Date: Sat Dec 6 05:42:48 2014
Presidential Address to the Federal Assembly
December 6, 2014, 13:20 The Kremlin, Moscow
Vladimir Putin delivered the annual Presidential Address to the Federal
Assembly. The Address was traditionally delivered at the Kremlin's St George
Hall before an audience of over 1,000 people.
In his Address, the President set out his views on the situation in Ukraine
and outlined Russia's position with regard to events taking place there. In
the foreign policy section of the Address, Mr Putin also spoke about
international security issues and the integration processes taking place in
the world.
On the subject of Russia's economic strategy, the President said that Russia
is open to the world, to investment and to carrying out projects together,
but ultimately, Russia's development depends above all on the country's own
efforts. Mr Putin named development of new technology and competitive goods,
giving the country's industry and financial sector a more solid foundation,
and training the needed personnel as priority tasks.
The President also talked about relations between the state and business, in
particular the need to free up the environment for doing business as much as
possible and the concrete steps that can be taken to achieve this. Mr Putin
proposed that no changes be made to the current tax rules for the next four
years, and also proposed an amnesty for capital returning to Russia.
The President set the goal of reaching growth rates above the world average
within the next 3-4 years.
Mr Putin also set objectives in the financial sector, agribusiness, and the
banking sector, and declared the need to free Russia from dependence on
foreign technology. Import substitution is a long term strategy, the
President said, and is a goal for Russia regardless of the situation with
sanctions. Mr Putin also gave the main target figures for Russian exports
and investment levels.
The President proposed implementing a national technology initiative that
will involve forecasting the technology needs required to guarantee Russia's
national security and ensure high living standards and economic development
over the coming 10-15 years.
The President also spoke about demography, healthcare and education.
In his concluding section, Mr Putin focused on the dialogue between the
state authorities and the public and the need to raise civic activeness and
Russia's civil society potential.
The ceremony was attended by members of the Federation Council, State Duma
deputies, members of the Government, heads of the Constitutional and Supreme
Courts, heads of the constituent entities, chairpersons of regional
legislative assemblies, heads of Russia's traditional faiths, public
figures, including heads of regional civic chamber, and executives of
Russia's major media outlets.
* * **************************************************
PRESIDENT OF RUSSIA VLADIMIR PUTIN: Citizens of Russia, members of the
Federation Council and deputies of the State Duma,
Today's address will be related to the current situation and conditions, as
well as the tasks we are facing. But before delivering it I'd like to thank
all of you for the support, unity and solidarity you have shown during the
landmark events that will seriously influence the future of our country.
This year we faced trials that only a mature and united nation and a truly
sovereign and strong state can withstand. Russia has proved that it can
protect its compatriots and defend truth and fairness.
Russia has done this thanks to its citizens, thanks to your work and the
results we have achieved together, and thanks to our profound understanding
of the essence and importance of national interests. We have become aware of
the indivisibility and integrity of the thousand-year long history of our
country. We have come to believe in ourselves, to believe that we can do
much and achieve every goal.
Of course, we will talk about this year's landmark events. You know that a
referendum was held in Crimea in March, at which its residents clearly
expressed their desire to join Russia. After that, the Crimean parliament -
it should be stressed that it was a legitimate parliament that was elected
back in 2010 - adopted a resolution on sovereignty. And then we saw the
historical reunification of Crimea and Sevastopol with Russia.
It was an event of special significance for the country and the people,
because Crimea is where our people live, and the peninsula is of strategic
importance for Russia as the spiritual source of the development of a
multifaceted but solid Russian nation and a centralised Russian state. It
was in Crimea, in the ancient city of Chersonesus or Korsun, as ancient
Russian chroniclers called it, that Grand Prince Vladimir was baptised
before bringing Christianity to Rus.
In addition to ethnic similarity, a common language, common elements of
their material culture, a common territory, even though its borders were not
marked then, and a nascent common economy and government, Christianity was a
powerful spiritual unifying force that helped involve various tribes and
tribal unions of the vast Eastern Slavic world in the creation of a Russian
nation and Russian state. It was thanks to this spiritual unity that our
forefathers for the first time and forevermore saw themselves as a united
nation. All of this allows us to say that Crimea, the ancient Korsun or
Chersonesus, and Sevastopol have invaluable civilisational and even sacral
importance for Russia, like the Temple Mount in Jerusalem for the followers
of Islam and Judaism.
And this is how we will always consider it.
Dear friends,
We cannot fail to mention today our perspective on the developments in
Ukraine and how we intend to work with our partners around the world.
It is well known that Russia not only supported Ukraine and other brotherly
republics of the former Soviet Union in their aspirations to sovereignty,
but also facilitated this process greatly in the 1990s. Since then, our
position has remained unchanged.
Every nation has an inalienable sovereign right to determine its own
development path, choose allies and political regimes, create an economy and
ensure its security. Russia has always respected these rights and always
will. This fully applies to Ukraine and the Ukrainian people.
It is true that we condemned the government coup and the forceful takeover
of power in Kiev in February of this year. The developments we are currently
witnessing in Ukraine and the tragedy unfolding in the country's southeast
prove that we were right to take such a stand.
