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JRL #7233 Simple Text - Entire Issue

from kremlin.ru
Moscow, the Kremlin
June 20, 2003

Press conference with Russian and foreign journalists
Press conference given by President of the Russian Federation Vladimir Putin
June 20, 2003
The Kremlin

President Vladimir Putin: Good afternoon ladies and gentlemen,

This is not the first time that we are meeting together like this in such a broad format. It is becoming a fine tradition that in the middle of the year we get together and you, the representatives of the press, get the chance to ask any questions that have come up over time. And I get the chance to answer your questions and explain what the federal authorities are doing regarding key development issues for Russia and also regarding international issues.

I wont spend any more time now on generalities. I am here at your disposal and Im ready to answer any questions you have for me. Please go ahead.

V. K. Dolzhenkova (Tomsky Vestnik newspaper): Mr. President, first of all, I have been asked to pass on the best wishes of the Vedyashkin family. If you recall, you were at their wedding, and you urged them then not to put things off. They have asked me to tell you that Russia will soon have a new little citizen. But now, getting on to serious matters

Vladimir Putin: No, what you just said is very serious. What could be more serious, especially given the demographic situation today in Russia? This is a very serious issue throughout the whole of Europe. Please wish them happiness on my behalf.

V. K. Dolzhenkova: Yes, I definitely will do that. Thank you.

Mr. President, what are your thoughts on the opinion set out in the report by the Council for National Strategy that a certain oligarchic revolution is ripening in Russia and that the representatives of big business are seeking to integrate themselves into political power and in doing so, turn Russia from a presidential republic into a presidential-parliamentary republic?

Vladimir Putin: Concerning the influence of big business on the countrys life, this influence is considerable. Its difficult, really, to imagine how it could be any other way in a country that has a market economy and has large companies. I dont think we should demonise anything here. If we look at the question from an optimistic angle, the big companies that work within the law are working for the good of the country. They are developing our economy, creating jobs and doing a lot to develop new technologies. These companies, as a rule, provide us with examples of very good and high-class management. They could be an example for many other sectors of the economy. In this sense, of course they have an influence on the economic and political life of the country.

If you take a look at what goes on in the State Duma during discussions on the budget and the various bills concerned with tax reform, if you take a bit of a plunge into the Dumas real life, then you will see that, say, the big oil companies are now actively lobbying against the tax on mineral resources because they say the government is putting too great a burden on them. I wont go into all the details now, but overall, the dialogue between business and the government should work towards finding the best possible solutions for the economy, for social issues and for all sectors of the Russian economy. This does not mean, of course, that we should let certain representatives of business influence the countrys political life in the aims of pursuing their own group interests. This is why we have democratic institutions such as the parliament and the courts that act in accordance with the Constitution. This is also why we have the mass media. It is my deep conviction that over these last years, this much talked about idea of keeping the various representatives of business at equal distance from the political authorities has become reality. As for those who do not agree with this position, its like they used to say, theres neither sight nor sound of them now.

As for the question of a presidential or a parliamentary republic, I think that given the way Russia is today, that is to say, a federation with a complex makeup and many different peoples and religions, any state system other than a presidential republic would be unacceptable and even dangerous.

In some countries, the parliamentary republic system works effectively. But I dont think it would be suitable for Russia. Thats the first thing. The second thing is that I dont think we should cast doubt on the choice this countrys people has made and deny people the chance to directly elect who they want to be the head of state.

A. V. Tumanov (Vashi 6 Sotok newspaper): Mr. President, you are no doubt aware just how many people in this country have flower and vegetable gardens, and you no doubt realise how many problems they have. I want to ask whether the authorities intend to pay more attention to the ordinary hardworking people with their spades and rakes who form the backbone of this country?

Vladimir Putin:

Of course I know how many people keep flower and vegetable gardens around 20 million -- and there are another 60 million who are also involved in this work. I know these figures not just from reports, but also from meetings with people active in this work. Here, in the Kremlin, I met with the leaders of the agrarian movement, and so I do get firsthand information. Whats more, my own parents in their time worked hard keeping up their garden, laboured away from morning till night and made me do the same. So I know very well what its all about.

In the old days they used to allocate people six hundredths of a hectare, and then the size grew a little, and then a bit more. The strange thing is that 90 percent of the potatoes grown in the country are grown in these little private gardens. 90 percent! And these gardens produce 80 percent of the vegetables and 60 percent of the fruit. These figures seem incredible, but these are the facts. So, I would first of all like to thank everyone out there who takes part in this work for such amazing results. And I hope that you will get satisfaction out the work you do this season and that it will bring you good results.

There are lot of problems with supply of seeds, for example, and the overly bureaucratic procedures for taking decisions on a whole number of issues. The state as a whole should be responsible for sorting this out, and the municipal authorities. We are aware of the problems and we will try to work harder in this area.

As for the name of your newspaper, of course, its up to you to decide. But given the results obtained from these gardens, which can indeed be only six hundredths of a hectare in size, or 9, or 12 or 15, I would call it the breadwinner.

A. V. Vernitsky (Channel One): Mr President, in your annual address to the Federal Assembly, you set the strategic objective of doubling GDP in the next 10 years.

What specific mechanisms do you propose using to achieve this objective? Who does it depend on and, being honest about it, just how realistic is it?

Vladimir Putin: You know that when speaking about people who like to borrow money, its said, Ask for more, theyll give as much as is needed. The same goes for work to be done. We need to set serious objectives, ambitious objectives, and then maybe we will start making at least a bit of progress.

Being more serious, the development of various other countries, some of which have a similar economic system to ours, shows that this objective is realistic and can be fulfilled.

This wont be an easy task for Russia. Its not enough to bring a new oil well on line and see the GDP jump up a few percentage points, as is the case in some countries. Russia is a big country with a complex economy, and this is a complex objective we have set. We have to orient our economy above all towards developing high technology. We must develop the new economy that is based on information technologies. Looking at the problem from this angle, it all seems more complicated, but I repeat that this objective is realistic.

Of course, achieving this aim will require us to work comprehensively in many different areas. I will just name the main things we need. First, we need political stability in society and at state level.

Second, we need economic stability and predictability. We need to develop legislation, lower the tax burden, change our tax structure, promote growth in the manufacturing and processing sectors of the economy, deregulate the economy and get the state out of areas where its presence is not justified and stifles economic activity.

In this respect, the government is doing a lot. I hope this work will continue. You know that certain decisions have already been made concerning taxation. The value added tax will be reduced by two percent and the sales tax will be abolished. The turnover tax has already been abolished. In any normal economy, you should have either VAT or a sales tax. The only exception is Canada, which has both, but the sales tax there is essentially just a changed form of VAT. So, we are making our economy more civilised, more understandable, transparent and predictable.

You already know last years results. The economy grew by 4.3 percent, and it has grown by 7.1 percent over the first five months of this year. These are very good results. Industrial output rose by more than 6 percent, and inflation, though it is still quite high, is generally within the planned limits. Peoples real incomes increased by 14 percent. This is not bad. Investment in fixed capital rose by 11 percent this year compared to the same period last year.

If we keep growing at this rate, then we will reach the results we have set ourselves and will fulfil the objectives I set out in my annual address. True, the target for this year is more modest, as we are seeking GDP growth of 4.5 percent.

Question (U.S. television channel NBC): President Putin, as you know, Washington is still preoccupied by Irans desire to manufacture nuclear weapons. Have you received new assurances from Iran that Tehran will observe the International Atomic Energy Agency protocols? And do you think that work on the nuclear power station should stop until Iran signs these protocols?

Vladimir Putin: The issue of Iran came in for particular attention during the meeting with President Bush in St. Petersburg and at the summit in Evian. We looked very closely at the question. I must say that the respective positions of Russia and the United States on this issue are a lot closer than they seem at first glance. Our position of principle is that we are categorically against the proliferation of weapons of mass destruction, and we support strengthening the non-proliferation regime. This concerns all participants in the international dialogue, and above all, of course, it concerns the countries that have signed the Nuclear Nonproliferation Treaty. Iran, as we know, has signed this treaty. As for your question on whether I have received new assurances from Iran that it has no plans to build its own nuclear weapons, yes, I have. Two days ago, I spoke by telephone with President Khatami on his initiative, and he once again assured me that Iran has no plans to make nuclear weapons. Whats more, we have information that the Iranian leadership plans to sign all the protocols as demanded by the IAEA for IAEA supervision over Irans nuclear programmes.

Our position is not something new for the Iranian leadership. We will build our relations with any country, including Iran, based on how open they are in their relations with the IAEA. In case youre not aware, I can tell you that a meeting of the IAEAs directors has just taken place, and no resolutions condemning Iran were passed. The meeting decided that the IAEA must pursue its joint work with the Iranian leadership on ensuring that all Irans programmes will be transparent in the future.

This corresponds to the position of the Russian Federation, and we will continue to work in this direction.

I would once again like to say that we will work together with the members of the international community on this problem. The only thing we are against is having the nuclear card used as a pretext for unfair competition on the Iranian market. Thats the only thing.

U. M. Saiyev (Republic of Chechnya, special correspondent for Gums newspaper): Mr. President, as you know, Chechnya has embarked on a complicated but hopefully stable process of returning to normal peaceful life. Unfortunately, many political parties only remember the North Caucasus region when an election is due. The only party today that is really showing a desire and ability to take part in the public and political life of Chechnya is United Russia.

In your opinion, what positive contribution could Russian political parties make to help bring lasting peace and civilised life back to Chechnya?

Vladimir Putin: Unfortunately it is true that many political forces only become active when elections are due. Im very pleased to hear you mention one of them in a positive light. United Russia did indeed do a lot to help prepare for the referendum. That is the truth. And some of the partys activists, such as Frants Klintsevich, for example, went there, as far as I know, without any bodyguards, visited almost everywhere, met with people and explained the position of the federal authorities and the State Duma. In short, he worked directly with the voters, and I think that is deserving of support at the very least.

