Vladimir Putin’s State-of-the-Nation Address

2006-05-12

Richard Moore

Friends,

This is a very long speech but I found myself wanting to read to the 
end. Perhaps some of you will as well.

What strikes me most is the candor. So different than speeches by 
Western leaders, where the only truth lies between the lines. One is 
reminded here of the speech by Castro that I posted, although with 
Castro we found also enlightened objectives along with candor. While 
Castro seeks a transformed world system, Putin is mainly concerned 
with national development within the existing system.

all the best,
rkm

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Original source URL:
http://www.mosnews.com/column/2006/05/11/PutinAddress.shtml

Vladimir Putin's State-of-the-Nation Address

Created: 11.05.2006 13:43 MSK (GMT +3)

MosNews


Russian President Vladimir Putin President used his annual 
state-of-the-nation address Wednesday, May 11, to warn that Russia's 
population of 143 million was falling by an average of 700,000 each 
year. He has pledged cash bonuses to Russian women who give birth to 
two or more children. His speech also focused on the problems of the 
Russian Armed Forces.

Here is the full text of Putin's speech:

Distinguished members of the Federal Assembly,

Citizens of Russia,

The addresses of the last years have set out our main socio-economic 
policy priorities for the coming decade. Our efforts today focus 
precisely on the areas that directly determine the quality of life 
for our citizens. We are carrying out national projects in the areas 
of healthcare, education, agriculture and housing construction. As 
you know, the problems in these areas have accumulated not just over 
a period of years but over entire decades. These are very sensitive 
issues for people's lives. We have had to build up considerable 
strength and resources in order to finally be able to address these 
problems and focus our efforts on resolving them.

A number of laws were passed in order to implement the proposals set 
out in the Annual Address for last year (2005). These were laws 
designed to improve our political system, in particular, the law on 
the Public Chamber, the law on parliamentary investigations and the 
law giving the party winning the majority in regional elections the 
right to take part in the process of selecting the regional governor. 
We likewise adopted a decision that improves relations between the 
federal, regional and local authorities.

In other words, we have concentrated over these last years on ironing 
out the imbalances that had arisen in our system of state 
organization and in the social sphere.

Now, as we plan the continued development of our state and political 
system, we must also take into account the current situation in 
society. In this respect I note what has become a characteristic 
feature of our country's political life, namely, low levels of public 
trust in some of the institutions of state power and in big business. 
The reasons for this situation are understandable.

The changes of the early 1990s were a time of great hopes for 
millions of people, but neither the authorities nor business 
fulfilled these hopes. Moreover, some members of these groups pursued 
their own personal enrichment in a way such as had never been seen 
before in our country's history, at the expense of the majority of 
our citizens and in disregard for the norms of law and morality.

   "In the working out of a great national program which seeks
     the primary good of the greater number, it is true that the
     toes of some people are being stepped on and are going to be
     stepped on. But these toes belong to the comparative few who
     seek to retain or to gain position or riches or both by some
     short cut which is harmful to the greater good."

These are fine words and it is a pity that it was not I who thought 
them up. It was Franklin Delano Roosevelt, the President of the 
United States of America, in 1934.

These words were spoken as the country was emerging from the great 
depression. Many countries have faced similar problems, just as we 
are today, and many have found worthy ways to overcome them.

At the foundation of these solutions was a clear understanding that 
the state's authority should not be based on excessive 
permissiveness, but on the ability to pass just and fair laws and 
firmly ensure their enforcement.

We will continue, of course, to work on raising the prestige of the 
civil service, and we will continue to support Russian business. But 
be it a businessman with a billion-dollar fortune or a civil servant 
of any rank, they all must know that the state will not turn a blind 
eye to their doings if they attempt to gain illegal profit out of 
creating special relations with each other.

I make this point now because, despite all the efforts we have made, 
we have still not yet managed to remove one of the greatest obstacles 
facing our development, that of corruption. It is my view that social 
responsibility must lie at the foundation of the work of civil 
servants and business, and they must understand that the source of 
Russia's wellbeing and prosperity is the people of this country.

It is the state's duty to ensure that this principle is reflected in 
deed and not just in word. I believe that this is one of the priority 
tasks we face today and that we cannot resolve this task unless we 
ensure the rights and liberties of our citizens, organize the state 
itself effectively and develop democracy and civil society.

We have spoken on many occasions of the need to achieve high economic 
growth as an absolute priority for our country. The annual address 
for 2003 set for the first time the goal of doubling gross domestic 
product within a decade. The calculation is not hard to make: to 
achieve this goal our economy needs to grow at a rate of just over 
seven percent a year.

On the surface we look to be keeping to our objectives and have had 
average economic growth of around seven percent for the past three 
years, but I want to stress that if we do not address certain issues, 
do not improve our basic macroeconomic indicators, do not ensure the 
necessary level of economic freedom, do not create equal conditions 
for competition and do not strengthen property rights, we will be 
unlikely to achieve our stated economic goals within the set deadline.

We have already begun taking concrete steps to change the structure 
of our economy and, as we have discussed a great deal, to give it a 
more innovative quality. I think that the government is moving in the 
right direction in this regard but I would like to make the following 
points.

