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President of Russia Dmitry Medvedev: Friends, colleagues,

I would like to begin by welcoming you and wishing you a happy New Year.

I am not going to hide the fact that today’s topic of discussion will not be centred on the holidays. At our previous meeting we discussed the tasks for overcoming the effects of the global financial crisis and coordinating the legislative activities of the federal and regional parliaments.

I think that today we can already draw certain conclusions on what has been accomplished. After all, we were able to ensure coordinated, harmonious work of the executive and representative authorities in the capital and in the regions, at least in the sense that we were able to take necessary and in my view sufficient regulatory measures allowing to combat the development of the crisis in our nation. This does not mean that we succeeded in everything, but nevertheless, through our coordinated efforts we were able to overcome or stop the key negative trends that appeared at the end of last year and the beginning of this year.

We introduced timely changes to the regional budgets aimed toward providing social protection for the people, supporting businesses, and stabilising money supply. I believe this kind of experience is unique. We have never before had a state mechanism function so harmoniously during a period of crisis, because honestly, in 1998, the state mechanism in effect at that time proved to be quite the opposite: it was not synchronised; instead, we saw that it was incapable of dealing with the challenges that stood before us. As a result, we suffered an economic collapse, we missed many opportunities, and our financial system came undone. However, we did not have a similar situation this year, and I am confident that this is the result of our joint efforts.

Now, I would like to outline what we must do in the future. I recently specified the key ideas on this topic in the Presidential Address to the Federal Assembly. In essence, we must take on three particularly important challenges.

The first and most important challenge is to modernise our economy. The second challenge is to increase the efficacy of the social policies in our nation. And the third challenge is to develop the political system itself. That is what I will talk about now.

As you all understand, improving the quality of life for our citizens is a clear priority in all of our work. In recent years, the government has been able to fully use all of its capacities and has been thoroughly fulfilling all of its social obligations. That is precisely why the people of our country trust the decisions that are being made at the top – both at the executive level and in our parliament. That is why, overall, the representative bodies of Russia’ constituent entities are trusted and respected by the citizens of our nation.

At the same time, society’s ability to meet its social guarantees is directly dependent on the competitiveness of our national economy. It needs to change; its current quality is absolutely not good enough. It must be modern and diverse, it should be based on high technologies, and we will all need to work together to make this happen. I count on your active support in resolving this problem.

Among the deputies of the Russian Federation’s regional parliaments there are thousands of people working on precisely this task. These are representatives of the business community, scientists, educators, attorneys, and economists – in other words, some of the most active members of our society, or the regional elites, as they are often called. You know what is happening in your regions, not just in theory but in practice as well: you know where the weak points are and where additional capacities may be found and employed. What’s most important for us right now is to close the technological gap, get past the economic nosedive that began in the late 1980s and early 1990s and which has clearly gotten worse since our nation, along with others, got caught in the economic crisis. This is our most pressing task. Still, in order to get out of this crisis, we need new solutions; we cannot simply do it by increasing the volume of energy exports. Although this would be easy and it is a proven recipe, it ultimately leads nowhere. We need to get out of the crisis by reforming our own economy and here, I repeat again, I count on the support of legislators from every region. This is the task of prime importance.

Economy modernisation is nevertheless impossible without changing the structure of our society, our way of life, and our culture, particularly our political culture. As you may recall, I devoted my last year’s Address [to the Federal Assembly] to measures for democratising the political system and improving the quality of representation at the federal, national level. In the next step of this progress, I believe it is critically important to focus specifically on the regional level, which is also a topic of my speech to you now. We should significantly increase the influence of the parties and regional parliaments in the constituent entities’ politics, and ensure additional guarantees of equal rights for all the parties, as well as their fair, civilised political competition.

Our society is already rather mature. It is not perfect, but relatively mature nevertheless, and we must remember this fact. Thus, we should actively implement new technologies for maximum transparency in elections and in operation of government authorities. We should set reasonable procedures for determining the number of representatives within regional parliaments. Incidentally, I signed a draft law today on submitting a corresponding document to the State Duma, which will regulate the number of regional parliamentarians. We will discuss the subject later, as this is another issue I propose for our agenda.

There is one more topic to it. At our meetings, we had multiple discussions of coordinating the legislative process at the federal and regional levels. The Federation Council has developed and approved a corresponding concept for its interaction with the legislative bodies of the constituent entities of the country. The concept provides a mechanism for selecting and enhancing the most topical legislative initiatives by the regions for the purposes of their subsequent submission to the State Duma and the Federation Council. As far as I know, a finalised agreement with the local legislative assemblies was signed today, is that right?

