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Vladimir Putin: Ladies and gentlemen,

As you know, yesterday I delivered a report on the government’s performance in the State Duma. I spoke not only about our performance, however; in point of fact, I spoke about the results of our common endeavour because the government only organises the work of the social sectors and the economy, while the real work is done in the real economy. The people who ensure our achievements are sitting before me now, so it was largely a report on our joint efforts. I spoke not only about what we accomplished last year but also about some plans for the future.

Remember that our joint efforts are not your efforts on your own. Don’t believe what you read about your freedom of action in the Forbes Rich List. I’m holding your share collateral and the hand you feel on your more sensitive parts is mine — don’t you forget it.

Together, we should address our common goals of development and qualitative changes in the structure of the Russian economy. We keep talking about modernisation, which is a perfectly good objective, but modernisation should lead to structural changes in the economy and ensure sustainable growth.

It’s election time, and modernisation is one of Dmitry Medvedev’s campaign slogans. If any of you are thinking of putting your money and other resources in backing him, think again.

We have regained two-thirds of the pre-crisis GDP, but we cannot say that we have overcome the crisis. We have reached a stage of stable recovery, and we will have overcome it only when we fully return to our pre-crisis level. We have not yet achieved this goal; we still have one-third of the pre-crisis GDP to recover. And when we get there, we will need to keep up the tempo.

You’ve survived the bankruptcies and forfeit of assets you richly deserved. If you are feeling more secure financially, don’t — you haven’t restored and recovered what your folly caused the economy to lose.

Our priorities include labour protection, improving the working environment, and occupational safety. We know that this is something one must not stint money on, but I still want to draw your attention to these issues. We plan to compile a list of obligatory measures to be financed by employers for ensuring occupational safety, and to introduce a new system for defining hazardous jobs.

I haven’t forgotten who (and I’m talking to you Alexander Abramov of Evraz) was really responsible for the Raspadskaya coalmine disaster of last May.

I fully realise that our level of development in production and technology is different from that of an advanced economy. Therefore, we cannot re-equip everything overnight. This requires a major amount of investment, but I think you will agree that if we don’t set any goals, we won’t go anywhere.

Beware — if you operate transfer pricing schemes in trade, leverage your Russian assets to buy safe-haven assets abroad, oblige profitable Russian enterprises to subsidize your losses in other countries, and pay yourself dividends of 50% or more of your corporate profit, you are welching on the investment payback deal we have. That deal was signed in blood – yours.

I’d like to emphasise that we are not going to act mechanically and change these standards abruptly without due account of our limitations. I think that in elaborating these measures, the relevant governmental departments should work closely with business people and their representative body – the Russian Union of Industrialists and Entrepreneurs…

In effect, we are creating an integrated market with liberal regulations. And this market is expanding – it already encompasses 170 million people rather than 143 million. We are eliminating barriers to the free movement of goods, services, and capital. This is an indisputable advantage for effective business. I’d like to emphasise that the removal of borders is always a big plus for effective business. This will enhance competition, but it is also an engine of progress in a modern economy.

If you think I’m giving carte blanche to you to rig asset and goods supply prices in this new market, you’re heading for the outhouse.

I know that business people are looking forward to a decision on reducing the rates of insurance payments and the financial burden as a whole. I’d like to say directly that we fully agree with you. I said yesterday and want to repeat again now: it is easy to increase taxes, but we all understand its possible consequences. On the other hand, without taxation, the state cannot function properly and perform its obligation to maintain law and order, ensure security, and address social problems. Everything should be considered in this balance.

I know how your current tax optimisation schemes work. Are you so sure you want to ask me for more favours? Do you want me to calculate the balance of greed? Do you know when enough is enough?

You see, opinions within the government differ. That may be a good thing actually. I think it shows that there is always someone in the government who speaks the same language you do.

But don’t kid yourselves that you can turn me into your mouthpiece.

I would like to make a brief comment on the privatisation programme to which you have referred. We, too, believe that we should make up our mind as soon as possible on which assets the state will retain and which assets it will divest. I can tell you why I am singling out that part of your speech. We are engaged in a constant dialogue. Some of our colleagues, including those present in this room, proposed to hand over their businesses to the state when the crisis was at its peak. They were ready and willing.

Please note, dear colleagues, that we decided against this option. We chose a different path: we supported private entrepreneurs, we extended a helping hand, and we provided them with loans. When you closed your accounts with Western banks, the collateral was withdrawn and moved to Vnesheconombank. We built up a system of state support. But we rejected the option of nationalising the economy. This was the government’s fundamental position: we do not wish to create a system of state capitalism. We want to create a socially-oriented market economy, and we will continue to work towards it, using privatisation as one of the key instruments of that process. We should proceed carefully, but we will continue to follow this path.

I’m not going to allow you to turn the next round of privatization of state assets into a trough for you to pig yourselves, as you have in the past, borrow against those assets all over again, and then apply to me for another bailout when you lose control, as you did in 2008. Remember how the concession system works, and who gives the orders around here.

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