The most important part of Putin’s March 1st speech

by Miles for the Saker Blog

March 10, 2018

If you look at western press and punditry as of late in regards to Russia or Putin (which, for some reason is basically the same in western MSM’s perceptions) or, more specifically, in regards to Putin’s address to Federal Assembly of Russia, you would inevitably get the impression that all he talked about was weapons. Russian media (those that took note of the Address, that is) unfortunately, are trailing not far behind.

In reality, though, the address was almost evenly split between internal politics and weapons. And in, my view, the first part was waaay more important because if at least half of the tasks he set out in the first part of the address would be carried out, Russia (and world alongside with it) would be drastically transformed.

To say that goals set by Putin in the address is ambitious would be a massive understatement in my opinion.

If you rip out substance out of political smooth talk, what Putin ordered was massive overhaul of infrastructure (primarily transportation, utilities, communication sectors) and radical ramping-up of acquisition and implementation of new technologies across the board. The end goal is, to quote, “breakthrough development of Russia”. And those orders are very concrete and specific, not allowing (at least, at a first glance) “virtual” execution, consisting purely of bureaucratic paper-pushing and reallocation of existing finances (which was, sadly the case with 2012 May decrees).

Without further ado a list of marching orders for the new government (and he said “new government” several times, I’d return to it a bit later) in direct quotes // My comments would be one of an official on a receiving end of those orders, official that only wants to get its pay and do as littles as possible – i.e. assessment of “sabotage potential”):

–

1. Upgrade the employment structure that has become inefficient and archaic, provide good jobs that motivate people, improve their well-being and help them uncover their talents. We need to create decent well-paid jobs ((more like a general order, giving waay too much leeway for a government in executing it, unless follow-up decrees would detail it down Too much a field to freely understanding it as you wish).

2. Reduce the poverty rate by at least one half over the next six years (down from 20 million as of present) (could be manipulated unless controlled tightly – via lowering poverty line bit by bit over allotted time. Though some effect would still be present – you could not simply lie to President’s face – lie without a grain of truth in it, that is. Plus, item 4 severely limits down space for maneuvering, since it is a very explicit order).

3. Raise pensions and index them regularly, so that they outpace inflation and to reduce the gap between the size of pensions and pre-retirement wages (at present, pensions are indexed for inflation, not above it, first part are fairly clear – indexing should be at least some percentage points above inflation level although as of now it is unclear just how many points. Second is more prone to sabotage as it stands, since there are no hard set waypoints on closing the gap. Again, hoping for a decree detalization).

3(a). New Government will have to draft a special programme for the systematic support of senior citizens and for improving their quality of life (that is a direct and explicit order here, one that entail MASSVE spending even at a minimum increase in social support to be present in the would-be programme, given age structure of population in Russia).

4. Per-capita GDP must increase by 50 percent by the middle of the next decade (Again. Direct order, and while increasing GDP is not new, adding “per-capita” to it changes very much everything, since you can increase GDP tenfold but if income inequality gap is high, laypeople will see very little of it. Per-capita formula at least limits the possibilities for a government to weasel its way out of executing order as planned. Those of you more well-versed in statistics methodology of per-capita GDP calculation, please correct me if I am wrong in the assumption that per-capita GDP is less prone to miscalculation as representing increase in income of general public then just GDP)

5. By the end of the next decade, Russia must confidently join the club of countries posting a life expectancy of 80-plus years (very explicit, entailing healthcare upgrade, much harder to fabricate – unless of course, you’d drastically increase lifespan in one part of the country while neglecting the rest – but it is too obvious a ploy to try in my opinion).

6. Large-scale spatial development programme in Russia, which would include developing cities and other communities by at least doubling spending in this area over the next six years. (as of now only several cities like Sochi, for example has undergone renovation, results are… grey, so execution should be monitored very closely to avoid misappropriation of funds and outright stealing).

7. At least five million families must be able to improve their housing conditions annually (up from 3 million now, and in Russian legalese it means either buying a flat/house or affordable social rent) (This directive can hardly be played with. Only way I see to avoid actually doing what is ordered is to raise criteria to be counted as family needing improvement so high that almost nobody would get on the list and then report that problem is gone altogether, but it is way too transparent. Plus, follow-up directives are limiting it down too.

8. Lower the average interest rate (on mortgage) to 7–8 percent (now it is just below 10, and order that hardly can be sabotaged as it is very clear. It also means lowering key CB rate too, or execution would be unfeasible and lover CB rate means cheaper credit in general).