Speaker of The Federation Council Sergei Mironov: Yes, that’s right.

Dmitry Medvedev: That’s good, because it means that the mechanism for this work has been created. I hope that it will be effective, functional, and meeting all the needs of today.

We are now meeting just before the New Year, a wonderful and nationally celebrated holiday. The next year is special, not only because of numerous new challenges and the efforts which will be required to progress toward the goals I just listed, but also because of the great anniversaries that will be taking place in 2010. Please note that next year we will all be celebrating the 65th anniversary of the Great Victory. I think that our task is to ensure the widest possible celebrations and a truly warm atmosphere for the veterans of the Great Patriotic War.

Last year, I made the decision to provide apartments to all veterans of the Great Patriotic War. I know that you also worked hard on this project. Work is underway in all the federal constituent entities to provide those apartments. I expect that every Great Patriotic War veteran who was registered [before March 1, 2005] as soliciting improvement in residential premises will be granted one by Victory Day. As for the veterans who registered after March 1, 2005, we must make all the necessary decisions before the end of next year, and we must provide them with apartments as well in line with a recently made decision.

Friends, I hope that today you will be able to practically discuss these problems, as well as others. I would like to once again wish you a productive day of work. Following the discussion of what I have pointed out and of the subjects you may suggest, I will draw some general conclusions.

Thank you.

<…>

I would like to say a few words about the issues being discussed here today. I should note that everything looks very good from a technological standpoint in the Federation Council and in meetings with legislators. We are sitting here, working, and I have already received a transcript of my speech, including all the details, such as “Mr Mironov, I will try to stay within the allocated time limits. (Excitement in the audience.)” (Laugher.)

Indeed, this is not as pointless as it may seem, because the faster we can work and issue these decisions, the more quickly the decisions will be implemented. It is the duty of the legislators, the parliament of the Russian Federation, and the legislative bodies of our federal constituent entities to pass laws and hold discussions while these discussions must also be accessible to the public, so this is a good thing.

Now, I would like to briefly comment on the points raised. My analysis may not be exclusive, but nevertheless, I just want to outline a few difficult problems that were brought uphere.

In his speech, Mr Mironov mentioned the fact that although we are resolving social problems, certain difficulties nevertheless do and will remain. I completely agree with this. Unfortunately, we have had a hard year, and the upcoming year will most likely be hard as well. In this context, I would like to draw legislators’ attention to the need for addressing unemployment.

We were able to make some fairly good decisions. The programme that was prepared by the Cabinet following my instructions is functioning and producing positive results. It is implemented in the regions creating new jobs, ensuring unemployment benefits, and offering public works. Still, this is not enough – we need to be more creative. Furthermore, the current crisis is such that unfortunately, unemployment tends will be fairly lengthy as you yourselves are probably aware after having read Russian and foreign analyses and given the crisis your own thoughts. In spite of the fact that production may be increasing, and even the gross domestic product may be growing, the number of jobs will nevertheless remain problematically low for a rather long time.

Thus, I think that we need to address unemployment seriously at multiple levels – the national level and the regional level. Currently, this is our number one problem. This year, for example, we have seen growth in the agricultural sector, which is good; we will not be in the negative this year – indeed, we will be in the positive. This is the result of earlier efforts.

However, unemployment is still our most important challenge. I would like to once again draw the attention of all legislative assemblies to this fact: your goal and your duty is to make the necessary decisions and consider various programmes for increasing employment, to act quickly and professionally.

Mr Sobyanin [Deputy Prime Minister and Russian Federation Government Chief of Staff] reported on the implementation of the Presidential Address by the Cabinet. Indeed, the work is already underway. I will not go into specifics now, but I will comment on one thing: my Address, as well as the strategies of the government place particular emphasis on investment projects. This issue is very difficult for us. We all began our careers in the regions, and you continue to work there today, even if you do spend a lot of time in Moscow. Regretfully, investment cycle in Russia takes years. I am not even referring to our main cities of Moscow and St Petersburg, where investment activities confront extraordinary difficulties and complications, where there is too much bureaucracy in everything, too many obstacles, so we absolutely need to change the situation there. Even in the smaller entities investment cycle may take months, sometimes even years.

Today, I signed into law a set of recently passed building regulations. This is already a good beginning. Yesterday, I also signed a draft law on amendments to the Law On Technical Regulations, which will hopefully allow most technical regulations to be approved through simplified procedures from now on. I now request the Cabinet to make sure that these regulations may be passed quickly by the appropriate agencies, so that the process does not stretch on for months.

