ANNUAL ADDRESS OF THE GOVERNOR OF ST. PETERSBURG,
30 MARCH 2005

Honourable Deputies of the Legislative Assembly,
Representatives of government agencies, academic, cultural, business circles, local government,
Citizens of St. Petersburg,

This is the second time that I deliver my Annual Address to this audience. That means I shall not only talk about the challenges lying ahead but also account for what has already been done.
I shall reiterate the key point of the previous Address. I am convinced that our city’s historic mission is to become a leader of Russian modernisation, a centre of advanced innovative ideas, a natural bridge linking Russia to Europe.
It implies that our minds, our actions, our strategy and tactics must be free of a provincialism-driven complex of “the great city with a small town destiny.” For long years we had underestimated our potential. We are Russia’s European capital and the fourth largest megalopolis in Europe. Our geostrategic, intellectual, economic, cultural and historical advantages are truly unique.
However, there is stark contrast between these advantages and the huge backlog of unsolved problems, which have largely been ignored over the decades. In order to put the city irreversibly on track towards renewal and modernisation we need a meticulously designed yet ambitious, resolute and firm policy. We need bold initiatives and trailblazing projects.
This is how we formulated the course of action for St. Petersburg Government at the time of its inception one and a half years ago. We never deviated from this course and we shall strictly adhere to it in the future.

Fair assessment of the state of our city, understanding of our strengths and weaknesses, our resources and capabilities served as a starting point for our sustained pursuit in accomplishing the strategic goal of making St. Petersburg a city with European standards of living, European level of economy and civic development.  

Last year we were able to achieve a genuine breakthrough on a number of key economic and social issues. Before discussing them in detail, may I emphasize that it became possible due to the new political climate in the city. We are working in an atmosphere of constructive interaction between the executive and legislative branches of the city government, in an atmosphere of mutual understanding between city authorities and the plenipotentiary representative of the President of Russia. Conflicts, which until recently had been setting the city on the road to political deadlock, are now a matter of the past.

I commend the members of the Legislative Assembly for their responsible attitude and meaningful co-operation in drafting St. Petersburg’s crucial pieces of legislation. Criticism, disputes and differences in opinion are components of this collaboration and I reaffirm our readiness for a frank and honest dialogue with the Legislative Assembly.

Last summer we signed a Joint Legislative Plan for 2004-2005. Some essential laws have already been adopted and promulgated to underpin the development of a dynamic city.
The best example of our constructive interaction was framing the 2005 Budget. Never before have both branches worked on the Budget in such a concerted manner. The deputies, particularly the Budget and Finance Commission, got involved in drafting even prior to the official launch of the process. It enabled us to jointly prepare a reconciled document, which was promptly passed in all readings by the Legislative Assembly.
St. Petersburg was among the first constituent entities of the Russian Federation to get an approved Budget. This helped City Government properly plan its activities for 2005 in advance.

A favourable political climate has allowed us to achieve a new quality of economic growth. In 2004, the economy of our city was developing faster than in preceding years. Very importantly, accelerated economic growth was attained by creating conditions to boost competitiveness of local industry and business, and not due to inflationary effects. For the first time in recent years, this growth can be called sustainable.

Industrial output expanded by 14.1 per cent, more than double the 2003 figure and the national average. The preliminary estimate shows that Gross Regional Product rose by 7.1 per cent.

Our leading industrial sectors, machine building and metalworking, have gone from strength to strength increasing production by 24.2 per cent. Most successful were hi-tech power equipment and shipbuilding companies placing strong emphasis on marketing their products internationally, which have completed large-scale contracts with China and India.
Food industry, the second biggest sector of the local economy, also saw sustainable growth, at 8.7 per cent. Per worker output in the food industry in 2004 amounted to USD 72,100.
St. Petersburg’s transportation complex showed dynamic growth. Conveyance of goods by all modes of transport went up by 6.6 per cent, freight turnover of the Sea Port of St. Petersburg rose by 21.7 per cent. The volume of export and import cargo handled by the Port totalled 51 million tonnes. Our port has become the largest one in the Baltic as well as the largest dry cargo handling port in the Russian Federation. The city’s expanding role as Russia’s European gateway is becoming even more evident.

