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Transcript of Putin's State of the Nation address
BBC Monitoring
May 16, 2003
Putin tells the nation Russia can be rich and strong again
Source: RTR Russia TV, Moscow, in Russian 0800 gmt 16 May 03

In his state of the nation address to members of both houses of the Russian parliament on 16 May, Russian President Vladimir Putin paid particular attention to the state of the economy, Russia's international standing and efforts to bring peace to Chechnya. He said that despite certain advances, the economic fundamentals were still "very weak", and the country was bedevilled by slowing growth, uncompetitive industries, over-reliance on temporarily favourable foreign markets, administrative inefficiency and a declining population. Putin described the country's economic achievements as "very, very modest", and set a 10-year target of doubling GDP. Problems with the economy, he said, were hindering what ought to be the "key purpose": making Russia a rich and powerful country again. Economically-developed countries were "squeezing Russia out of promising world markets", he complained. Terrorism, he said, "threatens the peace and security of our citizens", but instead of fighting terrorism strong countries' national armies were sometimes used for "expanding the areas of strategic influence of individual states". Putin said the Russian army must be strong, professional and well- equipped to defend the country and must act with others to counter common threats. The president praised Chechens who voted in a recent referendum in favour of remaining an "inseparable part" of the Russian Federation. Despite the difficulties that still lay ahead, he pledged, people in Chechnya would be given the chance to lead "normal, human lives". He expressed support for the UN as the world's most important decision-making mechanism and called for closer ties with the CIS and Europe. Turning to domestic politics, he described forthcoming Duma elections as a new stage in the development of the country's multiparty system and looked forward to a "professional and efficient government relying on the parliamentary majority" being formed after the elections. The following is the text of the address, as broadcast live on the Russia TV channel. The subheadings have been added editorially:

Good day, respected colleagues, respected deputies of the State Duma, respected members of the Federation Council, citizens of Russia.

Today, in keeping with the constitution, I will be presenting you with a report on the situation in the country and, first of all, will be summing up certain results. The results of the past year have been, to a great extent, a continuation of what was started three years ago. During this three-year period, we not only dealt thoroughly with a backlog of problems - and one had to deal with them every day, life itself made us do this - we also achieved some positive results.

Quest for power and influence

Now we have to take the next step and all our decisions and actions must be dedicated to ensuring that, in the foreseeable future, Russia will firmly take its place among the truly strong, economically advanced and influential states of the world. This is a qualitatively new task, a qualitatively new step for the country. A step which we were unable to take earlier because of a number, a multitude of pressing problems. We have this opportunity and we must take it.

Russia should be and will be a country with a developed civil society and stable democracy. Russia will guarantee full human rights, civil liberties and political freedom. Russia should be and will be a country with a competitive market economy, a country where property rights are reliably protected and where economic freedom makes it possible for people to work honestly and to earn without fear or restriction. Russia will be a strong country with modern, well-equipped and mobile armed forces, with an army ready to defend Russia and its allies and the national interests of the country and of its citizens. All this will and should create worthy living conditions for people and will make it possible to be an equal in the society of the most developed states. And people can not only be proud of such a country - they will multiply its wealth, will remember and respect our great history. This is our strategic goal. applause

Strong state

In order to achieve this, however, we need consolidation, the mobilization of our intellectual capabilities and united efforts on the part of the authorities and civil society and of all the people in the country. We must strive for consolidation in order to resolve the most important nationwide problems on the basis of clear and intelligible aims.

Why do I consider this to be vitally important? The whole of our historical experience bears witness to the fact that a country like Russia can live and develop within its existing boundaries only if it is a powerful state. Russia has always and inevitably been faced with the threat of disintegration in all periods when the country has been weakening, politically or economically. Yes, certain achievements in recent years have made it possible to speak of stabilization. Some have even had the feeling that all our problems have been resolved, that Russia's future is totally predictable, a success story, and that it is just a matter of whether our economy should grow at 4 per cent or 6 per cent, and how much to spend. I want to tell you that this is not so.

Russia squeezed on global markets

We are faced with serious threats. Our economic foundation, although it has become considerably sounder, is nevertheless unreliable and very weak. The political system is not sufficiently developed. The state apparatus is ineffective. The majority of industries are not competitive. And meanwhile the population is continuing to decline in number and poverty is receding extremely slowly. The international situation continues to be complex and competition in the world economy is not diminishing. Around us are countries with highly developed economies. It has to be said plainly that they are squeezing Russia out of promising world markets wherever they can. And their evident economic advantages give grounds for the growth of geopolitical ambitions.

