Russian President Putin Delivers State of the Nation Address

April 25, 2005

Esteemed Federal Assembly, esteemed citizens of Russia, a number of fundamental ideological and political issues will be raised in my message for 2005. I believe that this discussion is necessary at the current stage of Russia's development. The most topical socioeconomic tasks, including specific nationwide projects, were identified in my last message. I intend to develop them in the budget message and a number of other documents. At the same time I would ask you to regard the previous and current messages as a single action programme and our joint programme for the next decade.

I regard the development of Russia as a free and democratic state as our main political and ideological task. We utter these words quite often. However, in practical terms, the profound meaning of the value of freedom and democracy, justice and legality is shown quite rarely in our everyday life. But such analysis is needed. Increasingly often the objectively complex processes under way in Russia are the subject of intense ideological discussions which bear precisely on the topics of freedom and democracy.

Sometimes we hear the opinion that since the Russian people has been silent for ages, it does not know or need freedom and for this reason our citizens are said to need constant supervision from above. I would like to return those who think so to reality, to the real world.

Let me remind you again of how modern Russian history began. First of all, it should be acknowledged, and I have spoken of this before, that the collapse of the Soviet Union was the greatest geopolitical catastrophe of the century. And for the Russian people, it was a real drama. Tens of millions of our citizens and fellow-countrymen found themselves outside the Russian Federation.

Moreover, the epidemic of disintegration spread to Russia itself. Citizens' savings lost their value. The old ideals were destroyed. Many institutions were disbanded or simply hastily reformed. The country's integrity was disturbed by a terrorist intervention and the ensuing capitulation of Khasavyurt [Chechen peace deal of mid-1990s brokered by the late Aleksandr Lebed and the late Aslan Maskhadov].

With unrestricted control over information flows, groups of oligarchs served exclusively their own corporate interests. Mass poverty started to be accepted as the norm. All this evolved against a background of the most severe economic recession, unstable finances and paralysis in the social sphere.

It seemed to many at the time that our young democracy was not the continuation of Russian statehood, but its final collapse, the prolonged death throes of the Soviet system. Those who thought so were mistaken.

Indeed it was during that period that extremely significant events took place in Russia. Not only was the energy of self-preservation in evidence in our society, but also a will for a new, free life. During those difficult years, the Russian people had to simultaneously defend state sovereignty and choose a definite new direction in the development of their 1,000-year history.

The most complicated tasks had to be accomplished: preserving our own values without the loss of definite achievements, while confirming the capacity of Russian democracy to survive. We had to find our own path towards building a democratic, free and just society and state.

Speaking of justice, I certainly don't mean the infamous system of taking everything from people and dividing it up. I mean opening up wide and equal development opportunities for everyone, success for everyone, a better life for everyone. In the end we must become a free society of free people on the basis of implementing these principles. In this connection it would not be out of place to recall how the aspiration for freedom and justice has shaped Russian society throughout history and how it has matured in the public consciousness.

First of all, Russia has always been and of course will remain the largest European nation. For centuries, the ideals of freedom, human rights, justice and democracy that were gained through suffering and won by European culture, have been a determining value and a guiding principle for us. For three centuries, together with other European nations, hand in hand with them, we have gone through a process of enlightenment and experienced difficulties in setting up parliamentary rule, municipal and judicial power and forming similar legal systems. Step by step we have been moving towards shaping human rights, towards equal and general suffrage, towards an understanding of the need to care for the weak and the indigent, towards emancipation of women and other social gains.

I shall repeat: we have been doing all this together, in some things falling behind and in other things going ahead of all-European standards. I am convinced that for modern Russia democratic values are no less important than striving for economic success and people's social well-being.

Firstly, only in a free and just society does every law-abiding citizen have the right to demand for himself reliable legal guarantees and state protection. There is no doubt that ensuring people's rights and freedoms is critically important both for economic development and for public and political life in Russia. The right to be elected or appointed to a state post, as well as the right to access to public services and public information must be available equally to all citizens of the country. Anyone who breaks the law must know that punishment is inevitable.

