OREANDA-NEWS. April 20, 2011. “We are to find the kind of solutions that will give Russia the opportunity to go forward confidently and build a strong innovative economy, and each year of this development must bring real and palpable improvement in the life of people, for the absolute majority of Russian families. This is the thrust of our policy.”
Vladimir Putin’s report:              

Ladies and gentlemen, Mr Speaker,

This report on the government’s performance in 2010 is to be delivered in accordance with the Constitution of the Russian Federation.

I think it is our common achievement that during the complicated period of the global economic crisis Russia successfully avoided serious shocks and risks that could weaken the country, undermine its economic and human potential, and lead to a critical decline of social standards.

As you remember, the financial crisis began in 2008 and soon after that problems on the stock market and in the banking sector provoked a structural setback in the global economy. This unbalanced public finances in several countries.

You have probably heard that two weeks ago Portugal asked the EU for emergency financial assistance. Such assistance was earlier requested by other countries, for example Greece. Iceland is still trying to deal with its difficulties.

Some of our European neighbours had to raise the pension age or freeze social benefits and pensions. In France, the government adopted a law on gradually raising the pension age from 60 to 62 years, for men and women alike. The Estonian government adopted a law on the gradual increase of the pension age to 65. The law will become fully effective in several years, but the decision of principle has been taken. During the acute stage of the crisis, some countries, in particular Greece, Poland and Latvia, were forced to freeze pensions.

The global economy is now gradually recovering; that is a fact. But the consequences of the crisis turned out to be so serious that they have provoked social tensions in many countries and whole regions of the world. Furthermore, the situation is becoming unstable in entire regions, which can lead to unpredictable consequences. You have probably heard that the outlook on the US government debt has been downgraded. Professionals say this is most likely an election move, in this case, by Republicans. One way or another, it will have a negative effect on the global economy.

The lesson all of us should learn is that economic and government weakness and susceptibility to external shocks inevitably threaten sovereignty. We all know very well that – let’s admit it openly – if you are weak, there will always be someone who will be eager to advise you on where to move, which policy to pursue and which development path to choose. These seemingly friendly and unobtrusive recommendations may look good, but in point of fact they camouflage diktat and gross interference in the affairs of sovereign states. We are perfectly aware of this.

I know that all our parliamentary parties have taken a consolidated stand on this issue. I truly appreciate this. (Applause)

I would like to reiterate that we must remain independent and strong. Most importantly, we must also pursue a policy in the interests of our people, who will in this case support all our initiatives.

In the past few years I have toured nearly all Russian regions, visiting enterprises, schools, universities and hospitals and talking to workers, servicemen, doctors, teachers, and residents of rural areas and single industry towns.

Naturally, the situation differs from region to region. People sometimes encountered serious problems, especially in 2009, and not everything was put right in 2010. Incomes cannot be described as high. The numerous difficulties many people encountered during the crisis included layoffs and problems with keeping one’s business afloat.

Everyone knows that the crisis came from abroad. While fighting it, we did not try to blame it on insurmountable objective circumstances, although there were enough risks and uncertainty factors, including some we could not influence. We mentioned them, but did not shirk responsibility for the situation in the country; in fact, we assumed responsibility for everything.

Russia is a social state by constitution, and we shall never ever go back on our social commitments, whatever happens, whatever the circumstances; the government can guarantee that.

Now let us look at what we have actually accomplished over this very difficult period. Having come through severe economic shocks with a budget deficit, over the past two years the country has nevertheless provided 250,000 apartments to military servicemen and WWII veterans free of charge. It has met its targets in repairing dilapidated and hazardous housing and re-housing residents in better accommodation. You know that we set these targets before the crisis hit, when the economy was experiencing peak growth. We did not abandon these plans, we fulfilled them, despite it all: touching, in one way or another, the lives of as many as 10 million Russians.