Nuclear, terrorist threats

Nuclear weapons continue to spread across the planet. Terrorism threatens the peace and security of our citizens. Strong, well-armed national armies are sometimes used not to fight this evil but to expand the areas of strategic influence of individual states. Can Russia seriously withstand these threats if our society is split into small groups, if we care only about narrow small-group interests, if consumption-centred approaches are not diminishing but growing, if bureaucrats are benevolently nourishing these attitudes by failing to maintain national wealth, by not increasing it but often by wasting it? I am convinced that, without at least consolidation around the basic national values and goals, it will be impossible to withstand these threats.

Past sacrifices

I would like to remind you that, throughout our entire history, Russia and all our citizens have accomplished and are continuing to accomplish a truly historic and heroic feat, an exploit for the sake of the country's integrity, for the sake of peace in the country, for the sake of a stable life.

To maintain statehood in a vast country, to preserve a unique community of peoples while ensuring the country has a strong position in the world is not just a tremendous amount of work. It is also about great sacrifices, the deprivations people had to suffer - this is what Russia's thousand-year journey has been like. This is the way it reproduces itself as a strong country and we have no right to forget this. We must bear this in mind when assessing our current dangers and our main objectives.

Successful reforms

The results that we have achieved together, jointly, in the past three years, show that we are capable of reaching our goals and solving these problems. Indeed, we have tackled many problems, including those which very recently seemed simply impossible to resolve.

At last, we have restored the country's unity de jure and de facto. We have strengthened state authority and brought together the federal and regional authorities. Owing to the restoration of a common legal space we were able to deal very closely with the delimitation of powers and regional remits. Much needs to be done there but in any case we have begun to deal with the problem directly. We have embarked on the construction of effective and properly financed local authorities - I am speaking very precisely, as you can see - we have only embarked upon this work.

In adopting section three of the civil code, Russia has completed a very important stage in the codification of its legislation. A new labour code has been adopted. The updated legislation and a systematic dialogue with trade unions and entrepreneurs have begun to form a civilized labour market. We have moved on considerably in the creation of truly independent courts and have adopted new codes of criminal procedure, civil procedure and arbitration procedure, ensuring additional guarantees for human rights. We have improved the electoral system. Conditions have been created in the country for a fully-fledged civil society, including conditions for the emergence of strong political parties in Russia.

We have made substantial progress along the path of tax reform and have started military reform. As a result of difficult work, we have managed to get the reform of land relations out of the doldrums. May I remind you that this issue has continued to be a serious economic barrier on the road to democracy and the market for whole decades.

We have taken the first steps in reforming the pension system, the infrastructure monopolies and municipal housing. Together we have overcome an absolutely unacceptable situation where individual Russian territories were, in effect, beyond the bounds of federal jurisdiction and the supremacy of the Russian constitution and federal laws, and also of the obligation to pay taxes into the state treasury. Today these have become the everyday norm for all regions of the Russian Federation.

Chechnya referendum

Here I would like to make one important digression on a subject that is very sensitive for all of us. In my last address I spoke of the need to return the Chechen Republic to the country's political and legal space. Free elections and the establishment of effective institutions of republican power were also mentioned. Let me be blunt: Not many believed in this at that time. However, a year has passed and reality has confirmed that together we can accomplish a very great deal. I would like to thank yet again all those who lent support to this policy pursued by the country's leadership, those who took an active part in this policy and, of course, all those who took an active part in preparing the constitutional referendum in Chechnya itself.

Today I especially thank the Chechen people, for their courage, for the fact that they did not allow themselves to be intimidated and do not allow themselves to be intimidated now, for their wisdom, ever-present in ordinary people who instinctively know what's right and wrong. People in Chechnya had a heartfelt awareness of their responsibility and human interest. Finally, the referendum there showed that the Chechen people legitimately regard themselves as an inseparable part of a unified Russian multinational people.

Yes, we all had to pay a high price for the restoration of Russia's territorial integrity. We bow our heads to the memory of those servicemen and Chechen civilians who lost their lives, of all those who paid with their lives so as not to allow the country to be torn to pieces, who fulfilled their duty to the end.

The referendum on the constitution, which was held in the republic, drew a line under the era of anarchy, under the years when power in Chechnya was usurped by bandits, when the residents of the republic lived literally in the Middle Ages, deprived of basic human rights, when public executions were regularly and blatantly carried out on the streets of Chechnya's towns and villages, when thousands of people ended up as human merchandise in the hands of slave traders, when schools, institutes and hospitals were not working. All this has ended.

Much still to do in Chechnya

But in order for life in the republic to finally reach normality, a very great deal has yet to be done. It is necessary - in keeping with democratic principles and the constitution adopted at the referendum - to elect the republic's president and parliament, to form local government bodies, to draft and sign a treaty on dividing authority between the federal centre and the republic. And, of course, to restore Chechnya's economy. We will also have to hand over to the Chechen police the organization of law-enforcement work in the republic.

