Russian President Dmitry Medvedev’s annual address to Federal Assembly

Moscow,
30 November 2010

Citizens of Russia,

Deputies of the State Duma and members of the Federation Council,

Speaking in this room a year ago, I presented my political strategy: standing on the foundation of democratic values, we need to modernize our economy and give impetus to progress in every area, to raise a generation of free, well-educated and creative people, to raise the living standards of our people to a fundamentally new level and to confirm Russia’s status as a modern world power whose success is based on innovation.

These processes, modernization in our country, began at a time which was hard for the whole world, a time of the global crisis. Compounding this were the heat wave and wildfires of last summer. Yet, despite the difficulties, on the whole we were able to accomplish quite a few things, and would like to thank all those who contributed to renewing our society.

We managed to stabilize our economy after a significant downturn, and this year we expect economic growth of 4 per cent. Despite the rise of food prices, which regrettably occurred throughout the world, we prevented an inflation upsurge. Our objective for the next three years is to bring it down to 4-5 per cent a year.

Almost 150 billion rubles were allocated to the agricultural sector in order to mitigate the consequences of the drought. Our decisions will stabilize the situation in this key industry, help the farmers and prevent a drop in living standards in the affected areas. I will continue personally monitoring the implementation of these decisions.

The number of the unemployed is now about five million people, a reduction of two million since the crisis peaked. This is a significant achievement. Sovereign debt is at a very low level. Russia’s international reserves today amount to about $500 billion, much more than at the end of 2008.

After the anti-crisis measures, which were unprecedented in scale, we are now moving on to a more balanced budget policy. The budget deficit, unfortunately, remains quite high. We will reduce it lest it becomes an obstacle to development. All the leading nations have taken on similar obligations.

Of course, the economic situation is still quite complex. We haven’t overcome all the consequences of the crisis yet, and we must admit this openly. But we will fulfill our social obligations regardless of anything.

The real income of our people has grown by approximately five per cent over the last few months. Next year, we are planning to raise the salaries of public employees. We are implementing targeted programs to provide housing for war veterans and army personnel.

We have been able to raise pensions every year. I had set an objective to provide all pensioners with an income above the poverty line, and this goal has been achieved. Yet, the average level of pensions remains quite low, of course.

To raise pensions and modernize the healthcare system, we made a number of tough decisions, including raising mandatory medical insurance premiums. People talk a lot about this today. We need to find a way to mitigate the negative impact of this measure on businesses. In this context, I made the following decision. Small businesses working in manufacturing industries or providing social services will be given a two-year transition period with a lower taxation level set at 26 per cent.

This year, we focused on the priority areas of technological modernization. Our goal is to raise our economy’s energy efficiency by 40 per cent by 2020. This goal is realistic, and I am absolutely sure we can achieve it. This will both reduce corporate expenses and help people save their money, primarily and perhaps most importantly, when they pay utility bills. We discussed the issue recently, and the main conclusion we came to was that, in order to prevent further degradation of the utility infrastructure and at the same time enhance energy efficiency, we need to attract private investors to the utility sector more aggressively. I have already given all the necessary orders on this issue.

Also, I’d like to note some achievements in high-tech development. For example, Russia’s nuclear industry is once again building and launching new power plants every year. Nine reactors are currently under construction in Russia. In addition, Russia is working on projects in India, Iran, China and other countries. The total volume of orders generated by nuclear construction for the machine building industry has grown tenfold over the past three years, or by 25 times if we compare it with 2005. A good figure. Of course, the state budget and all the people employed in the industry benefit from that.

To give you another example, the list of the world’s top 500 supercomputers includes 11 systems made in Russia. The speed of Russia’s Lomonosov supercomputer will grow more than 2.5 times next year, making it one of the most powerful computers in the world. GLONASS satellites will be ready before the end of this year, and within the next two years all key digital navigation maps will be ready, so our own satellite navigators will be available for use, and GLONASS capacities will become available for mass consumption.

By next year, most border regions will have digital access to major TV channels. We will build over 1000 facilities for the public digital broadcasting system. This year, we taught the Internet to speak Russian, so to speak. It is important, even in terms of Russia’s reputation. The .rf domain is open and gaining popularity. I consider that to be another one of our achievements.

Also, we are implementing a new development strategy for Russia’s pharmaceutical industry. Over the next few years, the share of Russian-made pharmaceuticals on the domestic market must radically increase – from 20 per cent to 50 per cent, and to 60 per cent for innovative medicines. This will make medicines more affordable. I hope that growth in pharmaceutical exports will also generate substantial revenues for Russia.

