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Excerpts from transcript of meeting with Federal Assembly members

President of Russia Vladimir Putin: Good afternoon, colleagues.

I asked you here to thank you for taking part in our joint work over the past year.

We have achieved a great deal. I will not enumerate all the laws that have been adopted, nor the challenges that the country faced and that we successfully overcame with your help.

I want to thank you for very constructive and coordinated efforts. At the same time I would like to draw your attention to the fact that the situation is not easy and we must achieve even more in the future.

We must rebuild the economy’s structure while at the same time tackling the difficulties associated with the foreign economic situation. Naturally, we must also deliver on all the social commitments which were formulated in the May 2012 Executive Orders.

We have everything we need for steady, smooth and efficient work; we require coordination of all government branches: the executive branch, presidential structures, and, of course, the legislators – both the upper and lower houses of Parliament.

I am confident that in spite of the challenges we face we will overcome all the difficulties we are currently facing and continue with national development. We have everything we need to achieve that.

But, of course, it may be necessary to make operational decisions, to make them quickly and smoothly. I very much hope that you will work closely with the Government, as it happened in the past when such work was required.

Once again, thank you very much. Happy New Year holidays to you!

Federation Council Speaker Valentina Matviyenko: Mr President, I will try to be just as brief as you were.

I would like to begin by thanking you for your constant attention to the Federal Assembly, to regional parliaments and the Legislators’ Council.

In your address, you gave an assessment of the outgoing year. I believe it will go down in history as a landmark year, one that gave our citizens a feeling of pride for their country, of patriotism, of realising Russia’s special mission and its role in the modern world.

It was a tough year filled with events. I will not make a report; I will only say that the Federation Council has fully exercised the authority granted to it by the Constitution. Almost a third of the Council has been replaced with new people coming in from the regions, people who are focussed on their work and full of energy. This has had an impact on both the content and the quality of our work.

Mr President, both the State Duma and the Federation Council have done a great deal to integrate the two new regions – Crimea and Sevastopol – into the legal, economic and social space. We, the legislators do not accept the groundless accusations made against Russia that it allegedly annexed Crimea. Our analysis of the decisions made in 1954 to transfer Crimea Region from the Russian Federative Socialist Republic to the Ukrainian SSR shows that this reckless act was illegal and made in violation of the existing Constitution and legal procedures. Therefore, the Federation Council has initiated the drafting of a law where the transfer of Crimea and all the legal consequences since its passing would be declared null and void.

Naturally, we paid great attention to the developments in the southeast [of Ukraine]. A Public Committee to support the southeast was set up on our initiative, two days ago on behalf of the Federation Council and at the expense of its members, we sent 10,000 gifts to children in Donetsk and Lugansk peoples republics.

As for the current complicated situation, one sometimes thinks we needed this shakeup to finally start working on the issues that were facing us prior to the crisis – the structural reforms in the economy, the new industrialisation and the creation of a favourable investment climate we have all spoken of so much. I am certain that we will come out of this situation more united. As you correctly said, Russia has a great margin of safety and an enormous capacity for survival. There is no reason for panic, though some would like to build up the pressure.

The Federation Council has developed a plan for implementing your Address, for providing legal support for the targets you have set in your Address in various spheres. We know that these targets require immediate decision-making with proper reaction to the circumstances. We are prepared to take an active part in their implementation.

On behalf of the Federation Council, I would also like to wish you a happy upcoming New Year! May it bring you more patience, Mr President, and more stamina of the kind you have been demonstrating. You should feel that we are on the same team and we will overcome all challenges and threats.

Thank you.

Vladimir Putin: Thank you very much.

State Duma Speaker Sergei Naryshkin: Mr President, colleagues,

Tomorrow is the final day of the autumn State Duma session. As scheduled it ends with a plenary session. The deputies will travel to their regions to meet with their voters and with the workforce.

As we have already said, the outgoing year was very busy and for the State Duma it was probably the most intensive year in terms of the legislative work scope and the significance of the acts passed, including their historical significance.

We are now all concerned about the state of our national currency and the influence of the ruble exchange rate on the economy and the social sphere.

Today the State Duma Council has decided to create an inter-factional working group to control the situation on the financial markets. The Parliament has the instruments required for such control.

We are also taking very realistic measures to maintain macroeconomic and social stability in the country. The main thing now is to retain trust in the banking system. Last week, on Friday, the State Duma expeditiously passed a law on an additional capitalisation of Russian banks by a total 1 trillion rubles [over $18.2 billion]. These funds were not allocated for playing the market but to support investors.

As I have said, we have all the necessary control tools we need to influence the budget system. We have passed a law on the Accounts Chamber as a parliamentary control instrument, and a law on parliamentary control. I have to say here that the deputies are not abusing their control powers; they are using them very carefully, and this sometimes worries bureaucrats. It is the use of the two terms – parliament and budget – that worries them, and the Government sometimes even issues somewhat strange instructions to certain ministries to minimise the information made available to the State Duma to steer the deputies away from budget matters.

I hope this is merely a misunderstanding, especially since parliamentary control functions are meant to support state management rather than hinder it. Moreover, the balance of authority between the legislative and executive bodies of power has been established by the Constitution of the Russian Federation.

I would like to briefly inform you that recently, only last week, both chambers of Parliament made public their second report on the state of Russia’s legislation, where we analysed various legislative areas, including, as Ms Matviyenko said, issues pertaining to the integration of Crimea into the legal space of the Russian Federation.