In addition to this, preparations for an amnesty are being carried out together with you, esteemed colleagues, within the framework of continuing the political settlement process. The amnesty will create the conditions whereby those who for various reason failed to take this step earlier but are ready to do so now may become involved in civilian life. We will have to do all this in complex conditions. It is obvious that the remnants of the bandits will strive, through threats, killings and acts of terrorism, to intimidate the residents of the republic and frustrate the vigorous progress of the political process. We can see that the terrorist acts being perpetrated by the bandits are being aimed with increasing frequency against the civilian population, against ordinary people. We will, however, see this thing through to the end, without fail. People in Chechnya will lead normal, human lives applause .

Demographic decline

Esteemed assembly, three years ago we defined demographic decline, Russia's economic weakness and the low efficiency of the state as the most serious threats to this country. Have we managed to move forward in resolving these problems? Yes and no. There have been both successes and serious miscalculations. Let us talk about this openly today.

The decline in Russia's population was singled out as one of the most acute problems. This decrease was caused, first of all, by falling birth rates and rising mortality rates. Over the past several years, the death rate has continued to grow. It grew by 10 per cent over three years. Life expectancy rates also continued to decline, from 67 years in 1999 to 64 in 2002, which are sad figures.

Among the causes are: high illness rates, deaths in accidents, poisonings and injuries. The spread of new epidemics, the so-called new epidemics, including drug abuse and AIDS, is exacerbating the situation. But, over the same three years, birth rates grew by 18 per cent and infant mortality dropped by 21 per cent. At the moment, this is an absolute record low in our history.

I will remind you that recently, within the framework of the State Council, we discussed a set of measures to accelerate the transition to medical insurance. I believe that this will make it possible to significantly strengthen the health system's financial base and that, once organizational questions have been fine-tuned in 16 regions of Russia in the second half of the current year, medical insurance will be provided for pensioners across the entire country. I very much hope that this will be a serious support for our elderly citizens.

The nationwide Russian census has shown that, according to preliminary data, the country's permanent population is in excess of 145m people. This is almost 2m people more than routine statistics showed. At the same time, this is 2m down on 1989. What do these figures show? First, they show that the country's population is falling, albeit at a slower pace that the routine statistics above showed. The population is falling.

Second, although the birth rate has somewhat increased, it was not the main source of our population growth. The main source was legal immigration into the country. About 7m people have moved into our country in the last decade, mainly from the Commonwealth of Independent States, of course. This is a very telling result which shows that, despite all our difficulties, for millions of people Russia remains an attractive country in which to live and work.

Global economic integration

The growing globalization of the economy and the entire social life of the modern world were also cited as serious problems three years ago. Today not a single country, whatever its size or wealth, can develop successfully in isolation from the rest of the world. On the contrary, only those states which deliberately, intelligently and dynamically integrate into the world economy become successful.

In the last three years, we have made a number of serious steps towards international integration. First, Russia was last June invited to become a fully-fledged member of the club of the world's most developed states. Together with our partners, we are working to ensure our national interests and resolve the common problems facing contemporary civilization. Global partnership in the nonproliferation of weapons of mass destruction is an important example of this. Scrapping these weapons will help us improve the ecological situation in certain Russian regions.

I'd like to point out, too, that Russia's credit rating is now the highest in the entire history of new Russia. A number of Russian companies have joined the ranks of major European and international companies. For the first time in the last 90 years some of them have begun seriously breaking into world markets, become prominent in international economic relations and have turned into no-nonsense competitors for foreign companies. I have to say that we have also advanced significantly towards accession to the World Trade Organization.

Economic successes

And finally, Russia's economic weakness was identified as a strategic and fundamental challenge for the country back then, three years ago. What has changed since then? On the one hand, changes for the better have been observed over that period. Economic growth has continued. Over the three years, gross domestic product has risen by 20 per cent. Capital investment has increased by over 30 per cent. The physical volume of goods exported has grown by a quarter, including export of machinery, equipment and means of transport by over 70 per cent - not a bad result.

For the first time in half a century, Russia has gone from being a grain importer to a grain exporter. Since 1999, the sale of our food products abroad has trebled. Exports of oil, oil products and gas have increased by 18 per cent. Today Russia is the largest exporter of fuel and energy resources in the world. Information technology has been developing rapidly - the so-called new economy is growing. Its output has grown by between 20 and 30 per cent a year. The level of telephone penetration in the country has grown significantly. The number of users of mobile telephones has doubled annually and has reached nearly 18m. According to estimates, today about 10m people in Russia use the Internet.

