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Putin’s State of the Nation address: charting a course for a modern Russia

Alexander Mercouris

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Information about President Putin’s State of the Nation address is still coming through as I write this.

Most world attention has been on the various military developments which President Putin outlined.  Though these are dramatic enough the main focus of the address was on the domestic economy.  That is the part of the address I will discuss in this article.

(1) Increase in economic growth rates in the 2020s

President Putin has charted a very ambitious project of increasing per capita incomes in Russia by 50% by the mid 2020s ie. by roughly the end of his next term as President (assuming he is re-elected), which will be in 2024.

Since the government and the Central Bank forecast economic growth to continue to be low (less than 2% per year) up to 2020, that implies a very rapid increase in economic growth rates after 2020.

This is in fact consistent with the recent discussions of the state of the economy published by the Central Bank.

Briefly, the story of Putin’s third term with respect to the economy has been one of the Russian government sorting out various accumulated problems in the economy in order to prepare for a marked but sustained acceleration in the 2020s.

This has required:

(i) a very tight monetary policy to bring inflation down from its historic double digit annual level to the 2-4% annual range which it has achieved now;

(ii) hard work to improve the business climate, with the World Bank assessing that Russia’s ‘Ease of Doing Business’ rating has improved from 120th in the world in 2010 to 35th in the world now;

(iii) the introduction of a floating exchange rate for the rouble (achieved in 2014);

(iv) a steady clear up of the banking system, with a policy of closing down bad banks and consolidating the banking sector into a smaller number of strong banks; and

(v) a programme of fiscal consolidation, whereby the national budget is first balanced and then brought into surplus, with the share of oil and gas revenues further reduced, so that the deficit in the budget once oil and gas revenues are take out of account has already fallen from 15% of GDP in 2015 to 7% now, with plans to reduce it further, with the eventual intention of eliminating it entirely.

The Russian government and the Central Bank have explained that the primary reason for reducing and then eventually eliminating the ‘non-energy revenue’ deficit in the budget is so as to make the national budget invulnerable to falls in energy price movements..

These measures have been accompanied with further technical steps to strengthen the financial system, for example by introducing a Russian alternative to the SWIFT interbank payment system (which Russian officials have confirmed over the last few weeks is not merely ready but is actually operating), a Russian debit and credit card independent of Mastercard and Visa (the Mir card) and by the redirection of the Russian state’s borrowing from foreign to domestic sources (ie. towards ‘rouble bonds’ in place of eurobonds), with Russia however taking control of its own eurobond placements.

This period of sorting out the accumulated problems in the economy – some of which extend back to the late Brezhnev era of the mid to late 1970s – is now practically over, with the Russian government and the Central Bank expecting that the process will be concluded by 2020.

Thereafter, it is hoped that the hard work carried out over the period of Putin’s third term will finally bear fruit, with economic growth rates rising sharply, and doing so in a sustainable way.

Needless to say Putin touched on all of this in his speech, stressing that it is the achievement of macroeconomic stability in Russia that makes the very ambitious economic plans he outlined in his address possible

In the last few years, we have enhanced the sustainability of our economy. The dependence of the economy on hydrocarbon prices has been substantially reduced. We have increased our gold and currency reserves. Inflation has dropped to a record low level – just over two percent. Of course, we all understand that the growth of prices for many basic necessities is much higher. This should be strictly monitored by different agencies, including the Anti-Monopoly Service. But on the whole, this low inflation level creates additional opportunities for development. Let me remind you that quite recently, in 2015, inflation was almost 13 percent – 12.9 percent to be exact.

In effect, Russia has formed a new macroeconomic reality with low inflation and general economic sustainability. For the people this is a condition for real income growth and cheaper mortgage loans. For entrepreneurs it means predictability in business and cheaper loans. Business should also adapt to these new macroeconomic conditions. Finally, it makes it possible to attract long-term loans and private investment into large-scale infrastructure projects.

Now we have an opportunity, without speeding up inflation, and maintaining a careful and responsible approach, to gradually cut interest rates and make loans more affordable. I count on the support of the Bank of Russia in that, while making its decisions, implementing monetary policy measures and developing financial markets, it will work in contact with the Government in the interests of the common goal of creating a proper environment for increasing the economic growth rates.

The major driver of faster economic development will be higher investment and increased productivity, with the stable macroeconomic conditions making it possible to achieve at a sustained level a rate of investment in the economy the like of which it has never experienced in the post-Soviet period

Increased investment is the second source of growth. We have already set the task of bringing it up to 25 percent of the GDP, and then to 27 percent. Unfortunately, this goal has not been achieved yet. To ensure sustainable growth, we need to do so at all costs. I hope that the new Government in conjunction with the Bank of Russia will present a concrete plan of action in this area.

A recent study by the Russian Academy of Sciences has suggested that growth rates in the 2020s could be as high as 4-6% annually, which would certainly be necessary if the increase in per capita income by 50% that Putin is talking about by the mid 2020s is to be achieved.

In his State of the Nation address President Putin spoke of achieving this objective as a difficult one but as an attainable one, and spoke of his confidence in achieving it.

Russia must firmly assert itself among the five largest global economies, and its per-capita GDP must increase by 50 percent by the middle of the next decade. This is a very difficult task. I am confident that we are ready to accomplish it.

I would add that if Russia is able to achieve a growth rate of 4-6% in the 2020s then by the mid 2020s its GDP in purchasing power parity terms its economy will be substantially bigger than Germany’s (thus Putin’s comment about Russia “firmly asserting among the five largest global economies”) and by 2030 it could be close to overtaking – and might have actually overtaken – Japan’s.