The Skolkovo Center is our most famous innovation project. I proposed this initiative less than a year ago. Today, the project is becoming reality. We have a land plot, an administrative team and a special law offering unique benefits to those who will be involved in the project. Finally, we have specific offers from both private and state companies that are ready to start anytime.

I’d like to emphasize that tax benefits and state financing for research activities should be available to all those who have ideas and meet our criteria.

Also, over the next three years we plan to allocate approximately 30 billion rubles for joint research projects by leading universities and industrial companies. This is a serious figure, but if we see positive results we should increase financing for this program even further.

Another project that’s important to us is making Moscow a major international financial center. Federal agencies, the municipal administration and the new mayor of Moscow are all responsible for this project. Major Russian and foreign financial institutions have joined the work. I am convinced that with this project, too, our chances are quite good. Furthermore, an efficient financial market will provide obvious benefits both for people and for businesses, which will have access to a whole range of modern financial services, and, of course, for the whole country, which will benefit from an influx of capital and taxes generated by increased economic activities.

We have really achieved a lot, considering, of course, that it was all done in one year. But I hope we all realize that this is only the very beginning. We should use our resources to modernize our economy, not to mend holes. We need to create new competitive goods and services and millions of new jobs. We need to generate demand for innovation, develop our small and medium-sized businesses and expand our people’s professional and social prospects.

I order the government to use at least half of the appropriated funds that weren’t spent plus some additional revenues from the federal budget to support the priority areas of modernization, which include, as you know, making our economy more energy-efficient and developing new energy, information, telecom and medical technology. Our people’s quality of life depends on our success in all those projects.

Colleagues,

Of course, modernization, and all the things I’ve referred to just now, is not a goal in itself. It is an instrument which will help us resolve some old economic and social problems, support those who need it the most and create conditions to develop the potential of those we pin our hopes on – our children and our young people. It is mostly for their sake that we are carrying out modernization. We don’t want to be ashamed of the country we pass on to our children and grandchildren. But who we pass Russia on to is equally important. The 26 million children and teenagers living in Russia should have everything they need to develop. They should be healthy and happy as they grow up, and eventually they should become proper citizens of Russia. This is our Number One priority.

Taking care of future generations is the most reliable, smart and noble investment we can make. A society which really protects children’s rights and respects their dignity is not only kinder and more humane. Such a society develops faster and better. It has a positive and predictable future.

I believe it is vitally important for us to develop an efficient policy for children. This should be a modern policy which will help us develop as a nation. That’s why I will make this the key subject of my address today, and I will speak in detail about the issues which I think need new solutions and new approaches.

First of all, a few words about the measures we are taking to improve the demographic situation. The birth rate in Russia has increased by more than 21 per cent compared with 2005. Incidentally, I’d like to mention that this is one of the highest growth levels in the world. The infant mortality rate has dropped by 25 per cent. Last year, for the first time in 15 years we saw an increase in the Russian population. Of course, this is mostly thanks to the maternity capital, the Healthcare national project and other family-oriented social support measures.

We will continue working hard on the demographic problem but we should realize that during the next 15 years we will be confronted with the negative effects of the demographic downturn in the 1990s and the number of women in the so-called reproductive age group will considerably decrease, which is a serious threat and a challenge to our entire nation.

What do we need to do about it?

First, we should enhance both the quality and the accessibility of medical care and social benefits provided to mothers and their children. We should develop the maternity certificate program and the rehabilitative treatment program for underweight children during the first three years of their lives. Also, we should increase government subsidies for infertility treatment programs, including in vitro fertilization.

Second, we need to modernize children’s clinics and hospitals and improve the competence of the personnel working there. Starting next year, we will allocate substantial funds for these purposes by co-financing regional programs. At least 25 per cent of the total amount of money allocated to modernize the healthcare system should be used to develop health care for children. This is a lot of money. In fact, it may amount to 100 billion rubles over the next two years.

Today, almost a third of all children have health problems by the time they reach school age. Statistics for teenagers are even worse. Two-thirds of them have health issues. Starting from 2011, we must monitor more closely the medical condition of Russia’s children.

Special attention should be given to vaccination, to making quality medications available to children and teenagers, and to early detection of tuberculosis, cancer and other dangerous diseases. We will provide the funds required for these purposes as well.

Third – and this is a very important point – we need to support young families and families with many children. Housing remains one of the most acute issues. Since 2008, the law allows paying out mortgages and housing loans from maternity capital even if the contract is concluded prior to December 31, 2010. In other words, you don’t need to wait for your child to turn three. Almost 250,000 Russian citizens have already availed themselves of this opportunity. Incidentally, this also stimulates the housing market, which is important in the post-crisis period. I believe that starting next year we should make this a permanent rule.