How did it all begin? I will have to remind you what happened back then. It
is hard to believe that it all started with a technical decision by
President Yanukovych to postpone the signing of the Association Agreement
between Ukraine and the European Union. Make no mistake, he did not refuse
to sign the document, but only postponed it in order to make some
adjustments.
As you recall, this move was fully in line with the constitutional authority
vested upon an absolutely legitimate and internationally recognised head of
state.
Against this background, there was no way we could support this armed coup,
the violence and the killings. Just take the bloody events in Odessa, where
people were burned alive. How can the subsequent attempts to suppress people
in Ukraine's southeast, who oppose this mayhem, be supported? I reiterate
that there was no way we could endorse these developments. What's more, they
were followed by hypocritical statements on the protection of international
law and human rights. This is just cynical. I strongly believe that the time
will come when the Ukrainian people will deliver a just assessment of these
developments.
How did the dialogue on this issue begin between Russia and its American and
European partners? I mentioned our American friends for a reason, since they
are always influencing Russia's relations with its neighbours, either openly
or behind the scenes. Sometimes it is even unclear whom to talk to: to the
governments of certain countries or directly with their American patrons and
sponsors.
As I mentioned, in the case of the Ukraine-EU Association Agreement, there
was no dialogue at all. We were told that it was none of our business or, to
put it simply, we were told where to go.
All the arguments that Russia and Ukraine are members of the CIS free-trade
zone, that we have deep-rooted cooperation in industry and agriculture, and
basically share the same infrastructure - no one wanted to hear these
arguments, let alone take them into account.
Our response was to say: fine, if you do not want to have a dialogue with
us, we will have to protect our legitimate interests unilaterally and will
not pay for what we view as erroneous policy.
So what's came out of it all? The agreement between Ukraine and the European
Union has been signed and ratified, but the implementation of the provisions
regarding trade and economy has been postponed until the end of next year.
Doesn't this mean that we were the ones who were actually right?
There is also a question of why all this was done in Ukraine? What was the
purpose of the government coup? Why shoot and keep shooting and killing
people? In fact, the economy, finance and the social sector were destroyed
and the country ruined.
What Ukraine currently needs is economic assistance in carrying out reforms,
not petty politics and pompous empty promises. However, our Western
colleagues don't seem eager to provide such assistance, while the Kiev
authorities are not willing to address the challenges their people are
facing.
By the way, Russia has already made a major contribution to helping Ukraine.
Let me reiterate that Russian banks already invested some $25 billion in
Ukraine. Last year, Russia's Finance Ministry extended a loan worth another
$3 billion. Gazprom provided another $5.5 billion to Ukraine and even
offered a discount that no one promised, requiring the country to pay $4.5
billion. Add it all up and you get as much as $ 32.5-33.5 billion that were
provided only recently.
Of course, we have the right to ask questions. What was this Ukrainian
tragedy for? Wasn't it possible to settle all the issues, even disputed
issues, through dialogue, within a legal framework and legitimately?
But now we are being told that this was actually competent, balanced
politics that we should comply with unquestionably and blindfolded.
This will never happen.
If for some European countries national pride is a long-forgotten concept
and sovereignty is too much of a luxury, true sovereignty for Russia is
absolutely necessary for survival.
Primarily, we should realise this as a nation. I would like to emphasise
this: either we remain a sovereign nation, or we dissolve without a trace
and lose our identity. Of course, other countries need to understand this,
too. All participants in international life should be aware of this. And
they should use this understanding to strengthen the role and the importance
of international law, which we've talked about so much lately, rather than
bend its standards to suit someone's strategic interests contrary to its
fundamental principles and common sense, considering everyone else to be
poorly educated people who can't read or write.
It is imperative to respect the legitimate interests of all the participants
in international dialogue. Only then, not with guns, missiles or combat
aircraft, but precisely with the rule of law will we reliably protect the
world against bloody conflict. Only then, will there be no need to scare
anyone with imaginary self-deceptive isolation, or sanctions, which are, of
course, damaging, but damaging to everyone, including those who initiate
them.
Speaking of the sanctions, they are not just a knee-jerk reaction on behalf
of the United States or its allies to our position regarding the events and
the coup in Ukraine, or even the so-called Crimean Spring. I'm sure that if
these events had never happened - I want to point this out specifically for
you as politicians sitting in this auditorium - if none of that had ever
happened, they would have come up with some other excuse to try to contain
Russia's growing capabilities, affect our country in some way, or even take
advantage of it.
The policy of containment was not invented yesterday. It has been carried
out against our country for many years, always, for decades, if not
centuries. In short, whenever someone thinks that Russia has become too
strong or independent, these tools are quickly put into use.
However, talking to Russia from a position of force is an exercise in
futility, even when it was faced with domestic hardships, as in the 1990s
and early 2000s.
We remember well how and who, almost openly, supported separatism back then
and even outright terrorism in Russia, referred to murderers, whose hands
were stained with blood, none other than rebels and organised high-level
receptions for them. These "rebels" showed up in Chechnya again. I'm sure
the local guys, the local law enforcement authorities, will take proper care
of them. They are now working to eliminate another terrorist raid. Let's
support them.
Let me reiterate, we remember high-level receptions for terrorists dubbed as
fighters for freedom and democracy. Back then, we realised that the more
ground we give and the more excuses we make, the more our opponents become
brazen and the more cynical and aggressive their demeanour becomes.