First, state investment is necessary, of course, but it is not the 
only means of achieving our objectives. Second, it is not the volume 
of investment that is important so much as an ability to choose the 
right priorities while at the same time ensuring that we continue 
following the responsible economic policy we set five years ago.

After a long period during which we ran a budget deficit and faced 
sharp fluctuations of the ruble's exchange rate, the situation today 
is changing dramatically. We must maintain this financial stability 
that has been achieved as one of the basic conditions for increasing 
people's trust in the state and for encouraging entrepreneurs to 
invest money in business development.

Today's situation allows us to make a calmer and more sober 
assessment of the threats that Russia encounters as part of the world 
system, threats that represent a danger for our internal development 
and for our country's international interests.

We can make a more detailed examination of our place in the world 
economy. In a context of intensive competition, scientific and 
technological advantages are the defining factors for a country's 
economic development. Unfortunately, a large part of the 
technological equipment used by Russian industry today lags not just 
years but decades behind the most advanced technology the world can 
offer. Even allowing for the climate conditions in Russia, our energy 
use is many times less efficient than that of our direct competitors.

Yes, we know that this is the legacy of the way our economy and our 
industry developed during the Soviet period, but it is not enough 
just to know. We have to take concrete steps to change the situation. 
We must take serious measures to encourage investment in production 
infrastructure and innovative development while at the same time 
maintaining the financial stability we have achieved. Russia must 
realize its full potential in high-tech sectors such as modern energy 
technology, transport and communications, space and aircraft 
building. Our country must become a major exporter of intellectual 
services.

Of course, we hope for increased entrepreneurial initiative in all 
sectors of the economy and we will ensure all the necessary 
conditions for this to happen. But a real leap forward in the areas 
that I just mentioned, all areas in which our country has 
traditionally been strong, gives us the opportunity to use them as an 
engine for growth. This is a real opportunity to change the structure 
of our entire economy and establish for ourselves a worthy place in 
the international division of labor.

We already feel confident in the mining and extraction sector. Our 
companies in this sector are very competitive. Gazprom, for example, 
has just become the third biggest company in the world in terms of 
capitalization, while at the same time maintaining quite low tariffs 
for Russian consumers. This result did not just come about all on its 
own, but is the result of carefully planned action by the state.

But we cannot pat ourselves on the back and stop here. We need to put 
in place the conditions for more rapid technological modernization in 
the energy sector. We need to develop modern refining and processing 
facilities, build up our transport capacity and develop new and 
promising markets. And in doing all of this we need to ensure both 
our own internal development needs and fulfill all of our obligations 
to our traditional partners.

We must also take steps to develop nuclear energy, a nuclear energy 
sector based on safe, new-generation reactors. We need to consolidate 
Russia's position on the world markets for nuclear energy sector 
technology and equipment and make full use here of our knowledge, 
experience, advanced technology, and of course, international 
cooperation. Restructuring in the nuclear energy industry itself also 
aims at enabling us to achieve these goals. We must, of course, also 
focus work on promising new directions in energy - hydrogen and 
thermonuclear energy.

We must also take action to make our energy consumption radically 
more efficient. This demand is not just a whim for a country rich in 
energy resources, but is an issue for our competitiveness in the 
context of integration into the world economy. It is an issue of the 
environmental security and quality of life for our people.

I believe that only in this way can we ensure that Russia maintains a 
leading and stable position on energy markets in the long term. And 
in this way, Russia will be able to play a positive part in forming a 
common European energy strategy.

Our country has an advantageous geographical location and we must 
make use of this factor to realize our potential in the very 
promising area of modern transport and communications. The key 
decision in this respect is comprehensive and interlinked development 
of all types of transport and communications.

I note in this regard that concession mechanisms create new 
opportunities for carrying out such projects, and we should start 
making use of them very soon.

The reorganization of important sectors such as aircraft- and 
shipbuilding has been dragging on for an unjustifiably long time. The 
government must take rapid steps to finally complete work on 
establishing holdings in these sectors.

It is also extremely important for us to make the right choices in 
our development priorities for the space industry. We must not forget 
that the development of outer space is Russia's protective shield, 
gives us the possibility of detecting global natural cataclysms at an 
early stage and is a testing ground for new materials and technology. 
These and other objectives all require considerable investment to 
modernize facilities producing equipment for the space industry and 
to develop the infrastructure on the ground.

Russia has the potential to become one of the leaders in the field of 
nanotechnology. This sector represents one of the most promising 
directions for energy conservation and for developing new elements, 
medical technology and robotics. I believe we must take rapid steps 
to draw up and adopt an effective program in this field.

I hope too that the implementation of the government's and the 
Russian Academy of Sciences' joint plans to modernize the science 
sector will not be no more than a formality but will bring genuine 
results and provide our country's economy with promising new 
scientific developments.

Overall, what we need today is an innovative environment that will 
get new knowledge flowing. To do this we need to create the necessary 
infrastructure: technology incubators, technology parks, venture 
funds, investment funds. We are already doing this. We need to 
establish favorable tax conditions for financing innovative 
activities.