Fourth, experts believe that the best way to deal with a demographic crisis is to radically increase the number of families with three and more children. Recently, I came across an interesting online report about a social advertising campaign in the Altai Region. The idea is simple but I think it’s quite interesting: you show famous Russian people, the pride of our country, who were third in their families. These include Nikolay Nekrasov, Anton Chekhov, Yuri Gagarin, Anna Akhmatova and others. Without these great people, without their writings and achievements, the world would have been different. Humanity would have been left without something in terms of ethics and culture.

That’s why I believe we should provide the most favorable conditions possible for large families. I know that in some regions (for instance, in the Ivanovo region), when a third child is born the family is given a free plot of land where it can build a house or a dacha. This is a very appropriate decision and a good example for other territories.

I believe this should become common practice across Russia. I instruct the government to consult with regions and develop a procedure by which a family with three or more children would get a free plot of land to build a house or a dacha. Of course, this rule may be implemented gradually, taking into account special situations in various regions.

Regions may use other ways to support large families. For example, the Ulyanovsk Region provides young families with a 100,000-ruble certificate when a third child is born and for every child after that. I suggest that the heads of all regions consider introducing regional maternity benefits. Of course, this is a costly measure and you have to consider the situation in your region, but the results will be worth it.

Fifth, we should introduce additional tax benefits for families with three or more underage children. For example, we should increase the tax deduction for each child starting from the third one up to 3,000 rubles. I instruct the government to prepare their proposals on this issue and to consider tax deductions for all families with children, at the same time cancelling the so-called standard deductions. For the vast majority of our people, they are purely nominal anyway.

Sixth, charities and media often raise funds for children with various serious diseases. There are also businessmen who help orphanages and support athletic and entertainment programs for children. They don’t seek any publicity for what they do, and this is important. To support such initiatives, we’ve been improving our legislation on charity for a number of years now. However, there are still some problems in this area. For example, financial aid provided to children more than once, even if those children have serious diseases, is included in their parents’ tax base. That’s not fair.

Funds received from charities for children should never be included in taxable income. I expect the State Duma to adopt a law on this issue shortly. Judging by your applause, this will be the case.

Seventh, young families often face a very difficult problem – they can’t get their children into a kindergarten. Wherever I go, whenever I meet with people, they practically always ask me this question. At the beginning of this year, we had 1,684,000 children on waiting lists for a place in a kindergarten. In fact, parents often have to get on a waiting list even before their child is born. It’s often because kindergartens are not available that young families put off the decision to have a child until later in life, or decide to have just one child.

Because of this situation, I give the following instructions. First, regions should have a program to repair old kindergartens and build new ones that meet modern requirements, or provide suitable facilities for them. At the same time, those requirements must be justified reasonable and feasible. As I said in the past, they should not be excessive.

Second, we need to support alternative forms of preschool education, including a system of private institutions for children and family kindergartens. Also, we need to consider the possibility of lowering rent and introducing property tax benefits for new types of kindergartens, including family kindergartens.

Third, schools should provide pre-school classes for children who don’t go to a kindergarten.

Colleagues, two years ago I instituted the Parent’s Glory Award. It is awarded not only to fathers and mothers with biological children but also to foster-parents. We are deservedly proud of such families. To be frank, just talking to them when they come here, to the Kremlin, to receive their awards gives me much joy.

Sadly, our country still has 130,000 children deprived of parental care. They have neither biological nor foster-parents. They are deprived of the most important thing, a family atmosphere. We still have a long way to go before we can boast of a society without abandoned children. Foster care authorities should make it their priority to find families for orphans and to help foster parents. We should not have “nobody’s children” in our country.

The so-called correctional orphanages remain a serious issue. Unfortunately, they often tend to isolate children rather than integrate them into society. Therefore, not only government services but also civil society must oversee the situation in those institutions. Every orphanage and every correctional institution should have a board of trustees, and their work should be as transparent as possible.

Finally, we need social adaptation programs for those leaving orphanages. It’s not enough to just teach and feed children; they should enter their new adult life prepared and confident. It’s not only teachers but also local authorities that play an important role here. They could, for instance, help those leaving orphanages pay for preparatory courses to enter a university or a college.

Our policy towards children is based on universally accepted international standards. The Declaration of the Rights of the Child adopted by the UN General Assembly states that “mankind owes to the child the best it has to give,” while the Convention on the Rights of the Child says that the interests of the child are above those of society or the state.

In 2009, we appointed a presidential commissioner for children’s rights. He has a lot to attend to, to put it mildly. Last summer, for example, it was revealed that some summer camps grossly violated safety standards. This led to children getting ill and in some cases even dying. We need to make sure such things never happen again.