Coming back to what political parties can do, they can do a great deal. But we do need to give them their due for what they are doing. Without their active support, without the support of the main political forces in the parliament, it wouldnt have been possible to approve a whole series of important decisions for Chechnya.

In the political sphere, this concerns above all the decision on the amnesty. This was a difficult decision for the Duma. After all, this isnt the first amnesty, and it was not easy for the deputies to come to a decision, but they did.

On the economic side, many laws aimed at developing the republic have been passed, for example, the recent decision, approved by the Duma, to pay compensation of 14 billion roubles. That is an unprecedented large sum for Chechnya. Im pleased to see that this was a conscious choice made by the Duma deputies. What I really would like to see, in Chechnya, as in the other regions of the Russian Federation, is for political life to become civilised in character and gather strength. I would like to see all the main political forces in the country represented in Chechnya, and I very much hope that this will be the case.

M. S. Simonian (Rossiya television channel): Mr. President, in a few days you will go on a state visit to Britain, one of the leading players on the international stage. On the one hand, Britain is the United States closest partner, and on the other hand, it is one of the major countries in the European Union. What are your expectations for this visit?

Vladimir Putin: This will be a state visit. We have not made a visit like this to Britain in 150 years. On the one hand, it is good to make such a visit now, but on the other hand, it will involve following certain conventions. There will be a lot of protocol formalities, for such are the rules in the country that will host us. But there will also be a lot of substantial meetings, including a meeting with British Prime Minister Mr. Blair. He and I have a good and trusting contacts.

Britain is indeed one of our priority partners. It has one of the biggest economies in Europe. Its political activeness is immensely important for Europe and for the world as a whole. You no doubt remember the last visit the British prime minister made to Moscow. It looked then as though our meeting ended without producing any real result, but the result it did produce became the foundation for the Security Council resolution on Iraq that followed shortly afterwards. In fact, the main outlines of that resolution and our positions were coordinated here during that visit to Moscow.

We could not say all that then, because it was not yet clear whether the resolution would go through or not. It depended not only on Russias and Britains positions, but also on all the members of the Security Council, and there was still a lot of complicated work to do on coordinating positions.

Im using the situation with Iraq as an example. Britain is a country of great significance for us, from the point of view of coordinating our positions on key international issues, our integration into the European economy, and our bilateral political and economic relations. I am sure that this visit will help develop our relations with Britain.

Question (Al Jazeera television): Mr. President, recently at the press conference with President Bush in St. Petersburg, you announced that there would be greater efforts made to coordinate work on resolving key world issues. Shortly afterwards, the Americans organised a summit on their own in Egypt, and then in Jordan, to resolve the Palestinian-Israeli problem without Russia, the European Union or the United Nations.

What do you think of this kind of action, and how do you see a solution to this conflict?

Vladimir Putin: First of all, I dont think that there is anything unconstructive about President Bushs activities in the Middle East. As you know, President Bush flew to Egypt after the summit in Evian, where we discussed in great detail the situation in the Middle East and ways of resolving the Palestinian-Israeli conflict. These were not just bilateral discussions, but also multilateral discussions. President Bush discussed his position in detail with all the participants of the summit at Evian. All the other participants, and I can tell you, as I was there and taking part, also set out their positions. Judging by what I know of the discussions in Egypt and Jordan, the U.S. side took our general position into consideration.

Second, our respective foreign ministers are constantly keeping each other up to date, and Russia is very active in this. I must say that there are certain nuances in Russias position, in that of the United States and of the European Union. We, for example, did and still do think that the role and significance of Chairman Arafat in the regulation process cannot be overlooked. He is an influential figure and a look of people in the region look to him. I think it would be a mistake not to take this into account.

But on the main points, our positions coincide with that of the United States. Together we have already drawn up the Road Map, and now it is time for both the Israelis and the Palestinians to beginning implementing it.

You probably are aware that I met recently with the heads of international Jewish organisations in Moscow. I spoke by telephone with Premier Sharon, with Premier Abbas and with Chairman Arafat. We are in constant contact and have ongoing consultations. This is a very complicated issue, though Im sure Ive no need to tell you that. You are probably a greater expert on Middle Eastern regulation than I.

What can we do to resolve this problem? The only road is the road of compromise that takes into account the vital interests of everyone living on this land.

Yu. V. Voronenkov (Severnaya Pravda newspaper, Kostroma Oblast): Mr. President, you know that the All-Russian Congress of Journalists recently took place in Yekaterinburg. We are very concerned about the lack of a clear position regarding the so-called industrial committees draft law on the media.

Reading the draft law posted on their site is enough to make your hair stand on end. Essentially, this proposal would turn journalists into nothing more than communications operators being used as channels for conveying information. We lose the right to be co-founders and we lose the right to be responsible for our publications. What is your view of this proposal? Thank you.

Vladimir Putin: To be quite honest, I should properly familiarise myself with this project first, and only after that will I be able to give you my opinion on this text at an expert level.

As you know, the Industrial Committee is not made up of bureaucrats, but above all of representatives of the media itself. This is a document which is born in the corporation, in the widest sense of this word, of media representatives. Media representatives themselves think that they should make some self-restrictions, which we have talked about a lot, with the goal of protecting the interests of society as a whole for the sake of which, in fact, the media functions, but of course it needs to be seen what these self-restrictions are. They should not, of course, be connected with restricting freedom of distributing information. This is the most important thing. This principle should lie at the foundation of any decisions by power bodies in this area.

M. K. Tumanova (TVC television): Vladimir Vladimirovich, you call on oligarchs to be patriotic. Tell me, have they heard your call? Has there been a major drop in the outflow of capital recently? And what, besides the financial component, do you understand by the concept patriotic oligarchs?

Vladimir Putin: You know, I dont really like the word oligarch used to describe big business representatives in Russia. In the sense that we usually use this word, an oligarch is a person with stolen money, who continues to plunder the national wealth, using his special access to bodies of power and administration.

I am doing everything to make sure this situation never repeats in Russia, and among big business representatives today, I do not see anyone who acts in this way. Perhaps some of them try. Probably everyone involved in business always looks for ways to earn more money, and to do this as effectively and cheaply as possible. Societys task, our common task because both the state and the media should keep a very close eye on this is to make sure this situation does not arise in the country.

As for patriotism, capital as such is not unpatriotic in itself. Capital always flows to where the best conditions exist for its use, whatever you might say or desire. So our task is above all to create such conditions, and not cry about the fact that capital is flowing out.

As for the outflow of capital, here two qualities of the outflow need to be distinguished. The first is the criminal outflow of capital. We are actively working on this both within the country and with our partners abroad. As you know, yesterday Russia became a full member of the FATF an organisation which combats the laundering of dirty money. And I think that this is a good sign, it is an acknowledgement of Russias efforts in this direction. Russia really does a great deal in this area.

The second quality is the legal outflow of capital. According to our assessments and assessments by international experts, in 1999 the yearly outflow of capital from Russia was $24.8 billion, and in 2002 according to preliminary data, it was $11.2 billion, i.e. this figure has dropped by more than half. This is a good sign. It shows that Russia is gradually creating conditions for investment here, in Russia.

We are seeing a certain inflow of capital. I should tell you that after the Federal Republic of Germany I may be mistaken here, but not by much the second country for investment in Russia is, strangely enough, Cyprus. I assure you, that this is the return of Russian capital that was taken out of the country in the past. And Russia is not unique here. In all regions of the world, at all times, if after a period of outflow of capital, acceptable, favourable conditions for investment are created in a country, the repatriation of capital begins. We are seeing this return, so far in small volumes, but noticeable ones. And this is a pleasing fact, a positive phenomenon.

Question (Krasnodar): Vladimir Vladimirovich, there are two problems in Russia a good harvest and a bad harvest, because either way prices on flour and bread rise.

Last year intervention on the grain market was delayed, and this year in Kuban and the entire south of Russia there is a drought, and urgent aid is required.

My question is this. If the market mechanism fails, why is state aid ineffective? How can we make sure that it is not late, that it comes on time and in the necessary amount?

Vladimir Putin: For agriculture in Russia to function effectively, it must be up to date. And not just from the point of view of modern equipment you know well how many problems there are here. Agriculture must be organised correctly and effectively. And of course, the state should create these conditions. Rich countries can allow themselves to channel large sums into the agricultural sector. I dont actually think that this particularly helps the sector. As soon as support and quotas are introduced, prices grow on the produce of this sector for the population, and the producer begins to stagnate.

Taking into account risk farming in the country, here the state should of course conduct sensible policies, and measures need to be combined here. As you know, a decision has been passed on quotas, above all for agricultural produce, meat and poultry.

I think that these decisions are justified taking into account the restrictions which are taken by different countries to protect their agroindustrial sector. We have extensive support of the agricultural producer organised here, which at first glance is unnoticeable. It is contained in the Russian tax legislation.

As for direct support, connected especially with unfavourable weather conditions, here I agree with you that if anything is to be done, it needs to be done quickly and effectively. Where this support has worked last year in several regions of Siberia and the Urals these measures supported the producer. Currently, the south of the country is in a difficult situation. I gave an appropriate instruction to the Government on this issue, and I hope that it will be carried out on time.

There are system issues in the area of agriculture, which complicate the activity of this sector, such as the large debts of agricultural producers to state financial institutions. Of course, the general approach is correct, it is that debts should not be forgiven, otherwise this will lead to an imbalance of the economy, to a reduction of discipline in the financial sphere and so on. But there are still problems which lie on the conscience of the state. I mean above all not just debts, not the main body of debt, but fines and penalty fees on these debts.