Second, it is only in a free society that every citizen capable of working has the right to compete on equal terms, to be free to choose partners for themselves and to earn accordingly. The prosperity of every individual should be determined by their work and abilities, their qualifications and efforts. And they themselves have the right to spend their earnings at their own discretion, including bequeathing them to their children. Therefore, adherence to the principles of fairness is directly linked to equality of opportunity. This should, in turn, be ensured by the state itself.

Third, the Russian state is - if it wants to be fair, it must help citizens who are unable to work and who are poor, the disabled, pensioners and orphans, ensuring that such people lead dignified lives and that the main benefits are accessible to them. All these functions and responsibilities have been directly entrusted to the state by society.

Finally, a free and just society has no internal boundaries or restrictions on movement and it is itself open for the rest of the world. This allows our country's citizens to benefit from the riches of all human civilization, including achievements in education, science, world history and culture.

It is precisely these values of ours that also determine our desire for an increase in the state independence of Russia and the strengthening of its sovereignty. We are a free nation and our place in the modern world, I want to stress this particularly, will be determined only by the degree of our strength and success.

I dwelt in detail on these key general concepts to show how the above principles should be reflected in our daily practices. I contend that these actions could nominally be implemented in three - in at lease three directions.

First, measures aimed at the development of the state. Second, the strengthening of the law and developing the political system as well as improving the efficiency of justice. Third, the development of the individual and civil society as a whole.

First, the state. You know that in the last five years we have had to resolve the difficult tasks of preventing the degradation of state and public institutions. At the same time, we have had to create a basis for development for the years and decades to come. Together we cleared up the mess and moved on further. In connection with this, the policy of stabilization was, effectively, a policy of response to the problems that had accumulated. On the whole, this policy has proved correct. Yet it has now exhausted itself. It should now be replaced by a forward-looking policy.

For this purpose we need an efficient state above all.

Despite many positive changes, however, this central problem has not been resolved in full. Our bureaucracy remains a closed and sometimes simply arrogant caste which sees state service as a kind of business. Therefore, achieving more efficient state management, strict observance of the law and provision of high-quality public services to the population by officials remains our priority.

It's one of the features of the present that certain unscrupulous bureaucrats at both federal and local level have learned to use the stability that has been achieved for their own selfish ends. They have started using the favourable conditions and opportunities that have finally emerged in our country to increase their private rather than the public wealth.

Incidentally, in this sense party and corporate bureaucracies behave no better than state bureaucrats. If now, just as the foundations for major large-scale work have been created, the state should succumb to the temptation of seeking simple solutions, bureaucratic reactionaries will have the upper hand. We will get stagnation instead of a breakthrough. The potential of civil society will remain untapped and corruption, irresponsibility and poor skills will balloon rapidly, taking as back along the path of decline of the nation's economic and intellectual potential, an ever growing gap between the authorities and the interests of society and the state machinery's unwillingness to heed people's needs.

Let me repeat. The current state of affairs is unsatisfactory. Having liberated the largest mass media outlets from censorship by oligarchs, we failed to protect them from the unhealthy zeal of certain bosses. Having sent the law-enforcement agencies in to combat crime, including tax crime, we sometimes encounter crude violations of businessmen's rights and at times open racketeering by state structures.

Many officials believe that this is the way it is going to be and that such costs are inevitable. I shall have to disappoint them. Our plans do not include handing the country over to inefficient and corrupt bureaucrats. We proceed from the understanding that developed democratic procedures are not only needed by the country, they are economically profitable. To be engaged in a responsible dialogue with society is politically feasible, that is why a modern Russian official is obliged to learn how to speak to society not in the jargon of command, but in the modern language of cooperation, in the language of public interest, dialogue and real democracy. This is our basic position and we shall adhere to it.

The next most important task in the sphere of state construction is strengthening the federation. The main goal we are striving to reach is building an effective state within existing borders.

As you know, we have recently seen a growing desire among certain constituent parts of the federation to merge. This is a positive trend but it is important to avoid turning it into another political campaign. We should remember that constituent parts merge not for the sake of merging, but for optimizing governance, for making social and economic policy more effective and, in the end, to improve people's well-being.

Of course, the process of constituent parts' merging is a complicated matter. However, in certain cases, I want to emphasize this - not always and everywhere, but in certain cases - we shall not be able to concentrate state resources to govern a territory which is huge and composed in a unique fashion.