Despite our unprecedented openness back then and our willingness to
cooperate in all, even the most sensitive issues, despite the fact that we
considered - and all of you are aware of this and remember it - our former
adversaries as close friends and even allies, the support for separatism in
Russia from across the pond, including information, political and financial
support and support provided by the special services - was absolutely
obvious and left no doubt that they would gladly let Russia follow the
Yugoslav scenario of disintegration and dismemberment. With all the tragic
fallout for the people of Russia.
It didn't work. We didn't allow that to happen.
Just as it did not work for Hitler with his people-hating ideas, who set out
to destroy Russia and push us back beyond the Urals. Everyone should
remember how it ended.
Next year, we will mark the 70th anniversary of Victory in the Great
Patriotic War. Our Army crushed the enemy and liberated Europe. However, we
should not forget about the bitter defeats in 1941 and 1942 so as not to
repeat the mistakes in the future.
In this context, I will touch on an international security issue. There are
many issues related to this. These include the fight against terrorism. We
still encounter its manifestations, and of course, we will participate in
the joint efforts to counter terrorism on the international level. Of
course, we will work together to deal with other challenges, such as the
spread of infectious diseases.
However, in this case I would like to speak about the most serious and
sensitive issue: international security. Since 2002, after the US
unilaterally pulled out of the ABM Treaty, which was absolutely a
cornerstone of international security, a strategic balance of forces and
stability, the US has been working relentlessly to create a global missile
defence system, including in Europe. This poses a threat not only to Russia,
but to the world as a whole - precisely due to the possible disruption of
this strategic balance of forces.
I believe that this is bad for the US as well, because it creates the
dangerous illusion of invulnerability. It strengthens the striving for
unilateral, often, as we can see, ill-considered decisions and additional
risks.
We have said much about this. I will not go into details now. I will only
say this. Maybe I am repeating myself. We have no intention to become
involved in a costly arms race, but at the same time we will reliably and
dependably guarantee our country's defence in the new conditions. There are
absolutely no doubts about this. This will be done. Russia has both the
capability and the innovative solutions for this.
No one will ever attain military superiority over Russia. We have a modern
and combat ready army. As they now put it, a polite, but formidable army. We
have the strength, will and courage to protect our freedom.
We will protect the diversity of the world. We will tell the truth to people
abroad, so that everyone can see the real and not distorted and false image
of Russia. We will actively promote business and humanitarian relations, as
well as scientific, education and cultural relations. We will do this even
if some governments attempt to create a new iron curtain around Russia.
We will never enter the path of self-isolation, xenophobia, suspicion and
the search for enemies.
All this is evidence of weakness, while we are strong and confident.
Our goal is to have as many equal partners as possible, both in the West and
in the East. We will expand our presence in those regions where integration
is on the rise, where politics is not mixed with economy, and where
obstacles to trade, to exchange of technology and investment and to the free
movement of people are lifted.
Under no conditions will we curtail our relations with Europe or America. At
the same time, we will restore and expand our traditional ties with South
America. We will continue our cooperation with Africa and the Middle East.
We see how quickly Asia Pacific has been developing over the past few
decades. As a Pacific power, Russia will use this huge potential
comprehensively.
Everyone knows the leaders and the drivers of global economic development.
Many of them are our sincere friends and strategic partners.
The Eurasian Economic Union will start working in full on January 1, 2015.
I'd like to remind you about its fundamental principles. The topmost
principles are equality, pragmatism and mutual respect, as well as the
preservation of national identity and state sovereignty of its member
countries. I am confident that strong cooperation will become a powerful
source of development for all of the Eurasian Economic Union members.
To conclude this part of my address, I'd like to say once again that our
priorities are healthy families and a healthy nation, the traditional values
which we inherited from our forefathers, combined with a focus on the
future, stability as a vital condition of development and progress, respect
for other nations and states, and the guaranteed security of Russia and the
protection of its legitimate interests.
Dear friends,
To be able to implement all our plans and to meet the basic social
commitments set forth in the presidential executive orders of May 2012, we
must decide what we will do in the economy, finance and social spheres. But
most importantly, we must choose a strategy.
I repeat that Russia will be open to the world, cooperation, foreign
investment and joint projects. But we must above all see that our
development depends primarily on us.
We will only succeed if we work towards prosperity and affluence, rather
than hope for an opening or a favourable situation on foreign markets.
We will succeed if we defeat disorder, irresponsibility and our habit of
burying good decisions in red tape. I want everyone to understand that in
today's world this is not simply an obstacle to Russia's development but a
direct threat to its security.
The period ahead will be complex and difficult, when much will depend on
what each one of us do at our workplaces. The so-called sanctions and
foreign restrictions are an incentive for a more efficient and faster
movement towards our goals.
There is much we need to do. We need to create new technologies, a
competitive environment and an additional margin of strength in the
industries, the financial system and in the training of personnel. We have a
large domestic market and natural resources, capital and research projects
for this. We also have talented, intelligent and diligent people who can
learn very quickly.
The most important thing now is to give the people an opportunity for
self-fulfilment. Freedom for development in the economic and social spheres,
for public initiatives is the best possible response both to any external
restrictions and to our domestic problems. The more actively people become
involved in organising their own lives, the more independent they are, both
economically and politically, and the greater Russia's potential.
