U.S. Senator John McCain (R-AZ) has taken a harder line versus Russia than President Bush

While President Putin has been a harsh critic of the war in Iraq and U.S. plans to build a missile defense system in Eastern Europe, he has steadfastly refused to criticize President Bush's competence or good faith. Speaking about the current occupant of the White House, Putin said, "Sometimes you have to make decisions that nobody else can make...do you think Bush has it easy?"

A reporter asked Putin about unsubstantiated reports in the Western media that he had amassed a huge personal fortune during his time in the Kremlin. In reply, Putin declared that these allegations had been "excavated from someone's nose and then spread on those bits of paper." Putin added that he had worked "like a galley slave" during his eight years in office and that "heads of state have no right to whinge, or drool for any reason... if they are going to slobber and blow snot and say things are bad, bad, then that's how it will be."

In response to a question about the Organization for Security and Cooperation in Europe's (OSCE) refusal to send representatives to observe to the Russian presidential elections in March, Putin sniffed, "Let them rather teach their own wives to cook soup."

Read the full transcript of Putin's yesterday's remarks to the Russian and international news media below this post.

Russia Today TV's interview with longshot Republican presidential candidate Ron Paul (R-TX). The libertarian-leaning M.D. turned Congressman from Surfside, Texas is a staunch critic of American foreign policy, including the current U.S. policy towards Russia

February 14, 2008,
The Kremlin, Moscow

Transcript of Annual Big Press Conference

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, friends and colleagues,

It is my pleasure to welcome you to this event that has now become a tradition. I would like to begin as usual by summing up the results for 2007.

I will have to give a few figures. I will be brief, but I will repeat some of the figures I have already quoted, and I am happy to do so because 2007 was a successful year. It is enough to say that, as you already know now, our economy grew by 8.1 percent, and this is one of our best results over these last years. Calculated on a purchasing parity basis, our economy has grown to a size that now puts us ahead of G8 countries such as Italy and France. Russia's economy is now the seventh biggest in the world (according to data from international experts).

Real incomes have increased by 10.4 percent and wages are up by 16.2 percent. Real pensions have increased by 3.8 percent. This is higher than inflation but pension increases are still lagging behind wage growth. We have therefore decided to increase the insurance part of pensions by 12 percent as from February 1 of this year, and this part of the pension will undergo a further increase of 7.5 percent on April 1, while the basic part of the pension will be increased by 15 percent as from August 1 of this year. I stress that we will keep very close watch at the same time on developments in the inflation situation. The Government will unquestionably keep its eye on the situation and adjust pensions in accordance with inflation.

Our demographic project is going ahead successfully. I am particularly pleased to see the results in this area because a lot of people doubted that our proposed demographic measures would be effective in any way. Some people thought this was an impossible situation to deal with. But the birth rate dynamic in 2007 was at its best for the last 25 years and more children were born than in the last 15 years. What is especially important and especially pleasing to see is that we achieved one of the goals we set, namely to increase the number of families having a second or third child. The number of such families rose by 10 percent (from 33 percent to around 42 percent). As we promised, we are indexing all benefits in this area, including the maternity capital.

As you will recall, the maternity capital was initially set at 250,000 roubles. This year it will be 271,000 roubles and we are planning for a sum of around 307,000 roubles in 2010 depending on the inflation situation. I would like to assure our citizens that the state will continue to ensure strict fulfilment of all of its obligations in this area.

One of the biggest and most serious problems we face is that of poverty. In 2000, more than 30 percent of our population was living below the poverty line, but I am pleased to be able to say that this figure had come down to 17.7 percent in 2005, 15.3 percent in 2006, and was lower than 14 percent in 2007. The number of unemployed people has also dropped and I think we now have around 4.3 million unemployed.

Industrial production shows a good growth dynamic. Industrial output growth did not exceed 4 percent in 2005 and 2006, but last year it went up to 6.3 percent. The processing sectors have shown particularly good results and some sectors are growing very fast indeed, not just the service sector, but also areas such as construction, which was up by around 20 percent, and housing construction, which posted an even higher increase. Really, we are now seeing something of a construction boom underway in the country.

Investment in basic capital was higher last year than at any time in the last eight years and came to 21.1 percent. We did not see such a figure even back in 2000, when the economy grew by 10 percent. Net capital inflow to the Russian Federation totalled $82.3 billion last year -- two times higher than the figure for 2006.

Our country is consolidating its financial situation. Our foreign currency reserves increased by $170 billion and we are now close to reserves of half a trillion dollars, $478.6 billion to be more precise, according to the latest data. There has been a slight decrease due to changes in the dollar's exchange rate. The Stabilisation Fund now comes to 3.84 trillion roubles. Russian banks have ridden out the liquidity crisis without much trouble. The stock market index increased by 20 percent, which is slightly less than last year, but last year saw a record result. In general, the Russian stock market is growing at record rates -- 20 percent is a decent figure.

We are also well aware of the problems. Chief among them is inflation. We have not yet managed to bring inflation fully under control. Inflation grew by more than what we had planned for. Our forecast was for inflation of 8.5 percent, but instead we had 11.9 percent. Bringing down the inflation rate in this and the coming years is one of our biggest priorities, a priority for the entire Government and national leadership, especially for those in charge of the economy.

That is all that I wanted to say for a start. I will not tire you with long monologues and numbers. Please, begin with your questions.

PRESIDENTIAL PRESS SECRETARY ALEXEI GROMOV: Good afternoon colleagues, let's begin now.