These figures show that balanced growth in the domestic economy, based both on traditional industries and modern technologies, is possible. The country's increased economic potential has made it possible to improve the lives of tens of millions of people. It is thanks to economic growth that nearly 4m people have left the ranks of the unemployed during these years. The opportunity to work and earn real money reduced the scale of strike action, from nearly 900,000 days in 1997 to less than 5,000 in 2002. Please note, this was amid not falling but increasing trade union activity. The real incomes of the population have increased by 32 per cent. Only three years ago, the average pension amounted to just 70 per cent of the pensioner's subsistence minimum. Last year, the two figures were already equal. Finally, per capita consumption has gone up nearly one-third in three years. Last year, this indicator exceeded not just the level of three years ago, not just the level of the crisis year of 1998 or even the pre-crisis year of 1997: in 2002, it reached a record high in the entire history of our country.

Of course, this listing of bare figures may seem hard to understand - but not for you, I believe. What lies behind these figures are substantial funds that have really become available to millions of our citizens. These funds contributed to a rise in people's wellbeing, they preserved their health and helped solve difficult social problems in the country.


And yet, despite all that I have said, I have to state that our economic achievements so far have been very, very modest. First, a quarter of Russia's citizens still have incomes lower than the subsistence minimum. A quarter of the country's population! Second, economic growth in this country remains extremely unstable. Thus, whereas in 2000 industrial production grew throughout the whole year, in 2002 it grew only for six months. As a result, unemployment began to grow by the year's end. Third, economic growth is slowing down. In 2000, the economy grew by 10 per cent. Last year, it grew by only slightly more than 4 per cent. And a slowdown in growth inevitably leads to a slowdown in social development and makes it impossible to solve many other problems facing the country.

We also have to acknowledge that we owe economic growth in Russia, above all, to the favourable conditions in the world economy in recent years. Thanks to an unprecedented improvement in the foreign trade conditions for our economy, Russia has obtained substantial economic advantages and much extra income. Some of this income was directed at raising the our citizens' standards of living. Some was invested in the Russian economy. Yet more was used to pay the state's external debt, a debt we have succeeded in cutting by a quarter. Finally, it is to a large extent thanks to this revenue that we have beefed up our reserves, the combined reserves of the Finance Ministry and Central Bank and the Central Bank's own reserves, the gold and currency reserves. Moreover, these currently stand at the record level of 61bn dollars. Incidentally they amounted to only 11bn three years ago.

I think it is understandable that, without these resources, by which I mean without the propitious foreign policy circumstances, successes in social and economic development would have been much more modest. One would do well to bear in mind that such a propitious situation cannot and will not last forever. In this connection I would like to draw your attention to one more problem: the total annual volume of the state's welfare obligations amounts currently to R6,500bn. In practical terms, it is more than double Russia's consolidated budget.

Hollow promises

Both the executive and the legislative branches of power have, in the space of many years, promised much to people that the Russian economy is simply unable to deliver. As if this were not enough, promises which cannot be kept keep piling up, under the cover of populist slogans, deceiving the citizens of the country. Unfortunately some politicians are striving to exacerbate this situation right now.

In addition to expectations that are raised in vain, a lowering of the quality of existing economic policy is a serious consequence of this increase in hollow promises. It also engenders distortions and conflicts in intra-budget relations. It is difficult for one to expect things to be otherwise in conditions in which the state's expenditure grows faster than the growth in the real economy.

Esteemed members of both chambers of the Federal Assembly and esteemed heads of regions, I think it is long since time we all put an end to this policy. The authorities cannot, should not and have no right to deceive the citizens of their own country. If we promise people something, we simply must do it. It's better not to promise if you don't do it.

And finally, the regulated state tariffs for the products and services of the infrastructure monopolies are increasing at a higher rate than the growth of prices in the free sector of the Russian economy. As a result, the excess distribution of economic resources in favour of the monopoly sector is increasing and its share of the Russian economy is growing. Meanwhile, this monopoly sector is not showing great efficiency. Thus the monopolists are suffocating the competitive sector of our economy. The government should keep a stricter watch on this.

Continuing such a policy is evidently the road to stagnation. The upshot of what I have said is clear: while the positive tendencies and indicators that I have mentioned, the favourable external markets and a stable political situation, exist, they have simply not been used, or not fully at least, to attain our strategic goals.

Economic revival

Esteemed deputies, esteemed members of the Federal Assembly: the three years that have passed have also demonstrated what we really can achieve when we work together with a common purpose. We have shown that Russia is a country that is by no means doomed to crises and to freezing, that the Russian people are talented, with initiative and enterprise, that they know how to work and deserve a better life, and that they are capable of achieving this - as long, of course, as nobody gets in their way. Far from getting in the way, it would be better if we were to help. I think that returning Russia to the ranks of the rich, developed, powerful and respected states of the world should become our key purpose.

