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Vladimir Putin: Modernisation of the armed forces, meeting the social needs of servicemen and the reform of the military as a whole cost money. We had a very emotional discussion of the issue just now.

I think the focus of our efforts should be as follows: first, we should concentrate on the priorities of armed forces development without being distracted by secondary matters and wasting money. The programme of actions should be forward-looking: Russia must have modern armed forces.

Second, we must eliminate duplicating structures within the Defence Ministry and the military establishment as a whole, something that we also discussed at length. I would like to remind the members of the Security Council that work should be finalised faster. No matter how painful it may be for all the other ministries and agencies, where the Defence Ministry is capable of coping with the tasks, they should be assigned to the Defence Ministry.

We should move on to standardisation of arms and equipment more quickly. The fact that the Single Procurement Service has actually been set up is a step in the right direction.

It is necessary to rule out wasteful spending. Which raises the issue of how effective our international military cooperation is. Of course, that involves other factors, including political ones, but the general “cost/benefit” approach should apply here too. Any steps in the military sphere should lead to broader trade and economic cooperation with these states.

The financial resources released should be directed to modernise and rearm the Armed Forces, notably to increase the capacity of the space assets, as we were just told by the Chief of the General Staff.

As I have said, after the detailed study of the issue the decision was taken to withdraw the military contingent from the Kam Ranh base in Vietnam, and the withdrawal will start January 1 next year, as the Navy Commander-in-Chief has told us. I think the Vietnamese colleagues do not need Russian servicemen to help them implement their plans of putting the infrastructure to commercial use.

Furthermore, after a profound and all-round analysis of the situation and extensive talks with our Cuban partners it has been decided to withdraw the radio-electronic centre from Cuba. The Chairman of the State Council of Cuba has been apprised of the issue.

I would like to stress that these decisions do not indicate a downgrading of our interaction with our partners. As regards Cuba, we have maintained and intend to maintain relations in every sphere. As before, we will consistently advocate lifting of the economic blockade of Cuba and we support our joint efforts and position in the fight against terror.

As regards Vietnam, we have worked out an extensive programme of economic cooperation and development of relations in other areas. We will implement all these plans.

On the subject of our meeting today: the armament programme must be further improved and strictly adhered to, as we were told by Ilya Klebanov today. The Government must remain committed to these goals in 2002. And as Alexei Kudrin has said, the Government should proceed in a transparent way so that we are assured that the funding of the programme in the following years will increase, and considerably so. Amendments must be introduced in the draft 2002 budget to increase financing of a salary raise for servicemen.

I think pending a final decision on the budget these issues should come under further study at the Security Council and the Government’s economic agencies with due account of what the officers taking part in this meeting have said.

In conclusion I would like to thank Vladimir Kuroyedov and all those who took part in the lifting of the Kursk nuclear submarine for successfully completing the main stage of the work. After the operation is over, we will meet with all the main participants in the operation in the Kremlin.

Thank you for taking part in the meeting.