At that point Russian living standards would also be at least comparable and possibly higher than living standards in most of Western Europe, with all the huge geopolitical implications that flow from that.

(2) Embrace of the Fourth Industrial Revolution

I have previously written about how Russia’s leaders believe that Russia is strategically exceptionally well placed to exploit the ‘Fourth Industrial Revolution’ and how they believe that it plays to Russia’s strengths.

President Putin has spoken about this repeatedly, and in his State of the Nation address he returned to it and discussed it at length

As I said in the past, the state’s role and positions in the modern world are not determined only or predominantly by natural resources or production capacities; the decisive role is played by the people, as well as conditions for every individual’s development, self-assertion and creativity. Therefore, everything hinges on efforts to preserve the people of Russia and to guarantee the prosperity of our citizens We must achieve a decisive breakthrough in this area.

I repeat, a solid foundation has been created for this. Therefore, we can now set and accomplish new tasks. We already have substantial experience in implementing ambitious programmes and social projects. The Russian economy has proved its resilience, and the current stable macro-economic situation opens up new opportunities for surging ahead and maintaining long-term growth.

Finally, the world is now accumulating a tremendous technological potential making it possible to achieve a real breakthrough in improving the people’s quality of life and modernising the economy, the infrastructure and state governance and administration. How effectively we will able to use the colossal potentialities of the technological revolution, and how we will respond to its challenges depends on us alone. In this sense, the next few years will prove decisive for the country’s future. I reiterate, these years will be decisive……

……today knowledge, technology and expertise make the most important competitive advantages. They are the key to a real breakthrough and improved quality of life.

As soon as possible, we need to develop a progressive legal framework and eliminate all barriers for the development and wide use of robotic equipment, artificial intelligence, unmanned vehicles, e-commerce and Big Data processing technology. And this legal framework must be continuously reviewed and be based on a flexible approach to each area and technology.

We have all the resources to promptly implement 5G and Internet of Things technologies.

We need to build our own digital platforms. It goes without saying that they should be compatible with the global information space. This would pave the way to reorganising manufacturing processes, financial services and logistics, including using blockchain technology, which is very important when it comes to financial transactions, property rights, etc. These initiatives have real-world application.

We need to start making or localising key technologies and solutions, including those used in developing the Arctic and the sea shelf, and building new energy, transport and urban infrastructure systems. This is also important in areas related to improving the quality of life, such as cutting-edge rehabilitation tools for people with disabilities.

It is our duty to support high-technology companies, offer start-ups a favourable environment and introduce new industrial solutions. I am talking about a user-friendly infrastructure, taxation systems, technical regulations and venture financing.

Technological development should be firmly rooted in fundamental research. Over the recent years, we have been able to expand research, and are now leading in a number of areas. The Russian Academy of Sciences and Russia’s leading research institutions made a major contribution to achieving this.

Building on the advances made in the preceding years, including in developing the research infrastructure, we need to take our research to a new level. Projects to build cutting-edge mega science research facilities are already underway in Gatchina and Dubna. The Council for Science and Education has adopted a decision recently to build a powerful synchrotron collider at the Novosibirsk Akademgorodok and a new generation collider in Protvino, Moscow Region.

With these facilities, Russia will become one of the world’s leading countries in terms of the capability and performance of its research infrastructure. These units will give a serious competitive edge to Russian research teams and high-technology companies, for example for developing new medications, materials and microelectronics.

Of course, this infrastructure and ambitious research projects will not fail to attract our compatriots and researchers from abroad. In this regard, we need to create a legal framework that would enable international research teams to operate in Russia.

Large research and education centres should begin working to full capacity. They will integrate the possibilities of universities, academic institutions, and high-tech companies. Such centres are already being set up in Kazan and Samara, Tomsk and Novosibirsk, Yekaterinburg and Tyumen, Vladivostok and Kaliningrad, and other cities.

It is important to focus them on the implementation of major interdisciplinary projects, including in such a promising field as genome research. A cardinal breakthrough in this area will pave the way to developing new methods for diagnosing, preventing and treating many diseases, and will expand the selection possibilities in agriculture.

We need to reinforce the superiority of the national mathematics school. It gives Russia a strong competitive edge in the age of digital economy. International mathematics centres will also provide platforms for such work. These are already operating in Kazan and Novosibirsk. Following the adopted decisions, we will open more in St Petersburg, Moscow and Sochi.

(bold italics added)

However this enthusiastic embrace of the Fourth Industrial Revolution comes with a sharp warning of what will happen if Russia fails to embrace it

What I will say now has no connection to the domestic political cycle or even the presidential election. No matter who is elected President, each Russian citizen and all of us together must be able to see what is going on in the world, what is happening around us, and what challenges we are facing.

The speed of technological progress is accelerating sharply. It is rising dramatically. Those who manage to ride this technological wave will surge far ahead. Those who fail to do this will be submerged and drown in this wave.

Technological lag and dependence translate into reduced security and economic opportunities of the country and, ultimately, the loss of its sovereignty. This is the way things stand now. The lag inevitably weakens and erodes the human potential. Because new jobs, modern companies and an attractive life will develop in other, more successful countries where educated and talented young people will go, thereby draining the society’s vital powers and development energy.

As I have said, changes concern the entire civilization, and the sheer scale of these changes calls for an equally powerful response. We are ready to provide it. We are ready for a genuine breakthrough.

My confidence is based on the results we have achieved together, even though they may seem modest at first glance, as well as on the unity of Russian society and, most importantly, on the huge potential of Russia and our talented and ingenious people.