KOMSOMOLSKAYA PRAVDA NEWSPAPER: Your second presidential term is coming to an end now. What do you think was your biggest achievement and your greatest failure over these years?

VLADIMIR PUTIN: I do not think there were any serious failures. To start with the second part of your question, we reached the goals we set and we accomplished what we set out to do. There are some things we probably could have done more effectively. I just mentioned the inflation problem, for example. Inflation could have been lower perhaps if we had concentrated our efforts more intensively on this task, mobilising not only the country's economic officials but also public and political organisations. Why do I say this? Because inflation is an issue that concerns state spending, and the whole issue is about ensuring that all state spending is justified, for if we let spending get out of hand and do not keep it under control it inevitably has an impact on the inflation situation, as we all know. But we also need to look at the objective facts. The inflow of private capital that I mentioned before is partly speculative in nature (I am not using this term in any negative sense). These are people playing the markets and they have every right to do so. Moreover, the Russian economy has to a certain extent become something of a haven for international capital. We offer a stable economic and political situation and this attracts capital. But all of this has an impact on inflation, as does the large number of petrodollars. Overall, the Central Bank and the Government are managing to keep the situation under control, though there probably are additional steps we could have taken.

In the fight against poverty, as I already mentioned, the dynamic is positive. Here too we could have done more, especially as far as pensioners are concerned. The way that pensions for people who worked during the Soviet period, that is, until 1991, were calculated was not the best method. We will have to come back to this problem and take real steps to improve the pension situation for our citizens.

As for the results we have achieved and the things I see as positive, I will not list everything now. I think that our results are well known and I have already spoken about them on past occasions. Our country was not united and we did not even have a real national anthem. Each of the different regions had its own constitution that differed from the Constitution of the Russian Federation. We restored Russia's territorial integrity and unity. We rebuilt the state. Through our efforts people's incomes have reached and even surpassed pre-reform levels. Mostly importantly of all, we have rebuilt the Russian economy, placing it on an absolutely new market-based foundation. We are making steady progress towards becoming one of the world's economic leaders.

Only a few countries have achieved such rapid growth in securities and assets over the last twenty years. These are above all Asian countries such as Taiwan, Malaysia and Singapore and also to some extent Thailand and China. Russia has now joined these ranks and this is a great achievement.

As for my personal feeling, I am not ashamed to stand before the people who twice gave me their votes and elected me to be President of the Russian Federation. I have worked like a galley slave throughout these eight years, morning till night, and I have given all I could to this work. I am happy with the results.

NEZAVISIMAYA GAZETA NEWSPAPER: When you were first elected president you likened yourself to a manager hired by the people to run the huge 'Russia Inc. Corporation'. In your heart, do you think you are a good manager, have you always made only right decisions, and do you think the 'client' is happy with your work?

VLADIMIR PUTIN: I more or less just answered this question. I am happy with the results of my work. I think that the 'client', the Russian people, the voters who twice gave me their votes in presidential elections, is satisfied overall. This is backed up by public opinion surveys and by the current level of support expressed for the President of the Russian Federation.

As I said, our biggest achievement is to have rebuilt Russia's economy on a new and modern foundation, and this is reflected in people's incomes. Incomes are growing by 10-12 percent a year, and, as I said, wages grew by more than 16 percent over the last year. People should see these results reflected in their own pockets, and I think that this is something we have achieved. Though, of course, all of these wonderful figures, these macroeconomic indicators such as economic growth and so on do not always translate into improvements in life at the individual level. Still, no one can accuse us of not addressing this problem and not trying to improve living standards. The implementation of the national projects is evidence that we are indeed working hard to ensure that our economic results benefit people at the individual level.

Finally, we are not clinging to the past but are looking to the future, and I think this is also very important. You no doubt heard my speech at the expanded meeting of the State Council, at which I spoke of the need for innovative development. The whole problem, after all, is that we have achieved much over these last eight years, but if we continue on the same road we will come to a dead end. There are certainly past achievements of which we should be proud, but we must also think about the future, set new goals, ambitious new goals, and map out the roads we will take to achieve these goals. In other words, we are looking to the future and I think this is very important.

MOSKOVSKY KOMSOMOLETS NEWSPAPER: There have been a lot of calls for you to seek a third term in office over these last two or three years. There were no doubt attempts to influence you on this issue including by your entourage. What did you say in private conversation to the people who proposed changing the Constitution, and how great was the temptation to give in to these appeals and stay for a third term?

VLADIMIR PUTIN: I prefer to keep what I said in private conversation private; that is what private conversations are for, after all. Given that we have a big audience today with practically all of the world media and the Russian regional media present, I will reply in more official language.

I never felt any temptation to seek a third term in office. Right from my first day as President of the Russian Federation I decided that I would not violate the Constitution. This was something instilled in me during my time working with Anatoly Alexandrovich Sobchak. I think this sends a very important signal to society in general, namely, that everyone, from the head of state down, must respect the laws in force. I think this is a matter of principle, not a technical issue.

Of course I want to keep working, but such opportunities exist.

It is in people's nature to form dependencies on various things. Some people become addicted to drugs and others to money. It is said that most addictive of all is power. I have never felt this. I never have been the kind of person to become dependent on anything. I think that if God has given me the good fortune to work for the good of my country, and I have always felt a real connection to my country, I should be grateful for this opportunity, which is in itself the greatest reward. I think it is completely unacceptable to seek further reward or to try to hold on to power, to imagine that once you are in the top seat you should have the right to stay there until the day you die.

Russia should be a democratic state under the rule of law, and this means that all of its citizens, including its leaders, must respect the law.