I believe too that the state should also facilitate the purchase of 
modern technology abroad. In this respect we have also taken some 
steps, first of all, of course, in order to modernize priority 
branches of industry. In this respect I ask you to analyze the 
possibilities for channeling resources into the capital of the 
financial institutions involved in leasing, lending and providing 
insurance for these types of contracts.

Reliable protection of intellectual property rights remains an 
essential condition for developing new technology. We must guarantee 
the protection of copyright within our country - this is also our 
duty to our foreign partners. And we must also ensure greater 
protection for the interests of Russian copyright holders abroad.

Dear colleagues,

Russia today needs unhindered access for its goods on international 
markets. We consider this an issue of more rational participation in 
the international division of labor and a question of making full use 
of the benefits offered by integration into the world economy. It is 
precisely for this reason that we are continuing our negotiations on 
accession to the World Trade Organization based only on conditions 
that fully take into consideration Russia's economic interests.

It is clear today that our economy is already more open than the 
economies of many of the members of this esteemed organization. The 
negotiations on Russia's accession to the WTO must not become a 
bargaining chip on issues that have nothing to do with this 
organization's activities.

In my address for 2003 I set the goal of making the ruble 
convertible. An outline of the steps to take was set out and I must 
say that these steps are being taken. I propose today that we speed 
up the removal of the remaining restrictions and complete this work 
by July 1 of this year.

But making the ruble genuinely convertible depends in great part on 
its attractiveness as an instrument for settlements and savings. In 
this respect we still have a great deal of work to do. In particular, 
the ruble must become a more universal means for carrying out 
international settlements and should gradually expand its zone of 
influence.

To this end we need to organize markets on Russian territory for 
trading oil, gas and other goods, markets that carry out their 
transactions in rubles. Our goods are traded on world markets, but 
why are they not traded here in Russia? The government should speed 
up work on settling these issues.

As I said before, our growing economic possibilities have enabled us 
to allocate additional money to the social sphere - investment in our 
people's prosperity and in Russia's future.

The goal of the Affordable Housing project, for example, is to lower 
interest rates on mortgage loans over a period of two years and 
almost triple the total mortgage loans made, bringing them to a total 
of 260 billion rubles.

Another of our national projects allocates considerable resources to 
the development of agriculture. Work has already begun on programs to 
build housing for young higher education graduates in rural areas. We 
are also developing a system for making loans available to 
co-operative retailers, small individual land cultivation and 
large-scale agricultural production enterprises. We are facilitating 
the purchase of the new technology and high-quality agricultural 
equipment that is so essential for our rural areas.

Now for a few words on the aims and measures set out in the Education 
national project. Russia needs a competitive education system 
otherwise we will end up facing the real threat of having our quality 
of education not measure up to modern demands. Above all, we need to 
support the higher education establishments that are carrying out 
innovative programs, including by buying the latest Russian and 
foreign-made equipment and technology.

The government must bring order to the curriculum of vocational 
education schools. This is something that should be done through work 
together with the business community and social services sector, for 
whom these institutions are training specialists in the first place.

We need to create a system of objective and independent external 
control over the quality of the education received, and we need to 
engage in broad-based and open dialogue with the public to establish 
an objective rating of universities.

We should not be afraid to expand the financial independence of 
education institutions, including schools, at the same time raising 
their responsibility for the quality of every aspect of the learning 
process and for the final result.

I support our business community's initiative of financing major 
universities through special development funds and through the 
formation of an education loans system. In this respect we need to 
look at improving the legislation in order to create incentives for 
such spending and ensure the necessary guarantees. I deliberately 
have not used the term state guarantees, but there must be guarantees 
of some kind, and the government can organize this work and put in 
place the required mechanisms.

Our fourth national project has been started in the area of 
healthcare and is aimed at improving primary healthcare and 
prevention and at improving access to high-tech medical services. I 
want to emphasize at the same time that the money allocated to the 
national projects accounts for only around 5-7 percent of total state 
spending in these sectors.

The government and the regional and local authorities must work 
systematically together on modernizing these four sectors and making 
more effective use of the considerable resources that we already 
have. If properly organized, all of this work should improve the 
quality of service in healthcare and education and also make it 
possible to considerably increase wages for all groups working in 
these sectors, not only those who are receiving additional payments 
as part of the priority projects.

Furthermore, starting this year, a large part of the federal budget 
spending will be focused on the final result. The regional 
authorities also must begin this work. I deliberately draw the 
regional authorities' attention to this point. The government has 
already taken the first steps in this direction but in the regions 
nothing is happening.

We must also continue the process of devolution of powers. In 
particular, the regions should be given part of the investment funds 
from the federal budget, which are essentially already being used 
today to finance municipal powers.

It is high time to stop overseeing the construction of schools, 
bathhouses and sewerage systems from Moscow.

And now for the most important matter. What is most important for our 
country? The Defense Ministry knows what is most important. Indeed, 
what I want to talk about is love, women, children. I want to talk 
about the family, about the most acute problem facing our country 
today - the demographic problem.