We conducted a substantive analysis of Crimea’s legal history, which shows that the reunification of Crimea with Russia was both legal and just. This is clear from the analysis of the 1954 act Ms Matviyenko has just mentioned, and from the returns of the March referendum, as well as the January 1991 referendum, when over 93 percent of the Crimean residents who took part spoke out for the broadest possible autonomy of Crimea within a union state, but not within the unitary state of Ukraine.

In your Address to the Federal Assembly, you focussed on the quality of Russian jurisdiction and control over the administration of law. This would require the entire arsenal of parliamentary control methods, which we have been expanding and improving since the first day of the 6^th State Duma.

In conclusion, I would like to say that the State Duma has completed collecting proposals from the corresponding Committees and the State Duma factions regarding the initiatives you voiced in your December Address. Their implementation plan will be the major document guiding our activity next year.

I would like to join in the words of gratitude expressed to you for your close interaction with the State Duma and the entire Parliament in general.

<…>

Vladimir Putin: Colleagues, I have just a couple points to make.

It is natural that we are talking first and foremost about the economy today and, consequentially, about the need to fulfil our social obligations. Allow me to comment very briefly on several key points which I feel are important.

First, the speakers talked about the need to tighten parliamentary control, and I fully agree with this; there is nothing unusual here. Right now, throughout the modern world – in our nation and abroad – people are constantly discussing it, and it is particularly relevant for us. Especially if we understand the times we are living in and what has brought us here, if we talk about increasing patriotism in the country, then as one close acquaintance of mine said yesterday (he is a finance expert and entrepreneur), “The best expression of patriotism is not to steal.” And parliamentary control is entirely appropriate here.

I have already said at the recent end-of-year news conference that we will overcome the current difficulties for entirely objective reasons. First, as you recall, our economy will certainly and inevitably adapt to low energy prices, to the changing external market conditions. This is inevitable.

Second, some significant adjustments to the oil and gas commodity market are also inevitable, because the global economy will still grow, and right now, the global oil and gas companies are reducing investments in extraction, and sooner or later, the unavoidable will occur: there will be a shortage of energy resources.

The consumer countries understand this very well, and they are not interested in overly low energy prices; they are interested in global companies investing in promising projects, whereas right now, we are seeing the opposite. But in any case, we will recover from this situation.

What is the issue? Our main challenge is that we will pass through difficult times in the economy and the social sector; first of all, our actions will have to be as professional, expeditious and cohesive as possible. We certainly must deliver on all our social obligations, but first and foremost, on the social obligations that are set out in current Russian legislation.

I urge you not to act from a position of populism or make decisions that would destroy the foundations of our economy, in order for it always to remain healthy and efficient. Only then can we guarantee that we will overcome various difficulties, ensuring the interests of our citizens and achieving what we talked about many times, one of our main economic goals: its necessary diversification. Only then can we do this: I repeat, when the economy remains healthy and viable.

As for the external situation, I want to talk again about how the global economy and our main partners are reacting to what is happening. I have already talked about energy. With regard to, for example, commodity exchange, the growth or decline in trade, I can assure you that nobody is interested in the situation currently unfolding in Europe, for example.

Our trade with European nations is declining. This is our main trade and economic partner. But I assure you this does not make anyone over there happy either. And this is not just the result of global energy prices; it is also the result of our financial situation. It limits opportunities for, say, our companies that are importing products. Our trade with the European Union has dropped by 4.5 percent, and imports from those nations decreased by about 7 to 10 percent, depending on the country.

Granted, there are certain positive elements that even surprised me somewhat when I looked at the statistics earlier today. We are seeing an increase in trade with other countries. For example, trade with the United States increased by 7%, and imports from the US increased by 23%. I am not even talking about Asia Pacific nations, with which our trade is also growing.

However, the situation with our main trade partner, Germany, is deteriorating. Our trade has decreased by 3.9 percent, and imports from Germany have also dropped. Incidentally, our trade affects at least 60,000 German jobs, while overall, 300,000 German jobs are dependent on Russia’s economy in one way or another. Therefore, who among our serious partners can be interested in maintaining these kinds of trends? Nobody. I think that life itself will set many things right.

As for capital flight, let’s not forget one thing: apparently, these figures also need adjustment, this export of capital that we are observing today, because 50% of it represents exchange operations by Russian citizens. In other words, our citizens are transferring away from the ruble to other currencies, such as the US dollar and euro. All this money remains in the country; it has not gone anywhere.

In addition, our companies must pay out somewhere around $115 to 130 billion in credit in the fourth quarter of 2014. This is normal. It does not mean that they will pay everything immediately; they have a timeline and overall, nothing unusual is happening. Granted the outflow will be significant, at around 120 to 130 billion. In 2008–2009, as you recall, we had an outflow of 133 billion. But that is not a problem, everyone is alive and well, and incidentally, the money returned when the situation went back to normal.

Of course, we must accelerate the resolution of the matters that were announced: I am referring to deoffshorisation and other matters. We are facing many challenges and I am confident that we will handle all of them. I understand that one always wants to add something, especially in difficult times. But I urge you to ensure that when we add something, we do not chop the tree that bears us fruit. What is that tree? It is our economy.

Social issues are certainly paramount, but they cannot be resolved if we undermine the fundamental principles of the economy’s functioning. We have every opportunity to achieve the social objectives stipulated in the current legislation. This is absolutely certain. And if something, somewhere needs to be restructured – certain expenditures – then I very much hope that you will act, as I said, very responsibly and make final decisions with a complete understanding of the issue at hand. Although, of course, this does not rule that we may have different opinions on the challenges we face, which is normal for any nation, for any democratic state and for parliamentary practice.

Thank you again. I wish you a happy upcoming New Year.

Thank you.