In order to move forward and to develop dynamically, we must expand freedom in all spheres, strengthen democratic institutions, local governments, civil society institutions and courts, and also open the country to the world and to new ideas and initiatives.

It is high time we take a number of tough decisions that are long overdue. We need to get rid of anything that stands in the way of our development and prevents people from fully unleashing their potential. It is our obligation to focus all resources and summon all our strength and willpower in this daring effort that must yield results.

Otherwise, there will be no future for us, our children or our country. It is not a question of someone conquering or devastating our land. No, that is not the danger. The main threat and our main enemy is the fact that we are falling behind. If we are unable to reverse this trend, we will fall even further behind. This is like a serious chronic disease that steadily saps the energy from the body and destroys it from within step by step. Quite often, this destructive process goes unnoticed by the body.

We need to master creative power and boost development so that no obstacles prevent us from moving forward with confidence and independently. We must take ownership of our destiny

In other words, a failure by Russia to embrace the Fourth Industrial Revolution would put the whole future of the country and its independence at risk.

As Putin says, Russia has all the resources and potential it needs in order to embrace it successfully.  It would be an unforgivable disaster if it failed to do so.

At a more practical level, what embracing the Fourth Industrial Revolution requires is a sharp increase in funding for education and science, and this was indeed an important part of Putin’s address.

(3) Higher education and science spending

One of the most frequent criticisms of Putin which I hear from Russians is that education and science during his time in power have been neglected, with some Russians making unfavourable comparisons with the high priority education and science were accorded during the Soviet era.

There is some force to this argument, though in my opinion it underestimates the pressure on Putin’s government in determining priorities.

Now that macroeconomic stability is close to being achieved Putin clearly recognises the need to accord more budget spending to education and science and his comments about this were lengthy and detailed

International experts agree that Russia has one of the best primary school systems in the world. We will keep up our proactive efforts to develop general education at all levels. Let me emphasise that every child should have access to a quality education. Equal educational opportunities are a powerful driver in terms of promoting national development and social justice.

We need to shift to completely new education methods, including personalised learning, in order to cultivate in our children a readiness for change and creative curiosity, and teach them to work in teams, which is very important in the modern world, and other life skills applicable to the digital era. We will absolutely support talented teachers who are motivated to pursue continuous professional growth. And, of course, we need to build an open and modern system for school management selection and training. School administrators are the ones in charge of building a strong faculty and productive morale.

We will continue to enhance the comprehensive system to support and develop our children’s creative skills and talents. This system must extend to the entire country and incorporate the resources of such projects as Sirius and Quantorium, as well as extracurricular education centres and children’s creative centres all over Russia.

We need to build a modern career guidance system where schools partner with universities, research groups and successful companies. I propose starting a new early career guidance programme for schoolchildren, Ticket to the Future, from the next academic year. The programme will allow kids to try out real jobs in major Russian companies. We will allocate 1 billion rubles for this project this year alone…..

Technological development should be firmly rooted in fundamental research. Over the recent years, we have been able to expand research, and are now leading in a number of areas. The Russian Academy of Sciences and Russia’s leading research institutions made a major contribution to achieving this.

Building on the advances made in the preceding years, including in developing the research infrastructure, we need to take our research to a new level. Projects to build cutting-edge mega science research facilities are already underway in Gatchina and Dubna. The Council for Science and Education has adopted a decision recently to build a powerful synchrotron collider at the Novosibirsk Akademgorodok and a new generation collider in Protvino, Moscow Region.

With these facilities, Russia will become one of the world’s leading countries in terms of the capability and performance of its research infrastructure. These units will give a serious competitive edge to Russian research teams and high-technology companies, for example for developing new medications, materials and microelectronics.

Of course, this infrastructure and ambitious research projects will not fail to attract our compatriots and researchers from abroad. In this regard, we need to create a legal framework that would enable international research teams to operate in Russia.

Large research and education centres should begin working to full capacity. They will integrate the possibilities of universities, academic institutions, and high-tech companies. Such centres are already being set up in Kazan and Samara, Tomsk and Novosibirsk, Yekaterinburg and Tyumen, Vladivostok and Kaliningrad, and other cities.

It is important to focus them on the implementation of major interdisciplinary projects, including in such a promising field as genome research. A cardinal breakthrough in this area will pave the way to developing new methods for diagnosing, preventing and treating many diseases, and will expand the selection possibilities in agriculture.

We need to reinforce the superiority of the national mathematics school. It gives Russia a strong competitive edge in the age of digital economy. International mathematics centres will also provide platforms for such work. These are already operating in Kazan and Novosibirsk. Following the adopted decisions, we will open more in St Petersburg, Moscow and Sochi.

The one point I would make about these plans for higher education and science spending is that they do appear very narrowly focused on turning out more technically qualified workers for the economy.  There is nothing said at all about the humanities, and very little about culture.

I have commented in the past about how the one important constituency in Russia that Putin fails to reach is its large, very articulate and at times absurdly self-important cultural intelligentsia.  This despite the fact that his government provides heavy subsidies to Russian cinema and theatre, and – as he touched on in his address – is actively engaged in museum building.

In my opinion this resentment of the cultural intelligentsia towards Putin is in part the result of his lack of engagement with them, of which his failure to speak about them in his State of the Nation address is another example.

(4) Faster house building

Before discussing this topic, I should say that in my opinion one of the greatest causes of the underestimation of Russia’s GDP relative to those of other developed economies is the undervaluation of Russia’s large and rapidly growing housing stock.

