Moscow

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Naryshkin, deputies of the Russian parliament,

First of all, I would like to congratulate you on the upcoming Victory Day.

Today I present the candidacy of Dmitry Medvedev for the post of Prime Minister.

I made this decision a long time ago, as I said openly, in advance, prior to the State Duma and presidential elections. Therefore, my position and the position of Mr Medvedev were made public in advance. We have changed nothing in our position, and did not present the Parliament or the public with anything that could be interpreted as a misrepresentation or political intrigue. We did everything absolutely openly from the very first steps.

We all know Mr Medvedev as an experienced politician whose policy objectives include modernisation, as a man who sincerely loves Russia. He launched crucial reforms in an open dialogue with civil society, reforms aimed at improving the efficiency of the state apparatus, on building a law enforcement and judicial system that can protect the public, defend the truth and justice. On Mr Medvedev's initiative, the State Duma adopted a package of anti-corruption laws that strengthen public oversight of state officials.

I am confident that Dmitry Medvedev will be open to constructive cooperation with all political parties and public movements, with parliament and the parliamentary factions. Let me remind you that as President Mr Medvedev initiated changes in the legislation on political parties, greatly expanding the opportunities for party registration and participation in elections, including to the State Duma.

I would like to highlight that Mr Medvedev believes his most important challenge is to promote among our public the idea of modernisation and technological breakthroughs that are essential for our country today. This aspiration has been embodied in ambitious projects on providing support for talented young people, developing education, research centres and innovative businesses.

I have no doubt that his commitment, as well as political and managerial expertise will help Mr Medvedev to tackle the most demanding challenges as Prime Minister of the Russian Federation.

Esteemed deputies of the State Duma,

In accordance with the Constitution of the Russian Federation, I ask for your approval of Dmitry Medvedev's candidacy for the post of Prime Minister of the Russian Federation.

I count on your support.

Thank you very much.

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Concluding remarks at the State Duma plenary session

VLADIMIR PUTIN: First of all, I want to thank the State Duma deputies for today's decision. I am sure that the Government and the State Duma will cooperate constructively. I am absolutely confident of this, despite the opposition-mindedness of some of the deputies here. First of all, I am sure that the new Prime Minister will work with all of the State Duma fractions and the Government will listen to everyone.

Second, there are a few things I want to clarify, so that we all speak the same language.

WTO accession is indeed a very pressing issue, this is true. I should admit it is very much on my mind too. I just want to bring it to your attention that we cannot delay our accession for a year or two, because this would mean that we do not join the WTO. Under the organisation's rules, we have six months maximum in which to make a decision. We spent 17 years in negotiations, almost 17 years. We can delay, or rather, not delay accession, but simply not join at all, but this would be quite a different story, let me assure you. We built the Customs Union that Mr Medvedev spoke about just before together with our partners on the same principles as the WTO. We have nothing to lose here. On the contrary, as I said before, I think that integration in the post-Soviet area is one of our top priorities.

On the issue of the national electronics industry, such questions have been raised and they are important matters of a concrete nature. The question was, can we find 20 trillion rubles [$700 billion] for building and restoring this industry? The answer is no. We have a different amount available ­ 3 trillion rubles. The State Duma deputies are to be aware of these things.

We decided together to allocate 20 trillion rubles for state defence procurement. This money will go on defence orders, but for the defence industry to be up to the task we should modernise it. We have earmarked 3 trillion rubles for this purpose. This money can and must be spent precisely on such work, and has been earmarked for just such a purpose.

Concerning Siberia and the Far East, you say that geological exploration was not carried out there. This is not the case. Geological exploration is going on there all the time. Furthermore, the Government has decided to offer benefits for geological exploration and work in eastern Siberia, given the lack of infrastructure there, and in our Arctic waters. In western Siberia we have depleted fields and only have difficult-to-extract reserves. The Government only just a few days ago decided to introduce tax breaks for production at fields with difficult-to-extract reserves.

Mr Medvedev suggested earlier while President as again now, that more money must be put into the regions and the municipalities. These funds will come in part from abolishing the tax breaks for infrastructure monopolies. This decision will be taken soon and is being discussed very actively right now. The Government will submit this proposal to you, as it prepares the budget, and you will have to make the relevant decision. This idea is a step in the right direction.

On the subject of the crisis, yes, it was a severe crisis, and we had a deeper downturn than in many countries, this is true, but why was this the case? We suffered because we have a one-sided economy. This economy did not turn this way only yesterday, however, it developed this way over the course of 70 years because everything that we were producing...

(Remarks from the audience.)

Yes, my friends, yes. There is no point to argue. The fact of the matter is that we did not produce anything that people actually demanded (and there's no need to wave your hands about). No one bought the galoshes we produced except in Africa, to wear them in the hot sand. That is the whole problem.

We had an excellent defence industry, a strong industry of which we remain proud to this day. We are grateful to our grandfathers and our fathers for building this defence industry after the Great Patriotic War.

