by federal law, by you, dear colleagues. So that everyone knows who has what preferences and why. The Federal Assembly should take this decision.

Now on the situation in Chechnya. The military stage of the conflict can be considered to be completed. It has been completed thanks to the courage and heroism of Russian army and special forces. Just a year ago, we counted how many people opposed us there. How many bandits and terrorists: two thousand, three, five or ten thousand. Now it is not important for us how many there are. We need to know where they are.

There are still many social and economic problems in the republic, and peaceful life is disrupted by attacks by bandits who remain there. However, an entire people should not have their rights taken away because of this. We cannot allow this. All inhabitants or natives of Chechnya should feel themselves to be full citizens of the Russian Federation.

And so the main task of the current stage is to return Chechnya to the political and legal space of Russia. It is to create functioning legal institutions and law-enforcement structures in Chechnya. And in the future, to hold free elections, a free system of republic power and an economically organized life of the Chechen people.

Dear Assembly,

For a long period of time, federal power has given virtually no attention to problems of local self-administration. As a result, this directly affects the living standard of the population in Russian towns and villages.

One of the sources of the situation is the low quality of the legislative base of local self-administration. The Federal law on local self-administration and the according acts of Federation system are only coordinated to a small degree with the real situation in local self-administration, and between themselves.

One of the reasons is lack of clarity in the delimitation of authority with regional bodies of power, and also the uncertainty as to what the state bodies should answer for, and what the bodies of local self-administration should answer for.

In connection with this, the concept and list of issues of “local significance” need to be specified legislatively. Some of them coincide with tasks carried out by federal and regional bodies of state power. Others require tremendous material support, and can only be successfully realized with the cooperation of subjects, and sometimes with the direct support of the Federation.

Furthermore, a major problem for local self-administration remains the inadequacy of its own revenue base. But it is to local bodies that the population turns concerning the implementation of federal laws (such as the law on veterans), the work of housing and communal services, and many other things.

I think that federal legislators must determine the structure of local self-administration. Above all, by enforcing by law the forms which have shown their viability in practice. It is also worth remembering our own, pre-revolutionary historical experience.

All these issues should be reflected in the new version of the Federal law “On general principles of local self-administration”, and in regional legislation.

And finally, it is very important for local self-administration to have the capability to create its own sources for forming the budget. By developing small business, effective use of land, and other property. At the same time, state power – taking into account the expenditure powers of municipalities – could ensure long-term norms of deductions of regulatory taxes.

I would like to stress once more: without effective local self-administration, I believe effective organization of power is generally impossible. Furthermore, it is here, at the local level, where enormous resource of public control of power is. And at this level, we must establish order. The order which citizens of the country complain is lacking.

Dear colleagues,

I would like to discuss the problems of small business separately. I just mentioned this in the context of local self-administration. It is important for the country as a whole. As you know, the Government prepared amendments to legislation on taxation of small business. And in the process of working with them in the State Duma, I would ask you to listen to the opinion of entrepreneurial associations attentively, so as not to repeat the case when after a single social tax was introduced, the tax burden on small business unfortunately only increased.

This is not the first case when hidden revision of initial projects takes place “on the way” to the Duma. Revision which leads to a distortion of the original idea.

We often say that it is very important for starting businesses to “find their feet”. At the same time, badly thought out or incomplete projects often turn our entrepreneurs upside down rather than putting them on their feet.

We must stop pointless rivalry between the people and the authorities – when the authorities create laws, and the people find ways to get around them. People’s creative activity should not be directed towards “optimizing” tax schemes, but developing their own business on the basis of using norms which we provide them with.

I would also like to add: changing taxes is important, but only part of the problem. Business in general – and small business in particular – has an enormous amount of complaints about unjustified administrative pressure. And this primarily comes from supervisory bodies and inspections.

The problems from this inspection are very extensive, and sometimes completely pointless. They are often a formality. But the material loss from accidents, collapses and fires etc. does not diminish. You pay for a certificate and “burn as much as you want”.

Hhundreds of thousands of people oversee this order. Thousands of commercial organisations – this is no exaggeration – are accredited at these bodies to “feed” off inspections. Their dictates and fines, just like extortion and bribes, are an excessive burden and oppress enterprise.

We need changes in laws and by-laws which define and regulate the powers of inspection bodies. And where possible, they need to be replaced with more effective measures of responsibility of the economic subjects. We must of course act very carefully in this matter.

I believe that we need to expand the practice of comprehensive insurance of responsibility. For order in one sphere or another, an insurance company will “answer with money” – unlike officials who at the worst risk being fined.

I am certain: the development of a system of insuring risks will not only lead to an inevitable reduction in the number of inspectors, but also to greater effectiveness of the actual system of control and inspection in the country. It will have a favourable effect on the state of the treasury, on entrepreneurial activity of citizens.

Furthermore, the Government should ensure that these inspections are reduced to a minimum – in some regions this practice exists, and functions quite well. We need to declare a moratorium on checks for small enterprises – for example, at least for the first three years of their work. If necessary, changes to legislation need to be made. Several solutions to this problem are already outlined in documents on debureaucratisation that were passed previously.

In connection with this, I would also like to appeal to the regional authorities. Your support of small business today is absolutely essential. The decisions of the federal authorities only truly work when there are real actions in the territories of Russia.

Dear colleagues,

There is another very important topic. One of the serious tasks directly connected with economic growth rates is continuing reform of major Russia companies, the so-called natural monopolies. And here there are enormous reserves for developing competition.

Last year, after long discussions, programmes for reforming a series of monopolies were approved. I would like to point out that the state’s “business-like” treatment of these monopolies is unfortunately already being used by them to raise tariffs. And the monopolists’ claims that expenses have increased are not always valid, and are in fact usually invalid.

I would like to remind you: reforms to the monopoly sector of the economy should be made in the country’s interests. Consumers of products and services – citizens, municipalities, the state – should not suffer during the modernization process of these giants. Reforms of monopolies are designed to lead to a decrease in expenses, removal of wasteful expenditure, and the appearance of well-thought out investment programmes.

To achieve this, it is necessary for the Government to ratify the budgets of infrastructure monopolies as early as this year. So far, no one even knows what goes on there.

There is another important question – management of state property. State enterprises still exist in almost all sectors of the economy. But, for example, of the almost 10,000 unitary enterprises, only a handful truly work effectively. And in 2001, around 400 state unitary enterprises were filing for bankruptcy.

I should also remind you: we still do not know the real volumes of the state sector. Stock-taking of state property, which has been discussed several times, has not been completed. The ineffective state sector does not give our economy anything but additional expenses and problems. This does not mean that it should not exist – I am only talking about the ineffective sector. I suggest that we should precisely and as quickly as possible deal with property that should be kept in state and municipal ownership.

As for bankruptcy, order in this sphere needs to be established– and above all I appeal to you once more – in legislation. Mass bankruptcy of factories has already become a profitable business. We must make the mechanism for carrying out the bankruptcy procedure and factory recovery transparent, market-oriented, and therefore immune to corruption. And I would ask the Federal Assembly not to drag out examination of the corresponding draft laws.

An important condition of dynamic economic development is an effective banking system. It is designed to accumulate financial resources and turn them into investment. It is necessary to catch up with the lag in banking reform, to increase banking inspection, to ensure transparency of banks’ activity, and take measures to increase their capitalization.

Dear colleagues,

One of the most serious issues caused by the lack of competition and monopolization of manufacture and the service sphere is reform of housing and communal services. And this issue, to one degree or another, affects absolutely everyone.

On the one hand, the population pays more and more, and on the other hand the quality does not increase. The state spends enormous funds on subsidizing housing and communal services, but the return is still low. In certain regions, the Emergency Ministry has had to solve crises involving communal problems. And the vast majority of those present know this not just by hearsay or from the television.

It is clear that the entire system of the housing and communal services requires cardinal changes. And in the initial concept of housing and communal services reforms, money was spent on maintaining technically outdated and extremely worn-out communal systems, on all the leakages and losses in supply, and simply on the expenses of the bad work of housing and communal service enterprises.

However, the main goal of reform is to improve the quality of services while reducing supply costs. Only this approach can assuage people’s fears that all housing and communal services reforms will simply involve raising rates.

The main thing that remains to be done is to give citizens the rights to control budget subsidies. Otherwise, the population will be forced to become consumers of the services of an irrational and wasteful system.

Monopoly in the housing and communal services sphere does not give citizens the chance to choose the required selection of services on the market. I would like to remind the Government and regional leaders that payment can only raised at the same time as developing competition, holding an audit of expenses of commercial enterprises and providing residents with the right to a certain selection and scope of housing and communal services.

Only in this case will the consumer be stimulated to economise light and heat, and the producer to use energy-efficient equipment, and install devices for recording consumption of resources.

The housing and communal policy is above all to provide accessible accommodation for citizens. But many of our citizens still have bad living conditions. At the same time, there have long been institutions in the world that make it much easier for citizens to solve the problem of buying and keeping a home. Above all, there is the institution of mortgage lending. Of course, this system depends on the general level of development of the country’s economy.

The low incomes of the population and high interest rates on financial markets, the undeveloped housing market and enormous prices of construction – this is far from a complete list of the problems which can and should be decided with the help of the mortgage system.

In some regions, there has been the first successful experience of housing loans on mortgage. Around 40,000 loans have been provided, and in individual Federation subjects, regional agencies for providing housing loans on mortgage have begun work.

I expect that the development of the mortgage system should become a sphere of priority attention for both the federal Government and the regional authorities.

Dear colleagues,

We need to learn to use the advantages of the new state of the world economy. It is clear that for Russia, the problem of choosing whether to integrate into the world economy or not no longer exists. The world market is already here, and our market has become a part of the world system.

At the same time, there are intense discussions in the country about joining the WTO. I can’t avoid discussing this topic either. Sometimes these discussions are so heated that they end with burning effigies of the opponents on the bonfire. I think that we don’t need to go this far, but the issue requires serious examination.

The WTO – I want to draw attention to this – is not an absolute evil and not an absolute good. And it is not an award for good behaviour. The WTO is a tool. Those who know how to use it become stronger. Those who cannot or do not want to use it, those who prefer to sit behind protectionist quotas and tariffs are doomed. They are completely doomed strategically.

Our country is still “excluded” from the process of forming the rules of world trade. We have not yet been allowed to take part in forming the rules in world trade. This causes the Russian economy to stand still, and its competitiveness to drop.

Membership in the WTO should become a tool to protect Russia’s national interests on world market. And it should become a powerful external stimulus to solve the tasks which we need to solve so much.

I am certain: the development of the Russian economy is only possible if we are guided by the harsh requirements of the world market, and occupy new niches in it.

Thus, the “architecture” of our participation in the WTO should consist of several elements.

First, discussions within the WTO are not enough. We need to increase state structures which should help national manufacturers to adapt to new work conditions. We need to revise the existing measures of state support of enterprise. We need to discover programmes that are debatable from the point of view of antidumping investigations, and bring them into line with WTO requirements.

And what is fundamentally important, we need to train staff with appropriate qualifications. In each WTO member country, thousands of people work on trade cooperation and disputes. But only a few dozen officials work on this problem in the Russian state mechanism. Where we need specialists, we don’t have enough of them, and where we don’t need them there are plenty of them.

We need a constantly functioning discussion platform to bring the interests of Russian business to bodies of state power – the interests of both the supporters and opponents of our participation in the WTO.

We still need to seriously analyse federal and regional economic regimes. In the legislation of the regions there are documents which make Russia very vulnerable to the complaints of our competitors.

Enormous work rests on our parliament for bringing our legislation and our legal base into line with WTO norms. The new edition of the Customs code, and laws on technical regulation, protection, antidumping and compensation measures, and intellectual property rights are very important. We cannot sit around twiddling our thumbs, we need to get a move on.

And of course, the authorities need to continue consultation with industrialists and with trade unions. Everyone should take part in this process. Everyone’s opinion should be taken into account.

Dear colleagues,

Our economy is not yet receptive enough to the achievements of scientific and technical progress. A significant number of enterprises essentially do not invest any funds in creating new technology or in modernizing old technology.

At the same time, there is a huge demand for Russian scientists abroad, for their scientific results and high technology. They are fully competitive, which is shown by the many foreign venture foundations that work in our country. Entire scientific areas and schools are supported by grants from international research centres and international concerns.

But we ourselves do not make proper use of the rich scientific and technical potential that Russia possesses. There are very few worthy and long-term projects for this potential in the economy.

Thus, the Government should determine forms of state support of new technology. It should find approaches that correspond to our resources, to the modern geography of markets, and types of economic links.

It is understandable that the model of scientific and technical progress of former years – a model at once pompous and archaic – should not be reinstated. Decisions are needed that are attached to specific projects, and not individual industries.

We need to help Russian developers join the world venture market of capital, ensuring an effective turnover of scientific products and services. And we need to begin this work in the segments of the world market which national manufacturers really can occupy.

And finally, we need to create conditions for the healthy commercialization of applied science. This can be done by creating joint enterprises both in Russia and abroad.

I make particular mention of public health, as it directly concerns us all. This is mainly the case only when we have problems with our own health.

You all know the health figures for the population of Russia – they are not comforting. A great deal has been said about public health services requiring modernization.

In the last Address, I set the task of preparing a legislative base for completing the move to an insurance principle for paying medical services and medical aid. We have the habit of putting off the most difficult things, unfortunately. This task has not been fulfilled.

One of the undoubted priorities is continuing military reform and moving to a professional army while reducing the term of service by conscription. The reform is requested by society, but above all by the army itself.

A new system of recruiting, and reducing terms of service for conscripts, cannot be introduced in one year. Therefore, this year the Defence Ministry is starting an experiment on the basis of individual military formations, which should develop the entire mechanism of moving recruitment of the army and navy to a voluntary principle. According to the results of the experiment, it will be understandable and clear how soon we can move to reduced terms of service by conscription. I stress: significantly reduced terms. This reform cannot be delayed, but there should also not be any fuss in this matter.

We will conduct this work gradually – taking into account the financial capabilities of the country, and the national security interests of the state.

In moving to a new type of army – an army that is mobile and compact – we must create worthy social conditions for the military and their families. The people who gave years of their life to serve Russia and have left the service should not be ignored by the state. They must be helped to find their place in the economic life of the country.

I would also remind you that in October this year, the first state census will be held in the 11 year of the Russian Federation existence.

The most general results of this large-scale undertaking will be known at the end of the year. They will give us well-founded statistical information, and clarify the situation on the population size, national make-up, employment, the number of forced migrants and immigrants and so on.

It is very important for the country that this census be held thoroughly and competently. It is impossible to make valid administrative decisions without a real understanding of the situation, and information about the make-up of the population. Holding a census is impossible without the effective cooperation and coordination of efforts of the federal and regional authorities, bodies of local self-administration, and the staff of the Presidential plenipotentiaries in the regions.

I consider the organization of the census to be a top priority task, and I ask all levels of power to take active participation in preparing for it. And I ask citizens of the country to treat the census with an understanding of the state significance of this undertaking.

Dear Assembly,

Today, Russia is one of the most reliable guarantors of international stability. It is Russia’s principled position that has made it possible to form a strong anti-terrorist coalition. In the context of allied relations, we have made according decisions along with the leaders of a number of CIS countries.

For our country, which has faced terrorism for a long time, there was no choice whether or not to support efforts to destroy the “den” of terrorism. Especially as these measures have indeed helped to increase security on the southern borders of our country, and to a significant degree have helped to improve the situation in this matter in many countries of the Commonwealth of Independent States.

By joint efforts, we have been able to solve a very important strategic task – to liquidate the most dangerous centre of international terrorism in Afghanistan. To stop its negative effect on the situation in other countries, and to remove the threat to us that came from there.

After 11 September last year, many, many people in the world realized that the “cold war” was over. They realized that now there are different threats, that a different war is on – the war with international terrorism. The danger of this is obvious; it does not require any new proof. I want to make it clear: this also fully applies to Russia.

I want to stress that Russian foreign policy will in the future be organized in a strictly pragmatic way, based on our capabilities and national interests: military and strategic, economic and political. And also taking into account the interests of our partners, above all in the CIS.

The Commonwealth of Independent States is a real factor of stability in a large part of the world, an influential association of nations with a wide range of tasks and interests.

Working with CIS countries is Russia’s main priority in foreign policy. A priority that is also connected to receiving specific advantages on world markets. CIS countries have many opportunities for carrying out large-scale joint projects on infrastructure, transport and energy. I am certain that realizing these projects will increase the durability of our integration, and will provide new possibilities to the Russian economy – and not only the Russian economy.

There are large reserves of integration in humanitarian projects, including projects on science and education. Russia has already raised the number of students from CIS countries. And the Government should examine the possibility of further increasing the number of students – at least to 1% of the total number for whom the Russian state currently pays.

I believe it necessary to once more clearly state our priorities in Europe. Here our consistent position and numerous steps towards integration with Europe are clear. We will continue active work with the European Union to form a single economic space.

Our major goal in foreign policy is to ensure strategic stability in the world. To do this, we are participating in the creation of a new system of security, we maintain constant dialogue with the United States, and work on changing the quality of our relations with NATO.

On the whole I would like to note: Russia is being actively integrated into the international community. And despite the harsh competition that I have already discussed, it is particularly important for our country to find allies and itself to be a reliable ally for others.

Dear deputies of the State Duma and members of the Federation Council,

The principle feature of the modern world is the internationalization of economy and society. And in these conditions, the best world standards become the most important criteria of success. Standards in everything: in business, in science, in sport. In economic growth rates. In the quality of how the state mechanism works, and the professionalism of the decisions we pass.

And only when we not only meet the best standards in the world, but when we create these standards ourselves – only then will we really have the chance to become rich and strong.

We must make Russia a flourishing and affluent country, so that life here is comfortable and safe. So that people can work freely, and earn money for themselves and their children without restrictions and fear.

And so that they strive to come to Russia, and not to leave it. So that they bring up their children here, and build their houses here.

Thank you for your attention.




The source of information - April 18, 2002 - Presidential Address to the Federal Assembly

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May 16, 2003 - Annual Address to the Federal Assembly of the Russian Federation





President Vladimir Putin:




Esteemed colleagues, deputies of the State Duma, members of the Federation Council, citizens of Russia!

Today, in accordance with the Constitution, I have come to report to you on the state of the nation. I would like to begin with a brief summing up of the situation.

Last year’s results are in many ways a continuation of the work begun three years ago. Over these last three years not only have we worked hard to clear the mountain of problems that life itself forces us to tackle practically on a daily basis, we have also achieved some positive results.

Now we must take the next step and focus all our decisions and all our action on ensuring that in a not too far off future, Russia will take its recognised place among the ranks of the truly strong, economically advanced and influential nations. This is an entirely new challenge we must take up, and it represents an entirely new stage in our country’s development. We could not take up this challenge earlier because we faced a great number of more urgent problems that we had to tackle first. But now we have this new opportunity in our hands and we must use it.

Russia must become and will become a country with a flourishing civil society and stable democracy, a country that fully guarantees human rights and civil and political freedoms.

Russia must become and will become a country with a competitive market economy, a country that gives reliable protection to property rights and provides the economic freedoms that allow its people to work honestly and make money without fear and limitations.

Russia will be a strong country, a country with modern, well-equipped and mobile Armed Forces able to defend our nation and its allies and protect the national interests of our state and its citizens.

Through all of this, we will create the conditions for people to enjoy a decent life and enable Russia to take its place as an equal in the community of most developed nations.

Not only will people feel proud of such a country, they will strive to multiply its wealth. They will remember and respect our great history.

This is our strategic objective.

But if we are to achieve this objective, we must consolidate, we must mobilise our intellectual forces and unite the efforts of the state authorities, civil society and all the people of this land.

We must set out a programme of clear and comprehensible objectives that we will use to achieve the consolidation we need if we are to resolve the major national problems we face.

Why do I think this of such vital importance?

Our entire historical experience shows that a country like Russia can live and develop within its existing borders only if it is a strong nation. All of the periods during which Russia has been weakened, whether politically or economically, have always and inexorably brought to the fore the threat of the country’s collapse.

Yes, certain of our achievements over these last years make it possible to speak of stabilisation. Some people even have the impression that all our problems have now been solved, that Russia now has a perfectly bright and predictable future ahead of it, and that everything now is just a question of whether the economy should grow by four or by six percent a year, and of how much we should spend.

I would like to say that this is not the case. We face serious threats. Our economic foundation has become more solid, but it is still not stable enough and still very weak. Our political system remains insufficiently developed and our state apparatus is not very effective. Most sectors of our economy are not competitive. Meanwhile, our population continues to fall and the fight against poverty is progressing far too slowly. The international situation remains complicated and competition in the world economy is as intense as ever.

All around us are countries with highly developed economies. We need to look in the face the fact that these countries push Russia out of promising world markets when they have the chance. And their obvious economic advantages serve as fuel for their growing geopolitical ambitions.

The proliferation of nuclear weapons continues in our world today. Terrorism threatens the world and endangers the security of our citizens. Certain countries sometimes use their strong and well-armed national armies to increase their zones of strategic influence rather than fighting these evils we all face.

Can Russia have any real hope of standing up to these threats if our society is splintered into little groups and if we all busy ourselves only with the narrow interests of our particular group? And if instead of becoming a thing of the past parasitic moods are only growing? And what is helping feed these moods but a bureaucracy that instead of trying to look after and build up our national wealth often happily lets it get frittered away.

It is my conviction that without consolidation at the least around basic national values and objectives, we will not be able to withstand these threats.

I would like to recall that throughout our history Russia and its people have accomplished and continue to accomplish a truly historical feat, a great work performed in the name of our country’s integrity and in the name of bringing it peace and a stable life. Maintaining a state spread over such a vast territory and preserving a unique community of peoples while keeping up a strong presence on the international stage is not just an immense labour, it is also a task that has cost our people untold victims and sacrifice.

Such has been Russia’s historic fate over these thousand and more years. Such has been the way Russia has continuously emerged as a strong nation. It is our duty never to forget this, and we should remember it now, too, as we examine the threats we face today and the main challenges to which we must rise.

The results we have achieved through our common efforts over these last three years show that we can rise to these challenges. Yes, we have already managed to deal with a good many of our problems, including some that only recently seemed impossible to resolve.

We have finally re-established the unity of our country, in law and in fact. We have reinforced state authority and brought federal power closer to the regions. Having re-established a common legal space, we were able to turn our attention to the division of powers between the federal and regional authorities. There is still a lot do here, but at least we are now hard at work on this issue. We have begun work on building up effective local authorities that have the financial resources to do their jobs. I choose my words carefully here, as we have only just begun addressing this task.

The adoption of the third part of the Russian Civil Code marked an important stage in our work on codifying our laws. The new Labour Code has also been passed. Modernised legislation and ongoing dialogue with trade unions and employers are now beginning to shape a civilised labour market.

We have made great strides towards creating a genuinely independent court system. We have adopted the new Criminal Procedural, Civil Procedural and Arbitration Procedural Codes, thereby assuring additional guarantees for human rights.

We have improved the electoral system. We now have the conditions we need for the development of a real civil society, and also for the establishment of genuinely strong political parties.

We have made considerable headway in tax reform and have begun military reform. We have managed to make progress on the complex issue of reforming land relations, a matter that had been at a standstill. I would just like to remind you that for a whole decade this question was a serious economic obstacle on the road to democracy and the market.

We have taken the first steps towards reforming the pension system, the infrastructure monopolies and the housing and utilities sector.

Together we have overcome an absolutely unacceptable situation in which certain parts of the country had for all intents and purposes placed themselves beyond the scope of federal jurisdiction. The supremacy of the Russian Constitution and federal laws, as well as the obligation to pay taxes to the national treasury have now become the norm for all the regions of the Russian Federation.

I would like here to add a few important remarks on a subject that is sensitive for all of us. Last year’s address spoke of the need to reintegrate the Chechen Republic into the country’s political and legal space, of the need for free elections and the establishment of effectively functioning regional authorities in the republic. Frankly speaking, few people believed in these words at that time. Now a year has gone by and reality has proven to us that together we can achieve a great deal. Once again I would like to thank everyone who supported this policy we have pursued and who took an active part in it. And I of course wish to thank all those who helped organise the referendum on the constitution in Chechnya itself.

I wish to express particular thanks to the people of Chechnya today. I thank them for their courage, for the fact that they did not let themselves be intimidated in the past and will not let themselves be intimidated today, and for that wisdom that is so inherent in people who are simple and yet always so sensitive to the truth. People in Chechnya felt in their hearts their responsibility and where their human interest lies. And finally, the referendum showed that the Chechen people rightfully considers itself an inalienable part of the united multi-ethnic community of peoples that make up Russia.

It is true that we have had to pay a high price to restore Russia’s territorial integrity, and we bow our heads in memory of our fallen soldiers and of the Chechen civilians who lost their lives, in memory of all those who at the price of their lives did not allow this country to be torn apart and did their duty right to the end.

The constitutional referendum marked the end of these troubled times in Chechnya, these years during which bandits grabbed power in the republic and the people found themselves literally thrown back into a medieval world in which they lost even their most basic human rights. These were times when public executions became regular events on the streets of Chechen towns and villages, when thousands of people became living goods in the hands of slave traders, and when neither schools nor institutes nor hospitals functioned.

All of this is over now.

But we still a great deal of work to do before life in Chechnya returns completely to normal. Now, on a democratic basis and in accordance with the constitution approved by the referendum, the Chechen people must elect a president and parliament for their republic and establish local government. We must draw up and sign an agreement on the division of powers between the federal and the Chechen authorities, and of course we must get the Chechen economy working again.

We also have to transfer the organisation of law enforcement in Chechnya to the republic’s own police force. Also, as part of the ongoing process of political regulation, we are working together with you, esteemed colleagues, on preparing the ground for an amnesty that will pave the way back to peaceful life for those who for various reasons did not lay down their arms earlier, but who now wish to do so.

We will face difficult conditions as we carry out this work. It is clear that what remains of the bandits will attempt to intimidate the people of Chechnya through threats, murders and terrorist acts and will try to disrupt and prevent the political regulation process that is gathering steam and moving ahead. We see today that the terrorist acts committed by these bandits are more and more often targeting the civilian population, ordinary people.

But we will see our work through to the end and the people of Chechnya will live a normal life worthy of a human being.

Respected Assembly,

Three years ago we identified the biggest threats to Russia as being demographic decline, economic weakness and a state that did not function effectively.

Have we made headway with solving these problems? Yes and no. We have had some successes, but there have also been some serious failures. Let us take an honest look at this today.

One of the most serious threats we identified was the decrease in the Russian population due above all to a falling birth rate and rising mortality rate.

The mortality rate has continued to rise over recent years. It has increased by 10 percent over the last three years. Life expectancy, meanwhile, has continued to fall. Statistics paint the unhappy truth, showing us that life expectancy fell from 67 years in 1999 to 64 years in 2002. The reasons for this low life expectancy include high levels of illness and deaths from accidents, poisoning and injuries. The spread of new epidemics including drug addiction and AIDS is only making the situation worse.

On the positive side, the birth rate rose by 18 percent over the last three years, while infant mortality decreased by 21 percent and is now lower than at any other time in our history.

At a recent meeting of the State Council we examined a whole range of issues related to speeding up the move to a system of medical insurance-based healthcare. I think this will considerably improve the financial situation in our healthcare system. During the second half of the year we will work through the organisational questions in 16 regions in the country, and from next year we will introduce medical insurance for pensioners throughout the entire country. I very much hope that this will provide some real support for our senior citizens.

According to preliminary data from last year’s national census, the Russian population now numbers more than 145 million people. This is almost two million more than what ongoing statistics showed, but it is two million less than in 1989.

What do these figures tell us?

First, they show that our population is still falling, even if at a slower rate than what statistics had suggested.

Second, though the birth rate has risen somewhat, additions to our population have come not so much from births as from legal migration. Over the last decade, around 7 million people have immigrated to Russia, mostly from the Commonwealth of Independent States countries.

This is a significant result and it shows that despite the many problems we face, Russia remains an attractive country for millions of people looking to live and work here.

Another of the serious issues that was named three years ago was the increasing globalisation of the economy and of public international life in general in the modern world. No country today, no matter how big and how wealthy, can develop successfully in isolation from the rest of the world. On the contrary, the biggest success comes to those countries that consciously use their energy and intelligence to integrate themselves into the world economy.

We have taken some big steps forward on the road to international integration over the last three years.

Above all, Russia was invited in June last year to become a full member of the G-8 group of the world’s most highly developed nations. Together with our partners in this group we work on safeguarding our own national interests and on finding solutions to the common problems that affect all of us in the modern world. One important example of this cooperation is the global partnership on non-proliferation of weapons of mass destruction. Programs to dismantle, treat and process these weapons will help us improve the environmental situation in a number of Russian regions.

I would like to note that our credit rating today is the highest it has been so far in new Russian history. A number of Russian companies have now joined the ranks of major European and world corporations. Some of these companies have, for the first time in the last 90 years, begun serious expansion into world markets, becoming visible players on the international economic stage and real rivals for foreign firms.

We have also made a lot of progress towards joining the World Trade Organisation.

Finally, Russia’s economic weakness was named as a real strategic challenge for the country three years ago.

How far have we come since then in addressing that challenge?

There have been positive changes over this period. Economic growth has continued. Gross domestic product rose by 20 percent over these three years. Investment in fixed capital increased by more than 30 percent. Our exports increased by more than a quarter in physical volume, and exports of cars, equipment, and means of transport rose by more than 70 percent in physical volume terms. Overall, this is a decent result.

For the first time in the last fifty years, Russia went from importing grain to exporting it. Since 1999, exports of Russian foodstuffs have tripled.

Exports of oil, petroleum products and gas rose by 18 percent, and Russia today is one of the world’s biggest energy exporters.

Information technologies have developed at a fast pace. The new economy is on the increase in Russia with its output growing at a rate of 20–30 percent a year. The number of people in the country with telephones has gone up considerably, and the number of mobile phone users has doubled every year and has now reached almost 18 million. Estimates show that around 10 million people in Russia use the Internet.

These figures show that it is possible for us to achieve balanced economic growth based on both traditional sectors and modern technologies.

This growing economic potential has brought improvements to the lives of tens of millions of people. Thanks to this economic growth, almost four million people have left the ranks of the unemployed and found new jobs over these last years. The new opportunities to work and earn a living have also meant there have been fewer and not such large-scale strikes. Almost 900,000 people took part in strikes in 1997, while in 2002 that figure was down to less than 5,000. And this result has been achieved at a time when trade unions are becoming more, not less active.

Real personal incomes have increased by 32 percent. Three years ago, the average pension came to 70 percent of the survival minimum set for pensioners, while last year it reached the survival minimum level.

Finally, per capita consumption rose by almost a third over the last three years. Last year’s per capita consumption result was not just higher than that of the crisis year 1998, or than that of pre-crisis 1997, but was higher than at any time in Russian history.

Of course, this list of dry figures might seem not very comprehensible, but I am sure that you understand what these figures mean. These results represent considerable resources that have become genuinely accessible for millions of our citizens. These resources have helped improve people’s living standards, given them better healthcare and made it possible to find solutions for the complex social problems the country faces.

But at the same time, despite these positive changes, we are forced to admit that the economic results we have achieved are still very, very modest.

First, we still have a quarter of our citizens with incomes below the survival minimum. A quarter of the country’s population!

Second, our economic growth is still very unstable. In 2000, industrial output rose throughout the whole year, but in 2002, it showed an increase only for a total of six months and as a result, unemployment began to rise.

Third, the economic growth rate is slowing down. In 2000, we enjoyed growth of 10 percent, but by last year the growth rate had slowed down to only slightly more than 4 percent. A lower growth rate inevitably also slows down the rate of social development and prevents us from resolving many of the other problems we face.

We also must recognise that Russia owes its economic growth above all to the favourable world economic situation over recent years. An unprecedented improvement in foreign trade conditions for our economy gave Russia considerable economic advantages and brought in significant additional revenue. Part of this money was spent on improving living standards for the population. Part of it was invested in the Russian economy, and part of it went towards servicing our state foreign debt. We have reduced this debt by a quarter. Finally, these additional revenues also helped us build up our reserves, those of the Finance Ministry, the Central Bank, and the Central Bank’s own gold and currency reserves that have now reached a record figure of $61 billion after totalling only $11 billion three years ago.

I think it is clear that without these revenues, without this favourable foreign economic situation, our social and economic development results would have been a lot more modest. And we must not forget that this kind of favourable economic situation cannot and will not last forever.

In this respect I would like to draw your attention to another problem. The state’s total annual social spending commitments now come to 6.5 trillion roubles. This is almost double the country’s consolidated budget. Over the years, the executive and the legislative authorities have promised people far more than the Russian economy can actually deliver. What’s more, populist slogans and empty promises that mislead people and cheat their hopes are becoming more common. Unfortunately, some politicians are trying to add to them today, too.

These kinds of empty promises do not just deceive people’s hopes; they have a negative impact on our whole ongoing economic policy and they create conflicts and distortions in inter-budgetary relations. It cannot be otherwise if state expenditure is growing at a faster pace than the economy itself.

Esteemed members of both houses of the Federal Assembly and respected heads of the regions, I think it high time that we put an end to this kind of policy. The state cannot, must not and does not have the right to deceive its own people. If we have made a promise to the people, then we must deliver on that promise. Otherwise it is better not to make such promises in the first place.

And one last matter, the state-regulated tariffs for the goods and services of the infrastructure monopolies are rising at a faster rate than are prices in the unregulated sector of the Russian economy. As a result, economic resource distribution is becoming skewed in favour of these monopolies, which account for an ever-increasing share in the economy. But these monopolies are inefficient, and their expansion is putting a stranglehold on competitive sectors of our economy. The government must take a firmer line on this question, for if this situation continues it will lead to stagnation.

The conclusions we can draw from all I have just said are clear. There are some positive trends and results, but we have not made as full use as we could have of the favourable foreign trade situation and stable political environment to achieve our strategic aims.

Esteemed deputies,

Esteemed members of the Federal Assembly,

The last three years have shown us what we really can achieve if we work together towards a common goal.

These three years have shown us that Russia does not have to be fated to suffer crises and decay, and that the Russian people is full of talent, initiative and enterprising spirit, that our people know how to work, that they deserve a better life, and that they can achieve this better life if only we do not get in their way. At the very least we must not get in the way, and it would better still if we help.

I think that our ultimate goal should be to return Russia to its place among the prosperous, developed, strong and respected nations.

But this will only be possible when Russia gains economic power and when it no longer depends on the favours of the international financial organisations or on the unpredictable ups and downs of the foreign trade situation.

We can achieve this kind of Russia only through sustainable and rapid growth, growth drawing on all factors, internal and external, traditional and modern, Russian and foreign.

And finally, sustainable and rapid growth is only possible if we produce competitive goods. Everything we have must be competitive — goods and services, technology and ideas, business and the state itself, private companies and state agencies, entrepreneurs and civil servants, students and teachers, science and culture.

But some people make an opposition between economic growth and reforms. They say it is dangerous to keep pushing economic growth, and that it is more important to carry out structural reforms. I would like to express my point of view on this question, which is that this opposition between growth and reform is debatable, to say the least. We do not need reforms purely for the sake of reform. We do not need a permanent revolution.

It is clear that private initiative, both from Russian business and from foreign companies working in Russia, is the driving force of economic growth. It is also clear that Russian business must itself become modern, enterprising, flexible and mobile. It must become the worthy successor to the great traditions of Russian entrepreneurship, and some added patriotism would not go amiss.

Again I repeat, our country’s success depends to a great extent on the successes of our businesspeople.

Finally, there can be no opposition between a policy of pursuing economic growth and a social welfare policy. I would like to emphasise that we need economic growth above all in order to improve the living standards of our people. The solution to a whole range of vital problems depends directly on economic growth. This includes a quality diet, well-built and comfortable housing and reliable electricity and hot water supply. It also includes a good education and modern healthcare, protection from accidents and natural disasters, and finally, a longer life expectancy.

We have said that intense competition is an inherent part of the modern world. And so our ability to compete and our readiness to fight for resources and influence directly determines the situation within the country and Russia’s authority in international affairs.

This approach to the future of our development was heard and understood in Russian society.

Virtually all influential political forces and Russian citizens agree that making our country genuinely competitive should be our top priority. Now we should aim to ensure that this goal is also an inherent part of the way our state, regional and local authorities carry out their practical work.

But the Russian bureaucracy has proved itself poorly prepared to develop and implement the decisions our country needs today. At the same time, it has proved itself good at obtaining benefits and revenues through use of its powers and position. I spoke about this last year.

We also talked about the problem of the ineffectiveness of the state three years ago, and stressed the fact that weakness of the state will cancel out the effects of economic and other reforms.

The Russian bureaucracy today still has enormous power. But the quantity of power it has does not correspond to the quality. I must stress that to a large degree, this power has its source in nothing more than the superfluous functions of state bodies. Also, despite the enormous number of officials, the country has a severe personnel shortage. There is a shortage at all levels and in all structures of power, a shortage of modern managers and effective people. This is the background against which we must carry out the administrative reform that is vital to the country.

As you know, the Government has carried out an inventory of the functions of ministries and departments. There are approximately 5,000 of them. What this inventory revealed, however, was that almost every department thinks its functions should not be reduced, but broadened, and at the expense of other adjoining departments.

While the complexity of the task is understandable, and there are many difficulties, administrative reform has nevertheless dragged on for too long.

Evidently, the Government needs help. Obviously, an additional political impulse is needed. Of course, it will be given.

I think that the bureaucracy does not need to be convinced to become less greedy; it needs to be restricted by directive. The functions of state agencies must be radically reduced. Of course, this should be calculated very carefully. Otherwise, it seems we will not be able to solve this problem. We should base ourselves in this work on the inventory, which the governmental commission is now completing, and we should work in coordination with a series of decisions on division of powers between the different levels of authority, and on providing them with financial independence.

At the same time, we must establish an effective working mechanism for dispute resolution between citizens and the state by improving administrative procedures and the corresponding legal framework.

A few words on our socio-economic priorities. We often hear that the Russian economy does not need quality improvements and upheavals, and that there is no need for major national projects that provide serious step-by-step gains. We are told that it is quite enough to be consistent in pursuing the policies we already have, even if they do not bring the high growth rates that we all expect.

I would like to say that if we take this kind of stand and shy away from making responsible choices (and we are not talking here of the kind of mammoth projects that were typical of the stagnation period) we will not be able to make swift and meaningful progress. But I think that the problem of making a real choice between sources of growth only arises if there is a specific task that must be solved.

This task does exist, and is quite realistic, although also extremely complicated.

Over the next decade, we must at least double our country’s gross domestic product. Doubling the GDP is a systematic task, and naturally a large-scale one. It requires profound analysis and specification of existing approaches to economic policies. But what we need above all else is once again the consolidation of political forces and society, the consolidation of all the authorities, a union of our best intellectual forces, the support of our social and political structures and the co-operation of parliament and the government. We need to search together for the best ways to solve this truly strategic and vitally important historical task for Russia.

I am certain that Russia already has all the conditions to organise and carry out such tasks. The possibilities exist for truly embarking on the large-scale construction of a modern and strong economy and eventually building a state that will be competitive in every sense of the word.

Another major task that we must solve together is achieving total convertibility of the rouble, both domestic and foreign convertibility for major as well as short-term transactions. I would remind you that Russia once had one of the strongest and most respected currencies in the world. The value of the “golden rouble” was equal to the value of the nation itself.

To say it straight, Russia needs a rouble that will circulate freely on international markets. It needs a strong and reliable link with the international economic system.

And Russia, now a full member of the G-8 group of most developed states in the world, is of course obliged to achieve this goal.

Achieving this objective will be a great step towards Russia’s real integration in the world economy. And for the ordinary citizens of our country, it will mean in practice that when they travel outside Russia, it will be enough for them to take their passport and Russian roubles.

Our tax policies should remain based on the primary principles of simple procedures for tax calculation, the enforcement of legal norms such as equal treatment of all those subject to taxation, and a sensible level of taxes.

A few words on this topic. Tax reforms in Russia are unfortunately becoming a constant and ongoing process. Yes, the measures proposed by the Government to reduce the tax burden are of course a move in the right direction. But the frequency of amendments to tax legislation clearly exceeds the allowable level. Let us put it bluntly – this reflects the quality of work. It shows the quality is low. It makes it difficult for everyone to plan their lives – the state, entrepreneurs and citizens.

Now the Government has for the first time moved from yearly planning to medium-term planning in tax policies. Recently, a program was approved for tax amendments for the next three years. This is of course a correct, important and necessary step.

Now we need to move on and develop the outlines of a tax system that will exist in Russia for many years.

I would like to mention another very important matter that affects an enormous number of people – the problem of citizenship.

Currently, over a million people who came to Russia after the collapse of the Soviet Union and before the new law on citizenship was passed have found themselves in an extremely difficult situation. We recently discussed this subject with the leaders of the State Duma factions.

These people who came to Russia have lived and worked in this country, taken part in its political life, and many of them have served in the Russian army. And now they are persons without citizenship in their own country.

The laws passed last year were designed to bring order to migration flows and make them transparent. What we have ended up with does not help to solve these tasks, but rather creates serious problems for a large number of people. I consider it our duty to fix this situation. I agree with the faction leaders on this issue. Let us think about this and make the appropriate amendments.

We do not need bans and obstacles; we need an effective immigration policy. One that is advantageous for the country and convenient for people, particularly for residents of the Commonwealth of Independent States. For people who are close to us and with whom we have a good understanding, and with whom we share the same language. These are people of our common Russian culture.

Esteemed colleagues!

Russia strives to support and will continue to support friendly, good neighbourly relations with all countries, and will work together with them to solve common problems and protect common interests.

The main task of Russian foreign policy is to advance and safeguard our national interests. Here, the basic principle remains observance of the provisions of international law.

The events of the last year have once more shown that in looking after our national interests, both effective diplomacy and a reliable defence potential are equally important to Russia.

In the modern world, relations between nations are to a large degree determined by the existence of serious real and potential threats on an international scale. These threats include international terrorism, proliferation of weapons of mass destruction, regional and territorial conflicts, and the drug threat.

At the same time, it is extremely important that if a certain threat intensifies – for the international community as a whole or for an individual country – that an understandable, transparent and universally acknowledged decision-making mechanism exists. Undoubtedly, the most important such mechanism we have is the United Nations and its Security Council.

Yes, decisions at the Security Council are not always easy to make. And sometimes they are not made at all. It can happen that the initiators of a certain resolution simply do not have enough arguments to convince the other parties that they are right. Decisions by the UN, naturally, are not always to everybody’s liking. But the international community does not have any other such mechanism, and especially not one as universal, and so we need to protect the mechanism we have.

Of course, it is vital to modernise and increase the effectiveness of international organisations. And Russia is open to discuss such issues.

I think that such policies regarding international affairs are civilised and correct. These policies are not directed against anyone or for anyone. This is our position. It is a position of principle. And we will continue to hold to it in the future.

Russia was one of the first countries to confront the major threat of international terrorism. As we all know, quite recently it threatened the very territorial integrity of the Russian Federation. After the notorious tragedies caused by terrorist acts, the world formed an anti-terrorist coalition. This coalition was set up with active participation and in cooperation with the United States of America, and other countries. The operations in Afghanistan were an example of just how effective this coalition can be combating the threat of terrorism.

Russia values the anti-terrorist coalition. We value it as a tool to coordinate intergovernmental efforts in fighting this evil. Furthermore, successful co-operation within the coalition and within the framework of international law may become a good example of consolidation of civilised nations in fighting common threats.

I repeat again, it is in Russia’s interest to have a stable and predictable world order. Only this can provide global and regional stability, and political and economic progress as a whole. It will assist the international war on poverty, one of the biggest challenges we face.

Our undoubted priority in foreign policy remains strengthening relations with the countries of the Commonwealth of Independent States. These countries are our closest neighbours. We are united by centuries of historical, cultural and economic ties. The interdependence of our development is also obvious. Among other things, tens of millions of Russians live in these countries.

And to put it directly, we see the CIS area as the sphere of our strategic interests. We also assume that for CIS states, Russia is within the zone of their national interests. And our country wants to see stability and economic progress in the CIS area.

I want to stress that the economic integration process taking place in the CIS is bound up with the integration of our countries into the world economy, and will help us carry out this integration more dynamically and in conditions that are more advantageous for all our partners. And we will consistently increase co-operation within a Eurasian economic community that works more and more effectively.

Furthermore, events in the world confirm that our choice to create the Collective Security Agreement Organisation is correct and timely. In direct proximity to us, there are several sources of real, not imaginary threats – terrorism, trans-national crime, and drug trafficking. Together with our partners in the Collective Security Agreement Organisation, we must provide stability and security over a significant part of the area of the former Soviet Union.

An important element of our foreign policy is growing closer and becoming truly integrated into Europe. Of course, this is a complex and lengthy process. But this is our historical choice. It has been made. It is gradually being realised, at the present stage through initiating bilateral relations, developing strategic partnership with the European Union, and active participation in the work of the Council of Europe.

Together – in the interests of the citizens of Russia – we have found a political compromise on the problem of transit between the Kaliningrad Oblast and the rest of the territory of the Russian Federation.

It is also obvious that our interests, and the interests of “Greater Europe” require that serious steps be made towards each other. This is in the interests of citizens, business, cultural and scientific societies both in European countries and in the Russian Federation. Our proposals for helping to develop these common European integration processes are well known and focus on ensuring the free movement of citizens, and creating a single economic space.

This is not going to happen overnight. To achieve these goals, we will have to travel a complex and rather long path. But the dynamics of the integration processes at work in Europe make it possible for us to say that these plans are absolutely realistic. And they are actively supported by a great number of our partners in the European Union.

I would now like to discuss the modernisation of our country’s military.

The key issues in military reform include modernising arms and equipment, improving the way the Armed Forces is recruited and formed, and improving its actual organisation.

A strong, professional and well-equipped army is essential for the prosperous and peaceful development of the country. This army should be capable of defending Russia and its allies, and also of co-operating effectively with the armed forces of other countries in fighting common threats.

In accordance with the plans we have agreed on, we will continue to move towards a professional army, air force and navy. This transformation process will be completed in 2007. Interior Ministry and Border Guards forces will also move over to professional service.

In plain and understandable language (this is not the only consequence, but it is a very important one), this means the following: in dangerous areas and local conflicts, if Russia should, God forbid, encounter these challenges, only trained and professional units will take part.

I would also like to note that our Armed Forces will very soon move over to having a professional body of non-commissioned officers.

From 2008, compulsory military service should be reduced to one year. New recruits will spend the first six months learning military skills at specialised military institutions. They will then have the choice of serving for another six months in line units or moving over to contract professional service. People who have served for three years under contract should receive a number of benefits, including the right to higher education at government expense.

We have also decided to accept citizens from CIS countries for professional service in the Russian army. After a three-year contract service, they will receive the right to take Russian citizenship through a simplified procedure.

Much of the above requires legislative authorisation. In this matter, I count on your support – on the support of the Federal Assembly.

In the upcoming period, we must equip the Armed Forces with modern weaponry. As you know, a corresponding program to update equipment has been developed and approved, and will undoubtedly be carried out.

A serious part of reforms to the armed forces will be consolidation and modernisation of our nuclear deterrent forces.

As far as practical implementation of our plans go, I can inform you that work is also underway on creating new types of Russian weaponry, new generation weaponry. This includes what specialists have classified as strategic weapons. These weapons will ensure the defence capabilities of Russia and its allies in the long-term perspective.

I repeat: the country needs an efficient army, an army with an intelligent officer corps and a highly qualified young command staff, an army with soldiers who truly have the desire and readiness to serve their Homeland.

Esteemed deputies,

Esteemed members of the Federation Council,

Russia’s development prospects and the solution to many of our problems will to a large degree be determined by the results of the main political event of the year – the elections to the State Duma. I cannot ignore this very important event in the life of the country. It is an important step in the formation of our democracy.

In recent years, relations between the executive and legislative branches have significantly improved. Instead of conflict, we have constructive cooperation based on substantial exchange of opinion and balanced criticism. We have interaction.

I see the most important sign of the cultural recovery of our society as being the solidarity shown by politicians on issues such as the war on international terrorism, preserving the territorial integrity of the country and supporting our foreign policy efforts. I can say without exaggeration that I am truly grateful to these political figures of our country. And they are political figures of the most varied political orientation.

I would also like to thank the representatives of all deputy organisations for their active collective work.

At the same time, certain features of our national political life also cause concern. Above all, procedures for financing political parties are still “a deep dark secret” for voters. The market for election campaign and other political technologies is to a significant degree currently one of the sectors of the shadow economy. I hope that very soon our collective work will ensure a greater transparency of party life, and give people more objective information. And as a result, more chances to make the right choice.

The lack of transparency of financial operations on the political stage are often accompanied by an incoherence of ideological position, and sometimes, quite frankly, a certain political insincerity. I will explain what I mean: sometimes deputies who are supposed to be liberals and supporters of progressive economic theories in practice vote for bills that are ruinous for the state budget. And they know what they are doing. And deputies who are not afraid of publicly calling entrepreneurs nothing but “robbers” and “blood-letters” shamelessly lobby the interests of large companies.

Parliamentary parties are a part of the state political machine, and at the same time they are a part of civil society. I would say that they are the most influential part, and so the most responsible. We are all interested in furthering interaction of party structures with the regions and with citizens and public organisations.

It is clear that active contact with the people cannot and must not be limited to pre-election debates and election campaigns. Only a daily link between the state and society, which can and must be provided by the large parties, can protect the government from making serious political errors.

We often talk of the greatness of Russia. But a great Russia is not just a great state. It is above all a modern, developed society, which does not just arise by itself.

A truly developed civil society only emerges when the functions of the state machine are radically reduced, and distrust between various social groups is overcome.

But most importantly, this will only become possible if we can achieve the kind of national unity we need to examine and address the strategic tasks our country faces. This national unity is impossible to achieve without the active participation of political parties.

I consider the upcoming elections to the State Duma as another step in the development of our multi-party system, the development of a greater openness of intentions, greater effectiveness of actions, and greater responsibility before the people of Russia.

A strong and responsible government based on the consolidation of society is vital to preserve the country. Without strong power, it will also be impossible to move forward into the future.

I would like to stress once again that we are facing serious problems and threats. And we need to be clever and strong to survive in the bitter competitive struggle in the world.

But we must not merely survive. We must possess significant economic, intellectual, moral and military advantages. Only in this way will we maintain our position among the greatest powers on the planet.

And I consider that our most important tasks, which I have already mentioned today and which I repeat, are the following:

to double the gross domestic product;

to overcome poverty;

to modernise the Armed Forces.

I think that our society is capable of achieving these results in the period up to 2010. I consider the basis for achieving these goals to be a consolidation of public forces, the solid foundation of the Constitution of the Russian Federation and guaranteed rights and freedoms of our citizens.

I call on everyone who considers the above tasks to be a priority for the country to mobilise their intellectual forces, develop common approaches and agree on a program of action.

I have already said that I support the general policy to strengthen the role of parties in public life. And taking into account the results of the upcoming elections to the State Duma, I think it will be possible to form a professional, effective government, supported by a parliamentary majority.

To conclude my address, I would like to say that unification of our efforts is possible, if the main political forces take civil responsibility for collective work.

I am certain that Russia will rise to a height that is worthy of its potential.

The consolidation of all our intellectual, authoritative and moral resources will allow Russia to achieve the greatest goals.

Great goals worthy of a great people.

Let us wish one another success.

Thank you very much for your attention.




The source of information - May 16, 2003 - Presidential Address to the Federal Assembly

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May 26, 2004 - Annual Address to the Federal Assembly of the Russian Federation





Vladimir Putin:




Good afternoon, esteemed members of the Federation Council and the State Duma,

Dear citizens of Russia,

I think that, as in past years, there is no need in this audience to talk about recent results. We have all worked hard together to achieve them.

I would like to note simply that over these last four years, we have traversed a difficult but very important path. Now, for the first time in a long time, Russia is politically and economically stable. It is also independent, both financially and in international affairs, and this is a good result in itself.

Our goals are very clear. We want high living standards and a safe, free and comfortable life for the country. We want a mature democracy and a developed civil society. We want to strengthen Russia’s place in the world. But our main goal, I repeat, is to bring about a noticeable rise in our people’s prosperity.

We have better knowledge today of our own potential and we know what resources we have at our disposal. We understand the obstacles we could face in reaching the goals we have set and we are actively modernising the state in order to make sure that its functions correspond to the present stage of Russia’s development – that of achieving a real rise in living standards.

I would like to recall that over the last decade of the twentieth century, with its economy in a state of collapse and its positions on world markets weakened, Russia found itself having to simultaneously restore its statehood and create what for us was a new kind of economy, a market economy. Furthermore, it also had to defend its territorial integrity in the fight against international terrorism and stand up for the democratic achievements of its people.

Russia could be said to have passed through several stages since the beginning of the 1990s. The first stage involved dismantling the old economic system. It brought with it hardships and upheavals to the familiar way of life, acute political and social conflicts and was a very difficult time for our society.

The second stage was the time of clearing the debris resulting from demolishing the old edifice. At the same time, we managed to check the most dangerous tendencies in economic and political life. Not all the decisions taken over those years were long-term in nature. In many cases, the federal authorities were more than anything else reacting to the serious threats we faced.

In fact, we have only recently reached the third stage in modern Russia’s development, the possibility to achieve more rapid development and resolve more ambitious national tasks. We now have the necessary experience and tools to set ourselves genuinely long-term objectives.

Our economy has grown at a good rate overall over the last four years. People’s living standards have risen a little. There has been a 1.5-fold increase in real incomes, and I emphasise that we are talking about real incomes. The number of people with less than subsistence-level incomes has dropped by a third. The economic growth rate was 7.3 percent last year and was 8 percent over the first four months of this year.

But even so, we must ask ourselves the question, have we done all we could and have we made use of every opportunity for economic growth and social development? And are we happy with the current state of affairs?

No, and above all, we are not happy with living standards in the country.

I would remind you that during its lengthy economic crisis, Russia lost almost half of its economic potential. Over the last four years we have managed to compensate for around 40 percent of this drop. But despite our efforts, we have still not caught up to where we were in 1989. Only by maintaining high growth rates of the kind we have now will Russia avoid being relegated to the backwaters of the world economy.

We must grow faster than the rest of the world if we want to take the lead within today’s complex rules of global competition. We must be ahead of other countries in our growth rate, in the quality of our goods and services and level of our education, science and culture. This is a question of our economic survival. It is a question of ensuring that Russia takes its deserved place in these changing international conditions.

I realise that this is a far from easy task, but we are up to it and we can resolve it only through our own efforts.

Whether or not we can become a society of truly free people – free both economically and politically — depends only on us. Reaching our priority national goals depends only on us. These goals are well-known: doubling our gross domestic product over the next decade, reducing poverty, increasing people’s prosperity and modernising the armed forces.

Again I would like to say that today, for the first time in many years, we can make forecasts not just for a few months or even a year ahead, but for a decade ahead. Our achievements over recent years now give us the base we need to finally tackle those problems that can be resolved, but only so long as we have certain economic potential, political stability and an active civil society.

It is far from everyone in the world that wants to have to deal with an independent, strong and self-reliant Russia. Political, economic and information pressure have become weapons in the global competitive battle today. Our efforts to strengthen our state are sometimes deliberately interpreted as authoritarianism.

In this respect I want to say that there will be no going back on the fundamental principles of our politics. Commitment to democratic values is dictated by the will of our people and by the strategic interests of Russia itself. Russia’s greatest competitive asset and the main source of its development is its people. Making our country strong and prosperous requires ensuring a normal life for all our people, those people who are producing quality goods and services, are enriching our national culture and building a new country.

In order to open up this potential, we must create the conditions for a safe life and reduce the crime rate in the country. We must improve the nation’s health, prevent increase in drug use and resolve the problem of homeless children.

We must bring down the mortality rate, increase people’s life expectancy and overcome the population decline. We could find ourselves already in the near future facing labour shortages and an increased social burden placed on the younger generation of the workforce.

As you know, previous addresses tended to focus on the general social and economic objectives facing us. Today I think I should, and can, break with this tradition and focus on the objectives that concern practically every citizen and every Russian family.

Our task now is to resolve the most pressing problems for our citizens. These are, above all, accessible and good-quality housing, education and healthcare. We now have the capacities we need to find effective solutions to these problems and I would like to look at them in more detail.

* * *

Dear colleagues,

One of the most pressing problems we face today is providing people with affordable housing. This remains a real problem for the majority of people in Russia.

People need decent housing for rest, for work and for starting a normal family. But even the current rise in incomes does not always allow people to buy housing and improve its quality. This is one of the causes of the low mobility that prevents people from moving around the country in search of suitable work.

It must be admitted that very many people still live in dilapidated and unsafe buildings and apartments. Not enough housing is being built and what is built often does not measure up to modern safety and quality standards. Only people with high incomes can afford to buy new housing. The fact that young families are unable to afford housing of their own affects their plans to have children, and it is still quite common to find several generations all having to share the same apartment.

The conclusion is clear. The old methods and approaches, which did not solve the problem earlier, simply do not work today. We should stop deceiving people, forcing them to wait for years and even decades in line for housing. We need to create the possibilities for the bulk of the working population to buy housing on the market, while at the same time ensuring that low-income groups have access to social housing.

The government, regional and local authorities should work towards having at least a third of the population (and not a tenth, as is currently the case) able to buy housing that meets modern standards by 2010. They will buy housing through their own savings and with the help of mortgage schemes.

This means that mortgage schemes must become long-term and affordable for people. In order to prevent the situation when increased demand for housing pushes up prices competitive conditions for housing construction need to be ensured.

What are the steps we need to take here? They are basically well-known. I will name them now.

First, we need to put in place financial mechanisms that will enable people to improve their housing conditions not just through their current earnings and their savings, but also through their future earnings. We need to develop clear legal conditions for long-term mortgage schemes, conditions that will apply to citizens and to the construction companies.

Mortgages should become an affordable solution for people in the middle income group. Of course, we should also develop other forms of financing such as having future homeowners buy a stake in a building’s construction or take part in housing savings programmes. For all this to work, we also must ensure that we have an effectively functioning state system for registration of real estate rights, a credit history bureau and a developed market for mortgage securities. These are the things to be done.

Second, we need to put an end to the monopolies on the construction markets. Russia’s people are not obliged to pay the cost of the administrative barriers created in the construction sector or to ensure the excess profits of monopolist construction companies. What is needed are measures to reduce construction time and the expenses involved – clear-cut rules of municipal land use and construction , simplified procedures for getting all the approvals needed for construction and preparation of the necessary engineering and utilities infrastructure.

Third, guaranteed ownership rights for honest buyers of real estate is a question of principle importance. Real estate deals should be handled through transparent, comprehensible and, also important, inexpensive procedures.

Finally, we must bring order to provision of social housing. Contracts of social renting must become available to those who really need it. Furthermore, we should come up with additional measures to provide targeted support to individual categories of people, in particular young families. Some steps have already been taken in this direction but it is far from sufficient so far. We must increase our efforts in this area.

* * *

Now, a few words about healthcare modernisation. This is not the first time we have discussed this subject, but transformations in this area are taking place at a sluggish rate and have not brought any significant results so far.

Russia lags behind many countries today in its basic healthcare situation. Life expectancy in Russia is 12 years lower than in the United States, eight years lower than in Poland and five years lower than in China. This is due above all to a high mortality rate among working-age people. Child mortality is decreasing but is still 1.5–2 times higher than in the developed countries.

One of the main reasons for this situation is the country’s ineffective healthcare system. Throughout the entire system, the quality and accessibility of medical services continue to drop today, while costs keep rising.

Guarantees of free healthcare assistance are often declarative. People still do not know what they are entitled to for free and what they must pay for themselves. The people with the lowest incomes have found themselves in the most difficult situation of all. They are forced to spend a large share of their already modest incomes on medical treatment and even end up unable to afford basic medicines, which is absolutely unacceptable.

The main aim of modernising the Russian healthcare system is to ensure affordable and good-quality healthcare for broad sections of the population. This means above all that guaranteed free healthcare services should be clear and known to all. Medical treatment standards should be drawn up and approved for each type of illness, along with an obligatory list of treatment and diagnostic procedures and the minimum requirements for healthcare provision. These standards should be applied in every city, town and village in the Russian Federation, and patients should have to pay only for additional medical services and for extra comfort.

Having an itemised list of standards will make it possible to calculate the real cost of these services and move away from the system of funding medical establishments based on estimates of their demands, to funding based on the amount and quality of healthcare services they actually provide. Healthcare services should be paid for in accordance with the principles of compulsory medical insurance. At the same time, incentives should be created to encourage the development of voluntary medical insurance.

The government and the parliament must ensure the legal framework for compulsory medical insurance, state-guaranteed medical services, private medical practice and for provision of fee-paying services.

* * *

The next priority is to develop the Russian education system.

I want to emphasise that Russian education, with its fundamental approach to learning, held and still holds a leading place in the world. It would be absolutely unacceptable to lose this advantage. The global competitive environment demands of us that we strengthen the practical component of our higher education system. This means, above all, placing higher demands on professional education, professional in the broad sense of the word.

Professional education today is not firmly bound to the situation on the labour market and more than half of higher education graduates do not find work in the professions in which they got their degrees. More and more people are going into higher education, but at the same time the level of teaching is falling.

Compared to the Soviet period the number of people entering higher education has tripled and is now practically the same as the number of secondary school graduates. Who benefits from this situation? And even with this number of university graduates, we still face a shortage of desperately needed qualified specialists.

One of the most serious problems is the lack of access to quality education for low-income groups. College studies involve additional costs that not all people can afford. The drop in the number of student residences and the small student allowances mean that children from low-income families, especially from remote towns and villages, are cut off from getting quality education.

But the results of reforms in this sector should be evaluated by the quality of education, its accessibility and its relevance to the labour market’s demands. In this respect I want to name the following target criteria.

First, secondary-school graduates, no matter what the financial situation of their families, should have the opportunity to enter higher education in accordance with their level of knowledge.

This will require an absolutely transparent and objective system of evaluating knowledge to enter college, reviving on large-scale preparatory departments at the universities, and targeted provision of student allowances. Young people who live far away from prestigious universities should have the opportunity to take these universities’ entrance exams.

Second, we should aim at having the majority of graduates working in the professions for which they got degrees. Of course, this does not mean a return to the old system of allocating jobs from above to graduates. Rather, it is about forecasting the country’s demand for the specialists it needs.

I think we could also consider a system where students can sign a contract under which they receive free education and then have to either work a certain amount of time in the professions for which they got degrees or else reimburse the money the state spent on their education. This system should begin with the professions in short supply today. I also think that it is in the interests of Russian business to take part in training the specialists the economy needs through making use of education loans. This practice already exists and we should make more active use of it.

Third, we need to introduce education standards that meet today’s demands. Furthermore, the content of our education should measure up to the highest world standards. At the same time we must not forget about the areas in which we have built up our own achievements and we should ensure maximum development of these areas in which Russian education meets or even surpasses world requirements, and we do have such areas.

We must also go further in integrating education and research activities. Advancing research in universities and major academic centres should be a priority objective.

* * *

Dear colleagues,

Ensuring affordable and accessible healthcare and education and giving people the possibility of buying housing will help alleviate the problem of poverty. We currently have around 30 million people who earn less than the subsistence level. That is a huge figure, it being known that most of the poor people in this country are people of working age.

It is evident, that the state and the business community should direct their efforts at continuing to create jobs, especially in regions with persistent unemployment. They should also focus on developing small and medium-sized business and on effective use of targeted social assistance.

But only economic growth can provide a genuinely reliable foundation for long-term solutions to social problems, including the struggle against poverty.

As was said last year, we are entirely capable of doubling our economic potential over ten years. We can achieve this if we maintain average growth rates at least at the level we had over the first quarter of this year. Furthermore, if we maintain this kind of growth, we can hope to double our per capita GDP not in ten years time, but by 2010. The members of the government are also applauding – this means they agree.

An essential condition for ensuring a rapid rate of development is to complete the transformations currently taking place in many sectors of the economy and the social sphere.

* * *

Now I would like to say a few words on budget reform. The main principle of reform is to move from managing budget expenses to managing results. Overall, the government must develop a system for evaluating the plans and results of work of all the executive power bodies and only on this basis should it then sum up results, draw conclusions and make policy adjustments in each area.

Clearly set policy objectives and expected results should form the basis for the budget and its long-term planning. The independence the recipients of budget funds have in how they dispose of the allocated money should go hand in hand with responsibility for the results of their work.

I particularly want to emphasise that achieving an optimum level of state spending should be a basic principle of our economic policy. We do not have such a lot of money to spend. The government must above all carry out restructuring of the huge network of budget-funded institutions that sprout up all around the country and change procedures for their financing and in many cases even change their status.

This brings me to another very important issue. There are currently more than 35,000 federal state institutions in the country, many of which exercise control and supervision functions. These institutions often force their “services” – expert examinations, consultations and other – on business and individuals. This year, the government should revoke the powers of those institutions that are not part of the state management system. Moreover, state functions that have been declared superfluous should not be revived at regional and municipal level.

Steps also must be taken to bring order to state and municipal property. I have already said that each level of state power should only have the property that it needs to exercise its designated public functions, and no more than that. This should be kept in mind as ministries’ functions are cut back further.

We should also be ready to introduce a new distribution of revenue collection powers and spending commitments between the different levels of the country’s budget system. The regions and the municipalities should know exactly which functions they are supposed to exercise and which public services they are responsible for. And also, they need to know where the funding for these services will come from.

Finally, we need to clearly set and delimit each level of power’s responsibilities for providing social assistance to the population. All the country’s regions are directly concerned by the problems of ensuring affordable housing, education and healthcare. It would be only right then to actively involve them in drawing up the legal framework and the measures for practical implementation of the social programmes package, taking into account the division of powers between the different levels of state power.

All of these measures should result in a renewed system of inter-budget relations and increased independence and responsibility for the regions and the municipalities. I am aware of the regions’ and municipalities’ concerns regarding these questions. I hope that the government and the members of both houses of parliament will listen to these concerns, weigh up all the pros and cons and find solutions that are in keeping with the demands of the times and the economy.

* * *



Carrying out budget reform will in its turn make it possible to continue changes in the tax sphere. Over the last four years, serious steps have been made here. They have already begun to bring results – tax collection has increased, tax evasion has decreased, and the tax burden on the economy has dropped. But, of course, far from everything has been done.

And to move to an effective tax system, we need in the next two years to pass and implement a series of additional decrees.

How should the tax system look after reform is completed?

First, it should not be burdensome for business, neither by the level of tax rates, nor in the procedures of calculation and payment of taxes, regulation of tax checks and tax accounts.

Second, it should be fair for all economic agents. Taxation conditions should be equal for enterprises that work in the same sphere. Tax structure must exclude opportunities for tax evasion. Third, the tax system in Russian remains excessively oriented toward the fiscal function, to the detriment of other functions, above all the function of stimulating the growth of competitiveness. And here, the Russian tax system should become more favourable for investment and the development of business – more favourable than in competing countries. It should have itself sustainable competitive advantages.

To continue. The government has on several occasions raised the issue about the necessity to reduce the single social tax. We should bring a considerable percentage of work salaries out of the “shadows”, protect the social rights of employees and stimulate citizens’ concern for their own retirement pensions, thus reducing the burden on business.

Another problematic issue is value-added tax. Besides changing the procedure for levy of value-added tax, we need to further reduce tax rates, solve the issue of timely compensation of value-added tax on export operations, and in making capital investments, and also to finally put a stop to taxation of advance payments.