Local administrations and oversight agencies need to prepare for the next summer season ahead of time, which means they should start practically right now. 58 regions of Russia already have their own commissioners for children’s rights, and they too should participate in this work. By the way, I believe every region of the Russian Federation should have its own commissioner for children’s rights.

Violence against children is a truly horrible problem. According to Interior Ministry data, over 100,000 children and teenagers suffered from criminal violence in 2009. Just consider this figure! Many cases really break your heart. Children, mostly orphans and children from dysfunctional families, are involved in drug abuse, prostitution and other criminal activities. The scoundrels responsible for this should be punished with utmost severity.

Last year, we introduced harsher punishments for sexual crimes against underage children. But preventive measures against such crimes are no less important. I believe that people convicted of violent crimes or of involving children in criminal activities should be banned from working with children. Such people should never be allowed anywhere near children.

I have sent a bill with amendments to the Labor Code to the State Duma. I expect that it will pass into law by the end of this year.

Deputies of the State Duma and members of the Federation Council,

Protecting the life and health of a child is a direct responsibility of the child’s relatives. That’s why it is even more horrible when violence against children occurs in their families. As we know, cruelty breeds cruelty. Children adopt the behavior model they see in adults and apply it in their lives – in school, in college, in the army and then in their own families. Our society should adopt an attitude of intolerance towards cruel treatment of children. We need to expose domestic violence and stop it. I know that several regions have social aid centers that work with domestic violence victims. St. Petersburg, the Orenburg Region and the Khanty-Mansi Region have a lot of experience in this area, and other regions should learn from them and follow their example.

I have to mention another problem. Our country has practically no infrastructure for people with disabilities and serious diseases. I don’t need to explain to you how much of a problem that is for children. Even a trip to school often becomes torture for a disabled child. Finding a wheelchair-accessible bus is a real problem. Residential and office buildings are usually just inaccessible to children in wheelchairs. Although, I have to say that new buildings, at least the ones I saw, are built according to new standards.

At the same time, disabled people often achieve great results in sports and art. They are truly the glory of Russia. Take, for instance, our Paralympian team. Their success was amazing. When these things happen, however, they happen in spite of the circumstances rather than because of systemic measures taken by the state and society. Creating a favorable environment for disabled children should be a priority in our new federal program called Accessible Environment.

The job of raising future generations is closely linked with the modernization of the education system. By implementing the Our New School initiative, we have redefined our standards for elementary school and prepared new standards for junior high and high school. Also, during the Year of the Teacher, we introduced new qualification requirements for teachers and new procedures for regular professional examinations and re-training. Also, teachers should have an opportunity to undergo internships at Russia’s best schools and receive additional professional training at the best universities. We are planning to allocate over 2 billion rubles for those purposes in 2011. But regional and municipal authorities should provide their share of financial support.

As Winston Churchill said, “headmasters have powers at their disposal with which prime ministers have never yet been invested.” Those powers should be used today to bring out the potential of every child and prepare children to choose their future professions as well as we can. In order to achieve that, we have to pay attention to the following.

First, in 2011 each school should design its own “school of the future” project. It will be a vision of how the school should develop. Of course, these projects should be devised primarily by teachers, current and former students of the school and parents. But I think that regional administrations could devise implementation procedures for those projects, working with businesses if necessary.

Second, we need to conclude the creation of a nationwide system that would help locate and support talented children. All children should be able to develop their potential regardless of where they live, the incomes of their families or their social status. I order the government to take this recommendation into account when new educational standards are introduced and to establish a standard per capita subsidy for educational programs for gifted children.

Third, children today are different from what we were at their age. Every generation is different from the previous one. They feel at home in the world of telecommunications and are used to new ways of information gathering. They like using new gadgets. As it has been said, and rightly so, no one in the world is as sensitive to novelty as children. Using modern software and technological advances in education has to become the norm. It has to be envisaged in the new standards.

The teachers have to learn all about that as well. We can’t tolerate the situation where students know more about modern technology than teachers. Teachers have to know about these things.

Fourth, the upbringing of our children is a responsibility not only of the education system but of our culture and society as a whole. We need new, quality films that will interest our children. Let us remember the influence that good science fiction has had on entire generations. We all read those books. They fascinated children, encouraging them to make their own discoveries.A whole generation was raised on those books.

Fifth, we need to pay more attention to the patriotic upbringing of our youth. True, we need to make serious changes in this area, but some traditional methods, such as military and patriotic games, can still be used today. They build character, promote teamwork and teach children how to cope with difficult situations.