But Russia will only return to this when it becomes powerful in economic terms, when it is not dependent on handouts from international financial organizations or on unpredictable changes in external markets. Such a thing is only possible in conditions of steady and rapid growth, growth based on the utilization of all factors, internal and external, traditional and modern, domestic and foreign. And finally, rapid and steady growth is only possible when competitive products are being made. Everything we make must be competitive - goods and services, technology and ideas, business and the state itself, private companies and state institutions, entrepreneurs and civil servants, students and professors, science and culture. Meanwhile, economic growth is sometimes opposed to reforms. One can hear people saying that it is dangerous to stimulate economic growth and that it is more important to continue structural readjustment and reforms.

I want to express my opinion on this. Such opposition is, at least, dubious. Reforms for the sake of reforms are not needed. Permanent revolution is not needed. It is obvious that private initiative, by both Russian and foreign businesses working in Russian territory, is the engine of economic growth. It is also obvious that Russian business itself has to become modern, inventive, flexible and mobile. It has to solidly continue the tradition of Russian entrepreneurship. A little bit more patriotism will do it no harm either.

I will repeat once again: the success of this country greatly depends on the Russian entrepreneur's success. And the policy of economic growth cannot be opposed to social policy. I would like to stress that we need economic growth, first of all, to improve the citizens' wellbeing. The solution of an entire set of urgent problems directly hinges on it. These are quality of food, good and comfortable housing, a stable supply of electricity and hot water, good education and a modern health system, protection from accidents and natural disasters and, finally, longer life expectancy.

We stated that stiff competition is a norm in the modern world. That is why our ability to compete and our readiness to fight for resources and influence directly define the situation inside the country and Russia's international importance. This approach to our development prospects has been welcomed and adopted in Russian society.

Practically all the influential political forces and our citizens have agreed that the country's high level of competitiveness has to be a most important aim. Now we have to ensure that this aim is taken into consideration by the state authorities and by local self-government bodies in their practical work.

Administrative reform

Meanwhile, Russian bureaucracy has proven ill-prepared for working out and implementing the decisions appropriate to the country's present-day needs. At the same time, it has learnt to accumulate administrative clout, as it were, using its position. I talked about this last year. We also spoke about the problem of administrative inefficiency in our state three years ago and pointed out that the weakness of the state brings economic and other reforms to nought.

The powers of our bureaucracy are still vast. But the number of powers it possesses do not match the quality of government. I have to stress that the source of this is nothing other than the superfluous functions of state government bodies. And yet, despite the huge numbers of functionaries, the country has a severe dearth of personnel at every level and in all government structures. There is a dearth of modern managers, of efficient people.

The above constitutes the background against which administrative reform, which the country badly needs, has to be carried out. As you know, the government has compiled an inventory of the functions of ministries and departments. They came to 5,000. In the course of this work, however, it transpired that nearly every department believes that its own functions should be expanded rather than limited at the expense of other, neighbouring departments in particular. Even when we understand the complexity of this task, however, and all the difficulties that have already appeared, administrative reform is still taking too long. It looks as though the government needs help. Evidently, an extra political impetus is required. It will certainly come.

I believe that, rather than trying to persuade bureaucracy to curb its appetites, it should be curbed by directives. Radical cuts must be made in the functions of state bodies. They certainly need to be well thought out but it looks as though there is no other way for us to solve this problem.

This should be done on the basis of the inventory which a government commission is finalizing now. This should be done together with a package of solutions regarding the delimitation of powers between the levels of power and by ensuring their financial sustainability. At the same time, a mechanism which works effectively needs to be created to resolve disputes between individuals and the state by improving administrative procedures and judicial mechanisms.

Ten-year plan to double GDP

A few words now about top priority socioeconomic tasks. One often hears that the Russian economy needs no qualitative leaps and bounds, that there is no need for major national projects that produce serious, landmark increments, and that it is quite enough to be consistent only in pursuing the existing policy, even if it does not bring the high rates of growth, to which we all look forward so much.

I would like to point out that this kind of attitude, this kind of fear of making responsible choices - and we are not, of course, talking of large-scale projects in the mould of those from the era of stagnation changes tack - but I believe that the problem of really finding the source of growth will only arise when there is a need to tackle specific large- scale tasks.

We have such a task. It is quite realistic, though extremely difficult. In a decade, we have to at least double the country's gross domestic product applause .