In this context, I will cite one quote: "He who loves Russia should wish
freedom for it; above all, freedom for Russia as such, for its international
independence and self-sufficiency; freedom for Russia as a unity of Russian
and all other ethnic cultures; and finally, freedom for the Russian people,
freedom for all of us: freedom of faith, of the search for truth,
creativity, work, and property." Ivan Ilyin. This makes a lot of sense and
offers a good guideline for all of us today.
Ladies and gentlemen,
Conscientious work, private property, the freedom of enterprise - these are
the same kind of fundamental conservative values as patriotism, and respect
for the history, traditions, and culture of one's country.
We all want the same thing: wellbeing for Russia. So the relations between
business and the state should be built on the philosophy of a common cause,
partnership, and equal dialogue.
Naturally, responsibility and compliance with the law and obligations are
essential in the business world, as it is in other areas of life. And this
is exactly how the overwhelming, absolute majority of our business people
work. They value their business and social reputation. Like genuine
patriots, they want to be a benefit to Russia. These are the kind of people
to look to, providing conditions for their productive work.
This is not the first time we are speaking about the need for new approaches
to the activities of oversight, supervisory, and law enforcement agencies.
Nevertheless, things are changing very slowly here. The presumption of guilt
is still very much alive. Instead of curbing individual violations, they
close the path and create problems for thousands of law-abiding,
self-motivated people.
It is essential to lift restrictions on business as much as possible, free
it from intrusive supervision and control. I said intrusive supervision and
control. I will consider this in more detail later. I propose the following
measures in this regard.
Every inspection should become public. Next year, a special register will be
launched, with information on what agency has initiated an inspection, for
what purpose, and what results it has produced. This will make it possible
to stop unwarranted and, worse still, 'paid to order' visits from oversight
agencies. This problem is extremely relevant not only for business, but also
for the public sector, municipal institutions and social NGOs.
Finally, it's crucial to abandon the basic principle of total, endless
control. The situation should be monitored where there are real risks or
signs of transgression. You see, even when we have already done something
with regard to restrictions, and these restrictions seem to be working well,
there are so many inspection agencies that if every one of them comes at
least once, then that's it, the company would just fold. In 2015, the
Government should make all the necessary decisions to switch to this system,
a system of restrictions with regard to reviews and inspections.
Concerning small business, I propose establishing 'holidays from
inspections'. If a company has acquired a good reputation and if there have
not been any serious charges against it for three years, then for the next
three years it should be exempted from routine inspections by government or
municipal supervisory agencies. Of course, this does not apply to
emergencies, when there is a danger to people's health and life.
Business people talk about the need for stable legislation and predictable
rules, including taxes. I completely agree with this. I propose to freeze
the existing tax parameters as they are for the next four years, not revisit
the matter again, not change them.
Meanwhile, it is important to implement the decisions that have already been
made to ease the tax burden. First of all, for those who are just setting up
their operations. As we have agreed, two-year tax holidays will be provided
to small businesses registering for the first time. Production facilities
that are starting from scratch will be entitled to the same exemptions.
Another thing. I propose a full amnesty for capital returning to Russia. I
stress, full amnesty.
Of course, it is essential to explain to the people who will make these
decisions what full amnesty means. It means that if a person legalises his
holdings and property in Russia, he will receive firm legal guarantees that
he will not be summoned to various agencies, including law enforcement
agencies, that they will not "put the squeeze" on him, that he will not be
asked about the sources of his capital and methods of its acquisition, that
he will not be prosecuted or face administrative liability, and that he will
not be questioned by the tax service or law enforcement agencies. Let's do
this now, but only once. Everyone who wants to come to Russia should be
given this opportunity.
We all understand that the sources of assets are different, that they were
earned or acquired in various ways. However, I am confident that we should
finally close, turn the "offshore page" in the history of our economy and
our country. It is very important and necessary to do this.
I expect that after the well-known events in Cyprus and with the on-going
sanctions campaign, our business has finally realised that its interests
abroad are not reckoned with and that it can even be fleeced like a sheep.
And that the best possible guarantee is national jurisdiction, even with all
of its problems. We will continue to deal with those problems with
conviction, together with our business community, of course.
Russia has already made significant headway in improving its business
climate. A new legislative framework has for the most part been developed on
the federal level. Now the focus should be shifted to the quality of law
enforcement, promoting so called best practices in the regions in
partnership with business, using the national investment climate ratings to
this end. From next year, the ratings system will be introduced in all the
regions. We will review the progress at a State Council meeting without
fail.
We need properly developed construction sites and transport infrastructure
in order to be able to expand businesses and accommodate new production
sites. Our regions must focus on fixing regional and local roads. To enable
them to do so, we have introduced additional sources for regional road
funds. Overall, we should seek to double the volume of road construction
across Russia.
Of course, what I have just said has been verified by the relevant
government agencies. They all confirmed that this is a feasible project.
We'll be expecting to see the results of your work, colleagues.
In 2015, we will launch a programme to reimburse the regions' expenses
involved in creating technology parks. I hope that the regions will make
good use of this opportunity to develop their own industrial capacity. These
additional measures are being taken in order to support economic and
industrial growth in strategically important Russian regions.
