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The event took place in St George Hall of the Grand Kremlin Palace and was attended by the members of the Council of Federation, State Duma and Government, Presidents of the Constitutional, Supreme and Higher Arbitration Court, heads of the constitutional entities, chairpersons of regional legislative assemblies, heads of traditional faiths, public figures and executives of major media outlets.

The President highlighted several fundamental issues that are vitally important for Russia’s present and future.

Vladimir Putin stressed that the coming years will be decisive and perhaps even ground-breaking not only for Russia, but also for the entire world, which is entering an era of dramatic changes and possibly even shocks. Global development is becoming increasingly unequal, which may give rise to new economic, geopolitical and ethnic conflicts. Competition for resources is becoming tougher and a great deal will depend not only on the economic potential but also on the will of each nation, its internal energy and ability to move forward and change.

In the 21^st century Russia must be a sovereign and influential nation amid a new balance of economic, civilisational and military forces. It must not only develop with confidence, but also preserve its national and spiritual identity, its sense of national unity. In this regard, the President noted the rise of civic engagement in the country. Vladimir Putin sees civil responsibility and patriotism as a consolidating force behind Russian politics.

Next, the head of state focused on addressing demographic issues, noting that demographic programmes adopted in the past decade have been effective. The country's population has not only stabilised but also began to grow. The President outlined the main directions of further growth, including the creation and implementation of regional demographic programmes. He believes families with three children should become the standard in Russia.

The President also touched on the issue of creating quality new jobs that will be the driving force behind growth of wages and wellbeing, the revival of engineering schools and professional training.

Speaking of the social sphere, which employs highly educated and qualified people, the so-called creative class of doctors, school and university teaching staff, scientists and culture professionals, Vladimir Putin recalled that the Presidential executive orders he signed in May stipulate wage increase for each category of employees in these fields, and instructed the heads of the federal and regional authorities to mobilise all available resources to achieve this goal.

It is also necessary, the President stressed, to strengthen the spiritual and moral fabric of society. Issues of secondary education, culture and youth policy take on special importance in this regard as they are responsible for shaping a balanced, moral and responsible citizen of Russia. It is essential to give every support to the institutions that have enshrined our traditional values and have historically proven their ability to pass them on from generation to generation.

The President spoke about the revival of national consciousness, the development of Russia as a multinational state and the inadmissibility of any manifestations of nationalism and chauvinism, which cause the greatest damage to the nation and the ethnic group whose interests the nationalists claim to be defending. Vladimir Putin made several proposals in the field of immigration policy, including on such issues as granting Russian citizenship and the fight against illegal immigration, as well as the development of distance education in Russian that would be available to everyone in the world.

Democracy is the only political choice for Russia, the President said. But Russian democracy is the power of the Russian people, with their own traditions of self-rule, and not the fulfilment of standards imposed on us from the outside. The framework of the state and society must not be affected, the continuity of national development must not be disrupted, national sovereignty and the rights and freedoms of our citizens must never be questioned. Moreover, democracy is the ability not only to choose the government, but also to constantly monitor the government and evaluate the results of its work.

In his Address, the President formulated a set of rules of fair political competition.

Russia is characterised by a tradition of a strong state, the President said, citing poor performance of state agencies and corruption as the main problems in this area. The President listed the key principles for a new model of public administration, including the new forms and methods of control, effective motivation of municipal officials and the introduction of certain restrictions concerning, in particular, foreign accounts, assets and real estate.

The President made a number of proposals with regard to the fight against corruption, including the development of public control mechanisms.

Talking about the economy, the President highlighted the importance of moving away from a commodity-based economic model and overcoming the economy’s dependence on financial and commodity markets in other countries, as well as some issues of jurisdiction and administrative proceedings. The President suggested that the Government and the Central Bank consider new mechanisms for financing the economy and further reducing inflation. The tax system must correspond to the needs of economic restructuring. It is essential to stimulate investment and development, shifting the tax burden towards consumption, including excise goods and expensive real estate, the President stressed.

The President also asked the Government to adopt a roadmap for enhancing competition as part of its efforts on the national entrepreneurial initiative and to begin its implementation next year.

Vladimir Putin also touched on the issues of food security, the environment, industry modernisation, development of science and technology, which requires the full use of the unprecedented funds allocated for defence procurement and modernisation of the defence industry.

We also need an investment map of Russia, the President said, providing investors with clear information on the regions where it is more profitable to work, to set up production facilities, and what forms of state support will be available to businesses in the near future.

In the international part of the Address, the President stressed the multipolar nature of the modern world, noting that Russia stands for the principles of coherent and collective efforts in addressing challenges facing the world today and can propose projects that will unite nations and regions. Vladimir Putin confirmed Russia’s intention to move towards closer integration with its immediate neighbours. He stressed that the Customs Union and the Common Economic Space of Russia, Belarus and Kazakhstan are already working effectively. Efforts have begun on the establishment of the Eurasian Economic Union, and this goal will be achieved.

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President of Russia Vladimir Putin: Citizens of Russia,

Federation Council members and State Duma deputies,

Recently, just a few months ago, in the articles written during the presidential election campaign and then in the executive orders signed in May 2012 I set out our position and our short and medium term plans. They covered all areas of our work and our lives: the economy, social sphere, domestic policy, international affairs and security issues. These documents describe our plans in detail, sometimes citing specific figures and deadlines. Some of them are already being implemented, for example raising teachers’ wages and some other tasks. We have put together the required regulatory framework with regard to all other items on our agenda. The work has begun. I want to assure all citizens of our country that it will continue; we will tackle all the tasks we have set without fail. The commission that was created specifically for this purpose will monitor these efforts.

“A great deal has been achieved in the first twelve years of the new century. The stage of national reconstruction and strengthening, which is enormous in its importance, has been completed. Our task now is to build a rich and prosperous Russia.”

Today, in my first Address to the Federal Assembly since being elected President, I will not speak in detail about those plans. It is too early to talk about any substantial adjustments but there are several points I would like to make in this regard.

I would like to highlight some of the key aspects of our progress, questions that are fundamental for Russia’s present and future not only in the medium but also in the long term, the most basic issues for each and every one of us.

A great deal has been achieved in the first twelve years of the new century. The stage of national reconstruction and strengthening, which is enormous in its importance, has been completed. Our task now is to build a rich and prosperous Russia. I would like all of us to understand clearly that the coming years will be decisive and perhaps even ground-breaking not only for us, but for the entire world as it enters a period of transition and possibly even shocks.

Global development is becoming increasingly unequal. This creates a fertile ground for new economic, geopolitical and ethnic conflicts. Competition for resources is becoming more intense. And I can assure you and want to emphasise that this competition will not be limited only to metals, oil and gas, but above all will focus on human resources and intelligence. Who will take the lead and who will remain outsiders and inevitably lose their independence will depend not only on the economic potential, but primarily on the will of each nation, on its inner energy which Lev Gumilev termed “passionarity”: the ability to move forward and to embrace change.

“Russia must be a sovereign and influential country. We should not just develop with confidence, but also preserve our national and spiritual identity, not lose our sense of national unity. We must be and remain Russia.”

