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Vladimir Putin's annual State of the Nation Address

The Russian president says Moscow will continue its democracy-oriented course

President Vladimir Putin is delivering his annual State of the Nation Address to the Federal Assembly.

Presidential spokesman Dmitry Peskov earlier said that Putin’s forthcoming message will be 'particularly special'.

The Address is an annual event and is traditionally delivered at the Kremlin’s St George Hall where the president gives his speech to members of both houses of the parliament.



Democracy-oriented course

Vladimir Putin says Russia will continue its democracy-oriented course. Russia cannot afford to postpone development, the president stressed.

Russia has been tackling development issues under difficult conditions.

Putin stressed that the citizens had united around patriotic values not because they were satisfied with the state of the country. According to him, this shows that people are ready to work for the benefit of the country.

The Russian people once again have convincingly proved that they are able to defend and protect the national interests

"We have to solve all these tasks in difficult, unusual conditions, as it often happened in our history. But the Russian people once again have convincingly proved that they are able to respond to difficult challenges, to defend and protect the national interests, sovereignty and independent course of the country," he said, adding "we have confidence that we will overcome them as our people are unified."

The policy of developing the political system and institutions of direct democracy, as well as enhancing the elections’ competitiveness will be continued, the president notes. 

He recalled that last September’s State Duma elections were held under a mixed pattern and it was a "fundamental step forward in response to public opinion."

"The policy of developing the political system and direct democracy institutions and enhancing the competitiveness of elections is well-founded and we will certainly go ahead with it," Putin said.

People should be cared for, human capital multiplied as the country's main wealth, the Russian leader stressed. At the same time the citizens expect to be provided with equal opportunities for implementing their business, creative and civil initiatives. They expect that their rights, freedoms as well as their labor to be respected, Putin stressed.



Tough response to vandalism, violations of law

Vladimir Putin vows that the state will crack down on vandalism and lawbreaking.

"If someone believes they are more advanced, more educated and believes they are smarter that someone else, if you are like this, treat other people with respect," Putin said in the state-of-the-nation address to the Federal Assembly (Russian parliament) on Thursday.

At the same time, he said "the aggressive counter-reaction is inadmissible, and moreover, if it leads to vandalism and a breach of law."

"The state will respond harshly to these facts,," he promised.

At the September election to the lower house of parliament the Russian society demonstrated unity, he emphasized.

"Neither any doctrines nor a theatrical, artificial unity, or what is more the coercion to a particular set of mind have been implied here," Putin said. "Our history has been abundant in those, as you know, we used to have them, and we are not going to get back to the past now."

"However, it does not mean that juggling with fair words and shielding with speculations about freedom, anyone can abuse the other people’s feelings and national traditions," he emphasized.

War on domestic terrorism

 Russia will continue to combat terrorism within its borders as well, Putin said.

"We see the work done by security officials and counter-terrorism agencies employees," he said, adding that "we have losses there too."

"We will keep a close eye on all that, and we will continue this work," Putin stressed.

Government to support research

The government will provide priority support to scientific research that meets modern challenges and produce useful results.

"We will facilitate competitiveness in science as well as in other spheres, and support the strong ones who are capable of producing practical results," Putin said. "The Russian Academy of Sciences and other science agencies should take this into account," he added noting that basic science should "provide a solid scientific and technological foundation" for the country’s social and economic development.

"It faces a twofold task of assessing and predicting future trends as well as suggesting the best solutions in order to respond to the challenges that we are to encounter," Putin added.

He pointed out that over 200 world-class laboratories have been set up in Russia in accordance with the mega-grant program. Their staff particularly comprises those Russian scientists who have worked in foreign scientific institutions.

"It is crucially important to support our talented young Russian scientists - and we have many of them, so that they set up in Russia their research teams, labs. A special range of grants for a period of up to seven years will be accepted for them," Putin said.