VLADIVOSTOK NEWSPAPER (Primorsky Region): We know that a state programme for the resettlement of Russians from abroad has begun. One of its goals is to attract people to the depressed regions of Eastern Siberia and the Far East. But with the situation as it is at present no one is coming to the Far East: life is too expensive there and there are too many inconveniences and too few opportunities for realising one's potential. What is the state going to do, if anything, to try to stop the exodus of people from the Far East?

VLADIMIR PUTIN: This issue preoccupies not just you but many of our citizens. It is also of great concern for me. We are indeed seeing a decline in the population of Eastern Siberia and the Far East. The population continues to fall and the measures being taken have not yet brought the expected results. I have repeatedly come back to this issue over the last 5-6 years. There is a development programme for the Far East, a federal targeted programme. We plan to hold some major international events in the region, including the APEC summit, which will take place in Vladivostok. We plan to put considerable federal resources into developing this region, above all into infrastructure development.

Of course people in the Far East should enjoy the same economic situation and perhaps even better conditions than people in the European part of Russia. Attempts have always been made to give people incentives to stay in the region, ensure comfortable living conditions and give them economic incentives to stay. This includes things such as prices for electricity, heating and transport. This might look like a not very market-based approach, but we will have to offer some kind of preferential treatment in these areas. I will stop at this for now, but I can say that we are looking at what we can do in this area and are reflecting on the measures we can take to ensure better living conditions for our citizens in the Far East.

FOX NEWS CHANNEL, USA: My question concerns your words about retargeting nuclear missiles against Ukraine if Ukraine joins NATO or becomes part of the missile defence system. Condoleezza Rice called it yesterday deplorable and unacceptable rhetoric. Would you take back these words or comment on them? Also, does the fact that a Russian bomber made a low flight over the aircraft carrier Nimitz signify movement towards confrontation between the military in our countries?

VLADIMIR PUTIN: No, there is no confrontation on the horizon and I hope that there never will be. Incidentally, I can tell you that our American partners have held four military exercises, if I recall rightly, very close to the Russian border in the Alaska area. The United States' strategic aviation has never stopped its patrols, including along Russia's borders over the last 15 years, although we ended patrols by our strategic aviation in remote areas back around 1987. But our American partners never ended their patrols. At the expert level, our American colleagues reacted completely calmly to the renewal of patrols by our strategic aviation and no one saw any aggressive signal in this step, and rightly so. All this signals is that our Armed Forces have greater possibilities now and that we will continue to train our pilots, give them experience, and improve our military equipment, including our aviation. How can we do all of this without flights? We will continue this practice. That is the first point I want to make.

Second, regarding the possibility of retargeting missiles, I will of course comment on this situation and I am grateful to you for raising this issue. We will not target our missiles against anyone unless there is the extreme need to do so.

Take a look at what kind of situation we are talking about.

I have no doubt that there are people among you today who would appeal to democracy, freedom and so on. Democracy is a universal concept and it cannot be local (that is, you cannot apply democratic principles in one place and forget about them entirely in another). If a country considers itself democratic it has to be democratic in every way, in every manifestation, both at home and on the international stage.

What is democracy? We all know that democracy is government by the people. Our American partners are looking to deploy elements of a missile defence system in Eastern Europe, a radar station in the Czech Republic, and interceptor missiles in Poland, and these plans look like they will indeed go ahead. But who asked the Czechs and the Poles if they actually want these systems on their soil? According to the information I have received, the vast majority of Czech citizens are not enthusiastic about these plans. Our General Staff and our experts think that this system represents a threat to our national security. If this system is established, we will be forced to make an appropriate response. In such a situation we probably would be forced to retarget our missiles against the sites that represent a threat. But it is not we who are creating these sites. We are asking that this not go ahead, but no one is listening. We are giving a clear warning right from the start that if you take this step this is the response you can expect from us. No one asked the Czechs' opinion. It was simply decided to carry out these plans and that is that. Moreover, even NATO was not asked. Only after criticism came from Moscow did attempts begin to start coordinating this issue within NATO itself.

As for the situation in Ukraine, according to the information I have, the overwhelming majority of Ukrainians oppose joining NATO. But the Ukrainian leadership has nonetheless signed a certain document on starting the accession procedure. Is this democracy? Were the country's citizens asked their opinion? But if this is the way things are being done, without anyone's opinion being asked, then perhaps bases could also be established there in the future and missile defence system components deployed there. And what are we to do? In such a situation we would be obliged to target our missiles at these sites that we consider a threat to our national security. I think I have a duty to say this frankly and honestly today, so that no one in the future can try to offload the responsibility for such developments in events onto our heads. We do not want such developments in events. We are simply speaking honestly and clearly about the problems we see, that is all.

VESTI RESPUBLIKI NEWSPAPER (Republic of Chechnya): People in the Republic of Chechnya associate the positive changes that have taken place in our republic over this short time with your name, but many are worried that the constructive policies being carried out in Chechnya could change after your departure.

Also, our people would like you to come to Chechnya. We were expecting you when you visited the Northern Caucasus. If you have time, please come and pay us a visit.

VLADIMIR PUTIN: Thank you. First of all, I promise that I will come.

Second, concerning the positive changes, they are above all the work of the Chechen people themselves. You know how to work and you are working effectively. The republic's leadership is concentrating its financial resources, both federal and local resources, on resolving the key problems affecting the social well-being of all people in the republic.

