Global Insight Perspective
Significance	President Putin held his last annual press conference in the Kremlin yesterday.
Implications	Putin confirmed that he will stay in power as prime minister under the presidency of Dmitry Medvedev, an arrangement that will be finalised in May 2008.
Outlook	The domestic agenda of Russian leaders is liberal, aiming for the diversification of the economy, reducing the role of the state and instilling the rule of law. Internationally, Russia will continue dragging its heels on conducting international affairs strictly on the basis of existing documents and institutions, thus challenging the more ideational stance of the West.

President Vladimir Putin was on top form yesterday as he took more than 100 questions during a nearly five-hour press conference attended by over 1,300 journalists. These press conferences are an annual fixture, but as it was the final one of Putin's presidential tenure, it worked as an opportunity for the leader to draw a line under his presidency and designate the future directions of Russia's development, in which he intends to play a key role as prime minister.

Domestic Issues: Growing on Success

Putin started his press conference with a brief outline of Russia's economic successes during this presidency, including the 8.1% GDP growth rate, 10.4% real income growth, 21.2% capital investment increase, 50% cut in those living in poverty and booming birth rates. Looking forward, Putin named administrative reform and diversification of the economy as the two paramount goals for Russian development. Putin pledged to adopt an anti-corruption law and increase the salaries of state administrators to remove incentives for corruption. He also indicated that he would change the government system and reallocate responsibilities between ministries and federal agencies, saying that the previous mode of Cabinet structure "had outlived itself." He stressed the government's pet topic, diversification of the economy, with much enthusiasm, and dispelled the fears of overburdening the economy with the state, by saying that the proliferating state corporations would be intended as mere vehicles for propelling some ailing industries forward, to be taken to international public offerings (IPOs) and privatised when they had accomplished their role.

The liberal economic agenda was further detailed by first vice prime-minister Dmitry Medvedev, the all-but-confirmed presidential successor, at the Siberian investment forum today (15 February). Medvedev announced the "Four I" programme, prioritising Institutions, Infrastructure, Innovation, and Investment. Medvedev pledged further tax reform to foster these areas, as well as the simplification of the legal and tax regimes for small and medium enterprises. He made a point of assuring investors that the state does not intend to dominate the economy in the governmental plans. Of equal importance was Medvedev's intention to strengthen the rule of law in Russia, a wider-reaching echo of Putin's plans for governmental reform.

If the comments of Russia's two most powerful men on the domestic issues were essentially music to investors' ears, their stance on the international affairs was a note of discord.

International Affairs: Minding Its Own Business

Vladimir Putin had little surprises with respect to Russia's international standing, which Putin always argues about from the point of view of international legal documents and institutions. In his typically brusque and cold manner, he defended Russia's foreign policy, which often causes controversies within the West, while accusing the West of hypocrisy. Putin rejected treating Kosovo as a "special case" and compared it to Northern Cyprus's four-decade campaign for recognition as an example of the double-standard approach to international issues. He warned that Russia is keeping some ideas for retaliation in case of international recognition of Kosovo's independence declaration up its sleeve, although it would avoid "mimicking", or supporting separatist provinces elsewhere. Most notably, he brushed off the Organisation for Security and Cooperation in Europe (OSCE) accusation of not yielding on conditions for the international observation of the presidential election on 2 March as based on wishful premises to which Russia has not subscribed and hence was not obliged to follow. Putin further underlined his commitment to a "constructive dialogue" with the West, retaliating to presidential hopeful Hillary Rodham Clinton's description of him as having no soul by saying that foreign policy rather requires a leader with a head, "to pragmatically defend the interests of your nation." Head or soul, Putin certainly has the stubbornness to dig his heels in concerning international affairs and Russian foreign policy imperatives.

Third Term, First Term

The issue of power succession and allocation came up again and again during the press conference for obvious reasons. Putin reiterated his commitment to work as Prime Minister under the presidency of Medvedev, and do so for the "length" of Medvedev's presidential term. This last phrase gives rise to two speculations, that Putin does not intend to swap positions with Medvedev at the earliest opportunity, and that he may still run for the presidency after 2012. The gist is, however, that Putin is willing to continue shaping Russia's development, and believes he will have enough opportunity and authority to do so in the prime ministerial post. Putin also treated the audience to his trademark style of speaking in catchphrases such as suggesting international observers "teach their wives to cook soup" instead of preaching to Russia on democracy. He also adopted a tone of some sincerity when admitting that "taking decisions no-one else can take" is a serious burden and sympathising with U.S. President George W Bush for that as the head of the most influential world state, scolding consequent laughter in the audience. These linguistic and personal touches, and a mixture of apparent sincerity, resolve, roughness and energy make Putin genuinely admired by a considerable proportion of the Russian electorate and guarantee popular endorsement for his plans to continue playing a key role in the development of Russia.

Outlook and Implications

The press conference shone with the perception that Russians, and Putin as their leader, are happy for themselves, and this impression may not be far from the truth. It builds upon a strong social consensus behind the ruling elite, and the presence of a vision for Russian development by that elite. The vision itself is fairly liberal, with its goals of reducing the state role in the economy, enlarging the investor base, and instilling respect for the rule of law. This understanding does not by itself make Russian leaders easy partners to work with, especially for international political players, but it helps to know of their firm standing and plans. Political certainty has both positive and negative aspects, as a mixture of short-term predictability and risky oppression of dissent, and they will both transpire in the near future as Putin-Medvedev and their encourage continue in Russia's driver's seat.