People in countries with developed economies and many countries with developing economies have become used to constant consumption growth, the expansion of life and cultural opportunities. That is good but it is possible to ensure the continuation of such growth in the modern world only through the introduction of a new technological order, and that is a great obstacle in many parts of the world. A country that is unable to secure its place among the developers of new innovative technologies is not just doomed to dependence: the share of the global ”pie“ which will benefit its businesses and citizens will be much smaller than that of the leaders. See how the revenue is distributed today between those who produce intellectual products and the consumers of the end product. The share is 15% and 75–80%.

In the 21^st century amid a new balance of economic, civilisational and military forces Russia must be a sovereign and influential country. We should not just develop with confidence, but also preserve our national and spiritual identity, not lose our sense of national unity. We must be and remain Russia.

After 70 years of the Soviet period, Russian people went through a period when the importance of their private interests regained its relevance. That was a necessary and natural stage. However, working for one’s own interests has its limits. Prosperity cannot be achieved if chaos, disorder and insecurity reign beyond the walls of your house. You cannot live without having regard for others, without helping the weak, without extending your responsibility beyond the responsibility of your family or profession. Today more and more people in our country understand this. This has lead to the rise of civic engagement. People begin to relate their own lives and work with caring for others, with the aspirations of the entire nation and the interests of the state.

Today is December 12, the Constitution Day, and I would like to say a few words about the values that are rooted in the fundamental law of our country. The nation-wide responsibility for our country to the present and future generations is hailed by the Constitution as a fundamental principle of the Russian state. It is in civil responsibility and patriotism that I see the consolidating force behind our policy.

“The nation-wide responsibility for our country to the present and future generations is hailed by the Constitution as a fundamental principle of the Russian state. It is in civil responsibility and patriotism that I see the consolidating force behind our policy.”

Being a patriot means not only to treat one’s national history with love and respect, although, of course, that is very important, but first and foremost to serve one’s country and society. As Solzhenitsyn said, patriotism is an organic, natural feeling. And as a society cannot survive without civil responsibility, so a country, especially a multinational one, cannot exist without a nationwide responsibility. These are remarkable words, they really bring it home.

A sense of responsibility for one’s country cannot be instilled with slogans or appeals; people must see that the authorities are transparent, accessible, work hard for the benefit of the country, city, region, village and every citizen, and respond to public opinion. The authorities must not be an isolated caste. This is the only way to build a strong moral foundation for creative work, an affirmation of order and freedom, morality and civic solidarity, justice and truth, and nationally oriented consciousness.

What will guarantee Russia's sovereignty in the 21^st century? We often talk about this today. First, the country must have a sufficient amount of its own resources. This is not so that we could produce everything at home. Nobody lives like this anymore and I think that no one will ever live like this again. Russia must not only preserve its geopolitical relevance – it must multiply it, it must generate demand among our neighbours and partners. I emphasise that this is in our own interest. This applies to our economy, culture, science and education, as well as our diplomacy, particularly the ability to mobilise collective actions at the international level. Last but not least it applies to our military might that guarantees Russia’s security and independence.

Against the background of conflicting processes in the world, the interests of the nation require decisive action. We must look ahead and focus on the future.

Colleagues,

In the 20^th century Russia went through two world wars and a civil war, through revolutions, and twice it experienced the collapse of a unified state. The whole way of life changed radically in our country several times. As a result, at the beginning of the 21^st century, we were faced with a real demographic and moral catastrophe, with a demographic and moral crisis. If the nation is unable to preserve and reproduce itself, if it loses vital references and ideals, it does not need an external enemy because it will fall apart on its own.

“For the first time in our country’s recent history, natural population growth has been posted for five months in a row: the birth rate has finally started to exceed the death rate. In the past four years life expectancy in Russia has grown by almost 2.5 years and has exceeded 70 years.”

I have talked about this many times but I want to emphasise it again. For Russia to be a sovereign and strong nation there must be more of us and we must be better in our morality, competences, work and creative endeavours. Today, the share of the young, active, working population aged 20 to 40 years in Russia is one of the highest among the developed countries. But in just 20 years, this age group could be reduced by half. If nothing is done, this trend will continue. Either right now we can open up a lifelong outlook for the young generation to secure good, interesting jobs, to create their own businesses, to buy housing, to build large and strong families and bring up many children, to be happy in their own country, or in just a few decades, Russia will become a poor, hopelessly aged (in the literal sense of the word) country, unable to preserve its independence and even its territory.

The demographic programmes adopted in the past decade have shown their effectiveness. The country's population has not only stabilised, but it has also begun to grow. In January-September 2012, it has grown by more than 200,000 people. For the first time in our country’s recent history, natural population growth has been posted for five months in a row: the birth rate has finally started to exceed the death rate.

In the past four years life expectancy in Russia has grown by almost 2.5 years (this is a good indicator) and has exceeded 70 years. However, the mortality rate remains very high, especially among middle-aged men. Together we must fight the frankly irresponsible attitude in society towards healthy living. Along with the development of public healthcare more attention should be paid to preventive care. Naturally, this does not mean that we should focus less attention on improving healthcare and increasing its accessibility – not at all. However, it is not enough to limit our efforts to medicine. The Government should introduce programmes for replacing jobs with hazardous conditions and improving road safety. Only smoking (we know this well as we have discussed this many times already), alcohol and drug addiction cause hundreds of thousands of premature deaths in our country every year.

A vitally important area is the development of physical fitness and sport, especially among young people. After all, the reason why we will be hosting the biggest international sports events is to encourage people to exercise, to raise the popularity and prestige of sports and fitness. But this task, the task of promoting sports and fitness, mass sports, cannot be achieved through international sporting events and even increasing the hours of physical education in schools and universities. We need new methods, a wide range of not only sports, but also fitness activities, especially for children, and I want to emphasise this: activities for young children. As we know, lifelong habits and interest are formed at this age, and we must work to encourage them.

I believe it is crucial to support the idea of creating associations of student sports clubs. Such an organisation would not only contribute to the development of university sports, but in a sense could give a social boost for talented, focused and active young people. I think it is important that such an organisation remains beyond politics and unites young people with a wide variety of political views.

“We have a unique opportunity in the next decade to fundamentally resolve another long-standing Russian problem: housing. I think this is the most important issue both for the Government and heads of the Russian regions.”

We have adopted a programme providing family (maternity) capital at the birth of the second child. It is being implemented successfully, and will continue to be implemented until the end of 2016. We will fulfil all our obligations under this programme.

I want to stress once again: the programme was adopted until 2016, that is, every family that has a second child before 2016 will receive maternity capital and other benefits as required by law. This does not mean that I now want to encourage women to have a second child. Women know what they need to do and when. But it is our responsibility to inform people, just as we must decide what to do with this programme after 2016. Starting in 2013, we will begin paying additional benefits for the third and subsequent children in those regions where the demographic situation is worse than the national average.

We have 50 such regions in the Russian Federation, and most of them are concentrated in the Central, Northwestern, Volga and Far Eastern federal districts.

In addition, I would like to remind the heads of all Russian regions about the need to adopt and implement their own regional demographic programmes. Demographers say that the decision to have a second child is a potential decision to have a third. It is important that more families take this step. And, despite some experts’ doubts (with all due respect), I still believe that families with three children should become the standard in Russia. But a great deal must be done to make this a reality.