Doubling GDP is a systemic task and certainly a large-scale one. It will require a profound analysis and adjustment of existing approaches to economic policy. But the most important thing we need to do here, the thing we shall need, is once again consolidation of political forces, of society, consolidation of all the authorities, of the best intellectual resources, support from sociopolitical structures, cooperation between parliament and the government and a joint search for the best ways to achieve what is a strategic, a most vitally important and an historic objective for Russia.

I am convinced that Russia already has all the necessary conditions in place for setting and meeting such an objective. It is possible to really engage in the large-scale construction of a modern and strong economy and, ultimately in the formation of a state that would be competitive in every sense of the word.

Currency convertibility

Full convertibility of the rouble, both at home and abroad, both in current and capital transactions, is yet another big task that we should resolve jointly. I will remind you that, in the past, Russia had one of the strongest and most respected currencies in the world. The prestige of the gold rouble was equal to the prestige of the state itself. I am convinced that the country needs a rouble which would be freely converted on the international markets. It needs firm and reliable ties with the international economic system. Having become a fully-fledged member of the world's eight most developed countries, Russia simply must resolve this task. Attaining this goal will become a factor in Russia's genuine integration into the world economy. For our country's ordinary citizens this will mean, in practice, that when going abroad all they will need to take with them will be their passport and Russian roubles.

Tax reform

Straightforward fiscal accounting and the application of legal norms, the equality of taxable entities and a sensible level of taxation should remain the basic principles of tax policy. Permit me a few words on this subject. Unfortunately, tax reform has become an ongoing and uninterrupted process in our country. Of course, the measures the government has proposed to alleviate the tax burden represent steps in the right direction. But the frequency with which amendments are being introduced into tax law is clearly higher than can be tolerated. Let's be straight about this: it shows the low quality of the job done. It makes it difficult for everyone - the state, businessmen and citizens - to plan for the future.

For the first time now the government has shifted its tax policy from annual to medium-term planning. A programme for tax changes for the next three years was approved recently. This is a correct, important and necessary step, of course. Now we have to move on and draw up a blueprint for a tax system which will exist in Russia for many years to come.


I'd like to dwell on another topic which is important to a huge number of people. This is the problem of citizenship. Currently the lives of more than one million people who arrived in our country following the Soviet Union's disintegration and prior to the adoption of new legislation on citizenship have found themselves in a very complex situation. We discussed this topic quite recently with the leaders of the Russian State Duma factions. These people, who came to be with us, used to live and work in Russia, took part in her political life and many of them served in the Russian army but they have now turned out to be individuals without citizenship in their own country. The laws adopted last year were to have brought order to the flows of migration, to make them transparent. The situation that has come about does not facilitate the resolution of these tasks but, rather, creates serious problems for a large number of people.

I regard it as our duty to set this situation to rights. I agree with the faction leaders on this score. Let's ponder this and make appropriate amendments applause . Of course, it is not bans and barriers that we need. What we need is an effective immigration policy which is advantageous for the country and convenient for the people, especially for the residents of the Commonwealth of Independent States, for those who are close to us and with whom we have a good understanding, the people who speak the same language with us, for they are people who in their heart of hearts belong to our common Russian culture.

Importance of UN

Esteemed colleagues: Russia aspires to and will continue to maintain friendly, neighbourly relations with all the countries of the world, to tackle shared problems and defend common interests together with them. The foundation of our foreign policy, the fundamental task of Russia's foreign policy, is the implementation of our national interests. And here, the basic principle continues to be the observance of the norms of international law. The events of the past year have once again demonstrated that guaranteeing national interests requires in equal measure both effective diplomacy and a reliable Russian defence potential. In today's world, the relations between states are determined to a considerable degree by the existence of serious, world-scale real and potential threats. Among such threats we include international terrorism, the proliferation of weapons of mass destruction, regional and territorial conflicts, and the drugs menace. In the event of an aggravated threat to the world community as a whole or to an individual country, it seems extremely important to have a decision-making mechanism which has to be comprehensible, transparent and recognized by everyone. It goes without saying that the United Nations and its Security Council are the most important such mechanism.

Yes, it is not always easy for the Security Council to pass a decision. Sometimes no decisions are passed. It happens sometimes that the initiators of a resolution do not have enough arguments to persuade other countries that their initiative is right.

Of course, UN decisions are far from being favoured by everyone every time. But the world community has no other more universal mechanism. This mechanism should be looked after and maintained.

Of course, it is necessary to modernize the work of international organizations and to make it more effective. Russia is open to discussing these questions. I think that such approaches to international matters are civilized and correct.

These approaches are not directed against anyone nor in favour of anyone. It is our position, a position of principle, and we will adhere to it in the future.