REMARKS FROM THE AUDIENCE: ...And we launched the first satellite.

VLADIMIR PUTIN: Yes, we launched the first satellite and sent the first man in space, and this is something we all take pride in. These are the Soviet Union's achievements that we are all proud of. These are our common achievements as a country.

But when it comes to consumer goods, as Mr Zhirinovsky said just before, where were they? We did not have any. Let's not lie to each other and to our people. The people know that we did not have any consumer goods.

This is why the dropdown in the Russian economy was deeper, but we acted quite consciously and effectively and also recovered sooner than other countries have, and we do not have the same problems as countries with developed market economies are facing today. I will say a few more words about this.

You raised the matter of our growing debt. Colleagues, let's be clear about the concepts here and talk the same language. Yes, the corporate debt is growing. But the state does not bear subsidiary liability for these debts. Did you not realise this? If not, then be aware of this fact, read the books, it's all written there. As for our state debt, it is the lowest in the world, as has been noted on so many occasions. Our state debt comes to 10 percent, of which only 2.5 percent is foreign debt.

Now, regarding the statements that there has been no demographic improvement, there are no grounds for such assertions, for we have what is the best result for childbirths in the last 19 years. It is true that this is still not enough, but what has been achieved so far is the result of the carefully planned policies pursued by the President and Government over these last years, and the result of your work too. Do not shed your responsibility. These are your results too, including the Communist Party, A Just Russia, and LDPR. All of you took part in making these decisions. We have opened new perinatal centres, and have introduced the maternity capital, the payment made for the birth of a second child. Mr Medvedev recently put forward the idea regarding land plots, and now there is also a proposal to make payments for the birth of a third child in demographically depressed regions. These are things we will do very soon. Work is underway and is going ahead.

On the question of nationalising the raw materials, again, let's make sure that we are speaking the same language and using the same concepts. The raw materials notion comes to pretty much the same thing as our country's natural resources. I wrote my PhD thesis on rebuilding the raw materials base, and so I know what this is.

Colleagues, our natural resources belong to the Russian Federation, and so there is no need to nationalise them for they have long since been nationalised. Why try to break down an open door? We are to understand what exactly it is our colleagues want. Tell me what you want. What are we to nationalise, the companies? Do not forget that they already have a substantial share of foreign capital in them. In this respect we take a very liberal approach compared to other countries. Our colleagues on the left are correct in this respect because the situation is different in many countries, including developed market economies, take Norway, say, where there is just one state company, Statoil, our good partner. Everything has long since been nationalised and is in state hands in Mexico. There are many such countries. In the Arab Emirates and the Arab world in general everything is in state hands, or rather, belongs to the monarchs there. The state holds the controlling stake in our biggest companies, Gazprom, Rosneft, and Transneft, and the grid companies are in state hands too, so what is there to nationalise?

There is rather the question now of privatising something. This is a matter to reflect on.

A few years ago, we had a foreign partner enter a joint venture with our company. First, this partner brought in technology that, unfortunately, we ourselves did not have. Second, what do we actually aim at? We need for companies to work effectively and pay taxes. After this foreign partner's arrival in the joint venture, their tax payments to the budgets at the different levels increased 20-fold. This is a huge increase. What we need therefore are civilised market actors, but we decided together that our national deposits should not be just handed over so easily, but that all of these matters should be decided by a government commission set up for this purpose and headed by the Prime Minister.

On the subject of foreign equipment, of course, imports of foreign equipment put our own producers in a difficult position. But we abolish import duties only on equipment that is not being produced in Russia itself. Mr Zhirinovsky is correct here in the sense that this is a difficult decision, because this equipment is not being produced here, but if one can import it without having to pay import duties, will anyone ever start producing it here? I agree with this and share this point of view, and this is why we have introduced these rates only as a temporary measure, so as to give our companies the chance to modernise their production facilities.

Now, regarding the situation in France, yes, colleagues, a battle went on there not simply between two candidates, but between two ideologies. You are right. The outgoing president, Mr Sarkozy, my colleague and Mr Medvedev's colleague, supported the well-known theory of the need to tighten one's belt in order to rebuild macroeconomic indicators and set the conditions in place for getting the economy growing again and resolving social problems.

The Socialist Party proposes a different road. They also see the need to restore macroeconomic indicators, but slowly, gently, over a longer period of time, and then start resolving the problems. And they want to lower the pension age again, reverse the decision taken by the outgoing President.

Let's not discuss now what is good or bad here. Let's respect the choice the French people have made. The thing I want to draw to your attention is that this is a battle between two different opinions. But as for us, we have ensured economic growth. We had economic growth of 4.3 percent, and industrial growth, the highest birth rate in the last 19 years, and the lowest inflation in the last two decades. And not only did we not make cutbacks to any social obligations, but, on the contrary, increased them.

I am sure that Mr Medvedev, who is well abreast of all these issues, and his future team will continue this policy and perhaps make it even more effective.

Thank you for your attention and for your decision.