After all, many of our regions have complex jurisidictions. How powers should be divided between their state authorities, primarily in matters of taxation and budgets, is a problem that arises constantly. But all energies are expended on disputes and coordination, and sometimes on resolving disputes, including in the Constitutional Court. This is happening at a time of new opportunities and the need to implement a whole range of major national projects.

Specific examples of this are well known. The merger of Krasnoyarsk Territory with the Taymyr and Evenki Autonomous Areas, currently in progress, should help the development of new deposits and the energy supply for eastern regions of Siberia. Clear and precise administrative decisions should unlock the benefits of large-scale investment in the development of Russian regions.

I regard the third major task as the pursuit of an active policy of liberalization of enterprise. Here I will highlight above all else measures for stabilization of the economic process, radical expansion of opportunities for free enterprise, and areas of investment.

Firstly, we need to act to strengthen this economic process. I have already said that we should soon reduce to three years the statute of limitations for the consequences of invalid and detrimental transactions. At the moment the statute of limitations is 10 years. This proposal is already being widely debated and I would like to stress once again the motives that guided us to make this proposal.

The inviolability of the right to private property is the basic requirement for the conduct of any kind of business. The rules to which the state adheres in this field should be clear to all. And, importantly, they should be stable. This allows anyone developing their own enterprise properly to plan and conduct both their business and their life. It allows citizens calmly and without anxiety to conclude contracts in such vital areas as, for example, buying a home, or privatizing it. To a large extent this has largely already taken place in our country. In general, it motivates people to acquire property and to increase production.

At the same time we must not treat lightly those who have broken the law in signing deals. Of course, the state must react to this. But I must note that three years is a long period too, sufficient for both the interested parties and the state to sort out their relations in court. I would also like to stress that the three-year statute of limitation was the longest in our legislation in the last 100 years [presumably, before the 10-year rule applied]. Ten years is an infinitely and unjustifiably long period, from the point of view of common economic and legal consideration. Such a period breeds a lot of uncertainty, first of all lulling the state into complacency. It lulls into complacency not only the state but also other participants in the process.

Incidentally, the relevant proposal for amendments to legislation has already been sent to the Russian government. Unfortunately, there has been no reply, although only one word has to be corrected in one article. I am asking you to speed up the formal agreement.

Second, we must help people legalize in a simplified form the property which effectively belongs to them, that is garages, houses, allotments in various co-operatives and agricultural associations, and the corresponding plots of land. This legalization must be as simple for people as possible, and the filling of forms must not create additional problems for them. Incidentally, this will offer extra opportunities such as legal inheritance of property and bank loans secured by the property.

Third, we must boost the inflow of capital built up by people into our economy. We must allow citizens to declare in simplified form the capital they have accumulated in previous years, in the previous period. This practice must be accompanied by only two conditions: 13-per-cent income tax must be paid and the appropriate amounts of money must be paid into accounts in Russian banks.

This money should work for the benefit of our economy, in our country, and not hang around in offshore zones.

I will dwell on another task which I think is fundamental to the development of the state. It concerns the work of the tax and customs bodies. I believe that checking that tax and customs legislation is being implemented should become a priority in their work and not fulfilment of plans for collection of taxes and duties. It is obvious that fiscal bodies in any country should check whether taxes are being paid correctly, but it would also be fair to acknowledge that our tax system has been at the formative state in recent years. Time and the rich practice of applying legislation and administering justice were needed for clear answers to very many questions to emerge.

Fiscal bodies should not ignore violation of laws - under no circumstance should they do that. At the same time, ways of repaying tax debts for past years should be found so as to ensure the state's interests without destroying the economy and without driving business into a dead end. Fiscal bodies have no right to terrorize business by returning to the same old problems. They should work smoothly and react in timely manner to violations committed while focusing on checking the current period.

I believe that all the above measures will help stabilize economic activities for our citizens, create additional guarantees for the long-term development of business and ultimately ensure greater freedom for business activity and a fair attitude towards it on the part of the state.

Finally, another important issue. Russia is extremely interested in a large inflow of private investment, including foreign investment. This is our strategic choice and strategic approach. However, in practice, investors are sometimes faced with restrictions which can be explained by all sorts of notions, including notions of national security.