Antiterrorist coalition

Russia was one of the first countries to face a large-scale threat of international terrorism. As we all know, not so long ago it even threatened the territorial integrity of the Russian Federation.

After the well-known and terrible tragedies resulting from acts of terrorism, an antiterrorist coalition took shape in the world. It took shape with our active participation in cooperation with the USA, with other countries. In Afghanistan, it showed its high efficiency in the fight against the threat of terror.

Russia values the antiterrorist community that has taken shape, it values it as a tool for coordinating international efforts in the fight against this evil. Moreover, successful cooperation in the framework of the coalition and on the basis of international law may become a good example of civilized states' consolidation in the fight against common threats.

I would like to stress once again: Russia is interested in a stable and predictable world order. It is the only way to guarantee global and regional stability, to guarantee political and economic progress in general. It will help fight poverty in the world, which is one of the most important tasks.

Regional cooperation

The strengthening of relations with the CIS countries remains our indisputable priority in foreign policy. These countries are our next-door neighbours, many centuries of historical, cultural and economic ties bring us together.

The mutual dependence of our development is also evident. In addition, there are tens of millions of ethnic Russians who live there. I must say straight out that we regard the CIS space as a sphere of our strategic interest. We also proceed from the fact that the CIS states regard Russia as an area of their national interests. Having said this, our country is interested in stability and economic progress in the CIS. I would like to stress that the unifying economic processes taking place in the CIS are linked with the integration of our countries into the world economy and help us to implement this integration in a more dynamic way, on conditions which are more favourable for all our partners.

We will consistently broaden cooperation within the framework of the Eurasian Economic Community which is working more and more efficiently. Developments in the world confirm that we made a correct and timely decision to set up the Collective Security Treaty organization.

There are several sources of real rather than imagined threats in close proximity to us: terrorism, transnational crime, the influx of drugs. Together with our partners in the Collective Security Treaty organization, it is our duty to ensure stability and security over vast reaches of the former Soviet Union's territory.

Closer links with Europe

An important element of our foreign policy is broad rapprochement with and real integration into Europe. Of course, we are talking about a complex process which will take a long time. But this is our historical choice and a choice that has been made. It is being implemented gradually, at the current stage by stepping up bilateral relations, developing a strategic partnership with the European Union and taking an active part in the work of the Council of Europe.

Together, acting in the interests of Russia's citizens, we have found a political compromise regarding the transit between Kaliningrad Region and the rest of the Russian Federation. It is obvious that our interests and the interests of greater Europe require new qualitative steps towards each other. Members of the public, business and cultural circles, scientific organizations of the European countries and the Russian Federation are interested in this. Our proposals regarding the future development of all- European processes are known: they concern free travel for the public and a common economic space. This is not an immediate prospect. In order to achieve the aims stated above, we shall have to travel along a difficult and quite a long road. Yet the dynamics of pan-European processes enable it to be said that these plans are perfectly realistic. A great many of our partners in the European Union actively support them.

Army reform

Moving on now to the modernization of our military organization: in military reform, the key issues are substantial rearmament, perfecting the principles on which the armed forces are manned and improving their very structure.

For the trouble-free and peaceful development of the country, we need a strong, professional and well-armed army. This army should be capable of defending Russia and its allies. It should also cooperate efficiently with the armed forces of other countries as part of the fight against common threats.

In accordance with the plans already approved, we shall continue to form permanent-readiness units in the Ground Forces, the Airborne Troops and the marines on a professional basis. This work should be completed in the year 2007. Furthermore, service in the Internal Troops and Border Troops will also be based on professional principles.

In simple and plain terms - this is not the only consequence but a very important one - this means that in trouble spots and in local conflicts, should Russia, God forbid, be faced with such challenges - only trained professional units should take part. I would also like to note that the noncommissioned officer corps of our armed forces will be transferred more rapidly to a professional basis.

Starting from 2008, the length of conscription service should be reduced to one year. For the first six months, new recruits will study military professions at educational units. After that, they will have a choice: either to serve out the remaining six months at regular units or to move over to contract-based professional service. Those who have served three years on contract should gain a number of privileges, including the guaranteed right to receive higher education to be paid for by the state. Also, a decision has been taken, in principle, to recruit citizens from the Commonwealth of Independent States for professional service in the Russian army. After serving for three years under contract they will be entitled to a simplified procedure for obtaining Russian citizenship.

A lot of the above will need to be enshrined in law. In connection with this, I am counting on your support, the support of the Federal Assembly. Over the next period of time, we will have to increase significantly the provision of modern weapons for our armed forces. As you know, a relevant programme of rearmament has been developed and approved and will be implemented without fail. The strengthening and modernization of the nuclear deterrence forces will be an important component of the armed forces' reform.