The average price of a home in London is now $680,000, and $300,000 in the Britain as a whole.  Though comparisons with Russia are difficult, with Russians tending to value properties by the cost per metre rather than by the cost per unit, during a recent trip to Moscow I heard that the price of what I suspect was a higher end property in a suburb of Moscow – Russia’s capital and richest city – was below $200,000.

I suspect that high prices in Russia outside Moscow are significantly lower, save in St. Petersburg where a market in luxury homes is apparently emerging, driven it seems mainly by foreign buyers.

Anyway Putin had much to say about the need to increase Russia’s housing stock, with the emphasis in his address being on affordable ie. low end housing

In 2017, three million families in Russia improved their living conditions. Now we need to reach a stable level (I emphasise this: it is the first time in the history of modern Russia) – to a level where at least five million families improve their housing conditions annually. This is a difficult task – to jump from three million to five. We reached 3.1 million last year, but we need to make it five. Yet, it is an attainable goal.

I see three key factors for increasing the affordability of housing. The first is the growth of people’s incomes. I have spoken about this in the past, and we must ensure this. Next, a decrease in mortgage interest rates and, of course, an increased supply in the housing market.

I would like to remind you of something that few people remember, which is that only 4,000 mortgage loans were issued in 2001. Only 4,000. The interest rate was as high as 30 percent, including on foreign currency loans. By the way, half of the mortgage loans were issued in foreign currency. Few people could afford to take out mortgage loans then. Last year, the number of mortgage loans almost reached one million. In December, the average interest rate on ruble loans for the first time decreased to below 10 percent.

We know, of course, that loan terms are individual and may differ from one borrower to another. But we must continue to lower the average interest rate to 7–8 percent. We held long discussions on the figure I should say here. I am sure that the target figure should be 7 percent. In the next six years, mortgage loans must become accessible to the majority of Russian families, working people and young professionals.

Here are some more figures. In the 1950s through 1970s, we annually built approximately 60 million square metres of housing a year. The figure rose to 70 million by the late 1990s. Now we annually build around 80 million square metres of housing every year. We built even more housing in some years, but the average figure is 80 million. We must move forward and reach new heights in this sphere, that is, increase the volume of housing built every year from 80 million to 120 million square metres. This is an ambitious but realistic goal, given new technologies, the experience our construction companies have accumulated, as well as new materials. The rise from 80 to 120 million square metres is what we need and can achieve. I will tell you why: if we want 5 million families to receive new housing every year, we must reach the figure of 120 million square metres.

Those who invest their money in housing projects must be securely protected. We should gradually proceed from unit construction to project financing, when developers and banks, but not people, shoulder the risks.

This is a hugely ambitious housing programme, setting out to improve the housing conditions of five million Russian families each year.

To someone who lives in Britain, where just 184,000 homes were built in England last year (around half the peak levels achieved in the mid 1930s and the mid 1960s) these are staggering figures.

In my experience there is no single more important measure for most people – especially middle and lower income people – when they assess their standard of living than the state of their housing.  If Putin can achieve his target of improving the housing conditions of five million Russian families each year, then he will have made more Russians feel better off each year than any set of statistics can show.

I would add – though Putin did not mention the fact – that the rapid and continuing growth of mortgage lending since 2000 which Putin is referring to in these comments not only shows the immeasurably greater sophistication of the financial system since 2000.  It also greatly strengthens the financial system by providing it with a bedrock of secure mortgage assets which it can leverage in order to make possible higher investment lending.

Obviously this has to be watched closely to avoid the situation which has repeatedly arisen in the US and Britain, where mortgage borrowers repeatedly become over-borrowed, and where excessively low interest rates cause banks to lend to mortgage borrowers in preference to the more productive side of the economy.

However Putin’s comments show that he is aware of this danger, and I would add that the Russian government and the Central Bank’s policy of keeping interest rates positive (ie. higher than the rate of inflation) should allay it anyway.

(5) An infrastructure programme for Russia

In my opinion the single biggest constraint on economic growth in Russia are not the often mentioned ones of corruption, excessive state involvement in the economy, and opacity of laws.  Other economies where these problems arise (and for the record I question whether state involvement in the economy is necessarily a “problem”) have thrived economically despite them.

The single biggest constraint on economic growth in Russia is rather in my opinion the country’s underdeveloped transport and communications infrastructure, which is simply inadequate for such a huge country.

By contrast a visit to China last summer impressed on me the enormous spur to economic growth that China’s massive investment in infrastructure has provided to the Chinese economy.

It would be untrue to say that there have been no improvements to Russia’s communications and transport infrastructure during the Putin era.

The single biggest change – and one whose social importance quite simply cannot be overstated – is that for the first time in Russia’s history the entire population is connected by telephone, with almost 50% of the population now having continuous access to the internet and with more than 70% saying they use the internet regularly, as compared with only 25% who used the internet regularly in 2008.

This in a country where in the 1980s only 20% of the population had personal telephones (though the percentage was much higher in Leningrad and Moscow).

Russia has also witnessed a significant increase in road building and railway construction during the Putin era, and as Putin commented on in his State of the Union address, there has also been a drastic upgrade in the cargo handling capacity of Russia’s port

In 1990, the ports of the Soviet Union had an aggregate capacity of 600 million tonnes, but after the country broke apart, we lost almost half. In the early 2000s, Russian ports could handle only 300 million tonnes. Over the last 17 years, this figure has tripled. In early 2017, the aggregate port capacity in Russia exceeded 1 billion tonnes for the first time in history. As you can see from the charts, this exceeds the level reached by the Soviet Union by more than two thirds. By the way, these are the figures for early 2017, and the capacity currently stands at 1,025 billion tonnes.