Finally, it is important to distinguish the lawful practice of tax optimization from cases of criminal tax avoidance.

I would like to stress that stability of budget and tax policy is a very important factor in the development of the economy. This stability, however, is not able to solve all the uncertainty of economic conditions in doing business. A balanced macroeconomic policy is needed. We need to continue what has been formed in the economy in recent years, namely a policy of gradually reducing inflation to 3% a year. And to create the necessary conditions to ensure full convertibility of the ruble over the next two years. We know about the laws passed in this sphere. We know that the Government and the Central Bank have set themselves this task. But they have made easier conditions for themselves – by 2007. It is quite possible to work faster now.

We should also create an effective system of using natural resources. We need transparent, non-corrupt conditions of access to them, for example, with the use of auctions. We need to move from administrative permits to full agreements – with a clear determination of the rights and responsibility of both the state and entrepreneurs. We need to ensure predictability and stability in these relations.

The system of resource payments also requires changes. It should provide equal conditions of competition both within the extractive sector, and between the extractive and processing industries. And it should also ensure rational use of natural resources.

I expect that the new Forestry codex and the Law on mining will answer all these questions.

* * *

Dear Assembly,

Among the most important tasks that the country faces, I would like to single out another one especially – the development of transport infrastructure. When we take into account the size of Russia and the geographic remoteness of certain territories from the political and economic centres of the country, I would say that the development of infrastructure is more than an economic task. Solving it will not just directly affect the state of affairs in the economy, but ensure the unity of the country as a whole – whether people feel they are citizens of a united, large nation, and whether they can make use of its advantages.

Today, the poor condition and low density of the road network, oil pipelines, the gas-transport system and the infrastructure of the power industry puts serious restrictions on the development of the Russian economy.

Factories cannot function normally if it is impossible to supply goods quickly and inexpensively. The undeveloped road and port infrastructure has already become an obstacle for export, as it is unable to cope with the growing volume of goods. And it is quite clear that with Russia’s climatic conditions and extensive territory, infrastructural expenses make up a significant portion of the cost of many kinds of goods and services.

At the same time, a modern, well-developed transport infrastructure is capable of turning Russia’s geographical features into a real competitive advantage for the country.

What needs to be done to achieve this? Above all, we need to unite the economic centres of the country, to provide economic subjects with unhindered access to regional and international markets, and at the same time to provide infrastructure services of a world standard.

The Government should find effective mechanisms of controlling quality and expenses in building new objects. In order to radically change the situation we need to create a competitive environment.

At the same time, the state must control the development of the country’s infrastructure for a long time to come – I am convinced of this. Still, private investment will also make an important contribution to creating a branched transport infrastructure of high quality and reliability. However, for private capital, it is very important that the state have definite plans. From this viewpoint, the Government must announce its plans and projects, and the conditions to implement them. Such projects exist, and they need to be completed quickly. I will mention several of them.

For example, there are plans in the oil sector to diversify delivery of Russian oil. These plans are well-known. They involve expanding the capacity of the Baltic pipe system, opening the Western Siberia – Barents Sea pipelines, determining routes from oilfields in Eastern Siberia, bypassing the Bosporus and Dardanelle Straits, and integrating the Druzhba and Adriya oil pipelines.

However, this is not the first year that the Government has been unable to sort out its priorities. And a solution to this issue is, quite frankly, long overdue. I would note that the guidelines for passing the necessary decisions should be the realization of national tasks, and not the interests of individual companies.

As for the gas transport system, here we need first of all to develop the gas distribution network within the country – including expansion of the system to the east of Russia. In export, construction of the North European gas pipeline is most important. It will make it possible to diversify export flows, directly linking the networks of Russia and countries of the Baltic region with the total European gas network.

For Russia, modernization of roads is also important – not just roads that link the country’s main economic centres, but also those used for transit. The basic network of roads needs to be gradually directed towards integration into the total European road network, and — through the Trans-Siberian corridor — into the road network of the Far East region. Another project is construction and reconstruction of highways in the North-South corridor. Something is already being done here, and this work needs to be continued.

These projects will make it possible to ensure inter-regional and transit flows on the main international transport routes. And, what is also important, to develop the territories which are next to these routes.

And finally, we have been talking about toll roads for a long time. I think that we need to begin realizing these projects on the main routes – of course, along with the existing free roads. The Government should determine a list of them very soon.

* * *

Undoubtedly, modernization of the army is a task of national importance. We need effective, well-equipped and modern Armed Forces for reliable protection of the country. So that we can easily solve internal socio-economic tasks.

We should secure our country from any forms of military and political pressure and potential foreign aggression. And thus modernizing the Russian Armed Forces remains a very important task, including equipping strategic nuclear forces with the most modern systems of strategic armaments. We have everything needed for this. And also, we need to equip other types of the Armed Forces with the appropriate tactical and operational weapons. I would like to note once more: an adequate quality of weapons is the characteristic that directly determines the degree of battle readiness of a modern army.

We are also beginning reform of social support guarantees for soldiers. A mortgage programme will be created for them. Three years after joining this programme, a soldier will be able to receive housing on mortgage conditions.

I also think that military education for training specialists in unique professions that are required by a modern army can also be provided at civil institutes of higher education.

I would like to stress: for successful modernization of the entire military system of the state, we need to know precisely how considerable sums of money – including those for housing, military medicine and education – are spent. Furthermore, the army and other law-enforcement institutions have an enormous amount of property. And this also needs to be accounted for and managed effectively. A transparent military economy is the necessary condition for reform.

All these steps should be targeted at increasing the prestige and attractiveness of military service.

I would like to remind the Defence Ministry and the Government as a whole: the volumes of funds spent, the interests of the country’s defensive capacity, and also the important social parameters of reform make civil control over the effectiveness of changes in the army essential.

* * *

Dear colleagues,

The growth of the economy, political stability and the strengthening of the state have had a beneficial effect on Russia’s international position. We have been able to a significant degree to make our foreign policy both dynamic and pragmatic.

It is clear that the scale of the tasks that the country faces has now changed substantially. And we need to make our foreign policy adequate to the goals and scope of the new stage of development. In other words, we need to use the tools of foreign policy for a more appreciable practical return in the economy, and in the realization of important national tasks.

Work on deepening integration in the Commonwealth of Independent States remains our priority, especially within the framework of the Common economic space, and the Eurasian economic community. This, without exaggeration, is one of the conditions of regional and international stability.

I am certain that the CIS should work effectively for the benefit of citizens of our countries. It should work by ensuring maximum openness of economies, and by removing barriers to mutual trade and information flows, business and social initiatives, and direct contact between people.

We are interested in further integration of the Russian economy into the international economy, including joining the WTO on conditions that are beneficial for us. Increasing competitiveness on international markets stimulates developed countries to increase support of their manufacturers and exports. The Russian Interior Ministry and the Government as a whole need to find more effective ways to increase Russian export, and to provide reliable protection of the interests of Russian companies abroad.

This approach is particularly important now, when the Russia and the EU are already immediate neighbours. The expansion of the European Union should not just bring us closer geographically, but also economically and spiritually. I am certain that this is a prerequisite of success, not just for Russian, but for all European business. This means new markets and new investment. Generally, it means new possibilities for the future of Greater Europe.

We will continue to develop political and economic dialogue with the U.S.A. and with such major partners as China, India and Japan, and we will work with other countries. Border and interregional cooperation are also a significant reserve of development of trade and economic, cultural and humanitarian ties.

It is clear that a necessary condition for solving these tasks is the effective security of Russia, and the inviolability of its borders. And an adequate response to the most serious threats of the 21st century – international terrorism, proliferation of weapons of mass destruction, regional conflicts – can only be provided by the united efforts of the international community, relying on the tools of the UN and international law.

Terrorism threatens the human rights and lives, destabilizes nations and entire regions of the world, and stands in the way of economic and social progress. And today, international terrorists continue to commit acts of violence and murder of peaceful citizens. They attempt to provoke chaos and destabilize the situation in various regions of the world. And Russia, unfortunately, is no exception here.

Despite such acts of provocation – including the recent political murder of the leader of Chechnya and the attempt to disrupt the work of legally elected bodies of power in the republic – our policy in fighting terror remains unchanged and consistent. No one and nothing will stop Russia on the path to consolidating democracy, and ensuring human rights and freedoms.

We will continue to work on developing internationally recognized instruments of law and collective mechanisms of neutralizing global threats. I consider the task of strengthening the anti-terrorist coalition to be one of the most important.

At the same time, I would like to note that no excuses about the necessity of fighting terrorism can be an argument for restricting human rights, or for creating unjustified difficulties in contact between people on the international stage.

To conclude the topic of foreign policy, I would like to stress: Russian society should see the practical results of our work in the international sphere. They are ensuring safety of the individual, increasing possibilities for enterprise, and effective protection of the rights of Russian nationals abroad. I expect that in cooperation with the Federal Assembly, we will be able to work even more productively in all the areas mentioned.

* * *

Dear deputies of the State Duma, members of the Federation Council,

Keeping to the strategic policy, continuing changes – those that have already been tested by the practice of the last four years – is the basis of our further stable development. At the same time, the only source and bearer of power in the Russian Federation is its multiethnic people. And only the people – through the institutions of the democratic state and civil society – have the right and are able to guarantee the stability of the moral and political foundations of the country’s development for many years to come.

At the same time, we must make a critical assessment of the state of our democracy.

Is the political system in its present state a tool of real sovereignty of the people? And how productive is dialogue between the authorities and society?

It is clear that young Russian democracy has had considerable success in establishing itself. And those people who do not notice this success, or who do not want to notice it, are not quite honest. But our social system is still far from perfection. And it must be admitted: we are at the very beginning of the path.

Without a mature civil society, an effective solution to peoples’ daily problems is impossible. The quality of their daily life directly depends on the quality of the social and political system. And here, of course, we still have many questions.

I would like to remind you: any power above all means great responsibility. It is unacceptable when civilised political competition is replaced with a self-interested fight for status revenue. When the financial side of the activity of political groups is still hidden from society. When election technologies and lobbyist services is primarily oriented towards the shadow sector. And all this takes place against the background of the dreary monotony of most party programmes.

I would like to say a few words about the role of non-political public organisations. In our country, there are thousands of public associations and unions that work constructively. But not all of the organisations are oriented towards standing up for people’s real interests. For some of them, the priority is to receive financing from influential foreign foundations. Others serve dubious group and commercial interests. And the most serious problems of the country and its citizens remain unnoticed.

I must say that when violations of fundamental and basic human rights are concerned, when people’s real interests are infringed upon, the voice of such organisations is often not even heard. And this is not surprising: they simply cannot bite the hand that feeds them. Of course, such examples cannot be grounds for us to make accusations against civil groups as a whole. I think that these problems are unavoidable, and of a temporary nature.

To reduce these problems and stimulate the further growth of institutions of civil society, we do not need to invent anything new. Our own experience and international experience has already proved the productiveness of an entire range of approaches. It is necessary to gradually transfer to the non-governmental sector functions which the state should not or is unable to perform effectively.

It is also worth using the experience of public boards that has been gained in a number of Russian regions. These permanent non-governmental organisations can provide independent examination of important normative documents. Documents that directly concern citizens’ interests.

Political parties should also work more closely with public structures. Direct contact with people and society will help to improve the quality of people’s representation at all levels. And parties should be interested in expanding their ranks, consolidating the material base, and the intellectual and staff potential. They should actively create groups in regional parliaments, and participate in the work of bodies of local self-administration.

Parties should increase their level of political culture, and learn the skills of inter-party dialogue and coalition activities. They should learn to come to power and leave it by the will of the people.

I will stress once more: any radical re-examination of economic policy, any restrictions on the rights and freedoms of citizens, a cardinal change in foreign policy guidelines – any divergence from the historic path chosen by Russia, a path that I even would say has been gained by suffering – may lead to irreversible consequences. And they must be absolutely ruled out.

* * *

Dear friends,

Today I have talked about the most important national tasks. I believe that creating a free society of free people in Russia is our most important task. But it is also the most difficult.

It is the most important task because people who are not free or independent are incapable of looking after themselves, their families, or their countries. It is the most difficult because freedom is not always valued and even more rarely used properly. Creative energy, enterprise, a sense of proportion and a will to victory cannot be introduced by decree, cannot be imported, and cannot be borrowed.

In aiming for a growth in citizens’ prosperity, we will continue to maintain and stand up for the democratic achievements of the Russian people. We will consolidate the security of the state and strive for civilised solutions to key issues of world politics, founded on international law.

In this I count on the constructive cooperation of all branches and all levels of power.

I count on the support and solidarity of all citizens of Russia.

I count on their faith in themselves. In their abilities. In the success of our country.

Thank you for your attention.




The source of information - May 26, 2004 - Presidential Address to the Federal Assembly

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April 25, 2005 - Annual Address to the Federal Assembly of the Russian Federation





President Vladimir Putin:




Distinguished Members of the Federal Assembly,

Citizens of Russia,

In this Address of 2005 I will dwell on a number of fundamental ideological and political issues. I believe such a discussion is essential at the current stage of Russia's development. The most important social and economic tasks facing us, including specific national projects, were set out in the previous Address. I intend to elaborate them in the coming Budget Address and in a series of other documents.

At the same time I would ask you to consider last year's and this year’s Address to the Federal Assembly as a unified program of action, as our joint program for the next decade.

I consider the development of Russia as a free and democratic state to be our main political and ideological goal. We use these words fairly frequently, but rarely care to reveal how the deeper meaning of such values as freedom and democracy, justice and legality is translated into life.

Meanwhile, there is a need for such an analysis. The objectively difficult processes going on in Russia are increasingly becoming the subject of heated ideological discussions. And they are all connected with talk about freedom and democracy. Sometimes you can hear that since the Russian people have been silent for centuries, they are not used to or do not need freedom. And for that reason, it is claimed our citizens need constant supervision.

I would like to bring those who think this way back to reality, to the facts. To do so, I will recall once more Russia’s most recent history.

Above all, we should acknowledge that the collapse of the Soviet Union was a major geopolitical disaster of the century. As for the Russian nation, it became a genuine drama. Tens of millions of our co-citizens and compatriots found themselves outside Russian territory. Moreover, the epidemic of disintegration infected Russia itself.

Individual savings were depreciated, and old ideals destroyed. Many institutions were disbanded or reformed carelessly. Terrorist intervention and the Khasavyurt capitulation that followed damaged the country's integrity. Oligarchic groups – possessing absolute control over information channels – served exclusively their own corporate interests. Mass poverty began to be seen as the norm. And all this was happening against the backdrop of a dramatic economic downturn, unstable finances, and the paralysis of the social sphere.

Many thought or seemed to think at the time that our young democracy was not a continuation of Russian statehood, but its ultimate collapse, the prolonged agony of the Soviet system.

But they were mistaken.

That was precisely the period when the significant developments took place in Russia. Our society was generating not only the energy of self-preservation, but also the will for a new and free life. In those difficult years, the people of Russia had to both uphold their state sovereignty and make an unerring choice in selecting a new vector of development in the thousand years of their history. They had to accomplish the most difficult task: how to safeguard their own values, not to squander undeniable achievements, and confirm the viability of Russian democracy. We had to find our own path in order to build a democratic, free and just society and state.

When speaking of justice, I am not of course referring to the notorious ”take away and divide by all“ formula, but extensive and equal opportunities for everybody to develop. Success for everyone. A better life for all.

In the ultimate analysis, by affirming these principles, we should become a free society of free people. But in this context it would be appropriate to remember how Russian society formed an aspiration for freedom and justice, how this aspiration matured in the public mind.

Above all else Russia was, is and will, of course, be a major European power. Achieved through much suffering by European culture, the ideals of freedom, human rights, justice and democracy have for many centuries been our society's determining values.

For three centuries, we – together with the other European nations – passed hand in hand through reforms of Enlightenment, the difficulties of emerging parliamentarism, municipal and judiciary branches, and the establishment of similar legal systems. Step by step, we moved together toward recognizing and extending human rights, toward universal and equal suffrage, toward understanding the need to look after the weak and the impoverished, toward women's emancipation, and other social gains.

I repeat we did this together, sometimes behind and sometimes ahead of European standards.

It is my firm belief that for present-day Russia democratic values are no less important than economic success or people’s social welfare.

First, every law-abiding citizen is only entitled to firm legal guarantees and state protection in a free and just society. And, no doubt, safeguarding rights and freedoms is crucial both to Russia's economic development and its social and political life.

The right to be elected or appointed to a state post, as well as the opportunity to use public services and public information, must be equally available to all the country’s citizens. And any person who breaks the law must know that punishment is inevitable.

Second, only in a free society do economically active citizens have the right to participate in a competitive struggle as equals and choose their partners, and earn accordingly. The prosperity of every individual should be determined by his or her labor and abilities, qualifications, and effort. Everyone has the right to dispose of what he or she earned at will, including bequeathing it to his/her children.

In that way, the observance of principles of justice is directly connected with the equality of opportunities. And this in turn must be guaranteed by no one other than the state.

Third, the Russian state, if it wants to be just, must help its impoverished citizens and those that cannot work – the disabled, pensioners and orphans. These people must live a decent life and the main benefits must be accessible to them.

All these functions and duties are directly invested in the state by society.

And finally a free and just society has no internal borders or travel restrictions, and is open to the rest of the world. This enables citizens of our country to fully enjoy the benefits of human civilization in its entirety, including education, science, world history and culture.

It is our values that determine our desire to see Russia's state independence grow, and its sovereignty strengthened. Ours is a free nation. And our place in the modern world, I wish to particularly emphasize this, will only depend on how strong and successful we are.

I dealt at such length with these key and on the whole general concepts to show how these principles must be reflected in our daily work. I think these activities should be pursued as a minimum along three lines: first – measures to develop the state; second – strengthening the law, developing the political system, and making the judicial system more effective; and, third – developing the individual and civil societyas a whole.



First, about the state.

You know that in the last five years we have had to tackle difficult tasks to prevent the degradation of state and public institutions in our country. At the same time, we had to create the foundation for development in the next few years and decades. We cleared the debris together and gradually moved ahead. In that sense, the stabilization policy was practically a policy of reaction to the accumulated problems. This policy was, in general, successful. However, it has reached the limit of its effectiveness.

It must be replaced with a policy oriented towards the future. And for that, we must have an efficient state. However, despite many positive changes, this key problem has not been solved so far.

Our bureaucratic apparatus is still largely an exclusive and often arrogant caste regarding state service as an alternative form of business. Therefore, our priority remains making state management more effective, ensuring that officials strictly obey the law, and quality public services are provided to the population.

A specific feature of recent times has been that the dishonest part of our bureaucracy (at the federal and local levels alike) has been particularly keen on using the achieved stability in its own mercenary interests. It started using the favorable conditions and emerging opportunities to achieve its own selfish goals rather than to increase the prosperity of society.

It is worth mentioning that in this respect the party and corporate elites behave no better than the state bureaucracy.

Today, when we have created the necessary preconditions for serious and large-scale work, if the state falls into the trap of finding simplified solutions, the bureaucratic reaction will only benefit from it. Instead of a breakthrough, we will face stagnation. The potential of civil society will not be used effectively, while the level of corruption, irresponsibility and lack of professionalism will rocket, throwing us back on the way of economic and intellectual degradation and creating a growing rift between the authorities and public interests, with state apparatus refusing to heed public requests.

I repeat: we cannot be satisfied with the current situation in the country. While freeing major mass media from the oligarchs’ censorship, we failed to protect them from the unhealthy zeal of certain officials. Focusing the efforts of law enforcement bodies on the fight against crime, including tax evasion, we encountered frequent violations of the rights of our business community, and sometimes a blatant racket on the part of state officials.

Many bureaucrats believe this situation will never be changed, and such violations are the inevitable result of past and current polices.

I must disappoint them. Our plans do not include handing over the country to the inefficient rule of a corrupted bureaucracy.

We proceed from the idea that it is both essential and economically advantageous to have developed democratic procedures in the country; that it is politically prudent to maintain a responsible dialogue with society. Therefore, a modern Russian official must learn to speak with the public using the modern language of cooperation, the language of common public interest, dialogue and real democracy, rather than the jargon of military orders.

This is our fundamental approach and we will strictly follow it.



Another important task in the sphere of state development is bolstering the Federation. The major goal that we are pursuing is to build an effective state system within the current national borders.

You know that constituent members of the Federation have recently begun to display a desire to unite. It is a positive trend, and it is important to avoid turning it into another political campaign. We should not forget that Federation members do not merge for the sake of unification itself, but to make their management more efficient, and their social and economic policies more effective, which will ultimately lead to increased social prosperity.

Naturally, this process is complicated, but in certain cases, and I want to stress, not always or everywhere, but in certain cases, it is the only way to consolidate the state’s resources to manage such a unique and vast country as Russia. After all, many constituent members of the Russian Federation have compound subordination, and they often have to face problems related to the delineation of powers between various state bodies (primarily in the sphere of taxation and budget allocation). However, all the efforts have so far been wasted on disputes and coordination, and sometimes even on legal action in the courts, including the Constitutional Court. All this is happening when new opportunities have already emerged and we need to implement a number of large national projects.

You know specific examples well. The ongoing unification of the Krasnoyarsk Region, the Taimyr and the Evenkia autonomous districts must help the development of new deposits of natural resources and provide the eastern regions of Siberia with constant energy supplies. Clear and sound administrative decisions must open up new opportunities for major investments in the development of Russia’s regions.



In my opinion a third important task is to pursue vigorous policy in promoting liberalization in private enterprise. I’d like to focus on measures to stabilize civil law relations and to achieve a dramatic increase in opportunities for free enterprise and capital investment.

First, measures need to be taken to consolidate civil law relations. I have already mentioned that we should reduce the statute of limitations for minor transactions to three years. Now this statute is 10 years. This proposal is already in the focus of a broad discussion and for this reason I would like to emphasize once again the ideas that guided us.

Stability of the right to private property is the alpha and omega of any business. The rules to which the state adheres in this sphere should be clear to everyone, and, importantly, these rules should be stable. This enables people developing their business to plan normally both this business and their own lives. This allows citizens to feel comfortable and conclude, without any apprehensions, contracts on such vital issues as the acquisition of housing or its privatization, which has already been almost completed in our country. In general, this encourages people to buy property and expand production.

At the same time, those people who deviated from law in business transactions cannot be ignored. The state should certainly respond to that. But I must point out that three years is also a big term that gives both the parties concerned and the state enough time for clearing up their relations in court. I’d like to emphasize that a three-year statute of limitations has been the longest one in our legislation in the last hundred years. Ten years is too long both in terms of economic and legal considerations. Such a term creates a host of uncertainties, primarily dampening the ardor of the state, and not only of the state but also of other participants in the process. Incidentally, we have submitted our proposals on the relevant amendments to law to the Government of the Russian Federation. Regrettably, we have not heard a thing from them so far even though all they have to do is to amend one word in one clause. I request that formal agreement be accelerated.

Secondly, it is necessary to help our citizens legalize in a simplified way the real estate that belongs to them de facto. I mean garages, housing, suburban cottages and the relevant land plots in different cooperative societies and horticultural associations.

The legalization procedures should be as simple as possible, while the relevant paperwork should not create additional difficulties for our citizens. Incidentally, this will open up such additional opportunities as the legal inheritance of property, and will allow citizens to take out a mortgage in a bank with this property as security.

And, thirdly, the flow of capital accumulated by our citizens needs to be encouraged into our national economy. Citizens should be allowed to declare the money they have saved in previous years, in the previous period, in a simplified procedure. This procedure should be accompanied by only two provisions: one should pay a 13 per cent income tax and deposit the relevant sums into Russian bank accounts.

This money should work in our economy, in our country, not lie in offshore zones.

Another, systemic task of state development, in my view, is concerned with the work of tax and customs agencies. I believe their priority task should be to check compliance with tax and customs legislation, rather than the fulfillment of some “plans” to collect taxes and duties.

The fiscal agencies in any country should obviously exercise control over the correct payment of taxes. But it would be fair to say that our tax system has been in the making in the past few years; it took time and rich legal and judicial practice to receive clear answers to all of our questions.

The fiscal agencies must not close their eyes to legal violations. But we should find ways for back taxes from previous years to be repaid in the interests of the state without destroying the economy and pushing business into a corner. The tax agencies must not “terrorize” business by returning to the same problem again and again. They should work rhythmically, promptly reacting to violations but spotlighting above all inspections of the current period.

I believe that all of the above measures will help stabilize civil transactions, create additional guarantees for the long-term development of business, and ultimately ensure greater freedom of enterprise and a fair approach taken by the state to it.

And finally, one more crucial problem: Russia is extremely interested in a major inflow of private, including foreign, investment. This is our strategic choice and strategic approach.

In practice, investors sometimes face all kinds of limitations, including some that are explained by national security reasons, though these limitations are not legally formalized. This uncertainty creates problems for the state and investors.

It is time we clearly determined the economic sectors where the interests of bolstering Russia’s independence and security call for predominant control by national, including state, capital. I mean some infrastructure facilities, enterprises that fulfill state defense orders, mineral deposits of strategic importance for the future of the country and future generations, as well as infrastructural monopolies.

We should draft and legally formalize a system of criteria to determine the limitations on foreign participation in such sectors of the economy. Simultaneously a corresponding list of industries or facilities will be determined that shall not be extended or receive extended interpretation. Some industrialized countries use this approach and we should also use it.

While maintaining such control and limitations in some economic sectors, we should create favorable conditions for the inflow of private capital to all the other attractive sectors. I think you will agree that, regrettably, we have accomplished too little in this sphere so far.

I repeat, all of these decisions must be formalized in legislation. The goal of these measures is apparent: investors do not need riddles and charades. They will invest their money only in a stable economy with clear and comprehensible rules of the game. And this approach will be fair to both society and the state, which should protect its prospective interests and take care of the country’s development for years and decades to come.



Dear Colleagues,

The creation of an effective legal and political system is an essential condition for developing democracy in our country. But developing democratic procedures should not come at the cost of law and order, the stability that we worked so hard to achieve, or the continued pursuit of our chosen economic course.

The democratic road we have chosen is independent in nature, a road along which we move ahead, all the while taking into account our own specific internal circumstances. But we must and we shall move forward, basing our action on the laws and on the guarantees our constitution provides.

Of course, the state authorities must refrain from any abuse of the administrative levers they have at their disposal, and must work continually to open up new opportunities for building up the institutions of a genuine democracy in our country.

To deny our people, to deny ourselves the ability to live according to democratic laws is to have no respect either for ourselves or for our fellow citizens and would signify that we neither understand the past nor see the future.

“State power,” wrote the great Russian philosopher Ivan Ilyin, “has its own limits defined by the fact that it is authority that reaches people from outside… State power cannot oversee and dictate the creative states of the soul and mind, the inner states of love, freedom and goodwill. The state cannot demand from its citizens faith, prayer, love, goodness and conviction. It cannot regulate scientific, religious and artistic creation… It should not intervene in moral, family and daily private life, and only when extremely necessary should it impinge on people’s economic initiative and creativity”. Let us not forget this.

Russia is a country that has chosen democracy through the will of its own people. It chose this road of its own accord and it will decide itself how best to ensure that the principles of freedom and democracy are realised here, taking into account our historic, geopolitical and other particularities and respecting all fundamental democratic norms. As a sovereign nation, Russia can and will decide for itself the timeframe and conditions for its progress along this road.

But consistent development of democracy in Russia is possible only through legal means. All methods of fighting for national, religious and other interests that are outside the law contradict the very principles of democracy and the state will react to such methods firmly but within the law.

We want all our law-abiding citizens to be able to be proud of the work of our law enforcement agencies and not to cross the street when they see someone in uniform. There can be no place in our law enforcement agencies for people whose primary aim is to fill their own pockets rather than uphold the law. The motivation for our law enforcement officers should be above all about providing quality protection of our citizens’ rights and freedoms.

Finally, if part of Russian society continues to see the court system as corrupt, there can be no speaking of an effective justice system in our country.

Overall, I want to note that we need principally new approaches to fighting crime in our country. The relevant decisions will be prepared.



Eradicating the sources of terrorist aggression on Russian territory is an integral part of ensuring law and order in our country. We have taken many serious steps in the fight against terrorism over recent years. But we cannot allow ourselves to have any illusions – the threat is still very real, we still find ourselves being dealt serious blows and criminals are still committing terrible crimes in the aim of frightening society. We need to summon our courage and continue our work to eradicate terrorism. The moment we show signs of weakness, lack of firmness, the losses would become immeasurably greater and could result in a national disaster.

I hope for energetic work to strengthen security in the southern part of Russia and firmly establish the values of freedom and justice there. Developing the economy, creating new jobs and building social and production infrastructure are prerequisites for this work.

I support the idea of holding parliamentary elections in the Republic of Chechnya this year. These elections should lay the foundation for stability and for developing democracy in this region.

I want to note that the North Caucasus region already has good conditions for achieving rapid economic growth. The region has one of Russia’s best-developed transport infrastructures, a qualified labour force, and surveys show that the number of people in this region wanting to start up their own business is higher than the national average. At the same time, however, the shadow economy accounts for a bigger share in this region and there is criminalisation of economic relations in general. In this respect, the authorities should not only work on strengthening the law enforcement and court systems in the region, but should also help develop business activity among the population.

We should be paying no less attention to other strategically important regions of the Russian Federation. Here, I am referring to the Far East, Kaliningrad Region and other border areas. In these areas we should be concentrating state resources on expanding the transport, telecommunications and energy infrastructure, including through the creation of cross-continent corridors. These regions should become key bases for our cooperation with our neighbours.



Esteemed Assembly,

Very soon, on May 9, we shall celebrate the 60th anniversary of victory. This day can be justly called the day of civilisation’s triumph over fascism. Our common victory enabled us to defend the principles of freedom, independence and equality between all peoples and nations.

It is clear for us that this victory was not achieved through arms alone but was won also through the strong spirit of all the peoples who were united at that time within a single state. Their unity emerged victorious over inhumanity, genocide and the ambitions of one nation to impose its will on others.

But the terrible lessons of the past also define imperatives for the present. And Russia, bound to the former Soviet republics – now independent countries – through a common history, and through the Russian language and the great culture that we share, cannot stay away from the common desire for freedom.

Today, with independent countries now formed and developing in the post-Soviet area, we want to work together to correspond to humanistic values, open up broad possibilities for personal and collective success, achieve for ourselves the standards of civilisation we have worked hard for – standards that would emerge as a result of common economic, humanitarian and legal space.

While standing up for Russia’s foreign political interests, we also want our closest neighbours to develop their economies and strengthen their international authority. We would like to achieve synchronisation of the pace and parameters of reform processes underway in Russia and the other members of the Commonwealth of Independent States. We are ready to draw on the genuinely useful experience of our neighbours and also to share with them our own ideas and the results of our work.

Our objectives on the international stage are very clear – to ensure the security of our borders and create favourable external conditions for the resolution of our domestic problems. We are not inventing anything new and we seek to make use of all that European civilisation and world history has accumulated.

Also certain is that Russia should continue its civilising mission on the Eurasian continent. This mission consists in ensuring that democratic values, combined with national interests, enrich and strengthen our historic community.

We consider international support for the respect of the rights of Russians abroad an issue of major importance, one that cannot be the subject of political and diplomatic bargaining. We hope that the new members of NATO and the European Union in the post-Soviet area will show their respect for human rights, including the rights of ethnic minorities, through their actions.

Countries that do not respect and cannot guarantee human rights themselves do not have the right to demand that others respect these same rights.

We are also ready to take part in an effective partnership with all countries in order to find solutions to global problems – from finding effective ways to protect the environment to space exploration, and from preventing global man-made disasters to addressing the threat of the spread of AIDS. And of course we are also ready to join efforts to fight challenges to the modern world order such as international terrorism, cross-border crime and drug trafficking.

I would like now to say a few words about our priorities for developing civil society. [Sergei] Witte once wrote, “The state does not so much create as add substance. The genuine creators are all the citizens themselves… The aim should be not to hinder independence, but to develop it and encourage it in every way”.

This piece of advice is still just as relevant today.

I think that our primary task should be to ensure that our citizens have objective information. This is a political issue of vital importance and it is directly linked to putting the principles of freedom and justice into practice in our state policy.

I think that in this respect the draft law on information openness of the state agencies is a very important document. It is important that it be passed as soon as possible. Its implementation will enable people to receive more objective information about the work of the state bodies and will help them to protect their own interests.

I also wanted to raise another, very specific, issue here today, namely, what must be done to ensure that national television fully takes into account Russian civil society’s most relevant needs and protects its interests. We need to establish guarantees that will ensure that state television and radio broadcasting are as objective as possible, free from the influence of any particular groups, and that they reflect the whole spectrum of public and political forces in the country.

I propose reinforcing the Public Council’s powers in the area of civilian control over respect for freedom of speech by the television channels. To do this, a commission could be established with the Public Council that would be made up of people respected by the professional community, who would ensure the independence of broadcasting policy and bring in qualified specialists to help them in their work. To this effect, I plan to introduce to the State Duma the relevant amendments to the legislation. Furthermore, all parliamentary factions should have access to the media.

I am sure that these proposed measures will improve the quality and objectivity of the information our society receives today, intensify cultural life and enable everyone, even those in the most remote corners of our country, to have access to the immense wealth of achievements that our modern world offers.



Finally, I would like to say a few words about guarantees for the activities of political parties in parliament. I think that every faction should have an equal opportunity to express its views on the key development issues facing the country, propose its representatives to head committees and commissions and seek to have the problems that interest it included on the agenda.

I think we also need to confirm by law the procedures for parliamentary investigations.

Furthermore, in the interests of continuing to strengthen the role of political parties in forming state power, I propose that the State Council of Russia discuss precisions to the new procedures for appointing the chief officials of the executive branch of power in the regions. The President could propose a representative of the party that wins the regional elections as candidate for this post.



Dear colleagues,

Having spoken about the fundamental problems of developing the state and civil society, I cannot ignore a number of concrete issues that are long since needing to be addressed.

It is my firm conviction that success in many areas of our life depends on resolving the acute demographic problems we face. We cannot accept the fact that on average Russian women live 10 years less than women in Western European countries, and Russian men live a whole 16 years less on average.

But not only can many of the reasons for this mortality rate in Russia be addressed, in many cases the costs involved would not even be very high. For example, almost 100 people a day are killed here in traffic accidents. The reasons for these accidents are well known and we should take a whole series of measures to improve this dramatic situation.

We keep coming back to the state of the healthcare sector. An active discussion is underway today to find ways of improving this sector. Without anticipating the final decision, I can say that I am sure that, above all, we need to ensure that medical care is accessible and of high quality, and we need to revive the traditions of preventive medicine as a part of the Russian healthcare system.

I particularly want to stress another, more complex issue for our society – the consequences of alcoholism and drug addiction. Around 40,000 people a year die from alcohol poisoning in Russia, above all as a result of drinking alcohol surrogates. Most of these people are young men, the breadwinners for their families. But prohibitive methods will not resolve this problem. Our work should be focused on encouraging the young generation to make a conscious choice in favour of a healthy way of life, encourage them to get involved in sports and physical culture. Every young man should be aware that a healthy way of life is a key to success, a key to his personal success. But I did not see any desire to address this problem at federal level when I looked through the budget programmes for next year and the government’s investment programmes. We realise that these issues come more under the competence of the regional and municipal authorities, but without support from the federal government we will not manage to resolve this problem. I ask you to make the necessary changes.

The low birth rate is another national problem. There are more and more families in the country with just one child. We need to make being a mother and being a father more prestigious and create conditions that will encourage people to give birth and raise children.

Incidentally, I think it would be a good decision to abolish the inheritance tax, because billion-dollar fortunes are all hidden away in off-shore zones anyway and are not handed down here. Meanwhile, people have to pay sums they often cannot even afford here just for some little garden shack.

I also think that an increase in our population should be accompanied by a carefully planned immigration policy. It is in our interest to receive a flow of legal and qualified workers. But there are still a lot of companies in Russia making use of the advantages of illegal immigration. Without any rights, after all, illegal immigrants are convenient in that they can be exploited endlessly. They are also a potential danger from the point of view of breaking the law.

But the issue here is not just one of scaling back the shadow sector of the economy but of bringing real benefit for the entire Russian state and society.

Ultimately, every legal immigrant should have the chance to become a Russian citizen.

We cannot afford to postpone tackling these problems. We need to act simultaneously to create conditions that will encourage people to have children, lower the mortality rate and bring order to immigration. I am sure that our society is up to these tasks and that we will gradually stabilise the size of the Russian population.

We also must find definitive solutions for other problems that have built up over the years. This concerns, above all, wages for teachers, medical doctors, people working in the arts and sciences, and servicemen. They should finally begin to see benefits from the economic growth in the country.

It is they who carry the responsibility for ensuring that future generations of Russian citizens grow up healthy and educated and preserve the traditions and spiritual values of their forebears.

It is they who set the modern standards for society’s development and take part in forming the country’s current and future elite. They are the guardians of our country’s rich cultural and spiritual heritage. This is why the quality of these people’s work is no less important for the country than economic growth results. What kind of country we will be living in tomorrow, what level of freedom, justice and democracy we will have, and how reliably our country will be defended all depends on them.

But at the same time, the level of real wages in these sectors is still lower than it was at the end of the 1980s. The average public sector wage is still considerably lower than the average wage in the country in general. Of the common tariff grid’s 18 rates, 12 are lower than the survival minimum. In other words, most employees of budget-funded organisations face a very high risk of ending up in poverty. This humiliating situation is stopping people from being able to work effectively and creatively.

I think we need to increase public sector wages at least 1.5-fold in real terms over the next three years. In other words, public sector wages should rise at least 1.5 times faster than prices for consumer goods.

I stress that what we are talking about here is the necessary minimum below which we must not and do not have the right to go. In this way, we could substantially reduce the disparity between public and private sector wages in the country. And we should also remember that setting wages for most budget-funded organisations and paying them on time is the responsibility of the regional authorities. We need to establish inter-budgetary relations in such a way so that the regions are also able to increase public sector wages at a faster pace.

But we should also keep in mind that simply increasing wages is not going to solve all the problems in the public sector. The time has long since come for introducing financial solutions and mechanisms that will encourage better results and more effective organisation of the social sphere. Financial policy should be used as an incentive for increasing the accessibility and quality of social services.

Finally, we need to create conditions for actively raising investment from other sources besides state funds into the healthcare, education, science and culture sectors.

I want to stress also that the objectives of modernising the education and healthcare systems that were set out in the previous Address should still be pursued, but pursued very carefully.

Reorganisation for its own sake is not the aim. The aim is to improve the quality of service, make services accessible for the majority of citizens and ensure that they have a genuine influence on socio-economic progress in the country.

In speaking of our values, I would like to raise another issue I think is very important, that of the level of public morals and culture.

It is well known that a good business reputation has always been a prerequisite for concluding deals, and human decency has been a necessary condition for taking part in state and public life. Russian society has always condemned immorality, and indecent behaviour has always been publicly reprimanded.

Law and morals, politics and morality have traditionally been considered close and related concepts in Russia, at least, such was always the declared ideal and aim. Despite the problems we all know, the level of morality in tsarist Russia and during the Soviet years was always a very meaningful scale and criteria for people’s reputation, at work, in society and in private life. No one can deny that values such as close friendship, mutual assistance, trust, comradeship and reliability have flourished in Russia over the course of centuries, becoming enduring and immutable values here.

Prominent Russian legal theorist, Professor Lev Petrazhitsky, noted that the duties to help the needy and pay workers their agreed wages are above all ethical norms of conduct. I want to note that this was written almost 100 years ago, in 1910.

I think that unless it follows the basic moral standards accepted in civilised society, Russian business is unlikely to earn a respectable reputation. It will be unlikely to earn respect, not just in the wider world, but even more important, within its own country. After all, many of the difficulties faced by the economy and by politics in Russia today have their roots in precisely this problem of the greater part of Russian society having no trust in the wealthy class.

We should remember that corruption among state officials and rising crime are also consequences of the lack of trust and moral strength in our society. Russia will begin to prosper only when the success of each individual depends not only on his level of wealth but also on his decency and level of culture.

Dear citizens of Russia,

Esteemed Federal Assembly,

Our country is about to celebrate the anniversary of our great victory, a victory that came at the terrible cost of countless lives and sacrifices.

The soldiers of the Great Patriotic War are justly called the soldiers of freedom. They saved the world from an ideology of hatred and tyranny. They defended our country’s sovereignty and independence. We will always remember this.

Our people fought against slavery. They fought for the right to live on their own land, to speak their native language and have their own statehood, culture and traditions.

They fought for justice and for freedom. They stood up for their right to independent development and they gave our Motherland a future.

Just what kind of future this will be now depends on us, on today’s generation.

Thank you for your attention.




The source of information - April 25, 2005 - Presidential Address to the Federal Assembly

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May 10, 2006 - Annual Address to the Federal Assembly





President Vladimir Putin:




Distinguished members of the Federal Assembly,

Citizens of Russia,

The addresses of the last years have set out our main socio-economic policy priorities for the coming decade. Our efforts today focus precisely on the areas that directly determine the quality of life for our citizens. We are carrying out national projects in the areas of healthcare, education, agriculture and housing construction. As you know, the problems in these areas have accumulated not just over a period of years but over entire decades. These are very sensitive issues for people’s lives. We have had to build up considerable strength and resources in order to finally be able to address these problems and focus our efforts on resolving them.

A number of laws were passed in order to implement the proposals set out in the Annual Address for last year (2005). These were laws designed to improve our political system, in particular, the law on the Public Chamber, the law on parliamentary investigations and the law giving the party winning the majority in regional elections the right to take part in the process of selecting the regional governor. We likewise adopted a decision that improves relations between the federal, regional and local authorities.

In other words, we have concentrated over these last years on ironing out the imbalances that had arisen in our system of state organisation and in the social sphere.

Now, as we plan the continued development of our state and political system, we must also take into account the current situation in society. In this respect I note what has become a characteristic feature of our country’s political life, namely, low levels of public trust in some of the institutions of state power and in big business. The reasons for this situation are understandable.

The changes of the early 1990s were a time of great hopes for millions of people, but neither the authorities nor business fulfilled these hopes. Moreover, some members of these groups pursued their own personal enrichment in a way such as had never been seen before in our country’s history, at the expense of the majority of our citizens and in disregard for the norms of law and morality.

“In the working out of a great national program which seeks the primary good of the greater number, it is true that the toes of some people are being stepped on and are going to be stepped on. But these toes belong to the comparative few who seek to retain or to gain position or riches or both by some short cut which is harmful to the greater good.”

These are fine words and it is a pity that it was not I who thought them up. It was Franklin Delano Roosevelt, the President of the United States of America, in 1934.

These words were spoken as the country was emerging from the great depression. Many countries have faced similar problems, just as we are today, and many have found worthy ways to overcome them.

At the foundation of these solutions was a clear understanding that the state’s authority should not be based on excessive permissiveness, but on the ability to pass just and fair laws and firmly ensure their enforcement.

We will continue, of course, to work on raising the prestige of the civil service, and we will continue to support Russian business. But be it a businessman with a billion-dollar fortune or a civil servant of any rank, they all must know that the state will not turn a blind eye to their doings if they attempt to gain illegal profit out of creating special relations with each other.

I make this point now because, despite all the efforts we have made, we have still not yet managed to remove one of the greatest obstacles facing our development, that of corruption. It is my view that social responsibility must lie at the foundation of the work of civil servants and business, and they must understand that the source of Russia’s wellbeing and prosperity is the people of this country.

It is the state’s duty to ensure that this principle is reflected in deed and not just in word. I believe that this is one of the priority tasks we face today and that we cannot resolve this task unless we ensure the rights and liberties of our citizens, organise the state itself effectively and develop democracy and civil society.

We have spoken on many occasions of the need to achieve high economic growth as an absolute priority for our country. The annual address for 2003 set for the first time the goal of doubling gross domestic product within a decade. The calculation is not hard to make: to achieve this goal our economy needs to grow at a rate of just over seven percent a year.

On the surface we look to be keeping to our objectives and have had average economic growth of around seven percent for the past three years, but I want to stress that if we do not address certain issues, do not improve our basic macroeconomic indicators, do not ensure the necessary level of economic freedom, do not create equal conditions for competition and do not strengthen property rights, we will be unlikely to achieve our stated economic goals within the set deadline.

We have already begun taking concrete steps to change the structure of our economy and, as we have discussed a great deal, to give it a more innovative quality. I think that the government is moving in the right direction in this regard but I would like to make the following points.

First, state investment is necessary, of course, but it is not the only means of achieving our objectives. Second, it is not the volume of investment that is important so much as an ability to choose the right priorities while at the same time ensuring that we continue following the responsible economic policy we set five years ago.

After a long period during which we ran a budget deficit and faced sharp fluctuations of the rouble’s exchange rate, the situation today is changing dramatically. We must maintain this financial stability that has been achieved as one of the basic conditions for increasing people’s trust in the state and for encouraging entrepreneurs to invest money in business development.

Today’s situation allows us to make a calmer and more sober assessment of the threats that Russia encounters as part of the world system, threats that represent a danger for our internal development and for our country’s international interests.

We can make a more detailed examination of our place in the world economy. In a context of intensive competition, scientific and technological advantages are the defining factors for a country’s economic development. Unfortunately, a large part of the technological equipment used by Russian industry today lags not just years but decades behind the most advanced technology the world can offer. Even allowing for the climate conditions in Russia, our energy use is many times less efficient than that of our direct competitors.

Yes, we know that this is the legacy of the way our economy and our industry developed during the Soviet period, but it is not enough just to know. We have to take concrete steps to change the situation. We must take serious measures to encourage investment in production infrastructure and innovative development while at the same time maintaining the financial stability we have achieved. Russia must realise its full potential in high-tech sectors such as modern energy technology, transport and communications, space and aircraft building. Our country must become a major exporter of intellectual services.

Of course, we hope for increased entrepreneurial initiative in all sectors of the economy and we will ensure all the necessary conditions for this to happen. But a real leap forward in the areas that I just mentioned, all areas in which our country has traditionally been strong, gives us the opportunity to use them as an engine for growth. This is a real opportunity to change the structure of our entire economy and establish for ourselves a worthy place in the international division of labour.

We already feel confident in the mining and extraction sector. Our companies in this sector are very competitive. Gazprom, for example, has just become the third biggest company in the world in terms of capitalisation, while at the same time maintaining quite low tariffs for Russian consumers. This result did not just come about all on its own, but is the result of carefully planned action by the state.

But we cannot pat ourselves on the back and stop here. We need to put in place the conditions for more rapid technological modernisation in the energy sector. We need to develop modern refining and processing facilities, build up our transport capacity and develop new and promising markets. And in doing all of this we need to ensure both our own internal development needs and fulfil all of our obligations to our traditional partners.

We must also take steps to develop nuclear energy, a nuclear energy sector based on safe, new-generation reactors. We need to consolidate Russia’s position on the world markets for nuclear energy sector technology and equipment and make full use here of our knowledge, experience, advanced technology, and of course, international cooperation. Restructuring in the nuclear energy industry itself also aims at enabling us to achieve these goals. We must, of course, also focus work on promising new directions in energy – hydrogen and thermonuclear energy.

We must also take action to make our energy consumption radically more efficient. This demand is not just a whim for a country rich in energy resources, but is an issue for our competitiveness in the context of integration into the world economy. It is an issue of the environmental security and quality of life for our people.

I believe that only in this way can we ensure that Russia maintains a leading and stable position on energy markets in the long term. And in this way, Russia will be able to play a positive part in forming a common European energy strategy.

Our country has an advantageous geographical location and we must make use of this factor to realise our potential in the very promising area of modern transport and communications. The key decision in this respect is comprehensive and interlinked development of all types of transport and communications.

I note in this regard that concession mechanisms create new opportunities for carrying out such projects, and we should start making use of them very soon.

The reorganisation of important sectors such as aircraft- and shipbuilding has been dragging on for an unjustifiably long time. The government must take rapid steps to finally complete work on establishing holdings in these sectors.

It is also extremely important for us to make the right choices in our development priorities for the space industry. We must not forget that the development of outer space is Russia’s protective shield, gives us the possibility of detecting global natural cataclysms at an early stage and is a testing ground for new materials and technology. These and other objectives all require considerable investment to modernise facilities producing equipment for the space industry and to develop the infrastructure on the ground.

Russia has the potential to become one of the leaders in the field of nanotechnology. This sector represents one of the most promising directions for energy conservation and for developing new elements, medical technology and robotics. I believe we must take rapid steps to draw up and adopt an effective programme in this field.

I hope too that the implementation of the government’s and the Russian Academy of Sciences’ joint plans to modernise the science sector will not be no more than a formality but will bring genuine results and provide our country’s economy with promising new scientific developments.

Overall, what we need today is an innovative environment that will get new knowledge flowing. To do this we need to create the necessary infrastructure: technology incubators, technology parks, venture funds, investment funds. We are already doing this. We need to establish favourable tax conditions for financing innovative activities.

I believe too that the state should also facilitate the purchase of modern technology abroad. In this respect we have also taken some steps, first of all, of course, in order to modernise priority branches of industry. In this respect I ask you to analyse the possibilities for channelling resources into the capital of the financial institutions involved in leasing, lending and providing insurance for these types of contracts.

Reliable protection of intellectual property rights remains an essential condition for developing new technology. We must guarantee the protection of copyright within our country – this is also our duty to our foreign partners. And we must also ensure greater protection for the interests of Russian copyright holders abroad.

Dear colleagues,

Russia today needs unhindered access for its goods on international markets. We consider this an issue of more rational participation in the international division of labour and a question of making full use of the benefits offered by integration into the world economy. It is precisely for this reason that we are continuing our negotiations on accession to the World Trade Organisation based only on conditions that fully take into consideration Russia’s economic interests.

It is clear today that our economy is already more open than the economies of many of the members of this esteemed organisation. The negotiations on Russia’s accession to the WTO must not become a bargaining chip on issues that have nothing to do with this organisation’s activities.

In my address for 2003 I set the goal of making the rouble convertible. An outline of the steps to take was set out and I must say that these steps are being taken. I propose today that we speed up the removal of the remaining restrictions and complete this work by July 1 of this year.

But making the rouble genuinely convertible depends in great part on its attractiveness as an instrument for settlements and savings. In this respect we still have a great deal of work to do. In particular, the rouble must become a more universal means for carrying out international settlements and should gradually expand its zone of influence.

To this end we need to organise markets on Russian territory for trading oil, gas and other goods, markets that carry out their transactions in roubles. Our goods are traded on world markets, but why are they not traded here in Russia? The government should speed up work on settling these issues.

As I said before, our growing economic possibilities have enabled us to allocate additional money to the social sphere – investment in our people’s prosperity and in Russia’s future.

The goal of the Affordable Housing project, for example, is to lower interest rates on mortgage loans over a period of two years and almost triple the total mortgage loans made, bringing them to a total of 260 billion roubles.

Another of our national projects allocates considerable resources to the development of agriculture. Work has already begun on programmes to build housing for young higher education graduates in rural areas. We are also developing a system for making loans available to co-operative retailers, small individual land cultivation and large-scale agricultural production enterprises. We are facilitating the purchase of the new technology and high-quality agricultural equipment that is so essential for our rural areas.

Now for a few words on the aims and measures set out in the Education national project. Russia needs a competitive education system otherwise we will end up facing the real threat of having our quality of education not measure up to modern demands. Above all, we need to support the higher education establishments that are carrying out innovative programmes, including by buying the latest Russian and foreign-made equipment and technology.

The government must bring order to the curriculum of vocatonal education schools. This is something that should be done through work together with the business community and social services sector, for whom these institutions are training specialists in the first place.

We need to create a system of objective and independent external control over the quality of the education received, and we need to engage in broad-based and open dialogue with the public to establish an objective rating of universities.

We should not be afraid to expand the financial independence of education institutions, including schools, at the same time raising their responsibility for the quality of every aspect of the learning process and for the final result.

I support our business community’s initiative of financing major universities through special development funds and through the formation of an education loans system. In this respect we need to look at improving the legislation in order to create incentives for such spending and ensure the necessary guarantees. I deliberately have not used the term state guarantees, but there must be guarantees of some kind, and the government can organise this work and put in place the required mechanisms.

Our fourth national project has been started in the area of healthcare and is aimed at improving primary healthcare and prevention and at improving access to high-tech medical services. I want to emphasise at the same time that the money allocated to the national projects accounts for only around 5–7 percent of total state spending in these sectors.

The government and the regional and local authorities must work systematically together on modernising these four sectors and making more effective use of the considerable resources that we already have. If properly organised, all of this work should improve the quality of service in healthcare and education and also make it possible to considerably increase wages for all groups working in these sectors, not only those who are receiving additional payments as part of the priority projects.

Furthermore, starting this year, a large part of the federal budget spending will be focused on the final result. The regional authorities also must begin this work. I deliberately draw the regional authorities’ attention to this point. The government has already taken the first steps in this direction but in the regions nothing is happening.

We must also continue the process of devolution of powers. In particular, the regions should be given part of the investment funds from the federal budget, which are essentially already being used today to finance municipal powers.

It is high time to stop overseeing the construction of schools, bathhouses and sewerage systems from Moscow.

And now for the most important matter. What is most important for our country? The Defence Ministry knows what is most important. Indeed, what I want to talk about is love, women, children. I want to talk about the family, about the most acute problem facing our country today – the demographic problem.

The economic and social development issues our country faces today are closely interlinked to one simple question: who we are doing this all for? You know that our country’s population is declining by an average of almost 700,000 people a year. We have raised this issue on many occasions but have for the most part done very little to address it. Resolving this problem requires us to take the following steps.

First, we need to lower the death rate. Second, we need an effective migration policy. And third, we need to increase the birth rate.

The government just recently adopted a programme for improving road safety. Adopting a programme is easy, now we need to implement it. I take this opportunity to draw the government’s attention to delays and unjustified red tape involved in carrying out these kinds of tasks. I spoke about this issue in last year’s address, and the programme has only just now been prepared.

I am certain that other issues raised in last year’s address are also not always being resolved in the way they should be.

We are taking measures to prevent the import and production of bootleg alcohol. The national Healthcare project is rightly focusing on the detection, prevention and treatment of cardiovascular disease and other illnesses that are high causes of death among our population.

Regarding migration policy, our priority remains to attract our compatriots from abroad. In this regard we need to encourage skilled migration to our country, encourage educated and law-abiding people to come to Russia. People coming to our country must treat our culture and national traditions with respect.

But no amount of migration will resolve our demographic problems if we do not also put in place the conditions and incentives for encouraging the birth rate to rise here in our own country. We cannot resolve this problem unless we adopt effective support programmes for mothers, children and families.

Even the small increase in the birth rate and the drop in infant mortality we have seen of late are not so much the result of concerted effort in this area as of the general improvement in the country’s socio-economic outlook. It is good to see this improvement, but it is not enough.

The work we have carried out on social projects over these last years has laid a good base, including for resolving the demographic problem, but it is still inadmissibly insufficient, and you know why. The situation in this area is critical.

Distinguished members of the Federal Assembly, you will soon begin work on the budget for 2007, the year of elections to the State Duma. Understandably, the budget adoption process will be determined in large part by your desire to do as much as you can for your voters. But if we really want to do something useful and necessary for our citizens, I propose that you lay aside political ambitions and don’t disperse resources, and that we concentrate on resolving the most vital problems the country faces, one of which is the demographic problem, or, as Solzhenitsyn put it, the issue of ‘conserving the people’ in the broad sense. All the more so as there is public consensus that we must first of all address this key problem affecting our country.

I am sure that if you do this you will reap the gratitude of millions of mothers, young families and all the people of our country.

What am I talking about specifically? I propose a programme to encourage childbirth. In particular, I propose measures to support young families and support women who decide to give birth and raise children. Our aim should be at the least to encourage families to have a second child.

What stops young families, women, from making such a decision today, especially when we’re talking of having a second or third child? The answers are well known. They include low incomes, inadequate housing conditions, doubts as to their own ability to ensure the child a decent level of healthcare and education, and – let’s be honest – sometimes doubts as to whether they will even be able to feed the child.

Women planning to have a child face the choice of either giving birth and losing their jobs, or not giving birth. This is a very difficult choice. The programme to encourage childbirth should include a whole series of administrative, financial and social support measures for young families. All of these measures are equally important but nothing will bring results unless the necessary material support is provided.

What should we be doing today? I think that we need to significantly increase the childcare benefits for children under the age of one-and-a-half.

Last year we increased this benefit from 500 roubles to 700 roubles. I know that many deputies actively supported this decision. I propose that we increase the childcare benefit for the first child from 700 roubles to 1,500 roubles a month, and that we increase the benefit for the second child to 3,000 roubles a month.

Women who had jobs but then take maternity leave and child care leave until it is one-and-a-half should receive from the state not less than 40 percent of their previous wage. We realise that we will have to set an upper threshold from which this sum is counted. I hope that the government will work together with the deputies to set this threshold. Whatever the case, the total benefit should not be lower than what a woman who did not previously work would receive, that is to say, 1,500 roubles and 3,000 roubles respectively.

Another problem is getting women back into the workforce again. In this respect I propose introducing compensation for the expenses families pay for pre-school childcare. Compensation for the first child would come to 20 percent of expenses, for the second 50 percent, and for the third 70 percent of the average amount the parents actually pay for the pre-school childcare facility.

I draw your attention to the fact that I said that compensation would be for the expenses the parents actually pay and not for the costs for the childcare facility. The regional leaders understand what I am talking about. It is up to the regional and local authorities to ensure that there are enough kindergartens and nurseries to cover demand.

We also need to work together with the regions to develop a programme providing financial incentives for placing orphans and children whose parents are unable to care for them in family care. We currently have some 200,000 children living in children’s homes and orphanages. In reality the number of orphans is far higher, but around 200,000 of them are in children’s homes. It seems to me that foreigners are adopting more of our children than we ourselves are. I propose that we double the benefit paid to guardians or foster parents of children and make it at least 4,000 roubles a month. I also propose considerably increasing the wage paid to foster parents from 1,000–1,500 roubles a month to 2,500 roubles a month. And we should also increase the one-off payment made to families taking in children, regardless of the form chosen for placing the child with a family, to 8,000 roubles, that is, equal to the one-off payment made for giving birth to a child.

I instruct the government to work together with the regions to create a mechanism that will make it possible to reduce the number of children in institutions. We likewise need to take care of the health of future mothers and newborn babies and bring down the infant mortality and disability rates.

I propose that we increase the value of the childbirth certificates that were introduced last year and have worked well so far. I propose that we increase their value from 2,000 roubles to 3,000 roubles for pregnancy centres and from 5,000 roubles to 7,000 roubles for maternity homes.

This additional money should be used for buying the necessary medicines for women and providing a higher quality of medical services. This must take into account the views of the patients themselves, the women, and I stress this point. We need to develop such a mechanism. This is not difficult to do.

We also need to move rapidly to adopt a programme to create a network of perinatal centres and ensure that maternity homes have all the necessary equipment, special transport and other technology they need.

Finally, and most effective in my view, is a measure to ensure material support. I think that the state has a duty to help women who have given birth to a second child and end up out of the workplace for a long time, losing their skills. I think that, unfortunately, women in this situation often end up in a dependent and frankly even degraded position within the family. We should not be shy about discussing these issues openly and we must do so if we want to resolve these problems. If the state is genuinely interested in increasing the birth rate, it must support women who decide to have a second child. The state should provide such women with an initial maternity capital that will raise their social status and help to resolve future problems. Mothers could make use of this capital in different ways: put it towards improving their housing situation, for example, by investing it in buying a house, making use of a mortgage loan or other loan scheme once the child is three years old, or putting it towards the children’s education, or, if they wish, putting it into the individual account part of their own old-age pension.

Experts say that these kinds of state support measures should total at least 250,000 roubles, and this sum should be indexed to annual inflation, of course.

The question arises of what to do with the families who already have at least two children. This is an important question and I am sure that the deputies will come to a carefully thought-through decision in this respect.

Of course, carrying out all of these plans will require a lot of work and an immense amount of money. I ask you to work out the obligations the state would increasingly bear in this case over the years and give the programme a timeframe of at least 10 years at the end of which the state can decide on future action depending on the economic and demographic situation in the country.

Finally, the money needed to begin implementing these measures should be allocated in the budget for next year. This mechanism should be launched starting on January 1, 2007. I also ask you to work together with the government on the implementation procedures for carrying out this programme I have proposed.

Concluding on this subject, I note that we cannot resolve the problem of the low birth rate without changing the attitudes within our society to families and family values. Academician Likhachev once wrote that “love for one’s homeland, for one’s country, starts with love for one’s family”. We need to restore these time-honoured values of love and care for family and home.

While concentrating on raising the birth rate and supporting young families, we must also not forget about the older generation. These are people who have devoted their entire lives to their country, who laboured for their country and who, if necessary, rose to its defence. We must do all that we can to ensure them a decent life.

As you know, we have raised pensions on a number of occasions over recent years, and ahead of the planned timeframe. Next year we will again raise pensions by almost 20 percent overall. The state is allocating considerable money to providing social benefits and guarantees for pensioners and veterans. We need to continue our programme for providing state-funded housing for pensioners and veterans, including through using additional funds that are part of the Affordable Housing project. I ask you to continue focusing on this work as a key priority.

Distinguished deputies and members of the Federation Council,

In order to calmly and confidently resolve all the issues I have mentioned, issues of peaceful life, we need convincing responses to the national security threats that we face. The world is changing rapidly and a large number of new problems have arisen, problems that our country has found itself facing. These threats are less predictable than before and just how dangerous they are has not yet been fully gauged and realised. Overall, we see that conflict zones are expanding in the world and, what is especially dangerous is that they are spreading into the area of our vital interests.

The terrorist threat remains very real. Local conflicts remain a fertile breeding ground for terrorists, a source of their arms and a field upon which they can test their strength in practice. These conflicts often arise on ethnic grounds, often with inter-religious conflict thrown in, which is artificially fomented and manipulated by extremists of all shades.

I know that there are those out there who would like to see Russia become so mired in these problems that it will not be able to resolve its own problems and achieve full development.

The proliferation of weapons of mass destruction also represents a serious danger. If these weapons were to fall into the hands of terrorists, and they pursue this aim, the consequences would be simply disastrous.

I stress that we unambiguously support strengthening the non-proliferation regime, without any exceptions, on the basis of international law. We know that strong-arm methods rarely achieve the desired result and that their consequences can even be more terrible than the original threat.

I would like to raise another important issue today. Disarmament was an important part of international politics for decades. Our country made an immense contribution to maintaining strategic stability in the world. But with the acute threat of international terrorism now on everyone’s minds the key disarmament issues are all but off the international agenda, and yet it is too early to speak of an end to the arms race.

What’s more, the arms race has entered a new spiral today with the achievement of new levels of technology that raise the danger of the emergence of a whole arsenal of so-called destabilising weapons.

There are still no clear guarantees that weapons, including nuclear weapons, will not be deployed in outer space. There is the potential threat of the creation and proliferation of small capacity nuclear charges. Furthermore, the media and expert circles are already discussing plans to use intercontinental ballistic missiles to carry non-nuclear warheads. The launch of such a missile could provoke an inappropriate response from one of the nuclear powers, could provoke a full-scale counterattack using strategic nuclear forces.

And meanwhile far from everyone in the world has abandoned the old bloc mentality and the prejudices inherited from the era of global confrontation despite the great changes that have taken place. This is also a great hindrance in working together to find suitable responses to the common problems we face.

Taking into account all of the above, Russia’s military and foreign policy doctrines must also provide responses to the issues of today, namely, how to work together with our partners in current conditions, to fight effectively not just terrorism but also the proliferation of nuclear, chemical and bacteriological weapons, how to settle the local conflicts in the world today and how to overcome the other new challenges we face. Finally, we need to make very clear that the key responsibility for countering all of these threats and ensuring global security will lie with the world’s leading powers, the countries that possess nuclear weapons and powerful levers of military and political influence. This is why the issue of modernising Russia’s Armed Forces is extremely important today and is of such concern to Russian society.

The addresses of recent years have all dealt with various national security problems. Today I want to look more closely at the current state of the Russian Armed Forces and their development prospects.

These days we are honouring our veterans and congratulating them on Victory Day. One of the biggest lessons of World War II is the importance of maintaining the combat readiness of the armed forces. I point out that our defence spending as a share of GDP is comparable or slightly less than in the other nuclear powers, France or Britain, for example. In terms of absolute figures, and we all know that in the end it is absolute figures that count, our defence spending is half that of the countries I mentioned, and bears no comparison at all with the defence spending figures in the United States. Their defence budget in absolute figures is almost 25 times bigger than Russia’s. This is what in defence is referred to as ‘their home – their fortress’. And good on them, I say. Well done!

But this means that we also need to build our home and make it strong and well protected. We see, after all, what is going on in the world. The wolf knows who to eat, as the saying goes. It knows who to eat and is not about to listen to anyone, it seems.

How quickly all the pathos of the need to fight for human rights and democracy is laid aside the moment the need to realise one’s own interests comes to the fore. In the name of one’s own interests everything is possible, it turns out, and there are no limits. But though we realise the full seriousness of this problem, we must not repeat the mistakes of the Soviet Union, the mistakes of the Cold War era, neither in politics nor in defence strategy. We must not resolve our defence issues at the expense of economic and social development. This is a dead end road that ultimately leaves a country’s reserves exhausted. There is no future in it.

Of course, the question arises whether we can reliably ensure our security in a situation of such disparity with the other leading powers. Of course we can, and I will say how now. I propose that we look at this issue in more detail.

A few years ago the structure of the country’s armed forces was not in keeping with the reality of today’s situation. The armed forces were no longer receiving any modern equipment. Not a single new ship was built between 1996 and 2000 and only 40 new items of military equipment were commissioned by the armed forces. The troops carried out military exercises on maps, only on maps, the navy never left the docks and the air force never got to fly. When the need arose to counter a large-scale attack by international terrorists in the North Caucasus in 1999, the problems in the armed forces became painfully evident.

I remember very clearly a conversation I had with the chief of General Staff at that time. He is probably present here today. In order to effectively repel the terrorists we needed to put together a group of at least 65,000 men, but the combat ready units in the entire army came to only 55,000 men, and they were scattered throughout the entire country. Our armed forces came to a total of 1,400,000 men but there wasn’t enough men to fight. This is how kids who had never seen combat before were sent in to fight. I will not forget this ever. And it is our task today to make sure that this never happens again.

The situation in the armed forces today has changed dramatically. We have created a modern structure for the armed forces and the different units are now receiving modern, new arms and equipment, arms and equipment that will form the basis of our defence through to 2020. This year saw the start of mass defence equipment procurement for the Defence Ministry’s needs.

Naval shipbuilding has got underway again and we are now building new vessels of practically all types. The Russian Navy will soon commission two new nuclear submarines carrying strategic weapons. They will be equipped with the new Bulava missile system, which together with the Topol-M system will form the backbone of our strategic deterrent force. I emphasise that these are the first nuclear submarines to be completed in modern Russia. We had not built a single vessel of this type since 1990.

Five Strategic Missile regiments have already received silo-based Topol-M missiles, and one of our missile divisions will also receive the mobile version of the Topol-M system this year.

Another important indicator over recent years is that intensive combat and operational training is being conducted among the troops. Dozens of field exercises and long-distance sea voyages have been organised. One just finished today.

The result of these changes has been to boost combat spirit and improve the morale of soldiers and officers. We know examples of what it is no exaggeration to call mass heroism among military servicemen and law enforcement personnel.

