President Vladimir Putin says Russia has halted a slide into political disintegration but now needs new measures to stabilise an old-style economy still scrambling up the slope. In his annual state of the nation address on Tuesday, the 48-year-old Kremlin chief said Moscow was withdrawing troops from rebel Chechnya after achieving its main goals but warned against complacency and said the threat of attacks was still high. "The disintegration of the state, mentioned in the last address, has been arrested," Mr. Putin told parliamentarians in the Marble Hall, a grand Kremlin venue long used by the Soviet Communist Party for Central Committee meetings. He also called for European integration and criticised NATO in a 63-minute speech in which he failed to mention several topical themes including ties with the United States, military reform and media freedom. Mr. Putin devoted much of his speech to economic, social and legal reforms. He said the political changes had taken place against the background of favourable economic indicators last year. But economic stability this year was relative - too closely tied to commodities and the vagaries of world markets. He promised his government would launch new tax reforms to build on those introduced in the past year. The President admitted Russia still had an unfavourable investment climate and capital flight was more than $20 billion a year. According to the official statistics, Russia reached an unprecedented post-Soviet GDP growth rate of 7.7 percent last year. Still, growth has now slowed, making pessimists doubt the four percent target for 2001. Annual inflation could overshoot the 12-14 percent target by 1.0-1.5 percentage points.
The Armed Forces of Ukraine may face new problems over the upgraded Russian unmanned aerial vehicle Lancet. Kyiv will now need to use airfields far from the line of combat contact and look for new ways to protect its aircraft