As you know, work pensions were increased by 45% in 2010. We organised the construction of 38 perinatal centres and other high-tech medical centres across Russia, and continued to pursue far-reaching demographic programmes. We have indexed all the benefits people received under these programmes, including maternity capital – as we promised we would when we formulated this programme.

Government spending on education increased 50% compared with pre-crisis 2007, and federal allocations for civilian science and research more than doubled. Economic growth resumed in July 2009; in 2010, the country's GDP grew 4%, showing the highest growth rate of any G8 country.

This year, we expect 4.2% growth. By way of background, I can say that we have already seen 4.4% growth in the first quarter. This means that, by the start of 2012, the Russian economy should have compensated in full for the losses it suffered during the recession.

Earlier forecasts slated economic revival for 2013-2014. But we know we can do it sooner – this is not wishful thinking, but a well-founded assessment of the situation. Now we need to look ahead, concentrate all our resources on economic and infrastructure modernisation, build on each region's strengths and help each of them develop their assets.

The government will approve, before the end of this year, long-term strategies for each of the country's federal districts. These strategies should lend a forward momentum to regional development.

We have established, jointly with Vnesheconombank, special development institutions for specific regions, for the North Caucasus for example.

Also, a direct investment fund to support socio-economic projects in Russia's Far East and the Baikal Territory will start operating this year.

We need to improve the quality of the economy and investment, reduce our dependence on commodities exports, and develop the banking sector.

We must be effective in our support for businesses as we rein in corruption, which slows us down and erodes the moral fabric of society.

Russia needs to become a genuinely competitive country. This is a basic requirement for its government, businesses, and social institutions. If we look at labour productivity, in Russia it is much lower than in leading economies. At the very least, we have to double it over the next decade, perhaps even raising it threefold or fourfold in key industries. To increase the share of innovative production in total production from today’s 12% to 25% or 35%. Incidentally, labor productivity in the previous year, after all this is a 2010 report, rose by 210%. That is a fairly good showing.

Russia must become one of the world’s five leading economies in terms of GDP. And reach over USD 35,000 per person in per capita GDP. This is higher than the indices for countries like France or Italy. To be clear: this concerns today’s indices, because they do not stand still.

We should strengthen the trend towards stabilising the population numbers in the country, ensure that all people have access to high quality healthcare and education, guarantee a realistic pension, and form a massive middle class.

Now a large group of experts are putting the final touches on a strategy till 2020. It deals above all with the search for new growth reserves and the appropriate priorities. Modernisation, or in other words progressive and qualitative development, is, in our view, an investment in human resources, in their abilities and talents, in creating the conditions for self-fulfilment and initiative. It is investment in a quality of life for our people. I am absolutely convinced that this will ensure both high growth rates and real technological breakthroughs.

This country requires decades of steady, uninterrupted development. Without sudden radical changes in course or ill thought through experiments based so often in either unjustified economic liberalism, or, on the other hand, social demagogy. We need neither. Both will distract us from the general path of developing the country.

And, of course, we should maintain civic and inter-ethnic peace, and put a stop to any attempt to cause our society to split and quarrel among itself.

We are to find the kind of solutions that will give Russia the opportunity to go forward confidently and build a strong, innovative economy, and each year of this development must bring real and palpable improvement in the life of people, for the absolute majority of Russian families. This is the thrust of our policy.

Colleagues, when the year 2010 was just beginning, some predicted a heavy stagnation and even a second wave of crisis for us, and now there is still much talk concerning this subject. These gloomy forecasts have not come about so far, thank God, nothing of the sort has happened. And not because fate or business conditions were exceptionally favourable for us, although a nearly 30% growth in the prices for our basic exports: oil, gas, metals, chemicals, power generating equipment and some other commodities helped us a good deal. It was above all because the economy itself proved that it could develop under very rigid and sometimes extreme conditions.

Today I mentioned the annual GDP growth figures – 4%. Each percentage point of this growth was won by hard work and did not come for free. I want to emphasise this. It was all the result of our combined and timely efforts in the economy and in the social sphere.