I would like to specifically note the work of groups that find and identify soldiers’ remains. In 2010, the year when we marked 65 years since our Great Victory, they helped a lot of people find out where their loved ones were buried. This way our young ones are learning true patriotism.

I instructed the government to step up efforts to recover the remains of missing soldiers and repair war memorials. The situation is not altogether positive. But I believe authorities on all levels should be doing that constantly rather than just during special years like 2010.

Sixth, promoting the healthy way of life is a strategic priority of our policy for children. Of course, this applies not only to children. We, adults, have to set an example. Our whole society has to get over its childish mindset when it comes to healthy living. As Leo Tolstoy said, you can’t develop children properly unless you develop yourself first. Yet 80 per cent of Russians, or four-fifths of our entire population, don’t exercise or do sports.

Russia has one of the highest percentages of smokers in the world. The age at which young people start drinking and smoking keeps decreasing. Those who sell alcohol to underage children must remember that sanctions, including criminal prosecution, will be applied to them.

I hope your applause means the bill currently under consideration in the State Duma on penalties for such sales will be approved shortly. (Applause)

The health and future success of our nation depends directly on what kind of environment we leave to our children. In spite of the fact that Russia’s environment is unique and rich, we can hardly say that it is in perfect condition. We can only solve that problem by introducing a modern and efficient environment protection system.

We urgently need to take the following steps.

First, we have to evaluate the real condition of all polluted territories and use this as a starting point for our programs to minimize environmental damage and clean up accumulated pollution.

Also, some experts believe we need a so-called environmental amnesty, as long as the companies subject to the amnesty take it upon themselves to make their production facilities environment-friendly and clean up the territories where their plants are located. I think the idea is reasonable. The companies which are implementing such programs – not just preparing them but really implementing them and spending money on them – should not have to pay excessive fines, as it would only make it harder for them to amend the situation. On the contrary, we need to support such programs and use private-public partnerships as much as possible. I order the government to prepare their suggestions on this issue.

Second, the government should devise environmental standards that would take into account special conditions in some territories. Those would serve as a reference point for the authorities in their decision-making and setting requirements for production facilities. In fact, those standards will also serve as a clear benchmark for our people and our foreign partners.

Third, our civil society needs to play an important role in environmental protection. I often hear that “green” ideas are not popular in Russia because our people are not ready for them. To some extent, this may be true. That is why, as I have mentioned, the role of environmental education is crucial. We have to take that into account in our new educational standards.

Fourth, the quality of the environment should be the most important indicator of the quality of life and one of the main indicators of the territory’s socio-economic development. Consequently, it should to be a criterion to measure the efficiency of local authorities. I order the heads of all regions to present annual reports on the environmental situation in their regions. The people of those regions should have complete and true information about that.

As for non-governmental environmental organizations, if those people genuinely care for the environment, we need to have detailed discussions with them and find mutually acceptable solutions before we start building industrial or infrastructural facilities.

In conclusion I would like to say that childhood and youth is a time when people define their future, a time when people try new things. They discover. They experiment. They have no fear. The spirit of innovation, the desire to produce something new, bold thinking – those are the things our country needs today. We are counting on the energy and ambitions of our young people and their desire to work together and together achieve the goals they set.

Deputies of the State Duma and members of the Federation Council,

Modernization produces a smart economy but it also requires smart policies that provide conditions for an extensive renewal of society. We need new standards in governance and public services, a higher quality of courts and law enforcement, modern ways by which people can participate in the development of their city or village and more involvement on the part of the people in the work of municipal authorities.

In order to achieve that, I propose we take the following steps. First, we need to make day-to-day relations between the state and the citizen transparent, clear and simple. The understanding that government officials serve the people rather than control their lives is the foundation of democracy. For a regular citizen, the state is the official to whose office he comes with his problems, the judge who makes a ruling in his case, a local police officer or a tax inspector – any person who has the authority to solve his problems, like all of you sitting in this room. Government officials should not discredit the state with their activities. Their main mission is to improve the conditions that people live in.

We are optimizing our system of state and municipal services. Even today, people in many regions can file an electronic application for a passport or check their retirement account from home. Also, they can register a vehicle or get a driver’s license in any traffic authority office, not just the one closest to their registered residence, as long as it’s within their region.

Thus, some of the new rules are already working, even though I know from the letters I receive that some people are not satisfied with the way the system works. We need to keep improving it. The rest of the rules will become effective next year or the one after that.

The most important rule is to keep the “one-stop” principle. People should not have to run from one government office to another collecting all sorts of papers, the way parents have to do when they want to get support for their children that they are entitled to by law.

