POLICY MEMO
STRENGTHENING DEMOCRATIC INSTITUTIONS PROJECT
July 13, 2000
RUSSIAN PRESIDENT PUTIN’S STATE OF THE NATION ADDRESS
Russian President Vladimir Putin delivered his first State of the Nation address to the Russian
legislature on Saturday, July 8. In it he identified what he sees as the country’s central challenges and
offered his plans for addressing them. Given general fatigue with rhetoric from Russian leaders and
pundits about Russia, it is easy to miss the significance of what he said. To underline the point,
consider the following multiple choice “quiz” on key questions Putin raised. –Graham Allison,
Director, SDI Project
2.
3.
4.
5.
Unless Russia accelerates structural reform well beyond
anything achieved in the past decade, Russia will be in
danger of:
a. stagnation
b. losing respect of other great powers
c. being demoted to “second world” status
d. being demoted to “third world” status
Russia’s current real economic growth (8% growth, 10%
increase in industrial output this year) is principally the
result of:
a. success of IMF-recommended reform of Russia’s
economy
b. bottoming out; the only way to go is up
c. strong leadership
d. foreign economic factors: devaluation of the ruble and
strong commodity prices
The proper role of the state in the economy is:
a. a strong regulatory presence reflecting Russia’s history
and traditions
b. strict management of Russia’s natural and human
resources
c. reassertion of control over main financial- industrial
groups
d. less administration, more free enterprise, more freedom
to produce, to trade, and to invest
The main obstacle to growth is:
a. unreasonably high taxes
b. arbitrary actions of civil servants
c. rampage of criminals
d. all of the above
Russia’s enterprises have survived thanks to:
a. clever management
b. painful restructuring
c. fierce competition


According to Putin’s speech:
1.



d.
See inside:
Summary, p. 2
Key points, p. 2
Putin’s main
objectives, p. 2
6 policies to improve
business climate, p. 2
Key quotes, p. 3
devaluation of the ruble, maintenance of low prices for
energy, and barter
6.
The principal objective of restructuring relations: between
Moscow and the regions is to:
a. prevent disintegration
b. punish wayward governors
c. revive the Russian Empire
d. create a single economic and legal space
7.
The main cause of Russia’s lengthy and profound economic
crisis is:
a. international financial institutions
b. hostile foreign powers
c. unscrupulous oligarchs
d. Russia’s “ineffectual state”
8.
To promote economic growth the Russian state should:
a. intervene less in the economy
b. encourage more free enterprise
c. protect ownership and shareholder rights
d. all of the above
9.
Freedom of press in Russia is the responsibility of:
a. Russian citizens
b. Russian state authorities
c. the oligarchs
d. all of the above
10. The most important reason to strengthen the state is to:
a. ensure equal opportunities to the constituent parts of
the federation
b. create legal guarantees for the development of the
Russian economy
c. ensure effective implementation of economic strategies
everywhere in Russia
d. all of the above
(Answers on page 2)
For the full text of Putin’s speech in English, see: http://ksgnotes1.harvard.edu/BCSIA/SDI.nsf/web/Putinspeech
Answers: d
Putin’s first State of the Nation address
Putin’s speech
is notable primarily for its brutal
KEY POINTS
realism, an attribute SDI has
 Without immediate decisive action Russia risks economic
consistently identified as one of the
collapse, demographic and social devastation, and demotion
defining characteristics of Russia’s
to third-world status.
new president. In the speech Putin
 Only a powerful, effective state based on the rule of law can
blames the state for allowing a
serve as the guarantor of Russians’ democratic and economic
freedoms: civil society, free press, strong political parties,
“dictatorship of the shadow economy,”
private property rights, and fair competition.
“raging corruption,” and “massive
 Russia can exist only as a unified economic and legal space,
outflow of capital overseas.” He
a federal state with clear vertical chain of command from the
cautions that recent economic growth is
president to the territories.