The law on a special economic zone in Crimea has been adopted. Favourable
conditions will be created here for businesses, agriculture and tourism,
manufacturing industries and maritime transport, including taxation, customs
and other procedures.
As you may be aware, customs preferences for Kaliningrad Region will expire
in 2016. It is imperative that alternative measures to support this region,
which have already been prepared, be implemented in order to maintain a
comfortable entrepreneurial climate.
I'd like to ask the Government to complete this work as soon as possible.
I'd also like to ask the deputies not to delay their review of the law on
priority development areas (PDA).
In addition, I propose extending PDA regulations to new projects in a number
of single-industry cities with the most difficult socioeconomic situations,
rather than waiting three years, as provided by the draft law (I believe it
has passed its first reading). Instead, we should amend it and start working
on single-industry cities right away.
Of course, PDAs should play a key role in developing the Russian Far East.
We have announced ambitious plans for developing this region, and we will,
of course, implement them. I'd like to ask the Government to consider
recapitalising the Far East Development Fund. We can allocate a portion of
federal tax increments, which will be obtained from new businesses opening
in the region, for these purposes.
As is often the case in such matters, we had a tough conversation on this
issue with the Finance Ministry. We agree that initially this can be done
with an exception for VAT. Then, we'll see how well this system works.
I propose providing a free port status to Vladivostok, with an attractive
and easy customs regime. As you may be aware, Sevastopol and other Crimean
ports have already been given this status.
We also need a comprehensive project for modern and competitive development
of the Northern Sea Route. It must operate not just as an effective transit
route, but also promote business activity on the Russian Pacific coast and
the development of Arctic territories.
Colleagues, the quality and the size of the Russian economy must be
consistent with our geopolitical and historical role. We must escape the
trap of zero-level growth and achieve an above-average global growth rate
within the next three to four years. This is the only way to increase
Russia's share in the global economy, and thus strengthen our influence and
economic independence.
The national economy should also be more effective. It's imperative that
labour productivity be increased by no less than five percent annually. The
Government should find reserves for this and come up with a plan for the
best way to use them. At the same time, it's important to maintain a stable
macroeconomic environment and reduce inflation in the medium term to four
percent, but, importantly, not through suppressing business activity. We
must at last learn to harmonise two goals: containing inflation and
stimulating growth.
Today we are faced with reduced foreign exchange proceeds and, as a
consequence, with a weaker national currency, the ruble. As you are aware,
the Bank of Russia has switched to a floating exchange rate, but this does
not mean that the Bank of Russia has withdrawn from controlling the exchange
rate, and that the ruble may now be the object of unchecked financial
speculation.
I'd like to ask the Bank of Russia and the Government to carry out tough and
concerted actions to discourage the so-called speculators from playing on
fluctuations of the Russian currency. In this regard, I'd like to point out
that the authorities know who these speculators are. We have the proper
instruments of influence, and the time is ripe to use them.
Of course, a weaker ruble increases the risk of a short-term surge in
inflation. It's imperative that we protect the interests of our people,
first and foremost, those with low incomes, and the Government and the
regions must ensure control over the situation on the food, medicine and
other basic goods markets. I'm sure this can be done without any problem,
and it must be done.
A weaker national currency also increases the pricing environment and the
competitiveness of our companies. We take this factor into account in our
policy of import substitution (at least, where it's appropriate and
necessary). Within three to five years, we must provide our customers with
high-quality and affordable medicines and food that are produced mostly in
Russia.
The grain crop in Russia in 2014 was one of the best in recent history. The
overall output growth across our agro-industrial complex currently stands at
about 6 percent. We now have efficient large agricultural enterprises and
farms, and we will support them. Let's thank our agricultural workers for
their performance this year.
We must also lessen our critical dependence on foreign technology and
industrial goods, including in the machine-tool building and
instrument-making industries, power engineering, and the production of
equipment for field development, including on the Arctic shelf. Our
commodities and infrastructure companies can seriously help our producers in
this sphere. When implementing large oil, energy and transport projects,
they must rely above all on domestic producers and promote demand for their
products.
At this point, it's mostly the other way around: we buy everything abroad,
leaving the domestic industries and science empty-handed. I suggest creating
a special governmental coordination centre and giving the Government more
authority in this sphere. This centre would dovetail the implementation of
large projects with placement of contracts at Russian companies, with
further development of the national production and research facilities, and
production localisation.
As for imports, we must only buy distinctly unique equipment and technology
abroad. I'd like to add that we must also cooperate with domestic producers
when upgrading the housing and utility sector, public transport, agriculture
and other industries.
I am instructing the Government to take the necessary decisions to expand
small and medium-sized businesses' access to purchases by state companies,
and in particular to determine the volume of state-owned companies'
mandatory annual purchases from small and medium firms. This is tens and
hundreds of billions of rubles that must be used to boost the development of
national businesses.
It goes without saying that their products must satisfy the strictest
quality and price conditions. Next, we must prevent internal monopolism. I
want to stress that reasonable import substitution - reasonable is the key
word here - is a long-term priority, irrespective of external conditions.
Moreover, import substitution programmes must encourage the creation of a
large group of industrial companies that can be competitive not only
domestically but also on foreign markets. These companies exist in Russia.
They are highly efficient and have export potential - very good potential.