Moreover, not all of this is legally formulated. Such ambiguity creates problems for the state as well as for investors. It is time for us clearly to identify those areas of the economy where the interests of strengthening the independence and security of Russia dictate the need for primary control by national and state capital. I mean several infrastructure establishments, companies which fulfil defence orders and reserves of mineral resources which have strategic significance for the future of the country, for future generations of Russians, and also infrastructure monopolies.

It is necessary to develop and strengthen at the legislative level the framework of criteria which define the restrictions for foreign capital participating in such spheres of the economy. And at the same time, it is necessary absolutely to define a corresponding list of industries or establishments which will not be subject to enlargement and will not be broadly interpreted. It is this sort of approach which a number of countries with developed market economies use today, and we must also use it. Maintaining this sort of control and restrictions in a whole series of sectors of the economy, we must on the whole create favourable conditions for private capital in all attractive industries and I think you will agree with me, it must be said directly, that for the moment, unfortunately, too little has been done with regard to this.

I repeat that all these decisions must be established on a legislative level. The aim of such measures is clear: Investors do not need riddles and charades. Their money will only go where there is stability, and where the rules of the game are clear and understandable. And this sort of approach will be fair, both with regard to society and the state, which is obliged to protect its future interests, thinking about the development of the country for the year ahead and for a ten-year-period.

Respected colleagues, a necessary condition for the development of democracy in the country is the creation of an effective legal and political system. But this must not be at the expense of law and order, of the stability which has been achieved with such difficulty or of the steadfast pursuit of economic policy.

In this I see the independent character of the democratic path we have chosen. And so we are going to move forward, taking into account our individual domestic situation, but of course operating according to the law and the safeguards within the constitution. It goes without saying that the authorities themselves must also not abuse their administrative positions. They are obliged to find all possible opportunities to strengthen the country's real democratic institutions. Depriving one's own people of the ability to live according to democratic law shows a lack of respect for oneself and one's fellow citizens. It shows a lack of both understanding of the past and vision for the future.

The great Russian philosopher Ivan Ilyin wrote that the power of state has its own limits, determined by the very fact that it is a power that suits the external life of an individual. However, all the [internal] creative states of the soul and spirit, including love, freedom and goodwill, are not under the jurisdiction of the state and cannot be dictated by it. The state cannot demand the trust, blessing, love, goodness and faith of its citizens. It cannot regulate scientific, religious and artistic works. It must not meddle in moral, family and everyday life or, unless absolutely essential, stifle the people's economic initiative and creativity. Let us not forget this.

Russia is a country that, by the will of its own people, chose democracy for itself. It set out on this course itself and, observing all generally accepted political norms, will decide for itself how to ensure that the principles of freedom and democracy are implemented, taking into account its historical, geopolitical and other characteristics. As a sovereign country, Russia can and will independently determine the timing and conditions of its progress along this path.

However, the consistent development of democracy in Russia is only possible by following a legal, legitimate path. The use of any kind of illegal method to fight for national, religious or other interests contradicts the very principles of democracy. The state will respond severely, but within the law.

And we need the type of law-enforcement agencies in whose work the upstanding citizen can take pride, instead of crossing to the other side of the street when he sees a man in uniform. Those whose main goal is personal gain, rather than upholding the law, have no place in the law-enforcement system. So the motivation of people serving in these bodies should be, above all else, the quality of the protection of citizens' rights and freedoms. And finally, if part of Russian society continues to regard the judicial system as corrupt, then it will be simply impossible to speak of effective dispensation of justice.

On the whole I would say that the organization of the fight against crime in the country requires radically new approaches. The appropriate decisions will be prepared. Stronger law and order is indivisible from the removal of the sources of terrorist aggression in Russia. In past years we have taken several major steps in the fight against terror. But there can be no illusions here. The threat is still very strong. We are still taking very painful blows. Criminals are still committing dreadful acts, with the aim of intimidating society. And we need to gather our courage to continue this work to eradicate terror. The moment we display weakness or spinelessness, our losses will be immeasurably greater. And they could become a national catastrophe.