Even before today’s State of the Union address the sums allocated for infrastructure development in Russia are staggering

The government is pumping vast amounts of cash into upgrading Russia’s existing ports, railways and roads, or building new sites. By 2030, it is estimated Russia will have spent a monumental $969 billion on infrastructure projects. Over 325 such developments are in the pipeline, helping provide a stronger environment for transport and logistics……

In 2017, Russian Railways (RZA), Russia’s national rail operator, plans to take supply of roughly one million tons of new track. This goes to show the titanic scale of Russia’s rail construction ambitions. By 2030, some $464.2 billion will have been pumped into building fresh railways or existing facility enhancement….

Roads are something of a priority for Russia. Due to its sheer size, the nation needs rugged highways and roads to keep people and goods flowing freely. Over $548 billion has been allocated towards for construction of roads in rural areas, whereas Moscow’s ring road is looking at $1.5 billion in reconstruction investment.

Over 1,000 kilometres of new roads are planned for 2020. 36 individual construction projects, featuring new bridges, are to be implemented before 2030 too, suggesting Russia’s road network will be greatly expanded making road transport an easier, cheaper prospect.

It seems from what Putin said today that the tempo of infrastructure spending is to be increased still further

Overall, in the next six years, we must almost double the spending on road construction and repairs in Russia and to allocate more than 11 trillion roubles for this from all sources. This is a lot; keep in mind that we have allocated 6.4 trillion rubles in 2012–2017, but we need 11 trillion (ie. $193 billion for further road building and repairs over six years – AM)…….

The volume of transit shipments on our railways must grow almost fourfold. This means that Russia will become a global leader in transit shipping between Europe and Asia…..

The Northern Sea Route will be the key to developing the Russian Arctic and Far East. By 2025, cargo traffic along this route will surge tenfold to 80 million tonnes. Our goal is to make it a truly global and competitive transport route. Let me remind you that the Northern Sea Route was used more actively in Soviet times compared to how we have been using it so far. We will definitely develop this route and reach new horizons. I have no doubt about it……

We will renovate and expand the network of regional airports across Russia. In six years, half of the regions will be connected between each other by direct flights. The situation where you had to make a connection in Moscow when flying to a neighbouring region will become a thing of the past. We are already working on this. This includes efforts to develop aviation and airports.

…….we must introduce new technologies for the generation, storage and relay of energy. In the next six years, we plan to attract some 1.5 trillion rubles in private investment for modernising our power generation sector. All power systems throughout the country must convert to digital technology. We must use the so-called distributed generation method to supply electricity to remote areas.

By 2024, high-speed internet will be available throughout the country. We will complete the construction of fibre optic lines in the majority of populated areas with a population of more than 250 people. Small remote towns in the Extreme North, Siberia and the Russian Far East will access internet via a network of Russian satellites.

We will use advanced telecommunications to give our people access to the digital world. As we know, this is more than just modern services, online education and telemedicine, although all this is very important. More than that, people will be able to use digital space to conduct research, organise volunteer and project groups or run companies. In our vast country, this combination of talent, competencies and ideas amounts to a huge ground-breaking resource…..

Though Putin did not specifically mention the fact, it is clear that this huge infrastructure programme dovetails closely with Xi Jinping’s One Belt, One Road programme

Large Eurasian transport corridors will also be developing. An automobile road that will become part of the Europe – Asia-Pacific corridor is already under construction. Our Chinese and Kazakhstani partners involved in this project together with us have already completed their part. Their sections have already been opened, so we need to speed up our work…..

The volume of transit shipments on our railways must grow almost fourfold. This means that Russia will become a global leader in transit shipping between Europe and Asia…..

Russia must not just become the world’s key logistics and transport hub, but also, which is very important, a global centre for the storage, processing, transfer and reliable protection of large volumes of information, so-called big data.

Overall, infrastructure development must take into account global technological changes. In other words, the projects we are now considering must include practical solutions for combining infrastructure with drones and digital marine and air navigation, as well as use AI to streamline logistics.

There has been much criticism in the Western media not just of Putin’s decision to stand again as Russia’s President but of China’s pending decision to end term limits for its President, enabling Xi Jinping to continue as China’s President beyond his second term.

In my opinion these are not vanity decisions by two insecure and power crazed autocrats as the Western media represents them.

Rather they are joint decisions agreed by the two men and their respective leadership in order to guarantee that the massively ambitious ‘Greater Eurasia’ project which they have jointly sponsored – linking together China and Europe by a gigantic series of road, rail and maritime links constructed across mainly Russia – will be brought into effect.

As to the scale of Russia’s infrastructure programme, its scale of $1 trillion can be compared with $1.5 trillion allocated to President Trump’s infrastructure plan.

There is much talk in the US of how President Trump’s infrastructure plan is utopian.  Unlike President Trump’s plan President Putin’s plan is already being carried out, and already has results to show.  Yet in a much smaller economy it is two thirds the size of President Trump’s supposedly utopian plan.

Will it all happen?

These are very ambitious plans, and there is no guarantee of their fulfilment.  Much could go wrong.

However a starting point is President Putin’s record.  In the 18 years he has been Russia’s leader Russia has transformed.  To assume that it cannot continue to make progress is – depending on one’s perspective – unduly pessimistic or unduly complacent.

As President Putin pointed out in his speech, Russia now possesses the macroeconomic stability and the resources to make change happen.  Provided political stability is maintained, there is no reason why it should not.

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Russia’s Next Weapon: A Church

The Russian military plans to build a military church to bolster the spiritual values of its armed forces.

