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Vladimir Putin: From what I have heard now I see that very serious work to improve legislation is underway in the regions.

What I find particularly important and what I have made a special note of is that the package of laws on financial and economic matters defers the issue of delimitation of powers. That may discredit the very idea of reform.

Colleagues, nothing could be further from the truth.

It has rightly been pointed out. We have repeatedly discussed it at the State Council, and with the heads of regions, governors and presidents of the constituent republics of Russia. And we have concluded that this process, the synchronisation of proposed laws and amendments to the laws that regulate financial and economic activities must proceed in parallel, and the laws on delimitation of powers that we are considering must come into force simultaneously with amendments to the tax and budget legislation. The Finance Ministry is already preparing these proposals. Taking part in this work are the deputies of the State Duma.

After they have been formulated they will be presented to you without fail. They should on no account remain a secret. Moreover, a comprehensive revision of all legislation must be carried out. This is what we propose to do. More than 200 laws are to be reviewed by 2005. At present they are all pending before the Commission headed by Dmitry Kozak together with the representatives of the regions, ministries and agencies and the deputies of the Federal Assembly. I think members of the upper house are also represented there.

Now about the responsibility of all the parties, including the federal centre, for the decisions that will be taken in the process of delimitation of powers. I absolutely agree, I think that the commission for the preparation of the bills will pay attention to this if something is missing from that package. Likewise I would like to say that it is inadmissible to pare down the constitutional rights of the regions of the Russian Federation. It is not our aim to build a Soviet-style country based on over-centralisation. It is ineffective and it won’t work, especially in the context of a market economy. If there are such fears, if there are even hints in the law, they should come in for scrutiny.

And finally and most importantly. The regions may end up being saddled with obligations that are impossible to meet.

Dear colleagues, I would like to ask you a question. Do you know how much the state owes the population? If we set out to meet all the obligations to our people, all that is written down in the law, who knows what should be the size of the budget of the Russian Federation?

Only the experts know. Nobody knows for sure. Because so much has been written in recent years that we are still sorting it out.

6.5 trillion roubles is the rough estimate. The country’s consolidated budget is 3.5 trillion roubles. 6.5 minus 3.5 equals 3 trillion of outstanding obligations to the population. This is the problem. And that is why we are working here.

We must delimit powers and stop cheating our population. We must say who is responsible for what and how much he is to contribute to the budget in order to meet these obligations. And if there are some obligations that we cannot meet, we must say frankly and honestly that we won’t meet them because we can’t.

People can forgive us anything, except one thing, cheating. And we keep postponing payments year in and year out pretending that we do not notice…. We say that the law will not apply this year while we know that it will not apply next year too because we have no money.

So it would be absolutely true to say what the priority is, what the state is obliged to do by all means: to help disabled people, war veterans and the disadvantaged social strata and so on. We must declare what we must do and what we cannot yet do; and if we can do it, to what extent. This is our goal.

I must tell you that you are not the only people who have doubts about some provisions of the laws or bills. The federal authorities, the Government of the Russian Federation have at least as many questions and fears. They fear that when certain obligations are devolved on them, and when they have to meet them it would be difficult for them to do so.

Some intensive work is underway at the Finance Ministry and in the economy as a whole, in all the ministries and agencies. As soon as it produces something that can be presented to the State Duma deputies and to you, that will be done.

And finally, about the “hybrid” system. You know, it has rightly been said that if a law has been passed it must be obeyed. At the same time, I must draw your attention to some concerns that have been voiced: the small number of mandates the parties allocate to the regions, the need to make the lists more open; and there are some disputed issues such as the length of residence requirement and so on.

I would repeat what I said at the beginning. This law and the system are not being introduced with anybody particular in mind, or in order to please someone or to offer advantages in the political rivalry in the regions or in the country as a whole. This is being done to make our country more transparent for ourselves and for the world, to make it more stable and predictable so that when our people go to the polls, they vote not simply for a person they like, but a person whom they like and whose political convictions they understand, so that that person has a double responsibility: to the country, i.e. the voters, and to the party whose ideas he promotes in his election campaign.

Clearly, this cannot be introduced overnight, it takes time. I agree with many of those present that the approach must be more balanced and delicate. Let us think what can be done. I am not against it, I am for it. If you think that your opinion has not been duly taken into account let us think about it, but make sure that it does not happen as it often happens in Russia: spend a hundred years thinking just in order not to have to do anything, to lie on the sofa and stare at the ceiling like Oblomov. History has left us no time to behave like that. Time has run out, so the law must be implemented. But simultaneously let us put our minds together to decide how best to do it. I am ready to think some more together with you, relying on your opinion. Please formulate and convey your ideas through the speaker of the upper house. If we all decide that it is necessary, I am ready to join you in meeting the State Duma deputies in order to make some corrections.

Thank you for your attention, I wish you all the best.