Government officials should be legally liable if they violate maximum periods for providing public services or if they violate procedures established by appropriate administrative regulations.

I want the government to prepare their proposals on these issues in a month’s time.

Second, while modernizing the system of public services, we need to pay special attention to the social services we provide to people. I think we should involve non-commercial organizations more in providing those services. They often know the actual situation even better than the authorities, they have unique experience, and they help people who find themselves in a difficult situation. I think by involving non-commercial organizations we will make social services more substantive and targeted. Also, this will reduce corruption among government officials, which is crucial.

Federal agencies should develop a clear and transparent system of selecting NGOs for such jobs. We need to choose organizations with a well-established reputation which people really trust, which have been working in this area for a number of years or which have been converted from another organization with years of experience.

I want the government to prepare necessary changes to laws and regulations which will allow non-commercial organizations to participate in providing public social services. At the same time, in providing funds for such organizations, we should have competitive mechanisms more often.

Third, each region should have a clear program to improve the investment climate and create new productive jobs based on the so-called best regional practices. These include reducing the time required to get all the permits necessary to start a new business, creating prepared industrial sites, and a number of other measures. On a more general note, we need to reward the regions which manage to increase their revenues rather than strip them of support, and to take this into account when distributing federal subsidies. However, that’s not enough.

The government needs to prepare its proposals on how we can change the current ratio of revenue distribution between the budgets of different levels. As a result, regions and municipalities will play a bigger role in resolving key socio-economic problems.

The main responsibility for the situation in a region lies with the governor. His work will be evaluated based on how many investors he manages to attract, how many jobs he creates, especially in industries not related to raw materials. This should be used as a basis for personnel decisions.

Fourth, the authorities must get rid of the property which is not related directly to their duties. It seems that property can never be excessive. But in reality, managing excessive property takes up a great deal of time, effort and money, as you all know, but the worst part of it all is that this may lead to corruption.

This year, I signed a decree which reduces the list of strategic companies to a fifth of what it used to be. Following my instructions, the government adopted a plan to privatize a large number of big companies. The main goal of privatization is boosting the efficiency of those companies and attracting more investment – serious investment – into the Russian economy. The revenue from this privatization will be used primarily to modernize our economy. Similar decisions need to be taken on regional and local levels. The law defining the general principles according to which regional authorities operate says that regional authorities may only possess the property they need to perform their duties. Accordingly, all other property must be privatized. The authorities should not be owners of “factories, newspapers and ships.” Everybody should be occupied with their direct responsibilities.

Fifth, modernization will bring the expected results only when there are fair laws in place, when there are independent and respected courts and law enforcement bodies which people really trust.

All these components are definitely closely connected, and it’s the whole system that needs reform rather than individual institutions. That is why in addition to developing legislation on the judicial system, which we have been doing for some time, we have now started reforming the Ministry of Internal Affairs. Also, we are adopting amendments that will help boost the efficiency of investigation and prosecution services. That’s why I have sent two bills, one on the police and another one on the Investigative Committee, to the State Duma. Today, not only federal but also regional and municipal authorities must prepare to implement those new acts effectively. They contain a lot of new things. Government officials should not be hiding in their offices while crime groups grow and take over their territory. They must make sure that people don’t need to be afraid for their lives and the lives of their loved ones; that they don’t need to worry about attacks on their person, their property or their dignity.

Sadly, recently we’ve seen a number of tragic events that took the lives of Russian people. To some extent, this happened because of negligence on the part of police and other government agencies. In some case, they even had direct ties with criminal groups. Following one such case, I made a decision to dismiss the police chief of the Krasnodar Region and asked the Prosecutor General’s Office, the Federal Security Service and the Investigative Committee to submit their proposals regarding punishment for their officers who were responsible for maintaining law and order in that area.

Sixth, in my address last year I spoke about the need to amend the Criminal Code. I said that the law should be tough and at the same time modern and reasonably humane. While bringing about justice and protecting the rights of the aggrieved party, we should not produce new members for the criminal world. Let me stress it again: punishment for minor offences should not involve imprisonment if possible. This is, by the way, particularly important when dealing with minors having violated the law for the first time.

Today I am going to introduce a law to the State Duma allowing the court to use a case-by-case approach when choosing punishment. In a number of criminal offence categories, bottom-line sanctions will be eliminated. The court will now be able to use such alternative punitive measures as fines and forced labor. But most importantly, in the absence of the bottom-line sanctions the courts should not be guided by the gravest possible punishment. The power of the court consists in the unavoidability and justness of the punishment rather than harshness, while the mission of justice is not just to punish but also to correct.