I expect to see energetic work to bolster security in southern Russia, to assert there the values of freedom and justice. The essential conditions for this are development of the economy, creation of new jobs, construction of the social and industrial infrastructure. I support the holding, as early as this year, of parliamentary elections in the Chechen Republic. They should become the basis for stability and the development of democracy in this region.

I shall note that even now the North Caucasus region has good conditions in place for rapid economic growth. It has one of Russia's most developed transport infrastructures and a quality workforce. And polls show that the number of people wishing to engage in enterprise here is higher than the Russian average.

At the same time the share of shadow economy and criminalized business relations as a whole is much larger here. In this connection power bodies must not only strengthen law enforcement and the court system in the region, but also motivate people's business activities.

We should pay no less attention to other strategically important regions of the Russian Federation. I mean the Far East, Kaliningrad Region and other border territories. Here we need to concentrate state resources to enlarge transport, telecommunications and energy infrastructures, building transcontinental corridors among other things. These regions must become key points in Russia's cooperation with neighbouring states.

Esteemed assembly, very soon, on 9 May, we will celebrate the 60th anniversary of the great victory. This day can justly be regarded as the day civilization triumphed over fascism. The common victory made it possible to defend the principles of freedom, independence and equality of all individuals and peoples. It's obvious to us that this victory was won not only thanks to the might of arms but also thanks to the spiritual fortitude of all the people who were united in a union state at the time and together against inhumanity, genocide and one nation's claim to lord over others.

Meanwhile, the horrible lessons of the past continue dictating their imperatives to us today. Russia, with its ties to former Soviet republics, states that are independent today, ties of common destiny, ties through the Russian language and a great culture, cannot stand apart from the universal aspiration for freedom. Today, when independent states have formed and are developing in post-Soviet space, we want to aspire together to meet human values, to embrace broad opportunities for personal and collective success and to achieve standards of civilization gained through suffering. These are the standards that can give us a single economic, humanitarian and legal space.

While defending Russia's foreign political interests we are keen to develop the economies and strengthen the international prestige of states which are our close neighbours. We are interested in synchronizing the pace and parameters of the reform processes in Russia and the Commonwealth states. And we are ready to adopt really useful experience of our neighbours as well as share with them our ideas and the results of our work.

Our goals in the international arena are extremely clear. These are security of borders and the creation of favourable external conditions for resolving Russia's domestic problems. We are not inventing anything new here but are striving to use everything that European civilization and world history have accumulated. It goes without saying that the Russian nation's civilizing mission in the Eurasian continent must continue. Its purpose is to ensure that democratic values blended with national interests should enrich and strengthen our historical commonality.

Also, for us the issue of international support in guaranteeing the rights of Russian compatriots abroad remains highly important. And this is not a subject for political or diplomatic bargaining.

We count on the new members of NATO and the EU in post Soviet space to show real respect for human rights, including the rights of national minorities. People do not have the right to demand from others that human rights be observed if they themselves do not respect and observe or cannot guarantee these rights.

We are ready to enter into fruitful partnership with all countries to resolve global problems, from a search for an efficient answer to the worsening environmental problems to space exploration, from preventing global man-made disasters to fighting the spread of AIDS. And of course we are ready to pool efforts in the struggle against such challenges to the present-day world order as international terrorism, crossborder crime and drug trafficking.

A few words about the development of civic society. [Russian statesman] Vitte once wrote: the state does not so much create, but rather provides for what is missing. It is all citizens who are the true creators. Independence should not be hampered but developed in every way and assisted - this advice is still topical today.

I believe that above all else we should enable citizens to have access to objective information. This is a crucial political issue, and it is directly linked to action within our state policy on the principles of freedom and justice. In this respect I have hopes of the draft law on the information openness of state bodies which is currently being discussed. It is important that it is adopted as soon as possible. Its implementation will allow citizens to obtain more objective information about the work of the state apparatus and will help them to defend their interests.

I would like to speak today of a different and quite specific topic - what should we do to ensure that national television takes full account of the most pressing requirements of Russian civic society and meets its interests. We should establish guarantees so that state television and radio is as objective as possible, free from the influence of separate groups and reflects the entire spectrum of social and political forces in the country.