But they are short of capital, technology, personnel and equipment. We must
remove as many of these restrictions as possible. We must provide investment
incentives so that these companies can increase growth, increase their
capitalisation and production severalfold and become established on foreign
markets.
I am instructing the Agency for Strategic Initiatives to join forces with
Vnesheconombank, the Russian Direct Investment Fund and other development
institutions to draft a relevant programme and system. The first pilot
programme for the support for non-commodity companies must be launched
already next year.
The integrated credit and insurance export support centre, which will start
operating in 2015, will stimulate domestic exports. Its services will be
available to all non-commodity companies, both big and small.
In the next three years the capitalisation of Roseximbank, which was created
for this purpose, should reach approximately 30 billion rubles. In the next
three years, the volume of Russian high value-added exports should grow by
50 percent.
Of course, considerable funds will be needed for the development of the
non-commodity and other economic sectors. Russia has these funds. We have
large domestic savings, which must be used for this.
Despite any external restrictions, we must increase our annual investment to
25 percent of GDP by 2018. What does this mean? I'll explain it with just a
few words.
It means that we must invest as much as we save. Our savings must work for
the national economy and development, rather than the export of capital. To
be able to do this, we must seriously strengthen the stability of our
banking system - the Central Bank has been working towards this end quite
persistently - and also reduce the dependence of the national financial
market on external risks.
I propose using our reserves (above all, the National Welfare Fund) to
implement a programme for recapitalisation of leading domestic banks, with
funding to be provided under clearly specified conditions to be funnelled
into the most significant projects in the real economy at affordable
interest rates. Furthermore, banks will have to introduce project financing
mechanisms.
Regarding budget spending, the key requirements here should be thrift and
maximum return, the correct choice of priorities and factoring in the
current economic situation. For the next three years, we should set the goal
of cutting costs and ineffective budget spending by at least five percent of
total spending in real terms.
A huge economic reserve is lying on the surface. It is enough to look at
government-financed construction projects to see this. At a recent forum of
the Russian Popular Front, examples were cited of funds being invested in
grandiose buildings or the construction costs of same-type - I want to
emphasise this point - facilities, differing several times over, even in
neighbouring regions.
I believe that it is necessary to phase in a system of a single technical
contracting authority, and centralise the preparation of standard projects,
construction documentation and the choice of subcontractors. This will make
it possible to overcome the existing disparity in construction costs and
ensure significant saving of public funds spent on capital construction
projects, between 10 percent and 20 percent. This practice should be
extended to all civil construction projects financed from the federal
budget. I instruct the Government to submit relevant proposals.
Yesterday, the Prime Minister and I discussed this topic. Of course, there
are some pitfalls here, and knowing what they are, it is important to avoid
them, move with caution, implement several pilot projects in several regions
and see what happens.
However, leaving the situation as it is today is no longer an option. As I
said earlier, construction costs of similar facilities in neighbouring
regions differ many times over. What is this?
Diversion or embezzlement of budget funds allocated for federal defence
contracts should be treated as a direct threat to national security and
dealt with seriously and severely, as in the suppression of the financing of
terrorism. I mention this for a reason.
I don't think there is anything to hide or gloss over here. We have just
held our regularl meeting in Sochi with the leadership of the Defence
Ministry, combat arms and services commanders and leading defence company
designers.
On certain positions, prices double, triple or quadruple, and in one case
they grew 11 times. You realise that this has nothing to do with inflation
or with anything, considering that practically 100 percent of funding is
provided in advance.
I would like to reiterate, and I'm bringing this to the attention of law
enforcement agencies. I instruct the Defence Ministry, the Federal Service
for Financial Monitoring and other relevant agencies to develop a system of
strict, effective oversight over the use of funding allocated for federal
defence contracts. This system should operate along the entire supply chain.
Tougher penalties should be imposed on those in charge of federal defence
contract implementation for misspending every ruble from the budget.
It is also crucial to streamline state-owned company budgets. To this end,
unified financial settlement centres should be established therein,
something like the treasury, to ensure the transparency and optimisation of
financial flows and their effective management. Parent companies should also
clearly see how funds are used in their subsidiaries.
Key efficiency parameters should be introduced in all companies where the
state holds over 50 percent of stock, including the requirement to reduce
operating expenses by at least 2-3 percent a year. I should add that
compensations to state company management should be directly related to
performance and economic realities.
Colleagues,
I'm confident that Russia is capable not only of carrying out a large-scale
effort to upgrade its industrial sector, but also of becoming a supplier of
ideas and technology for the whole world, emerging as a leading producer of
goods and services that would shape the global technology agenda. Russian
companies will embody national success and pride, just as our nuclear and
space projects once did.
We have already adopted legislative amendments to introduce strict
environmental standards. Their purpose is to push companies to implement the
so-called best available technology, so that the key industries benefit from
continuous upgrades.
That said, we should also be mindful of future challenges. In this regard, I
propose implementing a national technology initiative. Long-term forecasts
should provide us with insight into the tasks Russia could face in the next
10-15 years, what state-of-the-art solutions will be needed to ensure
national security, improve quality of life, and promote industries operating
in a new technological environment.
Promoters of promising creative projects should join efforts with vibrant
companies that are ready to implement cutting-edge solutions. The leading
universities, research centres, the Russian Academy of Sciences and major
business associations should also be involved in this effort. And of course,
our compatriots working abroad as academics or in high-tech sectors should
also be invited to join in, but only those of them who actually have
something to contribute.