First of all, we must create a favourable environment for women so that they do not fear that the birth of the second and subsequent children will limit their career opportunities, their chances to find a good job and will force them to become housewives. Our efforts to eliminate waiting lists for kindergartens, introduce vocational training programmes for women who have children and provide support for flexible forms of employment will have a direct influence on each family’s decision to have the second and third child.

“We have set the goal to create and modernise 25 million jobs by 2020. Quality jobs will become the driving force for the growth of wages and wellbeing. That is the most important aspect of our work.”

Special attention should be given to pre-school education, including support for the creation of private pre-schools. The Government has already eliminated many barriers in this area. Please finalise this work in the first six months of 2013, and I ask the regions to make active use of the opportunities provided. We must finally let the people work normally so that they can open small home-based kindergartens and all-day childcare, which means that parents will have a choice of day care without the waiting lists and all the anxiety.

I am confident that we have a unique opportunity in the next decade to fundamentally resolve another long-standing Russian problem: housing. I think this is the most important issue both for the Government and heads of the Russian regions. In the first stage of the Housing National Project we successfully promoted the development of mortgage loans. In the past two years, these loans have been growing by 40–50% a year. This is a good indicator, but frankly, as we know, mortgage loans mostly benefit people with above average incomes. Other people cannot afford them.

Therefore, now, at the new stage, we must attempt to resolve the housing problem for a broader range of people: young families, social sphere professionals, doctors, teachers, scientists and engineers, and take measures to increase the commissioning of affordable economy class housing, as well as greatly enhance the opportunities to rent housing. Some regions already have pilot projects that serve as case studies for various forms of rental market support. Such housing must be affordable to working people.

We also emphasise that in 2013–2014 we will fully meet our obligations to provide housing to military personnel and war veterans, and make significant progress in relocating people from unfit housing. In the next few years all people who were recognised on January 1, 2012 to be in need of better living conditions due to the poor state of their housing will move into their new flats.

We have set the goal to create and modernise 25 million jobs by 2020. This is a very ambitious and difficult challenge, but we can achieve it. We can help people find good, interesting employment. Quality jobs will become the driving force for the growth of wages and wellbeing. That is the most important aspect of our work. We need to revive engineering schools and professional training. Overall, we must pay more attention to working people.

“Schools must regain their absolute value. This means renewing educational content, while of course maintaining our traditions and advantages, such as our fundamental mathematical education. Whether or not a student comes across a talented, dedicated teacher largely determines the formation of his or her personality, his or her future. The education system must be built around strong, gifted teachers.”

I am instructing the Government Cabinet to develop and implement a national system for evaluating the quality of professional training in the next two years.

I also want to particularly mention the social sector. The specialists working there are known as public-sector employees. However, these people are highly educated and highly qualified, and in terms of their work, their cultural needs and social engagement, they are members of the so-called creative class. This creative class, or if we use the traditional term, the intelligentsia, is comprised, first and foremost, of doctors, teachers, university educators, workers in science and culture; these people are working in every region, in every village, in every city. At the same time, in terms of their incomes, they are still beyond the middle class level and are unable to afford proper vacations or comfortable living conditions, and must constantly seek additional sources of income.

For many years, the government underpaid these specialists, simply because it did not have the means, primarily because we needed to resolve other, more pressing problems such as increasing pensions, because the elderly were in an even worse situation, often living below the poverty line.

Now, we can radically change the situation in the social sectors. I laid out my suggestions in detail in the executive orders I mentioned, as well as my pre-election articles. The executive orders signed in May set the parameters for wage increases for every category of workers in these sectors. I am asking the heads of federal and regional government agencies to mobilise all their resources to implement this goal, and not just because these are our pre-election promises, although that is certainly very important – we must fulfil every promise we made. But even more importantly, if we fulfil this goal, we will be able to solve several key problems at once.

First of all, we will see a significant improvement in the quality of healthcare and education, because new, talented professionals will be drawn to these fields. And current workers in these areas will get the opportunity to focus on their main jobs, improve their training, and not take on additional side jobs and overtime. This is how we hope to eradicate such problems as day-to-day corruption and indifference to one’s responsibilities – everything that so greatly offends and hurts people today.

Second, the number of citizens who classify as members of the middle class will grow significantly – by a quarter. This will be particularly noticeable in the regions. We will support the revival of provincial intelligentsia, which was once Russia’s professional and moral backbone.

Third, professional communities of medical workers, educators, scientists and cultural workers will gain a new impetus for development. These communities must become the core of a competent and active civil society. It is fundamentally important for society to have the opportunity to objectively assess the state of science and the social sector.

I am asking the Government Cabinet, jointly with the Presidential Executive Office, to put together suggestions on creating a system for publicly monitoring the quality of healthcare, education, results of academic research and the need for cultural institutions by April of next year. First and foremost, we must attract professionals to these lines of work, and to look at international best practices.

“We must promote technical and artistic creativity, establish summer sports camps and create special educational tourist routes for children. All this should be accessible to every child, regardless of where they live and how much their families earn.”

Let me stress that it would be incorrect to perceive the programme of professional development support as simply increasing everyone’s wages equally, without taking into account the qualifications and the actual input of each and every worker. Every organisation – medical, educational, scientific – must create its own programme for development and personnel renewal.

In this respect, I would also like to say the following. All of us (I do not know anybody who would be against this) speak about the need to restructure various sectors, but as soon as the restructuring process begins, we hear people complaining: this should not be touched, that should not be approached. We must avoid and eliminate this. If we understand what needs to be done, then we must do it, but at the same time, we must do it wisely. Here, I must agree with everyone who feels this work should be carried out in constant dialogue with the professional communities; we must always explain our policies. I am also asking media executives and leading journalists to give particular attention to the transformations happening in these areas – this is a highly important nationwide challenge.

I am confident that growth of wages will attract top graduates to education, healthcare and science sectors. Indeed, we are already seeing the beginning of this process. In the last three years, medical universities have taken the lead with the highest average Final School Exam [EGE] score among their applicants, leaving economics and law departments behind. This year, we have seen a significant change in the knowledge level of applicants to teaching professions. The number of talented, well-advanced school graduates who have enrolled in pedagogical universities has increased significantly.

Colleagues, today, in our cities and villages, we are seeing the results of what has been happening in our nation, in society, in schools, in the media, and in our heads for the past fifteen to twenty years. And this is understandable. That was the time when we discarded all ideological slogans of the previous era. But unfortunately, many moral guides have been lost too. We ended up throwing out the baby with the bath water. Today, this is often manifested in people’s indifference to public affairs, willingness to tolerate corruption, brazen greed, manifestations of extremism and offensive behaviour. And all of this occasionally takes an ugly, aggressive, provocative form; I’ll go even further and say that it creates long-term threats to the society, security and even integrity of Russia.

It is painful for me to say this, but I must say it. Today, Russian society suffers from apparent deficit of spiritual values such as charity, empathy, compassion, support and mutual assistance. A deficit of things that have always, throughout our entire history, made us stronger and more powerful; these are the things we have always been proud of.

“The morale of our Armed Forces is held up by traditions, by a living connection to history, by the examples of bravery and selflessness of our heroes.”

We must wholeheartedly support the institutions that are the carriers of traditional values, which have historically proven their ability to pass these values from generation to generation.