The changes in the structure of the military budget are also an indicator of change. Defence spending has increased from year to year. An ever greater share of this money is going precisely into improving the quality of the armed forces. Over the coming years we must reach the goal of having at least half of the defence budget being spent on development. Every budget rouble must be spent carefully and for the designated purpose.

I have long since raised the issue of the need to establish a unified procurement and supply system for arms, military equipment and rear support. The government must settle this issue by the end of the year and complete this work and then establish a federal civilian agency with the according powers. I very much hope that this will also have a positive impact on overcoming corruption in the armed forces.

Now I would like to name the main demands regarding the missions our armed forces must be ready fulfil. Over the next five years we will have to significantly increase the number of modern long range aircraft, submarines and launch systems in our strategic nuclear forces.

Work is already underway today on creating unique high-precision weapons systems and manoeuvrable combat units that will have an unpredictable flight trajectory for the potential opponent. Along with the means for overcoming anti-missile defences that we already have, these new types of arms will enable us to maintain what is definitely one of the most important guarantees of lasting peace, namely, the strategic balance of forces.

We must take into account the plans and development vectors of other countries’ armed forces, and we must keep ourselves informed on promising developments, but we should not go after quantity and simply throw our money to the wind. Our responses must be based on intellectual superiority. They will be asymmetrical, not as costly, but they will unquestionably make our nuclear triad more reliable and effective.

Modern Russia needs an army that has every possibility for making an adequate response to all the modern threats we face. We need armed forces able to simultaneously fight in global, regional and — if necessary — also in several local conflicts. We need armed forces that guarantee Russia’s security and territorial integrity no matter what the scenario.

Another important demand is that the armed forces be professional and mobile. I particularly note that we have made the necessary personnel cutbacks over the last five years. The process of bringing the size of the armed forces down to an optimum 1 million servicemen will not require further special cutbacks but will be reached as officers who have served their time take their retirement. This scaling down will be achieved only through cutting back the bureaucratic apparatus. The combat units will not be affected by any more cutbacks.

Changes will also be made to the military command system and the mobilisation system will be improved. By 2008, professional servicemen should account for two thirds of the armed forces. All of this will enable us to reduce compulsory military service to one year.

Once the permanently combat-ready units are all manned by contract servicemen, we must also, starting 2009, begin filling posts for sergeants, master sergeants, and for above-water craft crews on principle of contract service.

The armed forces units stationed in Chechnya are all manned by contract servicemen. As from January 1, 2007, the Interior Ministry troops in Chechnya will also all be contract servicemen. In other words, we will no longer use conscript servicemen at all in anti-terrorist operations.

By 2011 our general purpose forces should include around 600 permanently combat-ready units. A much larger number of such units will be created in fighter plane units and military aviation, in the air defence forces, communications, radio-electronic reconnaissance and electronic warfare units. If need be, we will be able to quickly put into place mobile and self-sufficient units in any potentially dangerous area. Professionally trained units and permanently combat-ready units will form the backbone of these forces.

Service in the Russian Armed Forces should be modern and genuinely prestigious. People serving their motherland should have a high social and material status and benefit from solid social guarantees.

By 2010 we should have definitively resolved the issue of permanent housing for servicemen and by 2012 we should have resolved the issue of service housing.

We also plan a number of wage rises for the military over the coming years. At the same time we are developing the healthcare and insurance system for servicemen. Finally, the issue of increasing discipline among the troops is an equally important task. The political problems of the transition period and the lack of funding meant that the army was essentially just taking what it could get to fulfil its personnel needs, and this also led to worse conditions of service and a drop in the level of combat preparedness.

A huge number of young men of conscript age today suffer from chronic diseases and have problems with drinking, smoking and sometimes drugs as well. I think that in our schools we need not just to educate our young people but also see to their physical and patriotic development. We need to restore the system of pre-conscription military training and help develop military sports. The government should adopt the appropriate programme in this area.

The regional authorities should not just be seriously concerned with meeting conscription figures but are also responsible for ensuring that the recruits satisfy quality requirements, and they should carry out preparatory work in close contact with the armed forces themselves.

Administrative measures alone are not enough to really change the situation. We need to realise that the armed forces are part of ourselves, part of our society, and that service in their ranks is of immense importance for the country and for the entire Russian people.

Reflecting on the basic principles on which the Russian state should be built, the well known Russian thinker Ivan Ilyin said that the calling of soldier is a high and honourable title and that the soldier “represents the national unity of the people, the will of the Russian state, strength and honour”. We must always be ready to repel potential aggression from outside and to counter international terrorist attack. We must be able to respond to attempts from any quarters to put foreign policy pressure on Russia, including with the aim of strengthening one’s own position at our expense.

We also need to make clear that the stronger our armed forces are, the lesser the temptation for anyone to put such pressure on us, no matter under what pretext this is done.

Dear colleagues,

Russia’s modern foreign policy is based on the principles of pragmatism, predictability and the supremacy of international law. I would like to say a few words today about the state of relations and prospects for cooperation with our main partners, and above all, about relations with our nearest neighbours, with the countries of the CIS.

The debate on the very need for and future of the Commonwealth of Independent States still continues to this day and we all have an interest in working on reform of the CIS.

The CIS clearly helped us to get through the period of putting in place partnership relations between the newly formed young states without any great losses and played a positive part in containing regional conflicts in the post-Soviet area.

I stress that it was Russia that helped defuse the tension in many of these conflicts. We will continue to carry out our peacekeeping mission in all responsibility.

The CIS experience has also given rise to several productive economic cooperation initiatives. The Union State with Belarus, the Eurasian Economic Community and the Common Economic Space are all developing in parallel today, based on the shared interests of the partners involved. Together we are resolving the problems that no one else will settle for us. We see in practice that multilateral partnership enables us to do this at much less cost and far more effectively.

The CIS has provided a good basis for the formation of the Collective Security Treaty Organisation that brings together countries genuinely interested in close military and political cooperation.

Finally, without diminishing the importance of the other aspects of reform in any way, I note the particularly promising project of strengthening our common humanitarian space, which has not just a rich historical and human foundation but now offers new social and economic opportunities. Throughout the CIS a difficult but active search for optimum cooperation models is underway. Russia states clearly and firmly that the end result we want from this search is the creation of an optimum economic system that would ensure the effective development of each of its participants.

I repeat that our relations with our closest neighbours were and remain a most important part of the Russian Federation’s foreign policy.

I would like to say a few words briefly about our cooperation with our other partners.

Our biggest partner is the European Union. Our ongoing dialogue with the EU creates favourable conditions for mutually beneficial economic ties and for developing scientific, cultural, educational and other exchanges. Our joint work on implementing the concept of the common spaces is an important part of the development of Europe as a whole.

Of great importance for us and for the entire international system are our relations with the United States of America, with the People’s Republic of China, with India, and also with the fast-growing countries of the Asia-Pacific Region, Latin America and Africa. We are willing to take new steps to expand the areas and framework of our cooperation with these countries, increase cooperation in ensuring global and regional security, develop mutual trade and investment and expand cultural and educational ties.

I wish to stress that at this time of globalisation when a new international architecture is in the process of formation, the role of the United Nations Organisation has taken on new importance. This is the most representative and universal international forum and it remains the backbone of the modern world order. It is clear that the foundations of this global organisation were laid during an entirely different era and that reform is indisputably necessary.

Russia, which is taking an active part in this work, sees two points of being of principle importance.

First, reform should make the UN’s work more effective. Second, reform should have the broad support of a maximum number of the UN’s member states. Without consensus in the UN it will be very difficult to ensure harmony in the world. The UN system should be the regulator that enables us to work together to draw up a new code of behaviour in the international arena, a code of behaviour that meets the challenges of our times and that we are so in need of today in this globalising world.

Distinguished members of the Federal Assembly,

Citizens of Russia,

In conclusion I would like to say once more that today’s address, like previous addresses, sets out the basic directions of our domestic and foreign policy for the coming decades. They are designed for the long term and are not dictated by fluctuations of the moment.

Previous addresses have focused on construction of our political system, improving the state power system and local self-government, have examined in detail the modernisation of our social sphere and have set new economic goals.

Today I have set out our vision of what place we want to hold in the international division of labour and the new architecture of international relations. I have also examined in detail what we can do to resolve the complex demographic problem we face and to develop our armed forces.

The steps proposed are very concrete. Russia has immense development opportunities and huge potential that we need to put to full use in order to better the lives of our people.

Without question we realise the full scale of the work at hand. I am sure that we will be up to the task.

Thank you for your attention.




The source of information - May 10, 2006 - Presidential Address to the Federal Assembly

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April 26, 2007 - Annual Address to the Federal Assembly





President Vladimir Putin:




Colleagues,

Yesterday we paid farewell to First President of Russia Boris Nikolayevich Yeltsin. I ask you to honour his memory with a minute of silence.

* * *

Deputies and members of the Federation Council,

As you know, this tradition of making an annual address to the Federal Assembly — in effect a direct address to the people of Russia — was established by the 1993 Constitution, the Constitution adopted on the initiative of President Yeltsin.

He believed it was crucially important to maintain a direct and open dialogue with the people. He believed in the need for public debate on state policy priorities and problems. He considered this to be a valuable instrument for bringing society together, a valuable instrument for building genuine democracy.

Our country at that time was deeply divided by complex social conflicts, confrontation between parties and ideologies. Separatism represented a real threat to Russia’s security and territorial integrity. And as if this were not enough, resources for resolving the country’s most urgent and vital problems were in drastically short supply.

But it was precisely during this difficult period that the foundations for future change were laid.

We have worked together for many years to overcome the serious consequences of the transition period, to overcome the negative effects of far-reaching but not always straightforward transformation.

In untangling the complex knots of social, economic and political problems, we have at the same time built a new life. As a result, the situation in the country is gradually, slowly, step by step, changing for the better. Not only has Russia now made a full turn-around after years of industrial decline, it has become one of the world’s ten-biggest economies. People’s real incomes have more than doubled since 2000. The income gap between our citizens is still unacceptably wide, but the measures taken over recent years have reduced the extent of poverty in Russia by almost half.

We realise that we are still only at the beginning of the difficult road to our country’s full and genuine recovery. The more firmly our society pulls together, the quicker and more confidently we will complete this journey.

The spiritual unity of the people and the moral values that unite us are just as important a factor for development as political and economic stability. It is my conviction that a society can set and achieve ambitious national goals only if it has a common system of moral guidelines. We will be able to achieve our goals only if we maintain respect for our native language, for our unique cultural values, for the memory of our forebears and for each page of our country’s history.

This national treasure is the foundation for strengthening our country’s unity and sovereignty. It is the foundation for our everyday life and the basis on which we can build our economic and political relations.

One of this year’s most important events is the election to the State Duma. What principle importance and unifying significance does this election have for our society?

Above all, the results of this election will objectively reflect the level of support among the Russian public for the policies we have been following. Essentially, this election will decide whether the current policies will continue or not, for the implementation of our strategic plans depends directly on the composition of the parliament after December 2.

These strategic plans include the formation of an effectively functioning civil society and development of an effective state able to ensure security and a decent life for our people. They also include the development of free and socially responsible enterprise, the fight against corruption and terrorism, modernisation of the armed forces and law enforcement agencies, and finally, a much more influential role for Russia in world affairs.

This year will be the first time that the State Duma elections will take place according to the proportional system. In other words, only political parties will take part in the election. The parties’ lists of candidates will be divided into regional groups so that voters will know exactly who is competing to represent their interests in parliament.

This amounts to a revolutionary change and it was a conscious choice that we made in order to achieve real democratisation of the electoral system.

It needs to be said frankly that the old system of single-seat electoral districts did not stop influential regional organisations from pushing through their ‘own’ candidates, making use of the administrative resource at their disposal. We have still not overcome this problem, but the new system does considerably reduce the possibilities for using such methods.

Practice shows that the proportional system gives the opposition greater opportunities to expand its representation in the legislative assemblies. This is easily proven through examples, or through statistics, to be more precise.

In the three years that this system has been used at regional level, the number of party factions in local parliaments has increased almost four-fold. Today they account for almost two thirds of all members of the regional parliaments.

Moreover, the abolition of the minimum voter-turnout requirement (the subject of much debate, you will recall) has not led to a decrease in political activeness, and indeed, voter turnout has been even higher than in previous election campaigns.

I am certain that the new election rules will not only strengthen the role of political parties in forming a democratic system of power, but will also encourage greater competition between the different parties. This in turn will strengthen and improve the quality of Russia’s political system.

Based on the outcome of the elections, the political parties will be entitled to state financing. Russia’s taxpayers have the right to rest assured that their money will not be spent on empty populist promises or on undermining the foundations of our state system.

To be frank, our policy of stable and gradual development is not to everyone’s taste. Some, making skilful use of pseudo-democratic rhetoric, would like to return us to the recent past, some in order to once again plunder the nation’s resources with impunity and rob the people and the state, and others in order to deprive our country of its economic and political independence.

There has been an increasing influx of money from abroad being used to intervene directly in our internal affairs. Looking back at the more distant past, we recall the talk about the civilising role of colonial powers during the colonial era. Today, ‘civilisation’ has been replaced by democratisation, but the aim is the same – to ensure unilateral gains and one’s own advantage, and to pursue one’s own interests.

Some are not above using the dirtiest techniques, attempting to ignite inter-ethnic and inter-religious hatred in our multiethnic and democratic country. In this respect, I ask you to speed up the adoption of amendments to the law introducing stricter liability for extremist actions.

Greater powers for regional and local authorities constitute one of the main criteria for measuring a society’s degree of political culture and development. Decentralisation of state power in Russia is now at a higher point today than at any other time in our country’s history.

In the last year alone, important powers in the areas of urban development, forestry management, land and water relations, wildlife protection, and employment, have been transferred to the regional authorities. Starting next year, the regional authorities will begin exercising powers with regard to the protection and management of historical and cultural monuments of federal significance.

Much has also been said about the need to strengthen the links between the upper house of the parliament and the country’s regions. I know that the Federation Council’s current members take their responsibilities very seriously indeed and consistently uphold the regions’ interests in their practical work.

At the same time, many of those gathered here today propose passing a law that would allow a region to be represented only by someone who has lived there for at least ten years.

I agree with this proposal but only on condition that this change will be introduced gradually, in accordance with the current procedures for rotation of the members of the Federation Council. We do not need any new revolutions.

Last year was the first year during which the new law on local self-government was in force. This law considerably expands the powers and possibilities of the local authorities. Overall, I consider it necessary to continue the work to consolidate the economic foundation for local self-government, above all through ensuring the formation of a sufficient revenue base.

All of this, of course, does not mean the federal authorities will no longer take responsibility for the quality of life in the regions. But it is important that the power system become more flexible and closer to the people, and that more and more decisions are taken locally. At the same time, all of us without exception, at every level of power, are responsible before the public.

I draw your attention to the fact that the federal budget will allocate the regional authorities 153 billion roubles this year so that they can exercise the powers transferred to them. Next year, the money allocated for this purpose will increase to 200 billion roubles. Overall, the regions’ budgets have increased six-fold over the last seven years. We will look later at the priorities for how this money is spent, but the possibilities are considerably greater today than they were before.

But along with the transfer of powers and financial resources to the regions, we must also develop an objective system for evaluating the effectiveness of the regional and municipal authorities’ work.

The rapid expansion of our national information and media space is also having a beneficial effect on the development of democratic institutions and procedures. The last four years have seen a 40-percent increase in the number of registered print media, and an almost 2.5-fold increase in the number of electronic media outlets. But the leader for growth is without question the Internet. The number of Russians regularly using the Internet has increased more then four-fold over this period and now exceeds 25 million people.

It is impossible to imagine the democratic political process without the participation of non-governmental organisations, without taking into account their views and opinions.

This exchange of views, this dialogue with the NGOs, is developing consistently today, including through the Public Council’s constructive assistance. The professional influence and the openness of the Council’s members have given NGOs greater influence on lawmaking work, on the activities of the Government and the Federal Assembly, and also on the administrative practices of the state ministries and agencies.

The Public Council has become involved in combating xenophobia and cases of bullying and abuse in the armed forces. It is making an important contribution to strengthening legality and protecting human rights.

State support for public organisations is also on the increase. Last year, state support totalled 500 million roubles, while this year it will be 2.5 times higher.

The number of active NGOs in the country is growing, and so is their membership, the number of volunteers carrying out all kinds of socially important work. Around 8 million people in Russia are now active in NGOs.

These are all real indicators that an active civil society is developing in our country.

Colleagues,

The protracted economic crisis the country has gone through has had severe consequences for our country’s intelligentsia, for the situation in the arts and literature, for our people’s culture and creativity. To be honest, these difficulties have all but led to the disappearance of many of our spiritual and moral traditions.

And yet, the absence of cultural beacons of our own, and blindly copying foreign models, will inevitably lead to us losing our national identity. As Dmitry Likhachev wrote, “State sovereignty is also defined by cultural criteria”.

Having a unique cultural and spiritual identity has never stopped anyone from building a country open to the world. Russia has made a tremendous contribution to the formation of European and world culture. Our country has historically developed as a union of many peoples and cultures and the idea of a common community, a community in which people of different nationalities and religions live together, has been at the foundation of the Russian people’s spiritual outlook for many centuries now.

This year, Russian Language Year, is a good time for us to remember once again that Russian is the language of a historical fraternity of peoples, a true language of international communication.

The Russian language not only preserves an entire layer of truly global achievements but is also the living space for the many millions of people in the Russian-speaking world, a community that goes far beyond Russia itself. As the common heritage of many peoples, the Russian language will never become the language of hatred or enmity, xenophobia or isolationism.

In my view, we need to support the initiative put forward by Russian linguists to create a National Russian Language Foundation, the main aim of which will be to develop the Russian language at home, support Russian language study programmes abroad and generally promote Russian language and literature around the world.

Looking after the Russian language and expanding the influence of Russian culture are crucial social and political issues. Genuine art has a serious educational mission, helps to forge patriotic spirit, promotes moral and family values, respect for work and respect for one’s elders.

We have already introduced a system of grants for a number of musical, theatrical and other creative groups. This has helped to stabilise the material situation in the arts community. We will take this positive experience into account in our future work.

I believe that not only the state but also the business community can do much to contribute to the revival of Russian cinema and theatre, publishing and literature. And of course, it is also vitally important today to help develop the national cultures of our country’s different peoples, including through support for folklore groups.

Turning to another very important matter, our country developed at one time a library system that was unique in the world, but we are forced to recognise that many years of financing shortages have led to its decline.

We now need to rebuild this library system on a new and modern basis. I have already made a decision to establish a Presidential Library, which will become an information link binding the entire national library system together. This part of the library development project will be completed by the end of next year.

I propose that this library be given the name of Boris Nikolayevich Yeltsin, Russia’s First President.

The next stage is to use regional libraries as a base for developing regional branches of the Presidential Library. They will be linked together into an information network using common methodological and software programmes.

I ask the regional and municipal authorities to ensure this work to develop local information and library networks and strengthen the material and financial base for libraries, including school libraries. Libraries should be not just the storage centres for books, but genuine information, cultural and leisure centres.

Carrying out these tasks I have named will require the adoption of a relevant programme and the allocation of funds. I think that support for this project from the Russian Academy of Sciences would also be helpful and timely.

Cooperation with the world’s major library centres is another possibility. Our specialists have already held a series of consultations with colleagues from leading libraries in other countries. In the future, this work could eventually lead to the creation of a global library based on digital technology, which would serve as the base for an ambitious international humanitarian project to preserve the cultures and histories of the world’s peoples. I discussed this subject just recently with U.S. President George W. Bush, and we agreed that a project of this kind deserves political support at the highest level.

Colleagues,

No matter what the tasks we are resolving, be they in the cultural, economic or social spheres, we must look for the most effective solutions and methods.

We began implementing the priority national projects 18 months ago. The primary aim of these projects is to invest in people and improve their quality of life.

We realised right from the beginning that work on these projects required a particularly carefully tailored management system. At the same time, financing for the national projects was to come to no more than 5–10 percent of total budget spending on the corresponding sectors.

The first year of the projects’ implementation has shown that we have succeeded in focusing budget spending on the final result. A whole number of programmes, especially in housing construction and education, are being carried out as joint projects between the federal, regional and local authorities, often with the business community becoming involved as well.

Another distinguishing feature of the national projects is their innovative nature. State support is going to development projects linked to the use and introduction of the most advanced technology. This includes, for example, computerisation of the country’s schools and ensuring the provision of Internet access – a programme that should be implemented already this year. This also includes providing healthcare establishments with state-of-the-art equipment, and providing financial support to universities using new teaching methods and concepts.

The projects are starting to yield their first results. The Healthcare national project, for example, has brought results in the form of victories, small victories, yes, but victories nonetheless, represented by the lives of thousands of our fellow citizens. The reduction in the death rate and rise in the birth rate that we achieved in 2006 and that has continued in the first months of this year are clear evidence that we are working in the right direction.

In this respect, I would like to support the initiative to declare 2008 the Year of the Family in Russia. I hope that this decision will consolidate the efforts of the state and the business community to help strengthen and support the institution of the family and basic family values.

The national project in agriculture has not only proven its effectiveness but has also demonstrated the enormous potential of Russia’s agriculture sector. It has helped to develop initiative and enterprise in rural areas. The result is that we have succeeded in checking a number of negative trends for the first time in many years. Moreover, it is clear to all now that agriculture is a promising and potentially technologically advanced sector of our economy.

We recently passed a law on agriculture in accordance with which a five-year development programme for the sector is to be drafted (I know how the deputies fought for this law). I ask the Government not to delay its adoption.

To give another example, implementation of the national project, Affordable and Comfortable Housing for Russia’s Citizens, has considerably invigorated the construction sector in every area, from low-rise housing to complex development of entire districts and even towns.

We have come to the point now when the need to adopt a long-term strategy for mass-scale housing construction for all groups of the population is high on the agenda. We also need to look at a whole range of related issues such as urban development policy, the use of energy-saving and resource-saving technology and a development strategy for the construction industry as a whole.

Although the construction industry is growing at record rates (it posted annual growth of more than 15 percent last year), it still cannot keep up with the country’s fast-growing needs.

The need for a long-term strategy for the industry is also underscored by the fact that even the ambitious targets set by the national project, such as bringing 80 million square metres of new housing on to the market every year by 2010, are already not enough to meet the needs of our country today.

What was once considered an achievement by Soviet standards will no longer be enough to meet demand even in the medium term. We will need to bring at the very least up to 100 million – 130 million square metres of new housing on to the market each year. Ideally, we would need to build at least one square metre of housing per capita every year.

While expanding the construction of new housing, we must also not forget about the importance of maintaining existing housing in a decent state. This was a subject we discussed in detail at the State Council Presidium meeting in Kazan.

The new Housing Code makes owners fully responsible for the maintenance of their property, but the chronic financing shortages for maintaining housing stock over previous decades makes this too great a burden for the overwhelming majority of new property owners, people who have become property owners after privatising their apartments and who simply do not have the means to carry out this work.

Judge for yourselves: of the 3 billion square metres of housing stock in the country, more than half is in need of repair. Some buildings have not only not had any repair work done over the last 15 years, but have not seen repairs in the last 40–50 years. This explains why we are seeing an increase in the amount of dilapidated housing, which now accounts for a total of 93 million square metres, more than 11 million square metres of which – 11.2 million square metres to be precise — is in a state unfit for habitation. The scale of the problem is disastrous, without any exaggeration. There is no other word for it.

The red tape involved in organising condominiums, the excessive tax burden they have to bear, and also the excessive burden of repair work are all acting as a brake on putting in place effective mechanisms to reform the housing and municipal services sector.

If we wish to move ahead we therefore must find additional sources of financing, at the very least for repairs, and for resolving an issue we cannot delay – that of moving people out of housing that is no longer fit for habitation.

It would be amoral for the state to ignore these problems. A country with such big reserves built up through oil and gas revenues cannot accept to see millions of its citizens living in slums.

The Government has planned to allocate only 1 billion roubles on moving people out of old and dilapidated housing in 2007. I remember that when we began working on this issue back in 2004, I think it was, only 300 million roubles were allocated, and then the figure rose to 1 billion, and this year it is again 1 billion. The local authorities are spending little more on this, although this is their direct responsibility. Now I would like to come back to what I mentioned earlier, namely that there has been a six-fold increase in the [regional] budgets.

I believe that sufficient financing for repairs should be allocated, but as a one-off procedure, in order to launch the mechanism for creating effective property owners’ cooperatives.

As for moving people out of dilapidated housing, this should become a long-term programme that would break the negative trends in this sector and help millions of our citizens resolve their housing problems.

We need to look the truth in the eyes and recognise that many of our fellow citizens, who have found themselves in very difficult circumstances, are unable to resolve this issue without support from the state. You are aware, of course, that this situation is the root of many of the serious problems we face, problems such as drunkenness, the high death rate, and crime, including juvenile delinquency. Let us also not forget the problem of abandoned children.

Of course, the question arises, where will the money come from?

First, we have the money. Spending decisions are always just a matter of the choice of priorities at federal and regional level.

Second, I have a concrete proposal, namely, to allocate considerable additional revenue to these tasks, including revenue obtained through improved tax collection, from the privatisation of state assets and also, perhaps, from the sale of assets belonging to YUKOS in payment of its debts to the state.

It is my view that we should establish a special fund with at least 250 billion roubles in order to effectively reform the housing and municipal services sector. We need to allocate at least 100 billion roubles to programmes to move people out of dilapidated housing. Note that this is twenty times higher than the funding allocated in previous years.

At least 150 billion roubles should be spent on repairs to the housing stock. Previously, the federal budget allocated no money for this purpose at all.

Not only government officials but also representatives of the parliament and public organisations should be involved in the management of this Fund. Given the seriousness of the problem and the large amount of resources allocated, the Fund should draw up a programme for a 4–5-year period. This programme should focus on encouraging reform of the housing and municipal services sector and on providing assistance to specific individuals.

I hope that the members of the national and regional parliaments will exercise reliable control over the spending of these funds, and I ask you to do so, and I also hope that the media and the public will ensure control. I stress too that nobody is relieving the regional and local authorities of their responsibilities in this area.

Colleagues,

In 2002, we decided to establish the Stabilisation Fund. It was necessary in order to guarantee the execution of budget spending commitments and to reduce inflationary pressure created by high oil prices on the world markets.

Time has shown that this policy was correct and justified. We have consistently brought down the inflation rate and this has had a positive impact on the growth of real incomes and has contributed to our economy’s sustainable development.

But the nature of the economic tasks at hand today call for adjustments to the Stabilisation Fund’s functions and structure, while continuing to pursue a conservative financial policy. In this respect, in my Budget Address, I proposed a new procedure for using the financial resources obtained through oil and gas revenues. The specific parameters of this new procedure are fixed in the Budget Code.

I remind you that all oil and gas revenues will be divided into three components.

First is the Reserve Fund, the purpose of which is to minimise the risks to our economy of a sharp drop in energy prices on the world markets, and also to maintain macroeconomic stability and fight inflation, which, as I said, has a direct impact on the growth of people’s real incomes.

Second, part of the oil and gas revenues will go into the federal budget, primarily in order to carry out large-scale social programmes.

Third, the remaining oil and gas revenue will be placed in the Fund for Future Generations.

I think that the money in this Fund should be spent on raising the quality of life of our citizens and developing our economy. This Fund should help bring greater prosperity for our people both now and in the future. In this respect, it would be more correct to call it the National Prosperity Fund.

I would like to look now in more detail at how we propose spending the Fund’s resources.

Historically, our culture has been based on respect for the people who have raised us and set us on our road in life. A society that does not show respect for its old people has no future. But during the difficult reform years, many pensioners – the vast majority, to be honest – ended up below the poverty line, above all due to the collapse of a pension system that was not adapted to market conditions.

We have no right to repeat the mistakes of the past and we must undertake every possible effort to guarantee a decent life for our pensioners in the future.

At the same time, we are hearing more and more often that we will not be able to resolve the problem of providing future pensions unless we raise the retirement age. Advocates of this idea base their conclusions on calculations that show a potential deficit in the pension system over 2012–2030 due to the need to index the basic pension at rates exceeding inflation, and also as a result of the problematic demographic situation.

It is my conviction that if we act in time to take all the necessary measures, there will not be any crisis in the pension system.

I also believe that there is no objective need to raise the retirement age in our country in the foreseeable future, not only because this would not in itself resolve pension provision issues for once and for good, but above all because we still have considerable possibilities we can make use of to ensure that the Pension Fund is better provided for and that would cover any deficit that could arise.

This takes us back to the issue of tax collection and to bringing wages out into the open, and I ask the Government to take the appropriate measures in this respect.

We also need to create a system of incentives so that people who have reached retirement age can, if they wish, voluntarily continue to work. Allowing people to voluntarily continue to work should, in the future, lead to a considerable increase in pension payments.

I think that pensions should increase on average by at least 65 percent over 2007–2009.

I also propose that we settle the issue of the so-called ‘Far North’ pensions, so that pensioners – both those who have already resettled from the Far North regions and regions with a similar status, and those who will do so in the future – can keep the greater part of the pensions they previously received. A decision on this matter should be made this year and I ask the Government to do this.

As well as indexing pensions, we must also provide incentives for voluntary retirement savings programmes – a very important aspect of pension schemes. In this respect, I propose that some of the money from the National Prosperity Fund be spent on co-financing voluntary retirement savings programmes.

What we must do, in essence, is to develop our citizens’ ‘pension capital’.

I propose the following scheme: for every 1,000 roubles a person makes in voluntary contributions, the state should add another 1,000 roubles to his personal pension account in the Pension Fund. Of course, so as to ensure that these contributions do not lose their value over time, they should be reliably and profitably invested. I ask the Government to define the maximum amount of this kind of co-financing in order to ensure a fair distribution of funds among the different social groups.

In the future, available funds from the National Prosperity Fund could be used to cover an eventual deficit in the pension system if it were to come about.

The Fund’s financial resources should be increased to levels that would make it possible to meet the set objectives through the revenue obtained by their effective investment. I will not name any specific figures now – the Government will get nervous if I name them, but it knows what kind of amounts we are talking about. I ask you to ensure that this does not remain just empty words.

Together, these measures I have mentioned should ensure that our citizens’ retirement provisions increase and should also guarantee the pension system’s reliable functioning in the long-term perspective.

Colleagues,

Russia’s rich educational, scientific and creative heritage gives our country clear advantages for creating a competitive economy based on knowledge and intellect, an economy driven not by the rate at which natural resources are exploited, but above all by the ability to come up with new ideas and inventions and introduce them more rapidly than others into everyday life.

We have prepared the conditions for implementing precisely this strategy. We have passed the necessary laws and established the necessary structures. Now, using the base we have laid, we must begin setting concrete objectives.

In this respect, I want to come back to the question of making use of the National Prosperity Fund. Part of the Fund’s money should be spent on capitalising development institutions, above all the Development Bank, the Investment Fund, the Russian Venture Company and others. For this purpose I propose that 300 billion roubles be allocated this year with further allocations for this work in the years to come.

Regarding the projects financed by the development institutions, I think they should be devoted to resolving the biggest tasks our economy faces.

First is to remove infrastructure bottlenecks that hinder growth.

Second is to make use of natural resources more effective.

Third is to modernise and develop high-technology industrial production.

I also note one point of principle importance, and that is that budget funds should not become the main source of funding but should above all serve as a catalyst for private investment.

The state’s aim in putting budget funds into the economy should be only to provide a shoulder to lean on in areas where the risks for private investors are still too high. The state’s main role should be to help business create a new and genuinely modern production base and encourage the emergence of an increasing number of national public companies.

I also want to mention the importance of small business as an economic sector. We have spoken on many occasions of the need to develop small business, and I ask you to pass at the earliest possible date a law on the support and development of small business.

I can say with all certainty that where small business is developing well, there is less poverty and the death rate is lower. The statistics confirm this. As small business continues to develop, the structure of our society will change and the middle class will grow. The parasite mentality will fade away and a spirit of initiative will develop as our citizens come to take ever greater responsibility for the results of their labour.

Concerning state funds, we should keep in mind that federal, regional and local investment already accounts for around 20 percent of all investment in the country. We must ensure that this investment is used as effectively as possible. The taxpayers have a right to demand that this money bring the expected results.

We also need to bring order to the system for concluding state contracts. We need to move over entirely to a system of contracts in which the cost of state procurement orders does not change throughout the contract’s execution. In the vast majority of cases, the allocation of state procurement orders should be conducted through a system of auctions.

Now I would like to speak in more detail about the specific projects we propose. These are ambitious and large-scale projects.

One of our clear priorities over the coming years is electricity production. Russia has already run up against a shortage of capacity for future growth.

We plan to carry out the biggest structural reform project this sector has seen in decades. In essence, our project amounts to a second electrification of the country. We need to increase electricity production by two thirds by 2020. The state and private companies will invest around 12 trillion roubles in this work.

We will build new electricity stations and modernise existing stations, and we will also expand the network infrastructure. We also need to change considerably the structure of our electricity production by increasing the share of nuclear, coal-based and hydroelectricity production.

Over the entire Soviet period, 30 nuclear power plant units were built, but we plan to build 26 such units over the next 12 years, and to do so using the most advanced technology available.

I propose establishing a special corporation to carry out this project, a corporation that would bring together nuclear energy and industrial companies. This corporation will work on the domestic and foreign markets and will also take part in ensuring the state’s defence interests. This will require a special law to be adopted. This is the nuclear energy industry I am talking about here.

Russia also has immense hydroelectricity production potential, but it is making less than 20 percent use of this huge potential, while other developed countries are making 70–80 percent use of their hydroelectricity production resources. We must begin building major new hydroelectric stations, above all in Siberia and the Far East.

We also possess enormous coal reserves, and we should therefore focus also on increasing the share of new generation coal-based production in our electricity production structure.

I hope that the Government’s active work and initiative from the business community will enable us to successfully implement these electricity production development plans.

Yet another element in the infrastructure for future growth is an effective transport system.

Poor and at times completely inexistent roads severely hamper development. Annual economic losses due to the poor state of our roads are estimated at more than 3 percent of GDP. Just think that we spend 2.7 percent of our GDP on defence each year. The mobility of Russia’s population is almost 2.5 times lower than in other developed countries.

You will agree, I am sure, that we can no longer accept to see the decrepit bridge crossings, construction of which began during the Soviet years, or calmly read the tragic figures for the number of road accidents, including fatal accidents, on busy highways such as the Moscow-Don road, for example, used by millions of people, especially in the summer. All of this is absolutely unacceptable.

Federal spending on roads has practically doubled since 2005, but given the urgency of the problems I have mentioned and the need to develop the road networks within cities too, I propose that an additional 100 billion roubles be allocated.

Overall, I believe that we need to approve a programme for developing the road network through to 2015. The construction of high-quality federal highways and the reconstruction of the roads that form the international north-south and centre-Urals transport corridors in the European part of Russia are definite priorities. Also a priority is work to develop the infrastructure needed to help the Far East and Siberia realise their economic potential.

I believe that simply increasing funding is not enough, of course. We need to put in place a legal base that would provide for new and modern methods of financing and the construction and operation of roads.

The members of the State Duma and the Government have already put forward the relevant legislative initiatives. We need to act now to implement them as soon as possible.

Developing the country’s rail, air and water transport links is just as important a task.

We need to adopt a long-term programme for developing our railways, in terms of both domestic and international traffic.

The number of airports in Russia has dropped three-fold over the last 15 years. We need to take urgent measures to improve the situation in this area and to begin implementation of a programme to establish aviation transit hubs.

I believe that only the most important airports should remain federal property, while the rest should be transferred to the country’s regions. I ask the Government to examine the adoption of a special programme for developing the airport network.

We need to raise private investment too, through the privatisation of airport terminals and the concession of airport infrastructure, including runways.

I have been talking about the need to develop our sea ports for several years now. But the situation has barely improved at all. Our freight traffic continues to go through foreign ports and this is quite simply unacceptable.

The Government, as if on purpose, is not taking any measures. And yet we have been discussing this matter for several years now! I think that this situation results from either an inability to properly set the priorities I have spoken of on several occasions now, or an inability to properly organise the practical work. Both cases are equally bad.

Now we must take urgent steps. First of all, we need to draft and adopt investment programmes for developing Russia’s ports. This year, we will settle the issue of allocating land resources for the development of port infrastructure. Finally, we also need to pass the corresponding law and make the decisions regarding the establishment of a number of free port zones offering tax incentives.

The development of river transport can play a big part in bringing down costs in the economy. We need to carry out projects to increase the throughput capacity of our internal waterways, including through modernising the Volga-Don and Volga-Baltic canals.

I propose that the Government also examine the establishment of an international consortium to build a second section of the Volga-Don canal. This new transport artery would have a significant impact on improving shipping links between the Caspian and the Black Seas.

Not only would this give the Caspian Sea countries a route to the Black Sea and the Mediterranean, thus providing them with access to the world’s oceans, it would also radically change their geopolitical situation by enabling them to become sea powers.

I have already held preliminary talks on this issue with my colleagues from the countries bordering the Caspian.

For Russia, this would be another large-scale and economically advantageous infrastructure project.

Another question future generations will have the right to ask us regards the use of our country’s natural resources. Are we really gaining maximum benefit from our natural resources? This question applies not only to oil, gas, and mineral resources, but also to our forestry and water resources.

Many of you probably do not know that Russia was the world’s biggest oil producer in 2006, but that we lag behind considerably when it comes to oil refining.

The Government needs to draw up a system of measures to encourage the development of refining capacity within the country.

Yet another problem is that Russian oil fields burn more than 20 billion cubic metres of accompanying gas every year, and that is the minimum estimate. And yet, elsewhere in the world, there is a whole system of measures that has already proven its effectiveness. We must act urgently to establish the relevant accounting system, increase fines for environmental damage, and also toughen licence demands for natural resource users.

Turning to the next issue, the Government has already made a decision to gradually raise export duties on round wood. We do not seek to damage the interests of our foreign partners, but we must work on developing our own wood processing industry. This includes further justified steps to bring down import duties on technical equipment, speeding up the provision of forest tracts and using co-financing programmes to create the necessary infrastructure.

We have been discussing the problems of another sector, the fisheries sector, increasingly frequently of late. No visible progress has been made yet in this sector, and yet the priority decisions are obvious and very clear.

Most countries have traditionally kept their fisheries closed to foreigners. We should stop allocating quotas to foreign companies and give preference to Russian companies that develop their own processing activities.

I also ask the Government to draw up a system of measures for ensuring effective customs control and prevention of poaching and smuggling.

I would like to look now at the sectors that will play an important part in developing an innovation-based economy.

Russia has historically been a leader in aircraft manufacturing, both military and civilian. Over the last decade, however, we have seen our civilian aircraft manufacturing industry decline.

We have adopted a programme to develop this sector and have established the United Aircraft Manufacturing Corporation.

This new aircraft manufacturing corporation should become an engine for modernising the entire sector. Ultimately, Russia will develop a modern aircraft manufacturing sector producing the main different types of civilian aircraft.

This year, we need to choose an international partner for mutually beneficial cooperation, while continuing to implement the projects already begun.

Russia is also a major sea power. We have a fairly well developed sea traffic market , but we have practically stopped building civilian vessels.

Over the last decade, our ship owners have placed orders for more than 90 percent of their new vessels with foreign shipyards. If we do not take action now, the shipbuilding sector in our country will go into decline and this will ultimately have a negative impact also on our country’s security, on military shipbuilding.

In order to rectify this situation, we have decided to establish the United Shipbuilding Corporation, which will work in all segments of the market, from designing and building ships to carrying out maintenance and repair work. The corporation’s mission is to win itself a decent niche on the global shipbuilding market. This is a goal within our reach.

I expect us to decide very soon on state support measures for the shipbuilding sector in Russia.

We cannot modernise our economy without also developing science in our country.

Last year, a federal law was passed which will see scientific work in state academies take place based on a five-year programme for fundamental research. This programme will be approved by the Government based on proposals made by the Russian Academy of Sciences and other state institutions.

A total of 48 billion roubles will be allocated to this fundamental research programme in 2008 and another 8 billion roubles will be allocated to funds supporting fundamental research. I ask that provisions be made to increase these allocations in the future.

Special targeted programmes introducing open tenders for state orders for applied scientific research and development constitute another source of funding. Based on the results of these tenders, contracts will be signed with individual scientific organisations and teams. This will also help to encourage the competitive spirit that is essential in science.

This thus gives us two sources of financing – through the Academy of Sciences and other institutions, and directly to the scientific centres through open tenders. The targeted programmes represent a total of more than 33 billion roubles in funds for 2008, and this is in addition to the financing through the Academy of Sciences. I also propose that we introduce the practice of holding tenders for development programmes for scientific research institutes, similar to the system of tenders for developing innovation in universities we began using last year.

We have the task now of developing our science and technology potential and ensuring it is up to the challenges of global technological development. In this respect, I particularly want to stress the need to establish an effective system of research and development in the area of nanotechnology based on atomic and molecular constructions.

For most people today, nanotechnology is as abstract a concept as was nuclear technology back in the 1930s. But nanotechnology is already a key direction in the development of modern industry and science. In the long term, nanotechnology will provide a foundation for raising living standards, strengthening national security and supporting high economic growth rates.

Scientists predict that goods making use of nanotechnology will become a part of our everyday lives, and that they will help us to conserve non-renewable natural resources.

I recently approved a development strategy for the nanotechnology industry, setting out the main priorities and the legal and organisational mechanisms for creating the infrastructure in this sector. This infrastructure will encompass state scientific centres and universities and also private corporations’ laboratories.

The state must make available the necessary resources for the material, technical, personnel and organisational implementation of this work. These funds will be managed by the specially established Russian Nanotechnology Corporation. These funds total at least 130 billion roubles. I ask that you complete the drafting and adoption of the corresponding federal law as soon as possible. I call on you, colleagues, to please do this as swiftly as you can.

In total, taking into account the federal targeted programmes, the federal budget will allocate around 180 billion roubles to this work.

I draw your attention to the fact that this new area of work will receive funding comparable to the funding we give to science in general, almost the same amount!

The main question is that of putting in place the conditions for increasing private investment in nanotechnology development. I hope to see intensive joint work by the Government, the state organisations being formed, and private companies, to carry out specific projects, including in aircraft manufacturing and shipbuilding and in the rocket and space industry, nuclear energy, medical technology and the housing and municipal services sector.

Given the scale and unique nature of the nanotechnology project, I think we could propose that the CIS countries also become involved. This could be yet another forward-looking and mutually beneficial project that brings us closer together. Regarding the nanotechnology corporation, I think that its directors should include representatives of both houses of the Federal Assembly.

Colleagues,

We must continue our work to strengthen the country’s armed forces. Our military reform and development programmes have already brought about significant changes, and this is in large part thanks to the consolidated position of the main political groups and the coordinated work of the executive and legislative branches of power.

The implementation of the federal targeted programme, Transition to Contract-based Service in a Number of Military Units, has led to two thirds of armed forces units now being manned by contract servicemen. The length of compulsory military service will be reduced to 12 months starting in January 2008. We will carry out this task.

The re-equipment of military units with new and modernised arms and equipment, which will form the basis of the arms programme through to 2020, is going according to plan.

We have begun implementing the State Arms Programme for 2007–2015. The bulk of the spending under this programme will go on series procurement of new arms and military equipment. In order to use these funds effectively, contracts will be concluded by a new specially set-up federal agency. The security agencies will all delegate to this new agency their functions for placing procurement orders and paying contracts.

One of the most important indicators of the state of the armed forces is the situation with the social protection system for servicemen and their families. Two 15-percent wage increases are planned for servicemen, one in December this year, and one in September 2008.

These increases will have a direct impact on military pensions too. Increases to military pensions depend on the level of wages of current servicemen.

Yet another matter: last year, more than 40,000 apartments were made available for servicemen and armed forces veterans. By 2010, we should have fully resolved the problem of providing all servicemen and veterans with permanent housing, and by the end of 2012, we should have completed construction of service housing stock. We also need to take additional measures to encourage housing construction for servicemen in the Far East.

I say again that we must work consistently to keep strengthening our armed forces, keeping our objectives in this area commensurate with our economic possibilities and with the nature of potential threats and the changes in the international situation.

This brings me to the following matter.

As you know, the Warsaw Pact countries and NATO signed the Conventional Forces in Europe Treaty in 1990. This treaty would have made sense if the Warsaw Pact had continued to exist.

But today all that this treaty means is that we face restrictions on deploying conventional forces on our own territory. It is difficult to imagine a situation where the United States, for example, would accept restrictions on such a basis on the deployment of troops on its own territory. However, not only did Russia sign and ratify this treaty, but it has also observed its provisions in practice.

We have carried out considerable troop reductions. We no longer have any groups in the northwest of army or corps size. Practically all types of heavy arms have been withdrawn from the European part of the country. We are essentially the only country facing so-called ‘flank restrictions’ in the south and north. Even when the situation flared up in Chechnya, Russia continued to observe its commitments under this treaty and coordinated its action with its partners.

But what about our partners? They have not even ratified the adapted treaty, citing the Istanbul Agreements providing for the withdrawal of Russian troops from Georgia and Trans-Dniester.

But our country has been working consistently towards resolving these complex tasks. More importantly, the Conventional Forces in Europe Treaty is not in any way legally bound to the Istanbul Agreements.

This makes us fully justified in saying that in this particular case, our partners are not displaying correct behaviour, to say the least, in their attempts to gain unilateral advantages. While making use of an invented pretext for not ratifying the Conventional Forces in Europe Treaty, they are taking advantage of the situation to build up their own system of military bases along our borders. Furthermore, they plan to deploy elements of a missile defence system in the Czech Republic and Poland.

New NATO members such as Slovenia and the Baltic states, despite the preliminary agreements reached with NATO, have not signed the Conventional Forces in Europe Treaty at all. This creates a real threat and an unpredictable situation for Russia.

In this context, I believe that the right course of action is for Russia to declare a moratorium on its observance of this treaty until such time as all NATO members without exception ratify it and start strictly observing its provisions, as Russia has been doing so far on a unilateral basis.

It is time for our partners to also make their contribution to arms reductions, not just in word but in deed. At the moment, they are only increasing arms, but it is time for them to start making cutbacks, if only in Europe.

I propose that we discuss this problem at the Russia-NATO Council. If no progress can be made through negotiations, then I propose that we examine the possibility of suspending our commitments under the Conventional Forces in Europe Treaty (Applause). I was about to say that I call on the Federal Assembly to support this proposal, but I understand from your reaction that you do support it.

I also call your attention to the fact that elements of U.S. strategic weapons systems could be deployed in Europe for the first time. It is clear that the U.S. plans to deploy a missile defence system in Europe is not just an issue for bilateral Russian-American relations.

This issue, in one way or another, affects the interests of all European countries, including those in NATO. In this respect, this subject should be, and I would even say must be, discussed in the Organisation for Security and Cooperation in Europe as part of this organisation’s political and military dimension.

It is time for us to give the OSCE real substance and have it address the issues of genuine concern to the peoples of Europe rather than just hunting for fleas in the post-Soviet area.

Incidentally, we support the candidacy of Kazakhstan for the presidency of this organisation and we hope that Kazakhstan’s presidency would help to give the organisation the needed positive boost to its work.

Colleagues,

Our foreign policy is aimed at joint, pragmatic, and non-ideological work to resolve the important problems we face.

In broader terms, what I am speaking about is a culture of international relations based on international law – without attempts to impose development models or to force the natural pace of the historical process. This makes the democratisation of international life and a new ethic in relations between states and peoples particularly important. It also calls for the expansion of economic and humanitarian cooperation between countries.

This explains the attention we must pay to building up the common humanitarian space within the CIS, making our work with Russians abroad more effective, and making greater use of cooperation between civil society organisations that has proved its worth. Youth, education, cultural and professional exchanges are all an important part of humanitarian cooperation.

As it rebuilds its economic potential and becomes more aware of its possibilities, today’s Russia seeks to develop equal relations with all countries avoiding any attitude of arrogance. We will do no more than defend our economic interests and make use of our competitive advantages in the way that all countries around the world do.

We support the development of institutions and mechanisms that give equal consideration to the interests of all partners. This is true for projects in all fields – in the energy sector, in industry, and in the area of international transit. These projects exist and are being implemented.

Russia will continue to show initiative in pursuing economic integration in the CIS area and, more broadly, throughout the Eurasian region. We need to bolster the integration processes taking place in the Eurasian Economic Community and in the Shanghai Cooperation Organisation. This, I stress, is precisely a case where economic development is synonymous with security, including the security of our borders.

I would like to reiterate our approach to building the Union State between Russia and Belarus.

Russia is open to all forms and models of integration. We are prepared to go as far in this respect as our Belarusian friends are ready to go. The pace at which we build the Union State depends only on the substance and the real depth of the integration processes underway.

We are not hurrying anyone. We are ready to hold frank discussions with our partners on any of the problems that arise on the way. But we remain unswervingly committed to our policy of comprehensive development of relations with Belarus in vital areas such as the economy, transport, social protection, healthcare and humanitarian cooperation.

Whatever the case, we will act in keeping with the interests of the peoples of both Russia and Belarus.

I note also that we are developing an increasingly constructive partnership with the European Union. We believe that all of these positive elements in our relations should now be cemented and developed in the new basic strategic partnership agreement between Russia and the EU.

Overall, we need to conduct a serious discussion involving the politicians and members of the business and academic communities on ways to facilitate the free movement of capital, goods, services and labour on the European and Asian continents. Russia, with its geopolitical position, can and will play an important part in this respect and will do all it can to encourage these processes.

I propose that we begin this discussion at the International Economic Forum in June 2007 in St Petersburg.

In conclusion, I would like to make a small and almost lyrical digression from the purely businesslike format of this Address. My presidential term comes to an end in the spring of 2008 and the next Address to the Federal Assembly will be delivered by the next head of state.

In this respect, of course, many of you expected that today’s Address would concentrate mostly on summing up and evaluating what we have accomplished in our work together since 2000. You expected to hear, no doubt, some philosophical recommendations for the future. But I think that it is not proper for us to evaluate our own work, and not time yet for me to set out my political testament.

Of course, we should always be thinking about the future. Here in Russia we have this old tradition, a favourite pastime, of searching for a national idea. This is something akin to looking for the meaning of life. It is, generally speaking, a useful and interesting pursuit, and also one that is never-ending. Let us not launch into discussions on such matters today.

But I think that many of you will agree with me that in working towards the goals we have set, making use of everything new, modern and innovative in doing so, we must and we also will rest our endeavours upon the moral values that our people have forged over the more than 1,000 years of their history. Only in this case will we be able to set the right course of development for our country, and only in this case will we achieve success.

No matter what times we have lived through, be it revolutionary upheavals or the stagnation years, we have almost always yearned for change. True, each of us has our own idea of what kind of change we need, our own priorities, our own preferences and dislikes, and our own vision of the past, present and future. This is natural and understandable, for we are all different.

But there is also something that unites us all without exception: we all want things to change for the better. But we do not all know how to achieve this. You and I, all of us present here at the Kremlin today, are not only duty-bound to know how to achieve this, but are duty-bound to do everything possible to come up with plans for practical, concrete action. We must do everything we can to convince the majority of our citizens that these plans are effective and to genuinely involve them in this constructive process.

I would like to note in this respect that each of my eight Addresses to the Federal Assembly has not only evaluated the situation in the country and its place in the world, but has also set priorities, including long-term priorities in the social sphere, in the economy, in foreign and domestic policy, and in defence and security. Though perhaps not complete, this constitutes in effect a fairly concrete and substantial conceptual programme for Russia’s development. Its implementation requires constructive work from all sections of society and calls for immense effort and huge financial resources.

It is my conviction that our country will take its deserved place in the world, and we will be able to preserve our statehood and our sovereignty, only when our citizens see and feel for themselves and are confident that all of the state’s endeavours aim at protecting their vital interests, at improving their lives and bringing them greater prosperity and security. Only when our people are able to feel proud of their country. Each citizen should feel that he is a part of the nation, involved in its fate. And each citizen should be able to improve his own life through lawful means and add to our nation’s wealth through his labour. All of us who are involved in administrative, public, and all the more so political work, bear particular responsibility. This applies fully to everyone present here today, to the Russian Government, the federal ministers, the regional governors, the members of both houses of parliament, the judges, to the representatives of all the branches of power. We must make the utmost effort and give all our strength to the very last minute of our lawful constitutional mandates and use effectively the time that destiny has given us to serve Russia.

Thank you.




The source of information - April 26, 2007 - Presidential Address to the Federal Assembly

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In 2008-2012, Dmitry Medvedev has been President of Russia.





December 12, 2012 - Presidential Address to the Federal Assembly





President of Russia Vladimir Putin:




Citizens of Russia,

Federation Council members and State Duma deputies,

Recently, just a few months ago, in the articles written during the presidential election campaign and then in the executive orders signed in May 2012 I set out our position and our short and medium term plans. They covered all areas of our work and our lives: the economy, social sphere, domestic policy, international affairs and security issues. These documents describe our plans in detail, sometimes citing specific figures and deadlines. Some of them are already being implemented, for example raising teachers’ wages and some other tasks. We have put together the required regulatory framework with regard to all other items on our agenda. The work has begun. I want to assure all citizens of our country that it will continue; we will tackle all the tasks we have set without fail. The commission that was created specifically for this purpose will monitor these efforts.

Today, in my first Address to the Federal Assembly since being elected President, I will not speak in detail about those plans. It is too early to talk about any substantial adjustments but there are several points I would like to make in this regard.

I would like to highlight some of the key aspects of our progress, questions that are fundamental for Russia’s present and future not only in the medium but also in the long term, the most basic issues for each and every one of us.

A great deal has been achieved in the first twelve years of the new century. The stage of national reconstruction and strengthening, which is enormous in its importance, has been completed. Our task now is to build a rich and prosperous Russia. I would like all of us to understand clearly that the coming years will be decisive and perhaps even ground-breaking not only for us, but for the entire world as it enters a period of transition and possibly even shocks.

Global development is becoming increasingly unequal. This creates a fertile ground for new economic, geopolitical and ethnic conflicts. Competition for resources is becoming more intense. And I can assure you and want to emphasise that this competition will not be limited only to metals, oil and gas, but above all will focus on human resources and intelligence. Who will take the lead and who will remain outsiders and inevitably lose their independence will depend not only on the economic potential, but primarily on the will of each nation, on its inner energy which Lev Gumilev termed “passionarity”: the ability to move forward and to embrace change.

People in countries with developed economies and many countries with developing economies have become used to constant consumption growth, the expansion of life and cultural opportunities. That is good but it is possible to ensure the continuation of such growth in the modern world only through the introduction of a new technological order, and that is a great obstacle in many parts of the world. A country that is unable to secure its place among the developers of new innovative technologies is not just doomed to dependence: the share of the global ”pie“ which will benefit its businesses and citizens will be much smaller than that of the leaders. See how the revenue is distributed today between those who produce intellectual products and the consumers of the end product. The share is 15% and 75–80%.

In the 21st century amid a new balance of economic, civilisational and military forces Russia must be a sovereign and influential country. We should not just develop with confidence, but also preserve our national and spiritual identity, not lose our sense of national unity. We must be and remain Russia.

After 70 years of the Soviet period, Russian people went through a period when the importance of their private interests regained its relevance. That was a necessary and natural stage. However, working for one’s own interests has its limits. Prosperity cannot be achieved if chaos, disorder and insecurity reign beyond the walls of your house. You cannot live without having regard for others, without helping the weak, without extending your responsibility beyond the responsibility of your family or profession. Today more and more people in our country understand this. This has lead to the rise of civic engagement. People begin to relate their own lives and work with caring for others, with the aspirations of the entire nation and the interests of the state.

Today is December 12, the Constitution Day, and I would like to say a few words about the values that are rooted in the fundamental law of our country. The nation-wide responsibility for our country to the present and future generations is hailed by the Constitution as a fundamental principle of the Russian state. It is in civil responsibility and patriotism that I see the consolidating force behind our policy.

Being a patriot means not only to treat one’s national history with love and respect, although, of course, that is very important, but first and foremost to serve one’s country and society. As Solzhenitsyn said, patriotism is an organic, natural feeling. And as a society cannot survive without civil responsibility, so a country, especially a multinational one, cannot exist without a nationwide responsibility. These are remarkable words, they really bring it home.

A sense of responsibility for one’s country cannot be instilled with slogans or appeals; people must see that the authorities are transparent, accessible, work hard for the benefit of the country, city, region, village and every citizen, and respond to public opinion. The authorities must not be an isolated caste. This is the only way to build a strong moral foundation for creative work, an affirmation of order and freedom, morality and civic solidarity, justice and truth, and nationally oriented consciousness.

What will guarantee Russia's sovereignty in the 21st century? We often talk about this today. First, the country must have a sufficient amount of its own resources. This is not so that we could produce everything at home. Nobody lives like this anymore and I think that no one will ever live like this again. Russia must not only preserve its geopolitical relevance – it must multiply it, it must generate demand among our neighbours and partners. I emphasise that this is in our own interest. This applies to our economy, culture, science and education, as well as our diplomacy, particularly the ability to mobilise collective actions at the international level. Last but not least it applies to our military might that guarantees Russia’s security and independence.

Against the background of conflicting processes in the world, the interests of the nation require decisive action. We must look ahead and focus on the future.

Colleagues,

In the 20th century Russia went through two world wars and a civil war, through revolutions, and twice it experienced the collapse of a unified state. The whole way of life changed radically in our country several times. As a result, at the beginning of the 21st century, we were faced with a real demographic and moral catastrophe, with a demographic and moral crisis. If the nation is unable to preserve and reproduce itself, if it loses vital references and ideals, it does not need an external enemy because it will fall apart on its own.

I have talked about this many times but I want to emphasise it again. For Russia to be a sovereign and strong nation there must be more of us and we must be better in our morality, competences, work and creative endeavours. Today, the share of the young, active, working population aged 20 to 40 years in Russia is one of the highest among the developed countries. But in just 20 years, this age group could be reduced by half. If nothing is done, this trend will continue. Either right now we can open up a lifelong outlook for the young generation to secure good, interesting jobs, to create their own businesses, to buy housing, to build large and strong families and bring up many children, to be happy in their own country, or in just a few decades, Russia will become a poor, hopelessly aged (in the literal sense of the word) country, unable to preserve its independence and even its territory.

The demographic programmes adopted in the past decade have shown their effectiveness. The country's population has not only stabilised, but it has also begun to grow. In January-September 2012, it has grown by more than 200,000 people. For the first time in our country’s recent history, natural population growth has been posted for five months in a row: the birth rate has finally started to exceed the death rate.

In the past four years life expectancy in Russia has grown by almost 2.5 years (this is a good indicator) and has exceeded 70 years. However, the mortality rate remains very high, especially among middle-aged men. Together we must fight the frankly irresponsible attitude in society towards healthy living. Along with the development of public healthcare more attention should be paid to preventive care. Naturally, this does not mean that we should focus less attention on improving healthcare and increasing its accessibility – not at all. However, it is not enough to limit our efforts to medicine. The Government should introduce programmes for replacing jobs with hazardous conditions and improving road safety. Only smoking (we know this well as we have discussed this many times already), alcohol and drug addiction cause hundreds of thousands of premature deaths in our country every year.

A vitally important area is the development of physical fitness and sport, especially among young people. After all, the reason why we will be hosting the biggest international sports events is to encourage people to exercise, to raise the popularity and prestige of sports and fitness. But this task, the task of promoting sports and fitness, mass sports, cannot be achieved through international sporting events and even increasing the hours of physical education in schools and universities. We need new methods, a wide range of not only sports, but also fitness activities, especially for children, and I want to emphasise this: activities for young children. As we know, lifelong habits and interest are formed at this age, and we must work to encourage them.

I believe it is crucial to support the idea of creating associations of student sports clubs. Such an organisation would not only contribute to the development of university sports, but in a sense could give a social boost for talented, focused and active young people. I think it is important that such an organisation remains beyond politics and unites young people with a wide variety of political views.

We have adopted a programme providing family (maternity) capital at the birth of the second child. It is being implemented successfully, and will continue to be implemented until the end of 2016. We will fulfil all our obligations under this programme.

I want to stress once again: the programme was adopted until 2016, that is, every family that has a second child before 2016 will receive maternity capital and other benefits as required by law. This does not mean that I now want to encourage women to have a second child. Women know what they need to do and when. But it is our responsibility to inform people, just as we must decide what to do with this programme after 2016. Starting in 2013, we will begin paying additional benefits for the third and subsequent children in those regions where the demographic situation is worse than the national average.

We have 50 such regions in the Russian Federation, and most of them are concentrated in the Central, Northwestern, Volga and Far Eastern federal districts.

In addition, I would like to remind the heads of all Russian regions about the need to adopt and implement their own regional demographic programmes. Demographers say that the decision to have a second child is a potential decision to have a third. It is important that more families take this step. And, despite some experts’ doubts (with all due respect), I still believe that families with three children should become the standard in Russia. But a great deal must be done to make this a reality.

First of all, we must create a favourable environment for women so that they do not fear that the birth of the second and subsequent children will limit their career opportunities, their chances to find a good job and will force them to become housewives. Our efforts to eliminate waiting lists for kindergartens, introduce vocational training programmes for women who have children and provide support for flexible forms of employment will have a direct influence on each family’s decision to have the second and third child.

Special attention should be given to pre-school education, including support for the creation of private pre-schools. The Government has already eliminated many barriers in this area. Please finalise this work in the first six months of 2013, and I ask the regions to make active use of the opportunities provided. We must finally let the people work normally so that they can open small home-based kindergartens and all-day childcare, which means that parents will have a choice of day care without the waiting lists and all the anxiety.

I am confident that we have a unique opportunity in the next decade to fundamentally resolve another long-standing Russian problem: housing. I think this is the most important issue both for the Government and heads of the Russian regions. In the first stage of the Housing National Project we successfully promoted the development of mortgage loans. In the past two years, these loans have been growing by 40–50% a year. This is a good indicator, but frankly, as we know, mortgage loans mostly benefit people with above average incomes. Other people cannot afford them.

Therefore, now, at the new stage, we must attempt to resolve the housing problem for a broader range of people: young families, social sphere professionals, doctors, teachers, scientists and engineers, and take measures to increase the commissioning of affordable economy class housing, as well as greatly enhance the opportunities to rent housing. Some regions already have pilot projects that serve as case studies for various forms of rental market support. Such housing must be affordable to working people.

We also emphasise that in 2013–2014 we will fully meet our obligations to provide housing to military personnel and war veterans, and make significant progress in relocating people from unfit housing. In the next few years all people who were recognised on January 1, 2012 to be in need of better living conditions due to the poor state of their housing will move into their new flats.

We have set the goal to create and modernise 25 million jobs by 2020. This is a very ambitious and difficult challenge, but we can achieve it. We can help people find good, interesting employment. Quality jobs will become the driving force for the growth of wages and wellbeing. That is the most important aspect of our work. We need to revive engineering schools and professional training. Overall, we must pay more attention to working people.

I am instructing the Government Cabinet to develop and implement a national system for evaluating the quality of professional training in the next two years.

I also want to particularly mention the social sector. The specialists working there are known as public-sector employees. However, these people are highly educated and highly qualified, and in terms of their work, their cultural needs and social engagement, they are members of the so-called creative class. This creative class, or if we use the traditional term, the intelligentsia, is comprised, first and foremost, of doctors, teachers, university educators, workers in science and culture; these people are working in every region, in every village, in every city. At the same time, in terms of their incomes, they are still beyond the middle class level and are unable to afford proper vacations or comfortable living conditions, and must constantly seek additional sources of income.

For many years, the government underpaid these specialists, simply because it did not have the means, primarily because we needed to resolve other, more pressing problems such as increasing pensions, because the elderly were in an even worse situation, often living below the poverty line.

Now, we can radically change the situation in the social sectors. I laid out my suggestions in detail in the executive orders I mentioned, as well as my pre-election articles. The executive orders signed in May set the parameters for wage increases for every category of workers in these sectors. I am asking the heads of federal and regional government agencies to mobilise all their resources to implement this goal, and not just because these are our pre-election promises, although that is certainly very important – we must fulfil every promise we made. But even more importantly, if we fulfil this goal, we will be able to solve several key problems at once.

First of all, we will see a significant improvement in the quality of healthcare and education, because new, talented professionals will be drawn to these fields. And current workers in these areas will get the opportunity to focus on their main jobs, improve their training, and not take on additional side jobs and overtime. This is how we hope to eradicate such problems as day-to-day corruption and indifference to one’s responsibilities – everything that so greatly offends and hurts people today.

Second, the number of citizens who classify as members of the middle class will grow significantly – by a quarter. This will be particularly noticeable in the regions. We will support the revival of provincial intelligentsia, which was once Russia’s professional and moral backbone.

Third, professional communities of medical workers, educators, scientists and cultural workers will gain a new impetus for development. These communities must become the core of a competent and active civil society. It is fundamentally important for society to have the opportunity to objectively assess the state of science and the social sector.

I am asking the Government Cabinet, jointly with the Presidential Executive Office, to put together suggestions on creating a system for publicly monitoring the quality of healthcare, education, results of academic research and the need for cultural institutions by April of next year. First and foremost, we must attract professionals to these lines of work, and to look at international best practices.

Let me stress that it would be incorrect to perceive the programme of professional development support as simply increasing everyone’s wages equally, without taking into account the qualifications and the actual input of each and every worker. Every organisation – medical, educational, scientific – must create its own programme for development and personnel renewal.

In this respect, I would also like to say the following. All of us (I do not know anybody who would be against this) speak about the need to restructure various sectors, but as soon as the restructuring process begins, we hear people complaining: this should not be touched, that should not be approached. We must avoid and eliminate this. If we understand what needs to be done, then we must do it, but at the same time, we must do it wisely. Here, I must agree with everyone who feels this work should be carried out in constant dialogue with the professional communities; we must always explain our policies. I am also asking media executives and leading journalists to give particular attention to the transformations happening in these areas – this is a highly important nationwide challenge.

I am confident that growth of wages will attract top graduates to education, healthcare and science sectors. Indeed, we are already seeing the beginning of this process. In the last three years, medical universities have taken the lead with the highest average Final School Exam [EGE] score among their applicants, leaving economics and law departments behind. This year, we have seen a significant change in the knowledge level of applicants to teaching professions. The number of talented, well-advanced school graduates who have enrolled in pedagogical universities has increased significantly.

Colleagues, today, in our cities and villages, we are seeing the results of what has been happening in our nation, in society, in schools, in the media, and in our heads for the past fifteen to twenty years. And this is understandable. That was the time when we discarded all ideological slogans of the previous era. But unfortunately, many moral guides have been lost too. We ended up throwing out the baby with the bath water. Today, this is often manifested in people’s indifference to public affairs, willingness to tolerate corruption, brazen greed, manifestations of extremism and offensive behaviour. And all of this occasionally takes an ugly, aggressive, provocative form; I’ll go even further and say that it creates long-term threats to the society, security and even integrity of Russia.

It is painful for me to say this, but I must say it. Today, Russian society suffers from apparent deficit of spiritual values such as charity, empathy, compassion, support and mutual assistance. A deficit of things that have always, throughout our entire history, made us stronger and more powerful; these are the things we have always been proud of.

We must wholeheartedly support the institutions that are the carriers of traditional values, which have historically proven their ability to pass these values from generation to generation.

The law can protect morality and should do so, but a law cannot instil morality. Attempts by the government to encroach on people’s beliefs and views are a manifestation of totalitarianism. This would be completely unacceptable to us and we do not plan to follow that path. We must not follow the path of prohibition and limitations, but instead, we must secure a firm spiritual and moral foundation for our society. That is precisely why issues of general education, culture and youth policy are so significant. These areas are not just a collection of services; rather, first and foremost, they are the environments for creating a moral, harmonious person, a responsible Russian citizen.