If the debts of agricultural enterprises to the state are, I think, 330 billion, the overdue indebtedness is 170 billion, and the debts and penalty fees in this are about 50-60 billion. I think that they should be written off. And I will sign an appropriate decree on this soon. This order has been given to the Government. The project is virtually at the final stage of preparation. It will allow to clear the balances of agricultural enterprises and create better conditions for work in the current season and in future.

V. P. Kondratev (NTV): Vladimir Vladimirovich, in your Address to the Federal Assembly you said that according to the results of the parliamentary elections, a Government could be formed of a so-called parliamentary majority.

In discussing the vote of no confidence in the parliament, the rightists reproached you with the fact that, in principle, you answer for the Government, and not Prime Minister Kasyanov.

Could you say in more detail what you meant: will we have a Government like in the West, which will be formed by party coalitions? Who will head this Government?

Vladimir Putin: I am constantly reproached, by the leftists or the rightists. And by the Centrists as well, by the way. And this is a good thing. There is always the chance to assess the results of ones work once more.

As for responsibility for the Government, of course I take responsibility for this work. But the Government is headed by the Prime Minister, and he works well. There are a lot of issues, and a lot of problems. It could be better. But on the whole, the activity of the Government must be acknowledged to be satisfactory.

As for the fact that the Government should be guided by the parliamentary majority, there is nothing very new in this. In accordance with the Constitution of the Russian Federation, as you know, the head of Government should be approved by the State Duma. But this is impossible if the candidate for Prime Minister does not gain the appropriate majority. This is the first point. And secondly, I would, of course, very much like to construct our work together with parliament, so that the parameters, principles and goals which the state sets itself are the same both for the executive and legislative branches of power. And then we will see a real advancement of Russia. Then we will not see a repeat of the dismal period of the mid 1990s, when reforms were only talked about and we only stayed in one place, not advancing a single step. This was the worst situation possible.

Over the last two to three years, we have passed more laws than have been passed since the beginning of the 1990s. I think that such renovation, reconstruction, and modernisation of the country has never happened in the history of our nation. And I very much hope that we will continue to feel the positive influence of the decisions passed in the years to come.

Yu. Kuznetsova (Privolzhya Federal District television, Sosedi (neighbours) program): Vladimir Vladimirovich, how do you feel about the increase in the number of capitals in Russia? What will happen if there is a capital in each district? For example, if Nizhny Novgorod becomes the capital of the Privolzhya Federal District?

Vladimir Putin: In Russia there can only be one head of state, one head of the federal Government and one capital Moscow. The hero city of Moscow.

As for federal districts and capital functions as a whole, my position is as follows.

Federal districts were not planned as quasi-national formations, and there should not be any capitals in them. As for administrational centres, of course, where an administrational resource is formed, they gain a certain authority and a certain significance. This happens de facto anyway. We will simply bear this in mind.

As for capital functions, in many countries of the world they are distributed more or less equally. For example, in Germany the constitutional court is in one city, the central bank is in another, and so on. This slightly relieves the burden from the capital city, but the city does not lose any of its capital functions because of this. The main political resources, the main centres of power and administration are nevertheless located in one city.

For Russia, in principle, a minor redistribution of this nature would also not hurt. But I would like to state that discussions on plans to move the capital from Moscow to other places have no basis in reality. This is an unjustified luxury for us. Russia is not just a large country. It is a core power, and I would like to point out that moving the capital to the full extent would mean enormous expenses. Expenses which are not at all justified, in my opinion. But as for individual capital functions, I repeat that yes, this should be considered, but it should be decided naturally, calmly and without agitation.

A. P. Gamov (Komsomolskaya Pravda newspaper): Vladimir Vladimirovich, if you are elected President for a second term next year, will you push for extending the term of presidency, for example from four years to five years, and what do you see as the optimal presidential term?

Thank you.

Vladimir Putin: On the whole, I do not see that there is a fundamental difference here. Four or five years is a small difference. Two five-year terms would be a more stable situation, in my opinion. Personally, if I decide to participate in elections next year and am elected, I will not push for this. Furthermore, I think that in our specific conditions, this does not need to be done. Because it is involves changing the Constitution, and the very process of changing the Constitution is already a kind of destabilising element. I think that this is worse, far worse, than a four-year term. Four or five years at the end of the day, its not that important.

Ye. N. Volisova (Nizhny Novgorod, Seti NN television channel): Continuing the question of the capital. I would like to know, would it be possible to pass a law or decree making it possible to register large companies not only in Moscow? Or even make them not register in Moscow, but in the other big cities, in the regional capitals, for example, so as to help bring living standards in the rest of the country up to the level of Moscow?

Vladimir Putin: I agree absolutely that this is not only possible, but also necessary. This is just the kind of area in which we need decentralisation. This is a very sound idea, and the government should definitely move in this direction.

Question (RIA Novosti): Mr. President, the question of looking after the interests of our compatriots abroad and former Soviet citizens who wish to live in Russia has become more topical of late. This question is most urgent in Turkmenistan and in some of the Baltic countries, even though they plan to join the European Union and become members of greater Europe. What policy will Russia follow with regard to Russians abroad? Thank you.

Vladimir Putin: We will consistently protect our citizens, wherever they may live, whether it be in Europe, Africa or in Central Asia. That is the duty of the government and the Foreign Ministry.

The only thing I would like to draw particular attention to is the need to do this in the proper way. We should not use this issue as a pretext for self-promotion, especially at a time when elections are due and there are enough internal political events in Russia itself. We should always remember that our actions should be constructive and aimed at helping our citizens abroad rather than further complicating matters by not being sufficiently careful. This is a sensitive issue, and we really must act with great thought here. We will act firmly, but in such a way as to strengthen rather than weaken ties with the countries where our compatriots live.

Regarding Turkmenistan and the situation of our compatriots there, which is a subject that is coming in for so much attention in the media now, it is true that we did sign a document ending the agreement on dual citizenship that had existed between our two countries. We immediately agreed that this new agreement would apply only to people who wished to obtain dual citizenship after the document was signed. People would no longer have the right to obtain dual citizenship from this moment. But in Turkmenistan, this agreement is being applied to people who already had dual citizenship.

I have spoken twice recently with the president of Turkmenistan on this issue. He called me on the telephone yesterday and we discussed this matter. He assured me that Turkmenistan would not do anything to worsen the situation of Russian citizens living there. A high-level bilateral working group will work on this problem. On our side, the group will be headed by the deputy foreign minister, and in Turkmenistan, as the president told me, it will be headed by the Turkmen foreign minister. It will begin work very soon and examine all the problems in this area. The president of Turkmenistan assured me that until this group completes its work there will be no changes to the rules for entering, leaving and residing in Turkmenistan for Russian citizens living there. That is what he told me.

Question (Egyptian television): Mr. President, we all followed the magnificent celebrations marking the 300th anniversary of St. Petersburg, the Leningrad that we love. I also studied in Leningrad, at the philological faculty just next to you. What influence do these celebrations have on the revival of Russia and its culture, given that at the State Council session on culture you said to Karen Shakhnazarov that you are, on the taxi drivers side. How can the state not look after culture?

And also, if I may, coming back to the question of weapons of mass destruction, why does the whole world talk about Iran, Iraq and North Korea, but no one talks about Israel? After all, Israel has nuclear weapons. What do you think of the Arab countries initiative on this question? Thank you.

Vladimir Putin: Regarding the celebrations of the 300th anniversary of St. Petersburg, the events were planned as being something for the city, and of course for the whole country, too. Over the last decade we have faced all sorts of problems, crises, economic disasters, collapses, bloody armed conflicts, and it seemed to me that it would good for us to show ourselves and show the world that Russia has risen from its knees and is being born anew. I am very grateful to my colleagues, and to the heads of state and government who came to St. Petersburg and showed respect for this country.

As for culture, it is a very specific sector. What I was talking about with Mr. Shakhnazarov was above all the economic component of culture. I have great respect for Mr. Shakhnazarov and I understand what prompted him to say what he did. Of course, our own producers are hardly likely to welcome the flood of foreign films and television productions on our market. And, as with other sectors, such as agriculture, for example, the national producers see the simplest solution as being to ban foreign imports. This is the simplest solution, but it also the most dangerous one.

As I already said to your colleague regarding agriculture, weve only to overdo it a bit, and prices would jump up inside the country. That is why, though we must take action to support the national producer, we cannot forget about the products consumers. This is where the fine balancing act of state economic policy comes in.

As for support for culture and for the people producing it, this support should not just be about limiting the amount of foreign products on our market. I think, rather, that it should be about creating the conditions that will help Russian producers become more competitive with regards to Western or Eastern producers. In many cases we can already see examples of effective work of this kind, all the more so here at home. If someone is working at home, this creates definite advantages. This goes for the cultural sphere, too, and for what it produces: films, books, TV programmes and so on.

I think that this is the kind of support we should be providing.

The second part of your question brings up a very complex problem the problem of proliferation and non-proliferation of weapons of mass destruction. This is a key issue today, and it is also a very difficult one. I think that the fact that one country may or may not possess nuclear weapons should not be a pretext for other countries to acquire these weapons. Rather, it is a pretext for us to think about what we can do to regulate the situation and reduce the arsenal of weapons of mass destruction in the world. This includes the arsenals of countries that have legitimately or illegitimately acquired nuclear weapons or other weapons of mass destruction, or are trying to acquire them.

V. K. Terekhov. (Interfax): Mr. President, there is the impression that you, and the country as a whole, face a shortage of good managers. This probably explains why officials who have already proved themselves not very effective get shifted from one high-level state job to another rather than being pushed out of the pool altogether. Am I right in saying this?