I propose strengthening the powers of the Public Chamber, for public supervision of broadcasters' compliance with the principles of free speech. For this, a commission consisting of people respected by the professional community, which will ensure the independence of broadcasting policy and attract qualified personnel for the work, may be created within the chamber. To this end, I am planning to propose to the State Duma appropriate amendments to legislation.

Apart from this, access to the mass media has to be ensured for all parliamentary factions.

I am confident that the proposed measures will raise the quality and objectivity of the information that our society currently receives. They will intensify cultural life and allow every citizen, even those who live in our country's remotest corner, to enjoy access to the achievements in which the modern world is so rich.

And finally, some words about guarantees for the activity of political parties in parliament. I believe that every faction should enjoy the opportunity, on equal terms, to set out its position on an issue under debate; to put forward its own proposals and judgements on key issues of the country's development; to have its representatives among those who guide the committees and commissions; to seek inclusion into the agenda of subjects and issues that interest it. I also believe that we need to enshrine in law a procedure for parliamentary investigations.

Apart from that, for the purpose of the continued strengthening of parties' role in the formation of state authorities, I propose that the Russian State Council consider ways of clarifying the new procedure for appointing the heads of the executive in regions of the federation, so that the president might nominate for the post a representative of the party that won the regional election.

Esteemed colleagues, speaking about the fundamental issues of the development of the state and of civic society, I cannot ignore a number of specific issues that have long required solutions.

I am deeply convinced that the success of our policy in all spheres of life is closely linked to the solution of our most acute demographic problems. We cannot reconcile ourselves to the fact that the life expectancy of Russian women is nearly 10 years and of men nearly 16 years shorter than in western Europe. Many of the current mortality factors can be remedied, and without particular expense. In Russia nearly 100 people a day die in road accidents. The reasons are well known. And we should implement a whole range of measures to overcome this dreadful situation.

We constantly go back to the situation with public health. Ways to improve this area are now actively discussed. Without prejudging the final decisions, I am confident that first of all we need to ensure accessible high quality medical care and revive the prevention of diseases as a tradition of Russian medical schools.

I would like to dwell on another subject which is difficult for our society - the consequences of alcoholism and drug addiction. Every year in Russia, about 40,000 people die from alcohol poisoning alone, caused first of all by alcohol substitutes. Mainly they are young men, breadwinners. However, this problem cannot be resolved through prohibition. Our work must result in the young generation recognizing the need for a healthy life style and physical exercises. Each young person must realize that a healthy life style means success, his or her personal success.

However, looking at programmes, budget programmes for the next year, the government's investment programmes, I have noticed no desire to tackle the problem on the federal level. Of course, in the eyes of the law, these are primarily regional and municipal issues. But without adequate support by the federal government, we will not be able to resolve this problem. May I ask you to make suitable amendments.

A low birth rate is another nationwide problem. There are increasingly more one-child families in the country. We need to improve the image of motherhood and fatherhood, and create conditions favourable for raising children.

Incidentally, I think it would be right to abolish inheritance tax. Because multi-billion fortunes are already hidden somewhere off-shore, they are not inherited in our country. But sometimes people have to pay so much for a little cottage that they cannot afford.

I also believe that population growth must be accompanied by a sensible strategy on immigration policy. We are interested in attracting a qualified, legal workforce. But, in Russia a significant number of businessmen benefit from exploiting illegal immigration. The thing is that an immigrant with no rights is extremely susceptible to unrestricted exploitation. And, also, he becomes more liable to commit crime.

However, this must not just be a matter of cracking down on illegal practices, but also of providing real benefits for the whole of the Russian state and society. Ultimately, each legal immigrant must have the opportunity to become a Russian citizen.

We cannot delay solutions to such issues. Measures to establish a climate conducive to maternity, to reduce mortality and bring order to immigration should be pursued simultaneously. I am sure that our society has the resources to complete these tasks, and gradually to stabilize the numerical strength of the Russian population.

It is essential also to draw a line under a number of other long-standing problems. First of all, this means the pay of teachers, doctors, cultural and scientific workers, and servicemen. They should finally enjoy the benefits of the country's economic growth. On their shoulders lies the task of ensuring that a new generation of Russian citizens grows up healthy and educated, maintaining the traditions and spiritual values of their forebears. These are the people who set the contemporary standard for the development of society, who are involved in the creation of Russia's current and future elite. They are the guardians of our country's immensely rich cultural and spiritual heritage.