The law can protect morality and should do so, but a law cannot instil morality. Attempts by the government to encroach on people’s beliefs and views are a manifestation of totalitarianism. This would be completely unacceptable to us and we do not plan to follow that path. We must not follow the path of prohibition and limitations, but instead, we must secure a firm spiritual and moral foundation for our society. That is precisely why issues of general education, culture and youth policy are so significant. These areas are not just a collection of services; rather, first and foremost, they are the environments for creating a moral, harmonious person, a responsible Russian citizen.

Friends, we must acknowledge that schools’ influence on shaping children and adolescents has grown weaker in recent years. They now have some powerful competitors: the Internet and the electronic media. The parents and students themselves are now much more demanding and a school must not fall behind its students, the development of society, or the flow of information; instead, it should be well ahead of them all. Schools must regain their absolute value. This means renewing educational content, while of course maintaining our traditions and advantages, such as our fundamental mathematical education, without forgetting the enormous significance of high-quality education in the Russian language, history, literature, the foundations of secular ethics and traditional religions. These subjects have a special role: they form a personality, an individual.

Whether or not a student comes across a talented, dedicated teacher largely determines the formation of his or her personality, his or her future. The education system must be built around strong, gifted teachers. Such teachers should be selected scrupulously, taken care of and supported. Schools do not simply impart a set of knowledge. I think you will agree with me that high-quality school training is impossible without education. I am asking the Government Cabinet to prepare a programme for the comprehensive development in schools of educational component, and it must above all be modern.

We must promote technical and artistic creativity, establish summer sports camps and create special educational tourist routes for children. All this should be accessible to every child, regardless of where they live and how much their families earn. Let me point out that this falls under the direct responsibility of the Russian Federation’s regions. But clearly, the Government must keep these matters under control.

“For centuries, Russia developed as a multi-ethnic nation, a civilisation-state bonded by the Russian people, Russian language and Russian culture native for all of us, uniting us and preventing us from dissolving in this diverse world. We treat and will continue to treat with great care and respect every ethnic group, every nation in the Russian Federation. Our diversity has always been and remains the source of our beauty and our strength.”

We should let the wealth of Russian culture guide us. Russia has always been among the nations that not only create their own cultural agenda, but also influence the entire global civilisation. State policy in this area must aim to resolve current societal challenges. We must clearly understand and respond to the needs of modern society, particularly those of youth, and strengthen the traditions of the peoples of Russia.

Our citizens who have made outstanding achievements in the creative sphere, in their work, business, sports and charity must be known in society and supported by the state.

Today, there are many people in Russia who work selflessly on public charity projects. The construction brigade movement is being revived. I think it is important to support such volunteer initiatives. And soon, we will be discussing this in detail at a meeting with members of volunteer organisations.

Friends,

In order to revive national consciousness, we need to link historical eras and get back to understanding the simple truth that Russia did not begin in 1917, or even in 1991, but rather, that we have a common, continuous history spanning over one thousand years, and we must rely on it to find inner strength and purpose in our national development.

We are nearing the end of 2012, which was declared the Year of Russian History. But this attention to our nation’s history and related educational and scientific projects should not fade away. I am counting on the active work by the recently recreated Russian Historical Society, as well as the Russian Military History Society and the Russian Geographical Society, which has been active now for several years.

I would like to particularly thank the search parties that are restoring the names of heroes for our nation and for their families, honourably interring the remains of soldiers who fell in the Great Patriotic War and caring for war memorials.

At our meetings with search party participants, we spoke about how important it is to preserve the historical military memory of the Fatherland. After all, is it fair that we still do not have a single worthy national monument to the heroes of World War I? Our predecessors called it the great war, but it was undeservingly forgotten and struck from our historical memory and history for political and ideological reasons. Meanwhile, the morale of our Armed Forces is held up by traditions, by a living connection to history, by the examples of bravery and selflessness of our heroes. I feel that we should revive the names of the most renowned regiments, military units and major formations of past eras within the Russian army – both from Soviet times and earlier eras, such as Preobrazhensky ans Semenovsky regiments. The Defence Minister should present corresponding suggestions.

We must value the unique experience passed on to us by our forefathers. For centuries, Russia developed as a multi-ethnic nation (from the very beginning), a civilisation-state bonded by the Russian people, Russian language and Russian culture native for all of us, uniting us and preventing us from dissolving in this diverse world.

To the rest of the planet, regardless of our ethnicity, we have been and continue to be one people. I recall one of my meetings with veterans. There were representatives of several ethnicities: Tatars, Ukrainians, Georgians, and ethnic Russians of course. One of the veterans, who was not an ethnic Russian, said, “As far as the entire world is concerned, we are one people, we are Russians.” That was true during the war, and it has always been true.

“I ask the Government Cabinet to submit proposals for the implementation of distance learning programmes in Russian. It should be available for young people in the CIS and for our compatriots all over the world. We should strive to ensure that quality education in Russian is available globally. In general, we should talk about ways to expand Russia’s presence in the global humanitarian, informational and cultural space.”

We treat and will continue to treat with great care and respect every ethnic group, every nation in the Russian Federation. Our diversity has always been and remains the source of our beauty and our strength.

But we must not forget that any nationalism and chauvinism do direct and enormous damage especially to the people and the ethnic group whose interests the nationalists are supposedly defending. That is why there is a grave danger for Russia in all manifestations of “simple and definitive” solutions offered by the nationalists and extremists of various stripes and persuasions. Whatever their slogans, they drag the country towards social decline and disintegration. We must regard attempts to provoke ethnic tensions and religious intolerance as a challenge to the unity of the Russian state and as a threat to all of us. We will not allow the emergence of closed ethnic enclaves in Russia with their informal jurisdiction, existing outside the country’s common legal and cultural norms, and disdainfully disregarding the accepted standards, laws and regulations.

I appeal to the heads of the republics of the Russian Federation, to the governors and mayors of major cities. This is primarily your responsibility. You must work with people on a daily basis, and you must organise this effort to make it effective.

Russia needs new blood. That much is clear. It needs smart, educated, hard-working people who do not just want to make some money here and leave, but want to move to Russia, settle down here and consider this country their homeland. However, the current regulations do not contribute to this goal. Quite the contrary. The process of obtaining citizenship for our compatriots, for those who are culturally and spiritually close to Russia is difficult and outrageously bureaucratic. At the same time it is very simple to import unskilled labour, including illegally.

I ask you to develop a simplified procedure for granting Russian citizenship to our compatriots, the bearers of the Russian language and Russian culture, the direct descendants of those who were born in the Russian Empire and the Soviet Union, for those who want to take up permanent residence in our country and, therefore, to give up their current citizenship.

At the same time I consider it reasonable and necessary to toughen penalties against illegal immigration and violations of registration rules. The relevant amendments have already been submitted to the State Duma. I ask the deputies to pass these laws.

I would like to make another proposal. We still allow citizens of  Background information Commonwealth of Independent States (CIS) CIS states to enter the Russian Federation using their national passports. Enough time has passed and all CIS states have become firmly established. It is almost impossible to ensure effective immigration control when foreign citizens can enter the country using their national passports. I believe that beginning from no later than 2015 entry into Russia should only be possible for bearers of international passports.

“Democracy is not only an opportunity to elect power, it’s about being able to monitor it and evaluate the results of its work. We must pay greater attention to the development of direct democracy and self-rule.”