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Authored by Michael Peck via The National Interest:


Meet Vladimir Putin’s newest weapon: a church.

The Russian military plans to build a military church to bolster the spiritual values of its armed forces. Construction will soon begin of the Main Church of the Armed Forces, to be erected in Patriot Park outside Moscow, according to Colonel General Andrei Kartapolov, deputy defense minister and chief of the armed forces’ Main Military-Political Directorate, a new organization responsible for political education of the troops.

The “new church will be one more example of the people’s unity around the idea of patriotism, love, and devotion to our Motherland,” Kartapolov told Russian journalists.

To say the church, dubbed by some as the “Khaki Temple,” will have a martial air would be an understatement.

“The walls of the military church are really made in the color of the standard Russian missile system and armored vehicle,” according to the Russian newspaper The Independent [Google English translation here ] “…From the inside, the walls are decorated with paintings with battle scenes from military history and texts from the Holy Scriptures. The projected height is 95 meters [104 feet] and is designed for 6,000 people.”

“Kartapolov is convinced that the modern Russian serviceman cannot be shaped without shaping lofty spirituality in him,” Russian media said. “Speaking about ideology, the deputy head of the military department pointed out that this will be based on knowledge of the history of our Motherland and people and on historical and cultural traditions.”

“Even though the Russian constitution states that ‘no ideology may be established as state or obligatory,’ the Kremlin continues to search for a unifying set of beliefs,” notes the U.S. Army’s Foreign Military Studies Office.

Religion has long played a role in Russian military life, first through the Russian Orthodox Church in Tsarist times, and then—in a secular way—through Communism in Soviet times. “In late imperial Russia, when they began to build garrisons, every regiment sought to build a regimental church, but not a synagogue or mosque,” Roger Reese, an historian at Texas A&M University who has written books on the Tsarist and Soviet armed forces, told the National Interest. “In Putin’s Russia, the Orthodox Church seeks every opportunity to represent itself as the national religion and tie itself to the state as it had under the tsars, so this act represents continuity broken temporarily by the Soviet years. Of course the Soviet regime did not build churches for the army, but it did build the ‘House of the Red Army,’ shaped like a star, in Moscow dedicated to the use of the Red Army and its soldiers.

In some respects it was analogous to a USO [United Service Organization that supports American soldiers] building. So Putin’s dedicating one particular building to the use of the Russian Army soldiers for purposes of morale—and morals—is in line with that.”

While the thought of a military church will be distasteful to some, Russia is hardly unique in linking the military and religion.

Many armies, the United States and Israel included, maintain chaplains who wear uniform and hold military rank. Chapels are common on military bases, and soldiers are given time for – and sometimes pressured to – attend religious services. While a Russian military church is likely to favor a specific denomination – Russian Orthodoxy – even that isn’t unique: non-Christian members of the U.S. military have complained of religious discrimination , especially by Christian fundamentalists.

What’s interesting is how little things change. Be it the Tsar’s conscripts, or the Red Army’s draftees or the volunteers who comprise much of modern Russia’s military, some spiritual reinforcement is deemed necessary to get soldiers to fight.

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World War I Homage – A Triumph of Lies and Platitudes

The unilateral, lawless imperialism that engendered World War I and 20 years later World War II is still alive and dangerously vigorous.

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Authored by Finian Cunningham via Strategic Culture:


World leaders gathered in Paris on Sunday under the Arc de Triomphe to mark the centennial anniversary ending World War I. In an absurd way, the Napoleon-era arc was a fitting venue – because the ceremony and the rhetoric from President Emmanuel Macron was a “triumph” of lies and platitudes.

Among the estimated 70 international leaders were US President Trump and Russian counterpart Vladimir Putin, each sitting on either side of Macron and his wife. German Chancellor Angela Merkel was also given pride of place beside the French president.

Macron’s address to the dignitaries was supposed to be a call for international multilateralism. He urged a “brotherhood” for the cause of world peace. He also made a pointed rebuke of “nationalism” as posing a danger to peace – a remark which seemed aimed at Donald Trump who recently boasted of his politics with that very word.

But, ironically, everything about the ceremony and Macron’s speech resonated with jingoistic French nationalism, not his avowed multinationalism. As the politicians sat under the Arc de Triomphe, Macron walked around its circular esplanade in a salute to assembled French military forces bearing assault rifles and bayonets. The French anthem – The Marseillaise – was played twice, once by an army brass band, the second time sung by an army choir. There was also a military plane flyover displaying the blue, red and white tricolor of the French national flag.

In his speech, Macron talked about soldiers coming from all over the world to “die for France” during the 1914-18 Great War. He even said at one point that the war was fought for “the vision of France” and its “universal values”.

This was fluent drivel, French-style. No wonder Russia’s Putin momentarily gave a look of boredom as Macron waxed lyrical.

The speechifying and commemoration was completely detached from current realities of conflict and international tensions.

Among the “brotherhood” whom Macron was appealing to were Israeli Prime Minister Benjamin Netanyahu whose military forces continue to bomb and slaughter Palestinian civilians in illegally occupied territory. Also present was Ukrainian President Petro Poroshenko whose armed militias continue to terrorize the people of eastern Ukraine with the blatant objective of instigating a war between the US-led NATO alliance and Russia.

Listening to Macron one would think that World War I erupted mysteriously from no specific cause and that an estimated 10 million soldiers were all killed in heroic battles for noble principles.

There was, of course, no mention by Macron of imperialist warmongering and the barbaric sacrifice of humans as slaves in the service of national capitalist power interests.