Seventh, fighting corruption remains our important objective. I believe that we must thoroughly analyze how our decisions are being implemented and move ahead. In our experience, even the threat of being imprisoned for up to 12 years does not stop bribe-takers. It seems that in a number of cases economic sanctions in the form of fines may turn out to be more effective. Thus, giving or receiving a bribe may be punished with fines to an amount 100 times the size of the bribe itself.

Currently we are facing a new type of criminal activity – that of bribery mediation. Everybody knows far too well that there are lots of crooks hanging around courts and other state agencies who assure that they know how to resolve any issue and to whom and how much money one should give. I think that bribery mediation, as well as the size of the fine I’ve been talking about, should be introduced to the Criminal Code.

Eighth, there’s another issue I would like to raise. I am not going to demonize the notorious Law 94. Everyone is criticizing it, as the situation has indeed gone beyond conceivable boundaries. The goals it stipulates have mostly remained mere declarations. According to the most conservative estimates, improper expenses including direct theft and bribes amount to at least one billion rubles. Therefore, it’s time to start working on a new version of the law on procurement, a modern and more balanced version.

I also believe that all planned open purchases must be announced in advance. Information about such plans must be posted on a special website with a possibility to give feedback, as companies may want to express their willingness to participate in a tender, or experts may want to express their opinions regarding the compliance of those plans with today’s requirements and market prices.

We need to define preliminary purchase plans of modern equipment, medications and other hi-tech products by the state and major state companies for the next nearest three years. In the future, we need to have similar plans for an even longer period of five to seven years. In this case both investors and researchers will be confident that the results of their work will be in demand.

Army modernization can be another factor in boosting demand for new technology. Like it or not, but in different periods of history it was only security issues and state investments in new technological defense solutions that were driving science and technology forward.

Today we are facing a fundamental task of creating a new hi-tech mobile army. We are ready to spend more than 20 trillion rubles on it. This is a lot of money. But this kind of investment will be twice as effective, if as a result, it will provide us with the so-called dual-purpose technology leading to industrial modernization and contributing to fundamental and applied research, as well as to collegial science. That’s why we are creating a special structure, which will search for and develop breakthrough technology for the defense industry. As you know, similar structures exist in other countries. We expect that much of that technology will be applied later in everyday life.

Ninth, the quality of the political system is a crucial indicator of the quality of life. In order to improve this system, a number of decisions have been made at the federal and regional levels. Speaking from this platform in 2008, I mentioned ten points for improving our political system and democracy, and then I mentioned another ten points in 2009. I would like to thank again everybody who took part in discussing these initiatives, all State Duma deputies and members of the Federation Council.

However we need to take additional steps at the local self-government level. Local self-government is a major element of any democratic state. Unfortunately most of our political parties don’t really play a significant role in municipalities. As a result, not all parties act as national political organizations at this level. I suggest we use mandatory proportional or combined electoral system in municipalities with 20 or more deputies.

Political competition at the bottom level will help build trust in the party system and make parties more accountable to voters. They need to be closer to the everyday life of our people. It is another step towards strengthening our democracy, which sees the well-being of our people as its main goal.

So the State Duma election next December will take place with a political system that has been renewed at all levels.

Tenth, all of us present here had an open and detailed discussion of the new law on police. In my opinion, this discussion has brought about some pretty good results. We will have a similar discussion of the new law on education. I think that we need to develop this practice. There should be a certain procedure for organizing public hearings, like we did with the law on police. I commission my staff to prepare their proposals on these public hearing procedures by the end of this year.

Colleagues,

Our state and nation cannot develop without efficient national security and defense. We are moving in the direction of major modernization of our armed forces, in the direction of systemic and deep reforms. We have modernized the structure of our Armed Forces and their combat readiness, administrative and logistics systems. We’ve started conducting regular large-scale military exercises again. Four military districts replaced the old six. Under the state armament program the troops will be equipped with modern weapons and hardware by the year 2020.

What objectives are we yet to reach? First, next year we need to put a special emphasis on aerospace defense, combine the existing missile and air defense systems, missile attack alert and space control systems. They must be under one strategic command.

Second, modern Russia needs a modern army and navy, compact and mobile troops equipped with modern weapons and led by professionals with the highest qualifications. For this we need serious funds (I just gave you the figure) and new decisions, which are sometimes not easy to make. At the same time, we need to fulfill all our obligations towards people who chose to serve in the army. First of all, we need to provide them with housing, and do that according to the existing timeline.

Third, the army should not have non-military duties and functions. These functions should be transferred to civilian organizations. The army should focus on combat training, first of all. A young man is only drafted to serve for one year, but the combat training program does not get any simpler. Every young man should become familiar with all the aspects of this program.