Growth in telecommunication services amounted to 13 per cent, retail turnover – 13.9 per cent, public catering – 7.1 per cent.
At the end of 2004, we had one of Russia’s lowest official unemployment rates, 0.8 per cent of the working age population. Fast economic growth provides jobs for nearly all St. Petersburgers who look for employment.
We are consistent and systemic in creating conditions for dynamic development of the economy. We introduced tax incentives for investors and laid down eligibility criteria for a sovereign guarantee from the City of St. Petersburg. In 2004, the system of land purchase and lease payments was amended so as to facilitate rational use of land by companies and to generate land acquisition. Costs of land acquisition by owners of buildings and installations located on it were cut threefold on average.
In my last year’s Address I had to admit that St. Petersburg started surrendering its competitive advantages not only to Moscow but also to a number of other Russia’s regions. Today one can assert that we had overcome this dangerous trend.

The key challenges facing the city authorities in the field of external economic activity include attracting investments and promoting access of domestic products to international markets. Our international activities are devoid of a pompous protocol component. They are based solely on pragmatism. All the negotiations the Government of St. Petersburg held and will hold in the East and West are oriented towards concrete results and we have already made solid progress in obtaining them.

The visits by top governmental officials and businesspeople of St. Petersburg to Japan, Kazakhstan, Turkmenistan and Azerbaijan were conducive to enhancing exports of our products to those states, winning new contracts, attracting serious investors to our city.

In Japan, we signed agreements with Marubeni Corporation and Sumitomo Corporation. The former is planning to take part in the Western Expressway project and in modernisation of the water supply system. Sumitomo is engaged in talks on the elevated train project as well as on the manufacturing of equipment for advanced intra-city electric transport.

We are continuing negotiations with Toyota Motor Corporation, which plans to build a large assembly plant outside the city. OAO Power Machines is involved in the first stage of a reconstruction project at the State Regional Power Plant in Mary, Turkmenistan (total project cost: USD 300 million).

In 2004, there was a 40 per cent increase in foreign investments into the city, which totalled USD 900 million. It is not the figures alone that matter, although they hit a record high in recent years. Overall investment landscape has changed dramatically. We are no longer perceived as an economic backwater, just a cultural experience worth visiting but where doing big business is not possible. Major European, international and domestic companies continue to swell the ranks of our investors.

I shall specify just few of the projects launched last year:
Construction of an Elcoteq electronic manufacturing plant, a KNAUF plasterboard plant, the second phase of the Interbeer (Tinkoff) brewery as well as projects by Gillette, Pepsi, Russky Standart, Yarovit Motors, First Furniture Factory and others, with investments ranging from USD 20 million to USD 100 million. We signed an agreement with Bosch und Siemens on the construction of a ˆ 50 million-worth washing machine assembly plant, which will have a total production capacity of 500,000 units per year.
We signed an agreement on the construction of a sludge incinerator which, following its completion, will make St. Petersburg the first city in Europe to have fully resolved its sludge disposal problem.

We reached accords with Shanghai Industrial Investment Company on the construction of the Baltic Pearl, a multifunctional megacomplex worth nearly USD 1.5 billion. This is an all-time record in terms of foreign investment in St. Petersburg.
The leading Russian companies are making big investments in our city too. Severstal launched the construction of its large diameter pipe production facility worth USD 430 million in Kolpino district.
We embarked upon full modernisation of heat supply system in Petrogradsky district. Under the contract with Gazprom, it is scheduled to be complete in 2008, with Gazprom’ investments amounting to some RUR 4 billion. The company will allocate another RUR 500 million to the development of gas infrastructure in the city suburbs this year.
Federal Grid Company has undertaken to build a new substation in Rzhevka investing over RUR 6 billion. Jointly with Russian Communal Systems, we held a groundbreaking ceremony in Rzhevka to mark the beginning of construction of a long-awaited RUR 1 billion boiler plant, which is due to be built at the company’s expense. We authorised the construction of a Vneshtorgbank-funded heating pipeline to link the North West Thermal Power Plant with a boiler plant in Primorsky district.
These projects will ensure improved heat supply to several city districts and create new capacity for construction and development.

Energy sector appears to be a new investment niche in St. Petersburg. Up to this point, attracting business into the energy sector with its long cost recovery period was considered hopeless. We have dispelled this myth by proving that the most convincing argument for businesspeople is confidence in political and economic stability in the city, and in its meaningful investment policy.

Investments in the city mean new well-paid jobs, extra taxes to the budget, a more vibrant city and increased governmental funding available for capital construction projects, for repairs of worn-out utility networks, and for tackling the most pressing social problems, including support for the vulnerable.