Friends, we must acknowledge that schools’ influence on shaping children and adolescents has grown weaker in recent years. They now have some powerful competitors: the Internet and the electronic media. The parents and students themselves are now much more demanding and a school must not fall behind its students, the development of society, or the flow of information; instead, it should be well ahead of them all. Schools must regain their absolute value. This means renewing educational content, while of course maintaining our traditions and advantages, such as our fundamental mathematical education, without forgetting the enormous significance of high-quality education in the Russian language, history, literature, the foundations of secular ethics and traditional religions. These subjects have a special role: they form a personality, an individual.

Whether or not a student comes across a talented, dedicated teacher largely determines the formation of his or her personality, his or her future. The education system must be built around strong, gifted teachers. Such teachers should be selected scrupulously, taken care of and supported. Schools do not simply impart a set of knowledge. I think you will agree with me that high-quality school training is impossible without education. I am asking the Government Cabinet to prepare a programme for the comprehensive development in schools of educational component, and it must above all be modern.

We must promote technical and artistic creativity, establish summer sports camps and create special educational tourist routes for children. All this should be accessible to every child, regardless of where they live and how much their families earn. Let me point out that this falls under the direct responsibility of the Russian Federation’s regions. But clearly, the Government must keep these matters under control.

We should let the wealth of Russian culture guide us. Russia has always been among the nations that not only create their own cultural agenda, but also influence the entire global civilisation. State policy in this area must aim to resolve current societal challenges. We must clearly understand and respond to the needs of modern society, particularly those of youth, and strengthen the traditions of the peoples of Russia.

Our citizens who have made outstanding achievements in the creative sphere, in their work, business, sports and charity must be known in society and supported by the state.

Today, there are many people in Russia who work selflessly on public charity projects. The construction brigade movement is being revived. I think it is important to support such volunteer initiatives. And soon, we will be discussing this in detail at a meeting with members of volunteer organisations.

Friends,

In order to revive national consciousness, we need to link historical eras and get back to understanding the simple truth that Russia did not begin in 1917, or even in 1991, but rather, that we have a common, continuous history spanning over one thousand years, and we must rely on it to find inner strength and purpose in our national development.

We are nearing the end of 2012, which was declared the Year of Russian History. But this attention to our nation’s history and related educational and scientific projects should not fade away. I am counting on the active work by the recently recreated Russian Historical Society, as well as the Russian Military History Society and the Russian Geographical Society, which has been active now for several years.

I would like to particularly thank the search parties that are restoring the names of heroes for our nation and for their families, honourably interring the remains of soldiers who fell in the Great Patriotic War and caring for war memorials.

At our meetings with search party participants, we spoke about how important it is to preserve the historical military memory of the Fatherland. After all, is it fair that we still do not have a single worthy national monument to the heroes of World War I? Our predecessors called it the great war, but it was undeservingly forgotten and struck from our historical memory and history for political and ideological reasons. Meanwhile, the morale of our Armed Forces is held up by traditions, by a living connection to history, by the examples of bravery and selflessness of our heroes. I feel that we should revive the names of the most renowned regiments, military units and major formations of past eras within the Russian army – both from Soviet times and earlier eras, such as Preobrazhensky ans Semenovsky regiments. The Defence Minister should present corresponding suggestions.

We must value the unique experience passed on to us by our forefathers. For centuries, Russia developed as a multi-ethnic nation (from the very beginning), a civilisation-state bonded by the Russian people, Russian language and Russian culture native for all of us, uniting us and preventing us from dissolving in this diverse world.

To the rest of the planet, regardless of our ethnicity, we have been and continue to be one people. I recall one of my meetings with veterans. There were representatives of several ethnicities: Tatars, Ukrainians, Georgians, and ethnic Russians of course. One of the veterans, who was not an ethnic Russian, said, “As far as the entire world is concerned, we are one people, we are Russians.” That was true during the war, and it has always been true.

We treat and will continue to treat with great care and respect every ethnic group, every nation in the Russian Federation. Our diversity has always been and remains the source of our beauty and our strength.

But we must not forget that any nationalism and chauvinism do direct and enormous damage especially to the people and the ethnic group whose interests the nationalists are supposedly defending. That is why there is a grave danger for Russia in all manifestations of “simple and definitive” solutions offered by the nationalists and extremists of various stripes and persuasions. Whatever their slogans, they drag the country towards social decline and disintegration. We must regard attempts to provoke ethnic tensions and religious intolerance as a challenge to the unity of the Russian state and as a threat to all of us. We will not allow the emergence of closed ethnic enclaves in Russia with their informal jurisdiction, existing outside the country’s common legal and cultural norms, and disdainfully disregarding the accepted standards, laws and regulations.

I appeal to the heads of the republics of the Russian Federation, to the governors and mayors of major cities. This is primarily your responsibility. You must work with people on a daily basis, and you must organise this effort to make it effective.

Russia needs new blood. That much is clear. It needs smart, educated, hard-working people who do not just want to make some money here and leave, but want to move to Russia, settle down here and consider this country their homeland. However, the current regulations do not contribute to this goal. Quite the contrary. The process of obtaining citizenship for our compatriots, for those who are culturally and spiritually close to Russia is difficult and outrageously bureaucratic. At the same time it is very simple to import unskilled labour, including illegally.

I ask you to develop a simplified procedure for granting Russian citizenship to our compatriots, the bearers of the Russian language and Russian culture, the direct descendants of those who were born in the Russian Empire and the Soviet Union, for those who want to take up permanent residence in our country and, therefore, to give up their current citizenship.

At the same time I consider it reasonable and necessary to toughen penalties against illegal immigration and violations of registration rules. The relevant amendments have already been submitted to the State Duma. I ask the deputies to pass these laws.

I would like to make another proposal. We still allow citizens of CIS states to enter the Russian Federation using their national passports. Enough time has passed and all CIS states have become firmly established. It is almost impossible to ensure effective immigration control when foreign citizens can enter the country using their national passports. I believe that beginning from no later than 2015 entry into Russia should only be possible for bearers of international passports.

I ask the relevant agencies to work on this matter together with our colleagues in the Commonwealth. We do not want to create problems for anyone. If necessary, we can provide them with assistance and support, including financial and technical. It is a simple matter of issuing documents. We must adopt the practice of many of our neighbours and strategic partners around the world. We can provide technical and financial assistance, if needed.

At the same time, the current regulations will remain in force for citizens of the Customs Union and Common Economic Space, who will enjoy the simplified rules for crossing the border within the territory of the Customs Union and the Common Economic Space.

The role of public institutions is extremely important in immigration policy matters. In this regard, I consider it correct to broaden the powers of national and cultural autonomies, to provide them with federal grants for the implementation of programmes for the legal, social and cultural adaptation of immigrants. This experience has shown to be effective in many countries.

I also ask the Government Cabinet to submit proposals for the implementation of distance learning programmes in Russian. It should be available for young people in the CIS and for our compatriots all over the world. It is important to support schools in the CIS and in other states which teach in Russian, including by providing support for the teachers, help with textbooks and equipment. We should create a system of international school competitions in the Russian language. The winners should be granted admission to the leading Russian universities.

Colleagues, I would like to address especially those of you who work in this field. I believe we should strive to ensure that quality education in Russian is available globally. In general, we should talk about ways to expand Russia’s presence in the global humanitarian, informational and cultural space.

Colleagues,

Democracy is the only political choice for Russia. I would like to stress that we share the universal democratic principles adopted worldwide. However, Russia's democracy means the power of the Russian people with their own traditions of self-rule and not the fulfilment of standards imposed on us from the outside. Democracy means compliance with and respect for laws, rules and regulations. The ruling parties, governments and presidents may change but the core of the state and society, the continuity of national development, sovereignty and freedoms of people must remain intact.

Democracy is not only an opportunity to elect power, it’s about being able to monitor it and evaluate the results of its work. We must pay greater attention to the development of direct democracy and self-rule, including the right of popular legislative initiative (I have already talked about this), when an idea that receives public support, including via the Internet, must be considered in Parliament.

In addition, I believe members of the Federation Council and State Duma deputies must be given the right to initiate legislation in the regional legislatures. Thus, we will strengthen the connection between federal laws and the life of the regions and each legislator.

Political competition is important for the country. At the same time, we must establish a kind of code of fair political competition.

There are several points I would like to make in this regard.

First. Russia’s unity, integrity and sovereignty are unconditional. Any manifestations of separatism and nationalism must be completely removed from the political agenda.

Second. Any direct or indirect foreign interference in our internal political processes is unacceptable. Anyone who receives money from abroad for his or her political activities, thus serving certain foreign national interests, cannot be a politician in the Russian Federation.

Third. There can be no place in politics for criminals. This should become standard practice for all political forces. Of course, people will say that it is already against the law for criminals to take part in politics. Yes, it is against the law but they still try to enter the political arena, sometimes receiving help, and this should not happen.

Fourth. Civilised dialogue is possible only with those political forces that make, justify and articulate their demands in a civilised way, defending them in compliance with the law. The change and modernisation of the political system are natural and even necessary, but I have said in the past that it would be inadmissible to allow for the destruction of the state to satisfy this thirst for change. The whole history of Russia screams about it.

Fifth. The state must and will seek to ensure equal access to the media for all political parties, and not only during election campaigns but at all times. However, this is not an easy task, as I am sure you realise. We had seven political parties at the beginning of this year, and now we have 48, if I am not mistaken, plus there are over 200 organising committees working to establish their own political parties. Nevertheless, the authorities must strive to ensure that all of them enjoy equal rights. Many political parties and experts propose that we return to a mixed system of State Duma elections – to party lists and single-mandate voting districts, which, of course, will have to be established first. I agree with this, let's go back to this system.

Some people talk about restoring the electoral blocs’ right to participate in elections. Let's think about this matter separately. It requires a detailed discussion, consideration and analysis. I am convinced that this can make our political system more fair, open and competitive, and will satisfy the society’s demand for new leaders in politics and the government, a demand for outstanding and independent people.

Colleagues,

Russia is characterised by a tradition of a strong state. Therefore, the main public demands are addressed to the state: to guarantee civil rights and justice, to reduce violence and social inequality, to restore order in the housing and utilities sector, and so on.

Poor government efficiency and corruption are major problems that everyone can see. We will never be able to tackle the challenges facing our society and our nation without quality, modern public administration, and without a high level of personal responsibility of everyone involved in it.

The following principles should be the key to the new model of public administration.

First. All parts of the state mechanism and all levels of government must be oriented towards a result that is measurable, transparent and understandable to the public.

Second. There must be extensive introduction of new forms and methods of control. Public opinion must become the main criterion for assessing the effectiveness of state bodies that provide public services as well as institutions in the social sphere.

Third. Effective motivation of municipal employees: competitive salaries, a system of moral, financial and career incentives to encourage continuous improvement in the work of state bodies. At the same time, personal liability must be increased dramatically, up to and including temporary disqualification.

This means that not only can an official found guilty of negligence be dismissed from office, but he or she can also be banned from engaging in this activity for a certain period of time.

Fourth. When we criticise public officials I would like us to bear in mind that the vast majority of employees in various state bodies are honest and responsible people. This is a special responsibility for those who take on a number of legal and ethical obligations and restrictions. We must not forget that. But if a person has chosen public service, he or she should be ready for these restrictions, for public scrutiny and special requirements, as is the case in almost all countries around the world. How can the public have confidence in an official or politician who says high-sounding words about the national good but at the same time tries to take his money and assets out of the country?

I ask you to support legislative proposals limiting the rights of state officials and politicians to hold foreign accounts, stocks and shares. (Applause.) Hold your applause, you may not like what is coming. (Laughter.) This requirement should apply to all officials who are in charge of key decisions: the top leaders of state and government, the senior staff in the Presidential Executive Office and their immediate families. It should also apply to members of the Federation Council and State Duma deputies.

As for the ownership of foreign real estate, it must be declared in accordance with the law, and the official must submit a report on the cost of the property and the origin of the funds used to purchase it.

Fifth. Control over agencies exercising regulatory oversight requires special attention. According to various estimates, about one million people are employed in these bodies, which is comparable to the number of doctors or teachers in the country.

I ask the Government Cabinet to submit proposals on ways to reshape the key functions of oversight agencies. Oversight is undoubtedly one of the key government functions. However, it is unacceptable when performance indicators for oversight agencies are not based on the result, but on the number of investigations.

It is essential to introduce public reports by oversight agencies about the results of investigations, as well as the financial and human resources used to conduct them. That will clearly show the cost of each investigation and even whether it is necessary at all.

We will certainly continue to combat corruption, which is a threat to national development prospects. I would like to stress that businesses must never enjoy any privileges based on their proximity to the executive, legislative or judicial government bodies at any level.

In this regard, first, in addition to monitoring income and assets, we will also begin monitoring the expenditures and major acquisitions of civil servants, executives of state companies and their close relatives. At the same time, I want to point out that the Prosecutor General’s Office has now got the right to petition the courts to confiscate property that was acquired as the result of unlawful enrichment.

Furthermore, I believe that the level of remuneration for the executives of organisations financed through the state budget should be pegged to the organisation’s performance and the average salary of its employees. We have already spoken about this many times. When we adopted new salary calculation principles a couple years ago, there were initially many disputes as to whether they should include mandatory principles or whether it would be enough to just set guidelines. But some guidelines were written, and yet ultimately, executives at some companies have salaries many times higher than the regular personnel. This is wrong and this situation is to be changed.

Third. State purchase contracts have become the current “breeding grounds” for corruption. I am asking parliament to accelerate the passing of a law on the federal contract system. And it is exceedingly important to audit the efficacy and expediency of budgetary expenditures as well as purchases by the government and state companies, and instil public accountability for the process and results of fulfilling state orders.

Fourth. The Accounts Chamber has significant instruments. We expect much greater efficacy and professionalism from this institution. The ruling party, as well as the parliamentary opposition, should have the right to propose candidates for the post of chairperson, deputy chairperson, and auditors. At the same time, given the specifics of this type of work, it would be best to limit their tenure to two consecutive terms.

Fifth. Active civic participation and effective public monitoring are necessary conditions for effectively fighting corruption. Today, many citizens are already building a system of public control at the municipal level on their own initiative, including for the housing and utilities sector. We are obligated to support this this type of attitude. Just recently, the day before yesterday, we spoke on this topic at a meeting with election campaign activists.

The media also play a very important role in this work. That said, while we understand that the media operate in the market environment, they must not sell the objectivity of their information to the highest bidder; instead, their efforts must be based first and foremost on the interests of the entire society and on high moral principles.

Let me stress that the state’s moral authority is a fundamental prerequisite for Russia’s development. Therefore the policy to cleanup and renew state authorities at all levels will be firm and consistent.

Colleagues,

We cannot be satisfied with today’s situation, when the Russian budget, the social sector, are basically held hostage to the financial and commodities markets of other countries. A lopsided raw materials economy, as has been pointed out on many occasions, is not just vulnerable to external shocks. Most importantly, it does not allow for developing and putting to adequate use human potential; it is incapable of giving most of our people the opportunity to make use of their strengths, talents, labour and education, which means, by definition, that it breeds inequality. Finally, the capacities of the raw materials based economy model are exhausted while Russia’s development needs require an annual GDP growth of no less than 5 or 6 percent over the next decade.

At the same time, I am fully aware of the reality in which we live and I am familiar with the calculations and forecasts by the Economic Development Ministry. Nevertheless, it is important to set this high goal and strive toward achieving it.

Essential changes in the structure of the economy, the launch of new industries and regaining leadership in traditional industrial sectors, as well as the development of small and medium-sized businesses are key targets. I am confident that economic freedom, private property, competition and a modern market economy, rather than state capitalism, must be the core of a new growth model.

Our entrepreneurs are often criticised for lacking patriotism. The high degree of offshore investments and ownerships in the Russian economy is an absolute fact. Experts call this phenomenon fleeing from jurisdiction. According to some assessments, nine out of ten major transactions made by major Russian companies are not regulated by Russian laws – including, incidentally, companies with state participation. We need a comprehensive system of measures to reverse the offshoring of our economy. I am instructing the Government to make corresponding integrated proposals on this matter.

We are to strive for offshore transparency, disclosure of tax information, as is done by many nations through negotiating with offshore zones and signing corresponding agreements. All this can and should be done. Nevertheless, if in choosing a jurisdiction, a foreign legislation is preferred, we then certainly must admit that we should improve the improper elements in our own judicial system, in our law-making, in our law enforcement practices. Only by admitting this honestly can we fundamentally change the situation. We have to carry out systemic work to improve our legislation, while refuting the presumption of guilt of businesses, the accusatory slant in our law enforcement and judicial practices, once and for all.

We must eliminate all hitches in the legal system that allow turning economic disputes into score-settling through instigating contracted criminal cases.

I want to thank the deputies of the State Duma and members of the Council of Federation for their work on a package of amendments that are bringing order to this domain. Thus, instituting criminal proceedings will not be allowed without a complaint filed by the damaged party regarding a variety of economic offences, while the penalties for policemen for tampering will be toughened.

We should as soon as possible draft special laws to regulate administrative legal proceedings. The Supreme Court President and I have discussed this in great detail several times. We need to have juries to resolve the disputes between citizens and state authorities at all levels – this is a highly important objective that has still not been resolved. The opportunity to file collective lawsuits in the interest of an unlimited number of individuals, as well as lawsuits by public associations, will provide citizens with additional protection. I ask that you accelerate the implementation of the corresponding amendments to the Civil Procedure Code.

Another important issue. Modern legislation, particularly financial and corporate legislation, is very specific. In this regard, I suggest that we work with partners to promote (or rather to complete, since it has already essentially begun but needs to be finished) the process of creating an arbitration court for the Customs Union, which can become a leading independent agency for examining financial and other disputes. Overall, it is imperative to come up with a set of measures to develop arbitration proceedings in Russia, at a qualitatively new level.

I would also like to stress that the best way to make businesses patriotic is to ensure effective guarantees for protecting property and honouring contracts, and to make Russia’s jurisdiction appealing.

The state itself must show a good example of using Russian jurisdiction, making a point of choosing Russian platforms for the placement of state resources in privatisation transactions. Incidentally, the privatisation the Government intends to conduct should not have anything in common with the practices of the 1990s, the notorious loans-for-shares auctions. Today’s privatisation should be based on the fair, transparent sale of state property at a just, realistic price.

Colleagues, the quality of privatisation is not just about money flowing into the state budget. It is, first and foremost, a question of society’s trust in the actions of the state; it is the emergence of a truly legitimate, respected proprietor. I am asking all Government representatives who are responsible for conducting privatisation processes to remember this.

Businesses should work to achieve their own success as well as that of the nation; and should breed talented, sensible organisers, patrons and patriots, as was the case in earlier times in Russia. It is then and only then that entrepreneurs will be able to gain widespread public respect.

Let me remind you that together with the business community, we began implementing a national entrepreneurial initiative. According to expert assessments, Russia’s inclusion in the group of 20 nations with the best business climate will allow us to add no fewer than 2.5 percent to the current GDP growth rate, and the additional growth will be primarily in the non-raw materials sector, through small and medium-sized businesses.

The most important factor in economic revival is the quality of the work done by regional authorities. We already have regions that have no oil or gas but, as you all know, show GDP growth of more than 10 percent per annum. Incidentally, this is a good response to those who state that our growth rate can not be over 4 percent per year. Here you go, you can easily add another 2 or 2.5 percent to that, and end up with 5 or 6 percent growth.

We need cheap and longer-term money for financing the economy, for further suppressing inflation, for offering competitive bank rates. I am asking the Government and the Central Bank to think about mechanisms for addressing these challenges. I know very well that certain experts will disagree and I know what they will say, that providing longer-term money is not the Central Bank’s job, that this type of money is represented by citizens’ and companies’ savings, pension money and so on. Yes, we all know this. But we also know that the Federal Reserve System of the United States, the European Central Bank, and certain other central banks have it written right in their charters that they are obligated to consider jobs and ensure the economy’s growth rate.

I am not calling on you to review anything in our legislation right now; I am simply drawing your attention to the fact that we must all be concerned with the key issues of our nation’s development. Our national savings must work in our country and for our country; at this time, however, very little of the National Welfare Fund’s resources are invested into national development. We came to an agreement (I remember this very well and I concur with it) that after the Reserve Fund surpasses 7 percent of the GDP, we can direct half of the surplus revenue into the Russian economy, primarily toward infrastructure projects.

Now a few words about possible adjustments to our previous agreements, which I spoke about in the very beginning. By the end of this year, the Reserve Fund and the National Welfare Fund already amount to approximately 9 percent of GDP combined, which means that we will have a certain cushion of security in place. Thus, beginning in 2013, after the establishment of a corresponding management entity, I suggest that some of the National Welfare Fund’s resources, perhaps about 100 billion rubles [3.3 billion dollars] (some experts think it should at least this amount) should be invested in Russian securities and implementation of infrastructure projects. Today, the government experts already agree with this. So I am asking the Finance Ministry to produce a corresponding plan. It is important that such projects pay for themselves.

I want to particularly stress the exceedingly important condition that they must be profitable and generate steady, guaranteed revenues, rather than requiring constant injections from the National Welfare Fund or the federal budget.

The tax system must also correspond to the needs of economic restructuring. We shall encourage investment and development, and shift the tax burden towards consumption, including excise goods and luxury real estate.

As a matter of fact, in many countries around the world and in Russia we always come back to this issue, namely the question of income tax, in one way or another. I have already talked about this, you know my opinion: we must keep the so-called flat tax. Even though a progressive tax might seem at first glance to be promoting social justice, in actual fact it does not. On the contrary, it will act as a burden for millions of citizens with average incomes. If you start to calculate what such a system will lead to, you’ll see that this will be the case.

And on top of this, what else will happen? Tax evasion; both the budget and the treasury will find themselves lacking the funds this tax supposedly generates. This means that we will have budget shortfalls in financing for the army, pensions, and the public sector. So that’s social justice. Therefore any action we take in this regard must be carried out extremely carefully. But here’s what we can do, what I think we must do, and what is also just: to impose additional taxes on so-called prestige, conspicuous consumption.

I would remind the Government that we must implement critical decisions relating to the so-called luxury tax already in the first half of 2013. This tax affects luxury properties and, no matter how harsh it might seem, expensive cars, even new ones.

Qualitative economic revival requires fair competition. As part of its efforts regarding national entrepreneurial initiative, I would instruct the Government to adopt a so-called road map for enhancing competition and to implement it next year.

Why do I think that this simply must be done in all important fields? Let me talk about this for a second, because I know very well how discussions go. They are usually sporadic: we talk about something important, confer, leave the conference room and forget about it, and the issue is put on hold. We need clear guidelines, we need documents we can track and whose implementation we can follow. I would ask you not to forget this and to make sure to do it.

The core of our economic policy should be the competitiveness of all essential aspects of doing business in Russia, from loan availability and tax incentives to comfortable administrative procedures and low inflation. This is almost a direct path to economic revival and to moving away from commodity dependence, because tens of thousands of new projects are becoming profitable. Projects that involve processing raw materials, engineering, light and heavy industry, the service sector, small and medium businesses and, of course, the agricultural sector.

A few words about agriculture. Demand for food is growing rapidly all over the world, especially in developing countries. As you know, Russia has more than half of the world’s arable land, 55 percent. In the next four to five years we must fully ensure our independence in all major types of food production, and Russia must then become the world’s largest producer of food. This will open up huge new opportunities for us.

We also should pay very close attention to environmental issues, and the environmental rehabilitation of various regions. In fact, we have already started working in some areas, such as the Arctic.

Our reference points are high quality environmental standards of development.

We intend to take full advantage of unprecedented funds allocated for defence procurement and modernisation of the defence industry in order to upgrade that industry, and to develop science and technology. Almost all sectors of the Russian economy will benefit from these funds via the implementation of related orders. We must strengthen our position in space, nuclear energy, revive key sectors such as aviation, shipbuilding, instrumentation, and establish them on a new foundation, at a new level, based on new technologies.

We have begun to rebuild our national electronic industry, and done so with the active participation of private capital. I believe that we need to prepare a road map for the development of new industries similar to the road maps for improving the investment climate. These industries include rare earth metals and composites, biotechnology and genetic engineering, IT, new urban planning, engineering, and industrial design.

A long-term prognosis for Russia’s scientific and technological development through to 2030 is currently being finalised. It highlights specific ways to both revitalise traditional sectors and to penetrate new high-tech markets. A special fund for promising research on the defence technologies of the future will be established.

Colleagues,

Imbalances between regional development, the labour market, and the social sphere are direct consequences of a commodity-based economy. As a rule, finding a job today with a decent salary is only possible in Moscow and St Petersburg or in resource-rich regions, and quality education and medical care is only available in several major cities. This is where people go to work, study, receive medical treatment, this is where young people want to go, and therefore other regions lose active citizens willing to work and be of value. Imperatives of our time include a decisive step towards decentralised development, a new geography of economic growth and the labour market, new industries and new centres for industry, science, and education, a new, modern social environment in all Russian regions, cities, and towns, including a barrier-free environment for individuals with limited abilities.

At present the difference between regional incomes is extremely high. You are well aware that ten regions generate more than half of Russia’s revenues. We must consistently work to ensure that all Russian regions without exception become economically self-sufficient and subjects of the Federation in the fullest sense. Therefore, we must slightly change the current logic of relations among state budgets at various levels. May the Finance Ministry not be frightened by these words.

We should create and strengthen the economic base of our regions, and help those who are working proactively there. One priority measure at the municipal level involves the reallocation of the bulk of taxes collected from small businesses, currently working under a special tax regime, to municipalities. In addition, we are eliminating many federal tax breaks for the properties and land of various legal entities. These funds will also flow into regional and local budgets.

However, I now address the Government first of all since you know what I’m referring to, we will get rid of the tax breaks for infrastructure companies and infrastructure monopolies, among others. This means that they will have to pay more. But not everyone is ready to start paying new amounts, because at that point we could completely deprive them of investment possibilities. We have already agreed on a smooth transition period and compensation for these companies. We absolutely must think about this. Such decisions are not taken casually, though of course it is necessary to move in this direction, and we will do so.

I also believe that as of 2014 regions should receive the right to tax real estate based on its cadastral value, and this would strengthen a given region’s tax base. But this must be the regions’ own choice, and along with this we must finish all work related to evaluating properties and verifying data about their owners.

I want to stress that we have to examine in detail all aspects of Russia’s balanced regional development, including education. It would be correct to provide priority support to those universities working in the regions and cooperating with major companies there, companies with which they promote research and development. Already during their studies the graduates of these universities are linking their futures to the places where they live and study.

We are to create more publically-funded places in precisely these universities, and the government must support their development programmes. Along with this it is essential that business takes part in the management and funding of these universities. Among other things, the above will stop the practice whereby a lot of resources are spent on training students in Moscow and St Petersburg, students who do not even plan to work in their field of training.

We need a kind of investment map of Russia, providing investors with clear information about which regions are more profitable, better to work in, to set up production facilities, and what forms of state support will be available to businesses in the near future. By using our competitive advantages we should encourage production to migrate from other Russian regions, just as we are currently doing in the automotive industry. Just yesterday I met with the CEO of one of the world's largest companies in this field.

We are currently moving in this direction. This is helped by the fact that Russia's WTO accession gives us the opportunity to relocate production to Russia that is designed not only for the domestic market but also for export. In the 21st century, the vector of Russia’s development will be the development of the East. Siberia and the Far East represent our enormous potential, as [Mikhail] Lomonosov once put it. And now we must realise our potential. We have the opportunity to assume a worthy place in the Asia-Pacific region, the most dynamic region in the world.

Just recently at a State Council Presidium meeting we discussed in detail specific steps to stimulate economic growth in the Trans-Baikal and Far Eastern regions. I will not repeat everything that we agreed to do. But one of things we agreed on was creating attractive living conditions there. By the end of the first quarter of 2013, the Government must work out in detail its proposed measures, including tax breaks for so-called start-ups (new businesses), plans for the development of energy, infrastructure and so on. This must absolutely be done, and I would ask you to pay you utmost attention to this task.

In addition, I would ask the Government to submit proposals concerning the future development of Kaliningrad Region, especially since the law on special economic zones will expire in 2016.

We need a real breakthrough in the construction of roads. In the coming decade we should at least double current rates of road building. Here too different calculations exist, but it is absolutely correct to consider that current figures must double.

Our most important development priority is regional aviation, as well as seaports, the Northern Sea Route, the Baikal-Amur Mainline (BAM), the Trans-Siberian railway, and other transit corridors. It is not enough to simply think about all of this, we must work hard in all these cases. We have to ensure the unity of Russia’s entire territory, in the full sense of transport connectivity.

Dear friends,

The main feature of the present era is that no one can solve global economic and political problems alone. In fact, this has always been the case, in the 1990s as well. Even though quite recently, ten years ago, some people thought that the world had become unipolar; some of my former colleagues told me so at the time. Today, no one thinks so.

It is absolutely obvious to everyone that the modern world is becoming increasingly multipolar. This creates both risks and opportunities. Risks will prevail when each player plays their own game, if they are not relieved of the illusion that it is possible to manage chaos (you know there is such a theory). And if people stop sowing such chaos, risks will not prevail.

Russia stands for the principles of coherent and collective efforts in addressing challenges facing the world today. This position is absolutely consistent with contemporary realities. We propose projects that will unite nations and regions. The experience and reality of the past 20 years as well as simple common sense put everything into its true place. And it is natural that interest in integration is growing in America (both North and South America), in Europe, and in Asia, and these processes are gaining momentum. Why should we remain on the sidelines? On the contrary, together with our immediate neighbours we must make use of all our advantages.

Our immediate neighbours are also showing more interest in integration processes. One example of this was their very practical and pragmatic approach to developing and adopting the agreement on the CIS free trade zone. By the way, I am grateful to our parliamentarians who were the first to ratify this very important document.

We will move towards closer integration. This is exemplified by the Customs Union and the Common Economic Space of Russia, Belarus and Kazakhstan, which are already functioning effectively. We have begun to establish the Eurasian Economic Union, and naturally we will continue to work at this and achieve this goal.

Dear colleagues and citizens of Russia,

We had set ourselves the goal of doubling our GDP and by the end of 2008 we were very close, somewhere in the range of an 80 to 85 percent increase. It was only the global crisis that slowed our momentum. And yet there was a reason we set such a high bar for ourselves, such a difficult challenge. Russia’s economy has demonstrated its ability to grow quickly and qualitatively. We were able to maintain and strengthen our development potential, and to set its new horizons.

What do I want to say? Using 1999 as a benchmark, our GDP per capita has almost doubled. Federal and consolidated budgets have increased, not by a certain number of percentage points, but by 2.6 times. Public debt in relation to GDP decreased almost tenfold. It went from more than 100 percent of GDP (I think it was about 120 to 125 percent) to 10 and some percent. Moreover, our external debt fell to 2.5 percent. The rate of inflation fell sixfold: in 1999 it was 36.5 percent and in 2011 6.1 percent. This year it will increase a little but remain less than 7 percent, at approximately 6.5 percent.

By 2000 Russia's population had declined (just think about these numbers, you know them well but I would like to remind you of this tragedy), and was declining by a million people almost every year. And it seemed that the disaster could not be stopped. At the time, demographic forecasts seemed like the country’s final judgment.

But we were able to reverse this destructive trend. Launching demographic programmes allowed Russia's population to stabilise, as I already said, and begin to grow as of 2010. This represents our crucial achievement. I want to draw your attention to this, and not to say: “Oh, look at how great we are!” No. I stress this so that we understand that people believed us, and changed their planning horizons accordingly. They believed that stability is essential for development and the improvement of living conditions. I say this because we should value such trust and take it into account in our work.

All growth rates I mentioned bear witness to enormous changes in both economic and social development. But the main thing is that we – as a country, a society, and citizens – can all overcome hardship and resolve significant problems. And we must remember that we have accomplished this difficult journey in commendable fashion, and achieved our goals step by step.

We have a lot of work ahead of us, and such work is always required if we want to move forward. And we need everyone’s contribution today, not tomorrow.

Why do I cite these figures? Our country has historically had an attitude to life that involves living for the future, for our children. Of course this is a very important and noble task and purpose. But it seems as if one’s own prosperous life is always being delayed, postponed, and postponed for the future. And this was almost always the case in Russia, for all generations. But let me go back once again to the reason I cited these figures: the time has come to drastically improve our situation. We are doing this and we can do it. If we continue consistent national development policies, harness our development to common creative work, if we work with dignity and spare no efforts, then we will achieve our goals and accomplish all the tasks before us.

Thank you for your patience and attention.



The source of information - December 12, 2012 - Presidential Address to the Federal Assembly

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December 12, 2013 - Presidential Address to the Federal Assembly





President of Russia Vladimir Putin:




Citizens of Russia, members of the Council of Federation and the State Duma,

The President’s state-of-the-nation annual Address to the Federal Assembly is a requirement set forth in the Russian Constitution, that which is exactly 20 years old today. I congratulate you on this important date for our state and our society. And of course, I also congratulate you on the 20th anniversary of the Federal Assembly, Russia’s parliament, which was created in accordance with the provisions of our country’s basic law.

Our Constitution brings together two fundamental priorities – the supreme value of rights and freedoms of citizens and a strong state, emphasising their mutual obligation to respect and protect each other. I am convinced that the constitutional framework must be stable, above all in what concerns its second chapter, which defines the rights and freedoms of individuals and citizens. These provisions of our fundamental law are inviolable.

But life does not stand still, and no constitutional process can ever be regarded as finally completed or dead. Targeted amendments to other constitutional chapters, deriving from law enforcement practices and from life itself, naturally are possible and sometimes necessary.

You know that we have proposed to amend the Constitution and to unite the Supreme Court and Higher Arbitration Court. Today these courts often differ, sometimes quite substantially, in their interpretation of various laws. Sometimes they take different decisions in similar cases, and sometimes they agree. This results in legal uncertainty, and at times in injustices that affect concrete people.

I believe that unifying these courts will allow us to bring judicial practice onto one track, and therefore strengthen the guarantees protecting a crucial constitutional principle, the equality of all before the law.

Colleagues,

The Constitution contains crucial unifying national ideas.

The meaning of its provisions on the welfare state consists in the mutual responsibility linking the state, society, the business community, and every Russian citizen. We must support the growing desire of citizens, representatives of public and professional associations, political parties, and the business class to participate in our country’s life.

Among other things we must support civic activism at the local level, in communities, so that people get a real opportunity to participate in managing their village or town, to deal with everyday issues that actually determine their quality of life.

Today quite a few problems have accumulated within our local self-government system. Unfortunately, and you know it well, the responsibilities incumbent on municipalities and their resources are not evenly balanced. This often leads to confusion regarding their authorities, which are not only blurred, but are constantly thrown from one level of government to another: from districts to regions, from towns to districts and back again. Local self-government authorities are being constantly shaken by corruption scandals.

The powers at the district level have been significantly watered down. Those that existed in education, healthcare, and social welfare have been transferred to the regional level of government.

In addition, local authority – because it is the closest power to the people – should be organised so that any citizen could reach out to it, figuratively speaking. In this connection I am addressing the All-Russian Council for Local Self-Government Development, All-Russian Congress of Municipalities, governors, and members of the Federal Assembly, of the Government of the Russian Federation – let’s comprehensively go over these issues again and finally bring the situation in line with common sense and attune it to the times.

Let me repeat: I think the most important task is to clarify the general principles of local self-government organisation, develop strong, independent, financially sustainable local authorities. And we need to start this work and give it sound legal foundations already next year, 2014, the year of the 150th anniversary of the famous Zemstvo Reform of 1864.

Incidentally, at the time it was precisely the development of zemstvos, of local self-government that enabled Russia to make a breakthrough and find competent people capable of implementing major progressive reforms, including Pyotr Stolypin’s agrarian reform and the restructuring of industry during the First World War.

I am sure that today as well strong local self-government can become a powerful resource for enhancing and renewing our country’s human resource potential. And of course, we are all interested in ensuring that elections bring to power qualified, motivated, professional people who are ready to perform their duties responsibly. For this reason we shall continue to work on developing the political competition, improving political institutions, and creating conditions for them to be more open and efficient.

Recent elections demonstrated that today there is less officialdom, bureaucracy, and predictable results in our political life. I consider it important that many new parties have made their presence felt. By winning seats in municipal and regional bodies, they have laid a good foundation for participating in upcoming federal election campaigns. I am sure that they will act as worthy competitors to longstanding political actors.

Today’s Russia requires broad public debate that would yield practical results, when public initiatives become part of public policy, while society monitors their execution.

I think that all draft bills, key government decisions, and strategic plans should pass a so-called initial public reading involving NGOs and other civil society institutions.

Both the federal and regional executive authorities must establish public councils. Of course many such councils already exist within various levels of authority, but they are not everywhere. And most importantly, these councils should not be formal or decorative structures. On the contrary, they should act as expert groups, and sometimes as the government’s constructive opponents, and be active participants in anti-corruption efforts.

I would ask the Civic Chamber, the Human Rights Council and other non-governmental and human rights organisations to be actively involved in drafting the bill On Public Oversight that would establish the legal basis for such civic participation.

Supporting the human rights movement should be a priority of joint work between the state and society. We expect that such organisations will not act in a way that is politically biased, and that they will engage as closely as possible with the interests and concerns of every citizen, every individual.

In this context, the role of the Civic Chamber is increasing. It must become a platform where various professional and social groups, associations, and unions can express their interests. More professionals should be involved in this work. I believe that members of these unions must compose at least half of the Civic Chamber’s members proposed by the President. Such an approach would balance the interests of different social and professional groups, and enable the Chamber to be more responsive to their concerns.

The most important topic requiring frank discussion in our society today is interethnic relations. This one topic concentrates many of our problems: challenges relating to socio-economic and regional development, corruption, shortcomings in the work of public institutions, and of course failures in educational and cultural policies, which often produce a distorted understanding of the true causes of interethnic tensions.

Such tensions are not provoked by representatives of particular nationalities, but by people devoid of culture and respect for traditions, both their own and those of others. They represent a kind of Amoral International, which comprises rowdy, insolent people from certain southern Russian regions, corrupt law enforcement officials who cover for ethnic mafias, so-called Russian nationalists, various kinds of separatists who are ready to turn any common tragedy into an excuse for vandalism and bloody rampage.

Together we must rise to the challenge; we must safeguard interethnic peace and thus the unity of our society, the unity and integrity of the Russian state.

Colleagues,

The May 2012 executive orders contain specific measures designed to ensure the country’s dynamic development in all fields. In fact, the orders amounted to a unified action programme, reflecting the will of millions of people, the desire of all Russian people for a better life. Sometimes we hear that there are insufficient funds to realise all stated plans and goals, that we need to lower our standards and simplify our tasks.

Colleagues, let me turn to a very important subject with profound implications. I think that it is impossible to elaborate policies following a formal approach. Yes, of course we all know that economic trends may and do change. But that is no reason to talk about revising our goals. We need to do real work, seek solutions, and clearly lay out budgetary and other priorities. I would ask you to update all state programmes accordingly.

Already within the next two years, all budgets should be changed to conform to our budget plan. This does not mean rewriting everything mechanically. It means increasing the personal responsibility of each manager for the achievement of results. What we need to do is to focus resources on achieving substantial changes in specific sectors.

For this reason we are raising salaries in education and healthcare so that the work of teachers, professors, and doctors becomes prestigious once again, and attracts strong university graduates. But as we agreed, decent wages must not only reflect budgetary transfers, but rather reforms designed to improve spending efficiency and, most importantly, the quality of social services. We need people to see how our schools, universities, clinics and hospitals are changing for the better.

Therefore, in addition to increasing salaries, which certainly needs to be done, and we will do it, we must also implement a whole set of other measures to ensure that all our objectives are met. What are those measures? They include transitioning to the use of an effective contract and the certification of specialists, as well as implementing per capita financing, when establishments (both state and private ones, which is very important) providing services of the highest quality receive special benefits. This means developing real competition, opening the public sector to NGOs and socially-oriented businesses. It certainly means optimising the budget institution network by reducing ineffective expenditures and components, and removing barriers that prevent public institutions from working independently.

What is happening with all these measures? A year and a half has passed since the executive orders were issued. You know what I’m seeing? Either things are being done in a way that elicits a negative reaction among the public, or nothing is done at all. Clearly, we will fail to achieve our stated goals with this kind of work.

It is taking us a long time to make these changes – an unacceptably long time. As a result, consumers of these services do not perceive any fundamental changes. We are allocating enormous resources, but if we do not hold reforms, instead of an improved quality, we will only see an increase in inefficient expenditures that inflate the administrative apparatus, which is what often happens in practice. I want to draw the federal and regional authorities’ attention to this.

One very important challenge is to create a system for independently appraising the quality of social institutions. This mechanism will allow their funding to be linked to their performance, which means effectively optimising the budget institution network.

I believe that we need direct application laws that will establish common approaches, standards and criteria, as well as responsibilities at all levels of government, to create a system for independently appraising the performance of organisations in the social sector. I am asking you to adopt a corresponding law in the upcoming spring session. Colleagues, this is an urgent request.

In recent years, we have been able to achieve a great deal in the healthcare sector. Life expectancy has gone up. Mortality from cardiovascular and many other types of diseases has gone down. However, we are still far from our target indicators.

The big question that remains is a realistic approach to the insurance principle in healthcare. Today, the function of mandatory health insurance is essentially to “pump money” to the recipient through the extra-budgetary fund rather than the budget. The objective is entirely different. The objective is for the insurance principle to work as an incentive for people to take responsibility for their health, to have financial incentives to live a healthy lifestyle, and for insurance companies to be interested in medical institutions providing high-quality services, so that a patient finally has the opportunity to select the medical institution that, in his or her opinion, works best.

The mandatory health insurance system should fully financially cover state guarantees for providing free medical assistance. This applies equally to the total spending volume and directing funding to a specific hospital or clinic. At the same time, the patient should clearly understand which healthcare services he or she is entitled to receive free of charge, and the doctor should understand the principles upon which his or her work is paid.

Particular emphasis should be placed on developing a preventive treatment system. Beginning in 2015, all children and teenagers must have a yearly mandatory free medical check-up, while adults should undergo such an examination every three years.

Clearly, there will be an increase in disease detection during routine medical examinations, and the need for high-tech medical care will grow. In recent years, we have created a whole network of federal centres, supporting ones that are located in major cities, but also creating a new federal network of centres capable of providing medical assistance at the most advanced level. We need to maintain and develop their potential. At the same time, services at these centres must be accessible not just to the residents of the cities where they are located, but also residents of other regions. We must provide the necessary financial resources for that.

On the whole, over the next three years, we must create the conditions to perform 50% more high-tech operations than today. This is an entirely achievable goal. At the same time, we cannot fall behind the global trends. Leading nations already stand at the threshold of implementing medical technologies built on bio- and genetic engineering, based on the human genome sequence. This will truly revolutionise medicine. I believe that the Healthcare Ministry and the Russian Academy of Sciences should make fundamental and applied medical research a priority.

We must greatly increase the professional community’s role in managing the healthcare system. I am aware that there are some ideas in this area that deserve support. I am asking the Health Ministry to work with leading healthcare worker associations to submit concrete proposals.

We must also revive our traditions of charity. I propose that we organise a nationwide movement for volunteers who want to work within the healthcare system, providing what assistance they can. I believe that volunteers who have spent several years working in healthcare institutions should have priority admission to medical schools.

Colleagues,

The year 2014 has been declared the Year of Culture in Russia. It is intended to be a year of enlightenment, emphasis on our cultural roots, patriotism, values and ethics.

We are aware of the all-encompassing, unifying role of Russian culture, history and language for our multi-ethnic population, and we must build our state policy with this in mind, including in education.

We need schools that do more than just teach; teaching is very important –most important, in fact – but we also need schools to help our nation’s citizens form their identity, absorbing the nation’s values, history and traditions. We need open-minded individuals with a strong internalised knowledge of culture, capable of thinking creatively and independently.

Instructions have already been given that starting from the next academic year, a mandatory essay-based final exam will be introduced for graduating high school students. The results of this exam will be taken into consideration alongside the National Final School Exam when applying to universities and other educational institutions.

Teachers’ professional development will be crucial to the future of Russian schools. Teachers must be ready to use modern technology and know how to work with children that have health-related disabilities. I ask you to prepare an integrated programme for upgrading school staff. I know that the Education Ministry is already working on this, and is developing a system of life-long training and professional development for teachers. We must complete the work on this programme.

There is another problem that requires urgent resolution. Even today, many schools operate with two shifts. This is true for nearly one quarter of Russian schools, and nearly half of schools in cities use this system. Thanks to positive demographic growth, the number of students in Russian schools will grow by a million in the next five to six years.

I ask the Cabinet, the Federal Assembly and regional authorities: we must assess the scale of this problem and provide effective solutions, which should include building preschools in such a way that in the future, they can be used as elementary schools as well.

This should not lead to an increase in the cost of preschool construction projects. We can consider the option of building schools and preschools under one roof, as a single campus.

Of course, let me stipulate that this is not the federal government’s responsibility. This responsibility falls on the regional and even local authorities. Nevertheless, we need to understand the scale of the problem. We cannot brush it aside. If it has enormous significance for our nation and takes on these forms, I do not think we will be able to address it without federal support.

Naturally, we must continue developing a wide array of sports infrastructure for children and teenagers. We must do everything to increase the popularity of active lifestyles. Indeed, that was the main idea behind the Universiade that was successfully held in Kazan and the Olympic Games in Sochi, which will open very soon.

I am confident that we will do an excellent job of organising the Olympics in Sochi, the 2018 FIFA World Cup and the Winter Universiade in Krasnoyarsk.

Colleagues,

The statistics from January through October of this year show that Russia has experienced natural population growth. This is the first time we are seeing such results since 1991, and it is a very positive indicator.

The birth rate exceeded mortality in almost half of Russia’s regions, and it surpassed the national average in all regions in the Urals and Siberia, and most Volga and Far Eastern regions.

But we need to understand something else as well. Right now, the generation born in the 1990s is beginning to start families of their own – this is the generation from the time when the decline in birth rates was the greatest, when it was catastrophic. We must make a special effort to ensure that the positive population growth remains irreversible.

I remind you that the birth rate in our country reached one of its highest figures in the late 1980s. Housing construction also peaked at this time. Today, housing construction must once again play a decisive part in encouraging population growth in Russia.

The Government has already drafted the policy measures needed to implement the programme for building affordable housing. This programme will see the construction of at least 25 million square metres of new housing, complete with the corresponding social infrastructure, by 2017, so that middle-income families can improve their housing situation. I propose that we call this programme Housing for Russia’s Families, so as to focus attention on this side of the issue.

Overall, by 2016, we will need to pass the 75-million square-metre mark, which is higher than the record set in 1987, when 72.8 million square metres of housing were built. Modern technology allows us to build a lot of relatively cheap and quality housing, but there are several problems we need to resolve on the way.

Above all, we need to finally make all the legal amendments that will clear the way for making land plots available for housing construction. This must be done within the coming months. This is a subject we are always discussing, and we have come back to this issue many times over these last weeks.

The local government authorities will have the task of organising bids for land plots under clear and transparent procedures. Developers will also have greater responsibility: if they receive the land but do not begin construction according to schedule, they will have to return the land.

Another barrier that is holding back construction is the lack of funds for providing land plots with the necessary engineering infrastructure. We will need to develop specially-designed instruments to resolve this and work out the financing sources and organisational form.

I know that at the tax authorities’ initiative the Government is drafting proposals on bringing order to online trade. This could also become a source of funding for developing engineering infrastructure. I ask you to make proposals on this matter.

Finally, we need to put the situation with permit procedures in order. These procedures are still not standardised. I ask you to draft a single and exhaustive list of all permits required for construction and reduce the time it takes to go through the necessary procedures as much as possible. I would like you to do this by the end of March 2014.

We all know why this work is not making progress and why problems have not been settled to this day. It is because there is a lot of corruption in this sector. This is where the root of the problem lies.

Colleagues,

We all know that renewed, sustained economic growth is the essential condition for achieving our social development goals. This brings me to the heart of our work.

Of course we are feeling the effects of the global economic crisis, but let’s be frank: the main reasons for the slowdown in our economy are internal rather than external in nature.

In terms of the size of its GDP, Russia is doing well and counts among the world’s five biggest economies. But in key indicators such as labour productivity, there is a two- to three-fold gap between us and the developed economies. We must work hard to close this gap.

To do this, we must make full use of all new development factors. What are these factors? We all know them well. They include high quality professional education and a flexible labour market, a good investment climate and modern technology.

I ask the Government, together with the Russian Academy of Sciences, to make adjustments to the programme of priority areas for science and technology development. The recently created Russian Scientific Fund will also need to organise its work in line with these priorities. The Fund’s purpose is to finance fundamental research and programmes with a long-term implementation timeframe. I consider this work to be of national importance.

The leaders of the parliamentary parties voiced their proposals on taking part in Russia’s innovative development at recent meetings held in preparation for today’s Address. You all voted for the law that established the Russian Scientific Fund. I propose that all of the parliamentary parties send their representatives to the Russian Scientific Fund’s Board of Trustees.

As for applied research, it should be based around technology platforms. I propose that targeted programmes such as Research and Development in Priority Science and Technology Fields refocus their funding on supporting this kind of applied research. It is also important at the same time to ensure co-financing of projects from state and private sector sources.

At the moment, only one out of every 265 scientific results obtained becomes protected by the law. Added-value contribution to Russia’s GDP from intellectual property turnover comes to less than 1 percent. This is not just a low figure – it is a very paltry figure indeed. In the United States, this figure is 12 percent, in Germany 7–8 percent, and in Finland, our neighbour, it is 20 percent. Technology platforms must therefore focus on concrete results, getting patents and licenses, and getting their developments into actual practical use.

We must develop internal demand for advanced technology. It is absolutely crucial to have demand for advanced technology from within the country. We must use the public procurement system and state company investment programmes to help encourage this demand. These sources represent a lot of money, trillions of roubles.

We must also carry out a thorough stock-taking of our development institutions. Their activities have become fragmented of late between numerous disparate projects that are not always directly related to innovation. That was not our objective when we established these development institutions. This is not to say that these projects are without merit, but the institutions were set up specifically to support the economy’s innovation development. We must reset their strategic focus back on technology breakthroughs.

In order to rid our economy of outdated, inefficient and harmful technology, we must finally put together a modern technical and environmental regulation system. This is a very complicated and sensitive matter for the economy. I hope that the Government will work energetically together with the business community and with our colleagues in the Customs Union to carry out this work.

I also propose that we establish a statistical evaluation system for the technology situation in the different economic sectors so as to gain an objective picture of our competitiveness. A system of this kind worked during the Soviet period. That old system was scrapped, but nothing was developed in its place. We now need to develop a new system.

The next task is support for the non-raw materials export sectors. This support system has still not begun working in full. Many administrative barriers remain in place. It takes more than 20 days to get an export permit. In comparison, it takes 6 days in the United States, and in Canada or South Korea it takes 8 days. These are all issues that need to be addressed in a new roadmap for supporting exports. I ask the Government, together with the Strategic Initiatives Agency, to draft this roadmap by March 1, 2014.

Colleagues, new professional standards play a crucial part in quality economic development. These standards must set the qualification demands that professionals in the different sectors should meet. But they will work only if they meet the demands of business itself, and they must therefore be developed with the professional communities’ involvement. I propose establishing a National Professional Qualifications Council. Rather than being attached to a government body, it would be a truly independent organisation. The main business organisations and professional associations should be involved in its work. Over a two-year period, this council will have the task of approving the entire package of new professional standards.

I ask our colleagues from the business community and from the associations I just mentioned not to shirk their part in this work. After all, it is in your own interests to get involved.

The entire professional education system should be reorganised so as to fit with the new standards and their demands. There is much in our own experience that we can draw on here, updating it for today’s needs. I am thinking here of things such as professional and workplace-related training right from school and technical higher education centres set up by big industrial companies. The main principle is to have on-the-job training so that theory is reinforced by practical skills and experience.

A few words separately on the subject of higher education, most young people want to get higher education, and the quality of our universities must measure up to this demand. Only in this way can we really turn our young people’s education drive into a powerful force for our country’s development. But today, both in the capitals and in the regions, there are still many universities that do not meet modern demands.

I think that in order to reinvigorate the entire higher education system, we must make use of our best universities’ potential by delegating to them the power to evaluate education quality and help to ensure that graduates’ knowledge and skills will be needed in the labour market and will bring our economy and society real returns.

In no circumstances must we create barriers for educational mobility. This also concerns the cost of student residences. The prices here should not be excessive in any way, but must be directly linked to the living conditions and services provided. I ask the Ministry of Education and Science and the student organisations to strictly monitor the situation here. It is unacceptable to set exorbitant prices for student accommodation.

A word of warning to university rectors in this respect: the situation will soon reach a point where the Finance Ministry will look at your revenues and will lower the norms accordingly. This is what you will end up with, and education, students and the universities will all suffer as a result.

We must also make a much greater effort to export quality education services and create conditions for having foreign students and our compatriots abroad, especially from the CIS countries, to study in Russian universities. This is something that can play a very big part in strengthening Russia’s cultural and intellectual influence in the world.

Over this coming period we must settle the matter of mutual recognition of school diplomas within the CIS and also examine the matter (as a proposal) of setting up centres for sitting the Russian National Final School Exam in accordance with Russia’s standards in the CIS countries, at Russian language centres, for example. These exams would be held at the same time as the National Final School Exam takes place in Russia’s schools. This would give talented young people from the CIS greater opportunities for coming to study at Russia’s universities.

Finally, we need to speed up the adoption of laws that would enable Russian universities to actively develop distance learning, which would also be aimed above all at our compatriots abroad and at the CIS countries.

As we improve professional education, we must remember that the labour market is becoming more flexible and people need to have possibilities for re-training and getting a new professional start in life. We must provide the right conditions for people who are willing to change jobs or move to a different town or region. Of course, this needs to be coordinated with our regional and local development plans, and working together with business.

We must give people information support, including by setting up a national job database, so that people everywhere can see in which region they might find a good job. This requires a whole series of decisions. I ask you to draft these measures, including those on rental housing and so forth. You know what sorts of issues I am talking about. The list is long. This work can and must be carried out as soon as possible.

The second task is to make the countryside a more attractive place for life and work. We have already invested considerable money in developing the agriculture sector. The sector is showing a positive dynamic now. In many areas we can now fully cover domestic demand with Russian-produced goods. I want to thank our rural population for their work and the results they have achieved.

The big task now is to encourage people to stay in the countryside and build a modern and comfortable infrastructure in rural areas. I ask you to pay particular attention to this issue when making changes to the state agriculture development programme.

I would like to say a few words about the situation in single-industry towns. They are part of the complicated legacy we inherited from the Soviet economy. These towns are home to more than 15 million people. Many of them are in a difficult situation, but these towns do have an excellent base: social infrastructure, housing and a skilled labour force. We need to identify what is stopping business from coming here, what incentives and conditions we can offer so that investors will come to these towns not under pressure, but because they see real opportunities for themselves there. Believe me, it is better to resolve things this way than to end up pumping tens of billions from the budget later into job creation there, which is what we will end up having to do if we do not properly address the situation now.

I therefore ask you to draft proposals on comprehensive development in the single-industry towns, investment projects that can be carried out there, and proposed financing sources, as well as proposals on reducing labour market tension and targeted support for small and medium business.

In this respect, I want to say to all of the regional heads that we are aware of the constraints that regional budgets face, but we do need to look beyond our immediate problems too.

The proposal has already been made – and I support it – that all regions could offer two-year tax holidays to new small businesses working in the manufacturing, social or scientific sectors (applause). Probably not all of the governors are applauding, but I want to say that carrying out this kind of idea today would bring dividends tomorrow in the form of additional revenue for the regions and municipalities. These would be new businesses. They do not even exist at present, and so we are not talking about any loss in budget revenue here. On the contrary, if we create the conditions for these new businesses, we will create revenue too.

We also need to make it possible for small businesses and individual entrepreneurs to pay their taxes and insurance payments using the ‘one window’ system. These are different payments, but we need to make it possible for them to be paid at a single place and time.

Another complicated problem related to the labour market is foreign labour migration. The lack of proper order in this sector creates labour market distortions, causes imbalances in the social sector, provokes ethnic conflicts, and leads to higher crime rates.

We need to put order in the procedures for employing foreign nationals who have visa-free entry to Russia, and increase employers’ responsibility for employing foreign workers. Of course, if these people are living and working in Russia and using our country’s education and healthcare services, they must also take on their share of obligations and pay their taxes and other payments.

The task is not an easy one. We must preserve our special ties with the former Soviet republics, but at the same time we also need to put the situation in order. I think that in this context we should change the current license system. Foreign workers currently need to acquire a license if they are employed by a private individual. I propose that legal entities and individual entrepreneurs should also have the possibility of hiring foreign workers on a license basis. The license’s cost would be set by the particular region depending on the situation on the region’s labour market and the average income there. The license system should be differentiated and encourage above all professionals, educated specialists, who speak Russian and have an affinity for our culture to come to work in Russia. I stress too that licenses would be valid only in the region where they were issued.

I hope that if we organise this work competently, it will be an economic instrument that can help us regulate the migration flow. I call it an economic instrument because of the differing cost the licenses would have from one region to another in Russia.

Finally, we need to establish tighter scrutiny of the purpose foreign nationals declare when entering Russia. All civilised countries do this. Russia must be able to know why people are coming, and how long they plan to stay. We also need to settle the issue of foreigners who enter Russia under visa-free travel arrangements and without any specific purpose. At least they supposedly have no specific purpose, though in actual fact they probably do have a purpose, but the authorities know nothing about it. Their time in the country should be limited, and entry into Russia should be prohibited for people who have broken the immigration rules. Depending on the seriousness of the violation, entry should be prohibited to enter the country for 3–10 years.

These measures would set an additional barrier for foreign citizens who are working in the shadow economy or are even engaged in criminal activity, or who are working illegally, often in inhuman conditions, and who, sadly, themselves become the victims of criminals.

Colleagues,

Two years ago, together with the business community, we began systematic work to improve Russia’s investment climate. I can say that we have already achieved some good results. Perhaps not many people believed that we would actually achieve these results, but they are there. Now we must go further. By 2015, we must have completed the main work to put in place the laws and regulatory base that will make it attractive and easy to do business in Russia.

For this reason, starting next year, we will publish a national rating of the investment climate situation in the different regions. This will essentially be an instrument for evaluating the national business initiative’s implementation in each of the country’s regions.

At the same time, we need to create incentives for regions that are developing their economic base and that have made it their mission to support business initiative and create new production facilities and jobs.

Let me announce a piece of good news for the regional governors. Regions that invest in developing industrial and technology parks and business incubators will have the federal taxes paid by their resident companies returned for three years to the regional budgets in the form of inter-budgetary transfers. Let me stress that this will be within the limits of the region’s expenses for building the infrastructure for these sites.

There is nothing to laugh about here! This is a good proposal. It was the result of long and exhausting discussions with the Finance Ministry. I ask the Finance Minister not to water down these agreements, but to give them your full attention and carry them out.

One issue that is still a sensitive matter for businesspeople is excess attention from various inspectors. Inspections and checks are necessary, but the work to change the principles on which the oversight and inspection agencies carry out their work must continue.

This work is still ongoing and it must continue. To make this area more transparent, I propose that we set up a unified federal portal, where every check and inspection will be given an individual number and it will be clear immediately who initiated each investigation, who was inspected, on what grounds the inspectors carried out their investigations, and, most important, what results the investigations produced.

Let me note another problem too, namely, that our mechanisms for settling economic disputes are still a long way behind the best global practices. In this context, we also need to make a serious effort to raise the arbitration courts’ authority.

I ask the Government, together with the Russian Union of Industrialists and Entrepreneurs and the Chamber of Commerce and Industry, to draw up a draft law on fundamental improvements to the arbitration system and submit it to the State Duma as soon as possible.

In last year’s Address, I spoke about the challenges in relieving the economy of offshore activity. This is another topic to which I want to draw your attention and which we must return to today.

Why is that? I will tell you frankly that so far, the results are barely perceptible. Let me remind you about a major transaction that took place this year, worth over $50 billion. The sale of TNK-BP shares occurred outside of Russia’s jurisdiction, although we all know that the sellers were Russian nationals, and the buyer was one of Russia’s largest companies.

Last year, according to expert assessments, $111 billion worth of Russian goods passed through offshores and partial offshores – that’s 20% of our exports. Half of the $50 billion of Russian investments abroad also went to offshores. These figures represent the withdrawal of capital that should be working in Russia and direct losses to the nation’s budget.

Since nothing significant has been achieved in this area this year, I want to make the following suggestions.

The incomes of companies that are registered in offshore jurisdictions and belong to Russian owners or whose ultimate beneficiaries are Russian nationals must follow Russian tax laws, and tax payments must be made to the Russian budget. We must think through a system for how to collect that money.

Such methods exist and there is nothing unusual here. Some countries have already implemented such a system: if you want to use offshores, go ahead, but the money has to come here. It is being implemented in countries with developed market economies, and this approach is working.

Moreover, companies that are registered in a foreign jurisdiction will not be allowed to make use of government support measures, including Vnesheconombank credits and state guarantees. These companies should also lose the right to fulfil government contracts and contracts for agencies with government participation.

In other words, if you want to take advantage of the benefits and support provided by the state and make a profit working in Russia, you must register in the Russian Federation’s jurisdiction.

We must increase the transparency of our economy. It is imperative to introduce criminal liability for executives who knowingly provide false or incomplete information about the true state of banks, insurance companies, pension funds and other financial institutions.

We need to maintain our fundamental, firm position on ridding our credit and financial system of various types of money laundering operations. Meanwhile, the interests of honest clients and depositors in problematic banks should be securely protected.

Today, the fight against the erosion of the tax base and the use of various offshore schemes is a global trend. These issues are widely discussed at the G8 and G20 summits, and Russia will conduct this policy at both an international and national level.

The need for liability fully applies not only to private businesses, but executives at state-controlled companies and development institutions as well. I propose that the Government should radically change the principles of its work; there should not be any executive comfort zones here. They are paid very good money. We will not achieve much economic progress if we undermine them; we will not be able to employ the professionals we need. But we must establish supervision over their work, and we must do it the right way.

All such organisations must develop their own long-term strategies, which should state clear goals and personal responsibility indicators for their leadership. Executives’ employment agreements must stipulate liability for failure to fulfil the set objectives, including financial liability.

Company programmes for corporations included in the strategic enterprise list must be approved by the Government of the Russian Federation, and their implementation should undergo an external audit. I looked at the list yesterday: there are several dozen such companies. We have several lists, but the list of strategic enterprises includes only several dozen. Of course, this means an additional workload, but I am confident that the Government will rise up to this challenge.

I will stress again that government and private sector resources should go toward development and achieving strategic objectives. For example, let’s look at such objectives as developing Siberia and the Far East. This is our national priority for the entire 21st century. The challenges we will need to tackle are unprecedented in their scale, which means we must take unconventional approaches.

We have already made a decision on a reduced income tax rate and a number of other taxes for new investment projects in the Far East. I feel it would be expedient to expand this regime to all of Eastern Siberia, including Krasnoyarsk Territory and the Republic of Khakassia.

Moreover, I suggest creating a network of special advanced economic development zones in the Far East and Eastern Siberia with special conditions for organising non-extractive production, including that intended for export. New companies located in such zones, in such territories, should be provided with five-year exemptions for income tax, mineral extraction tax (with the exception of oil and gas, which is a profitable sector), land and property taxes, as well as preferential insurance rates, which are very important for high-tech manufacturing.

What’s also important is to create conditions here that will be competitive with key business centres of the Asia-Pacific region. Such conditions should apply to authorisation procedures for construction, connecting to electricity networks, and passing through customs. We will make active use of the Far East Development Fund in order to resolve infrastructure issues in these territories.

We will need to decide on the exact location of these territories by July 1, 2014, and adopt all the legal regulatory acts necessary for them to operate. Given the importance and scale of this endeavour, I am asking the Prime Minister to personally supervise this work. In the future, we will make decisions about their future development based on the experience and practice of working in such zones and the resulting effect.

We will also continue the projects already being implemented at this time. As you know, a new university has been established on Russky Island. It will conduct a sound scientific evaluation with regard to Far East development programmes, and provide for the region’s employment needs, first and foremost in areas such as space, biotechnology, robotic technologies, design, engineering, oceanography and the use of marine resources.

I am confident that Russia’s reorientation toward the Pacific Ocean and the dynamic development in all our eastern territories will not only open up new economic opportunities and new horizons, but also provide additional instruments for an active foreign policy.

Colleagues, global development is becoming increasingly contradictory and dynamic. Russia’s historical responsibility is growing in these conditions, not only because it is one of the key guarantors of global and regional stability, but also a nation that consistently asserts its value-based approaches, including in international relations.

The intensity of military, political, economic, and informational competition throughout the world is not decreasing, but only getting stronger. Other power centres are closely monitoring Russia’s progress as it grows stronger.

We have always been proud of our nation. But we do not claim to be any sort of superpower with a claim to global or regional hegemony; we do not encroach on anyone’s interests, impose our patronage onto anyone, or try to teach others how to live their lives. But we will strive to be leaders, defending international law, striving for respect and national sovereignty and peoples’ independence and identity. This is absolutely objective and understandable for a state like Russia, with its great history and culture, with many centuries of experience, not so-called tolerance, neutered and barren, but the actual common, natural life of different peoples within the framework of a single state.

Today, many nations are revising their moral values and ethical norms, eroding ethnic traditions and differences between peoples and cultures. Society is now required not only to recognise everyone’s right to the freedom of consciousness, political views and privacy, but also to accept without question the equality of good and evil, strange as it seems, concepts that are opposite in meaning. This destruction of traditional values from above not only leads to negative consequences for society, but is also essentially anti-democratic, since it is carried out on the basis of abstract, speculative ideas, contrary to the will of the majority, which does not accept the changes occurring or the proposed revision of values.

We know that there are more and more people in the world who support our position on defending traditional values that have made up the spiritual and moral foundation of civilisation in every nation for thousands of years: the values of traditional families, real human life, including religious life, not just material existence but also spirituality, the values of humanism and global diversity.

Of course, this is a conservative position. But speaking in the words of Nikolai Berdyaev, the point of conservatism is not that it prevents movement forward and upward, but that it prevents movement backward and downward, into chaotic darkness and a return to a primitive state.

In recent years, we have seen how attempts to push supposedly more progressive development models onto other nations actually resulted in regression, barbarity and extensive bloodshed. This happened in many Middle Eastern and North African countries. This dramatic situation unfolded in Syria.

As far as Syria is concerned, the international community had to jointly make a momentous choice: to either descend into further erosion of the world order’s foundations, or collectively make responsible decisions.

I feel it was our common success when the choice was made on the basis of the fundamental principles of international law, common sense and the logic of peace. So far, at least, we have been able to avoid external military intervention in Syria’s affairs and the spread of the conflict far beyond the region.

Russia made significant contributions to this process. We acted firmly, thoughtfully and carefully. We never jeopardised our own interests and security, nor global stability. In my view, that is how a mature and responsible nation must act.

As a result, together with our partners, we managed to steer the course of events away from war and toward establishing a nationwide political process and civil consensus in Syria. Syria’s chemical weapons arsenal is now under international control. Its liquidation is an important step in strengthening non-proliferation regimes for weapons of mass destruction. The Syrian precedent confirmed the UN’s central role in global politics.