The economic and social development issues our country faces today 
are closely interlinked to one simple question: who we are doing this 
all for? You know that our country's population is declining by an 
average of almost 700,000 people a year. We have raised this issue on 
many occasions but have for the most part done very little to address 
it. Resolving this problem requires us to take the following steps.

First, we need to lower the death rate. Second, we need an effective 
migration policy. And third, we need to increase the birth rate.

The government just recently adopted a programme for improving road 
safety. Adopting a program is easy, now we need to implement it. I 
take this opportunity to draw the government's attention to delays 
and unjustified red tape involved in carrying out these kinds of 
tasks. I spoke about this issue in last year's address, and the 
program has only just now been prepared.

I am certain that other issues raised in last year's address are also 
not always being resolved in the way they should be.

We are taking measures to prevent the import and production of 
bootleg alcohol. The national Healthcare project is rightly focusing 
on the detection, prevention and treatment of cardiovascular disease 
and other illnesses that are high causes of death among our 
population.

Regarding migration policy, our priority remains to attract our 
compatriots from abroad. In this regard we need to encourage skilled 
migration to our country, encourage educated and law-abiding people 
to come to Russia. People coming to our country must treat our 
culture and national traditions with respect.

But no amount of migration will resolve our demographic problems if 
we do not also put in place the conditions and incentives for 
encouraging the birth rate to rise here in our own country. We cannot 
resolve this problem unless we adopt effective support programs for 
mothers, children and families.

Even the small increase in the birth rate and the drop in infant 
mortality we have seen of late are not so much the result of 
concerted effort in this area as of the general improvement in the 
country's socio-economic outlook. It is good to see this improvement, 
but it is not enough.

The work we have carried out on social projects over these last years 
has laid a good base, including for resolving the demographic 
problem, but it is still inadmissibly insufficient, and you know why. 
The situation in this area is critical.

Distinguished members of the Federal Assembly, you will soon begin 
work on the budget for 2007, the year of elections to the State Duma. 
Understandably, the budget adoption process will be determined in 
large part by your desire to do as much as you can for your voters. 
But if we really want to do something useful and necessary for our 
citizens, I propose that you lay aside political ambitions and don't 
disperse resources, and that we concentrate on resolving the most 
vital problems the country faces, one of which is the demographic 
problem, or, as Solzhenitsyn put it, the issue of 'conserving the 
people' in the broad sense. All the more so as there is public 
consensus that we must first of all address this key problem 
affecting our country.

I am sure that if you do this you will reap the gratitude of millions 
of mothers, young families and all the people of our country.

What am I talking about specifically? I propose a program to 
encourage childbirth. In particular, I propose measures to support 
young families and support women who decide to give birth and raise 
children. Our aim should be at the least to encourage families to 
have a second child.

What stops young families, women, from making such a decision today, 
especially when we're talking of having a second or third child? The 
answers are well known. They include low incomes, inadequate housing 
conditions, doubts as to their own ability to ensure the child a 
decent level of healthcare and education, and - let's be honest - 
sometimes doubts as to whether they will even be able to feed the 
child.

Women planning to have a child face the choice of either giving birth 
and losing their jobs, or not giving birth. This is a very difficult 
choice. The program to encourage childbirth should include a whole 
series of administrative, financial and social support measures for 
young families. All of these measures are equally important but 
nothing will bring results unless the necessary material support is 
provided.

What should we be doing today? I think that we need to significantly 
increase the childcare benefits for children under the age of 
one-and-a-half.

Last year we increased this benefit from 500 rubles to 700 rubles. I 
know that many deputies actively supported this decision. I propose 
that we increase the childcare benefit for the first child from 700 
rubles to 1,500 rubles a month, and that we increase the benefit for 
the second child to 3,000 rubles a month.

Women who had jobs but then take maternity leave and child care leave 
until it is one-and-a-half should receive from the state not less 
than 40 percent of their previous wage. We realize that we will have 
to set an upper threshold from which this sum is counted. I hope that 
the government will work together with the deputies to set this 
threshold. Whatever the case, the total benefit should not be lower 
than what a woman who did not previously work would receive, that is 
to say, 1,500 rubles and 3,000 rubles respectively.

Another problem is getting women back into the workforce again. In 
this respect I propose introducing compensation for the expenses 
families pay for pre-school childcare. Compensation for the first 
child would come to 20 percent of expenses, for the second 50 
percent, and for the third 70 percent of the average amount the 
parents actually pay for the pre-school childcare facility.

I draw your attention to the fact that I said that compensation would 
be for the expenses the parents actually pay and not for the costs 
for the childcare facility. The regional leaders understand what I am 
talking about. It is up to the regional and local authorities to 
ensure that there are enough kindergartens and nurseries to cover 
demand.