Grotesquely, as the world leaders donned solemn faces and mouthed pious platitudes for peace, the whole occasion was a triumph in burying reality and the ongoing causes of wars, as well as whitewashing the very culprits responsible for wars. Among the war criminals wearing a mournful black suit was former French President Nicolas Sarkozy who launched the NATO blitzkrieg on Libya in 2011.

While the empty, self-indulgent rhetoric was ringing out, one couldn’t help but recall some of the most glaring contemporary contradictions that were blocked out with awesome Orwellian efficiency.

Just this week, reports emerged of the horrific civilian death toll from the American air force bombing the Syrian city of Raqqa. The city was razed to the ground by US air strikes last year – supposedly to defeat the ISIS terror group. Some 8,000 bodies of civilians, mainly women and children, have now been recovered by Syrian government forces. And that’s only from clearing away a tiny area of rubble for the whole city.

What the Americans did in Raqqa was a monumental war crime, all the more criminal because US forces, along with their NATO partners Britain and France, are illegally present in and assaulting sovereign Syrian territory.

As Macron was telling world leaders about “the vision of France”, hundreds were being killed in Yemen in a battle to strangle the entire population by taking the port city of Hodeida. The genocidal war on that country – which is putting up to 16 million people at risk from starvation – has been fully backed by France, the US and Britain, from their supply of warplanes and bombs to the Saudi and Emirati aggressive forces.

We could mention other specific conflicts where the culprits are clearly identified. For example, the multi-million-dollar support from Washington for the Azov Battalion and other Neo-Nazi militias in Ukraine, which openly emulate the genocidal conduct of Hitler’s Third Reich to exterminate ethnic Russians.

We could mention how US-led NATO forces continue to expand towards Russian territory with outrageous provocation. The mounting earlier this month of the biggest-ever NATO war drills since the Cold War in the Arctic region adjacent to Russia’s northern border was a brazen threat of rehearsing invasion. The announced tearing up of yet another nuclear arms control treaty unilaterally by Washington is a reckless undermining of global security.

Washington threatens China with naval forces marauding near Beijing’s maritime territory in the South China Sea. Washington blockades Iran with illegal economic warfare and openly agitates for regime change. Washington declares Venezuela, Nicaragua and Cuba a “troika of tyranny” and reserves the right to threaten each of these countries with military invasion at any time.

Meanwhile, this weekend, Russia hosted peace talks in Moscow between the warring parties of Afghanistan. It was seen as a major breakthrough in trying to bring peace to the Central Asia country which has been wracked by 17 years of violence since US forces began their ongoing military occupation – allegedly to defeat terrorism.

Elsewhere, Russia has engaged with Turkey, Germany and France to convene a summit for peaceful reconstruction of Syria. The latest summit held in Ankara at the end of last month follows several other such meetings in Astana and Sochi, largely at the behest of Russian leader Vladimir Putin, to find a political settlement to the nearly eight-year war in Syria – a war that was fomented covertly by Washington and its allies for regime change.

France’s Macron talks about “multilateralism” for world peace, yet the two countries which have arguably supported and implemented multilateralism in practice are Russia and China in their calls and policies for global partnership and economic development.

And yet it is Russia and China that are being harassed with American and European sanctions, and US military provocations.

The unilateral, lawless imperialism that engendered World War I and 20 years later World War II is still alive and dangerously vigorous. We only have to look around the present world to realize that. But when the culprits indulge in a triumph of bullshit then we also know that the world is once again in very grave danger.

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German Bundestag MP, Petr Bystron, calls for an end to sanctions against Russia

Petr Bystron: I don’t think Germany should let itself be blackmailed by anyone, and should be free to get its energy supplies from wherever is best.

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Via the Centre for Geopolitcal Studies…


Interview conducted by Dragana Trifkovic, Director of the Centre for Geopolitcal Studies with the MP of the German House of Representatives (Bundestag), Mr. Petr Bystron

Dear Mr. Bystron, recently we have met at the International Conference on the Development of Parliamentarism in Moscow recently. In front of representatives of Parliaments from all around the world, international experts and journalists you held a well-received speech, calling for an end to sanctions against Russia. Why?

I demanded an end to sanctions because they have not achieved anything except harming German business. There’s no point to maintaining these useless sanctions any longer.

Photo: Petr Bystron

The Russian-German relations are very complex. On the political agenda, they are burdened with the sanctions which the EU countries imposed to Russia, but on the other hand, Germany and Russia cooperate on a strategic project such as North Stream 2. How do you see the prospect of developing further relations between your country and Russia, and also how the United States relations towards the possibility of greater convergence between Germany and Russia?

Of course German companies are still trying to do business with Russia. The sanctions mainly hurt the meat and fruit exporters, as well as the machine tool industry. Exports dropped as much as 60% in the early days of sanctions in these sectors. Naturally, German businesses want to maintain their traditionally good contacts to Russia. North Stream 2 is just one example of this. But it’s no secret there is a lot of pressure from the United States to stop this project. There was a bipartisan initiative in the U.S. Senate in March supported by 39 Senators, urging the government to do everything it can it stop the pipeline. President Trump has come out against North Stream 2 as well.

I don’t think Germany should let itself be blackmailed by anyone, and should be free to get its energy supplies from wherever is best. Even during the Cold War, Russia was a reliable supplier of energy, and there’s no reason to think that will change.

At the Moscow conference, we discussed about the perspective of Eurointegration of Balkan countries that are not yet members of the EU. You represent the view that the EU has no perspective and that EU candidate countries do not have much to hope for. What are in your opinion the biggest problems in the EU, and are they solvable? What kind of future can expect the EU, and can the EU be reformed and become a functional community?