Vladimir Putin: Youve put me on the spot here. You know, the Germans have a very good answer. In German, as you no doubt know, ja means yes, and nein means no. Well, the Germans say jein, meaning at once yes and no.

I dont know any examples that would back up your argument concerning the really high-level jobs. I think there is probably only one example, but I dont want to go into it here. Even in this case, the person concerned worked first in one area and then was moved to an area totally different from the one where he had problems.

Otherwise, I cannot think of a case when someone who really could not handle their responsibilities was promoted if he had done something that should have led to very different decisions being taken. Thats the first thing.

Second, its very easy to chop off a few heads, fire a few people and look like a tough boss. But I think it is far more important to treat people with care, especially people who, being in very public positions and therefore exposed to a hail of criticism, including criticism in the media, have nonetheless carried this burden with dignity and have looked after sectors, companies and regions. We need to make use of their skills and experience. It is true that we dont have so many modern management specialists. That is one of the problems we face. There are plenty of people who are managing, but few of them are modern managers. We are trying to resolve this problem, including through various programmes and through support from our partners abroad. Unless we resolve this question, we are unlikely to be able make progress toward achieving the objectives we have set for ourselves.

A. L. Batalov (Grozny-Inform information agency, Republic of Chechnya): Mr. President, presidential elections are set to be held soon in Chechnya. Does the Kremlin already have a candidate that it intends to support?

Vladimir Putin: This is a very sensitive question. When the decision was taken to organise a referendum on the constitution, many thought we shouldnt go ahead with it, said that the time was not yet right and questioned as to whether people in Chechnya are ready yet for elections. The question was would people even come to vote? The easiest way to vote against what the constitution proposed, after all, was simply not to come to the polling booth. No one can force someone to vote after all, no one can drag the voters in. If someone doesnt want to vote, they just dont turn up, and theres nothing more to it. To be frank, there was a big risk for the federal authorities that people would not come. And then I said to myself that if they didnt come and vote, that would show us that were not going in the right direction and have been wasting our efforts. At least then we would be able to draw some fitting conclusions, because in any case, we could not put things off any longer. The results, as you know, were far beyond all our expectations, and even beyond expectations in Chechnya itself. Eighty percent of the voters came to the polling booths, despite attempts by bandits to intimidate them. Its hard in general to intimidate the Chechens, and I think that people made a conscious choice, regardless of who tried to put pressure on them there.

Of course, now people are also saying that its too early yet to go ahead with presidential elections in Chechnya. The decision of who to elect belongs to the Chechen people. The constitution allows elections to go ahead once six months has gone by since its approval, and I will create no obstacle to having the elections go ahead in the time that Chechnya itself decides. I dont think there should be too much waiting, despite all the difficulties that an election campaign period could bring up. Its clear that the situation will become tenser, but the situation gets tenser everywhere during elections. There is, of course, the danger that this will take on particular, shall we say, not exactly civilised forms in Chechnya. But the quicker a legitimate government is put in place, the better it will be for the people. I have no doubt about this, because it will enable us to complete the process of handing over power to the regional authorities in Chechnya, including full control over the Chechen Interior Ministry. This is very important in order to have the Chechen people take over the responsibility of looking after law and order in the republic. Thats to say nothing of the need to get the economy on its feet, create new jobs and so on.

But as for the question of supporting particular people, I have already spoken about this with people who have the respect of the Chechen population and do not hold any formal official post, and with the acting president and former deputies of the former parliament, and I can repeat now what I said. Personally, I would like to see in power someone who will have the support of the population, because without this support it wont be possible to carry out effective policies in Chechnya, and this is the main and most important issue for us. Whoever the Chechen people elect as their leader, this is the person we will recognise and will work with.

Question (ITAR-TASS): It looks as though the differences of opinion with the United States over Iraq are now a thing of the past, but do you think there is a risk of the Iraq scenario repeating itself in Iran or North Korea? And do you think there is a mechanism in the world that can prevent events from developing in this way?

Vladimir Putin: Yes, the situation with Iraq really was a serious test for Russian-U.S. relations, and I agree that we have managed to emerge from this situation with minimal losses. I think that we managed to find compromise solutions through the United Nations Security Council and have got the United Nations much more involved in this issue again. We discussed this question in detail with the U.S. president, and we also discussed the situation with Iran, North Korea and other hot spots on the planet.

If were looking at a mechanism for settling complicated issues such as these, our position is clear: this mechanism exists in the form of the United Nations and its Security Council. There is no other such universal mechanism in the world today. I believe that only through the United Nations can we resolve these kinds of problems, by being patient, working together, taking each others interests into account and acting in accordance with international law.

Reuters: You said that your Governments work is satisfactory. But nevertheless, judging by surveys and the vote of no confidence in parliament this week, there are still a large number of people who are not happy with the Governments work.

Do you think that this may influence your actions, especially if you decide to run for President next year?

Vladimir Putin: Firstly, I havent yet said that I will decide to run for President. This is premature. This pre-election fuss and excitement is pointless, I have a lot of other concerns at the moment. I am also trying to incline the Government towards constructive work, so that it doesnt get involved in the pre-electoral situation which is developing in connection with the upcoming State Duma elections. As for the future presidential elections, they are next year. There should be no fuss or hurry here. The time will come when the pre-election period is announced, and I will make my decision.

As for the motion of a vote of no confidence in the Government, which was put to the Duma, as you know the Duma did not support this motion. This is the answer to your question. But I should say that I am not happy with everything, of course. And I will take into account the results of work by the Government. Every year, we make corrections to our work. I meet with Government leadership on Mondays. And what we show on television is one thing, what we dont show is somewhat different, I assure you. Our talks can sometimes become quite heated. We try to react efficiently to everything happening in the life of the country.

I proudly cited the figure of 7.1% - the growth of the economy, a very high figure. If you compare it with what is going on in Western Europe, and in the United States, it is a very high growth rate. As you know, in the leading countries of Western Europe the growth of the economy this year is unlikely to reach 1%. We have 7.1%. But we realise how we achieve this result: thanks to a favourable external economic situation, and the prices of energy resources. And we discuss this directly and openly at our meetings, with a detailed analysis of the economic situation in the country.

But the positive elements must also be noted. I talked of an increase of 11% in the growth of investment in main capital. This is the result of activity by the Government. Consumer import here has grown over the first five months of this year by 16% - this is what we bring into the country for consumption. And investment import, that which is brought in by domestic entrepreneurs for expansion and renewal of production, creation of new enterprises and new work places, has increased by 36%. This is a very good figure.

So there are things to criticise the Government for, but it also has things which should be seen positively, and it should be supported in these directions.

E. A. Bobrova (Zhizn newspaper, Moscow): Vladimir Vladimirovich, what do you think about the rescue operation in Karmond?

Vladimir Putin: As for the rescue operation in Karamond, probably only specialists can answer this question, who understand what a rescue operation is better than I do. I have no grounds not to trust these people. The Emergency Situation Minister Shoigu has reported the progress of this operation many times, about what the Minister is doing, and what volunteers are doing who have worked in the Karamond gorge. In my opinion, they have done the maximum they could. And it should be said that, in my view, they have even done more, because according to all norms and standards, according to all the rules the work should have been ended a long time ago. Nevertheless, they set themselves a specific task and goal: to reach the tunnel. And this was all despite the fact that according to specialists information, after two or three weeks of work it became quite obvious that the result, as concerns finding people, would unfortunately be minimal, or rather that there would be no result at all. Sergei Shoigu came to me, made a report and asked my opinion. I said that, in your position, I would work until the end. Until you are sure if not you personally, then your employees should be sure, and see things for themselves. This is necessary not just for relatives, but for the country as a whole.

I think that in any case, whatever happens to our people, and wherever it happens, the state should do everything to save people, or determine that it is already impossible to do so.

I am glad for the miners who were saved in Kuzbass, and I would like to express my regrets for those who died, and give my condolences to their relatives and thank the rescuers who were able to save people.

S. F. Filipchuk (Irkutsk, AIST television): At the moment, a large part of Russia, at least up to the Urals, is covered in smoke from forest fires. In the Irkust Oblast in this year alone, around 100,000 hectares of forest have burnt. A similar situation is taking place in many Russian regions. I would like to ask how the state intends to fight these fires, and will long we will have to wait for divine intervention, and when our Emergency Ministry forces will be able to solve this task? Thank you.

Vladimir Putin: You know, this is not just because of the Emergency Ministry, there are situations which the Ministry cannot deal with by definition, it is simply impossible. And if we are dealing with large-scale ecological, natural phenomena, even if you gather ten Emergency Ministries together there will be no effect. There are economic issues. As you know, in some regions, including in the Far East, there is reason to believe that fires started as a result of arson either as part of the competition for the forest, or to create conditions for theft, or to hide these thefts.

In general, there are several factors. The first is economic. We need to create conditions to legalise this business. The second factor is law-enforcement. Bodies of law and order, the Internal Ministry, the Prosecutors Office and customs should act more effectively, the state should act more effectively.

The Emergency Ministry, perhaps, does not always work with full efficiency, but in general, I think, their work is satisfactory. And unfortunately, as you know, there are even victims among firefighters, and journalists who reported these events. However, in some countries, which at first glance are much better off, unfortunately the same thing happens. In France, for example, there are fires at the moment. There is no way to stop them, and the population of several regions has to be evacuated. So the Emergency Ministry by definition will be incapable of dealing with such large-scale events if the state does not establish better control, registration, and clearer economic conditions, and improve activity in the law-enforcement sphere.

M. V. Volkova (Rossiskaya Gazeta): Vladimir Vladimirovich, what are the strategic plans to reduce taxes? Is there are a plan to redistribute the tax burden from the manufacturing sector? And the second question will the Government be able to keep inflation within the limits planned for this year?

