VZCZCXRO8191
OO RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #1932/01 1161500
ZNR UUUUU ZZH
O 261500Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9731
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 MOSCOW 001932 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ECON PGOV PARM RS
SUBJECT: PUTIN'S STATE OF THE FEDERATION ADDRESS: TOUTING 
ECONOMIC ACHIEVEMENTS; SUPPORTING "MORATORIUM" ON CFE 
 
 
¶1.  (SBU)  Summary: President Putin's hour-plus address to 
the Federal Assembly on April 26 was - he emphasized - his 
last.  To loud applause, he declared support for a 
"moratorium" on Russia's compliance with the CFE Treaty.  He 
again condemned U.S. plans to deploy BMD systems in Europe. 
The bulk of Putin's remarks focused on economic initiatives. 
However, the election-year economic measures he highlighted 
represented more a repackaging of existing programs than, as 
it might have appeared, a torrent of new spending.  Putin 
slammed efforts by unnamed "external forces" to interfere 
with Russia's internal affairs.  He noted he had discussed a 
global digital library initiative with President Bush.  End 
Summary. 
. 
Last Speech as President 
------------------------ 
 
¶2.  (U)  Putin began his (one hour and twenty minute) annual 
State of the Federation speech by asking for a moment of 
silence to mark Yeltsin's death earlier in the week.  After 
noting the difficult transition following the fall of the 
Soviet Union, he underlined that Russia was only at the 
beginning of the road to national revival, which would be 
marked not only by political stability and economic 
achievement, but by strengthened values.  Putin stressed that 
this was the last of his eight annual addresses as President. 
 The next address to the Federal Assembly, he said, would be 
given by a new head of government.  He did not tip his hand 
as to his successor and stressed that it was too early to 
discuss his political legacy. 
. 
CFE Moratorium and Missile Defense 
---------------------------------- 
 
¶3.  (SBU)  Putin drew sustained applause (the loudest of the 
address) when he announced that he considered it "expedient 
to declare a moratorium on Russia's implementation of the CFE 
Treaty until all NATO members, with no exception, ratify it 
and, as Russia does unilaterally today, implement it 
strictly."  Putin justified the move by arguing that while 
Russia had ratified the treaty and complied with its 
requirements -- even when it disadvantaged Russia during the 
Chechen war -- Western countries had not.  He suggested that 
Russia would consider withdrawal from CFE if no progress was 
made.  He proposed "to discuss the problem in the NATO-Russia 
Council  framework."  Putin reiterated that U.S. missile 
defense deployment in Central Europe threatened European 
security and suggested that it be discussed in the OSCE. 
Unlike in last year's address, Putin did not emphasize 
military modernization. 
. 
Duma Elections:  Referendum on Russia's Course 
--------------------------------------------- - 
 
¶4.  (U)  Turning to the upcoming Duma elections, Putin 
stressed the role of political parties in maintaining 
political stability.  He predicted that the December 2007 
election would show the degree to which Russian civil society 
supports the current direction the country is taking, noting 
that implementation Russia's strategic goals depended on the 
makeup of the next parliament.  The only significant 
institutional change Putin flagged was the introduction of 10 
year local residency requirements for Federation Council 
seats. 
. 
Democracy Promotion = "Dirty" Politics 
-------------------------------------- 
 
¶5.  (SBU)  In harsh terms, Putin slammed efforts by unnamed 
"external forces" to interfere with Russia's internal 
affairs.  Foreign entities used the "dirtiest" of political 
technologies to fuel ethnic and confessional conflict in 
order to keep Russia down and steal it riches.  He said that 
NGOs played a role in the political process, but their 
activities needed to be appropriately channeled through 
institutions like the Public Chamber.  Putin called on 
Parliament to pass legislation countering extremism without 
delay.  He emphasized the role of the Russian language and 
culture in encouraging patriotism and family values.  He 
noted he had recently spoken with President Bush about a 
"world digital library." 
. 
Highlighting Economic Accomplishments 
------------------------------------- 
 
¶6.  (SBU) Touting Russia's newfound economic strength, Putin 
announced that Russia has "not only completely overcome its 
long period of declining production, but has become one of 
the ten largest world economies."  He advocated a transition 
toward a more efficient, innovative economy through 
 
MOSCOW 00001932  002 OF 002 
 
 
infrastructure development, more efficient use of natural 
resources, development of nanotechnologies, stronger support 
for small business, poverty reduction, and expansion of the 
middle class.  He named electric power development a 
priority, calling for greater use of nuclear, hydro and coal, 
and emphasized the need for better transportation 
infrastructure, particularly airports and seaports.  In a nod 
to regional dissatisfaction with federal funding, Putin 
announced plans to transfer 153 billion rubles (about $6 
billion) to the regional governments. 
 
¶7.  (SBU)  As expected in this election year, Putin 
characterized as successful efforts under the National 
Priority Projects to invest in human capital.  His only 
criticism was to call for improved management, particularly 
stronger financial oversight.  He highlighted the housing 
project, setting a goal of building one square meter per 
capita annually to better meet demand.  Expressing particular 
concern over the appalling state of the housing utilities 
sector, Putin argued that part of the revenue the state 
receives from the payment of Yukos debt should go to 
improving utilities.  Furthering his populist theme, Putin 
announced that pensions would increase by at least 65% over 
the next two years and affirmed that the retirement age would 
not be raised anytime soon.  Also, for the first time he 
suggested splitting the Stabilization Fund into three funds: 
the Reserve, Future Generation, and Social Program Funds. 
 
Foreign Policy:  Rote Speech 
---------------------------- 
 
¶8.  (SBU)  Putin was at his least animated in discussing 
Russia's foreign policy aims other than defense.  Noting 
Russia's economic and energy interests in the area of the 
former Soviet Union, he highlighted the integration function 
of the Eurasian Economic Community and the Shanghai 
Cooperation Organization.  After a perfunctory nod to the 
Russia-Belarus Union State, Putin stressed the economic 
potential of cooperation with Russia's European partners. 
BURNS