The Syrian crisis, and now the situation in Iran as well, clearly demonstrate that any international problem can and should be resolved exclusively through political means, without resorting to forceful actions with little potential that are rejected by most nations in the world.

This year, we saw a breakthrough with the Iranian nuclear programme, but it was only the first step. It is imperative to continue patiently searching for a broader solution that will guarantee Iran’s inalienable right to develop peaceful nuclear energy and – I want to stress this – security for all countries in the region, including Israel.

Incidentally, it was Iran’s nuclear programme that once served as the main argument in favour of deploying a missile defence system. So what is happening now? The Iranian nuclear issue is being resolved, but the missile defence system remains. And it doesn’t just remain, it is being developed further. But I will talk about that a little later.

I want to stress again: Russia is prepared for joint efforts with all partners in the interest of ensuring common, equal, indivisible security.

Russia’s G8 presidency in 2014 will focus on acute global problems: strengthening non-proliferation regimes, combating international terrorism and drug trafficking. We will also act in accordance with these principles when preparing to host the BRICS and Shanghai Cooperation Organisation (SCO) summits in 2015.

We are now entering a crucial stage in preparing the Eurasian Economic Union Treaty. We expect to have agreed on the Treaty’s text by May 1, 2014 and to have submitted it to the Russian, Belarusian and Kazakhstani parliaments by that time. Colleagues, I would ask you to prioritise this document and give it your consideration and support.

Let me add that working groups are currently preparing roadmaps governing the accession of Kyrgyzstan and Armenia to the Customs Union. I am sure that the real achievements of Eurasian integration will only enhance our other neighbours’ interest in it, including that of our Ukrainian partners.

Even before all these protests that we are now witnessing in Kiev – and I very much hope that the country’s political forces will be able to negotiate and resolve Ukraine’s accumulated problems in the interests of its citizens – before all these problems began, starting in May Ukraine has expressed its desire to be present at all meetings between Russia, Belarus and Kazakhstan as an observer. Ukraine participates in discussions and has repeatedly declared its interest in joining some of the Customs Union’s agreements.

We are not imposing anything on anybody. But if our friends want to work together, then we are ready to continue this work at the expert level.

Our integration project is based on equal rights and on real economic interests. We will consistently promote the Eurasian process, without setting it against other integration projects including the more mature European one. We proceed from our complementarity and naturally we will continue to work with our European friends on a new basic agreement.

Colleagues,

A few words about our actions to further strengthen our Armed Forces.

I just mentioned the issue of missile defence, and here’s what I would like to say in this regard. We are all perfectly aware that the missile defence system is defensive in name only. In fact, it is a crucial component of strategic offensive capabilities. The development of new weapons systems, such as low-yield nuclear weapons, strategic non-nuclear missiles and hypersonic high-precision non-nuclear systems for prompt, long-range strikes are also causes for concern.

We are closely following the development of the so-called Prompt Global Strike system, which is being actively developed by some countries. Implementing all of these plans could have extremely negative consequences for regional and global stability.

The ramping up of high-precision strategic non-nuclear systems by other countries, in combination with the build-up of missile defence capabilities, could negate all previous agreements on the limitation and reduction of strategic nuclear weapons, and disrupt the strategic balance of power.

We understand this very well, and in this context we know exactly what we need to do. No one should entertain any illusions about achieving military superiority over Russia; we will never allow it. Russia will respond to all these challenges, both political and technological. We have all we need in order to do so.

Our military doctrine and advanced weapons, weapons that are being and will be deployed, will unconditionally allow us to ensure the security of the Russian state.

We still have a lot to do to develop modern high-precision weapons systems. At the same time, judged by qualitative parameters for modern strategic nuclear deterrent forces, today we are successfully reaching new milestones on schedule, and some of our partners will have to catch up.

We are developing new strategic missile systems for land, sea and air to further strengthen our nuclear forces. We will continue to strengthen our strategic missile forces and continue building a fleet of nuclear submarines. We are also starting work on a promising long-range aviation system.

The establishment of a global intelligence network is the next step on our agenda. The formation of an integrated, real-time global network for reconnaissance and targeting, which will operate in a single informational space in the interests of the Armed Forces of the Russian Federation, is extremely important. This is connected with additions to our satellite group.

We will continue to develop our general purpose forces: aviation, the navy and the land forces. This year in keeping with our plans, the number of privates and sergeants under contract increased to 220,000. At the same time we have to think how to create highly trained reserve forces.

There is another suggestion in this regard: keeping deferrals for students and changing the very system of military training offered by institutions of higher education. This will enable all students to study, receive military training for their next military assignment and a particular area of military specialisation.

This mechanism will allow us to train the right amount of reservists for the most needed, primarily technical military specialisations, while not drafting them into the Armed Forces. I would ask the Government and the Security Council to submit concrete proposals for how such a system could be organised.

Next. As you know, the funds we are allocating for rearming the Army and the Navy, for modernising the defence industry are unprecedented. They total 23 trillion rubles [more than $700 billion].

In the next decade, our defence companies will be fully loaded with orders. They will be able to upgrade their manufacturing base and create high-quality jobs. Let me recall that in Russia about two million people work in the defence industry. Together with their families, the number comes to almost seven million people. And specialists in this sector will have stable, well-paid jobs, and their families will be provided for.

Now we have to think about what the defence industry’s companies will do after having fulfilled the state defence procurement order, after 2020. We cannot allow them to become obsolete.

We need to strengthen our position in global markets. I would ask the Military-Industrial Commission to submit proposals in this regard, to ensure that our businesses can promptly switch to releasing in-demand civilian products onto both our domestic market and foreign ones.

There’s another point I would like to emphasise. We said that all Defence Ministry servicemen who began their service before January 1, 2012 would receive permanent housing by the end of this year. This task should be fully completed in the near future, and it will be. I would draw the Defence Ministry’s attention to this and ask you to deal with the issue on a case-by-case basis, helping people choose the best option for them.

Colleagues,

For the first time in our country’s history, we are turning the page on the issue of permanent housing for servicemen in Russia’s Army and Navy. Now we can concentrate on completing the construction of modern service housing and comfortable military bases.

Colleagues,

A sense of responsibility for the country is the main theme, lifeblood, and core value of the Russian Constitution, and it is also a call to each of us.

The nation’s strategic development agenda is well-known; this Address has outlined main areas of work and ways to achieve specific goals.

Everything that has been stated here must be executed without any reservations, new suggestions or bureaucratic interpretations. This is what the authorities’ most important and most notable task consists in.

It is our duty to increase people’s trust. Only in this way will we be able to increase the activity of our citizens, and people will want to contribute to our country’s development.

Let me repeat that if a decision has been made, then it must be implemented. I consider this approach to be a concise expression of shared responsibility, and would suggest making this the motto of the coming year, a motto for everyone: for the government, for society, for citizens.

I am absolutely convinced that by drawing on the best traditions of our people, by using the latest ideas and most effective development paths, we will meet all the challenges we face and guarantee our success.

Thank you for your attention.



The source of information - December 12, 2013 - Presidential Address to the Federal Assembly

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December 4, 2014 - Presidential Address to the Federal Assembly





President of Russia Vladimir Putin:




Citizens of Russia, members of the Federation Council and deputies of the State Duma,

Today’s address will be related to the current situation and conditions, as well as the tasks we are facing. But before delivering it I’d like to thank all of you for the support, unity and solidarity you have shown during the landmark events that will seriously influence the future of our country.

This year we faced trials that only a mature and united nation and a truly sovereign and strong state can withstand. Russia has proved that it can protect its compatriots and defend truth and fairness.

Russia has done this thanks to its citizens, thanks to your work and the results we have achieved together, and thanks to our profound understanding of the essence and importance of national interests. We have become aware of the indivisibility and integrity of the thousand-year long history of our country. We have come to believe in ourselves, to believe that we can do much and achieve every goal.

Of course, we will talk about this year’s landmark events. You know that a referendum was held in Crimea in March, at which its residents clearly expressed their desire to join Russia. After that, the Crimean parliament – it should be stressed that it was a legitimate parliament that was elected back in 2010 – adopted a resolution on sovereignty. And then we saw the historical reunification of Crimea and Sevastopol with Russia.

It was an event of special significance for the country and the people, because Crimea is where our people live, and the peninsula is of strategic importance for Russia as the spiritual source of the development of a multifaceted but solid Russian nation and a centralised Russian state. It was in Crimea, in the ancient city of Chersonesus or Korsun, as ancient Russian chroniclers called it, that Grand Prince Vladimir was baptised before bringing Christianity to Rus.

In addition to ethnic similarity, a common language, common elements of their material culture, a common territory, even though its borders were not marked then, and a nascent common economy and government, Christianity was a powerful spiritual unifying force that helped involve various tribes and tribal unions of the vast Eastern Slavic world in the creation of a Russian nation and Russian state. It was thanks to this spiritual unity that our forefathers for the first time and forevermore saw themselves as a united nation. All of this allows us to say that Crimea, the ancient Korsun or Chersonesus, and Sevastopol have invaluable civilisational and even sacral importance for Russia, like the Temple Mount in Jerusalem for the followers of Islam and Judaism.

And this is how we will always consider it.

Dear friends,

We cannot fail to mention today our perspective on the developments in Ukraine and how we intend to work with our partners around the world.

It is well known that Russia not only supported Ukraine and other brotherly republics of the former Soviet Union in their aspirations to sovereignty, but also facilitated this process greatly in the 1990s. Since then, our position has remained unchanged.

Every nation has an inalienable sovereign right to determine its own development path, choose allies and political regimes, create an economy and ensure its security. Russia has always respected these rights and always will. This fully applies to Ukraine and the Ukrainian people.

It is true that we condemned the government coup and the forceful takeover of power in Kiev in February of this year. The developments we are currently witnessing in Ukraine and the tragedy unfolding in the country’s southeast prove that we were right to take such a stand.

How did it all begin? I will have to remind you what happened back then. It is hard to believe that it all started with a technical decision by President Yanukovych to postpone the signing of the Association Agreement between Ukraine and the European Union. Make no mistake, he did not refuse to sign the document, but only postponed it in order to make some adjustments.

As you recall, this move was fully in line with the constitutional authority vested upon an absolutely legitimate and internationally recognised head of state.

Against this background, there was no way we could support this armed coup, the violence and the killings. Just take the bloody events in Odessa, where people were burned alive. How can the subsequent attempts to suppress people in Ukraine’s southeast, who oppose this mayhem, be supported? I reiterate that there was no way we could endorse these developments. What’s more, they were followed by hypocritical statements on the protection of international law and human rights. This is just cynical. I strongly believe that the time will come when the Ukrainian people will deliver a just assessment of these developments.

How did the dialogue on this issue begin between Russia and its American and European partners? I mentioned our American friends for a reason, since they are always influencing Russia’s relations with its neighbours, either openly or behind the scenes. Sometimes it is even unclear whom to talk to: to the governments of certain countries or directly with their American patrons and sponsors.

As I mentioned, in the case of the Ukraine-EU Association Agreement, there was no dialogue at all. We were told that it was none of our business or, to put it simply, we were told where to go.

All the arguments that Russia and Ukraine are members of the CIS free-trade zone, that we have deep-rooted cooperation in industry and agriculture, and basically share the same infrastructure – no one wanted to hear these arguments, let alone take them into account.

Our response was to say: fine, if you do not want to have a dialogue with us, we will have to protect our legitimate interests unilaterally and will not pay for what we view as erroneous policy.

So what’s came out of it all? The agreement between Ukraine and the European Union has been signed and ratified, but the implementation of the provisions regarding trade and economy has been postponed until the end of next year. Doesn’t this mean that we were the ones who were actually right?

There is also a question of why all this was done in Ukraine? What was the purpose of the government coup? Why shoot and keep shooting and killing people? In fact, the economy, finance and the social sector were destroyed and the country ruined.

What Ukraine currently needs is economic assistance in carrying out reforms, not petty politics and pompous empty promises. However, our Western colleagues don’t seem eager to provide such assistance, while the Kiev authorities are not willing to address the challenges their people are facing.

By the way, Russia has already made a major contribution to helping Ukraine. Let me reiterate that Russian banks already invested some $25 billion in Ukraine. Last year, Russia’s Finance Ministry extended a loan worth another $3 billion. Gazprom provided another $5.5 billion to Ukraine and even offered a discount that no one promised, requiring the country to pay $4.5 billion. Add it all up and you get as much as $ 32.5–33.5 billion that were provided only recently.

Of course, we have the right to ask questions. What was this Ukrainian tragedy for? Wasn’t it possible to settle all the issues, even disputed issues, through dialogue, within a legal framework and legitimately?

But now we are being told that this was actually competent, balanced politics that we should comply with unquestionably and blindfolded.

This will never happen.

If for some European countries national pride is a long-forgotten concept and sovereignty is too much of a luxury, true sovereignty for Russia is absolutely necessary for survival.

Primarily, we should realise this as a nation. I would like to emphasise this: either we remain a sovereign nation, or we dissolve without a trace and lose our identity. Of course, other countries need to understand this, too. All participants in international life should be aware of this. And they should use this understanding to strengthen the role and the importance of international law, which we’ve talked about so much lately, rather than bend its standards to suit someone's strategic interests contrary to its fundamental principles and common sense, considering everyone else to be poorly educated people who can’t read or write.

It is imperative to respect the legitimate interests of all the participants in international dialogue. Only then, not with guns, missiles or combat aircraft, but precisely with the rule of law will we reliably protect the world against bloody conflict. Only then, will there be no need to scare anyone with imaginary self-deceptive isolation, or sanctions, which are, of course, damaging, but damaging to everyone, including those who initiate them.

Speaking of the sanctions, they are not just a knee-jerk reaction on behalf of the United States or its allies to our position regarding the events and the coup in Ukraine, or even the so-called Crimean Spring. I’m sure that if these events had never happened – I want to point this out specifically for you as politicians sitting in this auditorium – if none of that had ever happened, they would have come up with some other excuse to try to contain Russia’s growing capabilities, affect our country in some way, or even take advantage of it.

The policy of containment was not invented yesterday. It has been carried out against our country for many years, always, for decades, if not centuries. In short, whenever someone thinks that Russia has become too strong or independent, these tools are quickly put into use.

However, talking to Russia from a position of force is an exercise in futility, even when it was faced with domestic hardships, as in the 1990s and early 2000s.

We remember well how and who, almost openly, supported separatism back then and even outright terrorism in Russia, referred to murderers, whose hands were stained with blood, none other than rebels and organised high-level receptions for them. These “rebels” showed up in Chechnya again. I'm sure the local guys, the local law enforcement authorities, will take proper care of them. They are now working to eliminate another terrorist raid. Let’s support them.

Let me reiterate, we remember high-level receptions for terrorists dubbed as fighters for freedom and democracy. Back then, we realised that the more ground we give and the more excuses we make, the more our opponents become brazen and the more cynical and aggressive their demeanour becomes.

Despite our unprecedented openness back then and our willingness to cooperate in all, even the most sensitive issues, despite the fact that we considered – and all of you are aware of this and remember it – our former adversaries as close friends and even allies, the support for separatism in Russia from across the pond, including information, political and financial support and support provided by the special services – was absolutely obvious and left no doubt that they would gladly let Russia follow the Yugoslav scenario of disintegration and dismemberment. With all the tragic fallout for the people of Russia.

It didn’t work. We didn’t allow that to happen.

Just as it did not work for Hitler with his people-hating ideas, who set out to destroy Russia and push us back beyond the Urals. Everyone should remember how it ended.

Next year, we will mark the 70th anniversary of Victory in the Great Patriotic War. Our Army crushed the enemy and liberated Europe. However, we should not forget about the bitter defeats in 1941 and 1942 so as not to repeat the mistakes in the future.

In this context, I will touch on an international security issue. There are many issues related to this. These include the fight against terrorism. We still encounter its manifestations, and of course, we will participate in the joint efforts to counter terrorism on the international level. Of course, we will work together to deal with other challenges, such as the spread of infectious diseases.

However, in this case I would like to speak about the most serious and sensitive issue: international security. Since 2002, after the US unilaterally pulled out of the ABM Treaty, which was absolutely a cornerstone of international security, a strategic balance of forces and stability, the US has been working relentlessly to create a global missile defence system, including in Europe. This poses a threat not only to Russia, but to the world as a whole – precisely due to the possible disruption of this strategic balance of forces.

I believe that this is bad for the US as well, because it creates the dangerous illusion of invulnerability. It strengthens the striving for unilateral, often, as we can see, ill-considered decisions and additional risks.

We have said much about this. I will not go into details now. I will only say this. Maybe I am repeating myself. We have no intention to become involved in a costly arms race, but at the same time we will reliably and dependably guarantee our country’s defence in the new conditions. There are absolutely no doubts about this. This will be done. Russia has both the capability and the innovative solutions for this.

No one will ever attain military superiority over Russia. We have a modern and combat ready army. As they now put it, a polite, but formidable army. We have the strength, will and courage to protect our freedom.

We will protect the diversity of the world. We will tell the truth to people abroad, so that everyone can see the real and not distorted and false image of Russia. We will actively promote business and humanitarian relations, as well as scientific, education and cultural relations. We will do this even if some governments attempt to create a new iron curtain around Russia.

We will never enter the path of self-isolation, xenophobia, suspicion and the search for enemies.

All this is evidence of weakness, while we are strong and confident.

Our goal is to have as many equal partners as possible, both in the West and in the East. We will expand our presence in those regions where integration is on the rise, where politics is not mixed with economy, and where obstacles to trade, to exchange of technology and investment and to the free movement of people are lifted.

Under no conditions will we curtail our relations with Europe or America. At the same time, we will restore and expand our traditional ties with South America. We will continue our cooperation with Africa and the Middle East.

We see how quickly Asia Pacific has been developing over the past few decades. As a Pacific power, Russia will use this huge potential comprehensively.

Everyone knows the leaders and the drivers of global economic development. Many of them are our sincere friends and strategic partners.

The Eurasian Economic Union will start working in full on January 1, 2015. I’d like to remind you about its fundamental principles. The topmost principles are equality, pragmatism and mutual respect, as well as the preservation of national identity and state sovereignty of its member countries. I am confident that strong cooperation will become a powerful source of development for all of the Eurasian Economic Union members.

To conclude this part of my address, I’d like to say once again that our priorities are healthy families and a healthy nation, the traditional values which we inherited from our forefathers, combined with a focus on the future, stability as a vital condition of development and progress, respect for other nations and states, and the guaranteed security of Russia and the protection of its legitimate interests.

Dear friends,

To be able to implement all our plans and to meet the basic social commitments set forth in the presidential executive orders of May 2012, we must decide what we will do in the economy, finance and social spheres. But most importantly, we must choose a strategy.

I repeat that Russia will be open to the world, cooperation, foreign investment and joint projects. But we must above all see that our development depends primarily on us.

We will only succeed if we work towards prosperity and affluence, rather than hope for an opening or a favourable situation on foreign markets.

We will succeed if we defeat disorder, irresponsibility and our habit of burying good decisions in red tape. I want everyone to understand that in today’s world this is not simply an obstacle to Russia’s development but a direct threat to its security.

The period ahead will be complex and difficult, when much will depend on what each one of us do at our workplaces. The so-called sanctions and foreign restrictions are an incentive for a more efficient and faster movement towards our goals.

There is much we need to do. We need to create new technologies, a competitive environment and an additional margin of strength in the industries, the financial system and in the training of personnel. We have a large domestic market and natural resources, capital and research projects for this. We also have talented, intelligent and diligent people who can learn very quickly.

The most important thing now is to give the people an opportunity for self-fulfilment. Freedom for development in the economic and social spheres, for public initiatives is the best possible response both to any external restrictions and to our domestic problems. The more actively people become involved in organising their own lives, the more independent they are, both economically and politically, and the greater Russia’s potential.

In this context, I will cite one quote: “He who loves Russia should wish freedom for it; above all, freedom for Russia as such, for its international independence and self-sufficiency; freedom for Russia as a unity of Russian and all other ethnic cultures; and finally, freedom for the Russian people, freedom for all of us: freedom of faith, of the search for truth, creativity, work, and property.” Ivan Ilyin. This makes a lot of sense and offers a good guideline for all of us today.

Ladies and gentlemen,

Conscientious work, private property, the freedom of enterprise – these are the same kind of fundamental conservative values as patriotism, and respect for the history, traditions, and culture of one’s country.

We all want the same thing: wellbeing for Russia. So the relations between business and the state should be built on the philosophy of a common cause, partnership, and equal dialogue.

Naturally, responsibility and compliance with the law and obligations are essential in the business world, as it is in other areas of life. And this is exactly how the overwhelming, absolute majority of our business people work. They value their business and social reputation. Like genuine patriots, they want to be a benefit to Russia. These are the kind of people to look to, providing conditions for their productive work.

This is not the first time we are speaking about the need for new approaches to the activities of oversight, supervisory, and law enforcement agencies. Nevertheless, things are changing very slowly here. The presumption of guilt is still very much alive. Instead of curbing individual violations, they close the path and create problems for thousands of law-abiding, self-motivated people.

It is essential to lift restrictions on business as much as possible, free it from intrusive supervision and control. I said intrusive supervision and control. I will consider this in more detail later. I propose the following measures in this regard.

Every inspection should become public. Next year, a special register will be launched, with information on what agency has initiated an inspection, for what purpose, and what results it has produced. This will make it possible to stop unwarranted and, worse still, ‘paid to order’ visits from oversight agencies. This problem is extremely relevant not only for business, but also for the public sector, municipal institutions and social NGOs.

Finally, it’s crucial to abandon the basic principle of total, endless control. The situation should be monitored where there are real risks or signs of transgression. You see, even when we have already done something with regard to restrictions, and these restrictions seem to be working well, there are so many inspection agencies that if every one of them comes at least once, then that’s it, the company would just fold. In 2015, the Government should make all the necessary decisions to switch to this system, a system of restrictions with regard to reviews and inspections.

Concerning small business, I propose establishing ‘holidays from inspections’. If a company has acquired a good reputation and if there have not been any serious charges against it for three years, then for the next three years it should be exempted from routine inspections by government or municipal supervisory agencies. Of course, this does not apply to emergencies, when there is a danger to people’s health and life.

Business people talk about the need for stable legislation and predictable rules, including taxes. I completely agree with this. I propose to freeze the existing tax parameters as they are for the next four years, not revisit the matter again, not change them.

Meanwhile, it is important to implement the decisions that have already been made to ease the tax burden. First of all, for those who are just setting up their operations. As we have agreed, two-year tax holidays will be provided to small businesses registering for the first time. Production facilities that are starting from scratch will be entitled to the same exemptions.

Another thing. I propose a full amnesty for capital returning to Russia. I stress, full amnesty.

Of course, it is essential to explain to the people who will make these decisions what full amnesty means. It means that if a person legalises his holdings and property in Russia, he will receive firm legal guarantees that he will not be summoned to various agencies, including law enforcement agencies, that they will not “put the squeeze” on him, that he will not be asked about the sources of his capital and methods of its acquisition, that he will not be prosecuted or face administrative liability, and that he will not be questioned by the tax service or law enforcement agencies. Let’s do this now, but only once. Everyone who wants to come to Russia should be given this opportunity.

We all understand that the sources of assets are different, that they were earned or acquired in various ways. However, I am confident that we should finally close, turn the “offshore page” in the history of our economy and our country. It is very important and necessary to do this.

I expect that after the well-known events in Cyprus and with the on-going sanctions campaign, our business has finally realised that its interests abroad are not reckoned with and that it can even be fleeced like a sheep.

And that the best possible guarantee is national jurisdiction, even with all of its problems. We will continue to deal with those problems with conviction, together with our business community, of course.

Russia has already made significant headway in improving its business climate. A new legislative framework has for the most part been developed on the federal level. Now the focus should be shifted to the quality of law enforcement, promoting so called best practices in the regions in partnership with business, using the national investment climate ratings to this end. From next year, the ratings system will be introduced in all the regions. We will review the progress at a State Council meeting without fail.

We need properly developed construction sites and transport infrastructure in order to be able to expand businesses and accommodate new production sites. Our regions must focus on fixing regional and local roads. To enable them to do so, we have introduced additional sources for regional road funds. Overall, we should seek to double the volume of road construction across Russia.

Of course, what I have just said has been verified by the relevant government agencies. They all confirmed that this is a feasible project. We’ll be expecting to see the results of your work, colleagues.

In 2015, we will launch a programme to reimburse the regions’ expenses involved in creating technology parks. I hope that the regions will make good use of this opportunity to develop their own industrial capacity. These additional measures are being taken in order to support economic and industrial growth in strategically important Russian regions.

The law on a special economic zone in Crimea has been adopted. Favourable conditions will be created here for businesses, agriculture and tourism, manufacturing industries and maritime transport, including taxation, customs and other procedures.

As you may be aware, customs preferences for Kaliningrad Region will expire in 2016. It is imperative that alternative measures to support this region, which have already been prepared, be implemented in order to maintain a comfortable entrepreneurial climate.

I’d like to ask the Government to complete this work as soon as possible. I’d also like to ask the deputies not to delay their review of the law on priority development areas (PDA).

In addition, I propose extending PDA regulations to new projects in a number of single-industry cities with the most difficult socioeconomic situations, rather than waiting three years, as provided by the draft law (I believe it has passed its first reading). Instead, we should amend it and start working on single-industry cities right away.

Of course, PDAs should play a key role in developing the Russian Far East. We have announced ambitious plans for developing this region, and we will, of course, implement them. I’d like to ask the Government to consider recapitalising the Far East Development Fund. We can allocate a portion of federal tax increments, which will be obtained from new businesses opening in the region, for these purposes.

As is often the case in such matters, we had a tough conversation on this issue with the Finance Ministry. We agree that initially this can be done with an exception for VAT. Then, we’ll see how well this system works.

I propose providing a free port status to Vladivostok, with an attractive and easy customs regime. As you may be aware, Sevastopol and other Crimean ports have already been given this status.

We also need a comprehensive project for modern and competitive development of the Northern Sea Route. It must operate not just as an effective transit route, but also promote business activity on the Russian Pacific coast and the development of Arctic territories.

Colleagues, the quality and the size of the Russian economy must be consistent with our geopolitical and historical role. We must escape the trap of zero-level growth and achieve an above-average global growth rate within the next three to four years. This is the only way to increase Russia’s share in the global economy, and thus strengthen our influence and economic independence.

The national economy should also be more effective. It’s imperative that labour productivity be increased by no less than five percent annually. The Government should find reserves for this and come up with a plan for the best way to use them. At the same time, it’s important to maintain a stable macroeconomic environment and reduce inflation in the medium term to four percent, but, importantly, not through suppressing business activity. We must at last learn to harmonise two goals: containing inflation and stimulating growth.

Today we are faced with reduced foreign exchange proceeds and, as a consequence, with a weaker national currency, the ruble. As you are aware, the Bank of Russia has switched to a floating exchange rate, but this does not mean that the Bank of Russia has withdrawn from controlling the exchange rate, and that the ruble may now be the object of unchecked financial speculation.

I’d like to ask the Bank of Russia and the Government to carry out tough and concerted actions to discourage the so-called speculators from playing on fluctuations of the Russian currency. In this regard, I’d like to point out that the authorities know who these speculators are. We have the proper instruments of influence, and the time is ripe to use them.

Of course, a weaker ruble increases the risk of a short-term surge in inflation. It’s imperative that we protect the interests of our people, first and foremost, those with low incomes, and the Government and the regions must ensure control over the situation on the food, medicine and other basic goods markets. I’m sure this can be done without any problem, and it must be done.

A weaker national currency also increases the pricing environment and the competitiveness of our companies. We take this factor into account in our policy of import substitution (at least, where it’s appropriate and necessary). Within three to five years, we must provide our customers with high-quality and affordable medicines and food that are produced mostly in Russia.

The grain crop in Russia in 2014 was one of the best in recent history. The overall output growth across our agro-industrial complex currently stands at about 6 percent. We now have efficient large agricultural enterprises and farms, and we will support them. Let’s thank our agricultural workers for their performance this year.

We must also lessen our critical dependence on foreign technology and industrial goods, including in the machine-tool building and instrument-making industries, power engineering, and the production of equipment for field development, including on the Arctic shelf. Our commodities and infrastructure companies can seriously help our producers in this sphere. When implementing large oil, energy and transport projects, they must rely above all on domestic producers and promote demand for their products.

At this point, it’s mostly the other way around: we buy everything abroad, leaving the domestic industries and science empty-handed. I suggest creating a special governmental coordination centre and giving the Government more authority in this sphere. This centre would dovetail the implementation of large projects with placement of contracts at Russian companies, with further development of the national production and research facilities, and production localisation.

As for imports, we must only buy distinctly unique equipment and technology abroad. I’d like to add that we must also cooperate with domestic producers when upgrading the housing and utility sector, public transport, agriculture and other industries.

I am instructing the Government to take the necessary decisions to expand small and medium-sized businesses’ access to purchases by state companies, and in particular to determine the volume of state-owned companies’ mandatory annual purchases from small and medium firms. This is tens and hundreds of billions of rubles that must be used to boost the development of national businesses.

It goes without saying that their products must satisfy the strictest quality and price conditions. Next, we must prevent internal monopolism. I want to stress that reasonable import substitution – reasonable is the key word here – is a long-term priority, irrespective of external conditions.

Moreover, import substitution programmes must encourage the creation of a large group of industrial companies that can be competitive not only domestically but also on foreign markets. These companies exist in Russia. They are highly efficient and have export potential – very good potential. But they are short of capital, technology, personnel and equipment. We must remove as many of these restrictions as possible. We must provide investment incentives so that these companies can increase growth, increase their capitalisation and production severalfold and become established on foreign markets.

I am instructing the Agency for Strategic Initiatives to join forces with Vnesheconombank, the Russian Direct Investment Fund and other development institutions to draft a relevant programme and system. The first pilot programme for the support for non-commodity companies must be launched already next year.

The integrated credit and insurance export support centre, which will start operating in 2015, will stimulate domestic exports. Its services will be available to all non-commodity companies, both big and small.

In the next three years the capitalisation of Roseximbank, which was created for this purpose, should reach approximately 30 billion rubles. In the next three years, the volume of Russian high value-added exports should grow by 50 percent.

Of course, considerable funds will be needed for the development of the non-commodity and other economic sectors. Russia has these funds. We have large domestic savings, which must be used for this.

Despite any external restrictions, we must increase our annual investment to 25 percent of GDP by 2018. What does this mean? I’ll explain it with just a few words.

It means that we must invest as much as we save. Our savings must work for the national economy and development, rather than the export of capital. To be able to do this, we must seriously strengthen the stability of our banking system – the Central Bank has been working towards this end quite persistently – and also reduce the dependence of the national financial market on external risks.

I propose using our reserves (above all, the National Welfare Fund) to implement a programme for recapitalisation of leading domestic banks, with funding to be provided under clearly specified conditions to be funnelled into the most significant projects in the real economy at affordable interest rates. Furthermore, banks will have to introduce project financing mechanisms.

Regarding budget spending, the key requirements here should be thrift and maximum return, the correct choice of priorities and factoring in the current economic situation. For the next three years, we should set the goal of cutting costs and ineffective budget spending by at least five percent of total spending in real terms.

A huge economic reserve is lying on the surface. It is enough to look at government-financed construction projects to see this. At a recent forum of the Russian Popular Front, examples were cited of funds being invested in grandiose buildings or the construction costs of same-type – I want to emphasise this point – facilities, differing several times over, even in neighbouring regions.

I believe that it is necessary to phase in a system of a single technical contracting authority, and centralise the preparation of standard projects, construction documentation and the choice of subcontractors. This will make it possible to overcome the existing disparity in construction costs and ensure significant saving of public funds spent on capital construction projects, between 10 percent and 20 percent. This practice should be extended to all civil construction projects financed from the federal budget. I instruct the Government to submit relevant proposals.

Yesterday, the Prime Minister and I discussed this topic. Of course, there are some pitfalls here, and knowing what they are, it is important to avoid them, move with caution, implement several pilot projects in several regions and see what happens.

However, leaving the situation as it is today is no longer an option. As I said earlier, construction costs of similar facilities in neighbouring regions differ many times over. What is this?

Diversion or embezzlement of budget funds allocated for federal defence contracts should be treated as a direct threat to national security and dealt with seriously and severely, as in the suppression of the financing of terrorism. I mention this for a reason.

I don’t think there is anything to hide or gloss over here. We have just held our regularl meeting in Sochi with the leadership of the Defence Ministry, combat arms and services commanders and leading defence company designers.

On certain positions, prices double, triple or quadruple, and in one case they grew 11 times. You realise that this has nothing to do with inflation or with anything, considering that practically 100 percent of funding is provided in advance.

I would like to reiterate, and I’m bringing this to the attention of law enforcement agencies. I instruct the Defence Ministry, the Federal Service for Financial Monitoring and other relevant agencies to develop a system of strict, effective oversight over the use of funding allocated for federal defence contracts. This system should operate along the entire supply chain. Tougher penalties should be imposed on those in charge of federal defence contract implementation for misspending every ruble from the budget.

It is also crucial to streamline state-owned company budgets. To this end, unified financial settlement centres should be established therein, something like the treasury, to ensure the transparency and optimisation of financial flows and their effective management. Parent companies should also clearly see how funds are used in their subsidiaries.

Key efficiency parameters should be introduced in all companies where the state holds over 50 percent of stock, including the requirement to reduce operating expenses by at least 2–3 percent a year. I should add that compensations to state company management should be directly related to performance and economic realities.

Colleagues,

I’m confident that Russia is capable not only of carrying out a large-scale effort to upgrade its industrial sector, but also of becoming a supplier of ideas and technology for the whole world, emerging as a leading producer of goods and services that would shape the global technology agenda. Russian companies will embody national success and pride, just as our nuclear and space projects once did.

We have already adopted legislative amendments to introduce strict environmental standards. Their purpose is to push companies to implement the so-called best available technology, so that the key industries benefit from continuous upgrades.

That said, we should also be mindful of future challenges. In this regard, I propose implementing a national technology initiative. Long-term forecasts should provide us with insight into the tasks Russia could face in the next 10–15 years, what state-of-the-art solutions will be needed to ensure national security, improve quality of life, and promote industries operating in a new technological environment.

Promoters of promising creative projects should join efforts with vibrant companies that are ready to implement cutting-edge solutions. The leading universities, research centres, the Russian Academy of Sciences and major business associations should also be involved in this effort. And of course, our compatriots working abroad as academics or in high-tech sectors should also be invited to join in, but only those of them who actually have something to contribute.

I propose that the Government make the necessary arrangements, with assistance from the Agency for Strategic Initiatives. It is important that business representatives, academics and developers tell us what barriers need to be removed and what additional assistance they require. The most advanced technologies will yield results only if there are people who are ready to develop and use them.

Unfortunately, engineers are still mostly educated at universities that are no longer linked to the actual producers, and lack access to the latest research and solutions. It is high time that we focus on the quality of education, not sheer enrolment numbers, and ensure that engineers are trained by top higher education institutions with strong industry connections, and preferably in the same regions where the future engineers will live.

This quality requirement should also be applied to regular labour force. By 2020, at least half of Russia’s vocational training colleges are expected to offer education in 50 of the most relevant and promising labour professions, in accordance with the highest international standards and using advanced technology. Contests among workers and engineers should also become an important indicator of the changes in vocational training. The system of professional contests is not new, and Russia has joined it and has become a proactive member. This is not just about enhancing the prestige of engineering and labour jobs, but also an opportunity to be guided by the best practices in the training of such professionals. Building on this experience, professional and educational standards can be devised.

As you know, Russia competes in various international professional contests. I don’t have the data on hand, so I’ll cite them by memory, since they are worth mentioning. Three teams have been created: one with experts from leading enterprises, one with students and a third with 14 to 17 year old school students. They have trained to perform various tasks of the same kind. The team of 14 to 17 year old school students was able to find the best solutions for the most complex tasks in the space industry, where they worked on spacecraft, as well in traditional industrial tasks, despite the fact that such tasks were designed for highly-skilled workers. School students beat university students, as well as workers from the leading companies, by a wide margin. What this means is that, first, we have great potential, a lot of young promising talent. It also means that a lot has to be done to change the professional training system. It’s what I spoke about. We just need to avoid acting formally here. There is now a clear understanding of what should be done, so now we must just start doing it. Once we engage in this effort, we must keep up the momentum, since despite the changes in labour professions and training, the key economic driver always was and will continue to be the availability of highly-skilled qualified workforce and engineers. A network of certification centres should be created so that workers can prove that they meet professional requirements.

Colleagues,

I’ll move on to the next topic, which is demographics. In the early 2000s, UN experts predicted further demographic decline in Russia. According to UN forecasts, the population of our country was supposed to shrink to 136 million people by the end of 2013. On January 1, 2014, the population of Russia was almost 144 million people, 8 million more than forecast by the United Nations.

In addition, as you know, Russia registered natural population growth for two years in a row in 2013 and 2014. It is expected that by late 2014, with Crimea and Sevastopol included, Russia's population will exceed 146 million people. Our demographic programmes have proved their effectiveness, and we will continue to implement them, with full coverage for the people of Crimea and Sevastopol. Families in Crimea and Sevastopol that have had a second or subsequent child since 2007 will receive the full amount of maternity capital.

I would like to draw your attention to another important and meaningful fact. This year, Russia was for the first time recognised as a successful country in world health rankings. The average life expectancy in such countries exceeds 70 years. Currently, this indicator in Russia is over 71. I believe that we have every opportunity to increase average life expectancy to 74 years in the near future and achieve a drastic reduction in mortality. That’s why I propose declaring 2015 the National Year of Fighting Cardiovascular Diseases, which is the leading cause of death, and combining the efforts of healthcare workers, representatives of culture, education, media, civic and sports organisations in order to resolve this problem.

The 2014 Winter Olympics in Sochi played an enormous role in promoting a healthy lifestyle. Once again, I’d like to congratulate our Olympians on their success.

Of course, the kindest words go to the Paralympic athletes. Friends, you have become true heroes of Russia. Largely thanks to you, attitudes towards people with disabilities have undergone a dramatic change. I’m convinced that our society will become truly united when we provide equal opportunities to everyone.

Government programmes must include measures to provide vocational training and employment opportunities to people with disabilities and create a barrier-free environment in all spheres of life. I suggest extending the Accessible Environment programme to 2020. We also need to create a modern domestic industry to manufacture goods for people with disabilities, including devices for physical therapy and rehabilitation.

With regard to healthcare, it is imperative to complete the transition to an insurance-based system and to make sure all its mechanisms are working without a fault. We have been talking about it and working on it for quite a while now, but insurance-based medicine still isn’t working properly. Importantly, both patients and medical staff should have a clear understanding of how health insurance works. We must create a centralised system of public oversight over the quality of healthcare organisations with corresponding powers and levers. I’d like to ask the Government to amend the legislation accordingly.

I also propose providing a special training certificate to doctors. They will use it to choose the best educational programme for them in order to take advanced courses and improve their skills. The hours and methods of such training should be convenient for the doctors.

Even with the most advanced technological innovations in medicine, a doctor’s personal qualities remain important. That includes a focus on the patient, a noble attitude and commitment to their professional and moral duty. Such medical professionals are the backbone of our healthcare system. And we must create all the conditions for them to be able to do their job properly.

Colleagues, yesterday, for the first time in many years, students in Russian schools wrote graduation compositions. This is another step towards a more objective system of evaluating the academic progress, knowledge, perspective and intellect of the younger generation and, importantly, the quality of the teachers’ work.

I’d like to ask the Ministry of Education and Science in conjunction with the professional community to review the results of these compositions and the national final school exam and come up with solutions aimed at increasing teachers’ accountability and motivating children to learn new skills.

It should be noted that the national final school exam has allowed gifted children from remote towns and villages and low-income families to apply to the nation’s best universities.

Talented children are a valuable asset of the nation, and we need to provide additional support to young people who show an aptitude for technology, liberal arts or inventing at an early age, who have achieved success in national or international academic and professional contests, and have patents or publications in academic journals. We have many such young people.

I propose establishing 5,000 annual presidential grants for talented young people who study at higher education institutions. Each grant will be for 20,000 rubles a month.

Of course, certain conditions will apply for the duration of their studies at a higher education institution. First, such students must make a commitment to work for a certain time in Russia, as targeted training programmes currently require. Second, they would have to confirm their eligibility each year by demonstrating the necessary academic and personal achievements for the duration of their studies.

Every child and teenager in our country should be able to find something to do outside the classroom. Any curtailment of extracurricular, supplemental education is unacceptable. Art, technology and music centres help create well-rounded people.

I’d like to ask the Government and the regions to focus on this issue and come up with financial and organisational approaches to address it. Most importantly, children and their parents should have a choice between getting additional education at school, a municipal centre of creativity, or a non-governmental educational organisation. Importantly, all these options must be affordable and children must have access to classes taught by properly trained professionals.

Another important issue that I spoke about in last year’s address is overcrowded schools and classrooms. We have crunched the numbers and found that we need to create an additional 4.5 million spots at schools.

How did we arrive at this number? Today, nearly two million schoolchildren attend the second shift. There are schools with three shifts. In the coming years, with a growing birth rate (which we hope will continue), the number of pupils will increase by another 2.5 million.

Naturally, we also have to solve the issue highlighted in the executive orders signed in 2012, that of increasing the number of preschools, something we spoke about with our colleagues from the Government yesterday. This is the way it should be. We have to consider all our opportunities and remember that one problem will intensify – that of spots at schools. I ask the Government, together with the regional authorities, to develop a comprehensive approach to resolving these issues.

Colleagues,

Education, healthcare, and the social welfare system should become a true public benefit and serve all citizens of the country. Attention to the people cannot be faked. You cannot simulate teaching, medical assistance or social care. We have to learn to feel respect for ourselves and honour reputation. It’s the reputation of individual hospitals, schools, universities and social institutions that form the country’s overall reputation.

Citizens don't have to think about where to apply for a social service: at a state, municipal or private organisation. They have the right to come to those who can provide professional assistance, with full dedication, putting their soul in their work. All the other things – including technical, organisational and legal issues concerning the provision of services – is the responsibility of the state, the responsibility to properly organise the work.

We will continue to support socially oriented non-commercial organisations. Such NGOs, as a rule, bring together people who feel their civil duty and who are aware of how much mercy, attention, care and kindness mean. We should use their proposals and experience, especially when implementing social initiatives.

We must not allow discrimination of the non-governmental sector in the social sphere and eliminate all barriers to it: not only legal ones, which have been mostly abolished, but also those that persist, I mean organisational and administrative barriers. Equal access should be provided for the non-governmental sector to financial resources.

Competition is a crucial factor to boost the quality of services in the social sphere. Also, it is necessary to launch a mechanism of independent assessment of the quality of services and to ensure transparency of information on the work of agencies providing social services. I ask the Russian Popular Front, together with civic associations, to assist the reforms in the social sector.

Following next year’s results, I plan to meet with representatives of the non-governmental sector. We will discuss what changes we have succeeded in achieving lately. Overall, we should considerably expand the opportunities for dialogue, for exchange of ideas between the Government and the public, particularly the Civic Chamber and its regional branches.

These structures should be incorporated, both at the federal and regional level, into a comprehensive expert examination of draft laws and government decisions, including at the level of the so-called initial reading, which should serve as an efficient feedback mechanism.

We can see how active citizens are and what constructive efforts they are taking. Not only are they highlighting issues for the authorities to tackle, they also actively participate in settling issues and problems. They realise full well that much depends on their personal efforts. The will, deeds and generosity of these people make up the invaluable social potential of the nation.

Everyone who is prepared to take responsibility has to be involved in the implementation of the plans of developing the country, certain regions and municipalities. If the state and the public act as one, in an atmosphere of cooperation and mutual trust, success is guaranteed.

I would like to address representatives of all political parties and social forces. I am counting on our joint consolidated work. Russia’s interests demand this unity and this work.

Friends, citizens of Russia,

I will conclude my address where I began it. This year, as has been the case many times during crucial historical moments, our people have demonstrated national enthusiasm, vital endurance and patriotism. The difficulties we are facing today also create new opportunities for us. We are ready to take up any challenge and win.

Thank you.



The source of information - December 4, 2014 - Presidential Address to the Federal Assembly

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December 3, 2015 - Presidential Address to the Federal Assembly





President of Russia Vladimir Putin:




Citizens of Russia, members of the Federation Council, State Duma deputies,

I would like to begin my Address with words of gratitude to the Russian servicemen who are fighting international terrorism.

Today here in the St George’s Hall, a historic hall of Russian military glory, we have combat pilots and representatives of the Armed Forces who are taking part in the anti-terrorist operation in Syria.

Gelena Peshkova and Irina Pozynich, who lost their husbands in the war against terror, have joined us too. My deepest respect to you and the parents of our heroes.

I would like us all to honour the memory of the soldiers who gave their lives while doing their duty, and the memory of all Russian citizens who fell at the hands of terrorists.

(Moment of silence)

Colleagues,

Russia has long been at the forefront of the fight against terrorism. This is a fight for freedom, truth and justice, for the lives of people and the future of the entire civilisation.

We know what aggression of international terrorism is. Russia faced it back in the mid-1990s, when our country, our civilian population suffered from cruel attacks. We will never forget the hostage crises in Budennovsk, Beslan and Moscow, the merciless explosions in residential buildings, the Nevsky Express train derailment, the blasts in the Moscow metro and Domodedovo Airport.

These tragedies took thousands of lives. We still grieve for them and will always grieve, along with the victims’ loved ones.

It took us nearly a decade to finally break the backbone of those militants. We almost succeeded in expelling terrorists from Russia, but are still fighting the remaining terrorist underground. This evil is still out there. Two years ago, two attacks were committed in Volgograd. A civilian Russian plane was recently blown up over Sinai.

International terrorism will never be defeated by just one country, especially in a situation when the borders are practically open, and the world is going through another resettlement of peoples, while terrorists are getting regular financial support.

Terrorism is a growing threat today. The Afghanistan problem has not been resolved. The situation there is alarming and gives us no optimism, while some of the relatively peaceful and stable countries in the Middle East and North Africa – Iraq, Libya and Syria – have now plunged into chaos and anarchy that pose a threat to the whole world.

We all know why that happened. We know who decided to oust the unwanted regimes and brutally impose their own rules. Where has this led them? They stirred up trouble, destroyed the countries’ statehood, set people against each other, and then “washed their hands”, as we say in Russia, thus opening the way to radical activists, extremists and terrorists.

The militants in Syria pose a particularly high threat for Russia. Many of them are citizens of Russia and the CIS countries. They get money and weapons and build up their strength. If they get sufficiently strong to win there, they will return to their home countries to sow fear and hatred, to blow up, kill and torture people. We must fight and eliminate them there, away from home.

This is why it has been decided to launch a military operation there based on an official request from the legitimate Syrian authorities. Our military personnel are fighting in Syria for Russia, for the security of Russian citizens.

The Russian Army and Navy have convincingly demonstrated their combat readiness and their increased capabilities. Modern Russian weapons have proved to be effective, and the invaluable practice of using them in combat conditions is being analysed and will be used to further improve our weapons and military equipment. We are grateful to our engineers, workers and all other personnel of our defence companies.

Russia has demonstrated immense responsibility and leadership in the fight against terrorism. Russian people have supported these resolute actions. The firm stance taken by our people stems from a thorough understanding of the absolute danger of terrorism, from patriotism, high moral qualities and their firm belief that we must defend our national interests, history, traditions and values.

The international community should have learned from the past lessons. The historical parallels in this case are undeniable.

Unwillingness to join forces against Nazism in the 20th century cost us millions of lives in the bloodiest world war in human history.

Today we have again come face to face with a destructive and barbarous ideology, and we must not allow these modern-day dark forces to attain their goals.

We must stop our debates and forget our differences to build a common anti-terrorist front that will act in line with international law and under the UN aegis.

Every civilised country must contribute to the fight against terrorism, reaffirming their solidarity, not in word but in deed.

This means that the terrorists must not be given refuge anywhere. There must be no double standards. No contacts with terrorist organisations. No attempts to use them for self-seeking goals. No criminal business with terrorists.

We know who are stuffing pockets in Turkey and letting terrorists prosper from the sale of oil they stole in Syria. The terrorists are using these receipts to recruit mercenaries, buy weapons and plan inhuman terrorist attacks against Russian citizens and against people in France, Lebanon, Mali and other states. We remember that the militants who operated in the North Caucasus in the 1990s and 2000s found refuge and received moral and material assistance in Turkey. We still find them there.

Meanwhile, the Turkish people are kind, hardworking and talented. We have many good and reliable friends in Turkey. Allow me to emphasise that they should know that we do not equate them with the certain part of the current ruling establishment that is directly responsible for the deaths of our servicemen in Syria.

We will never forget their collusion with terrorists. We have always deemed betrayal the worst and most shameful thing to do, and that will never change. I would like them to remember this – those in Turkey who shot our pilots in the back, those hypocrites who tried to justify their actions and cover up for terrorists.

I don’t even understand why they did it. Any issues they might have had, any problems, any disagreements we knew nothing about could have been settled in a different way. Plus, we were ready to cooperate with Turkey on all the most sensitive issues it had; we were willing to go further, where its allies refused to go. Allah only knows, I suppose, why they did it. And probably, Allah has decided to punish the ruling clique in Turkey by taking their mind and reason.

But, if they expected a nervous or hysterical reaction from us, if they wanted to see us become a danger to ourselves as much as to the world, they won’t get it. They won’t get any response meant for show or even for immediate political gain. They won’t get it.

Our actions will always be guided primarily by responsibility – to ourselves, to our country, to our people. We are not going to rattle the sabre. But, if someone thinks they can commit a heinous war crime, kill our people and get away with it, suffering nothing but a ban on tomato imports, or a few restrictions in construction or other industries, they’re delusional. We’ll remind them of what they did, more than once. They’ll regret it. We know what to do.

We have mobilised our Armed Forces, security services and law enforcement agencies to repel the terrorist threat. Everyone must be aware of their responsibility, including the authorities, political parties, civil society organisations and the media.

Russia’s strength lies in the free development of all its peoples, its diversity, the harmony of cultures, languages and traditions, mutual respect for and dialogue between all faiths, including Christians, Muslims, Judaists and Buddhists.

We must firmly resist any manifestation of extremism and xenophobia while defending our ethnic and religious accord, which is the historical foundation of our society and the Russian statehood.

In 2016 we will hold elections to the State Duma. I would like to remind party leaders, all participants of the upcoming election campaign and all the social and political forces about the following words of our famous historian, Nikolai Karamzin: “Those who have no respect for themselves cannot hope to be respected by others. That does not mean that love for our homeland must blind us into saying that we are better than all others in everything we do. But Russians must know their value.”

Yes, we can debate ways to solve this or that issue. But we must remain united and remember what is most important for us: Russia.

The election campaign must be honest and transparent and respect the law and the electorate. At the same time, it must be conducted so as to win public trust in the election results and legitimacy.

Colleagues, I expect that a considerable part of the parliamentary candidates’ election programmes will be devoted to the issue of corruption, which is a major concern for society. Corruption is hindering Russia’s development.

Officials, judges, law enforcement officers and deputies at all levels are obliged to submit their income and expense declarations and declare their property and assets, including outside Russia.

From now on, state and municipal officials will also have to disclose information about the contracts they plan to sign with the companies of their relatives and friends. Situations with a possible conflict of interest will be closely monitored by the regulatory and law enforcement authorities, as well as civil society.

Just recently participants in the Russian Popular Front’s project For Fair Public Procurement told me about the instances of abuse and blatant violations they have uncovered. I ask the Prosecutor General’s Office and the law enforcement authorities to promptly react to this information.

The law must be hard on those who are guilty of premeditated crimes against human lives and the interests of society and the state. But the law must be lenient to those who have slipped up.

Today, nearly half of the criminal cases brought to court concern petty crimes or misdemeanours, but those who committed them, including very young people, go to prison for them.

A prison term and even a prison record usually have a highly negative impact on these people’s lives, often creating a situation in which they commit new crimes.

I ask the State Duma to approve the Supreme Court’s proposal that some offences in the Criminal Code are decriminalised and that misdemeanour is reclassified as an administrative offence, with an important reservation: a repeated offence must be classified as a criminal act.

We must also work to enhance the independence and objectivity of our courts. In light of this, I suggest strengthening the role of juries and expanding the list of crimes that can be submitted to them. It’s not always easy to find 12 jurors, and although I know the position of human rights organisations, which insist on 12-member juries, forming such juries is not easy and it is also expensive. Therefore, I suggest cutting the number of jury members from 12 to 5–7, on the condition that they take their decisions autonomously and independently.

Colleagues, last year we faced some serious economic challenges. Oil and other products we traditionally offer for export fell in price. The access of Russian financial institutions and companies to global financial markets was restricted.

I know that many people are experiencing hardships today. These economic issues are affecting incomes and the general quality of life. I understand very well that people are wondering when we are going to overcome these hardships and what needs to be done in order to accomplish this.

The current situation is complicated but, as I have said before, not critical. In fact, we can already see some positive trends. Industrial production and the national currency are generally steady. There is a slight decline in inflation. We can see a significantly lower capital flight as compared to 2014.

However, this doesn’t mean that we just calm down and wait for everything to miraculously change, or that we can just sit quietly in expectation of rising oil prices. Essentially, such an approach would be unacceptable.

We must be prepared for low commodity prices and external restrictions to last much longer. By changing nothing, we will simply run out of reserves and the economic growth rates will linger around zero.

This is not the only issue to consider. Busy with the immediate tasks, we must not overlook general global development trends. The global economy is rapidly changing shape. New trade associations are forming. We are experiencing a period of radical change in the sphere of technology.

This is a crucial moment when countries need to compete to secure their roles in the global division of labour for decades ahead. We can and must become one of the leaders.

Russia has no right to be vulnerable. We must have a strong economy, excel in technology and advance our professional skills. We must fully use our current advantages, as there are no guarantees that we will have them tomorrow.

Clearly, the authorities must hear the public out and explain the nature of the problems people face and the reasons behind the government’s actions, treating civil society and business as equal partners.

What areas should we focus on?

First, competitive manufacturing is still concentrated mostly in the commodities and mining sector. We’ll only be able to achieve our ambitious goals in security and social development, to create modern jobs and improve the living standards of millions of our people if we change the structure of our economy.

Importantly, we do have effective industrial and agricultural operations, as well as small and medium-sized businesses. Our goal is to have the number of these kinds of companies grow fast in all sectors. Our programmes for import substitution and export support, manufacturing retrofitting and professional training should be geared to achieving this goal.

Second, we need to bear in mind that a number of industries are now at risk, including primarily the construction, automotive, and light industries, as well as railway engineering. To address this, the Government will need to come up with special support programmes. Financial resources for this purpose have been set aside.

Third. It is imperative to support low-income households and socially vulnerable groups of citizens, and finally adopt fair principles of providing social assistance that is made available to those who really need it. In particular, it is necessary to take into account the individual needs of people with disabilities, and focus on their training and employment.

We have done a lot to improve demography, education, and healthcare. The key benchmarks in these areas were outlined in the corresponding executive orders of May 2012. Of course, life is ever changing, and, given current complications, our responsibility for people’s welfare only increases, so I’d like to ask you to take these executive orders seriously. We must strive to fulfil them.

Fourth, it is imperative to achieve a balanced budget. This, of course, is not an end in itself, but a critical prerequisite for macroeconomic stability and our financial independence. As you may recall, by the end of the 2016 federal budget year, the deficit should not exceed 3 percent, even if revenue is lower than expected. Please take a note of this, colleagues, members of the State Duma and the Federation Council, the Federal Assembly in general. This is important. I just mentioned that financial stability and the independence of our country are completely interrelated. Please keep these basic considerations in mind.

Budget planning, in fact, planning each budget cycle must begin with a clear identification of priorities. We must make government programmes play the decisive role in this process again. It is essential that we tighten our control over public funds, including federal and regional subsidies to industrial and agricultural enterprises. I believe that they should be transferred to the end user only through treasury accounts. Government revenue must be used strictly as planned. ”Grey“ schemes used in paying customs duties, excise taxes on alcohol, tobacco, and fuels and lubricants siphon off hundreds of billions of rubles from the budget annually. This is outright theft.

I propose forming a single system for administering tax, customs and other fiscal payments. There are a variety of options to go about this, and we have discussed them on many occasions. I expect the Government to submit specific proposals. Here again, I would like to emphasise that the tax environment for business should remain unchanged in the coming years.

Fifth. We need to further strengthen trust between the Government and business, to improve the business climate in Russia.

This year we have mostly completed the plans outlined in the national entrepreneurial initiative. The dynamics are good, but we certainly shouldn’t stop yet.

The Government, together with the Agency for Strategic Initiatives and leading business associations, should continue their systematic work to improve the conditions for doing business, constantly monitoring how laws are carried out locally.

I believe free enterprise to be the most important aspect of economic and social well-being. Entrepreneurial freedom is something we need to expand to respond to all attempts to impose restrictions on us.

That is why we have given such a broad authority to the newly created Federal Corporation for the Development of Small and Medium Business. I would like to ask all ministries, departments, governors, heads of all Russian regions, state-owned companies and banks to provide all the necessary assistance to it.

Polls show that businesses see no qualitative progress in the regulators’ work. Yet, all the necessary instructions for this have been issued, even more than once. We repeat ourselves and our attempts to reduce their powers. We reduce them in one area – they simply grow again in another. A whole army of inspectors continues to hinder the operation of good businesses. I am not saying that control is not necessary. Business does require regulation. But I ask the Government Commission for Administrative Reform to work out, together with business associations, proposals on eliminating redundant and overlapping functions of regulatory agencies, and submit them by July 1, 2016.

I would like to cite some figures supplied by one of our business associations. During 2014, the investigative authorities opened nearly 200,000 cases on so-called economic crimes. But only 46,000 of 200,000 cases were actually taken to court, and 15,000 cases were thrown out during the hearings. Simple math suggests that only 15 percent of all cases ended with a conviction. At the same time, the vast majority, over 80 percent, or specifically, 83 percent of entrepreneurs who faced criminal charges fully or partially lost their business – they got harassed, intimidated, robbed and then released. This certainly isn’t what we need in terms of a business climate. This is actually the opposite, the direct destruction of the business climate. I ask the investigative authorities and the prosecutor’s office to pay special attention to this.

I would like to emphasise that prosecutors should make greater use of the tools available to check the quality of investigations. I know that discussions have been going on for a long time about the prosecutor office’s needs. As you know, we have separated the investigative authorities and the prosecutor's office in order to ensure independent investigations are carried out; it was a conscious decision. Today, I remind you, the prosecutor’s office has the authority to cancel a decision to institute criminal proceedings, or waive the indictment, or even refuse to support the case in court. We must learn to use what is available; only then we will be able to analyse what is happening in practice.

In addition, I believe that suspects in economic cases should be detained only as a last resort measure; for the most part investigators should opt for release on bail, travel restrictions or house arrest. The role of law enforcement and the judicial system is to protect the economy and community from fraud and criminals, and to protect the rights, property and dignity of all those who obey the law and conduct their business honestly.

There is one more point I’d like to make. Last year we announced the so-called capital amnesty to return financial assets to Russia. Yet, businesses seem in no hurry to take advantage of that opportunity, which suggests that the procedure proposed is too complicated, while guarantees it provides are still insufficient. I follow the public discussions on the issue. The word is, that what we have already done and the decisions we made previously are slightly better than the solutions we’ve offered in years past, but it is definitely not enough today. I ask the Government to organise consultations, including further consultations with the business community, with the Supreme Court, with law enforcement agencies, and in short order make the appropriate adjustments. I also suggest extending the capital amnesty itself for another six months.

Colleagues, the state will fund the necessary assistance to those who are ready to go forward and lead. We are building such a system in our dialogue with the business community based on its requirements and the tasks facing our country.

The Industry Development Fund is already supporting import substitution programmes. These programmes are needed by entrepreneurs. I suggest increasing its authorised capital by another 20 billion roubles.

We are also guaranteeing stable tax rates and other basic terms for investors who are ready to finance import substitution projects. This is included in mechanisms such as the special investment contract. I suggest granting the regions the right to reduce profit tax to zero under such contracts. Some governors directly request this to allow investors to cover their capital outlays on developing new production lines.

Obviously, we are aware of the concerns of the regional governors. The regions should be motivated to consolidate their economic bases, so an increase in regional profits from implementing these projects should not lead to a reduction in federal subsidies.

We are ready to guarantee the demand for the products produced under these programmes and projects. I propose giving the Government the right to purchase on a non-competitive basis up to 30 percent of the products manufactured under special investment projects and special investment contracts. Whatever remains should go to the free markets, including those abroad to motivate these companies, to monitor the quality of their products and reduce overhead.

As you know, when these kinds of programmes were carried out by other countries, the terms for state support were even tougher: a certain percentage of goods produced were to be sold abroad by any means. What for? To motivate producers to manufacture quality products.

We’re saying that we’ll guarantee demand in our own market. Our terms are somewhat different than those in other countries with tougher terms. That said, we must assume that these products will be highly competitive on the international market. Let me emphasise again that we will support expressly competitive domestic production lines. No one should be working under the illusion that under the guise of import substitution it’s possible to build a cheap product and pawn it off to the state or to our people and make them pay a premium price for it. Russia needs companies that are capable not only of providing the country with quality products but also of taking on foreign markets. The Russian Export Centre was established to help those who are ready for this effort.

In addition, I suggest making the growth of non- primary exports one of the key indicators of the performance of industry-related agencies and the Government as a whole.

I think it would be appropriate to motivate the business community by creating a technological development agency to help companies acquire domestic and foreign patents and licenses for engineering services. Access to foreign markets and the expansion of Russian manufacturing should become a natural strategy for the development of the nation’s business sector and the entire Russian economy. We should put stereotypes aside and believe in our own capabilities. If we work with this attitude we’ll succeed.

Our agriculture industry is a positive example. Just a decade ago we imported almost half of our food products from abroad and critically depended on imports, whereas now we are in the exporters’ club. Last year Russia’s agricultural exports totaled almost $20 billion. This is a quarter more than our proceeds from arms sales or about one third of our profits from gas exports. Our agriculture has made this leap in a short but productive period. Many thanks to our rural residents.

I believe we should set a national goal — fully provide the internal market with domestically produced foods by 2020. We are capable of feeding ourselves from our own land, and importantly, we have the water resources. Russia can become one of the world’s largest suppliers of healthy, ecologically clean quality foods that some Western companies have stopped producing long ago, all the more so since global demand for such products continues to grow.

To fulfill these ambitious goals, we need to concentrate our resources on primary support for highly efficient companies. This approach should underlie the programme for the development of the agro-industrial complex. This includes large, medium and small companies – all of them must be efficient. I would like the Ministry of Agriculture to pay special attention to this.

It is necessary to put to use millions of hectares of arable lands that are now idle. They belong to large land owners, many of whom show little interest in farming. Listen, how many years have we been talking about this? Yet things are not moving ahead. I suggest withdrawing misused agricultural land from questionable owners and selling it at an auction to those who can and want to cultivate the land.

I would like to ask the Government to prepare specific proposals, including draft regulations and standards by June 1, 2016. I would also like to ask the State Duma deputies and all members of the Federal Assembly to make amendments to the related laws over the next year and adopt laws to make this possible at the next autumn session.

We also need our own technology for the production, storage and processing of agricultural produce, our own seed and pedigree stock. This is a very important goal. We are still vulnerable in these areas. I ask you to get leading research centres, the Russian Academy of Sciences and businesses which are successfully putting advanced technology into practice involved in this process.

In my previous Address, I announced the launch of the National Technology Initiative, spanning 15–20 years, but practical work is already underway. It shows that we have plenty of strong teams capable of offering and following through on innovative ideas. In areas such as neutron technology, robotics in aviation and the transport sector in general, energy storage and distribution systems, Russia has every chance of breaking through to global markets in the near future, within the next few years.

Development institutions should be geared towards the achievement of priority goals, primarily those related to technological modernisation. We have over two dozen of them. Unfortunately, many of them, to put it bluntly, have turned into dumping grounds for bad debts. It is essential to streamline them and optimise the structure and mechanisms of this work. I know that both the Government and the Central Bank are actively working on this.

We should make a more active use of the investment potential of domestic savings for economic modernisation. I ask the Central Bank and the Government to submit proposals on the development of the corporate bond market, something we have discussed many times. It is essential to simplify the procedure for the issue and acquisition of corporate bonds. To make it worthwhile for investors, individuals to invest in the development of the domestic real sector, I propose exempting the coupon income on these bonds from taxation, including the individual income tax.

Dozens of major projects are being implemented or are about to be launched in industry, agriculture, transport and housing construction. They should have a positive impact not only on separate sectors but also stimulate the comprehensive development of entire territories. These are primarily private projects.

To expedite their effective implementation it is important to make pinpoint amendments to laws, lift administrative barriers and assist the development of infrastructure and the process of entering foreign markets. These issues often extend beyond the scope of just one government agency, so I propose putting in place a mechanism to support the most important projects. A special agency can be established for this. I ask Prime Minister Dmitry Medvedev to submit proposals on the work of this agency.

Incidentally, one such project could be the creation of major private Russian companies for online trade so that Russian goods are delivered via the Internet to all countries in the world. We do have something to deliver.

Colleagues, we are interested in broad business cooperation with our foreign partners, and we welcome investors who focus on long-term work on the Russian market, even though the current circumstances they face aren’t always favourable. We highly appreciate their positive attitude to our country, and the fact that they see advantages for growing their respective businesses in our country. Russia is involved in integration processes designed to open additional avenues for expanding economic ties with other countries.

We have reached the next level of cooperation within the Eurasian Economic Union by creating a common space, with free movement of capital, goods and labour. We have reached a basic agreement on combining Eurasian integration with the Chinese Silk Road Economic Belt. A free trade zone with Vietnam was established. Next year, we will host the Russia-ASEAN summit in Sochi, and I am sure we will be able to work out a mutually beneficial agenda for cooperation.

I propose holding consultations, in conjunction with our colleagues from the Eurasian Economic Union, with the SCO and ASEAN members, as well as with the states that are about to join the SCO, with the view of potentially forming an economic partnership. Together, our states make up nearly a third of the global economy in terms of purchasing power parity. Such a partnership could initially focus on protecting investments, streamlining procedures for the cross-border movement of goods, joint development of technical standards for next-generation technology products, and the mutual provision of access to markets for both services and capital. Of course, this partnership should be based on principles of equality and mutual interest.

For Russia, this partnership will open new possibilities for increasing exports of food and energy, as well as offering services in engineering, education, healthcare, and tourism to the Asia-Pacific Region, allowing us to play the leading role in forming new technology markets, and re-orienting major global trade flows to Russia.

We will continue to upgrade our transport infrastructure and expand major logistic centres, such as the Azov-Black Sea and the Murmansk transport hubs, modern ports in the Baltic Sea and the Russian Far East. We will consolidate the system of inter-regional air transport, including in northern and Arctic regions. We will review in detail the situation with inland waterways and river routes during a forthcoming State Council meeting.

The Northern Sea Route should become a link between Europe and the Asia-Pacific Region. To enhance its competitiveness, we will extend the preferential regime of the free port of Vladivostok to key Far Eastern harbours, as requested by the entrepreneurs who operate in this strategically important Russian region.

The socioeconomic development of this region is a major national priority. Investors have shown great practical interest in the new methods of operation we have proposed, including priority development areas.

I instruct the Government to expedite decisions on levelling off energy rates for the Far Eastern regions where they are considerably above average national rates, and I urge the Parliament to promptly hear the draft law on the free allocation of land plots to people in the Far East.