I ask the relevant agencies to work on this matter together with our colleagues in the Commonwealth. We do not want to create problems for anyone. If necessary, we can provide them with assistance and support, including financial and technical. It is a simple matter of issuing documents. We must adopt the practice of many of our neighbours and strategic partners around the world. We can provide technical and financial assistance, if needed.

At the same time, the current regulations will remain in force for citizens of the  Background information Customs Union between Russia, Belarus, and Kazakhstan Customs Union and  Background information Common Economic Space (CES) Common Economic Space, who will enjoy the simplified rules for crossing the border within the territory of the Customs Union and the Common Economic Space.

The role of public institutions is extremely important in immigration policy matters. In this regard, I consider it correct to broaden the powers of national and cultural autonomies, to provide them with federal grants for the implementation of programmes for the legal, social and cultural adaptation of immigrants. This experience has shown to be effective in many countries.

I also ask the Government Cabinet to submit proposals for the implementation of distance learning programmes in Russian. It should be available for young people in the CIS and for our compatriots all over the world. It is important to support schools in the CIS and in other states which teach in Russian, including by providing support for the teachers, help with textbooks and equipment. We should create a system of international school competitions in the Russian language. The winners should be granted admission to the leading Russian universities.

“Political competition is important for the country. We must establish a kind of code of fair political competition.”

Colleagues, I would like to address especially those of you who work in this field. I believe we should strive to ensure that quality education in Russian is available globally. In general, we should talk about ways to expand Russia’s presence in the global humanitarian, informational and cultural space.

Colleagues,

Democracy is the only political choice for Russia. I would like to stress that we share the universal democratic principles adopted worldwide. However, Russia's democracy means the power of the Russian people with their own traditions of self-rule and not the fulfilment of standards imposed on us from the outside. Democracy means compliance with and respect for laws, rules and regulations. The ruling parties, governments and presidents may change but the core of the state and society, the continuity of national development, sovereignty and freedoms of people must remain intact.

Democracy is not only an opportunity to elect power, it’s about being able to monitor it and evaluate the results of its work. We must pay greater attention to the development of direct democracy and self-rule, including the right of popular legislative initiative (I have already talked about this), when an idea that receives public support, including via the Internet, must be considered in Parliament.

In addition, I believe members of the Federation Council and State Duma deputies must be given the right to initiate legislation in the regional legislatures. Thus, we will strengthen the connection between federal laws and the life of the regions and each legislator.

Political competition is important for the country. At the same time, we must establish a kind of code of fair political competition.

There are several points I would like to make in this regard.

First. Russia’s unity, integrity and sovereignty are unconditional. Any manifestations of separatism and nationalism must be completely removed from the political agenda.

Second. Any direct or indirect foreign interference in our internal political processes is unacceptable. Anyone who receives money from abroad for his or her political activities, thus serving certain foreign national interests, cannot be a politician in the Russian Federation.

“Russia’s unity, integrity and sovereignty are unconditional. Any manifestations of separatism and nationalism must be completely removed from the political agenda.”

Third. There can be no place in politics for criminals. This should become standard practice for all political forces. Of course, people will say that it is already against the law for criminals to take part in politics. Yes, it is against the law but they still try to enter the political arena, sometimes receiving help, and this should not happen.

Fourth. Civilised dialogue is possible only with those political forces that make, justify and articulate their demands in a civilised way, defending them in compliance with the law. The change and modernisation of the political system are natural and even necessary, but I have said in the past that it would be inadmissible to allow for the destruction of the state to satisfy this thirst for change. The whole history of Russia screams about it.

Fifth. The state must and will seek to ensure equal access to the media for all political parties, and not only during election campaigns but at all times. However, this is not an easy task, as I am sure you realise. We had seven political parties at the beginning of this year, and now we have 48, if I am not mistaken, plus there are over 200 organising committees working to establish their own political parties. Nevertheless, the authorities must strive to ensure that all of them enjoy equal rights. Many political parties and experts propose that we return to a mixed system of State Duma elections – to party lists and single-mandate voting districts, which, of course, will have to be established first. I agree with this, let's go back to this system.

Some people talk about restoring the electoral blocs’ right to participate in elections. Let's think about this matter separately. It requires a detailed discussion, consideration and analysis. I am convinced that this can make our political system more fair, open and competitive, and will satisfy the society’s demand for new leaders in politics and the government, a demand for outstanding and independent people.

Colleagues,

Russia is characterised by a tradition of a strong state. Therefore, the main public demands are addressed to the state: to guarantee civil rights and justice, to reduce violence and social inequality, to restore order in the housing and utilities sector, and so on.

“We will certainly continue to combat corruption, which is a threat to national development prospects. I would like to stress that businesses must never enjoy any privileges based on their proximity to the executive, legislative or judicial government bodies at any level.”

Poor government efficiency and corruption are major problems that everyone can see. We will never be able to tackle the challenges facing our society and our nation without quality, modern public administration, and without a high level of personal responsibility of everyone involved in it.

The following principles should be the key to the new model of public administration.

First. All parts of the state mechanism and all levels of government must be oriented towards a result that is measurable, transparent and understandable to the public.

Second. There must be extensive introduction of new forms and methods of control. Public opinion must become the main criterion for assessing the effectiveness of state bodies that provide public services as well as institutions in the social sphere.

Third. Effective motivation of municipal employees: competitive salaries, a system of moral, financial and career incentives to encourage continuous improvement in the work of state bodies. At the same time, personal liability must be increased dramatically, up to and including temporary disqualification.

This means that not only can an official found guilty of negligence be dismissed from office, but he or she can also be banned from engaging in this activity for a certain period of time.

“The state’s moral authority is a fundamental prerequisite for Russia’s development. Therefore the policy to cleanup and renew state authorities at all levels will be firm and consistent.”

Fourth. When we criticise public officials I would like us to bear in mind that the vast majority of employees in various state bodies are honest and responsible people. This is a special responsibility for those who take on a number of legal and ethical obligations and restrictions. We must not forget that. But if a person has chosen public service, he or she should be ready for these restrictions, for public scrutiny and special requirements, as is the case in almost all countries around the world. How can the public have confidence in an official or politician who says high-sounding words about the national good but at the same time tries to take his money and assets out of the country?

I ask you to support legislative proposals limiting the rights of state officials and politicians to hold foreign accounts, stocks and shares. (Applause.) Hold your applause, you may not like what is coming. (Laughter.) This requirement should apply to all officials who are in charge of key decisions: the top leaders of state and government, the senior staff in the Presidential Executive Office and their immediate families. It should also apply to members of the Federation Council and State Duma deputies.

As for the ownership of foreign real estate, it must be declared in accordance with the law, and the official must submit a report on the cost of the property and the origin of the funds used to purchase it.

Fifth. Control over agencies exercising regulatory oversight requires special attention. According to various estimates, about one million people are employed in these bodies, which is comparable to the number of doctors or teachers in the country.

I ask the Government Cabinet to submit proposals on ways to reshape the key functions of oversight agencies. Oversight is undoubtedly one of the key government functions. However, it is unacceptable when performance indicators for oversight agencies are not based on the result, but on the number of investigations.

It is essential to introduce public reports by oversight agencies about the results of investigations, as well as the financial and human resources used to conduct them. That will clearly show the cost of each investigation and even whether it is necessary at all.

We will certainly continue to combat corruption, which is a threat to national development prospects. I would like to stress that businesses must never enjoy any privileges based on their proximity to the executive, legislative or judicial government bodies at any level.