I am very happy with the changes we are seeing. No one can say of Grozny now that it looks like Stalingrad in 1943 or 1944. The changes really are visible to all. But there is still a lot of work to do. Above all, there is a need for new jobs. Unemployment is still very high in the Caucasus. The Chechen leadership and the republic's president, Ramzan Kadyrov, have big plans. I will meet with them and we will be discussing all of these different projects. I assure you that development in the North Caucasus in general, in Chechnya and throughout all of Russia will continue unhindered. It is absolutely clear today that our people want to continue this positive course that we have been following over the last eight years. This is the guarantee of our future success.

TV-CENTRE TELEVISION CHANNEL: The presidential election is just around the corner. Why did you decide to support Dmitry Anatolyevich Medvedev in particular?

VLADIMIR PUTIN: As you know, Dmitry Anatolyevich Medvedev was nominated by United Russia, A Just Russia and a number of other public organisations and parties. I was indeed happy to give my backing to this nomination and support Dmitry Anatolyevich Medvedev as candidate for president of the Russian Federation.

As I have said before, I have known Dmitry Anatolyevich for a long time now and I am sure that the experience he has gained over his years of work in Moscow, as chief of staff of the Presidential Executive Office and first deputy prime minister, and his personal and professional qualities are the guarantee that he will be able to work successfully in this, the country's highest office. He is an honest and decent man. He is young, progressive and modern, has an excellent theoretical background and good organisational skills gained through his work here in the capital. I am sure that he will be a good president, a worthy president and an effective manager. Aside from everything else, I trust him. Quite simply, he has my trust. As I said at United Russia's congress, I can feel confident and unashamed about handing over the main reins of power in this country to such a person.

XINHUA NEWS AGENCY MOSCOW BUREAU, CHINA: How do you see future relations with China?

VLADIMIR PUTIN: China is one of our main strategic partners and this is something confirmed by our work together over the days and the hours. Our trade with China is growing very fast. This is an important aspect of our cooperation but it is not the most important factor. More important is that the relationship of trust between Russia and China is an important stabilising factor in the world. We see how the Chinese people and the Chinese leadership nurture and look after relations with Russia, and this is something we value very much. We have far-reaching plans for trade and investment cooperation and for developing high-technology production and working together in the space sector, defence and military-technical cooperation. China is one of our biggest partners in the area of military-technical cooperation. We see how rapidly China is developing its own high-technology base in this area. China is one of the few countries with whom we have established trusting cooperation for the long term, perhaps even decades ahead.

I have absolutely no doubt that we will maintain this level of trust between our two countries and take our cooperation to new heights, above all in the economy. One of the serious issues we need to work on together is that of environmental cooperation, including as regards the use of rivers in the border area. But we see that despite the difficulties, including technological difficulties, our Chinese partners are seeking solutions to these problems, respond swiftly to technological incidents and disasters, attempt to minimise the consequences and are ready to look for new forms of cooperation that would prevent such incidents in the future. No one is ever completely guaranteed against such events, of course, but working together on addressing environmental issues will be one of the most important areas for our two countries over the coming years. With the good will of both countries we can resolve these problems, and the good will is there in both China and Russia.

SHEST SOTOK NEWSPAPER: Land relations are a very broad and fundamental issue. Maybe this is an issue that should be dealt with not by ten different agencies but by one agency working on a comprehensive and permanent basis?

VLADIMIR PUTIN: Yes, these functions are indeed somewhat dispersed between the different institutions, agencies and ministries. There are two possible solutions: either to create a position of a vice-prime minister and assign to him responsibility for this whole set of issues, or concentrate all of these different issues within a single agency.

If the situation turns out as I hope and a president is elected whom I support, and if a government is formed accordingly and I have the opportunity of heading this government, we will take one of these two roads. I agree with you that we need to focus our administrative possibilities on resolving these issues and we will do this.

RUSSIA TODAY TELEVISION CHANNEL: How do you think relations between Russia and the United States will develop once you and George Bush are no longer in office, and who do you think will win the U.S. presidential election?

VLADIMIR PUTIN: The winner will be whoever puts forwards the most effective programme that meets the American public's demands and succeeds in clearly convincing the majority of voters that their programme is the best. Whoever wins, we will, as they say in such cases, respect the American people's choice and work with whoever becomes president, if, of course, the new president wants to work with us.

As for the future of relations between our two countries, I have no real doubts on this point. No matter what is said during election campaigns, the fundamental interests of Russia and the United States will inevitably prompt the leadership in both countries into developing a positive dialogue as partners at the very least.

The United States is one of Russia's biggest trade and economic partners. Only by cooperating with each other can we effectively fight terrorism, strengthen the weapons of mass destruction non-proliferation regime, combat poverty and infectious diseases. These are all global problems that we can only hope to resolve if all the world's leading countries join forces. I have no doubt that this is clear in the minds of the leadership in both Russia and the United States. I am sure that these fundamental ideas will serve as the guideline for the presidents in both countries, no matter what their names (not that the personal aspect is without importance, but the fundamental significance of our relations is more important).

POLISH TELEVISION: What will happen to relations between Russia and Poland if elements of the missile defence system are deployed in Poland? And a second question: many Poles are worried about Russia's return to superpower status, given the historical experience. What can you do to assure Poles that a powerful Russia is not a threat to countries such as Poland?

VLADIMIR PUTIN: I do not think that we should heap ashes on our heads and turn to self-flagellation in an attempt to prove to all how good we are. Russia is not behaving aggressively and is not fixated on the difficult moments in the history of our bilateral relations. Russia thinks that we need to look to the future and draw on the positive pages in our relations, and this way we can expect success.