Fourth, not only are we developing our Armed Forces, we are also developing international co-operation in the security sphere. Russia is ready to work on strengthening the missile non-proliferation regime with countries that are interested. I shared my ideas of the possible architecture of the European missile defense system at the recent Russia-NATO summit in Lisbon. This architecture would merge the potentials of Russia and NATO, protecting all European countries from missile strikes. We have started a joint evaluation of all issues related to that. This is certainly a positive development. But here, in this room, I would like to speak frankly. One of the following two things will happen within the next ten years: either we reach an agreement on missile defense and create a full-fledged cooperation mechanism, or (if we can’t come to a constructive agreement) we will see another escalation of the arms race. We will have to make a decision to deploy new strike systems. It is obvious that that would be a very unfavorable scenario.

The Lisbon summit made decisions related to the forming of a modern partnership, one based on the indivisibility of security, mutual trust, transparency and predictability. We decided on how we will work on the creation of a common space of peace and security in the Euro-Atlantic region. This makes us moderately optimistic when we evaluate the prospects of our work on the Russian initiative on a European security treaty.

Fifth, we have to develop our economic diplomacy, evaluating its results based on practical benefits it produces for modernization, first and foremost. Our foreign policy today should not be limited to missiles. We have to make specific achievements that our people can appreciate: creating joint ventures in Russia, supplying high-quality, inexpensive goods to the Russian market, creating modern jobs and simplifying visa procedures.

Our foreign partners, I should note, understand our pragmatic approach. They are ready to share their experience in innovative development. I believe we should work directly with the countries and companies that are ready to co-operate with us. Thanks to this mutual interest, we are currently developing what I would call modernization partnerships with, for instance, Germany and France. I see a great potential for expanding the innovation aspect in our cooperation with China, India, Brazil, South Korea, Singapore, Japan, Canada, Italy, Finland, Ukraine, Kazakhstan and several other countries. These partnerships will help develop primarily the five priorities Russia has set out in its technological modernization program.

I see great potential that can be used to achieve these goals as our relations with the European Union and the US expand. The mechanisms of Russian-US partnership should be used to establish a full-scale economic co-operation, improve the investment climate and co-operate on high technology.

The “Partnership for Modernization” agreement signed by Russia and the EU, as we formulated the idea one year ago, should work in the following three areas. Firstly, the mutual exchange of technology and the harmonization of technical regulations and standards and practical assistance by the EU for Russia to join the WTO.

Secondly, a simplified visa regime with the prospect of introducing visa-free travel in the near future.

Thirdly, we need to seriously expand our exchange programs for professionals and scientists. I will speak about this during the Russia-EU summit in Brussels next week.

Sixth, Russia’s integration into the Asia-Pacific economic space is of utmost importance. We have to better exploit the potential of Russia’s participation in APEC and other forums. Some of these forums just recently held sessions. Building up our ties with other countries in the region is our strategic objective. You can see that clearly in our relations with China. Our unprecedentedly high level of bilateral cooperation is projected on to the international arena and consequently reflects positively on the standing of alliances such as BRIC and the SCO. We have serious potential in the sphere of long-term mutually beneficial cooperation with Latin American and African nations.

Seventh, the CIS and its alliances, EURASEC and the CSTO, remain a priority for our foreign policy. We have already established a customs union and are now building a common economic space within EURASEC, testing new integration models and efficient economic cooperation concepts. Eventually, we need to work towards creating a common economic space that would stretch from the Arctic to the Pacific, all across Eurasia.

Eighth, Russia with its unique experience and human and technology resources, can initiate a global, or trans-European, emergency management system. Approximately six months ago, at the G20 summit, I proposed uniting our efforts to protect the marine environment from oil spills. We now have to approach our main goal – exchange our best practices in that area and prevent, or clear, oil spills together.

And the last of the foreign policy issues: We have to step up international co-operation in fighting piracy. We have put forward an initiative to create an international mechanism for piracy trials. We believe that would help resolve the issue of prosecuting pirates as impunity remains one of the key factors that drive piracy.

I expect specific results in all of these areas from our Foreign Ministry.

Dear friends,

We will work together to implement the plans that I set out today. I don’t have the slightest doubt that we will be successful. I believe in your support. Let me add a few words of the kind you rarely see in official documents. These words may, however, be the most important. We are renewing our country and our society. We are changing our lives and we are changing ourselves. All we are doing we are doing for the sake of those we love the most – our children, because we want them to have a better life than we have. We want them to be better than we are. We want them to do things that we perhaps won’t have time to do. We want their achievements to create constitute a successful future for our great country.

I am sure that is the way it will be!