“We cannot be satisfied with today’s situation, when the Russian budget, the social sector, are basically held hostage to the financial and commodities markets of other countries. A lopsided raw materials economy does not allow for developing and putting to adequate use human potential; it is incapable of giving most of our people the opportunity to make use of their strengths, talents, labour and education, which means, by definition, that it breeds inequality.”

In this regard, first, in addition to monitoring income and assets, we will also begin monitoring the expenditures and major acquisitions of civil servants, executives of state companies and their close relatives. At the same time, I want to point out that the Prosecutor General’s Office has now got the right to petition the courts to confiscate property that was acquired as the result of unlawful enrichment.

Furthermore, I believe that the level of remuneration for the executives of organisations financed through the state budget should be pegged to the organisation’s performance and the average salary of its employees. We have already spoken about this many times. When we adopted new salary calculation principles a couple years ago, there were initially many disputes as to whether they should include mandatory principles or whether it would be enough to just set guidelines. But some guidelines were written, and yet ultimately, executives at some companies have salaries many times higher than the regular personnel. This is wrong and this situation is to be changed.

Third. State purchase contracts have become the current “breeding grounds” for corruption. I am asking parliament to accelerate the passing of a law on the federal contract system. And it is exceedingly important to audit the efficacy and expediency of budgetary expenditures as well as purchases by the government and state companies, and instil public accountability for the process and results of fulfilling state orders.

Fourth. The Accounts Chamber has significant instruments. We expect much greater efficacy and professionalism from this institution. The ruling party, as well as the parliamentary opposition, should have the right to propose candidates for the post of chairperson, deputy chairperson, and auditors. At the same time, given the specifics of this type of work, it would be best to limit their tenure to two consecutive terms.

Fifth. Active civic participation and effective public monitoring are necessary conditions for effectively fighting corruption. Today, many citizens are already building a system of public control at the municipal level on their own initiative, including for the housing and utilities sector. We are obligated to support this this type of attitude. Just recently, the day before yesterday, we spoke on this topic at a meeting with election campaign activists.

The media also play a very important role in this work. That said, while we understand that the media operate in the market environment, they must not sell the objectivity of their information to the highest bidder; instead, their efforts must be based first and foremost on the interests of the entire society and on high moral principles.

“Economic freedom, private property, competition and a modern market economy, rather than state capitalism, must be the core of a new growth model.”

Let me stress that the state’s moral authority is a fundamental prerequisite for Russia’s development. Therefore the policy to cleanup and renew state authorities at all levels will be firm and consistent.

Colleagues,

We cannot be satisfied with today’s situation, when the Russian budget, the social sector, are basically held hostage to the financial and commodities markets of other countries. A lopsided raw materials economy, as has been pointed out on many occasions, is not just vulnerable to external shocks. Most importantly, it does not allow for developing and putting to adequate use human potential; it is incapable of giving most of our people the opportunity to make use of their strengths, talents, labour and education, which means, by definition, that it breeds inequality. Finally, the capacities of the raw materials based economy model are exhausted while Russia’s development needs require an annual GDP growth of no less than 5 or 6 percent over the next decade.

At the same time, I am fully aware of the reality in which we live and I am familiar with the calculations and forecasts by the Economic Development Ministry. Nevertheless, it is important to set this high goal and strive toward achieving it.

Essential changes in the structure of the economy, the launch of new industries and regaining leadership in traditional industrial sectors, as well as the development of small and medium-sized businesses are key targets. I am confident that economic freedom, private property, competition and a modern market economy, rather than state capitalism, must be the core of a new growth model.

Our entrepreneurs are often criticised for lacking patriotism. The high degree of offshore investments and ownerships in the Russian economy is an absolute fact. Experts call this phenomenon fleeing from jurisdiction. According to some assessments, nine out of ten major transactions made by major Russian companies are not regulated by Russian laws – including, incidentally, companies with state participation. We need a comprehensive system of measures to reverse the offshoring of our economy. I am instructing the Government to make corresponding integrated proposals on this matter.

“The best way to make businesses patriotic is to ensure effective guarantees for protecting property and honouring contracts, and to make Russia’s jurisdiction appealing.”

We are to strive for offshore transparency, disclosure of tax information, as is done by many nations through negotiating with offshore zones and signing corresponding agreements. All this can and should be done. Nevertheless, if in choosing a jurisdiction, a foreign legislation is preferred, we then certainly must admit that we should improve the improper elements in our own judicial system, in our law-making, in our law enforcement practices. Only by admitting this honestly can we fundamentally change the situation. We have to carry out systemic work to improve our legislation, while refuting the presumption of guilt of businesses, the accusatory slant in our law enforcement and judicial practices, once and for all.

We must eliminate all hitches in the legal system that allow turning economic disputes into score-settling through instigating contracted criminal cases.

I want to thank the deputies of the State Duma and members of the Council of Federation for their work on a package of amendments that are bringing order to this domain. Thus, instituting criminal proceedings will not be allowed without a complaint filed by the damaged party regarding a variety of economic offences, while the penalties for policemen for tampering will be toughened.

We should as soon as possible draft special laws to regulate administrative legal proceedings. The Supreme Court President and I have discussed this in great detail several times. We need to have juries to resolve the disputes between citizens and state authorities at all levels – this is a highly important objective that has still not been resolved. The opportunity to file collective lawsuits in the interest of an unlimited number of individuals, as well as lawsuits by public associations, will provide citizens with additional protection. I ask that you accelerate the implementation of the corresponding amendments to the Civil Procedure Code.

Another important issue. Modern legislation, particularly financial and corporate legislation, is very specific. In this regard, I suggest that we work with partners to promote (or rather to complete, since it has already essentially begun but needs to be finished) the process of creating an arbitration court for the Customs Union, which can become a leading independent agency for examining financial and other disputes. Overall, it is imperative to come up with a set of measures to develop arbitration proceedings in Russia, at a qualitatively new level.

I would also like to stress that the best way to make businesses patriotic is to ensure effective guarantees for protecting property and honouring contracts, and to make Russia’s jurisdiction appealing.

“We need a kind of investment map of Russia, providing investors with clear information about which regions are more profitable, better to work in, to set up production facilities, and what forms of state support will be available to businesses in the near future.”

The state itself must show a good example of using Russian jurisdiction, making a point of choosing Russian platforms for the placement of state resources in privatisation transactions. Incidentally, the privatisation the Government intends to conduct should not have anything in common with the practices of the 1990s, the notorious loans-for-shares auctions. Today’s privatisation should be based on the fair, transparent sale of state property at a just, realistic price.

Colleagues, the quality of privatisation is not just about money flowing into the state budget. It is, first and foremost, a question of society’s trust in the actions of the state; it is the emergence of a truly legitimate, respected proprietor. I am asking all Government representatives who are responsible for conducting privatisation processes to remember this.

Businesses should work to achieve their own success as well as that of the nation; and should breed talented, sensible organisers, patrons and patriots, as was the case in earlier times in Russia. It is then and only then that entrepreneurs will be able to gain widespread public respect.

Let me remind you that together with the business community, we began implementing a national entrepreneurial initiative. According to expert assessments, Russia’s inclusion in the group of 20 nations with the best business climate will allow us to add no fewer than 2.5 percent to the current GDP growth rate, and the additional growth will be primarily in the non-raw materials sector, through small and medium-sized businesses.

