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. Last Updated: 07/27/2016

Speech Offers Few Specifics, Long Timelines

MTPrime Minister Vladimir Putin arriving for the speech with Patriarch Kirill and State Duma Speaker Boris Gryzlov.

President Dmitry Medvedev laid out few specific plans to modernize the country in his state-of-the-nation address Thursday, but sometimes offered goals that stretch far beyond his current term.

The longer-term goals included creating a local version of Silicon Valley, upgrading domestic industry to make affordable, high-quality goods for mass consumption and trimming Russia’s number of time zones.

“It’s a claim for re-election,” said Alexei Makarkin, an analyst with the Center for Political Technologies, a think tank. “He is demonstrating readiness to continue working on these issues, apparently as president.”

Medvedev and Prime Minister Vladimir Putin say they rule the country in tandem. Putin, who sat rigidly in the front row during the speech, has said the two will decide later which of them will run in the next presidential election, in 2012.

Putin did not make any public comments Thursday, but judging from his mannerisms he was not too enthusiastic about the speech. State television showed Putin sitting in the front row of the Kremlin’s ornate St. George Hall, frequently raising his eyebrows and looking toward the ceiling.

Yevgeny Volk, a Moscow analyst with Heritage Foundation, a U.S. think tank, disagreed with the idea that Medvedev’s speech was a sign of his presidential ambitions, even though it set strategic goals.

“It’s a natural desire to demonstrate his authority,” Volk said.

As expected, the 100-minute speech was largely an expanded version of Medvedev’s article “Go, Russia!” which he published in September with an invitation for comments and suggestions.

Medvedev several times quoted responses that he received after the publication. One of them — posted on his LiveJournal blog from a resident of the Moscow region city of Serpukhov — backed the idea of electronically automating more state services to cut down on corruption, he said.

By citing these responses, Medvedev apparently sought to show that he attaches great importance to these online discussions, Makarkin said.

“He’s demonstrating that he’s interested in a dialogue with society,” Makarkin said. “This may give a new stimulus to this dialogue.”

Quite unexpectedly, Medvedev weighed in on a discussion about reducing Russia’s time zones from 11 to make cross-country communication easier. He ordered the government to evaluate the effect of a potential reduction and to study the usefulness of daylight savings time.

Arkady Dvorkovich, the Kremlin’s economic aide, said taking out one hour in the 11 time zones could be useful for the economy. “We are not talking about more abrupt moves,” he told reporters after the speech.

People in the regions may be asked to vote in a referendum on any time changes, he said.

Some observers were left baffled by the mention of such a trivial topic in the address.

“This was the single revolutionary idea that shocked me — that cutting the number of time zones is now part of the national strategy,” said Lilia Shevtsova, an analyst with the Carnegie Moscow Center. “Will we or the Far East soon get up at 8 in the evening?”

On other issues, Medvedev said the key economic areas in need of upgrade are the medical and nuclear power industries, energy efficiency, communications and information technology. He criticized “primitive” reliance on commodity exports.

Current elites are likely to resist any changes that would wean the economy off oil and gas revenues, Makarkin said.

“Elites are generally content with the current situation,” he said.

Elites would fear a redistribution of political power and state finances, which will be a likely result of the modernization drive, Volk said.

Medvedev appears to be counting on youth, scientists and business people for support, Makarkin said.

A lot depends on Putin’s backing, he added. Putin will likely mention his views about the address at United Russia’s congress in St. Petersburg on Nov. 21, Makarkin said.

“Without Putin’s support, all this will be a mere declaration of intentions,” Makarkin said. “The real leverage belongs to the Cabinet.”

Tom Mundy, equity strategist at Renaissance Capital, agreed that investors would be looking for signs of consensus in the tandem when it comes to modernization.

Asked if Putin would make work on Medvedev’s modernization plans a priority, his spokesman Dmitry Peskov said, “Absolutely.”

Investors will find little new in the state-of-the-nation speech, analysts said.

“There was nothing hugely new or surprising,” Mundy said. “Medvedev addressed issues which have been a problem for many, many years.

“Talking about Russia’s problems is something that Russia’s leaders have done for a long time. Fixing Russia’s problems is a very different thing,” he said.

Mundy said he would like to have heard more about how to reach the goals of modernizing the economy and battling corruption.

Chris Weafer, chief strategist at UralSib, agreed that there were few specific proposals about spending and ways to help high-tech industries grow.

Medvedev laid particular emphasis on the need to tackle some of the major problems that keep foreign strategic investors wary of country risk, such as corruption, excessive bureaucracy and inadequate legal protection, Weafer said.

“But, again, there were no specific new proposals to deal with these issues other than highlighting them as priorities,” he said in a note to investors.

Investors will welcome Medvedev’s calls to develop nongovernmental organizations and scale down the government’s involvement in the economy, Mundy said. A good sign was Medvedev’s stated adherence to “pragmatic” foreign policy, Mundy said.

When talking about the economic crisis, Medvedev didn’t blame the United States as he had done on past occasions. He also markedly omitted any reference to the security of Russia’s energy exports, despite the fragile transit line via Ukraine. Medvedev mentioned last year’s war with Georgia just in passing when he made a point about Europe needing a new security arrangement.

In addition to modernization ideas, Medvedev made sure to mention social security issues, such as the government’s plans to raise pensions and provide apartments to military personnel despite the crisis.

“He understands that it’s important for people to have not only abstract prospects but also money in their pockets,” Volk said.

Senior Communist official Ivan Melnikov said Medvedev’s speech had a shade of “romanticism, idealism and even naivety” because it offered few specific proposals for resolving the country’s problems.

Former Prime Minister Mikhail Kasyanov, an opposition figure, said Medvedev correctly identified the problems but his proposed solutions were inadequate. By praising the current political system, Medvedev implied that “there will be no real changes in the country and Russia is fully facing the threat of having no future,” Kasyanov said in a statement.