"A total of 3.5 billion rubles ($54.7 million) in addition to the funds earlier set aside to finance science will be allocated for these aims, as well as for the development of scientific infrastructure, the opening of new laboratories in 2017," he said.

Long-term financing for efficient research projects should also come through funding by the Russian Science Foundation (RSF), he said, noting that people have the right and must understand their prospects for work and planning.

"With this in view, I suggest ensuring a long-term financing of efficient projects, including through the resources of the Russian Science Foundation," he said.

At the present time, RSF grants are awarded for three years.

Reasons for economic deceleration

Putin ordered the government to develop detailed action plan until 2025 aimed at strengthening Russia’s position in global economy. 

"Not later than next May, the government in cooperation with leading business associations should develop a detailed action plan until 2025. The implementation of this plan will enable Russia to reach the economic growth rates which are higher than in the world in 2019-2020, which means strengthening Russia's position in the global economy," Putin said.

The Russian leader noted main reason for economic deceleration lies in domestic issues. 

"The main reasons for deceleration of the economy are rooted primarily in our domestic problems. First of all, shortage of investment resources, modern technologies, professional staff, insufficient development of competition, flawed business environment," Putin said.

He added that by introducing sanctions, "they tried to make us "dance their dance" as our people say, to neglect our fundamental national interests.".

Decline in real sector ended, growth appears, he said, adding that macroeconomic stability has been provided, sovereign reserves maintained.

"Recession in the real section has stopped lately. Minor industrial growth has even appeared," Putin said.

The GDP decline was 3.7% last year and will be minimal this year, the president said.

"Support programs for a range of industries and the housing market played an important role," Putin said. Growth of production output has already surfaced, he said. "It is small but the trend is positive and should be definitely maintained," the head of state added.

"We’ve provided macroeconomic stability, which is very important, and maintained financial reserves. The Reserve Fund totals 1.992 trillion rubles, the National Wealth Fund amounts to 31.33 bln rubles. This is $103.86 bln in dollar terms. Russia’s gold and foreign exchange reserves did not decrease but even edged up, standing at $389.4 bln whereas they were $368.39 bln as of January 1, 2016," Putin said adding that the decline in the Russian economy will be about 0.3% in 2016.

"I think that this year the decline will be small. It was 0.3% in 10 months of 2016, I think that it will be like this," Putin said.

"I would like to stress that stabilization does not mean a tacit transition to stable growth. We may hang up for years near the zero level unless we resolve basic problems of the Russian economy and launch new growth factors in full scope. Otherwise we will have to continuously cut, save and postpone our development, while we cannot afford that," Putin said.

"Recession in the real section has stopped lately. Minor industrial growth has even appeared," Putin said.

"We should position our tax system to make it work towards the main goal - stimulating business activity, growth of the economy and investment, creating competitive conditions for the development of our businesses. It is necessary to organize existing fiscal benefits and make them more targeted, abandon the inefficient ones. I propose to consider over the next year proposals for setting up the tax system. It needs to be done with participation of business associations," Putin said.

Putin hopes that inflation in Russia in 2016 amounts to 5.8%. "We expect that by the end of the year inflation will significantly reduce - it will be lower than 6%. If you remember, the inflation rate in 2015 amounted to 12.9%. I hope that it will not rise above 6% this year, totaling 5.8%. The dynamics is obviously positive, considerably positive," said the head of the state.

"Next year we can actually achieve the target inflation of 4%. This is a very good prerequisite for achieving substantial growth based on healthy economy," he said.

Putin requested providing sustainable budget system, independent of hydrocarbons prices. Putin set task of considering proposals on tax system adjustment, passing all amendments to tax code by 2018. "Today we evidence an increasing request for expansion of economic liberties, for stable, sustainable, predictable rules of doing business, including the tax system," he said. "We have to prepare and pass all relevant amendments to the legislation, to the tax code by 2018, and to introduce new stable long-term rules starting January 1, 2019."