Vladimir Putin: Currently, inflation is just over seven percent 7.1%, but the forecast for the next few months is positive. This figure is less than last year for the same period, when it was 8.4%. We estimate that the Government and the Central Bank as the Central Bank takes responsibility for this will together be able to meet the parameters planned for this year.

As for the redistribution of the tax burden, this is one of the main tasks of the Government for this year and next year, because we need to create better economic conditions for the development of manufacturing branches of production and high-technology branches. In this matter, the Government plans a number of actions which I think are sensible they are as yet very modest, and probably insufficient, but they are sensible. It is planned to reduce the tax, as I already said, on the added cost to 2% from January 1, and abolish sales tax, which will have significance not just for trading organisations, but ultimately for production as well. The structure of tax on mining operations will be improved, as will the structure of a number of other laws, including taxation of individuals. In particular, it is proposed to remove the sum from the taxation base which is spent by citizens on buying property: apartments, houses, and sections of land. As you just frowned, I realise that I am talking rather vaguely. I will explain. If during a year you have spent a certain sum from your income on buying residential property, such as a house or an apartment, then when you fill out a tax declaration, the sum that you spent on this will not be calculated in taxation. Taxes will not be deducted from this sum. In general, a number of other sensible actions, I repeat, are planned in the taxation sphere.

From 2005 it is planned to reduce the single social tax, which in our opinion should lead to the further legislation of wages. We have already completely abolished reverse tax. This also involves enormous funds which will stay in the economy.

Of course, the question always arises: where do those billions, hundreds of billions, go which are freed from taxation? We estimate, of course, that these funds will be invested in the development of the economy of the Russian Federation. To achieve this, it is not enough only to free various sectors of the economy from taxation. Conditions need to be created to make sure these funds are required by the economy, to make it possible to use them and invest them in the Russian Federation. Taking into account the dynamics of the decrease in capital outflow and the increase of investment in basic capital, we have grounds to believe that this process will develop in this way.

E. E. Orlova (Volga television, Nizhny Novgorod): Are you happy with the rate of reform to the Russian army? And how long will service by conscription continue in the country? This is my first question.

And I would also like to clarify my colleagues question. In Nizhny Novgorod, a program for giving the city capital status has now began. We certainly dont want to compete with Moscow, there is only one capital, after all. The city should simply become more convenient and attractive, and correspond to the status of the centre of a federal district. Can the government also help in any way with this, including financially?

Vladimir Putin: We are not talking about the status of capital, but of certain functions, perhaps, which would make the city attractive. But I would like to say that other cities of Russia should also be attractive.

As for assistance from the centre, the fact that federal bodies of administration are located in Nizhny Novgorod, that it is the workplace of the Presidential Envoy and that a certain administrative resource is concentrated there all this already shows that the city is being supported.

The question of direct financing, I think, should not be asked just now. Moscow receives such financing officially for its so-called capital functions. They are connected with the burden on the city infrastructure, which arises during the execution of these capital functions. Obviously, here there are federal bodies of power and administration, and there are many international events held here. This is a burden on transport, on communication, on roads, on the city environment, and it simply requires money. So the capital receives funds from the federal budget not much, but it does receive a certain amount.

As Nizhny Novgorod, as you said, does not aspire to the role of capital, I think that you, together with the city authorities and the governor, should also think about how to make the city more attractive. If there are some specific proposals, then by all means, your city leaders should formulate them, and we will discuss them, of course. I should say that so far, I have not heard anything of this nature from the governor, from the mayor, although I meet with the governor on a regular basis.

The second part of your question was about reforms in the army. Of course, this is one of the most serious topics dealt with by the Government and the President, the Defence Ministry, and all of society.

The army in Russia, as I have said many times, should be small in size, compact but effective, ready for battle, and provided with modern equipment. We have everything for this. Above all, this is a good base of personnel training, a unique basis of personnel training. Few countries can boast of such a base for training officers. We have traditions, and strange as this may seem, I think this is very important. We have military science. We have a developed military-industrial complex. Of course, many problems have arisen over the last few years due to changes in the structure of the economy, and due to changes in the quality and size of the Armed Forces. In the past, the military-industrial complex was virtually the foremost complex in the country, and the entire country worked for it. This had its advantages for the industrial complex itself and for the army, but it also had disadvantages for the entire economy, and we know this well. I dont think there is any point for me to repeat all of this.

The development of the army should be balanced, it should suit the interests of all of society, and the entire nation as should the development of the military-industrial complex. We give this sufficient attention and will continue to give it attention in future. Both from the standpoint of clear economic decision, and from the standpoint of financial support. Virtually all debts to the military-industrial complex have been paid. I say this in connection with the army reforms, because as I said, the army should be well-equipped, with modern equipment.

As for recruitment into the army on a contract basis and on a conscription basis, this is only one of the elements of army reform, and not the only one. We should approach this very carefully, bearing in mind the real possibilities of the Russian economy and the traditions in the Russian army, and the enormous territory of the country.

I should say that recruitment on a contract basis is justified especially in connection with the demographic situation in the country. It is justified in connection with the threats which Russia faces. Recruitment on a contract basis is designed to make army personnel more suitable to present day demands, from the standpoint of the more complicated equipment which is acquired, and will continue to be acquired, by the Armed Forces of the Russian Federation. The army should be made up of specialists who have come to serve not for half a year, not for one year and not even for two years. They should be specialists who spend several years mastering the technology, know how to use it, and do so effectively.

The second component is the threats that Russia comes up against and the need to react to situations that can arise in certain points inside Russia itself, or abroad.

As for reacting to events abroad, this has to be, of course, within the framework of current international law and in accordance with Russias own laws. Of course, the people who serve in hot spots should be professionals, and not conscript soldiers of no more than 18-19 years old. I repeat, the people who go to these places should be professionals, people who have chosen this profession of their own free will and are aware of the risks it involves. Our plan is to have more than 100,000 contract servicemen in the Russian Armed Forces by the end of 2007. And by the end of 2008, we will reduce the number of conscripts and cut their compulsory military service to one year.

Debate is going on between various political forces and the Defence Ministry. Id like to give SPS [The Union of Right Forces] their due, for they have done a lot to help find the best solutions in this area. This party and the Defence Ministry do not agree on everything. However, I cannot base myself only on the arguments of people who, as I hope, are acting in the interests of the state and the Armed Forces, but also acting in light of their specific situation, for a political party, after all, always makes use of every situation, especially when elections are due. I also have to base my decisions on the conclusions drawn by professionals. A contract army is a very expensive army.

France went over to a contract army, and so did the United States. But Germany, one of Europes leading economies, did not, and still has compulsory military service. True, military service there is only nine months, but it is conscript service. In Finland, everyone has to do compulsory military service. So, given Russias huge territory and financial limits, we will proceed carefully, keeping in mind that a contract army is very costly, and we need an Armed Forces that we can afford.

I might be not quite right in some of the details, but I can tell you that a contract soldier in the Pskov Division now receives more than 5,000 roubles a month. A sergeant gets more than 6,000 roubles, and a major receives more than 8,000 roubles. In other army units, majors and captains get less than half that. We need to keep all of this in mind.

Overall, there is nothing so unusual in this situation. Even during the Soviet years, people served abroad, say, or in some particular places and earned different wages even though they had the same rank. Today, someone serving on a contract basis knows that there are particular conditions involved. This is a job that requires an intense physical and intellectual effort, a high level of training and a readiness to serve in hot spots. So, I think that this payment system for these people is justified. We plan to increase these wages further, and also to increase wages for the entire Armed Forces. This is all a complicated process, and our guiding principle here is to act in such a way as to make things better not worse.

This press conference was supposed to last an hour, and weve already been going for an hour and forty minutes. Lets continue a bit longer if there are more questions.

V. Yu. Tseplyayev (Argumenty i Fakty weekly): Mr. President, you talk a lot about the importance of strengthening the political parties, and of how they should form the backbone of the countrys political system. Do you envisage joining one of these parties either in the near or long-term future? Could the head of state in Russia become a figure chosen from within one of the political parties, as is the case in most developed countries?

Vladimir Putin: You are mistaken when you say this is the case in most developed countries. In France, the president, even if he was a member of a party until his election, leaves the party once he assumes office. This has a certain sense. The head of state should be above the political battles that go on between different forces. He should be neutral and independent and not be biased. Different countries deal with this in different ways.

I think that it is the right thing for Russia at the moment to have a head of state who is not a member of a party. I personally have no plans at the moment to join a party, but you are free to do so. I think this is for the better. It will be for the better, at least, for implementing the laws that we passed recently and that should finally now begin to have a real impact. This also takes a certain amount of time. What I mean here is that the federal-level parties have to really start working in the regions. I think that this will ultimately strengthen Russias state system and ensure that the interests of the different regions and those of the state as a whole are better taken into account. If the federal parties are well represented in the regional parliaments, they wont be able to live outside the context of the countrys national interests, but they will also be forced to take into account the interests of the region where they are working. This is inevitable. This is what the laws we passed aim to encourage.

Question (Korean television, Republic of Korea): The United States and many other countries are attempting to resolve the North Korean problem through economic and military means. What do you think about such action with regard to North Korea?

Vladimir Putin: As far as the United States goes, it would be better to put the question to the U.S. president. As far as I know from my meetings with President Bush and my discussions with him, he does not have plans to resolve the North Korean problem by military means. On the contrary, we discussed this issue in detail and our positions are drawing closer. We will work together and work with everyone who has an interest in resolving this problem the Republic of Korea, Japan, the Peoples Republic of China, Russia. We will do all that depends on us to settle this problem. Our position is clear: we oppose proliferation of nuclear weapons, and this also goes for the Korean Peninsula. We would like to see a nuclear-free Korean Peninsula.

