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Putin defends Russia's progress toward democracy

MOSCOW—Russian President Vladimir Putin on Monday called the 1991 collapse of the Soviet Union "the greatest geopolitical catastrophe" of the 20th Century and blamed it for years of economic decline and political chaos.

In his sixth state-of-the-nation address, Putin said his country's top priority was to build a "free and democratic country."

But he rejected Bush administration criticism that he had rolled back democratic reforms. "Russia will decide for itself the pace, terms and conditions of moving toward democracy," Putin said in his 45-minute speech, which was broadcast nationally.

Putin also tried to ease investors' fears that his government was moving to undo the privatization of the economy and pledged to make it clear which business sectors would remain under government control.

He called on tax authorities to halt their harsh prosecutions of leading companies and business executives.

"Tax agencies have no right to terrorize business by going back to the same issues again and again," Putin said, suggesting that officials should concentrate on current tax liabilities rather than old ones.

Putin used some of his strongest language ever to describe the consequences of the Soviet Union's demise as he traced the course of modern Russian history.

"Tens of millions of our citizens and fellow countrymen found themselves outside the Russian Federation" as former Soviet republics became independent countries, Putin said.

"Citizens' savings lost their value. The old ideals were destroyed. Many institutions were disbanded or simply hastily reformed," he said. In a reference to the conflict in Chechnya, he said, "The country's integrity was disturbed by a terrorist intervention."

Putin's portrayal of post-Soviet Russia seemed intended to fend off criticism of his government's actions.

Just last week, on a visit to Moscow, U.S. Secretary of State Condoleezza Rice criticized Putin, saying the Russian president's growing grip on power and the Kremlin's control of the major media were "clearly very worrying."

She also warned that Putin shouldn't try to rewrite the Russian Constitution to allow himself a third term in office come 2008.

Putin's comments on tax cases were also timely. On Wednesday, prosecutors are expected to conclude the 10-month trial of Mikhail Khodorkovsky, the founder of Yukos, once Russia's largest oil producer but now nearly bankrupt and stripped of its key assets after facing $27.5 billion in tax claims.

Khodorkovsky, 41, is facing up to 10 years in prison on charges of fraud, embezzlement and tax evasion in a case many believe is a political vendetta for Khodorkovsky's financing of Putin's political opponents.

A number of major firms have recently been hit with large bills for back taxes. Just two weeks ago, for example, the government filed a $1 billion claim against the joint-venture oil giant TNK-BP. That bill is for a single year, 2001.

To reassure the marketplace, Putin said, his government needed to define which sectors of the Russian economy were headed for "permanent control by ... state capital." He mentioned defense manufacturers and "strategic" natural resources, presumably oil, natural gas and certain minerals.

Putin also said he wanted Russians who've sent billions of dollars abroad to return their assets to the motherland. He suggested a possible amnesty on these fortunes—regardless of their dubious origin—if the owners paid a 13 percent flat tax on them and deposited them in Russian banks.

"This money must work for the good of our economy, of our country, and not lie in offshore accounts," he said.

Putin didn't mention his goal of doubling Russia's gross domestic product by 2013. That target—a staple of previous state-of-the-union speeches—appears increasingly unreachable.


(c) 2005, Knight Ridder/Tribune Information Services.

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