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Vladimir Putin: Good afternoon.

The topic of our meeting today is the current situation and the prospects of solving the social problems of servicemen and members of their families. Of late we have been actively discussing all the aspects of the issue and we understand that nothing can be done in this sphere unless we ensure normal material conditions for servicemen and their families. A military man must feel socially and financially secure. Only then can one count on success in solving the challenging tasks that we set for ourselves in this sphere. The state is obliged to address the social problems of servicemen – the people who devoted their entire lives to their country. So all the actions in the field of military reform should be accompanied by measures to solve the immediate problems in the sphere of accommodation and social welfare of servicemen. That is where we should start.

One must admit that today servicemen are materially less well off than the civilians. There are 40% of the families of servicemen and paramilitary personnel who have incomes below the subsistence minimum, although under the law it is a special category of civil service. I am not referring now to the provision with apartments: the housing situation in the army and in the agencies that are equated to the army under the law is appalling.

Healthcare is also a big problem. The healthcare facilities are in a dismal state.

Adaptation of officers and all the servicemen discharged from the army to civilian life remains another problem. We all understand very well that there are objective reasons for all this. Above all, it is the economic situation in our country in recent years, but there are some subjective reasons. And I would like to refer to several conceptual approaches to this sphere.

First. Reform and a significant rise in salaries are becoming absolute imperatives. The salaries of servicemen should be gradually brought to the level of those of civil servants. I say, gradually, but in any case I assume that the problem must be solved by the middle of next year. And we must preserve the current seniority benefits, preserve the cash compensations for food and outfit issue, as well as cut-rate accommodation at sanatoria and holiday resorts, considering the special character of military service. You understand that a civilian lives at home, but a serviceman usually does not have a home of his own. He moves from place to place year after year and it goes on for decades until the end of military service.

Military service involves particular hardship and the state must offer compensation for this. We are talking about preserving lump-sum rewards depending on the salary and so on. I don’t think there should be discrimination between agencies on that count. The principles and size of salaries throughout the armed forces should be uniform. I have to stress that the new concept of salaries envisages a substantial rise of salaries for junior officers. All that the Finance Ministry and the economic units of the Defense Ministry and the Government as a whole have worked out – and I repeat that I consider that this is justified today – must lead to a substantial raise in salaries for senior, but above all junior officers.

I would like to say something about retired servicemen. The Government has some proposals and on the whole I agree with them. I would like to stress that we must meet the target that the Government sets for itself. All the changes in this sphere must increase military pensions by at least 50%.

Third. All these measures must also cover the Interior Ministry and the penitentiary system of the Justice Ministry.

The next important set of issues is connected with housing for servicemen. The problem is acute, and yet it is not being addressed properly. In addition to the assets allocated for construction, fundamentally new approaches are needed. First of all, the programme of government housing certificates, which is due to expire in 2002, must be prolonged, and the Government must start preparations for continuing this programme. It makes sense to think about switching to a system of housing insurance for servicemen. I am choosing my words carefully. I say it makes sense to give thought to the matter. It does not mean that it should be introduced today or tomorrow. I understand that it is a challenging job. But we must start developing a philosophy for this sphere today, especially with respect to the army service. It may give additional confidence to the officer and provide an incentive for him to stay in the Army.

Thirdly, we should look for additional sources to finance construction, including off-budget sources. The measures proposed must not remain on paper. The Government must allocate the money when forming the budget for next year and it has to be done today, otherwise we may lose the next generation of officers.

And lastly, to implement the above measures there needs to be an adjustment of some federal laws that regulate social security of servicemen and categories of people equated to them. It is a very large-scale job because more than a dozen laws need to be amended. And I would like to address you, Yegor Semyonovich [Stroyev], and you, Gennady Nikolayevich [Seleznyov]: we count on the support of the State Duma and the Federation Council. The budget of the military organisation until 2010 was discussed by the Security Council last year. At the time the Government earmarked a maximum of what it could afford, and I stress that. Today additional financing is on the agenda. An interagency commission, headed by Valentina Ivanovna Matviyenko, has been set up to study the problem.

I would like to stress that considering the limited resources, the Commission has submitted a minimum set of proposals to address the most pressing social problems, but even implementing that minimum will cost the federal budget several tens of billions of roubles every year. While keeping this in mind we should also be aware that it is impossible to put off the solution of the problem. We have closely studied all its aspects, including the macroeconomic implications. Of course, the economic units in the Government are thinking about these problems, they cannot afford not to. But we can no longer postpone addressing the outstanding issues connected with the army and similar agencies. We must assess the acceptability and feasibility of proposed measures and discuss the deadlines and phases of their implementation. As I see it, the latest consultations with the Government show that it is not the question of ideology, but of timing.

Thank you.