I propose that the Government make the necessary arrangements, with
assistance from the Agency for Strategic Initiatives. It is important that
business representatives, academics and developers tell us what barriers
need to be removed and what additional assistance they require. The most
advanced technologies will yield results only if there are people who are
ready to develop and use them.
Unfortunately, engineers are still mostly educated at universities that are
no longer linked to the actual producers, and lack access to the latest
research and solutions. It is high time that we focus on the quality of
education, not sheer enrolment numbers, and ensure that engineers are
trained by top higher education institutions with strong industry
connections, and preferably in the same regions where the future engineers
will live.
This quality requirement should also be applied to regular labour force. By
2020, at least half of Russia's vocational training colleges are expected to
offer education in 50 of the most relevant and promising labour professions,
in accordance with the highest international standards and using advanced
technology. Contests among workers and engineers should also become an
important indicator of the changes in vocational training. The system of
professional contests is not new, and Russia has joined it and has become a
proactive member. This is not just about enhancing the prestige of
engineering and labour jobs, but also an opportunity to be guided by the
best practices in the training of such professionals. Building on this
experience, professional and educational standards can be devised.
As you know, Russia competes in various international professional contests.
I don't have the data on hand, so I'll cite them by memory, since they are
worth mentioning. Three teams have been created: one with experts from
leading enterprises, one with students and a third with 14 to 17 year old
school students. They have trained to perform various tasks of the same
kind. The team of 14 to 17 year old school students was able to find the
best solutions for the most complex tasks in the space industry, where they
worked on spacecraft, as well in traditional industrial tasks, despite the
fact that such tasks were designed for highly-skilled workers. School
students beat university students, as well as workers from the leading
companies, by a wide margin. What this means is that, first, we have great
potential, a lot of young promising talent. It also means that a lot has to
be done to change the professional training system. It's what I spoke about.
We just need to avoid acting formally here. There is now a clear
understanding of what should be done, so now we must just start doing it.
Once we engage in this effort, we must keep up the momentum, since despite
the changes in labour professions and training, the key economic driver
always was and will continue to be the availability of highly-skilled
qualified workforce and engineers. A network of certification centres should
be created so that workers can prove that they meet professional
requirements.
Colleagues,
I'll move on to the next topic, which is demographics. In the early 2000s,
UN experts predicted further demographic decline in Russia. According to UN
forecasts, the population of our country was supposed to shrink to 136
million people by the end of 2013. On January 1, 2014, the population of
Russia was almost 144 million people, 8 million more than forecast by the
United Nations.
In addition, as you know, Russia registered natural population growth for
two years in a row in 2013 and 2014. It is expected that by late 2014, with
Crimea and Sevastopol included, Russia's population will exceed 146 million
people. Our demographic programmes have proved their effectiveness, and we
will continue to implement them, with full coverage for the people of Crimea
and Sevastopol. Families in Crimea and Sevastopol that have had a second or
subsequent child since 2007 will receive the full amount of maternity
capital.
I would like to draw your attention to another important and meaningful
fact. This year, Russia was for the first time recognised as a successful
country in world health rankings. The average life expectancy in such
countries exceeds 70 years. Currently, this indicator in Russia is over 71.
I believe that we have every opportunity to increase average life expectancy
to 74 years in the near future and achieve a drastic reduction in mortality.
That's why I propose declaring 2015 the National Year of Fighting
Cardiovascular Diseases, which is the leading cause of death, and combining
the efforts of healthcare workers, representatives of culture, education,
media, civic and sports organisations in order to resolve this problem.
The 2014 Winter Olympics in Sochi played an enormous role in promoting a
healthy lifestyle. Once again, I'd like to congratulate our Olympians on
their success.
Of course, the kindest words go to the Paralympic athletes. Friends, you
have become true heroes of Russia. Largely thanks to you, attitudes towards
people with disabilities have undergone a dramatic change. I'm convinced
that our society will become truly united when we provide equal
opportunities to everyone.
Government programmes must include measures to provide vocational training
and employment opportunities to people with disabilities and create a
barrier-free environment in all spheres of life. I suggest extending the
Accessible Environment programme to 2020. We also need to create a modern
domestic industry to manufacture goods for people with disabilities,
including devices for physical therapy and rehabilitation.
With regard to healthcare, it is imperative to complete the transition to an
insurance-based system and to make sure all its mechanisms are working
without a fault. We have been talking about it and working on it for quite a
while now, but insurance-based medicine still isn't working properly.
Importantly, both patients and medical staff should have a clear
understanding of how health insurance works. We must create a centralised
system of public oversight over the quality of healthcare organisations with
corresponding powers and levers. I'd like to ask the Government to amend the
legislation accordingly.
I also propose providing a special training certificate to doctors. They
will use it to choose the best educational programme for them in order to
take advanced courses and improve their skills. The hours and methods of
such training should be convenient for the doctors.
Even with the most advanced technological innovations in medicine, a
doctor's personal qualities remain important. That includes a focus on the
patient, a noble attitude and commitment to their professional and moral
duty. Such medical professionals are the backbone of our healthcare system.
And we must create all the conditions for them to be able to do their job
properly.