"We replenished the capital of the banking system by 827 bln rubles ($12.9 bln) within the framework of anti-crisis support in 2015-2016; according to estimates, this resource made possible for banks to significantly increase real sector lending," the head of state said.

"However, the amount of such loans even slightly declined this year instead of growing," Putin said.

Banking sector

Only stable banks may boost lending to economy, the president said. 

Putin marked decisive steps of Central Bank aimed at enhancement of banking sector.  "The banking system is cleaned from offices violating the law and customer rights and performing doubtful financial operations owing to consistent and decisive work of the Bank of Russia," he said.

"All that is a good basis for quick recovery of the economy, for growth of real sector lending," Putin said.

The non-banking financial sector may be useful in Russia, according to the president. 

"The non-banking financial sector is successfully working in many countries and it should also be developed with us," the Russian leader said. "This makes possible to raise funds of investors and citizens for the economy through bonds and other mechanisms," Putin said.

This topic is discussed for quite a long time, Putin said. The head of state said he expects the Bank of Russia and the Government will jointly work out proposals on financial market development.

"Certainly, everything should focus on economic growth targets. Any changes should not lead to emerging macroeconomic balances and the so-called ‘bubbles’ in the economy," the president said.

"The whole range of countries created lending incentives exactly for the real sector of the economy and certain countries discuss limiting of banks’ abilities to invest raised funds into financial instruments," Putin said. "Such practice should be analyzed and everything suitable for us may and should be taken on board," he added.

Status of self-employed citizens

Vladimir Putin has instructed the government to clearly define the legal status of self-employed citizens during 2017.

"I gave an instruction to exclude the interpretation of the work of self-employed people as illegal business activities, the authorities should not find faults with them on any artificial occasions. In order to avoid such situations, within one year the cabinet should clearly define the legal status of self-employed people and give them an opportunity to work in peace," President Vladimir Putin said in his state-of-the-nation address to the Federal Assembly (Russian parliament).

Putin noted that "everyone who does business fairly or is employed there as a hired worker should fell that the state and society are on their side." The President said that the justice is not in levelling but in expansion of freedom and creation of labor conditions that give respect, prosperity and success,"

"And on the contrary - everything which limits opportunities, violates people’s rights is unfair," the President said.

New anti-doping program

 Russia will be able to set up the world’s most up-to-date system on the fight against performance enhancing drugs in sports and the country’s new national anti-doping program will be ready early next year, Putin said. 

"The so-called doping scandal will encourage us to create in Russia the most advanced system of the fight against this evil," Putin said during his annual state-of-the-nation address to the Federal Assembly.

"I am saying this basing on the fact that the national anti-doping program will be ready early next year," the Russian president said adding that a chain of doping scandals erupted simultaneously with recent attempts to exert outside pressure on Russia.

"All possible tools were used - beginning with myths about Russia’s aggression and propaganda, interference into foreign elections, and ending with harassment of our athletes and Paralympians," Putin said.

Agricultural exports exceed arms sales

The president noted exports of agricultural products brings more yields to Russia than arms sales.

"Exports of agricultural products … bring more than arms sales today," he said.

According to Putin, "in 2015 international sales (of military products) amounted to $14.5 bln" while sales of "agricultural products exceeded $16 bln". "This year we expect even more, most likely $16.9 (bln)," he added.

Bridge to Crimea

Work to build a bridge across the Kerch Strait proceeds in line with schedule, Putin said. 

"We will pay necessary attention to the federal highways, and to the construction of the facility of national importance - the bridge to Crimea. Its construction proceeds according to the schedule," he added.

Putin reminded the audience that large-scale work to update the road infrastructure is underway in Moscow and St. Petersburg. "Next year we will also launch such projects in other major cities and urban communities, where about 40 million people live," he pledged. Putin also set the task to put in order at least half of the roads. "The decision has been passed, the funds have been earmarked, it is only necessary to work efficiently," he said.