You will have noted that even a brief listing of major investment projects took up a significant part of my Address, while our investment portfolio contains yet more agreements, offers and protocols of intent, which will become operational in the near future.
Growing economy also means growing city revenues. In 2004 we achieved a revenue increase of nearly RUR 10 billion, reduced St. Petersburg’s sovereign debt by 18 per cent and finished the year with a surplus. We resolutely put an end to the practice of barter schemes, strictly adhering to the principle: every kopeck goes to the city coffers.
Predicted revenues growth in the current 2005 budget is unprecedented. In comparison with the previous year, revenue target was increased by 38 per cent or over USD 1 billion. It is of fundamental importance that this growth is achieved without raising taxes. The reform of the city procurement system effected last year has resulted in more than RUR 2 billion in savings.
It should be noted that sound budgetary policy and low debt are the factors leading to consistent upgrades of our city’s international ratings. Last year, international agencies raised St. Petersburg rating twice, so that today it finally matches that of Moscow. For the first time, the city’s ratings were increased to Investment grade.
This signals an official recognition of St. Petersburg’s investment attractiveness internationally. Without a doubt, it is evidence of high financial stability of the city.

As early as spring last year, I addressed Russia’s business community through an open letter urging the largest domestic companies to establish their presence in St. Petersburg and to implement investment projects.

I shall be frank with you in saying that we were most persistent in this field, taking recourse to political lobbying. The year 2004 has brought a great change in the attitude of big business to St. Petersburg. A number of major companies decided to either transfer their head offices to St. Petersburg, or to set up subsidiaries here. Re-registration of headquarters to St. Petersburg was approved by Vneshtorgbahk, Sovcomflot, Transnefteproduct, North West Federal Grid Company and Territorial Generating Company ¹ 1.

Russia’s leading oil companies such as LUKoil, Rosneft and Transneft, as well as Gazprom, have established branch offices in St. Petersburg.

The arrival in the city of major tax payers will raise 2005 budget revenues by RUR 5 billion. And this is the most cautious estimate.

Among the greatest successes of 2004 one should mention the agreement with Tyumen Regional Administration and Tyumen Oil Company to institute St. Petersburg Development Fund. The Fund has already received RUR 505 million, which will be used for restoration of the Admiralty, the Smolny Cathedral, St. Alexander Nevsky Lavra and other masterpieces of our cultural heritage. We expect that at least the same amount of money will be transferred to the Fund by the end of the year.

The entrance of companies comparable size-wise with the biggest international corporations not just sets an important precedent for Russia’s business leaders but also places St. Petersburg on a new level on the list of European investment destinations.
Our ambitious policy towards higher city revenues in 2004 allowed us to make advances in poverty alleviation, one of the key objectives set in the last year’s Address.
At that time I said that not a single city employee earning less than subsistence minimum would remain in the city by 2005. Now I can confirm that this goal was accomplished by 1 December 2004. Within a year, salaries of 273,000 people (teachers, health and culture workers) rose by 38 per cent on average. According to Goscomstat, average monthly salary in the public sector was RUR 8,000 in January 2005, up 66 per cent on the January 2003 figure, and largely corresponds to the average pay in the city.   

Nominal per capita monthly incomes of the population grew by 26.5 per cent on average, and gross payroll by 22.5 per cent. These are good results for the year. In 2004, the average annual pension increased by 15.1 per cent. Extra grants to pensioners aged over 65 receiving pensions less than the subsistence minimum reduced the number of people living below the poverty line by almost 130,000.

In 2004, two million square meters of new housing were added, a record level even by comparison to the Soviet times. Besides which, 500,000 square meters of retail space and over 200,000 square meters of office space were completed.

We started addressing the backlog in metro construction, which was and will remain the most popular mode of public transport in our city. In 2004, we re-opened the long-awaited section of the Kirovsko-Vyborgskaya metro line which had been closed by flooding. For the first time in years, we are opening a new metro station, Komendantsky Prospect: in fact, in two days’ time.
The first-ever suspension bridge over the River Neva was built and put into operation. The Great Obukhovsky bridge can confidently be named a unique engineering structure and a mega-project in the field of construction. The opening ceremony was attended by the President of Russia.
I should note that Vladimir Putin cares about his native city and extends invaluable personal support to all important city projects. On behalf of all St. Petersburgers, I would like to thank him very much for his efforts.

Problems of St. Petersburg receive Federal Government’s attention as well. In 2005, the allocations from the federal budget to the city stood at over RUR 28 billion, 20 per cent more than in 2004.