Concerning relations with Poland in particular, I would like to point out that we have not taken a single step aimed at creating difficulties in the relations between our countries. We have made no such moves. Yes, we decided to build a gas pipeline across the Baltic Sea. I do not understand how this could offend Poland. This is our gas and we want to sell it to our main consumers in Europe. We already built a gas transport system across Polish territory. We carried out this work together and we pay the transit fees on time and supply Poland with all necessary energy resources without any restrictions whatsoever. There have not been any interruptions. Indeed, in previous years, based on the take-or-pay principle, our Polish partners ended up taking less gas that what they had contracted for, and in principle, Gazprom had the right to impose penalties, but we did not do this and looked for other solutions to the situation. In other words, there have been no restrictions and we will not impose any restrictions in the future. But our position is that we need to diversify our supply routes for delivering energy resources to our main consumers. What is bad about this? Is there anything anti-Polish here? Why such a reaction? Where does it come from? To be honest, I was really quite surprised.

As for problems such as the meat imports issue, this is not a Russian-Polish issue. I discussed this with Mr Tusk [Polish Prime Minister Donald Tusk] when he visited. This is more of an issue between Russia and Europe. The issue here is that agriculture in Eastern European countries receives large subsidies from European financial sources and produce is then dumped on the Russian market. This is stifling the development of our own agriculture sector. There are also some specific issues. For example, we are carrying out a national rural development programme and have been offering various incentives to the agriculture sector such as making loans available. Many agricultural producers have taken out these loans and now it is time to repay them, but to repay them they need to sell their produce and they cannot do so on the domestic market. We can either continue to toss accusations each other's way or we can sit down at the negotiation table and sort out the issue, examine the motives behind our actions and take each other's interests into account. In this sense, Poland could act as the conduit for our common interests in the European organisations. What we need to do is not trade accusations with Poland but join forces to protect our interests in the face of richer countries. We face a situation in which on the one hand we have the problem of subsidies and dumping of agricultural produce on our market, and on the other hand we see that the Polish authorities are not always managing to deal with the flows of smuggled goods coming in from Latin America and Asia, and we clearly have to respond somehow.

As I said, we need not to aggravate our relations but to look for solutions. I had a very constructive, businesslike and substantial dialogue with Mr Tusk and I hope that this will continue to be the case. As for the missile defence issue and so on, it seems to me that this issue is closely linked to economic concerns. I have the impression that someone is deliberately fanning an anti-Russian mood in order to create the moral and political climate for deploying these systems. If you stir up anti-Russian sentiment in Poland it will be easier to convince the public that they need some new weapons systems or other supposedly for their protection. In reality it is not clear where the threat is coming from. They say it is Iranian missiles that are the threat, but we all know that Iran has no such missiles.

I discussed this matter too with the Polish Prime Minister. If such systems are deployed on Polish territory or attempts are made to use them to neutralise our nuclear missile potential, this would upset the strategic balance in the world and would be a threat to our national security, and we would have no choice in such a situation but to take countermeasures, including possibly retargeting our offensive missile systems against the sites we consider to pose a threat.

We do not want to do this. Would this obstruct development of our relations in other areas? I do not think so in principle, but the level of security in Europe would be lower, of course. Frankly speaking, I do not understand why anyone needs this. No one is retargeting any missiles at the moment and we are all developing our relations. Yes, sometimes we have disputes, sometimes we argue, but then we cool down, get together again and begin tackling our common problems, and all without targeting any missiles against each other. Why change the situation for the worse?

I hope very much that we will have a constructive dialogue with our Polish colleagues and American partners on all of these issues and that we will be able to take each other's concerns and interests into account.

NTV TELEVISION CHANNEL: In your outline of Russia's strategy through to 2020, you promised that Russia will become the most attractive country to live in. At the same time, you said that the state administration is not ready for this task, that it is corrupt, excessively bureaucratic and lacks motivation. Who then will provide you and the future president with the needed support base for achieving these goals? Do you plan to head United Russia once your presidential term is over?

VLADIMIR PUTIN: I have no plans at the moment to head a political party. As for my support base, you and the other citizens of our country will be my support base. Of course, this will not be easy with the administrative system in its current state. Coming back to the start of your question though, you said I made this promise. I did not promise anything. I said that this should be our goal, that this is the kind of Russia I would like to see, that this is what we should aspire to. I am certain that we can achieve this goal but we still have a lot of work to do first. We need to resolve at least two big problems. One of these problems is that of diversifying our economy and achieving innovative development. In this respect we need to increase labour productivity, perhaps by as much as a four-fold increase. Another very important problem is that of fundamentally improving the state management system at every level, from the municipalities and up to federal level. In other words, we need quality change in the economy and in public administration and governance. We need to work on both of these issues as we go along. Is this possible or not? Of course it is possible. The fact that in a number of sectors we are still at quite a low level of development even creates an opportunity in that we can jump straight away over several stages as other countries have done.

If we provide tax incentives for upgrading production facilities, for example, this gives producers the chance to buy the very latest equipment, purchase the most advanced and efficient technology, and this will help to dramatically increase labour productivity. To achieve this we also need an educated and healthy labour force, of course, and this means that we must invest in healthcare and education. If we take a comprehensive approach to resolving these problems and do not just make declarations, we will most certainly achieve our goal.

I remember the joke back in the 1980s: We were promised communism by 1980 but we got the Moscow Olympics instead. The goals we are declaring today, however, are based not on wishful thinking but on real calculations and real analysis of the Russian economy and its development prospects in the medium and long term.