Over the past few years, major investments have been made in the development of Khabarovsk and Vladivostok, and people there have noticed the improvements. Komsomolsk-on-Amur must become one more rapidly developing centre in the Far East. It is a city with a rich history and modern high-tech industries, which turn out civilian products that enjoy high demand and also work fruitfully for the defence sector. But this city’s urban and social infrastructure has been neglected.

I’m referring to the city’s face and its sports, culture, healthcare and education facilities, none of which are consistent with the potential of Komsomolsk-on-Amur. This is why it is difficult to attract talented young professionals there, which the regional companies badly need. I believe that we can use resources under the ongoing programmes to address the problems of Komsomolsk-on-Amur without delay. Of course, we can’t do this overnight, but we at least must understand what we need to accomplish and how fast work must proceed.

Colleagues, we have a long-term agenda that must be independent of election cycles and the prevailing situation. These strategic goals include preserving the nation, bringing up our children and helping them develop their talents, which constitutes the basis of the power and future of any country, including Russia.

I’d like to begin with demography. We’ve registered a natural increase in population for the past three years. It has been modest, but present nevertheless. What I would like to highlight is that, according to forecasts, we should have seen a demographic collapse due to the demographic echo of the 1990s [when Russia experienced its severest drop in birth rates], which demographers have predicted, including at the UN. But this hasn’t come to pass, primarily because half of the new-borns today are second or third children. Russian families want to have children, they believe in their future and in their country, and they are confident that the state will help them.

The maternity capital programme ends next year. Over 6.5 million families have enjoyed its benefits, including in Crimea and Sevastopol. But we know that our efforts in this sphere have not been sufficient to close the demographic wound of the past.

Of course, we know that this will be hard on the budget, that the programme needs major funding. We said in the past that we need to analyse the figures to see if we can shoulder this burden, as the financiers say, if we can guarantee the payment of these allocations. Yes, we can do this, despite the current challenges. I believe that we must extend the maternity capital programme for at least two years.

A major demographic policy measure is the development of preschool education. Over the past three years, additional accommodation was provided at kindergartens for 800,000 children. Practically in all parts of Russia, such institutions are available for children between the ages of three and seven. I know that the prime minister has paid special, personal attention to this. Thank you, Mr Medvedev.

However, so far, individual families – many families – continue to encounter problems placing children in kindergartens. As long as these problems exist we cannot say that the issue has been closed. I ask both the government and regional authorities to pay special attention to this.

Now, healthcare. The main achievement of our entire policy in this sphere is that we are seeing an increase in average life expectancy. Over the past decade, it has increased by more than five years and this year, according to preliminary estimates, should exceed 71 years. Nevertheless, there are still quite a few problems that have to be dealt with.

Next year, the Russian healthcare system will transition completely to an insurance-based system. It is the direct responsibility of insurance companies operating in the compulsory medical insurance system to uphold patients’ rights, including in situations where they are refused free medical care without a reason. If an insurance company does not do this, it should be held accountable, including being banned from working in the compulsory medical insurance system. I request the government to ensure stringent oversight in this regard.

Next. We have significantly expanded the scope of high-tech medical care. It may be recalled that in 2005, 60,000 high-tech operations were performed in Russia compared to 715,000 in 2014. For the first time in the country’s history, a significant part of such operations are carried out without there being a waiting list, and this is indeed a major achievement.

However, it is important to understand that certain operations are expensive. As a general rule, they are performed at leading federal medical centres and clinics. To finance such operations, I propose establishing within the compulsory medical insurance system… We have often thought about this – or we should provide additional funding to the system. The deputies, government ministers and governors know what happens in reality. The compulsory medical insurance system is a territorial system and it supports primarily territorial healthcare institutions. Naturally, underfinancing is a matter of concern for the heads of major federal clinics where the majority of high-tech operations are in fact performed. So, to finance these centres and perform such operations, I propose instituting a special federal component within the compulsory medical insurance system. I request that the relevant amendments to the law be adopted during the spring session.

Even so, this is not enough because while we make these decisions people must not suffer. It is necessary to ensure continuous financing of high-tech medical care, including with direct support from the federal budget until this decision is made.

As you also know, the EMS service has been significantly modernised as part of the Healthcare national project. We have procured a large number of modern EMS vehicles and other equipment. Naturally, as times goes on the auto fleet needs maintenance and renovation. Ten years have passed. This is the responsibility of Federation members and they are duty bound to fulfill this task, find the necessary reserves.

When we did this 10 years ago, I remember well, we agreed that we will make an initial injection of federal funding, and then the regions will take over the responsibility and keep financing at a certain level. But this never happened, which is unfortunate. I understand that there may be issues, but like I said many times before, it is imperative to set our priorities right. It was the wrong thing to do to wait for everything to fall apart, and then expect to be bailed out again with the money from the federal budget. The way things are now, it looks like we will have to do it again, though. But that's not what we agreed upon. In any case, I ask the Government and the regional authorities to get back to this issue and resolve it jointly.

People are complaining that they often cannot understand why certain hospitals, schools, cultural or social centres and institutions are being closed or merged. We keep talking about the need to restructure the network, which is, in some cases, oversized. Yes, that’s the way it is. But we must proceed very carefully, and be fully aware of the fact that in order for us to be able to reach certain indicators, closing rural medical centres is not always the best option. Unfortunately, such things happen. People then have to travel 100 kilometres to get medical attention. This is outrageous! Please make sure that things are done right. I ask the Government to draft and adopt a methodology for the most efficient distribution of social institutions by March 1, 2016. It should be mandatory for use in the regions. We must find a legally valid formula that will allow us to do so.

In matters such as providing assistance to the elderly or people with disabilities, or supporting families and children, it is imperative to show more trust in civil society and nonprofit organisations. Often, they work more effectively and efficiently, showing genuine concern for the people. Also, there’s less red tape in their work.

I would like to propose a number of concrete solutions based on the results of the Community civil forum, which took place in November.

First, we will launch a special programme of presidential grants to support NGOs working in small towns and villages.

Second, the NGOs that have established themselves as reliable partners of the state will receive the legal status of a ”non-profit organisation – provider of socially useful services,“ and a number of incentives and preferences. Finally, I believe that making up to 10 percent of the regional and municipal social programmes’ funding available to nonprofit organisations is the right thing to do. That way, NGOs will be able to participate in providing social services that are financed from the budget. We believe we know well the current legislation, and we are not imposing anything on anyone, but I’d like to ask heads of the regions and municipalities to bear this in mind in their work.

Colleagues, as you may recall, there was a meeting with children in Sochi at the Sirius Centre for Gifted Children on September 1. Our children and young adults are really interesting and goal-oriented people. We must do our best to make sure that today's students get an excellent education, have opportunities to be creative, choose a profession to their liking, and are able to self-actualise regardless of their geographical location or level of their parents’ income. All children must have equal opportunities for a successful start in life.

Every year, schools have more and more students. There will be 3.5 million more of them over the next 10 years. It's great, it's very good, but it is also important to make sure that this increase does not affect the quality of education and learning conditions, and that the current level continues to improve. Schools need more space for students. I asked the Government to put together, in conjunction with the regions, a specific plan of action in this regard. A decision was made to release up to 50 billion roubles from the federal budget next year to repair, renovate and build new schools.

I suggest we take a broader look at these issues. Comfortable buildings are not enough to get a good education. We need professional and motivated teachers, groundbreaking educational programmes and, of course, opportunities for the children to engage in creative activities, sports and extracurricular activities. Of course, we should use the best of what former Palaces of Pioneers and young technicians' clubs had to offer. We must build our work on an innovative and up-to-date foundation with the participation of businesses, higher education institutions and universities.

I will now note a positive fact, such as the growing interest of young people in engineering jobs and blue-collar occupations, the vocations of the future. Competition for enrolment in engineering universities has almost doubled in the past two years. The WorldSkills International (WSI) will take place in Kazan in 2019. By the way, Russia was the first to hold such contests for teenagers 10–17 years of age. It is important to make sure that such tournaments become a road map for school children, for those who are just choosing their trades. We must establish a whole system of national competitions for blue-collar workers. I suggest we call this system “The Young Professionals.” This is a very important task.

In a nutshell, Russian schools, additional and professional education, and support for children’s creative work should be aligned with the country’s future, the requirements of people, young people in this case, and the demands of the economy in the context of its prospects. These guys will have to resolve even more complicated tasks and should be ready to be the best. They should become not only successful in their careers but also simply decent people with a firm moral and ethical background.

Dear colleagues. We have repeatedly faced a historical choice of which road to take to further development. We crossed another milestone in 2014 when Crimea and Sevastopol were reunified with Russia. Russia declared a voce piena its status as a strong state with a millennium-long history and great traditions, as a nation consolidated by common values and common goals.

We are acting with the same confidence now, at a time when Russia is waging an expressly open, direct struggle against international terrorism. We are making and implementing decisions, knowing that only we can cope with the tasks facing us, but only if we act together.

I will cite a quotation that seemed stunning even to me. These words were said by a man who was far removed from politics, Dmitry Mendeleyev, who expressed these thoughts more than a hundred years ago: “We will be immediately destroyed if we are divided. Our strength lies in our unity, our warriors, our benign domesticity that multiplies the numbers of our people; our strength lies in the natural growth of our intrinsic wealth and love of peace.” These are wonderful words that are pertinent to us today.

At the same time Russia is a part of a global world that is changing rapidly. We understand well the complexity and scale of existing problems –both foreign and domestic. There are always difficulties and obstacles on the path to progress and development. We will respond to all challenges; we will be creative and productive; we will work for the common good and for the sake of Russia. We will move forward in unity and working together we will achieve success.

Thank you.




The source of information - December 3, 2015 - Presidential Address to the Federal Assembly
 
Old December 18th, 2015 #14
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December 17, 2015 - Vladimir Putin’s annual news conference - Part I





President of Russia Vladimir Putin:

Friends and colleagues,

We regularly meet at the end of the year. Only recently I made my Address [to the Federal Assembly]. Honestly speaking, I do not know what else to add to what I said then. I believe I covered all the key points.

Nevertheless, there must be issues, which you want us to clarify. When I say ‘us’, I am referring to my colleagues in the Presidential Executive Office and the Government Cabinet and myself.

Therefore, I suggest that we skip any lengthy monologues and get right down to your questions so as not to waste time.

Mr Peskov, please.



Presidential Press Secretary Dmitry Peskov:

Last year we started a good tradition by beginning the press conference with a question from one of the most experienced members of the Kremlin’s press pool, Vyacheslav Terekhov. However, we have another press pool old-timer, Alexander Gamov from the Komsomolskaya Pravda. I would like to give him the opportunity to ask the first question.



Alexander Gamov:

Thank you very much Mr President, for your 11th press conference of this kind.

Here is my question. Before coming here, I reread the transcript of your last year’s press conference, and there we also discussed the difficult situation developing in the Russian economy. When Vyacheslav Terekhov and our other colleagues asked you then how long it would take to get over this complicated situation, you said in the worst case scenario this would take a year or two. These were your words. I am sure you remember them. This means this would be roughly late 2016 – early 2017.

Could you please tell us if your feelings regarding our economic recovery have changed? The country is going through very hard times, and you know this better than we do. What is your forecast for the future?

Sorry, I forgot to introduce myself: Alexander Gamov, Komsomolskaya Pravda – radio station, website and newspaper. Thank you.



Vladimir Putin:

To begin with, I will tell you a very old joke.

Two friends meet and one asks the other: ”How are you?“ The other says: ”My life is all stripes – black stripes followed by white ones.“ – ”So which one is it now?“ – ”Now I’m in the black one.“ Another six months pass, they meet again: ”How’s life? I know it’s all stripes, but which one is it now?“ – ”It’s black now.“ – ”But it was black last time!“ – ”Looks like it was white last time.“

We are having something very similar.

When a year ago we spoke of our plans and how we would move ahead to recover from the crisis, about our prospects, we, knowing that unfortunately our economy is very dependent on foreign economic factors, mainly the prices for our traditional exports like oil and gas, petroleum products and chemicals, which are all calculated based on oil and gas prices, proceeded from the idea that the average price of Brent, our crude oil, would be around $100 a barrel.

This was in early 2014. We used this figure in all our further calculations of macroeconomic parameters, revenue and spending, and social support and support for the economy, and late last year the Economic Development Ministry built its development plans proceeding from these figures. However, by the end of this year we had to rerun all our calculations, and even last year we had to do this as oil prices fell almost by half, not by some percentage, but by half from $100 a barrel to $50.

We calculated the budget for next year based on this very figure, a very optimistic one of $50 a barrel. However, now it is what — $38? Therefore, I believe we will have to make further adjustments.

At the same time, I would like to use your question to demonstrate where we stand.

Naturally, after the drop in energy resource prices all our other figures started ‘sliding’. What are they? The GDP has gone down by 3.7 percent. As of December 7, the inflation has reached 12.3 percent since the beginning of the year.

I find it important to say this, because there are sure to be other questions dealing with our development prospects and our current state of affairs. To understand these things we need to know these figures and proceed from them.

The real disposable household income has gone down; fixed investment has dropped by 5.7 percent over the first 10 months of the year. At the same time, as we have already said, statistics show that the Russian economy has generally overcome the crisis, or at least the peak of the crisis, not the crisis itself.

Starting with the 2nd quarter of this year, we have been observing signs of economic stabilisation. What leads us to such a conclusion? In September-October the GDP grew (it is growing already) by about 0.3–0.1 percent compared to the previous month. The volumes of industrial production stopped falling as of May. In September-October, we also had a small growth in industrial production – 0.2–0.1 percent. Incidentally, industrial production in the Far East grew by 3.1 percent.

Agriculture is demonstrating positive dynamics with an at least 3 percent growth. This means we are doing all the right and timely things to support agriculture. For the second year running our grain crops exceeded 100 million tonnes – 103.4. This is very good. I would like to use this opportunity to once again thank our agricultural workers for their effort.

The labour market is stable, with the unemployment rate hovering around 5.6 percent. We can see that if we look back at 2008, this is an overall positive result of the Government’s efforts.

Our trade balance also remains positive. The overall trade volumes have gone down, but the export surplus remains at a rather high level of about $126.3 billion. Our international reserves stand at $364.4 billion – this is a slight reduction, but a good figure nevertheless.

The Russian Federation’s external debt has gone down by 13 percent compared to 2014. Capital outflow has also significantly dropped. Moreover, in the 3rd quarter we observed a net inflow.

The reduction in our debt burden is a very important positive indicator. This is the other side dealing with the so-called sanctions. It would have been good, of course, to have access to foreign refinancing markets, so that all the money would stay in the country and help us develop, but on the other hand over-crediting is also a bad sign.

So, what did we do? Despite all limitations, we complied with all our commitments to our partners, including international credit institutions. We pay everything due on time and in full. As a result, the overall joint debt, which is not the state debt, but the total debt of our financial institutions and companies operating in the real sector of the economy – the overall joint debt has gone down, which is generally a very positive thing.

As I have already said, we are observing a net capital inflow, which is also a very positive factor, and I am sure experts are saying this as well. This means that investors, seeing the realities of our economy, are beginning to show some interest in working here. Despite the complicated situation, the fuel and energy complex continues developing. The production of oil, coal and electricity has grown. More than 4.6 gigawatt of new generating capacity will be commissioned by the end of the year.

We have already commissioned about 20 facilities; this is somewhat less than last year and the year before that. In the previous two years, we had an absolute record, but 4.6 gigawatt is also very good. We will retain this rate in the following years. This is also very important as it shows the growing capacity of the economy as a whole, its energy security.

The infrastructure is also developing actively. Russia’s entire seaport infrastructure has grown by 19.5 million tonnes worth of capacity. I would like to use this opportunity to draw your attention to the fact that over the January-September period the volume of cargo loaded at Russian ports went up by 3 percent. What does this mean, colleagues? Why have our budget revenues from our export goods gone down? Because of the prices. Meanwhile, as we are observing growing trade turnover at the ports, it means the physical volume has not gone down but has actually increased. This is a very positive factor.

We continue developing our airport system. In the first nine months, our airports served over 126 million passengers, which is 2.5 percent more than last year. Internal air traffic has also grown noticeably – by more than 16 percent.

Despite the complicated financial and economic situation, we continue our responsible state financial policy. In the 11 months of this year federal budget revenue reached 12.2 trillion, spending – 13.1 trillion. The budget deficit, as we can see, stands at 957 billion. The expected budget deficit by the end of the year is about 2.8 – 2.9 percent of the GDP. This is a satisfactory figure for the current economic situation, even more than satisfactory.

To achieve a balanced federal budget this year we used our reserve fund. At the same time, it is very important that the sovereign funds generally remain at a healthy level of 11.8 percent of the GDP. The reserve fund amounted to 3.931 trillion rubles, which is 5.3 percent of the GDP, while the national welfare fund was 4.777 trillion rubles, which is 6.5 percent of the GDP.

We have complied with all our social commitments this year and are witnessing a natural population growth. This is a very good figure that speaks of the people’s state of mind, shows that they have the opportunity to plan their families, which makes me very happy. Thus, 6.5 million Russian families have received maternity capital over the entire period since the programme was introduced. We have now extended this programme. I would like to remind you that in 2016 maternity capital payment will remain the same as in 2015 at 453,000 rubles.

In the majority of regions, the situation with accessibility of preschool facilities has been resolved by over 97 percent.

According to the Federal State Statistics Service, life expectancy at the end of this year is forecast to exceed 71 years.

We have complied with our commitments in terms of adjusting pensions to the actual inflation in 2014, with the PAYG component increased by 11.4 percent. As of April 1 of this year, social security pensions have gone up by 10.3 percent.

You began your question by asking about last year and our expectations for next year and the year after that. Proceeding from the current value of our exports, the Government is expecting our economy to achieve at least a 0.7 percent growth in 2016, 1.9 percent in 2017 and 2.4 percent in 2018.

I would like to draw your attention to the fact that all our calculations were based on the oil price of $50 a barrel. Now the price is lower. Volatility is high. We will not rush to adjust the budget, as this would lead to a reduction in the funding of both the social and real sectors; however, the Government is of course working on different development scenarios. The Government should have this instrument available, to be ready for any developments.

Of course, potential GDP growth is not limited to our export-related opportunities. We must also promote import replacement, as I said in my Address to the Federal Assembly, which is not a cure-all, but we believe that it will help us retool a large park of the production sector and the agriculture industry. This programme will enable us to introduce novel technology and, hence, to increase labour productivity. We must certainly continue working to improve economic management, to de-bureaucratise our economy, and to create more attractive conditions for doing business and for helping entrepreneurs achieve the goals that are facing them and the national economy as a whole. We will be working hard, with a focus on these targets.

Thank you for your question: it allowed me to use the materials at hand.



Yelena Glushakova:

Thank you. Yelena Glushakova, RIA Novosti.

Good afternoon! Mr President, you said we are past the peak of the crisis, however the economic situation continues to be very disturbing, something economists say. In particular, your team mate Alexei Kudrin calls for reforms, but he is known to be an optimist.

This week, for example, your Ombudsman, Commissioner for Entrepreneurs’ Rights, Boris Titov, expressed very disturbing thoughts. He said, in particular, that the Central Bank interest rate is extremely high. So our entrepreneurs, who for obvious reasons are unable to borrow in the West, cannot borrow in Russia either because the costs are too high. He said that if this situation continues, we will turn into Venezuela, where there is one national currency exchange rate on the black market and a very different official rate.

Do you share these concerns? Do you support the monetary policy of the Bank of Russia? Do you consider it necessary to lower interest rates?

Thank you.



Vladimir Putin:

Please give a long applause for this question.

Naturally, these are everyone’s concerns. And of course, everyone wants the Central Bank refinancing rate lowered, because everyone knows it guides commercial banks in lending to businesses. This, by the way, is not the only thing that affects the rates in the commercial sector, but a major one of course.

Boris Titov does the right thing in fighting for the interests of the business community, and it is important that we have such a man and such institutions. Why do you think I insisted on appointing a business ombudsman in the first place? Because I want to hear different points of view, and I do not want to miss important and essential elements of our economic life over all the current issues.

To begin with, I will simply answer your question. I support the policy that the Central Bank and the Government pursue to ensure macroeconomic stability. That is first.

Second, however much we want to lower the rate, it cannot be done by administrative methods. We have to work from the realities of our economy and its structure. Of course, I often hear this talk about interest rates being far lower outside Russia. Of course, there are lower rates. So they do it on purpose. But they have other problems, and a different economic structure. We are threatened by inflation, and they probably have deflation looming when manufacturers cannot sell what they make. That is their problem.

We have a different problem. To lower the rate, we need to help the Central Bank and the Government suppress inflation and reduce devaluation risks and expectations, rather than snap at the regulator as was common in Soviet times in the planned economy. Once we can do both, once we start down this road, then the market will calm down naturally and Central Bank refinancing rate will decrease.

When there’s a possibility to support the real economy, the Central Bank is doing it anyway. That said, it should not be pushed to do even more, since this could affect its ability to keep the inflation at bay, which is one of the key issues, not the only, but still a very important one. It could prompt the question: Does the Central Bank have any objectives other than making sure that the country’s financial and banking systems are up and running? And we can argue that this is the way things are at the present time. What else is the Central Bank doing? For example, together with the Government it is working on the so-called project financing programmes: the Government oversees a wide range of projects under various programmes worth tens of billions of dollars, about 250 billion already, and up to 500 billion moving forward. Under these programmes, the Central Bank provides funding to Russian private banks so that they can finance these specific programmes. The Central Bank is also involved in new investment projects. It uses a wide range of instruments. For now, this is enough.



Veronika Romanenkova:

TASS news agency, Veronika Romanenkova.

Mr Putin, could you tell us in all honesty whether you are satisfied with the Government’s work? To what extent are the initiatives that are being taken against the backdrop of crisis developments you’ve just described adequate? Can any changes in the Government line-up be expected?



Vladimir Putin:

Well, as you may know or could have noticed throughout the years I’ve been in office, I a) value people highly and b) believe that staff reshuffles, usually, but not always, are to be avoided and can be detrimental. If someone is unable to work something out, I think that I bear part of the blame and responsibility. For this reason, there will be no changes, at least no major reshuffles.

We are working together with the Government on ways to improve its structure. This is true. This is about finding solutions for enhancing the Government’s efficiency with respect to the most sensible economic and social issues. There are plans to this effect, but there’s nothing dramatic about them and they don’t boil down to specific individuals. Our efforts are aimed at improving the operations of this crucial governing body.

As for the question whether I’m satisfied or not, overall I think that the Government’s work has been satisfactory. Of course, it can and should be even better. An anti-crisis plan was drafted and enacted in early 2014. I don’t remember its exact title, but essentially this was an anti-crisis plan. If you look at what has been done, you can see that unfortunately 35 percent or more than one third of the initiatives listed in this plan have yet to be implemented. This goes to show that efforts on the administrative, organisational front undertaken by various ministries and agencies did not suffice to respond to the challenges we are facing in a prompt and timely manner. However, let me reiterate that overall in terms of its strategy the Government is moving in the right direction and is efficient.

Let’s give the floor to Tatars. There is such a big poster. How can we possibly do without Tatars? Nothing is possible without Tatars here.



Yelena Kolebakina:

Thank you very much, Mr President. I am Yelena Kolebakina with Tatarstan’s business newspaper Business Online. The people of Tatarstan will not forgive me if I do not ask you these questions.

In your address, you said – you stressed, actually – that the kind, hard-working people of Turkey and the ruling elite should not be put on the same plane and that we have a lot of reliable friends in Turkey. As you know, over the years Tatarstan has forged extensive economic and cultural ties with Turkey. What are we supposed to do now? Rupture these ties, cut our bonds with the entire Turkic world? After all, this is precisely the message of Vladimir Medinsky’s recent telegram with his recommendation that all contacts with the international organisation of Turkic Culture (TURKSOY) be broken. What is to be done with the Turkish investors who have invested a quarter of all foreign direct investment in Tatarstan? This is my first question.

And allow me to ask the second question or the people of Tatarstan will be unhappy. In keeping with the federal law, from January 1, 2016, President Rustam Minnikhanov of Tatarstan will no longer be referred to as president. However, this can hurt the ethnic feelings of all Tatars in the world while you – let me remind you – have always said that in accordance with the Constitution, it is up to the republic itself to decide what to call the head of the region. So, will the federal centre insist on renaming the position of the head of Tatarstan after all?

Thank you.



Vladimir Putin:

Yes, I saw the “Turkey” poster. Please go ahead with your question and you too. We will sort this out.



Yelena Teslova:

Yelena Teslova with the Anadolu news agency. I have a similar question. I would also like to start off with the fact that in your Address to the Federal Assembly, you said that we should not put the Turkish people and the part of the Turkish elite that is directly responsible for the death of our military personnel in Syria on the same plane. On a day-to-day level, however, the impression is somewhat different. Complaints are coming to the Turkish embassy in Moscow from students saying they have been expelled and from business people who say they are about to be deported. What is to be done about this?

The second question concerns Syria. The position on the fate of the Syrian president is well-known. Russia says it should be decided by the Syrian people while the United States and its allies insist that he has no political future. Did you address the issue with John Kerry during his visit to Moscow? Will this issue be raised in New York? Thank you.



Vladimir Putin:

And your question please.



Fuad Safarov:

Mr President, Fuad Safarov with the Turkish news agency Cihan.

The rapid deterioration of relations between Russia and Turkey benefits neither side. What is more, this has only harmed both sides. Do you believe there is a third party in this scenario?

The second question, if you allow me. An Islamic anti-ISIS coalition was established recently, but we know that there is also the NATO-led coalition and the Russian-Syrian coalition. It turns out that there are three coalitions against ISIS. Is it really so difficult to deal with this evil? Maybe there are some other goals and some other plans here? Maybe it is not ISIS that is the problem? Thank you.



Vladimir Putin:

Okay, I will talk about Syria in the end. Now, regarding the conflict that has flared up. We believe that the actions of the Turkish authorities (in relation to our warplane, which they shot down) are not an unfriendly, but a hostile act. They shot down a warplane and our people were killed.

What outraged us so much? If it was an accident, as we heard later, apparently, the Turkish authorities did not even know it was a Russian plane… What is usually done in such cases? After all, people were killed. They immediately make a phone call and straighten things out. Instead, they immediately ran to Brussels, shouting: “Help, we have been hurt.” Who is hurting you? Did we touch anybody there? No. They started covering themselves with NATO. Does NATO need this? As it turned out, apparently it does not.

What is the most important thing for us? I want you to understand this. I want our people to hear this and I want Turkey to hear this as well. Apart from the tragedy, the fact that our people were killed, what has upset us so much, do you know? After all, we have not abandoned cooperation. When I was last in Antalya I had contact with Turkey’s entire leadership. Our Turkish colleagues raised very sensitive issues and asked for support. Even though our relations have soured now (I will not say what the issue was – this is not my style), but believe me, they raised issues with us that are very sensitive and that do not fit into the context of international law when we consider the decisions proposed by the Turkish side.

You will be surprised, but we said, “Yes, we understand, and we are willing to help.” You see, I had not heard about the Turkomans (Syrian Turks) before. I knew that Turkmen – our Turkmen – lived in Turkmenistan, and so I was confused… Nobody told us about them. But after we indicated our willingness to cooperate on the issues that are sensitive to Turkey, why did not they phone us via the cooperation channels between our militaries to say that during our discussions we overlooked a certain part of the border where Turkey has vested interests. They could have expressed their concerns or asked us not to hit certain areas. But nobody said anything.

As I said, we were willing to cooperate with Turkey on very sensitive issues. So why did they do it? Tell me, why? What have they accomplished? Did they think we would just pack up and go? They could not have thought that of course, Russia is not that kind of country. We have increased our presence and increased the number of warplanes [in Syria]. We did not have air defence systems there, but after that we dispatched S-400 systems to the area. We are also adjusting the Syrian air defence system and have serviced the highly effective Buk systems that we had sent them before. Turkish planes used to fly there all the time, violating Syrian air space. Let them try it now. Why did they do it?

You asked if there is a third party involved. I see what you mean. We do not know, but if someone in Turkish leadership has decided to brown nose the Americans, I am not sure if they did the right thing. First, I do not know if the US needed this. I can imagine that certain agreements were reached at some level that they would down a Russian plane, while the US closes its eyes to Turkish troops entering Iraq, and occupying it. I do not know if there was such an exchange. We do not know. But whatever happened, they have put everyone in a bind. In my opinion – I have looked at the situation and everything that has happened and is happening there – it appears that ISIS is losing priority. I will share my impressions with you.

Some time ago, they invaded Iraq and destroyed that country (for good or bad is beside the point). The void set in. Then, elements tied to the oil trading emerged. This situation has been building up over the years. It is a business, a huge trafficking operation run on an industrial scale. Of course, they needed a military force to protect smuggling operations and illegal exports. It is great to be able to cite the Islamic factor and slogans to that effect in order to attract cannon fodder. Instead, the recruits are being manipulated in a game based on economic interests. They started urging people to join this movement. I think that is how ISIS came about. Next, they needed to protect delivery routes. We began attacking their convoys. Now, we can see that they are splitting up with five, six, ten, fifteen trucks hitting the roads after dark. However, another flow, the bulk of the truck fleet, is headed for Iraq, and across Iraq through Iraqi Kurdistan. In one place there – I will ask the Defence Ministry to show this picture – we spotted 11,000 oil trucks. Just think of it – 11,000 oil trucks in one place. Unbelievable.

Whether there is a third party involved is anyone’s guess, but a scenario whereby these moves were never agreed with anyone is quite likely. However, today, the Turkish authorities are taking quite a lot of heat – not directly, though – for islamising their country. I am not saying if it is bad or good, but I admit that the current Turkish leaders have decided to let the Americans and Europeans know – yes, we are islamising our country, but we are modern and civilised Islamists. Remember, what President Reagan said about Somoza in his time: “Somoza may be a son of a bitch, but he is our son of a bitch.” Just keep it in mind, we are Islamists, but we are on your side, we are your Islamists.

There may be such an overtone, but nothing good came out of what happened. The goals, even if Turkey had any, not only were not achieved, but, on the contrary, only exacerbated the situation.

Now, regarding Turkic peoples residing in Russia. Of course we should maintain contacts with those who are close to us ethnically. I am saying “us,” because Turkic-speaking peoples of Russia are part of Russia, and in this sense the Turkish people, whom I mentioned in my Address as a friendly people, and other Turkic-speaking peoples remain our partners and friends. Of course, we will and must maintain contacts with them.

We have learned from experience that it is hard or almost impossible to reach common ground with the current Turkish leadership. Even when we tell them “yes, we agree,” they are trying to outflank or stab us in the back for absolutely no good reason.

Consequently, I do not see any prospects for improving relations with the Turkish leaders in terms of state-to-state relations, while remaining completely open to humanitarian cooperation. However, even this area is not without issues. I think that Turkish leaders have actually gone beyond their own expectations. Russia is forced to impose restrictive economic and other measures, for example, in tourism.

You know, the creeping islamisation that would have made Ataturk turn over in his own grave, affects Russia. We know that there are fighters from the North Caucasus on Turkish soil. We have told our partners time and again: “We do not do such things with respect to Turkey.” But these fighters are still there, they receive treatment and protection. They benefit from visa-free travel arrangements and are able to enter Russian territory using Turkish passports and disappear, while we have to go after them in the Caucasus or in our million plus cities. For this reason, we will certainly have to do it along with a number of other initiatives to ensure our national security.

As for the President of Tatarstan, there is a saying in Russia: “Call me a pot but heat me not.” This is Tatarstan’s business. I do not think that this is such a sensitive issue or that it could hurt national feelings. You know the people in the Caucasus always react vehemently to all issues related to their national identity. However, even Chechnya said: no, the country should have only one President, and we will not call the head of the Republic this way. This was the choice of the Chechen people. We will respect the choice of the people of Tatarstan. It is up to you to decide, all right?



Anton Vernitsky:

Anton Vernitsky, Channel One.



Vladimir Putin:

I am sorry, I forgot, but I wrote down your question. Again, I am sorry, Anton.

The fate of the Syrian president. I have said it many times, and I would like to repeat it: We will never agree with the idea of a third party, whoever it is, imposing its opinion about who governs who. This is beyond any common sense and international law. Of course, we discussed it with US Secretary of State Kerry. Our opinion remains the same, and this is our principled approach. We believe that only Syrians can choose their leaders, establish their government standards and rules.

Therefore, I will say something very important now. We support the initiative of the United States, including with respect to the UN Security Council draft resolution on Syria. The Secretary of State’s visit mainly focused on this resolution. We generally agree with it. I think Syrian officials will agree with the draft, too. There may be something that somebody does not like. But in an attempt to resolve this bloody conflict of many years, there is always room for compromise on either side. We believe it is a generally acceptable proposal, although there could be improvements.

As I have said before, this is an initiative of the United States and President Obama. This means that both the US and Europe are highly concerned with the current situation in the Middle East, Yemen, Syria and Iraq. We will do what we can to help settle the crisis and will aim to satisfy all parties with our solutions, however complicated the situation.

But first, it is necessary to work together on a constitution and a procedure to oversee possible future elections. It must be a transparent procedure that everyone trusts. Based on these democratic procedures, Syria will decide which form of government is the most suitable and who will lead the country.



Anton Vernitsky:

Back to the Syria issue. Mr Putin, do we have a clear-cut plan on Syria or we are acting impulsively? I mean, Turkey shot down our plane and we immediately increased our military presence in Syria. When will our military operation end? What will you regard as the end point of our military operation in Syrian airspace?

Do you believe that the intra-Syrian conflict can, after all, be switched to a political track? Though you already talked about it, is it possible?



Vladimir Putin:

I was trying to answer this just now. We think that, A, it is possible; and, B, we believe that there is no other way to resolve the situation. This will have to be done in any case sooner or later, and better sooner than later because there will be fewer casualties and losses, and there will be fewer threats, including to Europe and to the United States as well. Look, 14 people were killed in the United States − ISIS has made its way into the US. US law enforcement has acknowledged that it was a terrorist attack committed by ISIS, so it is a threat to everyone. And the sooner we do it, resolve this, the better.

Let me repeat, there is no solution to this problem except a political one. Do we have a plan? Yes, we do, and I just spelled it out. In its key aspects, strange as it may sound, it coincides with the American vision, proposed by the United States: cooperative work on the constitution, creating mechanisms to control future early elections, holding the elections and recognising the results based on this political process.

Of course, it is a complicated objective and of course there are various mutual grievances: some do nt like this group and others do not like that group, some want to work with the Syrian Government and others refuse do so categorically. But what is necessary is that all conflicting parties make an effort to meet each other halfway.



Anton Vernitsky:

And the military operation?



Vladimir Putin:

What about the military operation? We said a long time ago that we will carry out air strikes to provide support for offensive operations by the Syrian army. And that is what we have been doing while the Syrian army conducts their operations.

By the way, I have recently said publicly – the idea was proposed by Francois Hollande – that we should try to pool the forces of the Syrian army and at least part of the armed opposition in the fight against ISIS. We have succeeded in working towards this goal, even if partly.

At the least, we have found common ground with these people. This part of the Syrian opposition, these irreconcilable and armed people want to fight against ISIS and are actually doing so. We are supporting their fight against ISIS by delivering air strikes, just as we are doing to support the Syrian army. When we see that the process of rapprochement has begun and the Syrian army and Syrian authorities believe that the time has come to stop shooting and to start talking, this is when we will stop being more Syrian than Syrians themselves. We do not need to act in their place. And the sooner this happens, the better for everyone.



Dmitry Peskov:

Mr Brilyov, do you have anything to add?



Sergei Brilyov:

Thank you. Yes, I want to add to what my Turkish colleagues and Anton [Vernitsky] have said.

Mr President, first I would like to ask if the Turkish ship has sailed. Can President Erdogan do anything to reverse the situation? And second, we do not have to be more Syrian than Syrians themselves, but since Turkey’s actions have forced Russia to increase its contingent at Latakia, maybe we should keep that base to ensure stability in Syria and the rest of the Eastern Mediterranean?



Vladimir Putin:

I do not want to answer for other people and the leaders of other countries. If they believe it possible and necessary to do something, let them do so. We do not see any change so far. So why should I speak about it now? That is my answer to the first question.

As for the second question, about the base, opinions differ, you know. Some people in Europe and the US repeatedly said that our interests would be respected, and that our [military] base can remain there if we want it to. But I do not know if we need a base there. A military base implies considerable infrastructure and investment.

After all, what we have there today is our planes and temporary modules, which serve as a cafeteria and dormitories. We can pack up in a matter of two days, get everything aboard Antei transport planes and go home. Maintaining a base is different.

Some believe, including in Russia, that we must have a base there. I am not so sure. Why? My European colleagues told me that I am probably nurturing such ideas. I asked why, and they said: so that you can control things there. Why would we want to control things there? This is a major question.

We showed that we in fact did not have any medium-range missiles. We destroyed them all, because all we had were ground-based medium-range missiles. The Americans have destroyed their Pershing ground-based medium-range missiles as well. However, they have kept their sea- and aircraft-based Tomahawks. We did not have such missiles, but now we do – a 1,500-kilometre-range Kalibr sea-based missile and aircraft-carried Kh-101 missile with a 4,500-kilometre range.

So why would we need a base there? Should we need to reach somebody, we can do so without a base.

It might make sense, I am not sure. We still need to give it some thought. Perhaps we might need some kind of temporary site, but taking root there and getting ourselves heavily involved does not make sense, I believe. We will give it some thought.



Dmitry Peskov:

Colleagues, let's be respectful of each other and ask one question at a time, OK? So that everyone can get the chance to ask a question. Terekhov, Interfax, please go ahead.



Vladimir Putin:

Sorry, here’s Ukraine, our sister republic. I’m never tired of saying it over and over again. Please go ahead.



Dmitry Peskov:

Microphone to the first row, please.



Roman Tsimbalyuk:

Thank you for the opportunity to ask a question, even though we are not Turks, but Ukrainians.



Vladimir Putin:

I can see that, yes.



Roman Tsimbalyuk:

Mr Putin, as a follow-up to your allegations that there are no Russian servicemen in Donbass, Captain Yerofeyev and Sergeant Alexandrov, Third Brigade, the city of Togliatti, send their regards to you.

Are you going to exchange them for Sentsov, Savchenko, Afanasyev, Kolchenko, and Klykh? And the list goes on.

One more question, if I may, just to continue my first question: The Minsk Agreements are coming to an end, and none of the parties have complied with their provisions. So, what should we expect from you come January 1? Are you going to launch an offensive again, come up with some negotiation ideas, or maybe forget about Ukraine for a while? Thank you.



Vladimir Putin:

Regarding exchanges. We’ve never said there are no people there who deal with certain matters, including in the military area, but this does not mean that regular Russian troops are present there. Feel the difference. This is the first point.

Second, you mentioned two or three people you propose exchanging and then offered a long list of persons to exchange them for. First of all, the exchange should be equitable. Second, we should discuss everything calmly with our colleagues, talk and propose what we have always insisted on and what the Ukrainian President has proposed. People who are being held on one side and those held on the other should be released. This applies above all to people from Donbass, southeastern Ukraine, and Ukrainian servicemen who were detained in these territories. However, the exchange should proceed on an equitable basis.

What am I talking about? It’s no secret that the Ukrainian authorities regard all those detained and held in Donbass as people who are subject to exchange while those who are held in Kiev prisons are considered criminals and therefore outside the scope of this exchange. People in Donbass don’t agree with this. This should be treated fairly and it should be said: Let’s exchange all for all, as President Poroshenko proposed, not selectively – we’ll exchange these but not those. This is the line to take here and we support it. We have a lot of disagreements with the Ukrainian authorities but here we have a common position.

Now regarding January 1. On January 1, regrettably for us, we predict a deterioration in our economic relations because we had to make the decision that from January 1, we will no longer treat Ukraine as a member of the CIS free trade zone.

EU leaders have proposed and asked me not to expel Ukraine from the free trade zone and not to strip it of preferences in trade with Russia in the hope that we will negotiate in a tripartite format – Russia-EU-Ukraine – for a year and make certain changes in various formats, so that if the EU association agreement itself is not changed, we will introduce certain amendments through additional protocols to address our concerns and guarantee our economic interests. In the period before July, we had asked a hundred times for a tripartite meeting. Contact was only established in July, you see? The result was practically zero.

Only recently, I met with the German Chancellor and President of the European Commission in Paris. We received a document. It was their chance to gain a respectable audience. I’ll explain the specifics shortly. We’ve tried to maintain good economic relations with Ukraine, since Ukraine is member of the free trade area which offers mutual preferences and zero rates. In its economic relations with Russia and the CIS, Ukraine has used standards, technical regulations and customs rules which we inherited from the past and which we are gradually changing together. Ukraine is unilaterally withdrawing from this system and joining the European standards. Those, for example, state that all the goods in the Ukrainian market must comply with EU technical standards and regulations. But see, our products don’t comply with them yet.

Does this mean Ukraine has to keep our goods from its market? Okay, they heard us. Now Ukraine is officially allowed to keep both compliant and non-compliant products in their market. It’s not an obligation but a right. Whether it uses it or not, we don’t know. They have the right to establish a subcommission to decide, but again, it is not an obligation. However, Russia is expressly required to maintain all preferences in place. No, it doesn’t work that way.

Moreover, one doesn’t have to be an expert to see that Russia is required to bring CIS customs regulations into compliance with EU standards.

In Paris, I told them: this doesn’t make any sense. The three of us (Russia, Belarus and Kazakhstan) have argued for years about these customs duties. And you want us to change the CIS customs regulations just because Ukraine entered into this agreement with the EU. This is not a fair requirement. It will take years to accomplish.

Also, it was stated that we must comply with EU phytosanitary requirements. Ukraine is willing to do so but nobody discussed it with us. It is expressly written that Russia has agreed to comply. Since when? We may be in favour of the idea but it will take time. How can you not understand that it takes time and money? Tens, maybe hundreds of billions of dollars. We need time too.

By the way, they told me in Paris, “But our standards are better and maybe you had better switch to those standards.” Well, it is true, and we want to, but we need money – we need investments. And we still have our access to external financing blocked. You understand that it is impossible, I said, so why did you write all this? They said, “But we have not read this yet.” Look, you have not even read it, but you sent us this official paper. Should we agree with it?

Now, about what we will do. We are not going to impose any sanctions on Ukraine – I want this to be heard. We are just switching to a most-favoured-nation treatment in trade. Which means conditions for Ukraine will not be any worse than those for our other foreign partners. But of course, Russia will grant no more privileges or preferences to Ukraine from January 1, 2016.

What will this mean in practice? In practice, it means that the zero tariffs in trade between Russia and Ukraine will change to the weighted average tariff of 6 percent. Various rates will range from 3 to 8 or 10 percent. But this is not our choice. We have fought for this not to happen. But they did not want to listen to us. They did so unilaterally and in the style I just described to you. But we have to work in the conditions we have.

Now, about launching offensives. I tell you frankly that we are not interested in exacerbating the conflict. On the contrary, we are interested in resolving this conflict as soon as possible, but not by way of physical annihilation of people in southeastern Ukraine. By the way, take a look at the results of the municipal elections and see the voting pattern in the area. In nearly all the regions – nine or ten, I think – the opposition bloc came first or second.

Even in those territories of Donbass that are controlled by the Ukrainian authorities, the Lugansk Region, more than 43 percent voted for the opposition. Don’t the Kiev authorities see this? Are they so reluctant to take into account the sentiments and expectations of their own people? We very much hope that we will have an open, honest dialogue.

Now about the Minsk Agreements. We have heard it a hundred times that Russia must comply with the Minsk Agreements. And this is what we want! Let’s look at their provisions. First – to introduce amendments to the Constitution and coordinate them with Donbass on a permanent basis. Has this been done? Transitional provisions were amended, it seems. And what are those amendments? The law on the special status was incorporated into the transitional provisions. “On a permanent basis?” I ask all my colleagues. They all say, “Yes, permanent.” I say, “Do you know that this law has only been adopted for three years? A year has already passed.” They all say, “Really?” I say, “Yes.” “Is that true, Mr Poroshenko?” He answers, “Yes.” This is almost a direct quote. Everybody says, “You know, he should do it on a permanent basis.” I say, “He should, nobody is stopping him.”

Now the law on the special status. Has the Rada passed this law? Yes, it has. Under the Minsk Agreements, it should be “implemented within 30 days by having the Rada adopt a resolution to this effect.” Have they adopted the resolution? Yes. But how? They added an article, I think number 10, to the law, which stipulates that it can only be implemented after elections, which means more delays. I told them, “Listen, it says here that the law must be implemented.” “No, it does not. It says: the Rada must pass a resolution. We have done it. That is it.” But this is a manipulation.

If we really want to resolve the problem, let’s stop this, let’s work together. And we are willing to influence people in the southeast of the country and persuade them to accept a compromise. We are willing and we want it to happen, but we need our partners in Kiev to be willing as well.



Vyacheslav Terekhov:

Hello, Mr President. You just talked about a significant expansion of the military presence in the conflict zone in Syria.



Vladimir Putin:

There you go again about Syria. Ask me about the national economy.



Vyacheslav Terekhov:

No, about Russia, not Syria.

Sanctions are in force, oil prices are falling and there are not only sanctions but also a crisis. Will Russia have enough resources for all this?



Vladimir Putin:

For what?



Vyacheslav Terekhov:

For military operations, the expansion of its military presence, for survival. In addition to this, there are more than enough other problems to deal with. Meanwhile, resources – this is not only money and military officers. A popular expression has just come to my mind: “It’s easy to start a war but difficult to end one.”



Vladimir Putin:

We did not start a war. We are conducting limited operations with the use of our Aerospace Forces, air-defence systems and reconnaissance systems. This does not involve any serious strain, including strain on the budget. Some of the resources that we earmarked for military training and exercises – we simply retargeted them to the operations of our Aerospace Forces in Syria. Something needs to be thrown in, but this does not have any significant impact on the budget.

You see, we hold large-scale exercises. Take the Centre or Vostok-2015 drills alone. Thousands of people are involved. Thousands are redeployed from one theatre to another. There are hundreds of aircraft and so on and so forth. We simply direct a part of the resources to the operation in Syria. It is difficult to think of a better training exercise. So, in principle, we can keep training for quite a long time there without unduly denting our budget.

As for other components, yes, that is an issue – I mean the economic problems we are faced with. We know what needs to be done and we know how to do it, and we talk about this publicly.

What can be said in this regard? If we go back to the economy, of course, here we need to implement import replacement programmes (I believe I mentioned this earlier). Not just import replacement as such, but we need to modernise our economy, enhance labour productivity, improve the business climate and ensure effective public demand. This is an element of our economic drive.

We need to carry out an array of measures that the Government has publicly announced. And this is what we will do.



Anastasia Zhukova:

Hello, I am Anastasia Zhukova from Tulskiye Novosti. Here’s my question. A tragedy occurred in Tula last year when two babies were burned in a local maternity home. One of them was seriously injured and suffered burns to almost 80 percent of his body. The issue of his adoption is being reviewed now. People from all over the country are worried about Matvei’s fate. They worry that he will be institutionalised. They think the boy will end up in a nursing home. Most Russians and foreigners want him to be adopted by a loving family.

Mr Putin, can you please see to his fate and personally control his adoption and treatment? And what do you think can be done to prevent such accidents from happening again? Thank you.



Vladimir Putin:

This is a horrendous, terrible story. It is impossible to think about it or talk about it without tears. What a horrible tragedy. I simply do not want to say any more about it now – it is just awful.

The problem is not rooted in healthcare. No matter how much money is allotted to it, there will always be people who will be criminally negligent in fulfilling their duties. This needs to be monitored. The attitude of personnel to their duties should rest on a completely different approach.

As for a nursing home or adoption, I know that the entire country is watching the developments. I know this anyway, and we are keeping an eye on it. Moreover, several people (not one, two or three), several families not only want to adopt Matvei but are fighting for him. I wish them success and want to thank them for this. I hope this issue will be resolved very soon.

Young lady, I promised you – go ahead please.



Yekaterina Vinokurova:

Thank you for keeping your promises, Mr Putin. Yekaterina Vinokurova, Znak.com.

It is December 2015. You have been at the helm for 15 years, and so we can say that a certain system of authority has evolved. I have a question about a very dangerous aspect of this system because we can see especially clearly now that a very dangerous second generation of the elite has grown up over this period. One of them is Rotenberg Jr, who has received the country’s long-haul truckers as a present. Another is Turchak Jr, who cannot be summoned for questioning over the assault of Oleg Kashin, even though journalists continue to be beaten up in his region. These are also the children of Chaika, who have a very murky business, which should be investigated. Sorry, but I do not give a damn whether this is a paid-for reporting or not, because even rumours must be investigated. There are many more such children who are unable to revive or even preserve Russia, because they are not the elite but only a poor semblance of it.

At the same time, when journalists investigate something or public accusations are made as in the case of Prosecutor General Chaika and his team, the authorities, instead of launching an investigation, shout that the rumour is being spread by the hateful State Department or Obama, or order an inspection – for instance, how the prosecutor’s office dealt with the Dozhd TV Channel, which helped investigate the problem. When the long-haul trackers hold protests, they are accused of acting on somebody’s orders, whereas instead you simply need to talk to them.

Mr Putin, I have a simple question. Did you expect to see these results when you assumed power in 2000? Maybe the situation needs improving before it is too late? Thank you.



Vladimir Putin:

Let’s start with results. If we want to be objective, we will have to admit that these are not the only results. Our best achievements are higher incomes for the people and a stronger economy, which has grown by nearly 100 percent. Our GDP has almost doubled. These are our results. Stronger defences and improved capabilities of our Armed Forces – these are the results. The fight against terrorism, which we have not defeated yet but we have definitely broken its back – these are the results.

As for the problems of secondary importance you mentioned, they can happen anywhere. Now for the reaction of the media and the public to the activities of our high-level officials’ children. Take young Rotenberg, whom you mentioned: his father does not hold any government posts, as far as I know. Maybe he has found his way into a government agency since I last looked, but I do not think so.

As for Mr Chaika, and who else? Turchak and the rest. I am aware of the reports by the media and online that, say Turchak was involved in beating up journalists. Is he the one responsible or is his father involved? There is a famous Soviet-era joke, when an HR manager says: We are not going to promote this guy. Why? He had an incident with a fur coat. It turned out that five years ago his wife’s fur coat was stolen in a theatre. Something had happened, so the guy will not be promoted, just in case. This should not be our attitude. You are right to raise this issue. No, I really mean it. This provides us with an opportunity to respond… I mean, it is our obligation to respond.

Regarding all the issues you have mentioned, especially those related to the children of high-ranking officials… Let’s take for example the Prosecutor General – he heads a very important institution. We have to understand did the Prosecutor General’s children commit an offence or not? Does anything point to a conflict of interest in the Prosecutor General’s work? Did he assist or help his children in any manner? For that, we have the Presidential Control Directorate. I did not want to mention this issue, but it does not mean that we are not working on it. All the information should be carefully reviewed. The same goes for examining all the reports online.

Let’s now move to the truck drivers. Are there any questions on this particular issue? Are there any questions about the truck drivers? Go ahead. Maybe someone can articulate this question better.



Question:

My question is not just about the truck drivers. Everyone is aware of professional drivers’ problems, why they have been protesting for weeks against the problems with the new toll system. But I have questions on behalf of the entire driving community.

Ordinary motorists are also forced to pay. For example, there is this new road being built from Moscow to St Petersburg, recognised by all as the most expensive in Europe. For example, a drive to the nearest Moscow suburb and back costs 1,000 rubles, more than a small amount for most people.

In Moscow, the metered parking policy has reached residential areas where there actually was not any serious need for it, as many have said. But drivers have been told that this is the way things are in Europe. But we have a standard of living far lower than them, and even you pointed out at the beginning of this news conference that real income has declined. So my question is: is it fair to dump these high charges on all categories of motorists?



Vladimir Putin:

Paid parking is kind of beyond the point; it’s another matter. As for these car parks in Moscow, all major metropolitan areas at some point have to introduce paid parking because the problem cannot be solved in any other way. Of course common sense should prevail here too and you need to watch not only what to do but how to do it, and prices should be based on reality. However, the Moscow city authorities have made this decision. You need to know this.

The Moscow authorities decided that parking prices should not be directly set by the mayor's office, but only after consultations with the municipalities and with the districts. Moreover, the local elected authorities, district authorities have the right to decide on this issue – they have been given that authority. And parking is free for people who live in the buildings next to these car parks. I can assure you that the citizens concerned, the Muscovites who live near these car parks, are more in favour of the policy than against it.

The charges apply to those who arrive from other districts or other regions: from the Moscow suburbs and so on. This does not mean, however, that we should not think about them at all. And of course, the fees should have some relation to average incomes. But I repeat, these decisions are largely up to the local municipalities. The revenue from parking goes entirely, completely, one hundred percent, into the local district budgets.

I would like to reiterate that this does not mean the upper levels and limits should be ignored. After all, this is the prerogative of district and city authorities, above all, the districts.

Now, regarding other components of the auto business.

Most importantly, Rotenberg Jr was mentioned here. What should I say, and what is important? It is important to get to the bottom of the problem, not try to use a difficult situation for some quasi-political purposes, but look inside. And what lies inside? All revenues coming from the Platon system – all 100 percent – do not go into somebody’s pocket but into the Road Fund of the Russian Federation, down to the last cent, and from there all this money, down to the last cent, is spent on road construction in Russian regions. I would like you to hear this. This is the first point.

Second, where does this joint venture set up by Rostekhnologii and the company represented by private investors get funding from? Directly from the budget – I believe about 10 billion [rubles]. For what purpose? For the repair and maintenance of this system, keeping it operational, for development. However, what does it mean that they receive funding from the budget? This means that everything can be checked, including by the public and the Accounts Chamber, which is very important. If some people think that these maintenance and development costs are inflated, let them do calculations and submit them. This will be the right thing to do – calculate and submit. This can be done – [count] the money and revenues from Platon, the company created by private investors and Rostekhnologii – these revenues do not go there. I want this to be heard.

Where did the idea come from? It came from the Government. Why? For two reasons.

First, because economic agents across all transport sectors, including aviation, river, sea and rail transport, pay taxes and infrastructure fees, including on the railway. Motor vehicle owners pay only a portion of the infrastructure tax through the excise tax on petrol. But that is only a portion of it. In other industries, economic agents pay infrastructure fees in full. This had a portion of cargo travel from rivers, seas and railways to motor roads. Huge numbers of trucks flooded motor roads, causing damage to infrastructure. A motor vehicle tax is the same for passenger cars and trucks weighing 12 tonnes or more.

I know that those guys are saying there is no difference between a passenger car and a heavy-duty truck. But this is not true. Experts say that during acceleration and braking, 12-tonne trucks do more damage to the roadbed than cars. However, they pay the same amount. This proposal seeks to create a level playing field for all types of transport.

Second, the licensing of this activity was stopped in 2008 or 2007 as part of the war on red tape. It seemed like a good idea, but what do we have as a result? Large numbers of people go ahead and buy heavy-duty trucks and get away with it. But this is an absolutely grey economy. They are not even licensed as sole proprietors.

I come from a working-class family, and I know that these guys work hard driving these trucks, but we need to leave grey schemes behind. I would like to support them, believe me. Ms Pamfilova came to see me and said that she met with them, and they are hard workers and nice people overall. However, we must shed these grey schemes, and help truck drivers out as well.

Someone asked me if I am pleased with the Government or not. Here certain things must still be fine-tuned. How do we go about it? How do we get them out of the scheme and make sure that we do not charge them too many fees and taxes? There is a simple way to do this. They should be given an opportunity to purchase inexpensive patents. However, there is a problem. Patents are issued for a year, while there may be seasonal transport. Let the Government think about it in advance and do it.

Some time ago, the Government reviewed the possibility of introducing a similar fee. They charge for mileage covered by heavy-duty trucks in many countries around the world. In Belarus, truck drivers are paying seven times more than is suggested in Russia. They are paying seven times more for their mileage, just think about it. We said that the motor vehicle tax can be cancelled after transiting to this system. The tax was not cancelled upon the request of the regional authorities, as the motor vehicle tax goes straight to the regional budget. It must be cancelled at least for heavy-duty trucks whose owners must pay for mileage. I hope the Government will do so in early 2016.

I know that there is concern over having to buy various devices. They also cost money. Here also it is necessary to take a thorough look into who must pay and for what.

For instance, a tachograph, a device showing how much time a driver has been at the wheel. Listen, after all, this must be paid for. And people all over the world pay for this. It must be done to ensure the safety of both heavy-truck drivers and other motorists. Because when a person works overtime, sitting at the wheel for 20 hours on end, he poses a threat to himself and to other road users. Yes, this must be paid for. I cannot recall how much, but this must be paid for.

And there are two more devices. One is the Platon tracking device , which must be provided to all free of charge, and the other is the ERA-GLONASS system (or the SOS system, so to speak), which sends out an emergency signal. The latter device must be tucked away in a safe spot to prevent it from getting damaged during an accident. And so, the first and second systems [tachograph and Platon] can be put together in one box, while the third system must for the time being be hidden deep inside a vehicle. And by the way, it must also be provided free of charge.

Some people say that while it must be installed on new trucks free of charge, money is charged for installing it on used trucks. No, they must not charge anything. Around two million have already been produced, as far as I know.

As a matter of fact, this is the initiative of Rostekhnologii, and not of any private persons. Why? Because, first, Rostekhnologii proposed a technical solution, assigned the work to their enterprises and created jobs, so this is their intellectual product. Why do we need private persons there? We need them as investors. They have invested 29 billion rubles (by the way, as regards the elites, they or their children can do something, or cannot), invested these 29 billion rubles in Russia, and not in the United States, or Cyprus or anywhere else. The point is that the system needs to be adjusted, that’s true.

I hope the Government will make all these decisions, including taxes on transport vehicles in the near future – no later than the first quarter.



Tamara Gotsiridze:

Tamara Gotsiridze, Maestro TV.

Mr President, I have a general question about the future of Russian-Georgian relations. Three years have passed since the change of government in Georgia. There were expectations of a summit. It is still unclear why this has not been held yet. People hoped that Russia would ease visa restrictions for Georgians or make travel visa-free altogether but there is no progress on this either.

I have this question: what does each side need to do? What does Moscow expect from Tbilisi? What can be expected of Moscow to bring Russian-Georgian relations to a new level? What do you think about our prospects?



Vladimir Putin:

As for the events in 2008 and the subsequent decline in our relations, we have talked about this many times, but I consider myself obliged to repeat it. We are not to blame for the deterioration in relations. The former Georgian leaders and the then President Saakashvili should not have made the adventurist decisions that triggered Georgia’s territorial disintegration. This is their fault, their historical fault. They are fully to blame for this.

Now the export of politicians has begun. They are actively operating in another former Soviet republic – independent Ukraine. As you can see, they have not changed their approach.

I have already mentioned this but I would like to repeat it. I think this is simply a slap in the face of the Ukrainian people. Not only have they been put under an external administration but they have also had to accept so-called politicians that were delegated there. By the way, I think Saakashvili was never granted a work visa to the United States but they sent him to run the show in Ukraine and he is functioning there.

What was Ukraine told? We will not only organise you – we will send people who will administer over you, people from more civilised countries – either your neighbours or from overseas.

We will put all of them into key positions: finance, the economy, and so on and so forth because you do not know how to do it well. Others know but you do not.

Is it impossible to find five or ten honest, decent and efficient managers out of 45 million people? This is simply a slap in the face of the Ukrainian people.

Now let’s turn to relations with Georgia. We did not initiate the collapse of these relations bit we are willing to restore them. As for Georgia’s territorial integrity, this is primarily up to the people of Georgia, South Ossetia and Abkhazia. It would be necessary to work with them. We will accept any decision.

Today, despite the difficulties you mentioned we notice signals from the current Georgian leaders and we are receiving them. Imagine, today Russia accounts for two thirds of Georgia’s wine and wine stock exports. They are coming to the Russian market not to some other market abroad. We are importing these products as well as others and our trade has increased. It declined a little this year due to general economic difficulties, but on the whole it is demonstrating fairly high growth rates.

As for visas, we think we are ready to cancel them with Georgia.





To be continued.
 
Old December 18th, 2015 #15
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December 17, 2015 - Vladimir Putin’s annual news conference - Part II





Yekaterina Vyskrebentseva:

Yekaterina Vyskrebentseva, TV Centre.

Mr President, I would like to go back to Russian economic problems. This autumn, it became obvious that regional debt has grown significantly. Experts, the Ministry of Finance, the Accounts Chamber and foreign analysts are saying that one of the principal reasons for this is regional budget imbalances. For example, some regions spend up to 65 percent of the GDP to meet their social security obligations…



Vladimir Putin:

GRP [Gross Regional Product].



Yekaterina Vyskrebentseva:

Right, I am sorry. This leaves nothing for economic development, which, as you just said, is a key objective today.

What is the way out of this situation?



Vladimir Putin:

Generally speaking, when all is said and done, it is in fact the primary objective of the regional authorities to meet their social security obligations to the public.

What is economic development? Economic development can and should be ensured above all by creating conditions for such development. We always cite a number of Russian regions as an example. Say, Tatarstan and Kaluga Region, among others, they are creating such conditions. Top regional officials simply give their cellphone number to major investors and say: “Call me if there is any problem.” They take measures to provide tax incentives.

Today federal law provides for such possibilities: two-year tax holidays for new businesses, priority development areas, and so on. A region can grant a lot of preferences to encourage businesses to develop in a particular region.

Of course, regional budgets need funds to develop infrastructure for future investment. Indeed, there are problems related to high debt levels in certain regions. However, the government is making appropriate decisions. This year we have provided an additional 160 billion rubles from the federal budget to regional budgets – 310 billion in all. For what? For regional debt restructuring. Where commercial loans were taken out at 11–12 percent interest they can receive loans from the federal budget at 0.1 percent interest.

Next year, the federal budget will provide another 310 billion rubles for regional debt restructuring.

However, the most important thing is that these regional loans are spent on addressing primary, not secondary objectives.

What is the most important thing in terms of development? This [money] should be spent on creating new jobs, providing conditions for new manufacturing facilities, new technology and new infrastructure so that investment generates revenue that can be used to repay loans and generate additional funding for regional budgets. Unfortunately, this is something that we still need to work on.



Dmitry Peskov:

Let’s continue. A question from OTR, the Public Television of Russia.



Tamara Shornikova:

Thank you. Tamara Shornikova, the OTR public television network.

We asked our audience in the regions to suggest a question for the President. The most popular question was, “How can you survive on a pension or even wages without falling behind on your housing and utility payments?”

People in small towns and villages have to make a very difficult decision every month: Should they spend their pension or salary on mandatory payments and then try to live until the next pay day or not? The trouble is that the authorities claim that the average salary in their town or village is 20,000, 30,000 or even 40,000 rubles, while the people say many of them receive between 7,000 and 8,000 rubles. The low-income groups receive benefits, but not everyone is entitled to them, and not all municipal authorities have the funds to help everyone who really needs this assistance.

Maybe the Federal Government should step in at long last? Maybe there is a mechanism for doing this, and if not, one should be created, so that rent, electricity, gas and water fees do not exceed a certain share of people’s income, which has been decreasing? Meanwhile, the bills keep growing.



Vladimir Putin:

I believe that your question is certainly an issue of priority importance for millions in our country.

The OTR audience is not very large, probably, but I sometimes watch your programmes. And I want to thank the TV network team. You make interesting, substantive and solid shows in response to people’s questions; you ask sharp questions and try to find answers to them. You have asked me one of such questions. They concern housing and utility fees, people’s spending on these payments, and pensioners’ incomes.

Let’s start with pensioners’ incomes. You know that the Government has adjusted retirement pensions for inflation despite last year’s high inflation rate. Pensions were increased by more than 11 percent, and 10 percent for social pensions, I think.

Honestly, this was almost impossible, but we still managed to do it. Next year, all categories, including those receiving military pensions, will receive a 4 percent increase. We will see how the situation in the Russian economy plays out. I would really like 2016 indexation to be at least on par with the annual rate of inflation. I cannot say whether we will be able to do it or not, since we have to respond to the situation and simply cannot sacrifice the budget, since it would hurt everyone at the end of the day.

Now for housing and utilities. This year, rates were increased 8.7 percent on average and are expected to go up another 4 percent next year. Consequently, we expect this cost to decrease. However, this will not affect rates for building maintenance, waste removal, etc. These issues have to be tackled by the municipalities.

In addition, under the federal law, families who pay more than 22 percent of their income for utilities are entitled to subsidies. The federal law also enables regions to introduce an even lower threshold to subsidise families who pay less than 22 percent of their income for utilities. If I am not mistaken, this is the case in Moscow and many other regions.

There is no doubt that this issue deserves the most careful attention; we need to closely monitor the property management companies. A lot has yet to be done to improve this system. Make no mistake, this will be a priority for the Government and the regional authorities. It is true that we have a long way to go before we settle this issue.

Now for the system you have mentioned, and whether the system that has been proposed will be adopted or not. What is this system all about? Under federal law, there is a method for calculating the average possible increase and the possible variations both ways. This method is expected to be developed by the Federal Anti-Monopoly Service, which will be in charge of overseeing what the regional authorities are doing in this area. This is to say that not only will we monitor what the regions are doing but also how the Federal Anti-Monopoly Service carries out its functions.



Nathan Hodge:

Thank you, Mr President. My name is Nathan Hodge, Wall Street Journal.

Now, with the sharp fall in oil prices and the economic crisis, isn’t it time to privatise state-owned companies such as Rosneft and Aeroflot to fill the budget? Will the privatisation of state-owned companies improve their management and help withstand the crisis? Thank you.



Vladimir Putin:

As we all know, privatisation of large companies solves two problems. The first problem is unrelated to fiscal issues or budget profits, although this is also important. But most importantly it changes the ownership structure, increasing the efficiency of enterprises.

As for Rosneft or Aeroflot, which you mentioned, other companies often recalled in this context, I wrote in my articles back in 2012 that it was possible, and in principle, we are going to continue this work.

We will certainly always ask ourselves whether the market conditions are right to sell these valuable assets, which, so to speak, bring positive results to the economy, the budget, say, Rosneft. It is virtually impossible to say if the situation or conditions are right, although as you know, the Government did not take a decision on privatisation this year.

Yet, I do not rule out that the government might go for these decisions to generate income and make some changes in the structure of these large companies, to avoid tapping reserves. I try not to interfere with such decisions, especially as it is not as if the government will lose its controlling stake in those companies anyway.



Dmitry Peskov:

We have a question from a company that recently celebrated an anniversary, Russia Today.



Ilya Petrenko:

Good afternoon Mr Putin. First, I would like to thank you again for your greetings on the tenth anniversary of the RT channel. The English Section appreciated your recent gift to Sports Minister Vitaly Mutko, an English phrasebook.

Does this mean that not just Mr Mutko but also his other colleagues in the Russian Government will need this phrasebook in the near future, considering the worsening relations with our Western partners, including our English-speaking partners?

And now a more serious question: What relations do you expect to have with the next US president? There will be presidential elections in the United States next year. Thank you.



Vladimir Putin:

Regarding foreign languages, Russia is an open country and English is certainly the most widely used language in business, culture and diplomatic relations. English has replaced French as the lingua franca of diplomats. We encourage the study of foreign languages at schools and universities. We have programmes for training young professionals not only in Russia but also abroad, and we will continue to do so. I hope that my colleagues at the Government ministries and agencies and also in the regions will contribute to these efforts.