Three new motorways were built. Four million square meters of roads underwent repairs, including complete renovation. We are undertaking major repairs to Prospect Engelsa, the lengthiest and the most neglected thoroughfare in the city.

2004 was a breakthrough year also in another field essential for St. Petersburgers’ quality of living. One may place on record that our city has launched a genuine, not just formal, reform of the housing and utilities sector.
In the housing management sphere, there are currently 62 city-owned joint stock companies and more than 60 private operating entities. Tendering procedures for housing maintenance services divided into an initial 57 district lots are to be finished by the end of June.
Thus, real conditions were created to end state monopoly in the housing sphere. There are currently about 2,700 condominiums (housing cooperatives and associations) in St. Petersburg. The number of housing associations in older city areas has more than doubled.

In 2004, the city accelerated the pace of its dilapidated and unfit housing resettlement programme. We have managed to resettle to normal flats more than 1,000 families, including the beginning of resettlement of the notorious Shkapina – Rozenshteina quarter.

In 2004, 1,400 mortgage loans were provided. While the figure is still insufficient, it is three or four times greater than in previous years. Over 3,000 mortgage loans will be issued in 2005. More than RUR 2 billion was allocated for capital repairs of the housing stock; front façades of 195 buildings were refurbished and almost 1,000 roofs renewed. We started implementation of  “The Courtyards of St. Petersburg” programme with a total budget of RUR 6.5 billion.

In 2004, the city transport was revamped on a scale unknown in many years. The city has acquired 35 trams, 49 trolley buses and 254 buses. This is an eight-fold increase in transport procurement as compared with 2003.

Summarizing the main outcomes of our endeavours in 2004, I shall stress that we made a breakthrough in the key fields. It became possible because we resolutely stopped ignoring challenges facing the city. We were successful due to political stability, collective work of all branches of government, rigid budget policy, aggressive approach to encouraging investments, creation of sound entrepreneurial climate, promotion of St. Petersburg domestically and internationally, and proper identification of fundamental problems requiring dedicated resources.
Now, allow me to dwell upon the main focus of our efforts in 2005. First and foremost, we must maintain the existing momentum in all areas. Every new opportunity created in 2004 must bring about real results. May I assure you: St. Petersburg Government is not at risk of suffering “dizziness from success.”
We view the achievements of 2004 solely as a basis for further growth. The year of 2004 has borne out that only innovative style of running the city allows to jump over several steps at once on the way of modernisation. That is why ours is the tactics of a breakthrough, not a slow, step-by-step motion.

Outcomes of 2004 will give an impulse to further growth provided we clearly determine our top budget policy priorities for 2006.
Unprecedented growth in revenues projected for 2005 empowered us to simultaneously tackle two equally vital challenges, which the city previously failed to address together. Expenditure was increased for capital construction and infrastructural development in development zones alongside greater social spending. This is why the 2005 budget was called a development budget and a socially oriented one at the same time.
I am convinced that new budget opportunities allow, and the life itself dictates us, to place stronger emphasis on the developmental component, capital investments. Naturally, this should be done with no detriment to the social policy of the city. Now it is time for a genuine development of St. Petersburg.
But development is impossible if we keep on eating away at our financial resources, taking only emergency measures, addressing only present-day needs and being unable to see the wood for the trees. The time has come to build new schools, hospitals, theatres, health and fitness centres. We should not just build facilities, but also install in them the most advanced twenty-first century equipment, providing St. Petersburgers with European class services. It is our duty to contemplate what kind of a city are we going to pass on to the next generation.
Our top budget policy priorities in 2006 include:
 - increasing the budget’s developmental component by allocating funds for advancing public infrastructure;
- efficient social policy, targeted social assistance: as of 2006, we propose to introduce extra grants for non-working pensioners aged over 60 (thereby lowering the age limit by five years) to ensure that their overall earnings are above the subsistence minimum;
- increasing expenditure for the improvement of living conditions of Great Patriotic War veterans, Leningrad siege survivors and city employees;

- support for children, including the disabled.

Inflows into the city coffers should in future continue to be expanded without placing additional financial burden on the economy but through generating more investment, broadening the tax base, better city property management, improved tax collection and bringing “out of the shadows” the unregistered sector of the economy.