KOMMERSANT NEWSPAPER: You have unveiled your strategy for the period through to 2020. Dmitry Medvedev will announce his plan for the next four years in Krasnoyarsk tomorrow. Could these two plans not come into conflict with each other?

And a second question: at the start of 2000, you spoke of a 'pleasant sense of responsibility'. Could you repeat these same words now, eight years later? Are you tired of power or do you enjoy it?

VLADIMIR PUTIN: You spoke now about a sense of responsibility, and indeed, responsibility can sometimes be a heavy burden because you have to make decisions that no one else can make, and they are far from always easy decisions. Of course I worry about all of this, like any normal person. These are decisions that affect the well being and situation of millions of people, decisions that sometimes affect the lives of specific individuals in the country. No one else can make these decisions. There are many bosses, but ultimately, it is the head of state who has the final word. This is a heavy moral burden and it is the situation faced not only by the president of the Russian Federation but by the leader of any country, big or small. Do you imagine that Bush has an easy time? You may laugh, but his country has huge responsibility in the world, perhaps even greater responsibility than Russia, given the greater possibilities his country has. And when he makes decisions on matters both domestic and international, no matter whom he consults, the decisions are nonetheless his decisions. We may not always agree with them, but this is a complex process, including at the emotional level. This sense of responsibility therefore has always been with me. Moreover, in my practical work I have always been guided above all by my sense of responsibility before my own people. I think that this method of making decisions on social issues and security matters has never let me down.

You asked if I think that our plans could come into conflict with each other. Whatever they say that we have shaped the political landscape in Russia to our desires, there are many people who do not agree with what we have done over these last eight years and who do not agree either with our development plans. But, taking a serious look at this criticism and at the situation, it seems to me that there is nothing constructive and no depth to these arguments. No one has proposed anything more real and substantial. Dmitry Anatolyevich [Medvedev] and I are well aware that the line of attack against us will be at once personal, political and economic. There will be attempts to find differences in our approaches. There are always differences, but over the more than 15 years that we have worked together we have become used to listening to each other. As President, I never felt it beneath me to listen to the views of specialists and I often adjust my own views under the influence of respected colleagues when I see that what they are saying is correct, constructive and justified.

As for my relations with Dmitry Anatolyevich, what he will set out in his speech in Krasnoyarsk is essentially a continuation of the strategy that I outlined at the expanded meeting of the State Council. His address will complement, give concrete form to and build on these proposals for developing the country, not over the next decade, but over the next four years.

CHANNEL ONE: The OSCE Bureau for Democratic Institutions and Human Rights (OSCE-BDIHR) and the OSCE Parliamentary Assembly have declined to send their observers to monitor Russia's presidential election. Is this some sort of ultimatum to Russia, an attempt to pressure Russia, or is it something not worth worrying about?

VLADIMIR PUTIN: I don't think anyone is tempted to make ultimatums to Russia today. We think that the OSCE in general is long since ripe for reform. I want to stress that Russia respects in full all of its obligations within the European organisations, including the OSCE. The documents we signed state that the Russian Federation will invite OSCE representatives to monitor our elections, and we do just this. But the documents say nothing about how many people we need to invite and for how long. The BDIHR officials are putting forward their own terms, and these are terms Russia has not signed up to. This is a matter of principle for Russia. We will not allow anyone to impose conditions of any kind upon us, but we will respect all of the agreements we have signed. This is one of the most important and fundamental principles of international law. The country has a duty to respect the agreements it has made, but it is not bound to abide by conditions imposed from outside. We have invited 100 observers and we are ready to provide them with every opportunity to carry out their work. They think 100 is too few. Do they need to come here a year in advance, three weeks in advance or what? They seem to have a lot of demands. They send 16 observers to one country, 20 to another, see no need for any at all in a few countries, while they take a schoolteacher approach to some countries.

REUTERS: You, Russia's most influential politician, have agreed it seems to become prime minister under a Medvedev presidency, that is, you would take a post that is subordinate to the president. How do you plan to use your political influence after the elections? Are you willing to play the number two role under a Medvedev presidency?

VLADIMIR PUTIN: I think I have already received one present and even two presents from the Russian people and perhaps from God, when I had the honour and pleasure of working as head of the Russian state. Under our country's Constitution, this term is my final term. It is coming to an end now and rather than lamenting the fact that I can no longer work in this capacity I should be happy that I now have an opportunity to continue serving my country in a different capacity.

The Constitution gives the Government many opportunities. The Government is responsible for forming the budget and presenting it to the parliament. It is responsible for the budget report and for forming the foundations of monetary and credit policy. The Government is in charge of resolving social, healthcare, education and environmental issues, creating the conditions for ensuring our country's defence and security and carrying out our economic and trade policies abroad.

The President is the head of state, guarantor of the Constitution, and sets the main domestic and foreign policy guidelines, but the highest executive power in the country is in the hands of the Government. There are enough powers to go around and Dmitry Anatolyevich [Medvedev] and I will divide them between ourselves and build up our personal relations, if the voters give us such a chance. I can assure you that there will be no problems in this respect.

ROSSIA TELEVISION CHANNEL: I have question on the national projects. What have they achieved and what has not been achieved? Will there be a national project for culture at some point? Will they continue, and who will oversee them if Dmitry Medvedev, who is currently in charge, becomes president?

VLADIMIR PUTIN: For a start, regarding the question of who will oversee them, as you know, there is a Presidential Council for the National Projects chaired by the president. If Dmitry Medvedev is elected president he will also become head of this council. There are no difficulties in this respect. Moreover, as the person already overseeing the implementation of these projects he is best informed on their state of progress and can act most effectively to influence the implementation process. Within the Government, one of the deputy prime ministers or even the prime minister could be responsible for the national projects. I do not see any problems here.

