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President Vladimir Putin: Good afternoon. First of all, I want to congratulate you on the results of the referendum in the Chechen Republic on the Constitution and the laws on elections of new President of Chechnya and on elections to the republic's parliament.

I think all will agree that always, everywhere, in all times there have been many of those wishing to act on behalf of the people, purportedly to defend the people’s interests. So it always was with Chechnya too. But never before in Chechnya had the people been approached directly, never before had the people of Chechnya been asked just what it was they wanted themselves. We did that for the first time, and the people of Chechnya have given a clear answer to all the questions put to them.

This is not only a clear assertion that the Chechen people want to live in peace and friendship with all the other peoples of the Russian Federation, but also great confidence in the authorities of the republic and in the federal authorities. I think that this is also your great personal success. You have managed to establish positive, constructive and business-like contacts with the representatives of the federal authorities, despite the fact that that was very difficult. And no matter how difficult it was, you have also managed to establish relations with the main groups in the republic itself.

I repeat, this is great confidence on the part of all those who live in the land of Chechnya, and it gives us the opportunity to start a new stage in joint work on resolving the situation in the republic and developing Chechnya.

I think that we must concentrate our attention on three main areas. The first is further political settlement. I think that there are several important tasks here.

The first task: it is necessary to start joint work on the preparation of a treaty on the delimitation of powers between the federal centre and the Chechen Republic. To make a treaty that would enable the republic to develop in a full-blooded and effective manner, would make it possible to ensure the interests of the Chechen people by granting to Chechnya autonomy in the broadest sense of the word. The Constitution of the Russian Federation allows us to do this.

A second, very important component, work on which has already begun, and needs to be completed jointly with the deputies of the State Duma – we have already discussed this many times – is to arrive at an amnesty in Chechnya.

One more very important component – it is necessary, without any haste, to start preparations for the elections of President of Chechnya on the basis of the constitution that has been adopted by the people. In the law enforcement sphere we now have the possibility to start the transfer of the whole law enforcement sphere of the republic, of its major components, from the Federal Security Service to the Ministry of Internal Affairs(MVD). I mean that a considerable share of responsibility for the situation in Chechnya must be in the hands of the MVD of Chechnya. Let us start this work right now, let us complete it steadily, without haste and to the extent that law and order bodies are strengthened in the republic. I think that by the autumn we will have completed this work.

And, finally, the third component of political settlement is joint economic work. These are common, large-scale tasks. It is necessary to restore the economy of Chechnya and to create jobs. But there are also more immediate tasks. It is our duty to do some things as a matter of urgency. It is necessary to reconstruct villages, destroyed population centres, and first of all it is necessary to start clearing Grozny and rebuilding the capital of the Chechen Republic.

The second urgent task is to pay compensation to citizens who have lost housing. Preliminary lists already exist – about two hundred and eighty thousand people. There is also the program in the 2003 federal budget for the payment of compensation. But if we work in this fashion, then we shall drag out these payments for ten years or more. In principle, that cautious approach up until now has been justified. In the federal centre it was not clear what would happen to these buildings, whether they would be destroyed again, and so forth. We have already had such negative experiences.

The results of the elections have shown that the people have defined themselves conclusively and have made a choice in favour of peace. It is therefore quite justified to change the procedure of compensation payments. I think that this needs to be done at an accelerated pace, we must rapidly help people reconstruct their lost housing. We must do that in two tranches, in two stages. The first tranche, this year, comprises half the necessary payments, and the next – in 2004 – the second half. It will be correct if, in large part, you, the republic's leadership, choose the form of payments.

I consider that there should be no lists of first priority, second, third priority. It is necessary to make it possible for all to get the first half of the money at once, and the second half – also for all at once. Here there are many particulars and variables. But one certainty is this: we must ensure that it is impossible to corrupt this sphere. And a second point, however sad it is say, is that the responsibility will lie on the MVD of the republic to ensure that bandits do not take away this money from ordinary and little protected citizens.

If we ensure all this, then it can be said that the trust put in us by the Chechens in the referendum will be justified.

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With regard to the lists. Here I will once again repeat the theses which I have just articulated. I have heard certain comments, remarks from the most ordinary people who live in Chechnya. One woman said: ”Well, it'll never be my turn.“ People fear that very much. They are afraid of swindlers, both local and in Moscow. That's why it is necessary to divide the payments into two parts, into two tranches: paying the first half to all this year, and paying to all the second part in 2004.