We think that the matter should be settled through negotiations that take into account the legitimate interests and concerns of North Korea. We should not back North Korea into a corner and aggravate the situation. If North Korea has concerns over its security and is worried that someone might try to attack it, then we should provide it with security guarantees. We have a good basis for being able to resolve this matter, and there is good will from all the participants in this process. I know that the leadership of the Republic of Korea, with whom I am in constant contact, also supports this approach.

O. B. Solomonova ( Trud newspaper): Some of the objectives that you set out in your address to the Federal Assembly require time that would put them beyond even a second presidential term for yourself. Does this mean that responsibility for achieving these objectives would fall on someone else, on your successor?

Vladimir Putin: Quite right, let him take the rap.

O. B. Solomonova: So, the bolder, more ambitious and more long-term the plans now, the more responsibility falls on the shoulders of whoever succeeds you. What do you say to that?

Vladimir Putin: You know, we have certain plans for developing the country, and we have certain principles according to which we intend to develop our economy, social and humanitarian sphere. These plans and principles have been generally established and are understandable and transparent. It is true that some of these plans go beyond the timeframe of eight straight years, or two consecutive presidential terms of office. For a start, we first have to get through to 2004 and see who will head the country until 2008. But its clear that we cannot set objectives that are limited by the activity of the Duma, the Federation Council or the presidential powers. We need to set guiding principles and large-scale objectives. This will create stable conditions for our development and make it easier to understand for us and for our partners on the international stage.

I dont see anything unusual about this. I very much hope that the people who will run such a huge country as Russia in the future will share these principles and be up to achieving the aims that we have set for the country. I hope they will be able to take Russia even further and give our people better lives and bring the country greater prosperity.

Question (Spanish newspaper): Mr. President, how is it that you have not yet decided whether or not to take part in the next elections?

Vladimir Putin: You know, its simply that I do not want to set off a political campaign ahead of time that would only interfere with the real work that has to be done. Everyone, the government, the regional authorities, the entire executive branch of power, should be working hard together, and not running around worrying about holding on to their jobs in the Kremlin or the government White House. That explains my position on this matter.

S. V. Glushkov (Tverskaya Zhizn): First of all, your relatives in Tverskaya Oblast and all of us there would like to see you come home. Second, we see that very often, state agencies try to solve problems that affect all of us on their own, without turning to public organisations for support. This is especially true of the problem of crime, which is to a large extent a problem of everyday life. What do you think about this?

Vladimir Putin: Regarding the call of my forbears, you know, I was pleased and surprised when I found about this research done through archives, church and parish records and so on, and learned that researchers had established my family history right back to the 1600s. I was really interested to learn that all my ancestors, beginning in the sixteenth century, all lived in Tverskaya Oblast, all in the same little village, and all went to the same church. That just shows what kind of stability Russian society had back then.

As for the problem of crime, it is a very serious and urgent matter, and the problems of street crime, crime in the home and everyday life are, of course, matters of immense importance.

The heads of the law enforcement agencies say that statistics are becoming more transparent. But I think that to get a really clear picture of the statistics, the statistics agencies, rather than the law enforcement agencies, should be responsible for them, and then we would have a more objective picture.

As for the general need to improve the quality of work in this area, it is obviously something that we have to do.

Ye. A. Rylenkova (Apex TV): First of all, on behalf of the entire Kuzbass region, I would like to thank you for your support for the miners following the recent tragedy at the Ziminka mine. My question regards the State Council meeting at Mezhdurechensk last year, where it was decided to resettle miners from dilapidated old housing into new apartments. But the huge financial burden for doing this now lies on the regions. Will something be done about this?

And will something be done to improve the lives of miners who have done so much for the country?

Vladimir Putin: Your information is incorrect. It is true that old housing is one of the biggest problems in the country, and I must say that almost a third of all housing in Russia falls into this category. It is a very big problem.

There are regions that have a particularly big problem in this respect, Astrakhan and the Kuzbass, for example. For the first time in the last decade, the budget for this year has allocated serious money to help deal with this problem. We reached an agreement with the regions that this money from the federal budget would be allocated only if the region itself allocates half the amount. The funds earmarked for this in the federal budget are being paid out regularly, including in Kuzbass. I am always in touch with practically all the regional governors, including with Governor Tuleyev. Believe me, he is a very active and energetic man who knows how to get his way. If he hasnt raised the issue with me, then this means that the money for this item is coming through and there arent any problems with it at the moment. We do realise that the issue overall is a very urgent one, though, and we will continue to increase the federal funding made available.

T. P. Borisevich (Respublika, Komi): Mr. President, there are moves underway at the moment to redirect tax revenues, with most revenues going to the federal budget.

You said that taxes would be lowered. As part of this, sales tax will be abolished. This is a regional tax. That is, all the regions will be in a worse situation again. The situation for the Komi Republic, where mining industry is located, is very worrying.

Vladimir Putin: Yes, I am aware of this problem.

As for the sales tax, you are right in the sense that this is an additional burden on regional budgets. The amount of revenue lost will increase, and several regions will indeed face certain problems. But the Government is forced to do this to make Russias economy more civilised, and to make it work more effectively as a whole. There is not a single country in the world, I have said this already and I stress it once more, with two systems of taxation that function simultaneously a value added tax and a sales tax. There is either one or the other. Both of them have functioned here.

As a result of decisions passed recently we have aimed to reduce the tax burden on the countrys economy. But, strangely enough, the tax burden on the economy has grown by almost 36%. I may be mistaken about the details, but this is approximately the case. What does this show? It shows the legislation, the significant degree of legislation of tax revenue. And we are now beginning to understand how much is taken from the economy and how much can be left there. If one remembers this fact, and also the things I said earlier about the tax system, the decision to abolish sales tax is justified. It was made two years ago. The law was passed not yesterday, not today, but two years ago. Everyone agreed with it at the time, understanding that it was the right decision.

Of course, today, now that the regions have realised that they are losing revenue, this raises questions. I would like to direct your attention to the fact that in 18 regions of the country this tax was not introduced at all. The Komi Republic is not one of the regions that suffers the most from the abolition of this tax. Moscow, the Moscow Oblast and St. Petersburg suffer the most from this. Revenue from these taxes makes up a much greater percentage there than in other regions of the Russian Federation.

Nevertheless, the Government understands that the regions should not be put in a difficult situation due to this decision. In the 2004 budget, necessary resources will be examined to make up for lost revenue in the regions. This is the first point.

And secondly, together with the regions work is currently underway to transfer additional tax sources to regional level and thus minimise the negative consequences of this decision for individual territories.

I hope that all this will on the one hand make our tax system modern and more effective, and on the other hand will not harm individual regions, such as Komi.

Yu. A. Safonova (Russky yazyk (Russian Language) web portal): Firstly: what do you think, does there need to be a law on the Russian language as the state language, as it was called in the last reading. Secondly: Are you prepared to head a Russian language council? I know that you have received such proposals. And the third question, which for some reason no one has asked you: how was your childrens graduation from school this year?

Vladimir Putin: As for the Russian language, I have discussed this issue many times, and I can repeat: I think that this is the very foundation of our culture, and our multi-national culture, it is the foundation of multi-national contact. It is impossible to overestimate the role and significance of the Russian language in Russia, I apologise for this stock phrase.

We have a territory, for example, the Republic of Dagestan, where over 100 peoples and nationalities live. And this is a small republic. Naturally, Russian has become the language of multi-national contact, because the languages of the peoples and nationalities which traditionally live on these territories are so different that people speak in Russian so they can understand each other. Russian is, of course, one of the foundations of our nation, without any exaggeration. It requires help and support, and the state should give it this help and support.

As for becoming the head of anything, I am quite careful about this, as I already head the Russian Federation, and I am the head of state. If I answered all the proposals to head something, then I dont know what would be left outside the brackets.

And my children havent graduated from school yet, they are still studying, their school year ends in July. They are good students.

N. M. Shtepa (Ezhedelnik 1, Ulan-Ude): Vladimir Vladimirovich, where do you plan to take your holiday this summer, and would you like to visit the shores of beautiful Lake Baikal once again?

Vladimir Putin: Thank you very much for the suggestion. I will certainly think about this, and will try to go somewhere in the direction of Buryatia this year.

A. E. Kolesnikov (GTRK, Vladivostok): There is a project for constructing a new oil pipe line in Eastern Siberia. There is the project Angarsk-Datsin (China) and an alternative project Angarsk-Primorsky krai. The Government is inclined to favour the first project. Which one do you see as promising?

Vladimir Putin: This is a decision which should be made by the Government. It is a decision within the competence of the Government of the Russian Federation. So far, no final conclusion has been made. Indeed, a possible route for these pipelines is being examined, and there be two of them: an oil pipeline and a gas pipeline. One of the options is Angarsk-Datsyn, thats absolutely right. The second is Angarsk-Nakhodka.

Angarsk-Nakhodka, of course, seems preferable from the standpoint that it allows access to the market in the wide sense of word, allows the export of energy raw materials to all the countries of the region. It will allow us to add a branch pipe, if that is necessary, and I think this is also justified, directly to the Peoples Republic of China, to Datsyn. It will allow us to sell our energy resources to all the countries of the Asian-Pacific region, countries with fast developing economies, and of course, a limiting factor on economic development in this region is a deficit of energy resources. Russia may make up for this deficit. Generally, this is a very attractive project for us. The question is only whether it is economically valid.

The problem is that the filling this pipeline with oil is still problematic. It depends on the results of geological exploratory works in Eastern Siberia, and specialists should calculate how much laying the pipeline to Nakhodka will cost, whether this pipeline will be have a full load and be economically justified, and economically effective. A certain advantage may be over a corridor of about 700 km, this oil pipeline may be joined by a gas pipeline. All this is being carefully and thoroughly investigated by specialists and experts. A decision will be made when the investigation is completed.

