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Last Updated: Wednesday, 26 May, 2004, 10:48 GMT 11:48 UK
Putin predicts surging economy
Russian President Vladimir Putin
Putin held out the prospect of a fully convertible rouble
Vladimir Putin has vowed to build a rich, modern Russian state in his first state-of-the-nation speech since being re-elected as president in March.

He said his goals were a higher living standard for Russians and the pursuit of stability, democracy and Russia's strategic interests abroad.

Russia, he said, should match and even exceed other states in its development.

The president predicted the economy could double by 2010 if its steady growth - 7.3% last year - continued.

There was no oligarch-bashing and it was generally good for business
Erik Wigertz

He singled out as one achievement the fact that economic development could now be charted for years ahead.

Addressing both houses of the Federal Assembly in Moscow in a speech broadcast live to the nation, he outlined his social priorities:

  • to build new housing, particularly for young families now living in cramped conditions, with long-term loans for people to buy their own homes and for greater freedom on the property market

  • to provide access to higher education for all children, whatever their means, with greater provision for student loans and more opportunities for graduates to follow their vocations

  • to strengthen the health care system to ease the burden on the very poor, in particular

Hard rouble

Much of Russia is still mired in deep poverty following the collapse of the Soviet Union and Mr Putin pointed out that some 30 million citizens lived below the poverty level.

He stressed that economic reform was key to further growth and future prosperity, calling for a tax system "equally fair to all economic players".

He looked to eventual annual inflation of no more than 3% - the target for the current year is 10%.

Mr Putin added that it was his aim to achieve a fully convertible rouble.

Other economic priorities were to tighten controls on the exploitation of natural resources and modernise the transport infrastructure across Russia.

Russian interests

Mr Putin came to the speech boosted by a deal with the EU to join the World Trade Organisation and after promising faster action to back the Kyoto protocol on global warming.

The Russian leader also pledged to modernise the Russian armed forces, including the strategic nuclear forces, and to pursue a foreign policy which promoted stability within the former USSR and beyond and furthered Russian trade interests.

He made no direct mention of the situation in Iraq, despite Russia's strong opposition to the US-led invasion.

Russia, he said, would continue to combat international terrorism - which he linked to the recent assassination of Chechen President Akhmad Kadyrov - while respecting human rights.

'Good for business'

Economists who spoke to Reuters news agency generally welcomed the speech, with Erik Wigertz of United Financial Group (UFG) predicting that the development of Russia's mortgage industry would be the "main push" of Mr Putin's second term.

The speech was "generally good for business", he said, adding that the president had avoided "bashing" the tycoons who control much of Russia's wealth.

The BBC's Sarah Rainsford, reporting from Moscow, notes that there was no hint at all of Mr Putin's thinking as Russia's richest man, Mikhail Khodorkovsky, enters the dock this week to face controversial charges of large-scale fraud and tax evasion.

She adds that while the speech was filled with high targets, it was low on concrete methods to achieve them.

The BBC's Steve Rosenberg
"Mr Putin was selective in his subject matter"

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