We also need to work together with the regions to develop a program 
providing financial incentives for placing orphans and children whose 
parents are unable to care for them in family care. We currently have 
some 200,000 children living in children's homes and orphanages. In 
reality the number of orphans is far higher, but around 200,000 of 
them are in children's homes. It seems to me that foreigners are 
adopting more of our children than we ourselves are. I propose that 
we double the benefit paid to guardians or foster parents of children 
and make it at least 4,000 rubles a month. I also propose 
considerably increasing the wage paid to foster parents from 
1,000-1,500 rubles a month to 2,500 rubles a month. And we should 
also increase the one-off payment made to families taking in 
children, regardless of the form chosen for placing the child with a 
family, to 8,000 rubles, that is, equal to the one-off payment made 
for giving birth to a child.

I instruct the government to work together with the regions to create 
a mechanism that will make it possible to reduce the number of 
children in institutions. We likewise need to take care of the health 
of future mothers and newborn babies and bring down the infant 
mortality and disability rates.

I propose that we increase the value of the childbirth certificates 
that were introduced last year and have worked well so far. I propose 
that we increase their value from 2,000 to 3,000 rubles for pregnancy 
centers and from 5,000 rubles to 7,000 rubles for maternity homes.

This additional money should be used for buying the necessary 
medicines for women and providing a higher quality of medical 
services. This must take into account the views of the patients 
themselves, the women, and I stress this point. We need to develop 
such a mechanism. This is not difficult to do.

We also need to move rapidly to adopt a program to create a network 
of prenatal centers and ensure that maternity homes have all the 
necessary equipment, special transport and other technology they need.

Finally, and most effective in my view, is a measure to ensure 
material support. I think that the state has a duty to help women who 
have given birth to a second child and end up out of the workplace 
for a long time, losing their skills. I think that, unfortunately, 
women in this situation often end up in a dependent and frankly even 
degraded position within the family. We should not be shy about 
discussing these issues openly and we must do so if we want to 
resolve these problems. If the state is genuinely interested in 
increasing the birth rate, it must support women who decide to have a 
second child. The state should provide such women with an initial 
maternity capital that will raise their social status and help to 
resolve future problems. Mothers could make use of this capital in 
different ways: put it towards improving their housing situation, for 
example, by investing it in buying a house, making use of a mortgage 
loan or other loan scheme once the child is three years old, or 
putting it towards the children's education, or, if they wish, 
putting it into the individual account part of their own old-age 
pension.

Experts say that these kinds of state support measures should total 
at least 250,000 rubles, and this sum should be indexed to annual 
inflation, of course.

The question arises of what to do with the families who already have 
at least two children. This is an important question and I am sure 
that the deputies will come to a carefully thought-through decision 
in this respect.

Of course, carrying out all of these plans will require a lot of work 
and an immense amount of money. I ask you to work out the obligations 
the state would increasingly bear in this case over the years and 
give the program a timeframe of at least 10 years at the end of which 
the state can decide on future action depending on the economic and 
demographic situation in the country.

Finally, the money needed to begin implementing these measures should 
be allocated in the budget for next year. This mechanism should be 
launched starting on January 1, 2007. I also ask you to work together 
with the government on the implementation procedures for carrying out 
this program I have proposed.

Concluding on this subject, I note that we cannot resolve the problem 
of the low birth rate without changing the attitudes within our 
society to families and family values. Academician Likhachev once 
wrote that "love for one's homeland, for one's country, starts with 
love for one's family". We need to restore these time-honored values 
of love and care for family and home.

While concentrating on raising the birth rate and supporting young 
families, we must also not forget about the older generation. These 
are people who have devoted their entire lives to their country, who 
labored for their country and who, if necessary, rose to its defense. 
We must do all that we can to ensure them a decent life.

As you know, we have raised pensions on a number of occasions over 
recent years, and ahead of the planned timeframe. Next year we will 
again raise pensions by almost 20 percent overall. The state is 
allocating considerable money to providing social benefits and 
guarantees for pensioners and veterans. We need to continue our 
program for providing state-funded housing for pensioners and 
veterans, including through using additional funds that are part of 
the Affordable Housing project. I ask you to continue focusing on 
this work as a key priority.

Distinguished deputies and members of the Federation Council,

In order to calmly and confidently resolve all the issues I have 
mentioned, issues of peaceful life, we need convincing responses to 
the national security threats that we face. The world is changing 
rapidly and a large number of new problems have arisen, problems that 
our country has found itself facing. These threats are less 
predictable than before and just how dangerous they are has not yet 
been fully gauged and realized. Overall, we see that conflict zones 
are expanding in the world and, what is especially dangerous is that 
they are spreading into the area of our vital interests.

The terrorist threat remains very real. Local conflicts remain a 
fertile breeding ground for terrorists, a source of their arms and a 
field upon which they can test their strength in practice. These 
conflicts often arise on ethnic grounds, often with inter-religious 
conflict thrown in, which is artificially fomented and manipulated by 
extremists of all shades.

I know that there are those out there who would like to see Russia 
become so mired in these problems that it will not be able to resolve 
its own problems and achieve full development.

The proliferation of weapons of mass destruction also represents a 
serious danger. If these weapons were to fall into the hands of 
terrorists, and they pursue this aim, the consequences would be 
simply disastrous.

I stress that we unambiguously support strengthening the 
non-proliferation regime, without any exceptions, on the basis of 
international law. We know that strong-arm methods rarely achieve the 
desired result and that their consequences can even be more terrible 
than the original threat.