As for Mr Mutko, you can make fun of him, but he has no problems in this respect and is willing to work for his own improvement. Actually, this is very good. I would never have given him this gift if I did not know he would take it in stride and not develop a complex. You can make fun of him, of course, but you must admit that he knows what he wants and how to get it. He is working to improve, which is not easy. It is one thing when you start learning a foreign language as a child, and it is quite another matter when you do it at a mature age. By the way, learning a foreign language is very good brainwork. In fact, it is the best form of ‘brain jogging.’ I hope my colleagues will listen to me and do this too.

And your second question?



Ilya Petrenko:

It is about the next US president.



Vladimir Putin:

The next US president. First, we need to figure out who it is going to be.

No matter who he or she may be, we are prepared and willing to develop our relations with the United States. I think the recent visit by the US Secretary of State showed that the United States is willing to make certain moves towards jointly addressing issues that can only be resolved together. This is already a sensible position. We have been supporting it in every possible way and will continue to do so in the future.

We are never closed to this, no matter whom the American people elect as their president. It is them who are constantly trying to tell us what we should do in our country, who should get elected and who should not, and what procedures to follow. We never meddle in other people’s affairs. They say it is dangerous to do so in America. They say that if foreign observers get closer than five metres to a line of voters, they could end up in prison. We are not doing even that, right? We are open and will work with any president voted in by the American people.



Yevgeny Dzichkovsky:

As a follow-up to the question about Mr Mutko. The government is spending big money on professional sports. Senior citizens will agree with me. There is a parable that you can feed a hungry man by giving him a fish or a fishing rod. We are giving our sport a big fish, a sturgeon, to try to promote the prestige of our country, but then this doping, which they have regularly caught us red-handed with. What we get instead of boosting our image is a blow to the country. Who will be held accountable for this? So far, we have seen two token resignations and the actual disqualification of our athletic federation. Who will answer for this, what do you think? Also, please say a few words about the corruption scandal at FIFA. Should we be looking for Western ulterior motives in this, or is it simply a hunt for bribe-takers? Thank you.



Vladimir Putin:

There are underhanded dealings, of course, there is no way to get around it. Most importantly, as I have always said, no country should or has any right to extend its jurisdiction to other states, especially international organisations. This does not mean that we should not fight corruption. Of course, we should. But we believe that seizing foreign nationals around the world and dragging them to their country for an investigation and then a court trial is unacceptable.

What should we do in this regard? It is imperative to maintain an equal, transparent, and open partnership with all countries. Not to impose your own jurisdiction on anyone else, but just work with everyone in an honest and open manner. I hope that someday we will get there. We will go from the efforts to establish domination to cooperation, including the fight against corruption.

The investigation will show whether or not FIFA is involved in corruption. There are no results from this investigation yet. Someone out there is confessing, while others refuse to talk.

As for Joseph Blatter, he is a very respected person. He has done a lot for the development of world football. His contribution to the world’s humanitarian sphere is enormous because he has always tried to treat football not as a sport but as an element of cooperation between countries and peoples. He is the one who should be awarded the Nobel Peace Prize.

As for the choice of this or that country and potential problems – we do not know anything about them. We know one thing for sure – that we received the right to host the World Cup in an absolutely honest competition. It is not our problem that when, say, FIFA officials arrived before the voting, someone at the top level simply refused to meet with them.

At that time I was Prime Minister and I put all other things aside and met all my FIFA colleagues. We took them on a tour around the country and showed them where we would have stadiums. They met with the regional leaders and they explained how important football is for us although it was not at the world’s best level.

Nonetheless, we explained how important it is for the development of mass sports in Russia. We showed how many people love football in our country and how we planned to develop it. FIFA listened to us and made its decision on the World Cup in 2018 based on these considerations rather than some corruption-driven motives. If you remember, I did not even attend the voting procedure. I arrived after it was over so as not to interfere or exert any pressure. We could not even apply any pressure there. So let’s wait for the results of the investigation and see who is to blame for what.

As for doping, I have expressed my attitude to it more than once. We are against any doping primarily because doping destroys human health. This is poison for people. This is the first point.

Secondly, if an athlete engages in doping he should by all means be punished for it because this destroys the very principle of an honest sports competition and interest in sports vanishes. By the way, I have huge respect for those who score high results in speed skiing. But why some people who suffer from certain diseases since childhood are allowed to take some drugs whereas others who do not suffer from the same diseases since childhood are prohibited from taking them? If an athlete has to take medicines for health reasons, he should take part in Paralympic rather than Olympic sports.

There are many problems in sports and they are not so simple. The main point is the existence of a common approach to the law in general and in this case in particular: responsibility should always be personal if it has been proved. The one who is to blame, whether it is the coach, the organiser or an athlete has to be held responsible. People who have nothing to do with violations should not be responsible for those who make them. This is simply nonsense! This is unfair and wrong! These are the principles we will fight for.

That said, Russia – and I want to say this once again – should and will be open to the joint struggle against doping. I will demand that officials of all departments and levels openly cooperate with the international agencies without concealing or hiding anything. We have a stake in this and we will follow this path.



Inna Baskova:

Kurgan, Regionalnye Vesti, Rossiya 1 Channel. As a woman, I can’t but pay a compliment to you, Mr President, for being in such a good shape. Thank you very much for that, because our boys are looking up to you, it’s true! The number of young people leading a healthy lifestyle has markedly grown.



Vladimir Putin:

Without doping, I warn. Without doping.



Inna Baskova:

Yes, without doping. And we would like these boys, youths… To encourage and engage them in activities in their native territory, in their region. The Kurgan Region receives 24 grants annually under the Beginning Farmer federal programme to support private farming. But that is not enough, Mr Putin. I am conveying the wishes of all our farmers that three times more is needed. This year, 70 people expressed a desire to start their own businesses in the agro-industrial sector, but only 20 received those 1.5-million-ruble startup grants. Is it possible to redistribute quotas between the regions in a way that would take into account the peculiarities of the Kurgan Region? Because with 20 quotas it’s not possible to stop the outflow of specialists from agriculture and encourage young locals to stay.



Vladimir Putin:

The development of the agro-industrial sector and private farming is an extremely important issue. Of course, I know about discussions between the supporters of various development trends for the agro-industrial sector. Some say that large-scale production should be developed first and that only large-scale production, and not private farmers, can provide the country with quality food products in the required volumes. But, nevertheless, without any doubt, we must also support private farming as a form of agriculture. Farmers make a significant contribution to ensuring food security. I have repeatedly said this and can confirm that all plans regarding support for the agro-industrial sector will be implemented unconditionally, including financial support.

Here you just mentioned the 1.5 million, something that can be viewed as a startup grant for their business and maybe that's not enough, but there are also other instruments available in Kurgan as well as in other regions of the Russian Federation. It is possible to support those who want to start their own business by means of regulation, including financial or tax policies. For example the federal law gives the right to regional governments to decide on a two-year tax exemption for startups.

We are talking private entrepreneurs here, sole business owners, but it is up to them to choose a legal format for their business. I can assure you, it would be a significant help. But there are other forms of support – for example, the single agricultural tax can be appropriately transformed in order to facilitate the financial and fiscal burden, we can help them create the sales infrastructure. I am referring to setting up associations which could help farmers market their produce.

Finally, there is a new and substantial support policy, something that wasn’t in place before: the domestic market has been freed for our producers, and the growth the national agriculture is now showing – 3, maybe 3.5 percent by the end of this year – is good evidence of that. True, it reflects on the customers, as prices go up, and it is reflected in the macroeconomic fundamentals by hiking inflation, contributing to inflation.

But in the end, if we are in it long term, as they say, we expect to win, by which I mean a boost in agricultural production. Therefore, Kurgan, along with other regions, should look at the opportunities that the Government and legislature are creating to support the farmers as much as they can. Let's see how the situation develops. And if there is a need, it is possible to allocate additional resources. We do have such resources for 2016.

I saw a “pensions” poster. Pensions are an important issue. Please.



Yulia Izmailova:

Yulia Izmailova, the Molodoi Leninets [Young Leninist] newspaper, the city of Penza.



Vladimir Putin:

Molodoi Leninets is asking about pensions? It surely is thinking ahead. All right, a question from the Leninists.



Yulia Izmailova:

The majority of our readers are senior citizens. We write a lot about pensions.



Vladimir Putin:

Senior citizens, but they are always young Leninists. Good. Please go ahead.



Yulia Izmailova:

I’d like to hear your opinion. In February, pension indexing for working pensioners will be cancelled. Will this move to economise with working pensioners result in certain personnel problems, or growth in “off the book” income?



Vladimir Putin:

Yes, this issue has been repeatedly debated in the Government. Let me remind you about the Soviet practice. An opportunity to work and receive a pension in the Soviet Union was granted only to people working in the economic sectors that had personnel shortages – say, junior medical personnel, healthcare specialists and culture workers. All others had to choose – either work or receive a pension.

At one time, amid the collapse of the social system and the economy as a whole, we made the decision to pay pensions to everyone. However, there are different ideas about this, including a return to Soviet practices. The fiscal gain from not paying pensions to working pensioners is small. But this decision has not been made. What makes you think it has? Why do you say that working pensioners will not receive pensions? There is no such decision.

A decision has been made not to index [pensions for working pensioners]. However, here, too, I’d like to draw your attention to this. Take a closer look at the decision and inform your readers, but I think that people will hear it now.

If a person has decided to continue working, his pension will not be indexed in 2016 and 2017 but, say, in 2018, he decides to stop working and rely only on his pension, then he will not receive compensation for 2016 and 2017 but all the same, when he finally stops working, the indexation made for other pensioners will be taken into account for this category of pensioners as well. And of course, his pension will be indexed the same as other people’s pensions over this period. These decisions have been made, but the implications, among other things, for the labour market, are still under discussion, under careful consideration.



Dmitry Peskov:

Any additional questions about pensions? Yes, I see, Rossiyskaya Gazeta.



Kira Latukhina:

Kira Latukhina, Rossiyskaya Gazeta.

I have a question that is connected with this issue. For the past year, the Government and the State Duma have discussed increasing the retirement age, and they eventually decided that the retirement age should be increased for officials.

Will this really save money? And are there any other plans regarding the retirement age?

I also have a question about military pensioners in light of the ongoing debates about cancelling pensions for working pensioners.

You said that the issue is only at the debate stage, but military pensioners, who constitute a large group of working pensioners, are worried.



Vladimir Putin:

First, as I said, military pensions will be indexed just as all other pensions. Pensions will be increased by 4 percent early next year.

As for working and non-working pensioners, I don’t remember this detail, honestly. I’ll look into it, but I think the rules should be the same for all pensioners, whether they’re working or not working.

You know what I think about the retirement age; I have been fighting against increasing it. But there are problems, of course. As for increasing the retirement age for federal, regional and municipal officials to 65 years, both for men and for women, it will be increased gradually, every six months.

How will this work? For example, a woman has reached her retirement age, 55 years, and should retire. Well, under the new system she’ll be able to retire at 55 years and six months. In this way, we’ll gradually increase the retirement age for all officials. But it’s true that the economic effect will be very small.

As for increasing the retirement age for everyone, I still think that the time is not right for this. But frankly, many people, both experts and also people on the street keep telling me that I mean well but that it would eventually hurt the people. Why is that? Life expectancy is increasing in Russia. Back in 2005 or 2006, it was barely 65 years, while the current figure is 71.2. The number of working people who contribute to the pension system is decreasing, while the number of pensioners is increasing.

If we don’t do anything now, eventually pension system revenues will decrease. This year they have shrunk because real wages have contracted, and the pension fund is made of deductions from wages. The pension system is running a deficit, and we have to allocate money from the federal budget to cover the shortage.

I hope that this is a one-off issue, not a systemic one. However, with life expectancy on the rise, the workforce, as I’ve already said, is set to shrink compared to the number of non-employed. This could lead to systemic issues with replenishing the Pension Fund.

What are the possible consequences? In fact, this could result in lower incomes for retirees. The Government will be left with no choice but to reduce retirement benefits or increase the retirement age. But if this is the case, it should be done the same way as with the officials: calmly and without any haste.

When should it happen? I can’t answer this question yet. We’ll have to do it at some point. All the countries have already done it, I mean the neighbouring countries. However, I would prefer not to publically discuss when it should be done, because we have yet to answer this question ourselves. In any way, this is a relevant economic issue for us.

All other countries have also opted for a step-by-step approach. There is currently an age gap between those who reach the retirement age and those who retired a long time ago, and it is set to grow even more. We need to act in a timely manner so that the pension system does not collapse in five, 10 or 15 years.

What I want to say and people to hear: there is no way it will affect people who have already retired. They have nothing to do with the changes to the retirement system, no one will be forced to start working once again, even those who retired only yesterday. The law is not retroactive, so all those who have already retired are 100 percent sure to be able to fully benefit from their retirement rights.



Dmitry Peskov:

RBC, second row. Could you pass the microphone, please?



Mikhail Rubin:

Mr Putin, there are a number of media outlets within RBC media holding, so if I may and not to offend anyone, I would like to ask not one but a few brief questions.



Vladimir Putin:

How many is a few?



Mikhail Rubin:

Two.



Vladimir Putin:

There are a lot of people in this audience.



Mikhail Rubin:

The questions will be brief.

First, state-owned companies, which our colleague from the Wall Street Journal has already mentioned, failed to reduce salaries and bonuses for their employees during the crisis, but these very companies are constantly asking the Government for tax breaks or funds from the National Welfare Fund. What do you say to these requests?

I’d be remiss not to ask you about Yekaterina Tikhonova who is in charge of an important project at Moscow State University. Our Western colleagues tell us that she is your daughter. Is it true and what do you think about her endeavour?

We have a big favour to ask from you personally. Our reporter has been in jail for five months now. He is the person behind a high-profile investigation of the Vostochny spaceport fraud. His name is Alexander Sokolov. He is under investigation under a nonviolent article. If I may, I would like to hand over to you, when possible, our request to look into this matter. We are concerned that the issue may deal with pressure on the freedom of speech.

Thank you.



Vladimir Putin:

I've read online publications and other sources about Yekaterina Tikhonova and my other possible relatives and daughters.

A short while ago, everybody was saying that my daughters: a) study abroad; and b) live permanently abroad. Thank God, no one is saying this now. What they are saying now is that they — and that's true — live in Russia and have never left Russia for permanent residence in any other country. They studied only in Russian universities. This doesn’t mean that they don’t have contacts with their colleagues. I'm a proud father. They continue to study and work.

Someone from Russia Today asked me about languages. My daughters are fluent in three European languages. They also have conversational skills in one or two Oriental languages, and a fourth European language. They are not just fluent, they use these languages in their work. They are making the first steps in their careers, and are doing well. I tend not to discuss family-related issues. They don’t engage in business or politics, just keep a low profile.

With regard to the university project that you mentioned, regardless of the names of those who are engaged in it, it was spearheaded by the rector. It’s a good initiative. What does it concern? It concerns combining the capabilities of our higher educational institutions and research with the needs of our major enterprises and the national economy. Some people are running around not knowing how to place their inventions, while others are paying tons of money, billions of dollars, to buy Western technology and finished products. This endeavour initiated by the rector is the right thing to do. It’s still too early to say whether it’s a success or not. You should ask the rector and those who are involved in this work.

I have never been specific about the workplaces of my daughters and their line of work, and I’m not going to do so now. For many reasons, including security considerations. I believe that everyone is entitled to their own destiny. My daughters have never been star-struck children. They never craved the limelight. They just live their lives and do so decently.

About Sokolov. If he has been jailed for some eye-opener piece, including on the Vostochny space centre… I should be grateful to him for putting effort in the issue. It’s just that I know nothing about this, it is the first time I am hearing about the whole situation, and his name. But of course I understand. If that's the case, I will certainly try to help your publication, and that particular journalist.

But first I need to understand what has happened to him, I just don’t know. But you have this paper, will you give it to me? I am interested to have this project, one I actually initiated at the time, a few years ago, up and… I even visited the site, to help choose the place for the future spaceport. At first experts suggested other sites, a few places on the Pacific coast, not far from Vladivostok. They almost broke ground for it there.

Then these same experts said no. If you look at what the Americans are doing at Cape Canaveral, they said, they often postpone landing or lift-off due to the weather. The ocean causes a lot of problems, including an unstable climate, unstable weather, so it is best that we moved to the continent. And we did, moving to where it is today.

It is a major project, of national importance. We are building a whole new city there, and I hope that everything will be done in time. There is a backlog, used to be about one and a half years, now reduced to four or five or six months. I hope that the first launch timeframe we identified – the first quarter of next year – will be met, but it’s not wise to concentrate on specific dates so much. It is more important to have everything done well, and I look forward to seeing it.

Now the first part of your question – about state companies, benefits, wages and the use of the National Wealth Fund. You are absolutely right about everyone – state-owned companies and state authorities included – having to work more effectively to reduce inefficient spending. There’s certainly room for improvement here, a lot of work. I totally agree with you.

With regard to salaries, bonuses and so on, I think we talked about it last year, you know, the problem is that these amounts are calculated based on what senior executives make. We need the most upscale, world-class professionals, and possibly non-Russian managers to work for these companies, and these salaries and bonuses are legal on foreign labour markets.

If we cut them, we won’t get the high quality management we want. Another thing is that the senior executive (I never told them that, so I hope they hear me) could use part of their income, which they tell me – and it's true – they need to ensure that subordinate managers have theirs paid in full, could give some of their income to charity, as is also expected by world standards. This would hardly make them poor.

Regarding the National Wealth Fund, yes, they must improve the quality and administration and performance, and reduce inefficient costs, which I’ve already mentioned. I am personally very careful with any potential spending from the National Wealth Fund. What is the current purpose of this? The money must be spent on projects that will not lead to more spending by the fund but create conditions for economic development.

What are these projects? For example, 150 billion rubles was invested in the Trans-Siberian Railway and the Baikal-Amur Railway. This is economically advantageous and efficient, because there is already cargo to carry which will pay off the investment. I think so far, only 50 billion has been allocated for the Baikal-Amur Railway. I personally had several meetings with shippers. As soon as the railway is complete, transport will start and the National Wealth Fund will see returns. This is money that can be recouped.

Not many projects will fall under this description, but this is one of them. Another project is the ring road around Moscow. We need to create extra transport facilities around the city in order to ease the traffic burden on Muscovites, as well as to secure economic growth. I believe this is an important project that has already received around 150 billion.

Also, there is funding for Rosatom’s nuclear power station in Finland. These are returning investments because Finland has a stable economy. Despite all the sabotage there, the parliament made a firm decision to support this project, which was honestly very surprising to me. Rosatom’s partner, a company operating in Russia, has invested billions of euros in our economy and has expressed a willingness to cooperate and take on the risks. This money will be recouped by all means. This is a good investment.

Next, some of the money, I think around 180 billion, was invested in the Russian Direct Investment Fund. This fund raises ten foreign dollars for each invested dollar. This is an efficient investment. There are no other serious deposits by the National Wealth Fund but we’ll think about more opportunities that will be at least as efficient as those in the above projects.

”Oil“ Now let’s talk about oil.



Natalya Menshikova:

Good afternoon Mr Putin. Natalya Menshikova, the TV channel of the Nizhnevartovsk District, which is in Yugra, the home of the Samotlor oil field. The bulk of Russian oil is produced in our region, but these oil fields were originally explored back in the 1970s. This brings me to my question: Do you plan to invest in exploration, and if so, when? Also, pensioners from the Nizhnevartovsk District congratulate you on the coming New Year.



Vladimir Putin:

Thank you. Please convey my thanks not just to pensioners but to everyone in your region. I thank you for your support. Despite the problems facing them, people with moderate incomes are one of the most responsible groups in our society. These people – many of them – suffered many hardships after the war and worked very hard to rebuild our economy; they’ve seen a lot, and now they only have the state to rely on.

We know this, and we are grateful to them for their patriotic sentiments and their willingness to contribute to the education of the rising generation. They are doing this, and I mean not only veterans of the Great Patriotic War but all veterans, including veteran workers. I wish them a happy New Year. I wish them health and all the best. Thank you! Let’s applaud, no, not for me but for this part of our country. (Applause)

As for exploration, it’s a major part of our future. As you know, we adopted decisions on sour oil several years ago towards a more effective use of the depleting oil fields. We also adopted several other decisions, including decisions on taxation.

I know that the oil companies are not entirely satisfied, because we envisaged the so-called tax manoeuvre, under which we promised to reduce the export duty on crude oil while increasing the mineral tax. But this decision was not implemented, although we raised the mineral tax on oil and gas. The Government has increased the burden [on oil companies]. It’s important that this situation doesn’t last forever, and I agree with some in the industry who say that the oil companies act by inertia when they don’t reduce production, as I said. They don’t revise their development plans. But I’ve noticed they’ve even increased production.

At the same time, we, meaning the Government, must look closely at developments in this sector so we don’t kill the goose that lays the golden eggs. We’ll analyse the situation very seriously. Exploration is a highly important part, but the situation is not quite as you described it, that nothing has been done in exploration since the 1970s. No, we have been working on it, and we have invested in the agencies that have been charged with this work at the Government.

We try to encourage both private and state-owned companies to do this, and they have been doing it. I can’t cite figures now, but I can tell you that they are quite impressive. Maybe we are not doing enough, but I assure you that we’ve never neglected this.



Veronika Kilina:

Thank you very much for this opportunity to ask a question.

Good afternoon, Mr President.

Veronika Kilina with Nakanune.ru, a news agency based in the Urals Federal District.

Do you support the idea of the serial production of Il-96 planes and do you think that betting on foreign planes alone in connection with the recent tragic events was wrong? Why do you prefer domestically manufactured planes? I’m referring to the presidential air group that operates the Il-96. Thank you.



Vladimir Putin:

You know, I completely share your concern. The aircraft-manufacturing industry is one that ensures the development of our economy, it’s a high-tech sector. This is what we inherited from the Soviet era. Although of course, the Soviet Union developed primarily military aviation, adapting it to civilian needs. They didn’t care about the lifespan or fuel consumption of civilian aircraft.

We can’t follow the same approach today but we should definitely not only provide domestic carriers with our own commercial aircraft but also enter the international market. Generally, we should direct our manufacturers, including aircraft manufacturers, to ensure a level of quality that will make them competitive throughout the world.

Regarding a wide-body plane, this simply requires substantial investment. We have agreed with our Chinese partners to do this together and we are following this path. This is what I’d like to tell you. These are large, wide-body, long-haul planes. However, this is not enough for us. We need to provide planes not only for long-range routes but also regional routes, regional carriers. There are plans – I believe the Il-114, an old forgotten project, of course, with the innovation and new technology that’s possible and necessary for a modern product.

As you know, a major event has happened in engine manufacturing. The new PD-14 engine is the first product of its kind since the late 1980s. Somehow, we don’t pay attention to this, but it is a major achievement for our engine makers. I said this at one meeting and now I’ll take this opportunity to congratulate them on this accomplishment and thank them for their effort. This enables us to develop our aircraft industry further, including the Il-96 you mentioned.

The energy efficiency of the new engine and its capabilities make it possible for us to develop an entire line of planes, both medium-haul and long-haul. By the way, this was our weakest spot. I believe we can deal with avionics but this was the weakest spot, so we had to use either Pratt and Whitney or Rolls Royce. Their engines are good but ours are better. And our planes will also be better.



Vladimir Kondratyev:

Mr Putin, you spoke about oil, and you were asked about oil. And I’d like to ask you about gas – it is also one of the foundations of Russia’s prosperity. Not everything is clear on this issue.

We know that actions by the Ukrainian authorities are unpredictable. This is obvious from what happened in Crimea, where energy supplies were cut off. What if Ukraine stops the transit of Russian gas to Europe? Here’s the problem. The talks on Turkish Stream have been suspended because of the conflict with Turkey, and it is unclear whether they will be resumed. It would be very helpful if you would speak on this.

We have a backup option, Nord Stream-2 through the Baltic Sea, but a group of EU countries has protested against its construction and wants to torpedo the project like South Stream was done away with in the past.

What awaits us, and what turn will events take? By the way, what will happen

with the construction of the Russian nuclear plant in Turkey, in which Russia has already invested $3.5 billion, according to Western sources?



Vladimir Putin:

Russia has not invested $3.5 billion in the Akkuyu nuclear power station. The future of this project should be decided at the corporate level. This is a strictly commercial issue, and we won’t take a single step that would harm our economic interests. But this is up to Rosatom and its partners. As far as I know, the Turkish side has not yet issued a permit required to launch this project and make it a priority project. But let me repeat that this is a corporate decision.

Now let’s talk about Nord Stream and those who objected to it. We know that many countries were against the Nord Stream-1 project, but it was carried out. Its implementation turned out to be very helpful at the time. Not all conditions have been fulfilled and the pipes are not 100 percent filled with gas, especially in Germany – it’s 50 percent for Opal and almost none on another route, but I’m confident that these opportunities will come handy.

Regarding South Stream. You know our position: we were ready to implement it, but they simply wouldn’t let us. First, the European Parliament ruled that this project clashed with the European Union’s interests and forwarded the relevant document, and later the European Commission forced Bulgaria to halt the preparatory work, and then, all of a sudden, a Dutch regulator, where South Stream was registered, decided to grant us permission to launch the construction of the marine section. But how could we launch construction at sea, sink billions of euros there and then reach the Bulgarian coast without receiving permission first?

Naturally, they simply put us in a foolish situation, and seeing that, we said: if this is what it is, then we’re also stopping. They didn’t let us, do you understand? And I am surprised at the toothless stance of the Bulgarian Government that chose to neglect national interests for unclear reasons. We had planned to invest three billion [euros] in the construction itself — that means jobs, that means salaries, that means revenues to budgets of all levels, plus they could have had a minimum of 400 million euros per year just for transit. Well, a no is a no, so be it. As a matter of fact, one reason we came up with that project was to support Bulgaria. They don’t want it – well and good.

We began discussing Turkish Stream. You know, this doesn’t depend on us, after all. Not that we broke off the negotiations, but we want the European Commission to give written guarantees that all the routes, including a possible route through Turkey to Europe, are not only realisable, but also that it is a priority route and that the European Commission will back it. If Gazprom’s Turkish partners bring such a document from Brussels, we’ll move further. Unfortunately, so far, this doesn’t seem to be the case.

Regarding transit through Ukraine. True, at a corporate level, I heard it myself, during very serious debates someone would say: we will totally cut off this transit. I am not sure this should be done –cut off transit through Ukraine. But speaking about the capacity of Ukrainian transit and that of, say, Nord Stream-2… Well, everyone demands that Nord Stream in general and the future Nord Stream-2 meet certain requirements. What are these requirements? Reliability, the market nature of the gas transport system’s operation, and legal and administrative regulations that match the highest standards. Are our Ukrainian partners able to do what we together with our European partners have been doing with regard to Nord Stream? If they are able, we’ll continue working with them. If not, then we’ll see what can be done about it.



Natalia Rybyakova:

The Krasny Sever newspaper. Natalia Rybyakova. Yamal-Nenets Autonomous Area.

I have a question regarding the Northern Latitudinal Railway. Thank you for supporting Yamal projects. The regional government has also been doing a lot in this respect. Specifically, a public-private partnership agreement will be signed by the end of the year on the Bovanenkovo-Sabetta section. Unfortunately, the construction of the much-needed Salekhard-Nadym section has stalled, and project costs are growing by the day. Can this issue be resolved?



Vladimir Putin:

There is no doubt that we need this project. Yamal is Russia’s oil and gas pantry. We have been developing this territory and we’ll keep doing so in the future.

You know about the major international project implemented by Novatek, and the Chinese and French partners. The Government supports this project, among other things, because foreign investors entered this project before us. I’ll be honest with you. These investments by our foreign partners provided us with an incentive to support this undertaking. Withdrawing our support for the project after foreigners invested in it would have not made any sense. It would have been simply unfair towards our foreign partners who had already invested in the project.

This is an important project. This shows that we are thinking about the future. What I mean is that global LNG sales are set to grow.

Today, we are able to offer LNG for sale only in Russia’s Far East through the joint ventures we have, or through Gazprom’s swap deals. But here, in the Yamal Peninsula, there will be a powerful project by the Russian, French and Chinese to produce large volumes of LNG and access almost all global markets.

We have the future in mind as we work on this project. I’m surprised that those who run it have been so successful. Everything is on schedule, and the quality is high.

As for what you’ve mentioned, I think this is an extremely important project, as with a huge terminal, extraction and shipment operations, it would be desirable to have a universal port there. This way, not just LNG products can transit through this port, but all kinds of goods that can be rerouted from the Trans-Siberian Railway or Baikal-Amur Mainline. This is a very convenient location with great logistics. This could be all sorts of goods — bulk shipments, or anything else.

As for budget allocations, this requires additional consideration, taking into account budget constraints. We need to look at different options, including attracting foreign investment. The interest is there, and I hope the Direct Investment Fund, that I’ve mentioned earlier, will contribute to these efforts. We remember about these projects, and are committed to effectively supporting them whenever we can.

Egypt, please.



Question:

Good afternoon, Mr President, I have two questions. The first one is about Egypt.

When will you open Egypt to Russian tourists? This is my first question.

My second question is as follows. Two days ago, Saudi Arabia announced a new Islamist alliance. As far as I know, this new Islamist alliance brings together the Sunnis, and the Shiites will be in trouble. This will be an anti-Russian alliance, and it includes Turkey. This is dangerous. I would like to hear what you think about this alliance and, of course, your answer to my first question.



Vladimir Putin:

With regard to tourism, the decision to limit our civil flights to Egypt is not due to our distrust of the Egyptian leadership. It is not a political decision. This decision is about ensuring the safety of our citizens. We tell our people, ”Unfortunately, the Egyptian services, and oversight and law enforcement agencies are unable to deal with the threat of terrorism.“

Terrorists are a threat for you and us. President el-Sisi of Egypt shows amazing courage in fighting this scourge, but it takes time to resolve these problems. As soon as we come up with the mechanisms that can reliably ensure the safety of our passengers, we’ll lift the restrictions.

We’re working on this with our Egyptian partners. What would these mechanisms be like? At every stage of airport control, from landing to departure, we must have our employees involved in the process. Again, we don’t believe official Egyptian authorities have anything to do with this. This is our common problem and concern, so we must find a common answer to these challenges.

With regard to the coalition created in Saudi Arabia. We don’t think this coalition will have an anti-Russian slant. In addition to the country you mentioned, Turkey, which we don’t consider hostile. They have committed a hostile act against our plane, but saying that we consider Turkey a hostile state would not be true – our relations have indeed soured, and I’m not sure yet how we’ll get past this situation, but in any case, the ball is not in our court, but Turkey’s – but there’s Egypt, and other countries. This alliance was initiated by Saudi Arabia. We have both different and similar approaches to resolving the Syrian crisis, and we maintain contact with Saudi Arabia.

I recently met with the King [of Saudi Arabia]. We often meet at various meetings organised by our respective foreign and defence ministries. We are now considering joint projects in t military-technical cooperation with Saudi Arabia. It’s a multibillion dollar programme. We aren’t even thinking that this alliance may be directed against Russia.

On a separate note, in order to effectively address the challenges facing us in fighting terrorism, we must join our efforts rather than disperse our possibilities. I’m not quite sure what happened. The United States has created an alliance which includes all those countries, including Saudi Arabia. What’s missing? Why was it necessary to create another alliance, if there’s already one led by the United States? Do they have a plan of their own? Are there any internal contradictions? There may be contradictions.

Because regional interests of the regional powers are one thing and global interests in fighting terrorism are another. Europe is suffering from the ripple effects coming from that region. We have seen terrible terrorist attacks in Paris. The United States recently came under a terrorist attack that killed 14 people. The threat of more attacks remains.

We all need to join forces in fighting terrorist organisations, no matter what they are called and whatever slogans they may use to cover up their activities. I hope that the recently created alliance will uphold common interests and that we’ll develop common approaches and rules and establish effective cooperative actions and agree on the tools that we’ll use in this fight.



Maria Gomenyuk-Kravtsova:

Kaliningrad, Klops.ru news portal.



Vladimir Putin:

Again?



Maria Gomenyuk-Kravtsova:

Klops.ru



Vladimir Putin:

Klops?



Maria Gomenyuk-Kravtsova:

Yes, a German dish.



Vladimir Putin:

Aha. Rulka.ru. What are these klops – cutlets?



Maria Gomenyuk-Kravtsova:

That’s right.

Many traffic accidents take place in Kaliningrad every day in which pedestrians are killed or seriously injured. One such victim is our colleague Nadezhda Rzhevskaya. She was run down at a pedestrian crossing by a student at the Federal Security Service Border Protection Institute. Three months after, the investigation has not been closed and a criminal case has not been opened. The student had his driving license returned to him and he continues to drive his BMW, as before.



Vladimir Putin:

He must be a good student to drive a BMW.



Maria Gomenyuk-Kravtsova:

Our colleague was seriously injured. She is wheelchair bound.



Vladimir Putin:

Terrible.



Maria Gomenyuk-Kravtsova:

In this connection I have a question. Do you think high rank and shoulder boards can exempt [a person] from responsibility?



Vladimir Putin:

Of course not. This is nonsense. No rank, no position [can]. He does not even have a position. What is he, commander or what? A student, a rank and file serviceman. It’s simply unfair to say that he has some official position that allows him to avoid responsibility. Perhaps some influences may be involved there that are obstructing the investigation. I simply couldn’t know. I promise you that the investigation will be conducted thoroughly.

It’s difficult for me to say what happened there. In such road accidents, such tragedies, the sides’ positions are always different. Nevertheless, it is absolutely obvious that the investigation should be conducted objectively and brought to its logical conclusion.

I entirely agree with you: No matter who was driving, they must be held accountable for what happened. Those who are at the wheel bear a greater responsibility than the injured party, because a car is a source of enhanced danger, and in keeping with our law, a person behind the wheel bears a greater responsibility than the injured party. There is only one situation where a pedestrian can be guilty in an accident – this is when a pedestrian has deliberately caused an accident. Otherwise the driver is responsible. He may be charged either under the criminal code or the code of civil procedure but he is always responsible because he drives what is a source of enhanced danger.

What does the defence [industry] want? Okay, defence, go ahead.



Question:

Good afternoon. I come from Tula, and Tula, as its anthem goes, is a city of arms makers. Tula has a centuries-old history of arms manufacturing.

My question has to do with defence procurement. According to certain reports, it is set to increase by 10 percent annually, but given the situation with the price of oil and the economic situation, could it be frozen or reduced? I’m raising this issue because for Tula residents, this is about jobs, salaries and, of course, the country’s defence capabilities.



Vladimir Putin:

Listen, manufacturing in general and, even more so, the defence industry, is about long-term projects. It makes more economic sense to complete the projects already underway rather than stop them.

For example, if you start building a ship – ok, Tula doesn’t make ships, but it does make other types of military equipment with long production cycles – or airplanes or missile defence systems, and invest money in the project, it would cost more to freeze the project than to complete it. In fact, once you discontinue financing, you have to pay for maintenance, staff, workers, engineers, who still need to be paid, while not actually doing anything. Otherwise they have to be let go, which is extremely risky and should be avoided, because it will make recruiting highly-skilled workers impossible afterwards.

This goes to say that following through on the projects makes more economic sense for us. All these projects are envisaged in the State Armament Programme until 2020. Given the real budget constraints we currently face, the lower price of oil, etc. what do we do? There will be projects, and I want it to be clear, since no one is making any secret out of it, there will be projects that the industry itself is not prepared to complete by 2020. These projects won’t be launched, which will allow us to save money.

As economists and financial experts like to say, these projects are being shifted further down to the right of the chart. Everything already underway will be completed. The projects that will be pushed back beyond 2020 are not critical for the country’s defence capability, while helping free up resources and putting less strain on today’s and tomorrow’s budgets.

This is a very soft approach that requires a lot of attention by the industry and the Ministry of Defence. This is why we meet twice a year in Sochi, so that no one interrupts our work. We sit down after all the necessary calculations and submit proposals. This is one of the main, but not the only, aspects of how we work together with the military and the representatives of the defence industry. All the targets factored into the defence procurement programmes will be achieved if not in 2020, then in 2021 or in 2022 at the latest.

Maybe we should end the news conference soon.



Alexei Solomin:

Thank you. Alexei Solomin. Ekho Moskvy radio station and Diletant history website.

Mr Putin, first of all, I would like to inquire about the question my colleague asked about Mr Turchak. Please pardon my ignorance; I’m just like my boss, whom you know. So this isn’t surprising.

Mr Putin, don’t you think that it would make sense to suspend Governor Turchak from office during the investigation, since his name is mentioned not so much in the media as in the investigatory records? This has nothing to do with acknowledging that he is guilty. All this would mean that you’re neutral in this case, since people are unable to influence the proceedings at this level.

My main question is about Boris Nemtsov’s killing. We have learned from media reports, leaks from the Investigative Committee, and statements by the aggrieved party that the investigative authorities are unable to access two individuals who are involved in this case: North (Sever) battalion officers Geremeyev and Mukhudinov. The aggrieved party explains this by the possible stance of the Chechen leaders on this issue. They could be either hiding in Chechnya or successfully escaped abroad.

Ramzan Kadyrov repeatedly supported the defendants of this case in public. You had an opportunity to talk with Kadyrov many times. Did you discuss this investigation? What did you tell him? Did he convince you of the innocence of these people?

And I’d like to add a few details on children. There was a question linked with Matvei who is now disabled. According to official statistics, Russia still has large numbers of disabled children who have not been adopted by families. Maybe it’s time to repeal the ban on adoption by foreigners? This could also become part of the solution.



Vladimir Putin:

Here’s how we will work… Let’s start from the last part of your question. I’d like to point out that according to statistics the number of sick children adopted by foreigners is far below that of healthy ones. No foreigner has ever rushed to adopt our sick children. This is statistics. So let’s not hurry to change the decisions that we’ve already made. This is the first thing.

Secondly, speaking about Turchak, I must say that online and other publications write not about him but about the alleged interference of his father. I don’t even know much about this but I’m confident that administrative and personnel decisions, not to mention legal verdicts, should only be based on authentic facts established during the investigation and trial, not on press reports despite our respect for them.

Finally, let’s turn to the crime against Boris Nemtsov. I knew him personally and our relations had not always been bad. I never spoiled relations with him but he chose this path of political fighting – personal attacks and the like. That said, I’m used to this, he wasn’t alone. However, this doesn’t mean at all that the man should be killed. I’ll never accept this. I think this crime should be investigated and the culprits punished.

You said they may be hiding in Chechnya or may have fled abroad. It’s necessary to establish where exactly they are. I’ve never discussed these issues with the regional leaders, including in Chechnya, and am not going to do it in the future. This is for the investigators to establish, no matter how long it takes. You will remember the assassination of [Galina] Starovoitova. She was also a member of the opposition to some extent but law-enforcement brought this case to a successful completion as well as some other cases involving people that opposed the Government.

I think such cases must be investigated by all means, and those guilty of crimes should be exposed and punished. In this way we’ll be creating a stable political system in our own country. This is more important than trying to cover up somebody. Nobody is going to cover up anybody but we must wait for the results of the objective investigation.



Dmitry Peskov:

Mr Putin, maybe Sevastopol now?



Vladimir Putin:

Sevastopol, please. Please pass the microphone.



Sergei Gorbachev:

Sergei Gorbachev, the Novy Chernomorets newspaper, Chairman of the Union of Journalists of Sevastopol.

In Sevastopol, the most popular toast is ”To the Supreme Commander!“ these days.



Vladimir Putin:

Thank you.



Sergei Gorbachev:

Regardless of the occasion, regardless of its scale.



Vladimir Putin:

It is not necessary to make it so often…



Sergei Gorbachev:

This Stalin-era toast expresses cordiality, sincerity and great gratitude to you for Sevastopol and Crimea.

The problems that have become apparent over the last year and a half appear to be related to the fact that there is no definition of Sevastopol’s role at the state level. What we have is this counterproductive discussion at the regional level at least about what Sevastopol’s status should be: whether it is a Silicon Valley, an IT-centre, a centre for tourism or recreation.

In fact, Sevastopol was designed to be the main naval base, hence its status as a city of federal significance, a standalone entity of the Federation, not like Vladivostok, not like Kronstadt, with all due respect to them, but Sevastopol. It seems to me, on the state level, perhaps you need to confirm that the main role of Sevastopol is not the cultivation of elite vineyards, but the fact that it plays a special role in the country's defence as the main base of the Black Sea Fleet.

And one more thing. The Navy is a conservative organisation, one that largely depends on tradition. There is one tradition, even a privilege, a system of incentives: when an officer is discharged, transferred to the reserve, he retains the right to wear his uniform, and the naval uniform also calls for a marine cutlass. However, in the last two years officers began to have their daggers confiscated.

I have served in the Navy for 36 years, and I don’t understand who would want my cutlass with the Soviet emblem on it. And if you, as the Supreme Commander, decide that former marine officers can keep their daggers, as was the case in the Russian Empire and the Soviet Union, and later, too, I think you will earn the gratitude of thousands of naval officers and their children, grandchildren and great-grandchildren, who will also serve Russia in the oceans, in the fleets.



Vladimir Putin:

First, with regard to the importance of Sevastopol and ways for its development. I find it hard to accept the fact that from the naval point of view Sevastopol is more important than the base in Vladivostok or even more so the base on the Kamchatka Peninsula, which is home to our second-largest submarine nuclear fleet with missile carriers and strategic nuclear weapons on board.

We have done a lot to keep this base, and we will develop it in the future. In the North and Far East, our Navy has direct access to the oceans. Back in its time, the Soviet government – and this is an opportune moment to say a few kind words about it – did a lot to develop infrastructure in the North, including outside Murmansk, in Murmansk itself and in the Far East.

Our duty is to make sure that these efforts were not in vain. We must take up where our earlier generations left off, and take it to the next level. Sevastopol is also an important component of the naval infrastructure in Europe. As you can see, we equip the Black Sea Fleet with new ships and submarines. The Rostov-on-Don submarine is the most recent addition, though it went to Novorossiysk, not Sevastopol, where we have created another modern, I underscore, modern naval base. If I remember correctly, it must have six such submarines. As you may be aware, these submarines are equipped with the latest Kalibr missiles which worked well in Syria. There will be new surface ships there as well. The Sevastopol naval base will also grow and improve.

Wherever you look, there are problems that we inherited from the last century. We are now dealing with power generation. The Krymenergo equipment hasn’t been upgraded since the 1970s. As if there was no need to. The naval base is the same. Much needs to be done there to develop the infrastructure. However, saying that Sevastopol must be a solely naval base would be incorrect.

We still have to accomplish a lot in Vladivostok. But still Vladivostok has changed for the better. Some time ago, it too was an off-limits territory that was used solely as a naval base. The city was in a tough spot: no infrastructure, no airport, no roads, no modern social facilities, or theatres and museums. However, things are changing. In the modern world, people, wherever they live, especially in Sevastopol, should be able to enjoy all this, and have access to it. I'm sure that Sevastopol must be developed in several areas at a time. How? First, it’s up to Sevastopol residents and authorities. I know there may be different approaches.

Some want to develop it as a Silicon Valley, as you said. Nothing wrong with that. Developing high-tech industries instead of building hazardous production facilities makes sense. It’s quite possible. Former Navy personnel can be part of this work. They are intelligent and properly trained people. There are many other professionals out there as well.

Also, Sevastopol sprawls beyond its city boundaries and it’s a vast area that can be used for building resorts and all kinds of recreational facilities. Why not do it? It must be done. It’s necessary to do so and help people do so. We will help Crimea in general and Sevastopol in particular.

And Navy officers must have their dirks back.

Thank you so much. Let’s call it a day. Thank you.





The source of information - December 17, 2015 - Vladimir Putin’s annual news conference
 
Old March 15th, 2016 #16
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Meeting with Sergei Lavrov and Sergei Shoigu

Vladimir Putin held a working meeting with Foreign Minister Sergei Lavrov and Defence Minister Sergei Shoigu to address issues of settling the Syrian crisis. The President gave an order to begin withdrawing the main part of Russian troops from the Syrian Arab Republic on March 15.

March 14, 2016 20:35



President of Russia Vladimir Putin:

Colleagues, I have invited you here so we can once again assess the situation concerning settlement of the Syrian crisis. I propose that the Defence Minister starts with his assessment of what is happening there. Please, go ahead.



Defence Minister Sergei Shoigu:

Mr President,

In accordance with your instructions, we began the Syrian operation on September 30. In total, over the course of this time, we have carried out more than 9,000 flights, and for the first time, we carried out massive strikes with dispersed weaponry at a distance of over 1,500 kilometres using both air- and sea-based missiles.

In this time, as a result of the strikes, we were able to significantly hinder, and in some places completely stop resource support for terrorists by intercepting hydrocarbon trade, blocking the main routes for hydrocarbon supplies to Turkey and the main routes for weapons and ammunition deliveries to militants.

The terrorists have been driven out of Latakia, communication has been restored with Aleppo, Palmyra is under siege and combat actions are being continued to liberate it from unlawful armed groups. We have cleared most of the provinces of Hama and Homs, unblocked the Kweires airbase, which was blocked for more than three years, established control over oil and gas fields near Palmyra: three large fields that, as of now, have begun to operate steadily.

Over 2,000 criminals who have come from Russia have been eliminated in Syria’s territory, including 17 field commanders. Our air force destroyed 209 facilities for producing, processing and transferring fuel, as well as 2,912 sources of petroleum product delivery.

In total, with support from our air force, the Syrian troops liberated 400 towns and over 10,000 square kilometres of territory. We have had a significant turning point in the fight against terrorism.

Organisations involved in this work as a result of the negotiation process have begun taking active steps to ensure the ceasefire (there are currently 42 such organisations); plus, an additional 40 towns that joined the ceasefire.

There is monitoring over observance of the ceasefire; a fairly large number of unmanned aerial vehicles – over 70 – are being used for this purpose, as are all means of gathering intelligence, including electronic intelligence and our satellite constellation.

I could continue this report, Mr President, but I think these are the main outcomes of our work at this time.



Vladimir Putin:

Thank you.

Mr Lavrov, how is the peace process proceeding?



Foreign Minister Sergei Lavrov:

Mr President, in addition to the results that were achieved directly on the ground during military actions to repress terrorists, our Aerospace Forces operation helped create conditions for the political process.

We have consistently advocated establishing an intra-Syrian dialogue in accordance with the decisions made in 2012. Our suggestions were met with a lack of will on the part of all our partners working on this process. But since the start of the operations by our Aerospace Forces, the situation began to change.

The initial steps were gradually taken, first based on your talks with US President Barack Obama: the Russian-American group began to prepare a broader process for external support for intra-Syrian talks. An international Syria support group was created, which included all the key players without exception, including regional powers. Agreements on the parameters for the Syrian political process achieved in this group were approved by two UN Security Council resolutions, which confirmed the three-way process of ceasing hostilities, broadening access to humanitarian supplies in previously besieged areas and starting intra-Syrian talks.

Thanks to these decisions, including your latest agreement with President Obama, today intra-Syrian talks between the Government delegation and delegations of multiple opposition groups have finally been launched in Geneva. The work is difficult and we have yet to see how all these groups can gather at one table. For now, UN representatives are working individually with each of them, but the process has begun, and it is in our common interest to make it sustainable and irreversible.



Vladimir Putin:

In a short period, Russia has created a military group that is small in number but quite effective – one consisting of different types of forces and diverse capabilities. These include space reconnaissance, drones, combat missile strike systems in fighter aircraft and assault aircraft. They also include Navy forces that used the most modern weaponry from two seas – the Mediterranean and the Caspian – while working from surface ships and submarines. We created a powerful air defence system, including the most modern S-400 complexes.

The truly effective work by our troops has created conditions to start the peace process. I feel that the objectives set before the Defence Ministry and the Russian Armed Forces in the Syrian Arab Republic have generally been fulfilled.

With participation by Russian troops and Russian military grouping, the Syrian troops and Syrian patriotic forces, we were able to radically change the situation in fighting international terrorism and take initiative in nearly all areas to create the conditions for the start of a peace process, as I said.

At the same time, our service members – soldiers and officers – have demonstrated professionalism, teamwork and the ability to organise this military work far from their territory, without a common border with the seat of war. They operated effectively over the course of nearly half a year, bringing the necessary supplies and guidance to the military operations.

I feel that the objective set before the Defence Ministry and the Armed Forces is generally fulfilled, so I order the Defence Ministry to begin withdrawing the main part of our military group from the Syrian Arab Republic beginning tomorrow. I ask the Foreign Ministry to intensify the Russian Federation’s participation in organising the peace process to resolve Syria’s problems.

At the same time, our base points – our maritime base in Tartus and our aviation base at the Hmeymim airbase – will function as before. They must be protected securely from land, sea and air.

This part of our military group was located in Syria over the course of many previous years, and today, it must continue to fulfil the highly important function of monitoring the ceasefire and creating conditions for the peace process.

I hope that today’s decision will be a good signal for all conflicting sides. I hope that this will significantly lift the level of trust between all participants in the Syrian peace process and promote resolving the Syrian issue via peaceful means.


The source of information - http://en.kremlin.ru/events/president/news/51511
 
Old March 20th, 2016 #17
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Meeting with Russian Armed Forces service personnel



At a meeting in the Kremlin’s St George Hall, Vladimir Putin presented state decorations to service personnel and defence industry specialists who distinguished themselves in the performance of special missions in the Syrian Arab Republic.

More than 700 officers and men of the Aerospace Forces, the Ground Forces and the Navy attended the ceremony, along with representatives of the military-industrial complex.


March 17, 2016 13:45





President of Russia Vladimir Putin:

Comrade officers, friends,

I would like to welcome you – all the service personnel who took part in the operation in Syria.

All of you – pilots, sailors, service personnel of control bodies, of special purpose units, intelligence, communication and procurement, military advisers – acted consistently and with precision.

Words of special gratitude go to the female service personnel. You serve alongside men, with persistence and dignity. Your choice in life brings you our deep respect.

Thank you all for your dedication to our Fatherland.

Russia is proud of you, of its soldiers and officers who protect the interests of their homeland with a great degree professionalism and courage.

The main thing is that we have created conditions for the start of a peaceful process. We have managed to achieve positive, constructive cooperation with the United States of America and a number of other countries, as well as with the responsible political forces within Syria that truly wish to stop the war and find the only possible political solution to the conflict. It was you, Russian soldiers who opened up the road to peace.

Comrade officers,

After the ceasefire agreement was reached between the opposition and government forces, the scope of work for our aviation units was significantly reduced. The number of sorties went down threefold from 60–80 to 20–30 a day.

This made the grouping we had created there excessive in the military sense. The decision to withdraw a significant part of our service personnel and equipment was coordinated with the President of Syria Bashar al-Assad, who was notified of our plans in advance and supported them.

I would like to add that in our joint statement, Russia and the United States stressed that the struggle against terrorist organisations, recognised as such by the UN, will continue. Meanwhile, the government troops in Syria will not conduct any action against the armed units of the Syrian opposition that indicated their commitment to a ceasefire.

At the same time, I would like to stress that any group violating the ceasefire will be taken off the list provided by the United States, with all the consequences that come with it.

In this connection, I would like to specify the tasks our service personnel remaining in the Syrian Republic will be working on.

I will repeat that the primary task is to monitor ceasefire and create conditions for a political internal dialogue in Syria.

Our bases in Syria are at Tartus and Khmeimim, the service personnel there are reliably protected from land, sea and air. All the components of the deployed air defence system, including close range Pantsir-F and long-range S-400 Triumph units will be on regular duty.

I would like to note that we have significantly restored the potential of the Syrian air defence forces as well. All the parties concerned have been made aware of this. We proceed from fundamental international norms – nobody has the right to violate the airspace of a sovereign country, Syria in this case.

We have created together with the American side an efficient mechanism to prevent air incidents, but all our partners have been warned that our air defence systems will be used against any target that we deem to be threatening Russian service personnel. I want to stress – any target.

We will of course continue to provide assistance to the lawful Syrian government. This assistance is comprehensive in nature and includes financial aid, supplies of equipment and arms, assistance in training and building Syrian armed forces, reconnaissance support and assistance to headquarters in planning operations. And finally, direct support, I mean, the use of our space force and strike and fighter aviation. The Russian forces that remain in Syria are enough to ensure this.

We will continue to assist the Syrian army and authorities in their fight against the so-called Islamic State, Jabhat al-Nusra and other terrorist groups that have been declared as such, as I have said, by the UN Security Council. Our uncompromising attitude to terrorism remains unchanged.

What will the balance of forces be like after the reduction of the Russian group? A balance would be ensured.

Moreover, I am certain that with our support and strengthening of the Syrian army, we will shortly see the patriotic forces there achieve success in their struggle against terrorism.

As you may know, fierce fighting is on around Palmyra and on the approaches to the city. I hope this treasure of the world civilisation, or whatever is left of it after the bandits got there, would be returned to the people of Syria and the whole world.

If necessary, of course, Russia will be able to enhance its group in the region in a matter of hours to a size required for a specific situation and to use all the options available.

We would not want to do that. Military escalation is not our choice. Therefore, we still count on the common sense of both sides, on the adherence by both the Syrian authorities and the opposition to a peaceful process.
Comrade officers,

You remember what the situation was like in September of 2015. Back then, a significant part of the country was seized by terrorist groups, and the situation was getting worse.

In full compliance with international law, at the request of the legitimate government and the country’s president, we made a decision to launch our military operation. From the very start, we were very clear about its goals: support of the Syrian army in its lawful struggle with terrorist groups. Our actions were also timed for the period of active assaults against the terrorists. We stated clearly that we did not intend to get involved in an internal Syrian conflict. Only the Syrians themselves should seek a final solution and decide their country’s future.

The main target of our operation was terrorism. The struggle against international terrorism is a fair and righteous cause. This is a struggle against enemies of civilisation, against those who bring barbarity and violence, trying to renounce the great spiritual, humanitarian values that the world rests on.

I would like to repeat that the main goal of our actions in Syria was to stop the global evil and not to let terrorism spread to Russia. And our country has demonstrated its unquestionable leadership, willpower and responsibility.

Regarding the results we have achieved. Your actions and intense combat effort turned the situation around. We did not let this terrorist tumour grow, destroyed the bandits’ hiding places and munitions depots and blocked oil smuggling routes that brought the terrorists their main funding.

We have done a huge amount of work to support the lawful Syrian authorities – this is what I spoke about when addressing the United Nations on the organisation’s 70th anniversary. We strengthened their armed forces, which are now capable of not only holding back the terrorists, but also of conducting assault operations against them. The Syrian army has gained the strategic initiative and continues clearing its land of terrorists.

In this connection, I would like to note the position of President Bashar al-Assad. We see his reserve, his sincere striving for peace, his readiness for compromise and dialogue. The very fact that we withdrew part of our military group there against the backdrop of negotiations on the Syrian settlement that started in Geneva is an important positive signal, and I am certain that all parties to the Syrian conflict will duly appreciate it.

We will work and make every effort in coordination with our partners to help establish peace in Syria, to rid the long-suffering people of Syria of the terrorist threat and help the Syrians restore their country.

Comrade officers,

You have proved that our army and navy are strong, modern and well equipped and our warriors are steadfast, well-trained and hardened, capable of resolving the most complicated large-scale tasks.

In the course of the anti-terrorist operation, you have performed more than 9,000 operational sorties. Mass strikes using high-precision Kalibr cruise missiles with a range of 1,500 km were dealt at terrorist facilities from our naval ships located in two seas – the Caspian and the Mediterranean, both from subsurface ships and a submarine. We are proud of the professional actions of our navy.

Our long-range strategic aviation has also done a good job. Thus, they used new air-based X-101 missiles with a range of about 4,500 km. And finally, over the short period in Syria, as I have said, we deployed a modern and efficient air defence system and developed cooperation between all the forces and resources and organised administrative support for the group. Our military transport aviation and Navy support vessels have done well too.

In other words, all the most important support issues, the organisation of our group in a remote combat area were resolved competently and in a timely manner, which again demonstrated the enhanced quality of Russia’s Armed Forces.

I would also like to thank representatives of the military-industrial complex: workers, engineers and designers. The latest Russian weaponry has passed the tests, and not at shooting ranges but in real combat. This is the best and the most serious test.

This experience will make it possible to introduce necessary changes, to improve the efficiency and reliability of the equipment, to create new generation weaponry, and to improve the Armed Forces and enhance their combat capability. Life itself has shown that they are a reliable guarantee of our country’s security.

We should bear in mind the threats that appear when we do not do things on time; we should remember the lessons of history, including the tragic events of the beginning of World War II and the Great Patriotic War, the price we paid for mistakes in military construction and planning and the shortage in new military equipment. Everything should be done on time, while weakness, neglect and omissions are always dangerous.

The military operation in Syria certainly required certain funds, however the main part of the funding came from the Defence Ministry, their resources. Some 33 billion rubles were earmarked in the Ministry’s 2015 budget for military exercises. We simply retargeted these funds to support our group in Syria, and there is hardly a better way of training and perfecting combat skills than under real combat conditions. In this sense, it is better to use motor operating time and combat stock in combat than at a testing range. You, professionals, know this better than anyone else.

Obviously, additional funds will be required to restock our arsenals, equipment and ammunition, including repairs of the equipment that was used in Syria. I am sure these costs are reasonable and necessary, because this was a chance to test everything in combat, find faults and rectify them. These costs help enhance our country’s defence capability and resolve strategic and current tasks to ensure Russia’s security. We need to do it now, to avoid paying a much higher price later.

That price is high, and I am not talking about money now. Here in this hall are Yelena Peshkova, Valentina Cheremisina, Irina Pozynich and Yulia Zhuravleva – widows of our comrade officers who died fighting terrorists. I know that for their families and friends, the loss of Oleg, Ivan, Alexander and Fedor is irreparable. We all take this as our own loss. That is why I used your husbands’, fathers’ and sons’ first names. I spoke not as the Supreme Commander-in-Chief or President, but as a grateful citizen of Russia who grieves over this loss. We will remember their courage and chivalry; we will remember them as real men and courageous warriors.

Comrade officers,

The large-scale operation in Syria went on for more than 5 months in a complicated region, far from Russia, and you have done your duty with honour by protecting the security of your country and your people at faraway frontiers. The tasks you were set have been generally met, troops are returning to their regular deployment locations, returning home, to Russia.

I would like to note here, for this audience and for the entire country: Russia’s main agenda today is that of peace. It has to do with developing the economy in complicated conditions, with maintaining and improving the wellbeing of our people. However, without ensuring our security, without creating a battle-ready, modern and efficient Army and Navy we would not resolve a single task. Moreover, the very existence of a sovereign and independent Russia would not be possible without it.

It is very symbolic that we are honouring you in the legendary St George hall that holds the history of Russia’s military glory along with the names of its great sons. Everything here is filled with the victorious spirit of Russian warriors. Our officers and men have demonstrated yet again that they are courageous, noble, strong-willed warriors, true to their Fatherland

Thank you for your service. I thank all the participants of the military operation in Syria. Thank you.

Allow me now to move on to the presentation of state decorations. I will not be able to present them all today. I will present them to some of you; however, I assure you that we know how each one of you did your duty.

Thank you.



Hero of the Russian Federation, Colonel Viktor Romanov:

Comrade Supreme Commander-in-Chief,

Allow me to thank you for all these high decorations on behalf of the Aerospace Forces’ service members carrying out missions in Syria. For my comrades and me, the participation in this military operation has become a true combat baptism. Many young people passed through it, and this experience is incomparable to anything else. Every time we took off into the Syrian skies to destroy militants, we fully understood that we were protecting not just the Syrian people, but our Fatherland as well.

Today, we continue the traditions of the Russian veterans – our fathers and grandfathers. Our pilots have always stood out for their strength of spirit, honour, and high military and moral qualities. I want to assure you, Comrade Supreme Commander-in-Chief, that the Aerospace Forces’ personnel are capable of protecting our state, ensuring its security and fulfilling all the objectives we are set.



Corporal, Intelligence Officer of the Rocket Artillery Battery Squad of the Black Sea Fleet’s180th Separate Naval Infantry Brigade (Marines) Oleg Baranov:

Comrade Supreme Commander-in-Chief,

On behalf of my comrades and myself, allow me to thank you for your high assessment of our contribution to the fight against international terrorism.

We will remember this meeting at the Kremlin as a sign of your trust and we want to assure you that we will live up to that trust.

Today, our army is powerful, efficient, and capable of withstanding any enemy. I know from personal experience that Russian weapons are the best and most reliable; they have never let us down in battle.

We are proud to serve in the Russian Army. Our citizens can be confident that we will channel all our energy into protecting our Fatherland and do everything to ensure our citizen’s peaceful life.



Vladimir Putin:

Comrade officers, friends,

Allow me to once again sincerely congratulate you all on returning home and on receiving your state decorations.

In his speech, one of the award recipients just said – and clearly, he was nervous, because this is an atmosphere and situation we are not used to – that they were proud to be serving in the Russian Army. And Russia is proud of its army and of you.

Thank you.





The source of information - http://en.kremlin.ru/events/president/news/51526
 
Old June 19th, 2016 #18
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Plenary session of St Petersburg International Economic Forum



President of Kazakhstan Nursultan Nazarbayev and Prime Minister of Italy Matteo Renzi took part in the plenary session.



June 17, 2016 16:20 St Petersburg





President of Russia Vladimir Putin:

Ladies and gentlemen, friends,

I am very glad to welcome all of you to the 20th St Petersburg International Economic Forum.

To start with, looking at this hall I cannot but recall how such forums began. I cannot but recall that it was initiated by the first mayor of this city, Anatoly Sobchak. Twenty years, or even more, have passed since then. It started as a regional forum although we organised it then as members of the city administration. Today it has turned into a major venue where people can meet, talk about problems and exchange opinions.

First of all, I would like to thank the heads of international organisations, leaders of states, respected political figures and business representatives who responded to our invitation.

The St Petersburg Forum has traditionally served as a venue for discussing strategic issues. Such conversation is all the more important now that the world is undergoing a serious transformation, when deep changes are affecting practically all areas of life.

I would like to take this opportunity to share with you my assessments and thoughts, to tell you how we view Russia in a changing world. And I would like to start with the systemic problems that are besetting the global economy and practically all countries.

True, after the 2008–2009 crisis, we managed to partially balance our financial accounts, limit but not overcome the debt increase problem and make cash flow more transparent and manageable.

However, the structural problems accumulated by the global economy still persist, and we have not yet put our economy on the growth trajectory.

Incidentally, current geopolitical tensions are related, to some extent, to economic uncertainty and the exhausting of the old sources of growth. There is a risk it may increase or even be artificially provoked. It is our common interest to find a creative and constructive way out of this situation.

The world’s leading economies are looking for sources of growth, and they are looking to capitalise on the enormous existing and growing potential of digital and industrial technologies, robotics, energy, biotechnology, medicine and other fields. Discoveries in these areas can lead to true technological revolutions, to an explosive growth of labour productivity. This is already happening and will happen inevitably; there is impending restructuring of entire industries, the devaluation of many facilities and assets. This will alter the demand for skills and competencies, and competition will escalate in both traditional and emerging markets.

In fact, even today we can see attempts to secure or even monopolise the benefits of next generation technologies. This, I think, is the motive behind the creation of restricted areas with regulatory barriers to reduce the cross-flow of breakthrough technologies to other regions of the world with fairly tight control over cooperation chains for maximum gain from technological advances. We have discussed this with our colleagues; some say it is possible. I think not. One can control the spread of certain technologies for a while, but in today's world it would be next to impossible to keep them in a contained area, even a large area. Yet, these efforts could lead to basic sciences, now open to sharing of knowledge and information through joint projects, getting closed too, with separation barriers coming up.

However, the scale of technological, economic problems and the objective situation we are in – their scale and nature suggest that we can develop effectively only together, by building cooperation. We believe that such cooperation can be effectively built as part of a flexible and open integration environment that encourages competition in scientific research, a variety of technological solutions that allow the participating countries to fully employ their competence and their potential. In 2011, with Belarus and Kazakhstan, and relying on the dense network of cooperative relationships we inherited from the Soviet Union, we formed a common customs space, and then upgraded it to the Eurasian Economic Union. The initiator of this project is here with us today, on this very panel. It is President of Kazakhstan Nursultan Nazarbayev.

We are deepening our integration gradually, and are removing obstacles to commerce and the movement of investment, technology and workforce. We are implementing an industrial and technological cooperation programme already, and are forming a common service market incrementally. Common energy, oil and gas and financial markets will emerge by 2025.

We are aware of the impressive prospects of cooperation between the EAEU and other countries and integration associations. Over 40 states and international organisations have expressed the desire to establish a free trade zone with the Eurasian Economic Union. Our partners and we think that the EAEU can become one of the centres of a greater emergent integration area. Among other benefits, we can address ambitious technological problems within its framework, promote technological progress and attract new members. We discussed this in Astana quite recently. Now we propose considering the prospects for more extensive Eurasian partnership involving the EAEU and countries with which we already have close partnership – China, India, Pakistan and Iran – and certainly our CIS partners, and other interested countries and associations.

To start, we might streamline and unify the regulation of departmental cooperation and investment, nontariff measures of technology and phytosanitary control, customs administration and protection of intellectual property. Further on, we should move gradually to the reduction and eventual abolition of tariff restrictions.

We might proceed from a network of bilateral and multilateral trade agreements that envisage a varying pace, extent and level of interaction and the extent of market openness, depending on specific national economies’ readiness for teamwork, with understandings on joint research, educational and high-tech projects. All these agreements should be future-oriented and provide the basis for harmonious joint development resting on equal and effective cooperation.

As early as June we, along with our Chinese colleagues, are planning to start official talks on the formation of comprehensive trade and economic partnership in Eurasia with the participation of the European Union states and China. I expect that this will become one of the first steps toward the formation of a major Eurasian partnership. We will certainly resume the discussion of this major project at the Eastern Economic Forum in Vladivostok in early September. Colleagues, I would like to take this opportunity to invite all of you to take part in it.

Friends, the project I have just mentioned – the “greater Eurasia” project – is, of course, open for Europe, and I am convinced that such cooperation may be mutually beneficial. Despite all of the well-known problems in our relations, the European Union remains Russia’s key trade and economic partner. It is our next-door neighbour and we are not indifferent to what is happening in the lives of our neighbours, European countries and the European economy.

The challenge of the technological revolution and structural changes are no less urgent for the EU than for Russia. I also understand our European partners when they talk about the complicated decisions for Europe that were made at the talks on the formation of the Trans-Atlantic partnership. Obviously, Europe has a vast potential and a stake on just one regional association clearly narrows its opportunities. Under the circumstances, it is difficult for Europe to maintain balance and preserve space for a gainful manoeuvre.

As the recent meetings with representatives of the German and French business circles have showed, European business is willing and ready to cooperate with this country. Politicians should meet businesses halfway by displaying wisdom, and a far-sighted and flexible approach. We must return trust to Russian-European relations and restore the level of our cooperation.

We remember how it all started. Russia did not initiate the current breakdown, disruption, problems and sanctions. All our actions have been exclusively reciprocal. But we don’t hold a grudge, as they say, and are ready to meet our European partners halfway. However, this can by no means be a one-way street.

Let me repeat that we are interested in Europeans joining the project for a major Eurasian partnership. In this context we welcome the initiative of the President of Kazakhstan on holding consultations between the Eurasian Economic Union and the EU. Yesterday we discussed this issue at the meeting with the President of the European Commission.

In addition, it would be possible to resume dialogue between experts at the technical level on a broad range of issues, such as trade, investment, technical regulation and customs administration. In this way we could create the groundwork for further cooperation and partnership.

Naturally, we consider it important to continue cooperation on major research projects, such as the ITER thermonuclear plant and the x-ray free electron laser, to name a few. Joint efforts will allow us to seriously increase the technological competitiveness of both Europe and Russia. It is enough to note that in 2015 Russia invested 1.2 billion Euros in high-tech joint projects with Europe.