Question (Romanian national television): Mr. President! In two weeks from now, here in the Kremlin a long-awaited basic treaty will be signed between Romania and the Russian Federation. What, in your opinion, is the significance of this Treaty for Russia, and how do you see the future of relations between Romania and the Russian Federation?

Vladimir Putin: We are looking forward to this visit. We are preparing to sign the document you have mentioned. Romania is our traditional long-standing partner in the south of Europe. Relations with Romania have differed during different times. At the moment, I do not see any problems which could cast a shadow on our relations. Furthermore, Romania can and should be our partner in solving many problems in Europe and the world. Our economic relations have developed well recently. Although I suspect that the signing of this treaty you mentioned will create a good basis and atmosphere to raise our economic ties to a higher level. To a large degree, we have complementary economies. At one time, we traditionally received many goods from Romania and other Eastern European countries. In recent years, the goods that were traditionally received from your country were replaced on our market by goods from Western Europe. But I think that Romanian manufacturers have every chance to regain these natural advantages.

A. A. Ershov (Krasnodarskie Izvestiya): Well, firstly we would like to invite you to Sochi for a holiday, according to tradition.

Vladimir Putin: All right.

A. A. Ershov: During the American-Iraq war, and prior to it, the Russian press reported that experts both military and counterintelligence had informed you that the war would last a long time, and that we would gain various advantages from this. But the reality is that everything ended very quickly. Where are these experts now?

Vladimir Putin: How do you know what counter-intelligence agents reported to me? I will ask Patrushev to investigate you thoroughly.

But seriously speaking, counter-intelligence agents report the situation on the war on terrorism, the war on internal threats, the war on spying. The experts you had in mind work in internal intelligence bodies, at the Main intelligence department of the General Staff and at the Ministry of Foreign Affairs.

I can tell you that before the events in Iraq, they prepared an analysis which fully coincided, I would like to stress this, with the way that events developed. In full. Almost down to the day. It will also be no secret from our American partners, our intelligence recorded every launch, and take-off of every plane, every hit and miss of every rocket, and possible target. In this sense, our intelligence services worked very reliably and effectively.

The decisions that I took on the development of the situation in Iraq were based on this reliable information. These decisions and our position were not connected with the fact that according to our data, the war should be ended quite quickly, bearing in mind the military potential of the United States, their allies and the virtual lack of a military potential in Iraq, whatever people used to say. We knew the real state of the armed forces.

Our position on Iraq was not based on who would win, but with what means we have the right to solve conflicts of this kind. You know our position, it has not changed.

D. A. Anisimov (NN-TV): Not a word has been said today about reform to housing and communal services. I think this needs to be rectified. What do you think, how successful is this reform proceeding?

Vladimir Putin: Reform to housing and communal services is proceeding, but very slowly. This is the most sensitive issue for the population. Housing and communal services are in a miserable state. The first reason is that there was a severe lack of financing. The second reason was the lack of market mechanisms for regulation in this sector. And, accordingly, decisions should be made in this area. There needs to be normal financing, and the structure of this sector needs to be changed in the appropriate way.

You know that major companies are now also paying attention to this. The Government is forming its policy in this sphere. Experiments are being made in individual regions. The main tendency should be that citizens, consumers should provide the financing, not enterprises. They should receive from budgets of various levels the funds which currently go towards financing organisations that provide services for the population at an increasing higher price and with an increasingly lower quality. People need to be given this money from the budget, and personal accounts need to be opened directly with limitation on their use in such a way that people can join associations and engage one organisation or the other on the market to provide them with these services.

This is impossible to do from the federal centre. It can only be done with the joint efforts of the Government, the regions, the municipalities, primarily with the municipalities and regions. But this, of course, is a very sensitive issue, because it is connected to tariffs, with a possible increase of payment in this sector. Although if work is done correctly, there should not be any increase.

I hope that a positive role is played by the recent laws passed in this sphere, and which restrict the ability of regional authorities to hike up the tariffs on heat and electricity, to do this without any justification, without the agreement of the Government. This is the first point.

And the second thing, just before the autumn-winter period, the government decided to allocate additional funds of 5.5 billion roubles to help support the housing and utilities sector. That is a lot of money. I hope that this will have a positive impact.

S. A. Popov (Izvestia-Region newspaper): Your visit last year to Astrakhan has had a visible impact. Terrorists are not behaving with such impudence now and are keeping their heads down, but it is still too early for us to rest on our laurels.

My question is what do you think of the idea of establishing a state monopoly for sturgeons and caviar? We have a paradoxical situation at the moment. The state puts a lot of money into protecting biological resources and into fighting terrorism. The state allocates quotas, but caviar and sturgeons ended up being caught and traded through underground business. Many of my colleagues can confirm that here in Moscow and in other regions there is a lot of this fish and caviar that comes through unofficial channels.

Vladimir Putin: I know, Im guilty of having eaten it myself. What is it that youre saying? Yes, of course, its bio-terrorism that you have in mind, above all.

Monopolies are dangerous things in general; especially state monopolies. Though, given the uniqueness of this situation and the uniqueness of the resource in question, it could be justified. It is a decision that would require thorough work first by specialists and experts. I dont rule out that this idea of a state monopoly on sturgeons and sturgeon products could be justified. It is a very sensitive environmental matter.

A. V. Vlasov (Kaliningrad regional office of Komsomolskaya Pravda newspaper): Our Russian city will mark its 750th anniversary in two years time, and there is debate now on whether there will be any real celebrations or not.

Vladimir Putin: This depends above all on the citys residents, its authorities and the regional governor. If this is what they want, then we will of course do everything that depends on us to ensure that there are celebrations and events worthy of the city, and that this anniversary becomes an event that unites us with our neighbours rather than driving a wedge between us.

Question: Year after year the budget allocates less and less money for social insurance for peoples health needs. Next year, the budget will not allocate any money at all for childrens holidays. Dont you think it is time for you, as president, to step in and do something about this?

Vladimir Putin: You know, work on the budget is still going on, and I think that the agencies and ministries responsible for this question will, as in past years, find a solution to the problem of financing summer health holidays for children. This is all the more so as the number of families making use of this state support has been constantly increasing over recent years.

Thank you for informing me that no financing has been earmarked for this in next years budget. I will definitely give this matter my attention.

M. V. Parenskaya (Volga newspaper, Astrakhan): Mr. President, please excuse me if my question seems somehow improper, but could you please say what in the country makes you feel ashamed or causes you pain?

Vladimir Putin: The poverty that our people live in, the very low living standards and low incomes. People in Russia have the right to live better and should live better.

Yu. M. Zagvozdkina (Ivanovskaya Gazeta, Ivanovo): Mr. President, there is a lot of talk now about administrative reform and reform of the countrys territorial organisation. Is it true that regions will be merged, and what will happen to our Ivanovo Oblast?

Vladimir Putin: Administrative reform is not about reforming the government or merging regions. It is about bringing the functions of the state into line with the demands of society and the economy.

We have already said, and we often talk about the need to reduce or do away with unjustified state intervention in the economy. There are areas where the states presence only stifles the economy.

There was a question raised about gardeners. They know very well what it is to have to get some kind of authorisation from some official or other. The representatives of small and medium-sized business would be able to tell you even more about their problems in this area. Even big business encounters these kinds of problems.

What we need here is a systemic approach to resolving these problems. This means changing the states functions regarding the countrys economy and society. This is the most important thing.

As for the question of mergers between regions, the way the country is today, and the way the Constitution sets it out, Russia has 89 regions. At the same time, it is clear that some of these regions are not economically viable, and are not likely to be able to look after their own needs anytime soon. In this sense, it could make sense and be the right decision for these regions to merge with their neighbours.

But I want to stress here that according to the Constitution, the decision to merge or separate belongs to the regions themselves. You know that some regions are currently discussing this matter. Of course, this is not a simple process, and in accordance with the law decisions will have to be taken in these regions. For our part, we will support projects where the proposal is justified. But this should not set off some kind of landslide of mergers. We dont mergers merely for the sake of it. It has to be something that is clear, comprehensible and justified.

R. D. Nikuradze (Georgian television channel Rustavi-2): Mr. President, it is known that there are certain tensions today between Russia and Georgia. Please tell me honestly, what should Georgia do to defuse these tensions, and given this situation, are the Sochi agreements signed between you and the Georgian president able to be fulfilled?

Vladimir Putin: The answer is very simple and entirely acceptable for our Georgian partners. Georgia must ensure that its territory is not used as a base from which to launch attacks against Russia. That is all we ask for. All we want is for an end to the activities of destructive elements and terrorist groups that unfortunately are still present in parts of Georgia bordering Russia the Pankisi Gorge and surrounding area.

We are grateful to the Georgian leadership for the action it has undertaken in recent months, including measures to liquidate some of the armed formations and the arrest and extradition to Russia of people accused of blowing up apartment buildings in Moscow. These people are now in the hands of Russian justice thanks to the courageous efforts of the Georgian leadership. I must say that we understand the difficulties that Georgia faces and we know how frightening it is. Many people who have to make decisions and take effective action are in danger. It is often difficult for them to make decisions because they do not feel they have enough protection from the Georgian state, and we have to say this as it is. The people whose job it is to fight the bandits can find themselves the targets of attacks by these same bandits. This is the reality of the situation in Georgia, and we understand this and are willing to help, we just want you to tell us what we can do to help. We do not want to force solutions on Georgia. We are willing to help in whatever way suits best. If you want financial aid, administrative assistance, information support from our military, joint work on the borders, or if you want Russian GRU defence intelligence or FSB units to take part in joint operations, we could provide all of this, but we are not forcing anything on you. If something is unacceptable for Georgia, then we will not insist, but we must work towards joint efforts and effective cooperation.