I would like to raise another important issue today. Disarmament was 
an important part of international politics for decades. Our country 
made an immense contribution to maintaining strategic stability in 
the world. But with the acute threat of international terrorism now 
on everyone's minds the key disarmament issues are all but off the 
international agenda, and yet it is too early to speak of an end to 
the arms race.

What's more, the arms race has entered a new spiral today with the 
achievement of new levels of technology that raise the danger of the 
emergence of a whole arsenal of so-called destabilizing weapons.

There are still no clear guarantees that weapons, including nuclear 
weapons, will not be deployed in outer space. There is the potential 
threat of the creation and proliferation of small capacity nuclear 
charges. Furthermore, the media and expert circles are already 
discussing plans to use intercontinental ballistic missiles to carry 
non-nuclear warheads. The launch of such a missile could provoke an 
inappropriate response from one of the nuclear powers, could provoke 
a full-scale counterattack using strategic nuclear forces.

And meanwhile far from everyone in the world has abandoned the old 
bloc mentality and the prejudices inherited from the era of global 
confrontation despite the great changes that have taken place. This 
is also a great hindrance in working together to find suitable 
responses to the common problems we face.

Taking into account all of the above, Russia's military and foreign 
policy doctrines must also provide responses to the issues of today, 
namely, how to work together with our partners in current conditions, 
to fight effectively not just terrorism but also the proliferation of 
nuclear, chemical and bacteriological weapons, how to settle the 
local conflicts in the world today and how to overcome the other new 
challenges we face. Finally, we need to make very clear that the key 
responsibility for countering all of these threats and ensuring 
global security will lie with the world's leading powers, the 
countries that possess nuclear weapons and powerful levers of 
military and political influence. This is why the issue of 
modernizing Russia's Armed Forces is extremely important today and is 
of such concern to Russian society.

The addresses of recent years have all dealt with various national 
security problems. Today I want to look more closely at the current 
state of the Russian Armed Forces and their development prospects.

These days we are honoring our veterans and congratulating them on 
Victory Day. One of the biggest lessons of World War II is the 
importance of maintaining the combat readiness of the armed forces. I 
point out that our defense spending as a share of GDP is comparable 
or slightly less than in the other nuclear powers, France or Britain, 
for example. In terms of absolute figures, and we all know that in 
the end it is absolute figures that count, our defense spending is 
half that of the countries I mentioned, and bears no comparison at 
all with the defense spending figures in the United States. Their 
defense budget in absolute figures is almost 25 times bigger than 
Russia's. This is what in defense is referred to as 'their home - 
their fortress'. And good on them, I say. Well done!

But this means that we also need to build our home and make it strong 
and well protected. We see, after all, what is going on in the world. 
The wolf knows who to eat, as the saying goes. It knows who to eat 
and is not about to listen to anyone, it seems.

How quickly all the pathos of the need to fight for human rights and 
democracy is laid aside the moment the need to realize one's own 
interests comes to the fore. In the name of one's own interests 
everything is possible, it turns out, and there are no limits. But 
though we realize the full seriousness of this problem, we must not 
repeat the mistakes of the Soviet Union, the mistakes of the Cold War 
era, neither in politics nor in defense strategy. We must not resolve 
our defense issues at the expense of economic and social development. 
This is a dead end road that ultimately leaves a country's reserves 
exhausted. There is no future in it.

Of course, the question arises whether we can reliably ensure our 
security in a situation of such disparity with the other leading 
powers. Of course we can, and I will say how now. I propose that we 
look at this issue in more detail.

A few years ago the structure of the country's armed forces was not 
in keeping with the reality of today's situation. The armed forces 
were no longer receiving any modern equipment. Not a single new ship 
was built between 1996 and 2000 and only 40 new items of military 
equipment were commissioned by the armed forces. The troops carried 
out military exercises on maps, only on maps, the navy never left the 
docks and the air force never got to fly. When the need arose to 
counter a large-scale attack by international terrorists in the North 
Caucasus in 1999, the problems in the armed forces became painfully 
evident.

I remember very clearly a conversation I had with the chief of 
General Staff at that time. He is probably present here today. In 
order to effectively repel the terrorists we needed to put together a 
group of at least 65,000 men, but the combat ready units in the 
entire army came to only 55,000 men, and they were scattered 
throughout the entire country. Our armed forces came to a total of 
1,400,000 men but there weren't enough men to fight. This is how kids 
who had never seen combat before were sent in to fight. I will not 
forget this ever. And it is our task today to make sure that this 
never happens again.

The situation in the armed forces today has changed dramatically. We 
have created a modern structure for the armed forces and the 
different units are now receiving modern, new arms and equipment, 
arms and equipment that will form the basis of our defense through to 
2020. This year saw the start of mass defense equipment procurement 
for the Defense Ministry's needs.