Colleagues,

In formulating the strategy for Russia’s economic development, we certainly consider the current trends in the world and intend to make use of global technological changes, the formation of new markets and the opportunities of integration and cooperation to advance our own development.

Russia has managed to resolve the most urgent current problems in the economy. We hope growth will resume in the near future. We have maintained reserves and substantially reduced capital drain – by five times compared with the first quarter of 2016. Inflation is going down as well. It has fallen almost in half if we compare several months in 2014–2015 with the same period in 2015–2016. I believe that it is possible to bring inflation down to 4–5 percent as early as in the mid-term perspective.

In addition, it is necessary to gradually decrease the budget deficit and the dependence on revenues from hydrocarbons and other raw materials. This includes cutting our non-oil and gas deficit at least in half in the next 5 to 7 years.

I am sure that the Government and the Central Bank will continue their balanced and responsible efforts to ensure macroeconomic stability. Our goal is to achieve economic growth rates of no less than 4 percent a year. Yes, of course, I remember what we were saying in previous years. Today, we are talking about far more modest targets. The objectives are not as high as were outlined only a few years ago, but, to reiterate, the situation has changed not only for Russia but for the entire global economy. The current slowdown is a global trend.

A key factor that predetermines the overall competitiveness of the economy, market dynamics, GDP growth and higher wages is labour productivity. We need higher labour productivity at large and medium-sized enterprises: in industry, in the construction and the transport sectors and in agriculture – no less than 5 percent a year. This appears to be a challenging and even unattainable goal, if we look at what is happening here today. At the same time, the examples of numerous enterprises, as well as of entire manufacturing sectors, such as the aircraft industry, the chemical industry, pharmaceutics and agriculture, show that this goal is quite feasible and realistic.

We will develop legislation, tax regulators and technical standards to incentivise companies to raise labour productivity and introduce labour and energy saving technology. Enterprises that are ready and willing to achieve such goals should receive broad access to financial resources, including through development institution mechanisms such as Vnesheconombank and the Industry Development Fund.

With the growth of labour productivity, inefficient employment will inevitably shrink, which means we will need to substantially increase the labour market’s flexibility, to offer people new opportunities. We will be able to resolve this problem primarily by creating more jobs at small and medium-sized businesses. The number of people (what I am going to say is very important) employed at small and medium-sized businesses should grow from today's 18 million by at least 1.4 million by 2020 and by more than 3 million by 2025. It will be difficult to increase support for small and medium-sized businesses, and still harder to consistently build a niche for its operation. But it needs to be done.

We have already taken an important step toward that end, which has generated some initial results. For example, large companies co-owned by the government have tangibly increased their orders from small and medium-sized businesses. By the end of the year – and this is, I think, an achievement by the Government – large companies will place 1 trillion rubles worth of orders with small and medium-sized businesses, a nearly nine-fold increase on last year.

High-tech industries could provide another niche for small and medium-sized businesses. It is important to create favourable conditions for small companies, start-ups entering the market with breakthrough products. Finally, there is yet another significant niche – services, the development of consumer services, essentially creating a comfortable, supportive environment for people living in the cities and towns of Russia.

In July, the Federal Corporation for the Development of Small and Medium Enterprises will launch a free online service – the Business Navigator – containing information on promising areas for starting a business, by region, as well as which products and services are in demand and what financial and property support options are available there. The government has already started dedicated work to promote exports and has created the Russian export hub.

Still, we need to go further, building on the results achieved. We need to put together a support system for export-oriented companies, which would embrace the entire value chain from R&D and export financing to helping companies with certification, marketing, maintenance arrangements and generally gaining a foothold in foreign markets.

I should add that our import replacement programme is also aimed at manufacturing goods that are competitive on the global market. And in this sense, I would also like to stress that import replacement is an important stage for expanding exports in sectors other than raw materials and finding a place for our companies in global manufacturing and technological alliances – and not in secondary roles, but as strong and effective partners.

Friends, we will continue to further liberalise and improve the business climate. I know a great deal has been said about this at forum events today and yesterday. We will tackle systemic problems, of which we still have plenty. This includes improving transparency and balancing relations between government agencies and businesses. These relations should be built on understanding and mutual responsibility, meticulous observance and compliance with laws and respect for the interests of the state and society, and the unconditional value of the institution of private property.

It is essential to drastically reduce illegal criminal prosecutions. Furthermore, representatives of security and law enforcement agencies should be made personally liable for unjustified actions leading to the destruction of a business enterprise. I believe that this liability can be criminal.

I realise that this is a very sensitive issue. We cannot and should not bind our law enforcement agencies hand and foot. However, without a doubt, there is a need for balance here, for a firm barrier to any abuses of power. The leadership of the Prosecutor General’s Office, the Investigative Committee, the Interior Ministry and the Federal Security Service should continuously monitor the situation on the ground and, if necessary, take measures to improve legislation.

I ask the working group on law enforcement in entrepreneurial activity, which is headed by Chief of Staff of the Presidential Executive Office Sergei Ivanov, to focus on these issues as well. I should add that I have already submitted to parliament a package of draft laws prepared by the working group, designed to humanise the so-called economic statutes [of the Criminal Code]. That said, it is also important to guarantee businesses and all citizens the right to fair and impartial defence in court.

The Russian judicial community has done a good deal recently to improve the quality of the court system. The merging of the Supreme and the Higher Arbitration courts has played a positive role in ensuring the uniformity of law enforcement. I believe it is necessary to move further toward enhancing the responsibility of judges and making the judicial process more transparent.

A major role in creating a favourable business environment, without a doubt, belongs to Russian regions. I know that this was discussed at forum events in the morning, and the results of the annual national investment climate ratings were announced. I would like to join in congratulating the winners and remind you that these are Tatarstan and the Belgorod and Kaluga regions. I would also like to note the significant progress made by the Tula, Vladimir, Tyumen, Kirov, Lipetsk and Orel regions, and the city of Moscow.

What stands out here? Judging by the results, a core group of leaders has already emerged, who are invariably at the top of rankings. The natural question is: Where are the others? I ask the Government, in conjunction with business communities, to consider additional mechanisms to reward the best regional administrative teams. On the other hand, we will take serious measures, including dismissals, with regard to regional leaders who do not understand that business support is a major resource for regional and national development. I would like my colleagues in the regions, above all, regional leaders to hear me. We will seriously analyse what is happening in this sphere in each Russian region and discuss the issue in depth in the autumn.

Ladies and gentlemen, I have already talked about Russia’s participation in cooperative scientific research projects, in particular with European countries. It is essential to add that we have a core advantages in physics, mathematics and chemistry. As you know, recently we honoured scientists who won the National Award, who have made brilliant breakthroughs in biology, genetics and medicine. Russian microbiologists have developed, for example, an effective vaccine against Ebola. National companies are going to bring an entire line of unmanned vehicles to the market and are working on energy distribution and storage, and digital sea navigation systems. We have practically put in place a technological development management system. What does this entail and what would I like to say in this context?

First. The recently formed Technology Development Agency will help apply current research to real manufacturing and set up joint ventures with foreign partners.

Second. Another mechanism will be in use starting in 2019. Major manufacturers will be made legally bound to use the most advanced technologies meeting the highest environmental standards. Hopefully, this will give a serious boost to industrial modernisation. Many neighbouring countries introduced such requirements long ago. We have had to put off these changes due to problems in the real economic sectors, but we can’t keep postponing it any more. Our business colleagues know this and must be prepared.

And finally, third. The National Technology Initiative covers projects of the future based on technologies that will create fundamentally new markets in a decade or two. I would like to ask the Government to promptly remove administrative, legislative and other obstacles blocking the development of future markets. It is essential to back up technological development with financial resources. Therefore, the key task facing the overhauled Vnesheconombank will be to support long-term projects, attractive projects in this high-tech sector.

We clearly understand that it is people who create and use technologies. Talented researchers, qualified engineers and workers play a crucial role in making the national economy competitive. Therefore education is something we should pay particular attention to in the next few years.

We are witnessing revived interest on the part of young people in engineering and natural sciences. Russia already holds a leading position in the world in the number of students training to become engineers. Professional training standards in engineering are improving. Universities and colleges are consolidating ties with the real economy, both state and private sectors, and the demand for future professionals is therefore growing.

We have to continue to upgrade the material resources of universities and colleges, improve teachers’ qualifications, work to improve university and college curricula in line with modern updated professional standards and use the expertise we received when working with the WorldSkills international movement.

Beginning with school and extracurricular programmes, we create conditions to enable children throughout the country to work on technical and scientific projects, learning to work creatively in a team from childhood. These skills are essential to a modern specialist in practically any sphere.

Colleagues, obviously the issues that we are facing call for new approaches toward development management, and here we are determined to make active use of the project principle. A presidential council for strategic development and priority projects will be created in the near future. It will be headed by your humble servant, while the council presidium will be led by Prime Minister Dmitry Medvedev.

The council will deal with key projects aimed at effecting structural changes in the economy and the social sphere, and increasing growth rates. I have spoken about some of these projects today: raising labour productivity, the business climate, support for small and medium-sized business, and export support, among others.

These projects are comprehensive. They span various economic sectors and social spheres, go far beyond the competence of one agency and require the active participation of regions and municipalities. At the same time a project related segment will be singled out in socially oriented state programmes, such as healthcare, education and housing, with clearly designated targets that we plan to achieve by 2020 and by 2025, and what measures need to be taken to achieve these results.

By the middle of the next decade the world will obviously be a different place. To overlook, to ignore on-going processes means to fall by the wayside of development. To maintain leadership positions [we] should work to make these changes happen.

This is the 20th time St Petersburg welcomes the forum guests. During these years Russia has made great progress, showing its ability to meet the challenges of the times and in certain respect remain ahead of the curve, while preserving its identity and spiritual roots, which I consider to be extremely important. We are confidently looking ahead, linking our future and our success to [our] openness to the world and wide-ranging cooperation in the interest of development.

Dear colleagues, friends, ladies and gentlemen, I am sure that you share this approach, and we certainly appreciate this and invite you to work together with us.

Thank you.


<…>


Plenary session moderator, CNN host Fareed Zakaria:

Thank you to all three of you: two presidents, one prime minister, though in Italy, you are allowed to say ”President Renzi“ also. By the format we have agreed upon, what I will do is we will begin this discussion first with our host president, President Putin, and then I will widen that conversation to include Prime Minister Renzi and President Nazarbayev. We started a little bit late, so we will go a little bit longer.

President Putin, let me ask you a very simple question. Since 2014, you have had European Union sanctions and US sanctions against Russia. NATO has announced just this week that it is going to build up forces in states that border Russia. Russia has announced its own buildup. Are we settling into a low-grade, lower-level cold war between the West and Russia?



Vladimir Putin:

I do not want to believe that we are moving towards another Cold War, and I am sure nobody wants this. We certainly do not. There is no need for this. The main logic behind international relations development is that no matter how dramatic it might seem, it is not the logic of global confrontation. What is the root of the problem?

I will tell you. I will have to take you back in time. After the collapse of the Soviet Union, we expected overall prosperity and overall trust. Unfortunately, Russia had to face numerous challenges, speaking in modern terms: economic, social and domestic policy. We came up against separatism, radicalism, aggression of international terror, because undoubtedly we were fighting against Al Qaeda militants in the Caucasus, it is an obvious fact, and there can be no second thoughts about it. But instead of support from our partners in our struggle with these problems, we sadly came across something different – support for the separatists. We were told, “We do not accept your separatists at the top political level, only at the technological.”

Very well. We appreciate it. But we also saw information support, financial support and administrative backup.

Later, after we tackled those problems, went through serious hardships, we came to face another thing. The Soviet Union was no more; the Warsaw Pact had ceased to exist. But for some reason, NATO continues to expand its infrastructure towards Russia’s borders. It started long before yesterday. Montenegro is becoming a [NATO] member. Who is threatening Montenegro? You see, our position is being totally ignored.

Another, equally important, or perhaps, the most important issue is the unilateral withdrawal [of the US] from the ABM Treaty. The ABM Treaty was once concluded between the Soviet Union and the United States for a good reason. Two regions were allowed to stay – Moscow and the site of US ICBM silos.

The treaty was designed to provide a strategic balance in the world. However, they unilaterally quit the treaty, saying in a friendly manner, “This is not aimed against you. You want to develop your offensive arms, and we assume it is not aimed against us.”

You know why they said so? It is simple: nobody expected Russia in the early 2000s, when it was struggling with its domestic problems, torn apart by internal conflicts, political and economic problems, tortured by terrorists, to restore its defence sector. Clearly, nobody expected us to be able to maintain our arsenals, let alone have new strategic weapons. They thought they would build up their missile defence forces unilaterally while our arsenals would be shrinking.

All of this was done under the pretext of combatting the Iranian nuclear threat. What has become of the Iranian nuclear threat now? There is none, but the project continues. This is the way it is, step by step, one after another, and so on.

Then they began to support all kinds of colour revolutions, including the so-called Arab Spring. They fervently supported it. How many positive takes did we hear on what was going on? What did it lead to? Chaos.

I am not interested in laying blame now. I simply want to say that if this policy of unilateral actions continues and if steps in the international arena that are very sensitive to the international community are not coordinated then such consequences are inevitable. Conversely, if we listen to one another and seek out a balance of interests, this will not happen. Yes, it is a difficult process, the process of reaching agreement, but it is the only path to acceptable solutions.

I believe that if we ensure such cooperation, there will be no talk of a cold war. After all, since the Arab Spring, they have already approached our borders. Why did they have to support the coup in Ukraine? I have often spoken about this. The internal political situation there is complicated and the opposition that is in power now would most likely have come to power democratically, through elections. That’s it. We would have worked with them as we had with the government that was in power before President Yanukovych.

But no, they had to proceed with a coup, casualties, unleash bloodshed, a civil war, and scare the Russian-speaking population of southeastern Ukraine and Crimea. All for the sake of what? And after we had to, simply had to take measures to protect certain social groups, they began to escalate the situation, ratcheting up tensions. In my opinion, this is being done, among other things, to justify the existence of the North Atlantic bloc. They need an external adversary, an external enemy – otherwise why is this organisation necessary in the first place? There is no Warsaw Pact, no Soviet Union –who is it directed against?

If we continue to act according to this logic, escalating [tensions] and redoubling efforts to scare each other, then one day it will come to a cold war. Our logic is totally different. It is focused on cooperation and the search for compromise. (Applause.)



Fareed Zakaria:

So let me ask you, Mr President, then what is the way out? Because I saw an interview of yours that you did with Die Welt, the German newspaper, in which you said, the key problem is that the Minsk Accords have not been implemented by the Government in Ukraine, by Kiev, the constitutional reforms. They say on the other side that in Eastern Ukraine, the violence has not come down, and the separatists are not restraining themselves, and they believe Russia should help. So since neither side seems to back down, will the sanctions just continue, will this low-grade cold war just continue? What is the way out?



Vladimir Putin:

And it is all about people, no matter what you call them. It is about people trying to protect their legal rights and interests, who fear repression if these interests are not upheld at the political level.

If we look at the Minsk agreements, there are only a few points, and we discussed them all through the night. What was the bone of contention? What aspect is of primary importance? And we agreed ultimately that political solutions that ensure the security of people living in Donbass were the priority.

What are these political solutions? They are laid down in detail in the agreements. Constitutional amendments that had to be adopted by the end of 2015. But where are they? They are nowhere to be seen. The law on a special status of these territories, which we call “unrecognized republics”, should have been put into practice. The law has been passed by the country’s parliament but still hasn’t come into effect. There should have been an amnesty law. It was passed by the Ukrainian parliament but was never signed by the president, it has no effect.

What kind of elections are we talking about? What sort of election process can be organised during an anti-terrorist operation? Do any countries do that? We do not talk about it, but does any other country hold election campaigns when an anti-terrorist operation is taking place on its territory?

They [elections] have to be cancelled and our work should focus on economic and humanitarian restoration. Nothing is being done, nothing at all. Postponing these problems over on-going violence on the frontlines is just an excuse. What is happening in reality is that both sides are accusing each other of opening fire. Why do you think it is separatists who are shooting? If you ask them, they say, “It is Ukrainian government forces, the Ukrainian army.”

One side opens fire, the other side responds – that’s what exchanging fire means. Do you think this is a good enough reason to delay political reforms? On the contrary, political reforms that will constitute the foundation of a final settlement on security are a pressing priority.

Some things have to be done in parallel. I agree with Mr Poroshenko that the OSCE mission has to be reinforced to the point of authorizing OSCE observers to carry firearms. Other things can be done to improve security. But we cannot afford to continue putting off key political decision by citing the lack of security in the area. That’s it. (Applause.)



Fareed Zakaria:

There are so many areas to cover with you, Mr President, so let me go to the Middle East, where Russia has had a forceful intervention to bolster the Assad regime. President Assad now says that his goal is to take back every square inch of his territory. Do you believe that the solution in Syria is that the Assad regime should take back and govern every square inch of Syria?



Vladimir Putin:

I think that the problems of Syria, of course, concern primarily the anti-terrorist struggle, but there is more to it. It goes without saying that the Syrian conflict is rooted in contradictions within Syrian society, and President Bashar al-Assad understands this very well. The task is not just to expand control over various territories, although this is very important. The point is to ensure the confidence of the entire society and trust between different parts of this society, and to establish on this foundation a modern and efficient government that will be trusted by the country’s entire population. And political negotiations are the only road to this. We have urged this more than once. President al-Assad also spoke about this – he accepts this process.

What needs to be done today? It is necessary to join more actively the process of forming the new Constitution and to conduct, on this basis, future elections, both presidential and parliamentary. When President al-Assad was in Moscow, we spoke about this with him and he fully agreed with this. Moreover, it is extremely important to conduct the elections under strict international control, with the participation of the United Nations. Yesterday we discussed this issue in detail with Mr de Mistura and the UN Secretary-General. They all agree with this, but we need action. We hope very much that our partners, primarily from the United States, will work with their allies that support the opposition to encourage constructive cooperation with the Syrian authorities.

What do we mean by this? In general, when I ask my colleagues: “Why are you doing this?” they reply: “To assert the principles of democracy. President al-Assad’s regime is not democratic and the triumph of democracy must be ensured.” Fine. “Is democracy everywhere there?” “No, not yet but democracy should exist in Syria.” “Ok. And how do you make society democratic? Is it only possible to achieve this by force of arms or simply by force?” “No, this may be done only with the help of democratic institutions and procedures.” And what are they all about? There is no more democratic way of forming a government than elections on the basis of fundamental law: a Constitution that is formulated in a clear way, that is transparent and accepted by the overwhelming majority of society. Pass the Constitution and hold elections on its basis. What’s bad about this, especially if they are held under international control?

Occasionally we hear that some countries of the region do not fully understand what democracy is. Do we want to replace one undemocratic regime with another undemocratic one? And if we still want to promote the principle of democracy let’s do this by democratic means. But considering this is a complicated process and results will not come tomorrow or the day after tomorrow but will require time, while we still need to do something today, I agree with the proposals of our partners, primarily our American partners that suggest (I don’t know, maybe I’m saying too much although, on the other hand, this US proposal is known in the region, and the negotiators of both sides – the government and the opposition – are familiar with it and I consider it absolutely acceptable), they suggested considering the possibility of bringing representatives of the opposition into existing power structures, for instance, the Government. It is necessary to think about what powers this Government will have.

However, it is important not to go too far. It is necessary to proceed from the current realities and to refrain from declaring unfeasible, unrealistic goals. Many of our partners are saying that Assad should go. Today they are saying no, let’s restructure governing institutions in such and such a way, but in practical terms it will also mean his departure. But this is also unrealistic. Therefore, it is necessary to act carefully, step by step, gradually winning the confidence of all sides to the conflict.

If this happens, and I think this will happen in any event and the sooner the better, it will be possible to go further and speak both about subsequent elections and a final settlement. The main point is to prevent the country’s collapse. And if things continue to go as they are today, collapse will become inevitable. And this is the worst-case scenario because we cannot assume that after the country’s collapse some quasi-state formations will co-exist in peace and harmony. No, this will be a destabilising factor for the region and the rest of the world.



Fareed Zakaria:

Let me ask you, Mr President, about another democracy that is having a very different kind of drama. You made some comments about the American Republican presumptive nominee, Donald Trump. You called him brilliant, outstanding, talented. These comments were reported around the world. I was wondering, what in him led you to that judgement, and do you still hold that judgement?



Vladimir Putin:

You are well known in our country, you personally. Not only as a host of a major TV corporation, but also as an intellectual. Why are you distorting everything? The journalist in you is getting the better of the analyst. Look, what did I say? I said in passing that Trump is a vivid personality. Is he not? He is. I did not ascribe any other characteristics to him. However, what I definitely note and what I definitely welcome – and I see nothing wrong about this, just the opposite – is that Mr Trump said that he is ready for the full-scale restoration of Russian-US relations. What is wrong with that? We all welcome this! Don’t you?

We never interfere in the internal politics of other countries, especially the United States. However, we will work with any president that the US people vote for. Although I do not think, by the way, that… Well, they lecture everyone on how to live and on democracy. Now, do you really think presidential elections there are democratic? Look, twice in US history a president was elected by a majority of electors, but standing behind those electors was a smaller number of voters. Is that democracy? And when (sometimes we have debates with our colleagues; we never accuse anyone of anything, we simply have debates) we are told: “Do not meddle in our affairs. Mind your own business. This is how we do things,” we feel like saying: “Well then, do not meddle in our affairs. Why do you? Put your own house in order first.”

But, to reiterate, indeed, this is none of our business although, in my opinion, even prosecutors there chase international observers away from polling stations during election campaigns. US prosecutors threaten to jail them. However, these are their own problems; this is how they do things and they like it. America is a great power, today perhaps the only superpower. We accept this. We want to work with the United States and we are prepared to. No matter how these elections go, eventually they will take place. There will be a [new] head of state with extensive powers. There are complicated internal political and economic processes at work in the United States. The world needs a powerful country like the United States, and we also need it. But we do not need it to continuously interfere in our affairs, telling us how to live, and preventing Europe from building a relationship with us.

How are the sanctions that you have mentioned affecting the United States? In no way whatsoever. It could not care less about these sanctions because the consequences of our actions in response have no impact on it. They impact Europe but not the United States. Zero effect. However, the Americans are telling their partners: “Be patient.” Why should they? I do not understand. If they want to, let them.

Matteo, why should they be patient? Now Matteo will explain why they should. He is a brilliant orator, we’re seeing it now. His remarks were excellent. I am saying this sincerely, honestly. Italy can be proud of its Prime Minister, really. Just beautiful.

We do not lavish praise on anybody. It’s none of our business. As Germans say, “this is not our beer.” Because when they make their choice, we will work with any president who has received the support of the American people, in the hope that it will be a person who seeks to develop relations with our country and help build a more secure world.



Fareed Zakaria:

Just to be clear, Mr President, the word ”brilliant“ was in the Interfax translation, I realize that other translations might say ”bright,“ but I used the official Interfax translation. But let me ask you about another person you have dealt with a great deal. Mr Trump, you've never met. Hillary Clinton was Secretary of State. In your very long questions and answers with the Russian people, you made a joke when somebody asked you about her – you said, I think that the Russia idiom is, the husband and wife is the same devil. And what it means in the English version is, it's two sides of the same coin. What did you mean by that, and how did she do as Secretary of State? You dealt with her extensively.



Vladimir Putin:

I did not work with her, Lavrov did. Ask him. He is sitting here.

I was not a foreign minister, but Sergei Lavrov was. He will soon tie [Soviet Foreign Minister Andrei] Gromyko. (Addressing Sergei Lavrov.) How long have you been in office?

I worked with Bill Clinton, although for a very short time, and we had a very good relationship. I can even say that I am grateful to him for certain moments as I was entering the big stage in politics. On several occasions, he showed signs of attention, respect for me personally, as well as for Russia. I remember this and I am grateful to him.

About Ms Clinton. Perhaps she has her own view on the development of Russian-US relations. You know, there is something I would like to draw [your] attention to, which has nothing to do with Russian-US relations or with national politics. It is related, rather, to personnel policy.

In my experience, I have often seen what happens with people before they take on a certain job and afterward. Often, you cannot recognise them, because once they reach a new level of responsibility they begin to talk and think differently, they even look different. We act on the assumption that the sense of responsibility of the US head of state, the head of the country on which a great deal in the world depends today, that this sense of responsibility will encourage the newly elected president to cooperate with Russia and, I would like to repeat, build a more secure world.



Fareed Zakaria:

President Putin, let me finally ask you one question about news reports about Russian athletes. There are now two major investigations that have shown that Russian athletes have engaged in doping on a massive scale, and that there has been a systematic evasion and doctoring of testing and lab samples. And I was just wondering what you reaction to these reports is.



Vladimir Putin:

I did not understand what kind of programme it is – to tamper with the samples that were collected for tests? If samples are collected they are immediately transferred to international organisations for storage and we have nothing to do with them. Samples are collected and taken somewhere, to Lausanne or wherever, I do not know where, but they are not on Russian territory. They can be opened, re-checked, and this is what specialists are doing now.

Doping is not only a Russian problem. It is a problem of the entire sports world. If somebody tries to politicise something in this sphere, I think this is a big mistake, because just like culture, for example, sport cannot be politicised. These are the bridges that bring people, nations and states closer together. This is the way to approach it, not try to forge some anti-Russian or anti-whatever policy on this basis.

As for the Russian authorities, I can assure you, we are categorically against all doping for several reasons. First, as a former amateur athlete, I can tell you, and I think that the overwhelming majority of people will agree with this: if we know there is doping, it’s not interesting to watch the event; millions of fans lose interest in the sport.

Second, no less important, and maybe even most important, there is the health of the athletes themselves. You can’t justify anything that damages health. This is why we have combated and will continue to combat doping in sport on the national level.

Furthermore, as far as I know, the Prosecutor General’s Office and the Investigative Committee have been closely looking into all facts reported in the media, among others. Simply, this must not be turned into a campaign, especially a campaign disparaging sport, including Russian sport.

Next, the third point I would like to make. There is a legal concept that says responsibility can only be individual. Collective responsibility cannot be imposed on all athletes or athletes of a certain sports federation if certain individuals have been caught doping. An entire team cannot be held responsible for those who have committed this violation. I believe that this is an absolutely natural, correct approach.

However, doping is not the only problem today. There are plenty of problems in sport. Euro 2016 is underway. I believe that less attention is being paid to football than to brawling between fans. This is very sad and I regret this, but here too we should always proceed from some general criteria. To reiterate, responsibility for misconduct should be individualised as much as possible and the approach toward perpetrators should be the same.

Euro 2016 began with a high-profile case: a fight between Russian and British fans. This is absolutely outrageous. Granted, I do not know how 200 Russian fans were able to pummel several thousand Britons. I do not understand. But in any case, law enforcement agencies should take the same approach toward all perpetrators.

This is the way we have organised this work and will continue to combat doping and enforce discipline among fans. We will work with these fan associations. I very much hope that there are plenty of intelligent, sensible people among the fans, who really love sport and who understand that violations do nothing to support their team but, on the contrary, cause damage to the team and to sport. However, a great deal has yet to be done here, including in conjunction with our [foreign] colleagues.

I would like to stress that there has been absolutely no support and can be absolutely no support for violations in sport, let alone doping violations, at the state level. We have worked and will continue to work with all international organisations in this sphere.


<…>


Fareed Zakaria:

Well, we've had a very wide-ranging discussion, and there have been points of disagreement, and then points of profound agreement, such as on the quality of Kazakh-qualified women to rule the world. President Putin, I was wondering if you may have some closing thoughts that you could give us and then we will wrap up the session.



Vladimir Putin:

First of all, I would like to thank all those who came to St Petersburg.

I would like to thank our moderator. I think we have had a very lively discussion. We agree on some points and disagree on others but there are still more things that unite us – this is absolutely clear.

Our Italian friend scared me a bit toward the end by saying that unless it changes, Europe will be no more. This sounds alarming, but to be honest, I don’t think it’s the case – after all, Europe is Europe. The foundations of its economy don’t give us reason to believe that Europe will come to an end at any point, no matter what internal processes are playing out. It is our leading trade and economic partner. It is clear that European leaders want to gain some momentum, just like we in Russia certainly want to do the same. In my speech I described how we are going to achieve this.

You know, it is so symptomatic that today we have here the leader of a European country (and one that is developing fairly rapidly) – Italy, and the leader of Kazakhstan – our closest partner and ally with which we are building an integration association. Today we have gathered everyone together. This is symptomatic because we must focus our attention on joining forces for the sake of development if we want to achieve it.

For its part, Russia will do everything to follow this very road, actively developing at home and remaining open to cooperation with all of our partners.

Many thanks to all of you and best of luck.





The source of information - http://en.kremlin.ru/events/president/news/52178

Last edited by Alex Him; June 19th, 2016 at 02:05 PM.
 
Old June 20th, 2016 #19
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Meeting with heads of international news agencies





June 17, 2016 23:55 St Petersburg





President of Russia Vladimir Putin:

Good afternoon, ladies and gentlemen,

I have delivered so many speeches today that I think I will skip any introductory remarks, as you have likely attended some of the events here and have already heard a great deal. There is no point in repeating things. If I have missed something and you have questions or want me to give additional comments or information, it will be my pleasure.

I just want to say that I'm happy to see so many of you here representing so many international news agencies. I will not mention how many publications are based on your news feeds every day, you know that better than myself. The importance of your work does not need spelling out. I hope you will continue to try to be as unbiased as possible in your Russia reporting.

That is all for the introduction. I will now answer your questions. Please, go ahead.



TASS Director General Sergei Mikhailov:

Mr President, first of all, congratulations on the forum’s success. We all are certainly very impressed by your remarks and the remarks of your colleagues.

Thank you for allowing time in your very tight schedule to meet with the world’s major news agencies for the third year in a row. I believe about 90 percent of global information distribution is present.

As these meetings have already become a tradition, we have our conventions, one being that we give the floor to a woman first. We have only one woman at this table today, and I am happy to pass the floor to Alessandra Galloni, Global News Editor at Thomson Reuters. Please.



Alessandra Galloni:

Thank you very much, and also thank you, I think, on behalf of all of us for hosting us after a busy day. Now we understand why there is lemon tea for the throat.

Today we are at the St Petersburg International Economic Forum, and today in your speech, you spoke about the effect of sanctions on Russia and on Europe. I would like to ask you a question on Russian economy. Recent figures show that capital investment by Russian companies in Russia fell 5 percent year-on-year in the first quarter and have been falling at least for the last eighteen months. This would seemingly have little to do with falling oil prices, and would suggest that Russian companies are not willing to invest in their own country. Does that not point to some structural problems that need to be tackled, and if so, how do you plan to tackle them? Thank you.



Vladimir Putin:

Both. This does have something to do with oil prices because revenue from the oil industry and the energy industry in general are declining as a result of slumping oil prices, while substantial investment in recent years has been in oil, gas, energy and the related infrastructure. Therefore, there is a direct connection, no doubt.

Look at the investment programmes of our major energy companies. Do you think they can invest in expanding production as much as they planned before, now that demand is lower? This is why investment is decreasing. Certainly, this situation affects a country that is so dependent on the energy sector. Although you are correct in saying that this is not the only reason.

One of the key tasks of our economic policy is to diversify our economy. This has been on the agenda for years. I cannot say that we have been very successful, but we are getting there.

There is a Russian saying: if it were not for bad luck, there would be no luck at all. What do I mean by that? When revenue from the energy sector is declining, companies start looking for better opportunities to use capital in other areas – and they find them, much to our relief. Our job is to support this approach. We have and we will continue to create the most favourable conditions for a diversified economy, as I said.

Of course, we have seen some decline in investment, for the reasons I stated. This is not just a result of companies wishing or not wishing to invest. When an industry that used to be profitable is suddenly less so, they would rather not invest. I already said that. However, obviously, we need to create conditions for investment in other areas. Our focus now is on attracting more investment, both domestic and foreign.

Look, capital outflow has declined dramatically. I am not sure if I mentioned this today, but in my opinion, it did slow down to a trickle. It is about one-ninth of what it was – I would not want to mislead you, so you need to look up the figures. Please look them up to get the numbers straight. What does this mean? It means that the money remains in Russia because it has become more attractive here.

However, there are formal indicators as well. What do they say about further diversification? It is still slow, not as fast as we would like, but still: our exports decreased in absolute numbers, including equipment and technology products, but they have grown in terms of percentage. I mean the overall volume went down, but the export structure has improved, we have been seeing this trend for a few months.

By the way, we had projected a small recession at the end of this year, but we are actually seeing growth, 0.6 percent in the manufacturing industries, and 2.2 percent in agriculture, about 0.5 percent on average. Therefore, we have had some success, but we intend to continue to move along, toward further diversification and a greater inflow of investment.

We have developed a set of tools for this, including, for example, what we call priority development areas, as well as certain incentives and benefits relating to specific projects we consider a priority – primarily high-tech projects – an entire range of government policies we have prepared and backed with the appropriate resources. These policies stimulate the manufacture of high-tech products in Russia, but they also encourage domestic companies to research foreign markets and ensure that the products they make are competitive. We need to commercialise our scientific discoveries, the work of our technical researchers, primarily in the applied sciences.

Yet, when attracting foreign investment, like many countries, we insist on using as many local resources as possible. I have met with leading global manufacturers, our partners, today. We agreed, for example, that in one sector, as much as 70 percent of the product components would be manufactured domestically. Our partners generally agree with this, which indicates that this is adequately lucrative. So these are the projects we will tend to select, this is what we will focus on.



Sergei Mikhailov:

Mr President, I am pleased to introduce and welcome to this conversation our good friend, Mr Gary Pruitt, the President and CEO of the Associated Press. This is the first time Gary has attended SPIEF. It is also his first time in St Petersburg. Last year, Gary made a very important proposal on behalf of the media community to establish a new international legal convention for protecting journalists, which would equate the murder and kidnapping of journalists to war crimes. The Associated Press is the oldest news agency, marking 170 years this year. Please, Gary.



Gary Pruitt:

Thank you Sergei. Thank you very much for giving us this time to meet with the world’s leading news agencies and congratulations on the successful forum. Today, after you spoke, the IAAF upheld the ban on Russian track and field athletes participating in the Rio Olympics. I was wondering what your reaction to that decision is and do you think Russia is being treated fairly or unfairly?



Vladimir Putin:

I spoke about this here at the forum. Of course, this is unfair.

There are commonly recognised rules of law, one of which states that liability must be personalised. If a member of your family commits a violation, is it fair to hold the entire family accountable, including yourself? This practice does not exist.

People who have nothing to do with a violation should not suffer for others. This is beyond civilised behaviour. The doping issue is outrageous and we do what we can to prevent it and hold the guilty parties responsible. However, clean athletes should not suffer. This is completely beyond my comprehension.

I hope we can find a solution to this problem but it does not mean we are going to take offence and say that we will not do anything about doping. On the contrary, we will take tougher measures against doping. I have said this and there was a statement from our law enforcement agencies. The Prosecutor General’s Office and the Investigative Committee are looking into the media reports on this issue. We will thoroughly investigate all the allegations.

Let us go back to this infamous meldonium, which I had not even heard of before, although it was invented in the Soviet Union, specifically, in Latvia. What is doping? According to the World Anti-Doping Agency, doping is any substance that gives you an advantage in competition. Meldonium does not give any advantage. It only helps maintain the cardiac muscle during strenuous physical activity. It had never been considered doping and had been used without any consequences for years. It was also very well known that meldonium was invented in the former Soviet Union and was used almost exclusively by Eastern European athletes. This was a commonly known fact. But no, they had to single out this drug.

There had never been any clinical research on its washout period. First, it was claimed that meldonium is expelled over two weeks, then one month. Then suddenly, it is claimed the drug can remain in the system for six months. Nobody knows yet.

I believe the decisions regarding this were premature. Only after clinical research can you say that if meldoinium was detected after a certain period then the athlete is guilty. How can you claim that if you do not know its washout period? Everybody can make a mistake and our partners may have, too.

As far as today’s decision is concerned, over the past six months, our athletes have been tested by foreign doping officers. The samples were examined at foreign labs. Do they not trust them? If I am correct, the tests were conducted by UK Anti-Doping. We agreed to that as it was recommended by WADA. For the last six months, our athletes were tested by foreign experts and each time the samples were taken for evaluation. My question is: who is supposed to take samples so that everybody trusts the results? We can ask our Chinese colleagues to do that. We do not mind. We agreed to cooperate with international organisations and our foreign partners. We agreed to all their terms. We never argued about it.

Let me finish my answer with what I said in the beginning. Responsibility must be personalised. Those who have nothing to do with a violation should not suffer. Therefore, I expect that we will have an opportunity to discuss this issue with the anti-doping agency again. I also hope for an appropriate response from the International Olympic Committee.

That is it, I believe.



Sergei Mikhailov:

Italy is the honorary guest of this year’s forum. We heard Matteo Renzi speak at the plenary session. Now, I am pleased to pass the microphone to CEO and Managing Director of the leading Italian news agency ANSA, Giuseppe Cerbone. At our media session today, we discussed when artificial intelligence might finally replace human journalists and robots would do the writing. Giuseppe is engaged in this area professionally and holds a degree in artificial intellect development​​. Go ahead, please, Giuseppe.



Giuseppe Cerbone:

Thank you Mr President for this yearly appointment and thank you to Sergei for his kind words and for inviting us, every year. The young St. Petersburg Economic Forum which today is the 20th birthday of the forum and in which Italy, as Sergei said, is participating as a guest of honour thanks to the good relationship, looks like a new beginning of good traditional relations that exist between Moscow and Rome. To this end, Russia and Italy have both declared a strong interest in the southern gas pipeline. Is this, Mr President, a way to find the balance in light of the completion of the northern pipeline, Nord Stream 2 project, or Russia has a new long-term strategic interest in the furniture in the Mediterranean given that this project has had alternative fortunes in years? Thank you very much Mr President.



Vladimir Putin:

I have to remind you how the South Stream project to transport gas under the Black Sea to Bulgaria started.

We in Russia believed that access to the EU from the south would diversify energy shipment to Europe. However, before that, the European Parliament had adopted a decision dismissing this route as inconsistent with the interests of the EU, and the European Commission had sent a letter to the Government of Bulgaria, confirming the European Parliament’s decision and demanding that the Bulgarian government stop all preparatory work. The Bulgarian government complied.

Look, how could we even start laying a pipeline system in the sea, how could we spend 9 billion euros just to have all this metal sink into the sea, without having secured the right to enter Bulgarian territory? But of course, as soon as we realised what was happening, we shut down any further work. We did not abandon the project, we were stopped from implementing it.

Then the international consortium proposed continuing the Nord Stream project and building a second line, Nord Stream 2. I must say that it is not an alternative to South Stream and in this sense, they are not competing, because Nord Stream is designed to compensate for declining production in Northern Europe and to meet growing demand in the northern and central European economies, including Germany.

Furthermore, we need to bear in mind that Germany has announced publicly that it is phasing out nuclear power. If I remember correctly, nuclear energy accounts for 34 percent of power generation in Germany. What will replace it? No matter how attractive wind turbines and solar energy are, they will not be enough, and they are too expensive today.

I understand the German leadership’s concerns over its energy future. The weakening of the German and European economies and the loss of competitiveness will not benefit the global economy either. However, one should consider this well in advance.

But this is not a Russian-German project alone. It also involves our French and Dutch partners, and Britain has shown interest too. I do not know what decisions were made, but I know that some time ago experts discussed — I do not follow it too closely – the possibility of a branch-off to the UK. Resources are dwindling and needs are growing. How can they be met?

There is always shale gas from the US of course. However, think about it, first it needs to be produced, God knows how – it is a complicated process, and the cost of production is higher than the extraction costs in Siberia and Yamal. Then it needs to be liquefied, transported across the ocean, regasified and then delivered to the consumer. Funny, I do not know if it will be competitive in Europe. If it is – good, it will revive the market, and we are not worried about it.

Therefore, first of all, we do not think of Nord Stream 2 as an alternative to South Stream. Second, this is a purely commercial project; the government is not directly involved. Third, the shareholders agreed on a second Nord Stream line at the start of Nord Stream 1. So having completed the first part of the project, and having done this well and efficiently, they moved on to the second part, which, I repeat, had been agreed on earlier.

Of course, it is unfortunate that we were prevented from completing South Stream. But today I asked our colleagues: why didn’t you fight for this project before? Couldn’t the countries that were interested in it, particularly Bulgaria, have said anything? They could have appealed to the European Parliament, met with the parliamentarians to explain how important the project is for their countries and have an open debate. I am not saying that they should have been aggressive, but they could have explained things. They could have appealed to the European Commission. However, everybody kept their mouths shut. All we heard was Russia did this and Russia did that as if Russia was plotting another conspiracy.

A good friend of mine from Germany told me: we had this flood in Bavaria and I got the impression they could blame you for the flood, too. This cannot continue forever. They stopped us, we suspended the project. Now they say, oh, the project failed, how so? Well, where were you when this happened?

regarding our interest in Mediterranean projects, it is still there. As you know, Gazprom signed a memorandum with an Italian company and a Greek one to look for cooperation options. We are considering this opportunity as well.

We have also not completely given up on transit via Ukraine. The question is how much and where it will run. Recent experience has shown that a monopoly is not a great idea. When somebody holds a monopoly over something, it is immediately abused. If Ukraine comes to understand that it does not have exclusive rights to shipping Russian energy to Europe, certain officials in this country will not be blackmailed anymore and we will be able to cooperate in a normal businesslike manner.

In this regard, I would like to emphasise that, in general, we may still consider involvement in Ukraine’s gas transit system. We suggested that ourselves at the time. Moreover, there is a memorandum signed by President Kuchma, Chancellor Schroeder and myself. We suggested establishing an international consortium involving our European partners. In order to comply with Ukrainian law, we proposed leasing the Ukrainian gas transit system through an international consortium instead of buying it, committing also to the maintenance and improvements. The memorandum was signed but then discarded. Then the crises of 2008 and 2009 followed. As you may recall, it came down to their demand that we drop the price to the lowest rate and offer Ukraine a non-market rate, or they will shut down transit. They will just cut it off.

We must secure ourselves against issues like this and continue normal cooperation with Ukraine. By the way, if our Ukrainian partners offer us an economically feasible project today that would guarantee secure supplies and economic efficiency we would work with them.

As a matter of fact, despite our difficulties, we did not suspend distribution to Turkey for a day. Blue Stream is in full operation between the two shores of the Black Sea and the supplies are running smoothly along the on-shore leg. This is how we will keep working. We will continue pursuing attractive opportunities, mainly based on economic parameters.



Sergei Mikhailov:

Mr President, you are soon to visit China. Today, we have here Mr Liu Siyang, Vice President of the Xinhua News Agency. This year marks Xinhua's 85th anniversary, as well as the 80th anniversary of cooperation between TASS and Xinhua. It is a year of anniversaries, actually.

Mr Liu Siyang, you are welcome.



Liu Siyang:

Mr President,

You have just mentioned that the Russian economy's growth is 0.5 percent. Actually, many countries are experiencing difficulties with economic growth. We also believe that the general economic recession at the global level can only be tackled through joint, collective efforts. This forum has focused on seeking solutions to the current situation in the global economy.

How would you describe Russian-Chinese cooperation in science and technology, in innovation?



Vladimir Putin:

I have just spoken about this to your colleague, we thoroughly discussed it, but I will say it again.

We highly value the level of our cooperation. It should be noted that both Russia and China need new technologies. However, we can complement each other in this regard. The scientific and technical groundwork for fundamental science with prospects for further application in Russia is rather extensive.

We discuss cooperation in various areas with our Chinese partners, including nuclear power, missile technology and aviation, with further prospects in both civil and military applications. We have a high level of trust with China in this area, and we will continue to cooperate.

What pleased me, as I have just mentioned, is the fact that for many years, we have been speaking of the need to change the structure of our exports to China, and now I am pleased to note that despite a slight decrease in the overall export volume, Russia's exports of machine and technical products to China have increased considerably. This is a very positive fact that indicates that we have a great opportunity for growth in these areas.

Speaking of cooperation in science, we consider it a priority and expect to turn it into high technology production. Again, there is nothing new here: we are perfectly aware that within the next decade drastic transformations based on the latest scientific and technical achievements will take place in production.

You know well about the production process and how it has always been. As Michelangelo and Rodin said, to produce a work of art one has to choose a block of marble and chip away at whatever is not needed. Then, there is stamping — a method of production that is similar but more technical. And now we have ”cloud“ technology, which is quite similar, but with even less material waste. The transformation in production will be massive, there will be a real revolution in this field.

Today, we have discussed transportation methods, and our colleague from the United States mentioned the introduction of tube train technology, with speeds of up to 1,000-plus km per hour.

This will be a new chapter, a new life, new spheres of application, with a vast number of inefficient jobs being eliminated. People will have to be provided with jobs — and this is what we should work on with China today, and this is what we will set our minds to.



Sergei Mikhailov:

Mr President, let us go back to Europe now and give the floor to our friend and a regular participant in our meetings, Mr Clive Marshall, Chief Executive of PA Group, parent company of the Press Association, the UK's leading multimedia news agency. Mr Marshall is well known in our media world. He is also President of the European Alliance of News Agencies (EANA) where Russia is represented by TASS, and on May 23, he was elected President of the News Agencies World Congress.



Vladimir Putin:

Listening to you I get the impression that all we have is friends. Where do all the questionable articles in the Western media come from, I wonder.



Sergei Mikhailov:

Well, this is the way it works in the media world.

Mr Marshall, welcome.



Clive Marshall:

Mr President, in six days’ time the British people will vote on whether to remain or leave the European Union in a referendum that the British Prime Minister David Cameron has described as one of the biggest decisions this country will face in our lifetime. President Obama and Chinese President Xi have both publicly supported Britain remaining in the European Union. The British Foreign Secretary Philip Hammond has said that Russia is the only world power that would welcome a British exit from the European Union. Mr President, what is the Russian position on Brexit and your advice to the British voters? And if the UK does decide to leave the EU how will that affect its relationship with Russia and Britain’s position on the world stage?



Vladimir Putin:

I think I mentioned our ”guilt“ in the floods in Europe. I think this is another such joke. Actually, I think it is indecent to mention Russia when speaking of any issue, even those we have nothing to do with, to make our country out to be some kind of scarecrow. This not what intelligent people would do, I think.

As for the British Prime Minister: Brexit is now a very big issue, but why did he initiate this referendum, why did he do it? To intimidate Europe, or to threaten someone? What is the point of this if he himself opposes the idea?

I should say that this is absolutely none of our business. This is the choice of the British people. I have my own opinion on it, I do not know the results and no one does until they are made public, sentiments are split about 50/50 with a narrow margin. Who knows at this point? Nobody.

I do have a personal view as to whether this is good or not, but I will refrain from expressing it now because I think it would be inappropriate. Whatever I say will be interpreted in favour of a certain decision. This referendum is a matter for the EU and the British people.

Various experts have given different opinions as to whether the UK's withdrawal from the EU will do good or harm. Most of them agree that it will damage Europe, but some say that Europe will only get stronger and more stable.

For the UK itself… You have fishermen running fishing boats on the Thames and saying they have issues due to fishing restrictions. Yes, they have their problems, but there are advantages in other sectors. It is not easy to consider all the implications.

It is important that the voters receive objective information to make their own decision being fully aware of the consequences — both negative and, possibly, positive as well. This is all I want to say and have the right to say on the matter.



Sergei Mikhailov:

Let us now go back to the American continent. Malcolm Kirk has been representing Canadian Press, Canada’s national news agency, for three years at our meetings. On September 1, the agency will celebrate its 100th anniversary, and I hope that being a huge fan of hockey Mr Kirk will use this centenary as an opportunity to play hockey, and maybe you would even invite him to play in the Night Hockey League.



Vladimir Putin:

With pleasure, but only if he plays on my team, since Canadians are so good at ice hockey.



Malcolm Kirk:

Thank you. We look forward to welcoming Russia and other countries to Toronto and to Canada later this summer for the World Cup of Hockey so it should be a great event. I’ve seen a few of your hockey moves. You know how to score a few goals, Mr President. So your stats are pretty good. Thank you again for inviting us to this meeting with you. It is a privilege and we certainly appreciate the opportunity to spend some time with you. I am going to ask you: there are some reports that Canada is under pressure from the United States to join Britain, Germany and the US in the NATO initiative that would see four troop battalions stationed in Poland and other Baltic states. These countries may feel this is perhaps an act of deterrence in the event that Russia was to perhaps invade their territory. How would you view Canada’s participation in NATO plans should the Canadian government make the decision to do so? And I guess generally how would you characterise Russia’s relations with Canada now that we have a new government? Thank you.



Vladimir Putin:

Let me start with the last part of your question. Since the new Prime Minister took office in Canada, there has been a chance that relations between Russia and Canada could improve. This is what the Prime Minister told me in person at the G20 Summit in Antalya. He said he wanted to think of ways to fully restore our relations. We welcome initiatives of this kind and are ready to combine our efforts in delivering on this objective. We will work together, but there are specific steps that should be taken by both sides before we get there.

As for the missile defence system, look, people in this audience are all adults and are very experienced. I am not asking you to mirror everything I am about to say word for word in your coverage or to influence press coverage. I just want to tell you something in person, and remind you of some things. After all, the world is free of large-scale wars or military conflict, and we all know that. This is due to the so-called strategic balance that emerged when two nuclear super powers agreed to limit their offensive and missile-defence arsenals. Everyone understands that if one side is more successful in developing its missile defence than the other, it gains an edge and has the temptation to be the first to use these weapons. It is for this reason that missile defence and agreements in this regard are one of the cornerstones of international security.

It is not at all my intention to berate or accuse anyone of anything, but when our US partners unilaterally withdrew [from the Anti-Ballistic Missile Treaty], this was a major blow. In fact, this was the first blow to international stability in terms of upsetting the strategic balance of power. I said back then, “We are currently unable to develop this technology due to the high costs, and secondly, it has yet to be seen how it will work. Instead of simply siphoning off money, we will go the other way by improving Russia’s offensive weapons in order to maintain the balance. This was the only purpose, and it had nothing to do with threatening anyone.” Here is what we heard in response: “It is true that our missile defence system is not intended to oppose Russia, and we assume that what you do is not against us, so you may do as you please.”

I can explain this by saying, as I did at the plenary session today, that it was the early 2000s when Russia was in a very complicated situation, with a ruined economy, an actual civil war and the fight against terrorism in the Caucasus, the defence industry collapsing and the Armed Forces dramatically weakened. Who could imagine then that Russia would build up its strategic weapons? They probably thought that the weapons Russia inherited from the Soviet Union would eventually become degraded. And so they told us to go ahead and do what we wanted. However, we informed them about our plans, which we are implementing. Trust me: Russia has moved a long way on this path. I will not read out the entire list, but I can tell you that we have modernised our weapons and are creating new-generation systems, not to mention the weapons that are designed to penetrate ballistic missile defence systems.

Despite all our objections and offers of real cooperation, our partners do not want to cooperate with us; they have rejected all of our proposals and are working to their own plans. I believe it inappropriate to say certain things in public, but I can assure you, and you can choose to believe me or not, that we offered practical cooperation alternatives that were rejected.

Eventually, they built a BMD system in Romania. They kept saying that they were doing this to protect themselves against an Iranian nuclear threat. But where is this threat now? It does not exist. We have signed a treaty with Iran, and it was the United States that initiated it. We did our best, helping as much as we could, but the treaty was only made possible through the position of the US. This success should be credited to President Obama. I believe it is a good treaty, which has eased tensions around Iran, and President Obama should definitely give himself the credit for this.

Anyway, there is no Iranian threat, but the BMD system is being built nevertheless. This might mean that we were right when we suspected our partners of being insincere, of deceiving us with references to an alleged Iranian nuclear threat. Yes, this is how it was; they attempted to cheat us again.

They have built this system and are now delivering missiles there. You probably know that the launch systems of the Tomahawk sea-launched intermediate-range missiles will be used to launch anti-missiles with an effective range of 500 kilometres. However, technology does not stand still, and we know more or less precisely when the Americans will create a new missile that will have a range of 1,000 kilometres or more. From that time on, they will be a threat to our nuclear arsenals.

We know what will happen and in which year, and they know we know it. They are just throwing dust in our eyes, as the saying goes, and you in turn are throwing dust in the eyes of your people. What bothers me is that people are not aware of the danger. We fail to understand that we are dragging the world into a completely new dimension. This is what this is all about. They are pretending as if nothing is going on. I do not even know how to put my message across.

We are being told that this is part of a defensive, not offensive, capability, that these systems are intended to ensure defence against aggression. This is not true. This is not the way things are. A strategic missile defence system is part of an offensive strategic capability, and is tightly linked to offensive missile strike systems. Some high-precision weapons are used to carry out a pre-emptive strike, while others serve as a shield against a retaliatory strike, and still others carry out nuclear strikes. All these objectives are related, and go hand in hand with the use of high-precision conventional weapons.

All right, even if we put aside the interceptor missiles that will be developed in the future, increasingly threatening Russia, but the launch tubes where these missiles are stored, as I said, are the same that are used on navy ships to carry Tomahawk missiles. You can replace interceptor missiles with Tomahawks in a matter of hours and these tubes will no longer be used to intercept missiles. How do we know what is inside them? All they need is to change the software. This can be done seamlessly; even the Romanians would not know what is going on, since they cannot access these facilities, right? No one will know, neither the Romanians, nor the Poles. I know how this is done. In my opinion, this is a major threat.

When we discussed this with our US partners, they had the idea of creating nonnuclear ballistic missiles. We said, “Listen, do you understand what this would be? Imagine that you fire a submarine-launch or land-based missile. A ballistic missile is launched. How do we know whether it is carrying a nuclear warhead or not? Do you understand the kind of threat this would create?” As far as we know, this programme is currently suspended. They have stopped it for now. However, they are still working on it.

I do not know where this will take us. However, Russia will definitely have to retaliate. I know already that we will be accused of acting aggressively, even though all we do is respond. It is clear that we will have to ensure security, and not just in Russia, since ensuring the strategic balance of power globally is a matter of great importance for us.

I would like to conclude my answer with what I started with: it is the strategic balance that ensured and guaranteed peace on the planet, sparing us from major military conflict over the last 70 years. This should be viewed as good, even though it is based on mutual threat. However, this mutual threat brought about global peace for decades. I do not know how anyone could want to destroy it. I believe that this would be very dangerous. Not only do I believe it, I am certain of it.

If Canada wants to join, go ahead, what can we say? We cannot order you. Do as you please, and we will do as we deem necessary in terms of ensuring our security.



Sergei Mikhailov:

Thank you, Mr President.

Spain’s biggest news agency, EFE, headed by Mr José Antonio Vera, is the Spanish-speaking world’s biggest information agency. Mr Vera took over as the head of EFE not so long ago, in 2012, and one of the main professional issues he has been focusing on is terrorism, which is also a subject very close to our own hearts, a sensitive issue for all of us.

Mr Vera, you have the floor.



Jose Antonio Vera:

Thank you very much, Mr President, for the invitation and for the opportunity. You know that this week we have in Spain a repetition of annual votation, political elections. You know too that we have a new party, Podemos. The name is Podemos. You know that it has some special allies and friends like for example Alexis Tsipras in Greece. Would you like that Podemos get the power in Spain? How do you see the next election in Spain? And in the same sense, another short question, please: who would you prefer to see as the president of the United States, Hillary Clinton or Mr Trump?



Vladimir Putin:

I already gave a detailed account of my views on Mr Trump and Ms Clinton today. Should I repeat now what I said earlier? Please refer to what I said at the panel discussion earlier.

We will work with whoever is elected president. It is regrettable to see that the Russian card gets played the way it does during nearly every US election campaign, and I think that this is very counterproductive, but no matter what the campaign rhetoric, we will look not at the words, but at the deeds of whoever takes office in the White House, and we will look for ways to normalise relations of course, and set our cooperation in the economy and international security back on track.

There are many issues that we can resolve effectively only by working together. This includes the issue to which you devote your professional efforts, as Sergei said, the fight against terrorism. However, we will judge by concrete action.

As for the election campaign in Spain, this is not our affair. It is no secret, and I mentioned at the discussion earlier that I already said to my European friends 10 years ago that regarding the European model of social development, I do not know if a model that builds society with an emphasis on immigrants’ interests is a liberal model or not. Certainly, it all sounds very attractive, but ultimately, it could end up arousing discontent among the local people. It is better to take a gradual approach and not try to do things in a hurry. You can only take in as many immigrants as the country is able to absorb into its local labour market and help adapt to the local language and cultural traditions.

There are people who have lived in Spain for decades but do not speak Spanish. Is this normal? You are surely aware of these facts. You can let in more and more people who will live 15-odd years in Spain and still not speak the language, but it seems to me that this will sooner or later lead to the kinds of problems we are seeing now. But it is up to you yourselves to respond to this and take decisions on what to do about this issue.

We have no shortage of problems of our own in this area and we ourselves are far from always finding effective solutions, even though we all live within one unified country and have developed together as a multi-ethnic state over a thousand years. Nevertheless, it is not an easy task. Now we have large flows of people coming in from the former Soviet republics, making it even more difficult to resolve the problems that arise.

We feel no malicious joy of any sort observing this situation, and we are not blaming anyone, after all, we ourselves have problems in this area too. However, I believe that your problems are even more serious because the immigrants arriving in your countries are people from a completely different background altogether. This is not the case here, as the people coming here, even from the former Soviet republics, once shared a connection with the common country we used to live in. Most of them speak Russian, not always very well, but they generally know the language, and they share a similar understanding on what constitutes our common values, although there are nonetheless quite a few problems here.

We need to step up our efforts in this area, but you have an even harder task. It is up to you to decide how to go about it. We have no preferences in this respect. As with the US, we will work with whichever party and whichever leaders win the elections.

Unfortunately, I have to get going; otherwise, I will not be able to leave this venue for a number of technical reasons. Perhaps we could take a concluding question?



Sergei Mikhailov:

Let us give the floor to our Indian friends. Raj Chengappa, chief editor of India’s biggest media group, India Today, is taking part in our meeting for the first time. He is one of India’s best-known journalists and says that he owes his career to an interview you gave him in 2000. Back then, when the interview was over, you said to him “see you later”. Sixteen years have gone by, and now here he is together with you again.



Vladimir Putin:

I kept my word: here we are again, just as agreed.



Sergei Mikhailov:

That whole issue of the magazine sold out. Mr Chengappa asked me to show you a photocopy to show that it was all just like I said.



Vladimir Putin:

Who is this young man?



Sergei Mikhailov:

Mr Chengappa, go ahead with your question.



Raj Chengappa:

Thank you Sergei, thank you Mr President. You are still looking as young as ever since I saw you in 2000. My question number one is: India recently applied for membership of the Nuclear Suppliers Group. Russia has always backed India. But China is opposing India’s membership. Will you speak to the Chinese President and persuade him to drop the objections?

The other question is: Prime Minister Modi had a successful visit to the US last week. Is India being on the right side of the US putting it on the wrong side of Russia? How do you see relations between India and Russia? Many say it hasn’t reached its full potential.

And finally, a fitness question: will you be doing yoga on World Yoga Day? Have you tried yoga before? You are extremely fit, I know.



Vladimir Putin:

Let me start with your final point. With yoga, I am certainly more of a spectator than a practitioner. I greatly envy those who achieve tangible results here, genuinely envy them. That they can achieve these results says a lot about their character. Sometimes you can hardly believe what you are seeing.

In general, we love Indian culture here. Russia is probably the only country that has a rental channel where you can watch Indian films all the time.

Regarding our relations, they go back a long way, as you know, and we treasure them greatly. We have a very trusting relationship and all of our political forces, and I believe all political forces in India support continued development of our bilateral ties.

We see that the opposition and the parties in power have their differences, they quarrel on occasion, but both support developing relations with Russia. We see this and we value it very much. Let me assure you that the political consensus is the same here in Russia on the subject of developing relations with India.

However, we most certainly need to transform this positive historical and political capital into concrete cooperation projects. Our level of bilateral trade is still too low and really does not at all match our potential.

It is good that we are helping India to develop its civilian nuclear energy programme, but this is not enough; we need to further diversify our relations. We should develop and expand investment flows and projects. It is not enough to limit ourselves to generic medicines in the pharmaceuticals sector, for example. We should build production facilities and develop our own formulas and components in this sector. This is what we should be doing, taking this cooperation to a deeper level. The main thing is that we can do this. We have everything we need. The same applies to a wide range of high-tech sectors. I will not list them all now.

As for our nuclear sector cooperation, Russia’s work with India in this field is entirely within the limits of international law. We think that a country like India with its huge population, considerable economic problems, and the challenges it faces in the energy sector and in national security cannot be put in the same category as other countries. We must work within the framework of international law, but at the same time look for ways to guarantee India’s interests.

Regarding India’s rapprochement with the United States, we think this is a perfectly natural process. I am not sure who is getting closer to who here: India to the US, or is it the US trying to build closer ties with India? At one point, the US imposed sanctions on the current Prime Minister, Mr Modi, and banned him from entering the country, but later they said that bygones should be bygones and after he was elected Prime Minister, they lifted the sanctions. This suggests that the US sometimes make decisions rather spontaneously and without giving consideration to the long-term consequences and results. However, we see now that the US seek to develop relations with India, and we welcome this too.

In general, it would be absurd for us to imagine we could have some kind of exclusive relationship with a vast country like India with its population of more than a billion people. India has its own interests and it has the right to these interests. We are respectful of this. We know that our cooperation involves some very sensitive areas, and in developing our cooperation, including in these sensitive areas, we should take other countries’ interests into account too. Is this possible? I think it is. I believe we can gradually assuage others’ concerns and I am confident that we will succeed in this.



Raj Chengappa:

On the Nuclear Suppliers Group, would you speak to the Chinese President to back India’s claim to be a member?



Vladimir Putin:

Have I not answered all of your questions yet? You want me to go even deeper? I think we can say that I have answered your questions, all right?

Of course, we must discuss issues such as these. We discuss all issues very openly. Our Chinese friends and we have no secrets from each other. We make it our general rule to always discuss things openly, all cards on the table. I said this already, but if you want to hear it again, I will repeat it now.

Of course, we must take everyone’s concerns into account because if we do not do so in a timely fashion, otherwise we would not solve problems but only create new ones. Can we resolve problems in this way? I think that we can, provided we are careful in our actions and work to reach agreement with each other.

Please, forgive me for not being able to take everyone’s questions, but technical reasons really oblige me to leave this building right now. We have some problems of our own with transportation.

Let me thank you for your attention to our joint work and wish you all success. I am sure we will meet again, at any rate, we will certainly try to make this happen.

Thank you very much.



Sergei Mikhailov:

Thank you very much, Mr President.





The source of information - http://en.kremlin.ru/events/president/news/52183
 
Old June 27th, 2016 #20
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Answers to media questions



Vladimir Putin responded to media questions at the end of his working visit to Uzbekistan to attend the SCO Heads of State Council, timed to coincide with the 15th anniversary of the SCO.



June 24, 2016 16:40 Tashkent





Question:

I would like to ask you about Brexit. Well before the vote, it was alleged that Russia would be happy if Britain decided to leave the EU. After the vote, there were also comments to the effect that this plays into Russia’s hands and, in this context, that this can have a positive impact on the issue of lifting sanctions on Russia. How do you assess the results of the vote? Whose side were you on? How will Russia’s relations with the EU and Britain now be built? What implications will this decision have for our economy?



President of Russia Vladimir Putin:

We are in Tashkent, where the SCO summit has just ended. Therefore, I would like to begin by thanking President Islam Karimov and all our Uzbek friends for what they have accomplished during their presidency of the SCO.

As you have seen, we are about to admit two large countries, India and Pakistan. Pure formalities remain to be completed; there is good reason to believe that as of next year, they will be full members of this organisation. With their admission, the organisation naturally acquires a different ring to it and a different weight.

It accounts for almost half the world’s population – 45 percent, and for now less than 20 percent of global production, but even this is a high indicator, and it is sure to grow because all of these economies are developing rapidly. In this connection, there is every reason to say that the summit has been a success.

Now I’d like to say a few words about statements made before the voting in Britain and after it. Naturally, we closely followed the voting but never interfered or sought to influence it. Therefore, British Prime Minister David Cameron’s statements on Russia’s position before the referendum had no grounds whatsoever.

I think it was an inappropriate attempt to influence public opinion at home. As we can see, it did not work. In my opinion, it is all the more inappropriate to speak about Russia’s supposed position after the voting. This is truly a low level of political discourse.

Now, to address the core issue. Of course, this will have consequences for both Britain and Europe as a whole. The referendum campaign and subsequent results point to the British Government’s self-assuredness and supercilious attitude to life-changing decisions in their own country and Europe in general. It will have global effects. Again, they are inevitable – both positive and negative. Needless to say, everything will settle back to normal in the mid-term. Time will tell whether there will be more pluses or minuses.

It seems to me that ordinary British citizens understand why this happened. First, nobody wants to feed and subsidise weaker economies and pay support other states and entire nations. This is an obvious fact. Apparently, people are displeased about security, which is being eroded by powerful migration waves. People want to be more independent.

One of the EU leaders – a former leader—told me that the ratio of binding decisions adopted by the European Parliament is higher than made by the USSR Supreme Soviet in relation to Soviet republics.

This means that the concentration of power at the top there is very high. Some like it and want to continue down this road of erasing national borders, whereas others do not like it. Judging by everything, by the results of the voting, the overwhelming majority of British subjects do not like it. It does not suit them.

However, I would like to reiterate what I said recently at the St Petersburg International Economic Forum. This is the choice made by British subjects. We did not interfere, are not interfering and will not interfere in this in any way. From all indications, certain formal procedures will follow, related to the British people’s decision to leave the EU.

We will closely watch and analyse this, seeking to minimise whatever negative fallout this decision might have for our economy, because considering the blow it dealt to markets and currencies, it is bound to impact and is already impacting stock exchange indices and therefore the prices of our traditional goods, but I am sure that everything will fall into place in the very near future.

We do not expect a global upheaval as a result. Of course, as I said, we will be closely monitoring things, adjusting our economic policy and adjusting our relations with our European partners.

Regarding the sanctions policy, I do not think that this will in any way impact our relations with the EU in this regard. We were not the ones who initiated these sanctioned restrictions on both sides. We only responded to the restrictions that were imposed on our country.

I would like to reiterate that if our partners are ever ready for constructive dialogue on these issue, we are also ready. We are not only ready – we seek it and will respond positively to positive initiatives, but we cannot be expected to do certain things that are beyond the scope of our powers.

We all know that these restrictions are supposedly tied to the implementation of the Minsk agreements but the key aspects of the implementation of the Minsk agreements today are in the hands of our Kiev partners, in the hands of the Kiev authorities. Without them, we can do nothing. We cannot amend the Ukrainian Constitution; we cannot implement and enforce the law on special forms of governance in the well-known territories, the Lugansk and Donetsk People’s Republics; we cannot sign an amnesty law for the Ukrainian president.

These are key issues in the settlement of the Donbass situation. And it is simply absurd to expect us to make these decisions. I cannot think of any other word for it. Nevertheless, we have worked patiently and are willing to continue working just as patiently both with our Ukrainian partners and with our EU partners. However, there is no other way to fully resolve the situation in Donbass other than by implementing the Minsk agreements.

As for what will happen in the economic and political sphere following Britain’s exit [from the EU], we will see this in the very near future. We will see.





The source of information - http://en.kremlin.ru/events/president/transcripts/52264
 
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