The most important factor in economic revival is the quality of the work done by regional authorities. We already have regions that have no oil or gas but, as you all know, show GDP growth of more than 10 percent per annum. Incidentally, this is a good response to those who state that our growth rate can not be over 4 percent per year. Here you go, you can easily add another 2 or 2.5 percent to that, and end up with 5 or 6 percent growth.

We need cheap and longer-term money for financing the economy, for further suppressing inflation, for offering competitive bank rates. I am asking the Government and the Central Bank to think about mechanisms for addressing these challenges. I know very well that certain experts will disagree and I know what they will say, that providing longer-term money is not the Central Bank’s job, that this type of money is represented by citizens’ and companies’ savings, pension money and so on. Yes, we all know this. But we also know that the Federal Reserve System of the United States, the European Central Bank, and certain other central banks have it written right in their charters that they are obligated to consider jobs and ensure the economy’s growth rate.

“In the 21st century, the vector of Russia’s development will be the development of the East. Siberia and the Far East represent our enormous potential. And now we must realise our potential. We have the opportunity to assume a worthy place in the Asia-Pacific region, the most dynamic region in the world.”

I am not calling on you to review anything in our legislation right now; I am simply drawing your attention to the fact that we must all be concerned with the key issues of our nation’s development. Our national savings must work in our country and for our country; at this time, however, very little of the National Welfare Fund’s resources are invested into national development. We came to an agreement (I remember this very well and I concur with it) that after the Reserve Fund surpasses 7 percent of the GDP, we can direct half of the surplus revenue into the Russian economy, primarily toward infrastructure projects.

Now a few words about possible adjustments to our previous agreements, which I spoke about in the very beginning. By the end of this year, the Reserve Fund and the National Welfare Fund already amount to approximately 9 percent of GDP combined, which means that we will have a certain cushion of security in place. Thus, beginning in 2013, after the establishment of a corresponding management entity, I suggest that some of the National Welfare Fund’s resources, perhaps about 100 billion rubles [3.3 billion dollars] (some experts think it should at least this amount) should be invested in Russian securities and implementation of infrastructure projects. Today, the government experts already agree with this. So I am asking the Finance Ministry to produce a corresponding plan. It is important that such projects pay for themselves.

I want to particularly stress the exceedingly important condition that they must be profitable and generate steady, guaranteed revenues, rather than requiring constant injections from the National Welfare Fund or the federal budget.

The tax system must also correspond to the needs of economic restructuring. We shall encourage investment and development, and shift the tax burden towards consumption, including excise goods and luxury real estate.

As a matter of fact, in many countries around the world and in Russia we always come back to this issue, namely the question of income tax, in one way or another. I have already talked about this, you know my opinion: we must keep the so-called flat tax. Even though a progressive tax might seem at first glance to be promoting social justice, in actual fact it does not. On the contrary, it will act as a burden for millions of citizens with average incomes. If you start to calculate what such a system will lead to, you’ll see that this will be the case.

And on top of this, what else will happen? Tax evasion; both the budget and the treasury will find themselves lacking the funds this tax supposedly generates. This means that we will have budget shortfalls in financing for the army, pensions, and the public sector. So that’s social justice. Therefore any action we take in this regard must be carried out extremely carefully. But here’s what we can do, what I think we must do, and what is also just: to impose additional taxes on so-called prestige, conspicuous consumption.

I would remind the Government that we must implement critical decisions relating to the so-called luxury tax already in the first half of 2013. This tax affects luxury properties and, no matter how harsh it might seem, expensive cars, even new ones.

Qualitative economic revival requires fair competition. As part of its efforts regarding national entrepreneurial initiative, I would instruct the Government to adopt a so-called road map for enhancing competition and to implement it next year.

Why do I think that this simply must be done in all important fields? Let me talk about this for a second, because I know very well how discussions go. They are usually sporadic: we talk about something important, confer, leave the conference room and forget about it, and the issue is put on hold. We need clear guidelines, we need documents we can track and whose implementation we can follow. I would ask you not to forget this and to make sure to do it.

“Russia stands for the principles of coherent and collective efforts in addressing challenges facing the world today. This position is absolutely consistent with contemporary realities. We propose projects that will unite nations and regions.”

The core of our economic policy should be the competitiveness of all essential aspects of doing business in Russia, from loan availability and tax incentives to comfortable administrative procedures and low inflation. This is almost a direct path to economic revival and to moving away from commodity dependence, because tens of thousands of new projects are becoming profitable. Projects that involve processing raw materials, engineering, light and heavy industry, the service sector, small and medium businesses and, of course, the agricultural sector.

A few words about agriculture. Demand for food is growing rapidly all over the world, especially in developing countries. As you know, Russia has more than half of the world’s arable land, 55 percent. In the next four to five years we must fully ensure our independence in all major types of food production, and Russia must then become the world’s largest producer of food. This will open up huge new opportunities for us.

We also should pay very close attention to environmental issues, and the environmental rehabilitation of various regions. In fact, we have already started working in some areas, such as the Arctic.

Our reference points are high quality environmental standards of development.

We intend to take full advantage of unprecedented funds allocated for defence procurement and modernisation of the defence industry in order to upgrade that industry, and to develop science and technology. Almost all sectors of the Russian economy will benefit from these funds via the implementation of related orders. We must strengthen our position in space, nuclear energy, revive key sectors such as aviation, shipbuilding, instrumentation, and establish them on a new foundation, at a new level, based on new technologies.

We have begun to rebuild our national electronic industry, and done so with the active participation of private capital. I believe that we need to prepare a road map for the development of new industries similar to the road maps for improving the investment climate. These industries include rare earth metals and composites, biotechnology and genetic engineering, IT, new urban planning, engineering, and industrial design.

“Russia’s economy has demonstrated its ability to grow quickly and qualitatively. We were able to maintain and strengthen our development potential, and to set its new horizons.”

A long-term prognosis for Russia’s scientific and technological development through to 2030 is currently being finalised. It highlights specific ways to both revitalise traditional sectors and to penetrate new high-tech markets. A special fund for promising research on the defence technologies of the future will be established.

Colleagues,

Imbalances between regional development, the labour market, and the social sphere are direct consequences of a commodity-based economy. As a rule, finding a job today with a decent salary is only possible in Moscow and St Petersburg or in resource-rich regions, and quality education and medical care is only available in several major cities. This is where people go to work, study, receive medical treatment, this is where young people want to go, and therefore other regions lose active citizens willing to work and be of value. Imperatives of our time include a decisive step towards decentralised development, a new geography of economic growth and the labour market, new industries and new centres for industry, science, and education, a new, modern social environment in all Russian regions, cities, and towns, including a barrier-free environment for individuals with limited abilities.

At present the difference between regional incomes is extremely high. You are well aware that ten regions generate more than half of Russia’s revenues. We must consistently work to ensure that all Russian regions without exception become economically self-sufficient and subjects of the Federation in the fullest sense. Therefore, we must slightly change the current logic of relations among state budgets at various levels. May the Finance Ministry not be frightened by these words.