Naval shipbuilding has got underway again and we are now building new 
vessels of practically all types. The Russian Navy will soon 
commission two new nuclear submarines carrying strategic weapons. 
They will be equipped with the new Bulava missile system, which 
together with the Topol-M system will form the backbone of our 
strategic deterrent force. I emphasize that these are the first 
nuclear submarines to be completed in modern Russia. We had not built 
a single vessel of this type since 1990.

Five Strategic Missile regiments have already received silo-based 
Topol-M missiles, and one of our missile divisions will also receive 
the mobile version of the Topol-M system this year.

Another important indicator over recent years is that intensive 
combat and operational training is being conducted among the troops. 
Dozens of field exercises and long-distance sea voyages have been 
organized. One just finished today.

The result of these changes has been to boost combat spirit and 
improve the morale of soldiers and officers. We know examples of what 
it is no exaggeration to call mass heroism among military servicemen 
and law enforcement personnel.

The changes in the structure of the military budget are also an 
indicator of change. Defense spending has increased from year to 
year. An ever greater share of this money is going precisely into 
improving the quality of the armed forces. Over the coming years we 
must reach the goal of having at least half of the defense budget 
being spent on development. Every budget ruble must be spent 
carefully and for the designated purpose.

I have long since raised the issue of the need to establish a unified 
procurement and supply system for arms, military equipment and rear 
support. The government must settle this issue by the end of the year 
and complete this work and then establish a federal civilian agency 
with the according powers. I very much hope that this will also have 
a positive impact on overcoming corruption in the armed forces.

Now I would like to name the main demands regarding the missions our 
armed forces must be ready to fulfill. Over the next five years we 
will have to significantly increase the number of modern long range 
aircraft, submarines and launch systems in our strategic nuclear 
forces.

Work is already underway today on creating unique high-precision 
weapons systems and maneuverable combat units that will have an 
unpredictable flight trajectory for the potential opponent. Along 
with the means for overcoming anti-missile defenses that we already 
have, these new types of arms will enable us to maintain what is 
definitely one of the most important guarantees of lasting peace, 
namely, the strategic balance of forces.

We must take into account the plans and development vectors of other 
countries' armed forces, and we must keep ourselves informed on 
promising developments, but we should not go after quantity and 
simply throw our money to the wind. Our responses must be based on 
intellectual superiority. They will be asymmetrical, not as costly, 
but they will unquestionably make our nuclear triad more reliable and 
effective.

Modern Russia needs an army that has every possibility for making an 
adequate response to all the modern threats we face. We need armed 
forces able to simultaneously fight in global, regional and - if 
necessary - also in several local conflicts. We need armed forces 
that guarantee Russia's security and territorial integrity no matter 
what the scenario.

Another important demand is that the armed forces be professional and 
mobile. I particularly note that we have made the necessary personnel 
cutbacks over the last five years. The process of bringing the size 
of the armed forces down to an optimum 1 million servicemen will not 
require further special cutbacks but will be reached as officers who 
have served their time take their retirement. This scaling down will 
be achieved only through cutting back the bureaucratic apparatus. The 
combat units will not be affected by any more cutbacks.

Changes will also be made to the military command system and the 
mobilization system will be improved. By 2008, professional 
servicemen should account for two thirds of the armed forces. All of 
this will enable us to reduce compulsory military service to one year.

Once the permanently combat-ready units are all manned by contract 
servicemen, we must also, starting 2009, begin filling posts for 
sergeants, master sergeants, and for above-water craft crews on 
principle of contract service.

The armed forces units stationed in Chechnya are all manned by 
contract servicemen. As from January 1, 2007, the Interior Ministry 
troops in Chechnya will also all be contract servicemen. In other 
words, we will no longer use conscript servicemen at all in 
anti-terrorist operations.

By 2011 our general purpose forces should include around 600 
permanently combat-ready units. A much larger number of such units 
will be created in fighter plane units and military aviation, in the 
air defence forces, communications, radio-electronic reconnaissance 
and electronic warfare units. If need be, we will be able to quickly 
put into place mobile and self-sufficient units in any potentially 
dangerous area. Professionally trained units and permanently 
combat-ready units will form the backbone of these forces.

Service in the Russian Armed Forces should be modern and genuinely 
prestigious. People serving their motherland should have a high 
social and material status and benefit from solid social guarantees.

By 2010 we should have definitively resolved the issue of permanent 
housing for servicemen and by 2012 we should have resolved the issue 
of service housing.

We also plan a number of wage rises for the military over the coming 
years. At the same time we are developing the healthcare and 
insurance system for servicemen. Finally, the issue of increasing 
discipline among the troops is an equally important task. The 
political problems of the transition period and the lack of funding 
meant that the army was essentially just taking what it could get to 
fulfill its personnel needs, and this also led to worse conditions of 
service and a drop in the level of combat preparedness.

A huge number of young men of conscript age today suffer from chronic 
diseases and have problems with drinking, smoking and sometimes drugs 
as well. I think that in our schools we need not just to educate our 
young people but also see to their physical and patriotic 
development. We need to restore the system of pre-conscription 
military training and help develop military sports. The government 
should adopt the appropriate program in this area.