And for that reason, the quality of these people's labours is a defining factor for economic growth. On it depends the kind of country in which we will live tomorrow, the level of freedom, justice and democracy it will have, and finally whether it will be reliably protected.

However, the real level of pay in these sectors is still lower than it was at the end of the 1980s. The average level of pay in the public sector is significantly lower than the national average. Out of 18 unified pay bands, 12 are below the subsistence minimum. That is, most workers in the public sector are at extremely high risk of falling into the poverty trap. And such a humiliating situation hampers them from working effectively and creatively.

I believe it essential within three years to raise incomes in the public sector by at least half in real terms, and I stress in real terms. That is, in the coming years the pay of a public-sector worker should go up at least 50% faster than the consumer price index.

I will stress that we are talking about the required minimum below which we cannot, must not and have no right to go. This way we will be able to ensure that the average wage in the budget-funded sector is similar to the average wage in the country. And we must keep in mind the fact that responsibility for setting the size of pay and its timely payment rests with regional authorities. Interbudgetary relations should be built in such a way that constituent parts of the Russian Federation too have the opportunity to raise wages in the budgetary sphere ahead of schedule.

At the same time, we must realize that the problems of the budget-funded sector of the economy cannot be resolved by simply raising wages. The need became apparent long ago for such financial solutions and mechanisms which can motivate the social sphere itself towards achieving efficient results. Therefore, financial policy should become one of the stimuli for increasing the availability and improving the quality of public services.

Finally, conditions should be created to attract investment from other, nonstate, sources into health care, education, science and culture. I will emphasize also that the tasks of modernizing education and health care described in the previous message should be resolved in a very cautious manner. Reorganization for its own sake must not become a purpose in itself. The quality of services and, I stress again, their availability to the overwhelming majority of citizens and real influence on the socioeconomic processes in the country are the main thing.

Speaking about our system of values, I'll touch upon yet another topic which I believe is important. I would like to speak about public morality and culture. We know that good business reputation has always been a reliable guarantee in striking deals while integrity of character has always been a necessary precondition for participation in the life of society and the state.

Russian society has condemned immorality, and unworthy behaviour has always been publicly denounced.

In Russia, law and ethics, politics and morality have been traditionally seen as close and corresponding concepts. In any case, the connection between them has been a declared ideal and objective.

Despite all the drawbacks, in Tsarist Russia and in Soviet times moral standards were a significant yardstick and criterion for judging people's reputation, both at work and in public life, and in private life. And it can hardly be denied that values such as firm friendship, helping one another, trust, and counting on your comrades have, over a number of centuries, remained enduring and unshakeable values on Russian territory.

The famous Russian state law theoretician, Professor Petrozhitsksiy, noted that the obligation to help those in need, and scrupulously to pay workers the agreed wage are, in the first place, ethical standards. I would like to note that this was written in 1910.

I think that without observing the moral standards commonly accepted in civilized society, today's business community in Russia cannot hope to be seen as respectable. It will hardly be respected not only elsewhere in the world, but much more importantly, within our own country. Indeed, many of the difficulties facing the Russian economy and politics in this country today have their roots in this very lack of trust in the wealthy class on the part of the overwhelming majority of people in society.

It should also be noted that bureaucratic corruption and the rise of crime are also among the results of the lack of trust and moral strength in our society. Russia will only flourish when the success of every person depends not only on the level of his prosperity, but on his integrity and his culture.

Respected citizens, respected federal assembly, our country is on the verge of the anniversary of a great victory.

It was achieved at enormous cost. At enormous, incalculable cost. The soldiers of the Great Patriotic [War] are rightfully called the soldiers of liberty. They brought to the world deliverance from an inhuman and hateful ideology and tyranny. They upheld our country's sovereignty, and protected its independence. We shall always remember this. Our people fought against slavery, for the right to live on their own land, for the right to speak their native tongue, to have their own statehood, culture and traditions. They fought for justice and for liberty. They upheld the right to independent development. Back then, they gave our country a future.

What kind of future depends on the present-day generations, on us.

Thank you for your attention.