There are two problems here: First of all, the EU is in no state to accept new members right now, with all its problems. The EU is in a deep crisis and is fighting for its survival. The main example is Brexit, of course: The first nations are leaving the sinking ship. If the EU doesn’t undergo far-reaching and fundamental reform, it is doomed to failure. The Euro currency system is not sustainable in its present form.

These problems have been exacerbated by the migration crisis, which was caused by Angela Merkel’s completely unnecessary and undemocratic opening of the borders in 2015. In a precarious situation like this, it is completely irresponsible to think about expanding the EU even further, especially with candidates who are not able to meet the most basic standards for joining the Union.

We already saw what problems it causes to accept members who don’t meet the criteria or even cheated to get in, as in the case of Greece. The EU now faces huge problems with Greece, Romania and Bulgaria for this reason. These are countries which shouldn’t have been accepted to the EU in the first place. Accepting the West Balkan countries in these circumstances would be tantamount to suicide.

If there is any country from this region which would qualify for membership, both economically and culturally, it is Serbia. Countries like Albania and Macedonia have huge problems in regard to corruption and economic development. And then there’s the problem with Kosovo, which is not recognized as a country by several European nations, Russia or China, for example. That’s a very unstable situation.

The EU wants very much to expand their influence in the Balkans. However, given the current state of the EU, it’s not even advisable for Serbia to want to join the EU, when countries like the UK, Italy and Eastern Europe are moving away from the broken monstrosity in Brussels. Serbia should be glad it is not in the EU, and stand up squarely for its own national interests.

You are particularly interested in the problem of Kosovo and Metohija. The territory of the southern Serbian province since 1999 and the end of the NATO aggression on Yugoslavia is under occupation. The Western powers want to resolve the problem of Kosovo and Metohija outside the framework of international law and UN Security Council Resolution 1244. Negotiations on resolving this issue are underway in Brussels, although Serbia is not a member of the EU and this community has no basis to deal with this problem. How and where, in your opinion, should the issue of Kosovo and Metohija be solved?

Kosovo is a powder keg with no solution in sight. It will remain a problem for many years. I’m convinced the current situation can not be maintained. This territory was part of Serbia for centuries, an I am very sure it will belong to Serbia again in the long run. The EU protectorate in Kosovo will be short-lived.

How well in the German public do you know the facts about what is happening in Kosovo and Metohija and how the so-called democracy in this territory works? Are there known facts about violence against Serbs in the presence of international forces UMNIK, KFOR and EULEX? How well do you know the results of these international missions?

The problem began with the way the EU treated the UCK. We should not be supporting a terrorist organization aiming to break up a country. A group like this would be immediately outlawed if it were trying to break up Germany, for example, and they would all be locked up. In the case of Yugoslavia, the EU and Germany for some reason supported this terrorist group, which was a tragic mistake. We are very concerned about the current situation, the human rights violations and the ethnic cleansing of Serbs in Kosovo.

An entity like Kosovo – which I refuse to call a country – based on injustice and terror, is not viable in the long term, which is evidenced by the continued need for KFOR peacekeeping forces to keep this creation alive.

Recently has been an a discussion in the German Bundestag about the continuation of the mission of German soldiers in Kosovo. At KFOR, there are currently about 400 German soldiers in Kosovo. The Bundestag supported German soldiers remain in Kosovo, thanks to the votes of the ruling CDU / CSU and SPD and the Greens and Liberals (FDP). Alternative for Germany voted against it. How do you assess the mission of the German army in Kosovo and why did you vote against continuation of mission in Kosovo?

This is one of the paradoxes of German politics: That the first German combat mission since WW II was ordered by the formerly pacifist Green Party and their Foreign Minister Joschka Fischer under the Socialist Gerhard Schröder, and they continue to support the KFOR mission. The AfD does not believe in sending German troops to the Balkans, especially not to prop up an artificial entity like Kosovo.

The US supports the formation of the Kosovo Army, although this is contrary to Resolution 1244. German instructors train Albanians to become part of the official army. How is it possible to prevent the taking of illegal actions and violations of the international law by the Western countries?

This is a difficult question and will be a difficult process. But in countries like Germany and the USA, governments and policies can change, thank God. So Serbia needs to be very patient, continue to stand up for itself over the long haul, and reach out to allies and supporters who will see it the same way.

Have you personally, or a delegation from your party Alternative for Germany, visited Kosovo and Metohija? Is there an opportunity for you to do so in the coming period and to make sure of the state of democracy on the spot as well as to evaluate the results of the work of international missions, as well as the the German Bundeswehr?

That’s a good idea. We should definitely visit Serbia and Kosovo with an AfD delegation, to find out more about the situation on the ground. We have already been to Syria, for example, where the situation is completely different from the way it is portrayed in the Western mainstream media, so I’m sure visiting Kosovo would be very interesting.


Petr Bystron is the Speaker of the Alternative for Germany party (AfD)on the Foreign Policy Committee of the German Bundestag.He came to Germany in 1988 as a political refugee and joined the Euro-critical AfD in 2013. He was chair of the AfD for the State of Bavaria 2015-2018. Under his leadership the party reached the best tally of all states in West Germany in the federal elections 2017.

In 2018, he pushed to grant imprisoned British Islam critic Tommy Robinson political asylum in Germany, and filed criminal charges against migrant NGOs engaged in people-smuggling in the Mediterranean. He is a leading political publicist who has won several prizes for his writing and edited a book for

University of Geneva with Polish Nobel Peace Prize winner Lech Wałęsa. He is currently one of the 10 most popular German politicians on social media.

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