the result only of high commodity
prices and the lingering effects of the
ruble devaluation, warns that the
economy is on the verge of collapse, and that Russia risks sliding into third-world status. Russia’s
business climate, he concludes, is “unfavorable.” When describing his cure for Russia’s ills, Putin falls
back on a familiar mantra: strengthening the state. Only a strong state, he argues, can stabilize the
economy, defend Russia’s reputation abroad, and propel the country into the information age. (If you
don’t like the word “strong,” think “effective,” Putin tells doubters.) But the substance of Putin’s
speech is strikingly free-market, and his prescriptions focus overwhelmingly on the economy. He
condemns excessive state interference in the economy and calls for “less administration, more free
enterprise, more freedom to produce, to trade, and to invest.” The state, he asserts, must protect private
property rights, defend shareholder rights, and “liberate businessmen from administrative
dictatorship.” In addition, Putin delivers a standard textbook argument in favor of developing Russia’s
democratic institutions: a vibrant civil society, strong political parties, independent trade unions, and
independent media outlets. Of course, there are moments when Putin seems to lapse into the perhaps
more comfortable lingo of a state security specialist, for instance when he says “provision of accurate
information on developments in our country” is an issue of “national security,” or when he speaks
darkly of having to “face forces seeking geopolitical reorganization of the world.” Still, on the whole
Putin’s address sets out an ambitious agenda for building what his predecessor, Boris Yeltsin, used to
call a “civilized, normal country,” satisfying the economic and political needs of its people at home
and maintaining the respect of other countries abroad. If Putin is able to match these words with
actions—and that is another question entirely—then this first State of the Nation address may prove to
be significant indeed. –Ben Dunlap,
Putin’s speech
Putin’s speech
FOUR KEY OBJECTIVES
SIX POLICIES TO IMPROVE
RUSSIA’S BUSINESS CLIMATE
1.
2.
3.
4.
To improve the political system and build an effective state
which will serve as a guarantor of stable social development,
a guarantor of human rights.
To level out and ensure equal opportunities to the constituent
parts of the federation so that all citizens can enjoy the
whole gamut of political, social and economic rights.
To create legal guarantees for the development of the
Russian economy as an economy of free enterprise and
business initiative of citizens.
To ensure accurate and effective implementation of
economic strategies everywhere in Russia.
1.
2.
3.
4.
5.
6.
Ensure ownership rights.
Ensure equal conditions for
competition.
Free businesses from
“administrative dictatorship.”
Ease the tax burden.
Develop the financial
infrastructure.
Create a realistic social policy.
Putin’s speech
KEY QUOTES
On the economy:
 “Easing the tax burden will make it possible for conscientious and hard-working entrepreneurs to develop their own
business in their own country with confidence.”
 “We must admit that the state has to a greater degree facilitated the dictatorship of the shadow economy and grey
schemes, the raging corruption and massive outflow of capital abroad.”
 “Today’s economic indices look optimistic only against the background of yesterday’s.”
 “Many of our failures are rooted in the fact that civil society is underdeveloped and the authorities do not know how to
communicate and cooperate with it.”
 “Will we be able to survive as a nation, as a civilization, if our wellbeing, again and again, will depend on international
loans and favors from leaders of the world economy?”
 “The main obstacles to economic growth are high taxes, the arbitrary actions of functionaries and the rampage of
criminals.”
 “We have no right to miss out on the information revolution which is now gaining momentum in the world.”
 “We are losing out on the competitive world market, which is geared more and more to innovative sectors and to the
new economy: the knowledge and technology economy.”
 “Unfortunately, the business climate in our country is improving too slowly. It still remains unfavorable.”
On political parties:
 “Russia does not need another bureaucrats’ party that sucks up to the authorities…”
 “Perhaps only public and political associations should have the right to nominate candidates to the post of head of
state.”
 “It is advantageous for a weak power to have weak parties… But a strong power is interested in having strong rivals.”
On the media:
 “Without truly free media Russian democracy will simply not survive, and we will not succeed in building a civil
society.”
 “When people often tell me to come to grips with the media, to do this or that, my response is that we need to come to
grips with society as a whole, then the media will naturally change too.”
 “Economic inefficiency of a large proportion of mass media outlets makes them dependent on the commercial and
political interests of the bosses and sponsors of these media outlets…”
On the state’s role in the economy:
 “The state interferes excessively in spheres where it should be absent and is absent where its presence is needed.”
 “Our strategic policy is the following: less administration, more free enterprise, more freedom to produce, to trade, and
to invest.”
The Strengthening Democratic Institutions Project works to catalyze support for three great transformations underway in
Russia and other countries of the former Soviet Union: to sustainable democracies, free market economies, and cooperative
international relations. The Project seeks to understand Western stakes in these transformations, identify strategies for
advancing Western interests, and encourage initiatives that increase the likelihood of success. It provides targeted
intellectual and technical assistance to governments, international agencies, private institutions, and individuals seeking to
facilitate these three great transformations.
SDI PROJECT, BELFER CENTER FOR SCIENCE AND INTERNATIONAL AFFAIRS
JFK SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY
79 JFK STREET CAMBRIDGE, MA 02138
Phone: (617) 496-1565 Fax: (617) 496-8779
Web site: http://www.ksg.harvard.edu/bcsia/sdi
Email: SDIJFK@harvard.edu