I am bringing this up because while the approval process for the technical regulations will hopefully be simplified shortly, the approvals required for investments remain lengthy on the regional level. I suggest that we consider passing statutes in each region regarding respective investment cycles that reduce bureaucratic procedures and the time allowed for approvals. Even if some procedures fail to be completed within the timeframes set, the deadlines may then be extended a bit. Still, I would like for legislators to deal with this issue and to encourage their colleagues – local executive authorities – to do the same, because it is dependent on them: they are the ones making decisions and the ones extorting bribes. I am now addressing the legislative bodies, our regional parliaments with the request that this be taken care of.

It is good that we are seeing the emergence of new political institutions, as mentioned by our colleagues. I am referring to the local governments and governors reporting to the legislative bodies subject to the procedures under which the federal government must currently report to the Federal Assembly and the State Duma. Still, this is not enough. We need to consider making changes so that these types of contacts happen less sporadically.

I recall how this was organised in St Petersburg at the beginning of the 1990s. I do not think it is enough for the chairperson of the local government or regional governor to show up just once a year or so. As partners in this dialogue, please consider that we need to have regular discussions of this kind. I understand that you occasionally invite deputy governors to see you and hold discussions within committees, commissions, and at plenary sessions, but all of this needs to take place on a regular basis; in other words, these meetings should be standardised. I think this will promote higher quality governance.

We also need to give significant attention to elections for regional and local government positions, as well as to voting procedures and party equality. I specifically outlined these points in my Address and during meetings with the political parties. Our electoral system is still imperfect, although it has improved recently. I feel that we also need to reflect on how political parties’ activities are portrayed in the local media. At the federal level, I made decisions on the subject as part of the steps to implement the previous Address – namely, guaranteed access of parliamentary parties to electronic media. The setup is not ideal, but it functions. I was discussing this issue with my colleagues, and they have said that it works. It also works in the regions. Executives of the national television channels regularly file summaries and statistics on the politicians, who made the appearance, when, and for how long, so I am monitoring these processes. We need to have the same kind of statutes at the regional level. This is a question of democracy. We also need to think about fine-tuning our mechanisms for monitoring elections. To put it lightly, the last election made this need quite evident.

Innovation is an extremely important topic. Innovative work is currently underway in the Tomsk Region. By the way, I just presented an award to the rector of the University of Tomsk. Still, it is not enough to only do this kind of work at universities; innovation needs to be developed on a commercial level as well. You mentioned the fact that banks are supposedly doing a good job granting loans, but they are reluctant to issue bank guarantees. Frankly, in my view, this is one and the same thing, because a bank guarantee generally is part of the lending process, therefore the point is arranging financing.

Unfortunately, our situation is still difficult, because we have seen lack of confidence since the outbreak of the global financial crisis. Even though we currently have the lowest refinancing rate in the entire history of modern Russia, the de facto interest rates in our nation are significantly higher. Thus, it is our goal to lessen the gap between these figures as quickly as possible. Clearly though, this will not depend on our forceful actions, but rather, our economic situation, which will naturally depend on how we work.

There is one final matter to which I would like to draw your attention. We all understand that there is a lot of variation between our nation’s regions and that some of our regions have serious problems with unemployment – not just standard unemployment, but joblessness that has been accumulating over time. In particular, I am referring to the Caucasus region. Indeed, the Caucasus is an area of our country that reflects all of our problems, sometimes in hyperbolised form. These problems include regional vices like specific criminality, but they also include economic hardships. As you know, the Caucasus republics have the highest level of unemployment, and it is imperative for us to address these issues. I would like the legislative assemblies of our southern republics to pay special attention to these matters, because this is exceedingly important. Clearly, the situation is dependent on funding, but even with the financial resources we have available today, we must work more actively to attract investors, because the most important factor which stimulates investment is the investment climate. If the investment climate is normal and auspicious, then it is possible to attract investments even to fairly complicated areas. The investment climate depends largely on regulatory acts passed by legislative assemblies and on the level of activity by the regional administrators and regional parliament. This fact should not be forgotten.

Next year, we will continue working on all of these issues. No doubt, we will not resolve everything in just one year, but we must take a significant step forward. We cannot eliminate all the problems standing before us, but we must nevertheless maintain forward momentum. Thus, I am very much counting on the regional parliaments to demonstrate maximum efficiency in the upcoming year.

I would like to wish all of you a very happy New Year. Please pass on my warmest wishes to the regional deputies and to all the people of your regions.

Happy New Year to all!