Also today, and I can tell you about this, work on creating new types of Russian weapons, weapons of the next generation, is at the stage of practical implementation. This includes weapons which are classified by specialists as strategic weapons. This weaponry will make it possible to ensure Russia's and its allies' defence capability for a long period of time applause .

I will say once again that the country needs a combat-ready army, an army with a thinking corps of officers, highly professional junior command personnel and soldiers who sincerely want and are ready to serve their homeland.

Duma elections

Esteemed deputies, esteemed members of the Federation Council, the prospects for Russia's development and for solving many of our problems will be determined to a considerable degree by the results of the main political event of the year - the elections to the State Duma. I can't pass over in silence this most important event in the life of the country. It's an important stage in the development of our democracy. In the last few years relations between the legislature and the executive have improved. Confrontation has been replaced by constructive cooperation based on a meaningful exchange of views, balanced criticism and collaboration. Solidarity shown by responsible politicians on the issues of the struggle against international terrorism, the preservation of the country's territorial integrity and support for our efforts in the international arena constitute a most important sign of the spiritual revival of our society. I say this without any exaggeration and I am sincerely grateful to these politicians, politicians, moreover of the most wide-ranging political persuasions. I would also like to thank representatives of all the associations of deputies for their active joint work.

At the same time, some features of domestic political life are worrying. Above all, mechanisms for funding political parties still remain a closed book for the electorate. The market of electoral and other political know-how is today to a large extent a sector of the grey economy. I hope that quite soon our joint work will ensure more transparency in party life and provide people with more objective information, and, as a result, a better chance of making the right choice.

Lack of transparency in financial transactions on the political scene is often also complemented by ideological vagueness, and sometimes, let's be frank, a degree of political insincerity. Let me explain what I mean. Sometimes those deputies who enjoy the reputation of liberals and proponents of progressive economic theories vote in practice for bills that are ruinous for the state budget - fully aware of what they are doing. And those who have no qualms about describing businessmen as nothing but robbers and bloodsuckers in public unashamedly engage in lobbying the interests of major companies prolonged applause .

Parliamentary parties are part of the state political machine and, at the same time, part of civil society. Let me add: its most influential part, and consequently also its most responsible part.

We are all interested in enhancing the party structures' cooperation with the regions, the citizens and their public organizations. It is obvious that an active dialogue with people cannot and should not be restricted to pre-election debates and election campaigns. Only a day-to-day link between the state and society, which can and should be provided by the major parties, can spare the authorities from making serious political mistakes.

We often talk about the greatness of Russia but a great Russia isn't just a great state. First and foremost, it is a modern, developed society, one that won't come about of its own accord. A fully-fledged and developed civil society will only emerge in conditions where there is a drastic reduction in the functions of the state apparatus, where mistrust between various groups in society is surmounted and, most importantly of all, it will only be possible if there is national unity in assessing the strategic objectives the country faces. The creation of conditions such as these, without the active involvement of political parties, is impossible.

I consider the forthcoming elections to the State Duma to be yet another stage in the development of our multi-party system, a development in the direction of greater openness of intent, more effective action and greater responsibility towards the people of Russia. Strong and responsible power based on the consolidation of society is required for the preservation of the country. Without strong power, a breakthrough into the future is not possible either.

Parliamentary majority could form government

I would like to stress once again that we are facing serious problems and threats. One has to be intelligent and strong to survive in the cut-throat competition of this world. And what we have to do is not just survive. We have to have substantial economic, intellectual, moral and military advantages. Only in this way can we retain our position among the major powers of the planet. And, therefore, as I have already said today and will repeat, I believe that doubling gross domestic product, overcoming poverty and modernizing the armed forces are among our most important objectives.

I believe that society is capable of achieving these results by 2010 brief applause . I believe that the foundations for achieving these results are the consolidation of social forces, the inviolability of the constitution of the Russian Federation and the inviolability of citizens' guaranteed rights and freedoms.

I call on all those who regard the tasks formulated above as top-priority ones for the country to mobilize intellectually, to draw up common approaches and to coordinate specific plans.

I have already said I support the general course towards strengthening the role of parties in public life. I believe it possible, taking account of the results of the forthcoming election to the State Duma, to form a professional and efficient government based on the parliamentary majority.

Concluding my address, I would like to say: Pooling our efforts is possible if the main political forces possess the necessary civic responsibility for joint work.

I am convinced that Russia will definitely rise to a height worthy of its potential. Consolidation of all our intellectual resources, resources of authority and moral resources will enable Russia to attain the biggest goals, great goals worthy of a great people.

Let us wish each other success. Thank you very much.

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