We should create and strengthen the economic base of our regions, and help those who are working proactively there. One priority measure at the municipal level involves the reallocation of the bulk of taxes collected from small businesses, currently working under a special tax regime, to municipalities. In addition, we are eliminating many federal tax breaks for the properties and land of various legal entities. These funds will also flow into regional and local budgets.

However, I now address the Government first of all since you know what I’m referring to, we will get rid of the tax breaks for infrastructure companies and infrastructure monopolies, among others. This means that they will have to pay more. But not everyone is ready to start paying new amounts, because at that point we could completely deprive them of investment possibilities. We have already agreed on a smooth transition period and compensation for these companies. We absolutely must think about this. Such decisions are not taken casually, though of course it is necessary to move in this direction, and we will do so.

I also believe that as of 2014 regions should receive the right to tax real estate based on its cadastral value, and this would strengthen a given region’s tax base. But this must be the regions’ own choice, and along with this we must finish all work related to evaluating properties and verifying data about their owners.

I want to stress that we have to examine in detail all aspects of Russia’s balanced regional development, including education. It would be correct to provide priority support to those universities working in the regions and cooperating with major companies there, companies with which they promote research and development. Already during their studies the graduates of these universities are linking their futures to the places where they live and study.

We are to create more publically-funded places in precisely these universities, and the government must support their development programmes. Along with this it is essential that business takes part in the management and funding of these universities. Among other things, the above will stop the practice whereby a lot of resources are spent on training students in Moscow and St Petersburg, students who do not even plan to work in their field of training.

We need a kind of investment map of Russia, providing investors with clear information about which regions are more profitable, better to work in, to set up production facilities, and what forms of state support will be available to businesses in the near future. By using our competitive advantages we should encourage production to migrate from other Russian regions, just as we are currently doing in the automotive industry. Just yesterday I met with the CEO of one of the world's largest companies in this field.

We are currently moving in this direction. This is helped by the fact that Russia's WTO accession gives us the opportunity to relocate production to Russia that is designed not only for the domestic market but also for export. In the 21^st century, the vector of Russia’s development will be the development of the East. Siberia and the Far East represent our enormous potential, as [Mikhail] Lomonosov once put it. And now we must realise our potential. We have the opportunity to assume a worthy place in the Asia-Pacific region, the most dynamic region in the world.

Just recently at a State Council Presidium meeting we discussed in detail specific steps to stimulate economic growth in the Trans-Baikal and Far Eastern regions. I will not repeat everything that we agreed to do. But one of things we agreed on was creating attractive living conditions there. By the end of the first quarter of 2013, the Government must work out in detail its proposed measures, including tax breaks for so-called start-ups (new businesses), plans for the development of energy, infrastructure and so on. This must absolutely be done, and I would ask you to pay you utmost attention to this task.

In addition, I would ask the Government to submit proposals concerning the future development of Kaliningrad Region, especially since the law on special economic zones will expire in 2016.

We need a real breakthrough in the construction of roads. In the coming decade we should at least double current rates of road building. Here too different calculations exist, but it is absolutely correct to consider that current figures must double.

Our most important development priority is regional aviation, as well as seaports, the Northern Sea Route, the Baikal-Amur Mainline (BAM), the Trans-Siberian railway, and other transit corridors. It is not enough to simply think about all of this, we must work hard in all these cases. We have to ensure the unity of Russia’s entire territory, in the full sense of transport connectivity.

Dear friends,

The main feature of the present era is that no one can solve global economic and political problems alone. In fact, this has always been the case, in the 1990s as well. Even though quite recently, ten years ago, some people thought that the world had become unipolar; some of my former colleagues told me so at the time. Today, no one thinks so.

It is absolutely obvious to everyone that the modern world is becoming increasingly multipolar. This creates both risks and opportunities. Risks will prevail when each player plays their own game, if they are not relieved of the illusion that it is possible to manage chaos (you know there is such a theory). And if people stop sowing such chaos, risks will not prevail.

Russia stands for the principles of coherent and collective efforts in addressing challenges facing the world today. This position is absolutely consistent with contemporary realities. We propose projects that will unite nations and regions. The experience and reality of the past 20 years as well as simple common sense put everything into its true place. And it is natural that interest in integration is growing in America (both North and South America), in Europe, and in Asia, and these processes are gaining momentum. Why should we remain on the sidelines? On the contrary, together with our immediate neighbours we must make use of all our advantages.

Our immediate neighbours are also showing more interest in integration processes. One example of this was their very practical and pragmatic approach to developing and adopting the agreement on the CIS free trade zone. By the way, I am grateful to our parliamentarians who were the first to ratify this very important document.

We will move towards closer integration. This is exemplified by the Customs Union and the Common Economic Space of Russia, Belarus and Kazakhstan, which are already functioning effectively. We have begun to establish the Eurasian Economic Union, and naturally we will continue to work at this and achieve this goal.

Dear colleagues and citizens of Russia,

We had set ourselves the goal of doubling our GDP and by the end of 2008 we were very close, somewhere in the range of an 80 to 85 percent increase. It was only the global crisis that slowed our momentum. And yet there was a reason we set such a high bar for ourselves, such a difficult challenge. Russia’s economy has demonstrated its ability to grow quickly and qualitatively. We were able to maintain and strengthen our development potential, and to set its new horizons.

What do I want to say? Using 1999 as a benchmark, our GDP per capita has almost doubled. Federal and consolidated budgets have increased, not by a certain number of percentage points, but by 2.6 times. Public debt in relation to GDP decreased almost tenfold. It went from more than 100 percent of GDP (I think it was about 120 to 125 percent) to 10 and some percent. Moreover, our external debt fell to 2.5 percent. The rate of inflation fell sixfold: in 1999 it was 36.5 percent and in 2011 6.1 percent. This year it will increase a little but remain less than 7 percent, at approximately 6.5 percent.

By 2000 Russia's population had declined (just think about these numbers, you know them well but I would like to remind you of this tragedy), and was declining by a million people almost every year. And it seemed that the disaster could not be stopped. At the time, demographic forecasts seemed like the country’s final judgment.

But we were able to reverse this destructive trend. Launching demographic programmes allowed Russia's population to stabilise, as I already said, and begin to grow as of 2010. This represents our crucial achievement. I want to draw your attention to this, and not to say: “Oh, look at how great we are!” No. I stress this so that we understand that people believed us, and changed their planning horizons accordingly. They believed that stability is essential for development and the improvement of living conditions. I say this because we should value such trust and take it into account in our work.

All growth rates I mentioned bear witness to enormous changes in both economic and social development. But the main thing is that we – as a country, a society, and citizens – can all overcome hardship and resolve significant problems. And we must remember that we have accomplished this difficult journey in commendable fashion, and achieved our goals step by step.

We have a lot of work ahead of us, and such work is always required if we want to move forward. And we need everyone’s contribution today, not tomorrow.

Why do I cite these figures? Our country has historically had an attitude to life that involves living for the future, for our children. Of course this is a very important and noble task and purpose. But it seems as if one’s own prosperous life is always being delayed, postponed, and postponed for the future. And this was almost always the case in Russia, for all generations. But let me go back once again to the reason I cited these figures: the time has come to drastically improve our situation. We are doing this and we can do it. If we continue consistent national development policies, harness our development to common creative work, if we work with dignity and spare no efforts, then we will achieve our goals and accomplish all the tasks before us.

Thank you for your patience and attention.

(The national anthem of the Russian Federation.)