As for the future of the national projects, they will continue of course. Some of them will undergo some transformations and the regions will gradually take on more and more of the responsibility for aspects of their implementation, and will at the same time receive federal financing for this work. This is most important. I want to stress that the federal authorities are not going to simply abandon these different areas of work but will continue to actively support and finance these projects.

As for the idea of increasing the number of national projects, what we did was to take the most serious social problems we face, problems that, like the demography issue, had reached a point where there seemed to be no solution. Already back in the Soviet times people used to say, for example, that if you want to dig a hole under someone all you need to do is put them in charge of agriculture. But Medvedev did not take fright and has tackled this work. Now we are seeing the result: clearly visible progress in all of the different areas.

Look at what has happened with loans for the agriculture sector. Look at how production has increased. I visited Belgorod Region and looked around and it really lifted my spirits. It is one thing to read the reports and another thing to see it with your own eyes, to see the latest agricultural technology, the latest agricultural and livestock methods, to see that people have bought the best of what Europe has to offer, have learned to use it, and it is working. This is creating the conditions for achieving a four-fold increase in labour productivity. This is an opportunity for us.

What about healthcare and demography? No one thought we could achieve what we have. Our birth rate is growing faster now than at any other time in the last 25 years. We are achieving the goals we have set. But we cannot keep expanding the number of national projects or we will be quite simply swamped.

I do agree with you, however, that culture is an area that should receive greater attention and we will do this.

FRANCE PRESSE: Under your presidency Russia has grown stronger in many ways. Would you agree that the personal factor has played a part in this? And if you answer positively, do you believe such a situation is good for the state mechanism?

VLADIMIR PUTIN: There are two important things to remember when speaking of the part the personal factor can play in achieving results: know how to set ambitious goals and objectives and do not complain at every turn. Leaders of countries do not have this privilege. If they spend their whole time complaining about how bad everything is and how hard it is to get anything done, this is exactly the result they will end up with. But if you set ambitious goals and objectives based on real analysis, and if you work purposefully towards these goals and mobilise society and the state behind them, you will achieve them. This is what we have done. This is a very important factor.

As far as our state authorities and public organisations go, I think that we have made a lot of headway in strengthening the federal basis of our state. The country's regions now function more effectively. We have carried out a genuine decentralisation of power right down to local self-government level. Not everything is functioning in full yet perhaps, but it will all start to work, even within the medium term. We have transferred to the regional and municipal authorities not just new responsibilities but also new financial possibilities. Now we have to wait and see how this all works in practice. If the resources turn out insufficient for the level of powers, we will look at how to find additional sources of financing in order to make the regional and municipal authorities more responsible for the results of their work. This is a very important factor.

Another no less important factor is that of strengthening the multiparty system. There has been debate about the 7-percent threshold parties have to reach in elections to qualify for seats in the State Duma, but I think that consolidation of the different political parties has a positive impact overall on our political system's development. Look at the situation in Ukraine where the threshold for entry to the parliament is 3 percent. Do you like what you see there? How can they ensure the political stability needed for economic and social development?

Democracy is not a street bazaar. Democracy is the chance for the people to influence their country's development through political organisations. Big parties that have real connections with the people and with the regions can do this in a way that establishes the conditions needed for the country to be able to grow and reach its goals. In this respect I think we have made serious progress towards strengthening the basic foundation of Russia's statehood.

STUDIA 1+1, UKRAINE: Have you gained a greater understanding of Ukraine and its actions following your meeting with our president, Viktor Yushchenko? What is your assessment of Russian-Ukrainian relations over these last eight years, and why do you think they have been so difficult?

VLADIMIR PUTIN: Yes, I have gained a greater understanding because Viktor Andreyevich [Yushchenko] and I had a very substantial discussion, and I say this without any irony. We took a very detailed and frank look at all of the different areas of our relations. It seems to me that Viktor Andreyevich also understood the motives for our behaviour regarding this or that issue. I think that our Ukrainian colleagues, including the President, seek a constructive dialogue with Russia and are ready to look for solutions to any problems. I would not dramatise the fact that problems do arise. We are each other's closest neighbours and the relations between our countries are very extensive indeed. It is inevitable that problems sometimes arise. This has always been the case and always will be. The question is whether we want to find solutions or whether we decide to aggravate the situation. I have the impression that the Ukrainian leadership is committed to finding solutions to these problems.

As for the overall development of our relations over these last eight years, I think that we could have achieved more. There has been a lot of political froth in our relations. We have spent many years arguing about the gas transport system and Ukraine has very much politicised this issue.

In Ukraine, they don't want us Russians to get our hands on the gas transport system, but we have already long since given up this idea. We just want the system to function normally. What we proposed was to establish an international consortium with the participation of European partners, and this consortium would raise resources (we are talking about billions of dollars) not just for the transport system's technical maintenance but also for its development. The system itself, meanwhile, would remain the property of Ukraine. What is wrong with this proposal? The same goes for gas prices. We want to sell our gas at market prices but we are going about this in a calm and unhurried manner. We have decided to introduce market prices for energy resources on our domestic market too. Energy will still be cheaper on the Russian domestic market even so because we can subtract the export duties, transport costs and so on. But the principle is one and the same. I am very pleased to see that the Ukrainian leadership and above all President Yushchenko understand this. It was precisely with President Yushchenko that we succeeded in reaching an agreement a few years ago, and in Moscow he once again reaffirmed his position. I think that if the same constructive approach can be applied to resolving other problems then relations between Ukraine and the Russian Federation will most certainly be set to grow.