Only a budget policy which is prudent, well-articulated and responsible will bring tangible results in poverty alleviation.
Among the most important results of 2004, I mentioned the uplifting of the pensions of non-working pensioners aged over 65 who receive less than the subsistence minimum, as well as the pay of all the city’s employees, from below the poverty line. Now we must resolve once and for good the same problem in the private sector of the economy.
We will be persistent and rigorous in striving for higher salaries officially paid by all enterprises and organisations in the city. There is a commitment in the Tripartite Agreement signed by Government, trade unions and employers for the period from 2005 to 2007 to keep the ratio between the minimum wage and the subsistence minimum at 1:1, raising it to 1.1:1 and 1.2:1 in 2006 and 2007 respectively.
Business and Government share responsibility for socio-economic conditions in the city. No employer, notwithstanding the type of his business, is allowed to introduce poverty, thereby generating a threat to political and social stability, pessimism and a “loss of heart” philosophy.
Government will continue to support those in the public sector who teach our children as well as those who provide medical services to them. But salary increases are not the only form of support. I have instructed Government to develop a special programme aimed at helping city employees to improve their housing conditions.
It should generally be based on the following approach: 30 per cent of the housing acquisition costs is paid by the employee and the rest should come from long-term credit provided by the city.
In co-operation with the business community, we have tested new models of assistance to socially vulnerable categories of citizens. Last year, the city and retail chain stores entered into agreements on discounted staple foods for the poor, a measure never practised before. 33,000 city residents have already received discount cards. We are going to at least double this figure.

Targeted action is the main principle of the social support. No amount of money will ever be sufficient if we fragment our resources blindly. Assistance must reach the truly needy.

In order to pursue genuinely efficient social security policy, we have to devise standards and requirement criteria of social services in St. Petersburg, and clearly formulate the scope of the city’s obligations before its citizens. In 2005-2006, we will draft and then enact the Social Code.
In the context of broad-based social reforms being introduced at the federal level, close co-operation between the city authorities and federal structures carries particular importance. We have all experienced the extreme urgency of this problem in the aftermath of the entry into force of the federal Monetisation of Benefits Act ¹ 122.
I shall say again what I have repeatedly said before. Social implications of the Act were left without proper analysis, and mechanisms for its smooth implementations were not in place. And when the benefit recipients were negatively affected by the reform, some bureaucrats appeared willing to kick responsibility onto regional authorities.
Jointly with the Legislative Assembly, City Government had to effectively act as crisis manager. Of particular difficulty was the Act’s provision demanding a distinction to be made between federal and local recipients. But for us, categorizing benefit recipients is nonsense. For us, they are all St. Petersburgers.
I do not claim we were made the scapegoat. We have been through many challenges. Something was not taken into account, something was not 100 per cent right. But a perfectly smooth implementation of such a serious social reform in a city of five million people was just impossible.
We managed to save the situation by pooling our efforts. Decisions we made in St. Petersburg, for example, on the introduction of discounted travel passes, were later replicated by other regions. At the same time, we were able to push through partial compensation from federal government.

Today, there are two painful issues which need to be promptly dealt with. Firstly, correct calculation and timely payment of pensions. Although the situation in general has been stabilized, certain irregularities continue to occur causing justified anger of pensioners. Secondly, the problem of discounted medicines should be resolved. Tens of thousands of St. Petersburgers, federal benefit recipients, were placed on the waiting list. This is absolutely unacceptable. Meanwhile, regional benefit recipients experience no problems whatsoever with acquiring medicine.

As a matter of urgency, the city is doing everything necessary to assist the St. Petersburg branch of the Pension Fund of Russia. We have redeployed personnel from municipal social agencies to help the federal body. But again, every structure has its own responsibilities. And we strongly urge the Pension Fund to speedily complete its emergency efforts associated with rectifying the situation.

The crisis in providing benefit recipients with discounted medicine should be resolved in the near future. At the federal level, a mechanism has finally been fine-tuned for paying authorized suppliers of medicines. Repayment of debts to suppliers would allow pharmaceutical companies to boost supplies of discounted medicines and cut delivery time. I would like to express my gratitude to Mr II Klebanov, the Plenipotentiary Representative of the President of Russia, for his support and his principled position in dealing with these problems.

The benefits reform requires accelerated introduction of computer systems in pharmacies and in those medical/preventive treatment facilities which serve benefit recipients. This is the only way to create a comprehensive database of all discounted prescriptions and drugs sold. 110 pharmacies have already been computerised. Doctors in the city’s outpatient clinics are being provided with professional electronic equipment.  We must act quickly in this regard.