9. Increase volume of housing built every year from 80 million to 120 million square meters (no sabotage here, short of directly falsifying of reports, and one hell of an order to carry out considering item 8. New and cheap construction technologies (like 3D printing) widespread use are needed, which he also mentioned).

10. Proceed from unit construction to project financing, when developers and banks, but not people, shoulder the risks (already in the works).

11. Revise the mechanism for calculating the tax and also the calculation of the cadastral value of property. One way or another, it must not exceed the real market value. All decisions regarding this must be taken without delay in the first six months of this year. (no comments, very explicit and gives no time to weaseling).

12. 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 (up from 6.4 trillion from 2012-17 period. He also demands use new tech, infrastructure mortgage loans and life cycle contracts – as opposed to non-stop road repairs in the middle of December due to fiscal income being through for spending only by around November. Highly sabotage-proof – as it is too detailed – and we are not down to decree yet.).

13. The throughput capability of the Baikal-Amur Mainline and the Trans-Siberian Railway will grow 1.5 times, up to 180 million tonnes, in six years (no comments. Of course you could screw with reporting, but only so much, being given EXACT target tonnage).

13(a) The volume of transit shipments on our railways must grow almost fourfold (this is even worse for weasels – here he talks not capability but ACTUAL transit volume, meaning ones responsible for reaching this goal will have to create an environment where this volume will come in, not just build up rails to nowhere).

14. Increasing the capacity of railway links to ports in the Azov and Black Sea basin 1.5-fold to 131 million tonnes (very little to distort, given exact geography and tonnage provided).

15. By 2025, cargo traffic along this [Northern Sea] route will surge tenfold to 80 million tonnes (No comments. One hell of a megaproject in the Arctic).

16. 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. (right now state of the regional aviation is abysmal. Infrastructure is down, regional air fleets are either non-existent ore aged beyond reason. Basically it need to be built from the ground up. Can be tampered with via creating conditions to radically decrease number of regional flights and then repair some infrastructure. Have to be closely watched over).

17. 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 modernizing 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. (I wonder what new energy-generation tech he was talking about. Renovation of power grid is WAAAAY overdue and also a massive undertaking.)

18. 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. (Really, no comments. It is dumbfounded even me, Putin supporter. Given the size of Russia… HOW?! The amount of funding necessary is stratospheric. Especially if you count in his directive to guarantee satellite-provided Internet to remote areas).

19. In 2019–2024, we need to spend over 4 percent of the GDP each year to develop the healthcare system. At the same time, the goal we must bear in mind is 5 percent. In absolute terms, this means that healthcare spending must double. (Great, just one condition – watch the money like a hawk or it’ll line someone’s pockets).

20. In the period from 2018 to 2020, we must ensure that each small town with a population of 100 to 2,000 people has a paramedic station and an outpatient clinic. (counter-measure to botched execution of 2012 May decrees, which ordered rise in doctors’ wages and in reality resulted in closing down rural clinics and firings to meet the criteria without raising a finger to attract additional financing. This one is precise enough to be reasonably sure of REAL execution).

20(a). To provide all people with a real opportunity to have a complete physical at least once a year (Currently, it is done only when prescribed by law for different categories, civil servants, for example. He does not say that it should be free of charge, though, and “real opportunity” is a term that could be strained…)

21. 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. (also way overdue, if not measurable in execution. although monitoring is possible. Also he gives general orders on increasing quality of education across the board, starting with very early age but they are too general to quote and assess here).

22. 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. (Russia is really lagging here, so godspeed… I just hope they do not formalize spirit out of the idea. He also calls for extensive uses of AI in streamlining logistics in Russia).

23. By the middle of the next decade, their [small-sized enterprises] contribution to the country’s GDP should approach 40 percent (ambitious to say the least. Can be sabotaged either by raising the plank as to what small-sized means or by GDP contraction (not bloody likely be allowed).

24. To ensure the provision of virtually all public services in real time via remote services within six years. All document circulation between state agencies should be digitized. (underway already but with difficulties. I can order virtually any document right from my smartphone, true, but inner and intra-agencies documentation still killing forests every year. Can be slowed down, but certainly cannot be stopped. Too late.).