We have every reason to believe that the agreements we reached in Sochi can be fulfilled. We assume that Georgia has its own legitimate demands and concerns regarding unity of the state and restoration of its territorial integrity. But this has to all go ahead in a way that is acceptable for all the parties involved in this conflict, including Abkhazia. Im sure Georgia would not welcome it if we put pressure on the Abkhazian side and forced it to agree to something it finds unacceptable, because this would not create the normal environment needed for the different peoples living on this territory to live together in the long term. The only way to resolve this conflict is to find a compromise solution. But what is really needed today is a carefully planned effort to return the refugees to their homes. As far as I know, more than half the refugees have returned to their homes in the Galsky region. We will continue working with Eduard Shevardnadze on resolving this problem.

I think that our joint work in the region is very important, our cooperation on rebuilding infrastructure, energy and transport infrastructure. Sitting in separate corners on different sides of the barricades and staring at each other down the barrel of a gun is the worst way to try to solve the problem. It isnt any kind of solution at all. But working together to resolve common problems is the way to lay the ground for tackling the biggest issues of all in the political sphere.

I. Yu. Chernyavskaya (GTRK Tomsk): I would like to continue the discussion on the modernisation of Russia. Mr. Yavlinsky recently spoke in favour of consolidating southern regions, suggesting that this is the best way to level out the living standard of the country in different regions.

But in the regions themselves, in my opinion, people think quite justly that then Oblasts which do not become capital, and will become the servant of two masters. Is this the case?

I would also like to know in more detail why you are unhappy with the governments work?

Vladimir Putin: On the last issue, I will give the basic details. I already said in the Address to the Federal Assembly that we should double GDP in ten years. For this, growth rates should be 7/2% a year. Last year we had 4.3%, and this year 4.5% is planned, although now for the first five months we have 7.1%/

If we fulfil what I talked about in the Address, then we can say that the Government has fully dealt with the issues before it. If this result is not achieved, then this means there are problems. And it is premature to be happy with all the activity of the Government yet.

As for the federal capitals, I have already talked about this issue. I do not think that we should create any regional capitals.

There should not be any double dependency, and I hope that this will not happen. Because creation of the districts was only directed towards one thing to join the forces of the regions and solve common tasks, and not subordinate some to others. This is why I said that there should not be any mini-capitals. I talked about this from the very beginning.

I repeat once again, the goal of creating districts was in coordinating the efforts of regions to solve common tasks. The government and I have now moved from the plurality of federal programs, replacing them with general regional programs of an infrastructure nature.

L. S. Krasavina (RIA Pobeda, editor): The 60th anniversary of Victory is approaching. Since you came to power, a lot has been done for veterans of the Great Patriotic War. What is planned for the anniversary in the social sphere to improve their position?

Vladimir Putin: You were indeed quite right to say that recently something has been done in the interests of veterans, and elderly people as a whole. Compare for yourself. Once we set the task of putting 3.5% of GDP towards defence purposes. Now we spend 2.45% of GDP on defence, and the task for 2004-2005 is to reach 3%, but this is hard to achieve. I dont know if it will be possible. But in 1999 we spent 4.5% of GDP on pension support, and in 2002 we spent 6%. This is simply an enormous sum, and the growth rate of pension support is very serious. I know that there are also many reproaches that can be made here, I know that people would like the situation to be better, but the growth rates are still very high. Even if you make allowance for inflation, income for pensioners is growing faster than inflation, in this year as well. In accordance with the law, we will index pensions if inflation exceeds 6%, now it is 7.1%, which means that in August we will definitely index pensions, indexing is now around 7.4-7.5%. In absolute figures this will be around 121-122 rubles.

As for veterans, we know about the decisions made for people who have reached a venerable age such as 80. We also intend to distribute these benefits and additional payments for people who will soon be 75. In the future we will work on providing direct assistance to veterans in connection with the 60th anniversary of Victory as well. On the whole, I think that in Russia, in our country which suffered so much from the war, this holiday should be celebrated in a fitting manner. And we will do this.

A. A. Lebedev (Narodnaya initsiativa newspaper, Moscow): Vladimir Vladimirovich, I have a question on a subject which has been somewhat forgotten in Russia, but which you initiated. About eight years ago, if I am not mistaken, the State Committee on youth affairs disappeared. This is a very serious problem. State youth policy has also disappeared. Isnt it time for us to return to this subject?

Vladimir Putin: I am very grateful to you for this question, although I do not have any eloquent or clear answer. No, because you are right. Indeed, the appropriate structure within the Government has been liquidated, and nothing has been proposed as an alternative. The best way to solve problems is not to increase administrative structures, that is true, but attention from the state to this subject should of course be increased. I very much hope that this work will be conducted by the political parties which we said needed to be strengthened.

N. I. Pashigina (Gorodok newspaper Sverdlovsk Oblast): The standard of living in small towns is much lower than in large cities. And at the same time, when I talk to my readers, I see that people are very patriotic, they dont complain, although many families today live on the incomes of their wives who work in the budget sphere, or on the pensions of their parents. And a lot can be said about villages. Tell me, what ways do you see to make the life of these people more dignified?

Vladimir Putin: Firstly, I completely agree with you: the further away one is from major capital cities, the easy it is to talk to people, even though their life there is harder. People live a more natural life there, perhaps. Values fundamental values are stronger. We wont go into why this happens right now, but it is a fact.

And firstly, I would like to ask you to wish your readers the very best. Secondly, there are no magic solutions here. We can only talk about one effective decision, to be quite honest. Improving the life of people in villages and small towns of Russia can only be achieved as a result of a general improvement in the Russian economy. We need a redistribution of power resources, so that these problems on the periphery are solved which should be solved in the regions, and not in Moscow. And this is a part of possible administrative reforms. This should be solved by strengthening the legal system. Because without a strong, effectively functioning legal system, it is unlikely that people will be able to protect their interests reliably. On the whole, this is connected with the entire complex of system issues which the country faces. I hope that we will be able to solve this effectively together with you.

E. M. Shusterman (Inter newspaper, Volgograd): Several years ago, I asked you a question when you were in Volgograd, and still the Prime Minister, about the fate of local administration. Will there be any changes connected with this, in your opinion?

And the second question. Once, an American journalist asked you the question: who are you, Mr. Putin. This topic was the subject of enormous discussion in the press. And I want to continue this question, and ask you in the following way: who are you with, Vladimir Vladimirovich?

Vladimir Putin: As for municipalities in my opinion, this is a very important issue, one of the fundamental issues of the development of the Russian nation. Without strong municipalities there cannot be a strong state in Russia. Unfortunately, the activity of the population was virtually zero for almost 80 years. Everything was decided in Oblast committees, regional committees, and in Moscow. This means that to revive this culture, the culture of taking responsible decisions at local level, clear decisions are required from legislators, along with the growth of civil consciousness in Russia, the growth of the populations consciousness in these municipalities and an awareness of what depends on local authorities.

In several regions of the Far East, we have encountered incredible situations. During the so-called autumn-winter maximum, some cities were frozen, as specialists say people there froze to death. It was revealed that, on the whole, there was enough money, the Government allocated everything on time. The budget of the region has enough money, but everything has collapsed in a specific municipality, and the heads of this municipality knew that this would happen beforehand. Construction began, for example, of a boiler-house, but it was not finished, the money towards was it either stolen, used incorrectly, thrown away, or it simply vanished. And there is no one to ask about this, although people living in this region or town elected these people. But how do they elect them? A person speaks well, and scolds the authorities eloquently and this is though to be enough. But no, today this is not enough. Professionals should be elected. Not only those who have throats of cast iron. People should be elected who can solve voters problems. This is what we need to understand. And to understand this, no one should be blamed now, because, I repeat, there has not been a culture of local administration here in decades. This requires time, and a realisation of the fact that a lot depends of local authorities.

At the same time, local authorities should not be put into conditions where problems are imposed on them, but there are no tools to solve these issues. To distribute obligations and financial sources to solve the issues faced by the regions, the set of laws is being passed which we are talking about, and which you mentioned just now. I can tell you that today the State Duma passed laws on redistribution of authorities on the third reading.

The laws which concern the activity of the regions will come into force in January 2005. Those laws which concern the activity of municipalities will come into force in 2006. I would like now to direct your attention to the fact that this will only involve the redistribution of revenue. Today, the government should effectively make a decision and go to the legislator to the State Duma and the Federation Council with amendments to the Tax and Budget Codes, to provide sources of financing in both municipalities and the regions as well.

This is a difficult decision for the Government, because from this moment it will not be able to delegate any obligations to a lower level without delegating the source of financing or without direct financing from the federal budget. This is a very important circumstance.

As for land policies, I consider that recently we have done an enormous amount of positive work in this direction. Indeed, a civilised land market is being created. Just recently, people said that in a certain region it was possible to buy quite a large section of arable land for nothing, for a bottle of vodka, but now this land is not so easy to acquire. Yes, there are regional peculiarities. But I think that these peculiarities are taken into account in federal law. Here it says directly that it is the choice of the authorities of the region: to introduce norms stipulated in federal law, or not to introduce them.

If people in your region think that it this is not yet advisable, and that preparatory work is needed, a cadastral valuation and so on, for example, then must be done, no one is hurrying you. And if in Cossack regions people think that this situation is not yet ready, then things need to be done in such a way to make sure that it is. But I would like to direct your attention to the fact that in places where the law has come into force, land policies are becoming more transparent. There are fewer possibilities to cheat and deceive people and agricultural production is becoming more effective.

As for the answer to the question Who are you and who are you with?, I can say that I am the President of the Russian Federation, and that I am with my voters and the people of Russia.

Thank you very much for your attention.

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