INTERFAX: You said we need to develop both large business and small business. It is almost impossible now to develop small and middle business. Do you think that a council should be set up, a government council rather than a presidential council, to resolve the problems facing business, both big and small? Otherwise we could end up in 2020 having a country that is not as attractive as you said in your speech on February 8.

VLADIMIR PUTIN: This is not so much a question as a demand from the voters, and you should therefore take it to Dmitry Anatolyevich [Medvedev] and I hope he will hear you. You are absolutely right. It is precisely for this reason that there are several tasks we must tackle.

We need to fundamentally improve the quality of management and increase labour productivity at every level.

There are several other issues we need to address in order to achieve our development objectives. First, we need to establish an education system that would make it possible for people to retrain rapidly and professionally. Second, we need to remove red tape in all areas affecting the development of small and medium business including that of access to power, utilities, office space. We need to resolve the problem of corruption in this area. There is still a great deal to do. I have already issued additional instructions to the Economic Development and Trade Ministry and they are now in contact with various small and medium business organisations and are working together to set out proposals for systemic changes in this area.

And finally it also depends on the population mobility. This is related to housing problems. It is important that a person could move from Moscow following a new interesting job offer, buy there an apartment, or rent it. We have to develop construction industry and we simply can not concentrate on one issue here; we will tackle the whole thing.

REN TV: There has been a lot of talk lately about a possible redenomination of the rouble...

VLADIMIR PUTIN: Don't believe the rumours! There is no economic need for such a decision. Neither the Government nor the President nor the Central Bank has any such plans. The Russian economy's foundation is such today that there are no reasons for such a step and it would only be harmful. We have almost 500 billion dollars in foreign currency reserves and a little over three trillion roubles in the Stabilisation Fund. Our budget and trade balance both show a surplus and there is an enormous flow of private capital into the country. These are not the issues on our minds at the moment. What we need to be working on is innovative economic development, education and healthcare. Schoolteachers' wages are only 80 percent of the average national wage, and they should be higher than the average wage. These are the issues on our minds now, not redenomination of the rouble.

ITAR-TASS: Vladimir Vladimirovich, you have made 170 visits abroad over your eight years in office. How have attitudes to Russia abroad changed over this time and why do you think the West has such a negative view of Russia? Times magazine chose you as person of the year. I wonder whether you were pleased or worried, as there are two different images of Putin -- one in western and the other in Russian media. What do you think about what the Western media writes about you?

Also, will you continue to hold such press conferences as today in your new job?

VLADIMIR PUTIN: I have to get this new job first. Yes, I am willing to work as Prime Minister of the Russian Federation. But for this to happen the presidential election first has to take place and Dmitry Anatolyevich Medvedev has to be elected, if Russia's citizens give him their trust. Then he would have to submit my candidacy to the parliament, and the parliament would then vote on it.

I am well aware that the chances for these events taking place are very good, but as they say, you should never count your chickens before they are hatched. If these events do indeed take place, the prime minister does have the right to meet with journalists (above all to discuss the country's social and economic development). The current prime minister does this quite regularly, I think, as did his predecessor.

Incidentally, I am very pleased that we have organised things in such a way that Dmitry Anatolyevich, as first deputy prime minister, is able to keep working and at the same time carry out his election campaign, while the prime minister can concentrate fully on his duties and the Government in general can keep working. I am pleased that I have organized it this way because otherwise the country could have run the risk of sinking into endless political squabbles and we could have seen problems arise in the Government's and administration's work. But we have none of this.

As for what the press writes about me, if I were to react to everything that is written about me and change my behaviour accordingly I do not think we would have achieved all we have today.

I remember when international terrorists attacked Dagestan and I saw how I was depicted with fangs dripping with blood and so on. I remember this, but I also had my absolute inner conviction that we were taking the right course of action and that we had no other choice.

The same is true of other issues. If I have the inner conviction that what I am doing is right I do not let what others say and write about me distract me and I do not respond to attempts to influence me from outside. But I can alter my decisions through a process of dialogue with colleagues whose opinions I respect.

As for attitudes to Russia, attitudes are good! Just because some article appears in this or that country or some campaign or other gets underway this does not automatically reflect the attitudes to Russia among these countries' people. Look at the public opinion surveys in European countries. I just saw the latest survey from Germany and the attitude expressed is positive overall. Of course the press can help shape attitudes, but we know that a few countries between them hold a monopoly on the world's media. Of course the political centres in these countries use these channels to try to influence our population and the population in Europe and North America. I do not think they have much success in these attempts. Incidentally, the selection of Sochi to host the 2014 Winter Olympics suggests that they don't have much success. This was a good litmus test: the members of the International Olympic Committee, all influential and independent people, voted for Russia. This shows that there is respect for Russia and that Russia's role in the world today is recognised.

Of course we see growing competition on the international stage today, especially in the economy, and of course various means are used to try to reach political or economic goals. Of course various instruments, including the media, are also used.

As for the discussions about democracy in Russia, we have to realise the objective behind these discussions. For example, why listen to Russia's views on Kosovo if Russia itself is supposedly not a democratic country?

Another example: why listen to what those Russians have to say about missile defence is they cannot be trusted anyway because they have problems with democracy? We need to take a sober look at what is happening in the media. We need to analyse the situation, but it is not worthy of Russia to react by kicking up a fuss, and we will not respond in this way.

Continuation follows.

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