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Vladimir Putin: Good afternoon.

In keeping with tradition, today we are reviewing the results of the year. It has been an eventful year. And it has demonstrated that reappraising the modern threats and taking them into account while modernising the entire state military organisation have been timely.

International terrorism is increasingly becoming a factor of global policy. If we are to combat it effectively, we need not only adjust our doctrinal documents but to optimise the actual structure of the armed forces and to have better interaction between the army and the law enforcement and other security agencies.

An adjusted Concept of National Security must provide the basis for and be a first step in this work. But the country needs its armed forces today, and they must be able to guarantee its security.

Permanent combat readiness units require the most serious attention. The army should be adapted to solve all these tasks within the framework of the Basic Principles of Government Policy in Military Development to 2010. It is one of the fundamental documents.

That approach applies equally to the government’s programme of armaments. Let me stress from the beginning that despite our efforts in fighting terrorism, if our troops do not have what the leading military powers in the world pride themselves on, that would nullify all our efforts in the most important area in the fight against terror.

Regarding the achievements during the current year, I would like to note the following.

First. Next year’s budget for the first time has a declassified item that includes most of the national defence spending. I think you will agree with me that it has been done above all for the benefit of the army itself. The money allocated for salaries, the payment for utility and transportation services must be put under public control.

I hope that this policy of openness will contribute to the modernisation of the armed forces.

Second. You know that the social problems of servicemen were discussed by the Government at its meeting on November 21. This year saw an improvement of the financial and social status of servicemen and veterans of the armed forces. The payment for military rank has more than doubled and the salaries of servicemen have increased by 60–80%.

Of course the increases are not sufficient to warrant claims that the social position of servicemen is excellent. But movement in the right direction is evident. We will continue to take steps in that direction to improve the social status of servicemen and address the problems that have piled up.

Therefore the task of the Defence Ministry and its local bodies is to monitor the way the allocated money is spent. It is within your powers to rule out abuses and make the spending process transparent.

Third. The experiment aimed at changing the principles of recruitment and forming a voluntary army launched in September this year is moving forward, albeit with difficulty. Some results of the pilot project in the Pskov Airborne Division have enabled us to correct our initial approaches.

Fourth. A few words about the personnel policy. I have already twice shared my views on that issue with this audience. My remarks address the issues of selection, placement and enhancement of the responsibility of the top-level and senior officers. And we have said critically that some top-level officers have exceeded their retirement age, and that there is no rotation between the central Staff of the Defence Ministry and the military units on the ground.

The Defence Ministry has drawn the necessary conclusions from that discussion.

I am aware that some serious measures have been taken in recent months to strengthen discipline in the armed forces and eradicate non-regulation relations. In connection with this, I urge you to pay special attention to preventing and stopping crime in the army, especially crime involving the use of arms. I expect that early measures will be taken to strengthen discipline and improve personnel management in the armed forces.

I would also like to mention the decisions taken by the Government on the initiative of the Defence Ministry to improve the work of military schools and their management. That effort must continue.

I have mentioned just the main areas of your work. I believe that during the course of this conference we will be able to discuss some other matters as well. The main thing is that our discussion should help to solve the tasks currently facing the Armed Forces of Russia.

Thank you for your attention.