The regional authorities should not just be seriously concerned with 
meeting conscription figures but are also responsible for ensuring 
that the recruits satisfy quality requirements, and they should carry 
out preparatory work in close contact with the armed forces 
themselves.

Administrative measures alone are not enough to really change the 
situation. We need to realise that the armed forces are part of 
ourselves, part of our society, and that service in their ranks is of 
immense importance for the country and for the entire Russian people.

Reflecting on the basic principles on which the Russian state should 
be built, the well known Russian thinker Ivan Ilyin said that the 
calling of soldier is a high and honorable title and that the soldier 
"represents the national unity of the people, the will of the Russian 
state, strength and honor". We must always be ready to repel 
potential aggression from outside and to counter international 
terrorist attack. We must be able to respond to attempts from any 
quarters to put foreign policy pressure on Russia, including with the 
aim of strengthening one's own position at our expense.

We also need to make clear that the stronger our armed forces are, 
the lesser the temptation for anyone to put such pressure on us, no 
matter under what pretext this is done.

Dear colleagues,

Russia's modern foreign policy is based on the principles of 
pragmatism, predictability and the supremacy of international law. I 
would like to say a few words today about the state of relations and 
prospects for cooperation with our main partners, and above all, 
about relations with our nearest neighbors, with the countries of the 
CIS.

The debate on the very need for and future of the Commonwealth of 
Independent States still continues to this day and we all have an 
interest in working on reform of the CIS.

The CIS clearly helped us to get through the period of putting in 
place partnership relations between the newly formed young states 
without any great losses and played a positive part in containing 
regional conflicts in the post-Soviet area.

I stress that it was Russia that helped defuse the tension in many of 
these conflicts. We will continue to carry out our peacekeeping 
mission in all responsibility.

The CIS experience has also given rise to several productive economic 
cooperation initiatives. The Union State with Belarus, the Eurasian 
Economic Community and the Common Economic Space are all developing 
in parallel today, based on the shared interests of the partners 
involved. Together we are resolving the problems that no one else 
will settle for us. We see in practice that multilateral partnership 
enables us to do this at much less cost and far more effectively.

The CIS has provided a good basis for the formation of the Collective 
Security Treaty Organization that brings together countries genuinely 
interested in close military and political cooperation.

Finally, without diminishing the importance of the other aspects of 
reform in any way, I note the particularly promising project of 
strengthening our common humanitarian space, which has not just a 
rich historical and human foundation but now offers new social and 
economic opportunities. Throughout the CIS a difficult but active 
search for optimum cooperation models is underway. Russia states 
clearly and firmly that the end result we want from this search is 
the creation of an optimum economic system that would ensure the 
effective development of each of its participants.

I repeat that our relations with our closest neighbors were and 
remain a most important part of the Russian Federation's foreign 
policy.

I would like to say a few words briefly about our cooperation with 
our other partners.

Our biggest partner is the European Union. Our ongoing dialogue with 
the EU creates favourable conditions for mutually beneficial economic 
ties and for developing scientific, cultural, educational and other 
exchanges. Our joint work on implementing the concept of the common 
spaces is an important part of the development of Europe as a whole.

Of great importance for us and for the entire international system 
are our relations with the United States of America, with the 
People's Republic of China, with India, and also with the 
fast-growing countries of the Asia-Pacific Region, Latin America and 
Africa. We are willing to take new steps to expand the areas and 
framework of our cooperation with these countries, increase 
cooperation in ensuring global and regional security, develop mutual 
trade and investment and expand cultural and educational ties.

I wish to stress that at this time of globalization when a new 
international architecture is in the process of formation, the role 
of the United Nations Organization has taken on new importance. This 
is the most representative and universal international forum and it 
remains the backbone of the modern world order. It is clear that the 
foundations of this global organization were laid during an entirely 
different era and that reform is indisputably necessary.

Russia, which is taking an active part in this work, sees two points 
of being of principle importance.

First, reform should make the UN's work more effective. Second, 
reform should have the broad support of a maximum number of the UN's 
member states. Without consensus in the UN it will be very difficult 
to ensure harmony in the world. The UN system should be the regulator 
that enables us to work together to draw up a new code of behavior in 
the international arena, a code of behavior that meets the challenges 
of our times and that we are so in need of today in this globalizing 
world.

Distinguished members of the Federal Assembly,

Citizens of Russia,

In conclusion I would like to say once more that today's address, 
like previous addresses, sets out the basic directions of our 
domestic and foreign policy for the coming decades. They are designed 
for the long term and are not dictated by fluctuations of the moment.

Previous addresses have focused on construction of our political 
system, improving the state power system and local self-government, 
have examined in detail the modernization of our social sphere and 
have set new economic goals.

Today I have set out our vision of what place we want to hold in the 
international division of labor and the new architecture of 
international relations. I have also examined in detail what we can 
do to resolve the complex demographic problem we face and to develop 
our armed forces.

The steps proposed are very concrete. Russia has immense development 
opportunities and huge potential that we need to put to full use in 
order to better the lives of our people.

Without question we realize the full scale of the work at hand. I am 
sure that we will be up to the task.

Thank you for your attention.

source: www.kremlin.ru
-- 

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