Colleagues, yesterday, for the first time in many years, students in Russian
schools wrote graduation compositions. This is another step towards a more
objective system of evaluating the academic progress, knowledge, perspective
and intellect of the younger generation and, importantly, the quality of the
teachers' work.
I'd like to ask the Ministry of Education and Science in conjunction with
the professional community to review the results of these compositions and
the national final school exam and come up with solutions aimed at
increasing teachers' accountability and motivating children to learn new
skills.
It should be noted that the national final school exam has allowed gifted
children from remote towns and villages and low-income families to apply to
the nation's best universities.
Talented children are a valuable asset of the nation, and we need to provide
additional support to young people who show an aptitude for technology,
liberal arts or inventing at an early age, who have achieved success in
national or international academic and professional contests, and have
patents or publications in academic journals. We have many such young
people.
I propose establishing 5,000 annual presidential grants for talented young
people who study at higher education institutions. Each grant will be for
20,000 rubles a month.
Of course, certain conditions will apply for the duration of their studies
at a higher education institution. First, such students must make a
commitment to work for a certain time in Russia, as targeted training
programmes currently require. Second, they would have to confirm their
eligibility each year by demonstrating the necessary academic and personal
achievements for the duration of their studies.
Every child and teenager in our country should be able to find something to
do outside the classroom. Any curtailment of extracurricular, supplemental
education is unacceptable. Art, technology and music centres help create
well-rounded people.
I'd like to ask the Government and the regions to focus on this issue and
come up with financial and organisational approaches to address it. Most
importantly, children and their parents should have a choice between getting
additional education at school, a municipal centre of creativity, or a
non-governmental educational organisation. Importantly, all these options
must be affordable and children must have access to classes taught by
properly trained professionals.
Another important issue that I spoke about in last year's address is
overcrowded schools and classrooms. We have crunched the numbers and found
that we need to create an additional 4.5 million spots at schools.
How did we arrive at this number? Today, nearly two million schoolchildren
attend the second shift. There are schools with three shifts. In the coming
years, with a growing birth rate (which we hope will continue), the number
of pupils will increase by another 2.5 million.
Naturally, we also have to solve the issue highlighted in the executive
orders signed in 2012, that of increasing the number of preschools,
something we spoke about with our colleagues from the Government yesterday.
This is the way it should be. We have to consider all our opportunities and
remember that one problem will intensify - that of spots at schools. I ask
the Government, together with the regional authorities, to develop a
comprehensive approach to resolving these issues.
Colleagues,
Education, healthcare, and the social welfare system should become a true
public benefit and serve all citizens of the country. Attention to the
people cannot be faked. You cannot simulate teaching, medical assistance or
social care. We have to learn to feel respect for ourselves and honour
reputation. It's the reputation of individual hospitals, schools,
universities and social institutions that form the country's overall
reputation.
Citizens don't have to think about where to apply for a social service: at a
state, municipal or private organisation. They have the right to come to
those who can provide professional assistance, with full dedication, putting
their soul in their work. All the other things - including technical,
organisational and legal issues concerning the provision of services - is
the responsibility of the state, the responsibility to properly organise the
work.
We will continue to support socially oriented non-commercial organisations.
Such NGOs, as a rule, bring together people who feel their civil duty and
who are aware of how much mercy, attention, care and kindness mean. We
should use their proposals and experience, especially when implementing
social initiatives.
We must not allow discrimination of the non-governmental sector in the
social sphere and eliminate all barriers to it: not only legal ones, which
have been mostly abolished, but also those that persist, I mean
organisational and administrative barriers. Equal access should be provided
for the non-governmental sector to financial resources.
Competition is a crucial factor to boost the quality of services in the
social sphere. Also, it is necessary to launch a mechanism of independent
assessment of the quality of services and to ensure transparency of
information on the work of agencies providing social services. I ask the
Russian Popular Front, together with civic associations, to assist the
reforms in the social sector.
Following next year's results, I plan to meet with representatives of the
non-governmental sector. We will discuss what changes we have succeeded in
achieving lately. Overall, we should considerably expand the opportunities
for dialogue, for exchange of ideas between the Government and the public,
particularly the Civic Chamber and its regional branches.
These structures should be incorporated, both at the federal and regional
level, into a comprehensive expert examination of draft laws and government
decisions, including at the level of the so-called initial reading, which
should serve as an efficient feedback mechanism.
We can see how active citizens are and what constructive efforts they are
taking. Not only are they highlighting issues for the authorities to tackle,
they also actively participate in settling issues and problems. They realise
full well that much depends on their personal efforts. The will, deeds and
generosity of these people make up the invaluable social potential of the
nation.
Everyone who is prepared to take responsibility has to be involved in the
implementation of the plans of developing the country, certain regions and
municipalities. If the state and the public act as one, in an atmosphere of
cooperation and mutual trust, success is guaranteed.
I would like to address representatives of all political parties and social
forces. I am counting on our joint consolidated work. Russia's interests
demand this unity and this work.
Friends, citizens of Russia,
I will conclude my address where I began it. This year, as has been the case
many times during crucial historical moments, our people have demonstrated
national enthusiasm, vital endurance and patriotism. The difficulties we are
facing today also create new opportunities for us. We are ready to take up
any challenge and win.
Thank you.
December 4, 2014, 13:20The Kremlin, Moscow
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