I stop it here, lest I risk reciting entire Address, but I think you get the idea. The Darkest One (as Putin is jokingly called by many Russians in response to non-stop vilification from the West) has either learned the lesson of May 2012 decrees where he set goal basically in percentages – and percentages can really be screwed with – or he was not able to say thing he is saying now back then. Now he gives clear instructions as to what exactly to do to what degree and in what amount. And he is known to be very demanding at doing what he said needs to be done unless he left a hole to escape. Not much holes here. Of course, there is many generalized words, especially in research and education sections, but overall it is very clear cut set of goals. And to me, there is sense of urgency in address. He keeps repeating breakthrough development and that time is basically nigh to radically speeding up, especially with new tech development and implementation or be drowned by it. I may be mistaken but in current economic and political situation the goals he set out (in very short – making Russian #1 logistics hub of the world (at last utilizing its geographic position), one of the leading science and IT centers all the while sustaining above-world-average economic growth and radically increasing standard of living) is extremely hard to get to, especially in the next few years. They ARE achievable, yes, but…only if entirety of governance would REALLY fall in line behind him. Given that Putin usually do not speak something THIS important and, frankly, grand without determination to actually do it, I could come to only one conclusion – Putin had chosen.

By this I mean the following. From his ascent to power and up until now he assumed and maintained the role of Supreme Arbiter in intra-elite disputes. This role, while allowing him unrivaled power and facilitating stability through carefully sustained internal elite equilibrium, also meant that Putin, being Supreme Justice for elitist clans within Russia power structure, cannot have had a direct say about general direction in which country was taken by said elites. Judge only rules when there is a dispute brought to his attention, he is not the one to root out the problem that is at the core of all this disputes.

Counterintuitive? You bet. Wrong? Possibly. But I think that Putin, with Atlantic Integrations support faltering both within and outside Russia and Russian society’s collective psyche being built around principle of social justice had decided to respond to growing demand of the masses and assume mantle of Ruler instead that of a Judge. He HAD to tackle internal policy problems now or Russia will be overrun by inbound international economic crisis/collapse and leaps of technology. But for that, given so little time, he had to rule with a really iron fist. He chose. And he, it seems, chose to be that iron-fisted ruler, given the scope, precision and terms of goals he set out. He simply would not reach them unless he beat a living crap out of Atlantic Integrationists, and soon. Yesterday, actually. He tried to communicate with the West. And tried and tried and tried and tried. But now, it seems, he is in position of Stalin back in 1930s. Country lagging behind on eve of worldwide technological revolution, still recovering from war (losses from 1990s was no less then losses from Civil War. He actually compared demographic pits resulting from 1941-44 with that of 1990s during address, which is mightily telling), under sanctions and with mighty enemy just itching for war. Judging from the address, especially its second part, Putin decided to take to heart one Russian joke – “If you’re undeservedly insulted – go back there and do something to deserve it!”. You wanted hardliner (aka Stalin) instead of negotiator? You’ll get one. The second part off the address, one about weapons are necessary to demonstrate it and to scare the hell out of idiots in the west who thinks that first nuclear (or non-nuclear, for that matter) strike is a good idea, hence giving Russia at least some breathing space to actually do thing he laid out. But the effect will not last long, so he needs to be fast about purging the systems and gearing them into mobilization mode to complete those plans in very short order. Basically entire address had a mobilizational undertone to it. “Arise, the great country”. There would be a lot of people who do not going to like it, especially “old guard” in power, who got used to just doing bare minimum and get their pay and ill-gotten gains alike. Again, same problem (intraelite resistance) Stalin faced in late 30s, albeit with different roots. Putin already signaled that he would deal with corruption and incompetency the same way Stalin did, as he instructed FSB at its board meeting on March 5^th he said the following

“Our country will implement large-scale, in many ways unprecedented measures related to social development, infrastructure modernisation, and city and town renewal. Work is underway to implement the newly adopted state armament programme. We also need to protect efforts in these areas from the threat of corruption, and to protect the interests of the people from theft, bribe-taking and attempts to put pressure on businesspeople, protect from everything that threatens the economic and other rights and freedoms of people, the rights that are the foundation of the development of a state and society.” So he basically just specifically ordered FSB to watch over execution of orders he had given in address, with corruption charges being usually duty of Investigative Committee. I would not be surprised if there is a draft bill already, shifting this duty from IC to FSB. He takes this serious it seems. So, if I am right and if history rhymes, there is Great Purge (light) ahead Light, because it is not ideology-related and aggressive corruption fighting is something almost entire nation could get behind. This theory would be proven eight or wrong in mere months if not weeks, starting with new Government formation. We’ll see.

P.S. I might be wrong in any number of ways, so I welcome any corrections or thoughts in any way, shape or form.

Thanks

Miles

Miles is Russian. Lawyer by trade, serviceman by conviction. Amateur analyst. Temper:Nordic, stoic (who am I kidding with Nordic part, eh?)

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