In 2004, the concept for the modernisation of St. Petersburg’s health care system was approved. The current system, let us be frank, itself resembles a sick patient unable to get up from his bed. The concept’s priorities are: primary care, prevention of socially meaningful illnesses, and maternity and childhood protection. We have managed to allocate over RUR 100 million from the 2005 budget to fight HIV/AIDS alone. 37 new GP practices were opened over the last year.

Modernisation of the health services necessitated full abandonment of their multi-directional development, and highlighted the need to conduct a detailed analysis of medical institutions’ material and technical capacity. The following disturbing facts were uncovered: under-utilised capacity in some hospitals and the lack of unoccupied beds in others;  80-90 per cent of equipment in most institutions was obsolete, while some large clinics’ expensive equipment is kept idle; seriously weakened outpatient clinics component and the shortage of skilled personnel.

Merging health care institutions would help concentrate resources, and make more efficient use of costly equipment and services provided by the best specialists. A large hospital will become a stronghold of medical aid in a district or a group of districts by co-ordinating outpatient care and ambulance service activities. In 2005, the city began to set up a network of well-equipped inter-district and district clinic-diagnostic centres. This year, such centres will become operational in Kirovsky and Moskovsky districts.

Earlier this year we opened a new modern hospice and plan to complete building of a new surgery complex at Pokrovskaya hospital. New Botkin hospital is being designed to relocate the existing facility from the city centre and accommodate it at two sites. The city is attracting commercial investments into health care institutions, and several projects are already being implemented.
In 2005,  we plan to begin construction (to be completed in 2006) of Russia’s largest Centre for rehabilitation and professional training of disabled persons aged 14 and over, capable of serving 500 people per month with permitted duration of stay six months. Thus conditions will be created in the city for sustained, systemic medical and social support of disabled adults.
As of 1 January 2005, St. Petersburg had 20,000 jobs filled by the disabled, including 3,000 jobs created or allocated during the last two quarters of 2004. The citywide job vacancy database contains nearly 2,500 jobs available for people with limited capabilities. Let us not forget that attitude to the disabled can be held up as a marker of social health of any state and society.
I have to repeat one of the points from last year’s Address and refer to the demographic crisis as St. Petersburg’s most acute problem. As of early 2005, the city’s permanent population was 4,601,000 people, a decline of 23,000 by comparison to the 2004 figure.
However, some positive shifts were recorded last year in terms of birth rate and mortality indices. Birth rate went up from 8.7 per 1,000 in 2003 to 8.9 in 2004, and mortality dropped from 16.7 to 16.2. Infant mortality decreased by 12 per cent. However, it is too early to speak about a sustainable positive trend.

The need to address demographic crisis poses an urgent task of radically changing society’s views on the family as a social institution as well as on family values. We must stop repeating the cliché that the family is the foundation of society, and move to a coherent state policy in this sphere.

We must acknowledge that everything that relates to children should become top priority for the city. It involves improved quality of obstetric aid, chidren’s health, studies, recreation, wholesome diet, creative development opportunities and sport.

In 2004, over 383,000 St. Petersburg families received state child grants. Every month, the city budget subsidised school meals for 220,000 pupils.

Under the arrangements introduced by St. Petersburg’s Social Support for Families with Children Act of 2004, which was recognised as one of Russia’s most progressive pieces of legislation, increases took place of the birth of child grant, pre-school age child grant, and extra compensatory allowance for large families. The amount of child grants and compensatory allowances will be adjusted annually.
In 2005, we are going to focus our efforts on supporting adoptive and foster families. There is no other way to reduce numbers of orphans and phase out orphanages inherited from the Soviet era. The responsibilities of authorities at all levels (primarily, local government) regarding the support services for adoptive and foster families, will be set forth in St. Petersburg’s Minors Protection Act, which is being drafted jointly by City Government and the Legislative Assembly.
Whatever alterations may occur in our agenda and in priorities under changing circumstances, those who epitomise our future and our heroic past – children and veterans - should always remain the center of our attention. 
In just a few weeks, we will celebrate the 60th Anniversary of the Great Victory. The Governor’s programme of the jubilee preparations was named “Duty” because it is a key word in the understanding of our historical responsibility to the generation of victors. It is a common duty of government, business and society to honour the deeds of this great generation of heroes in the war against fascism, and of the defenders of Leningrad under siege, of those who saved and preserved civilisation itself.

Yesterday, at a meeting of the “Victory” steering committee, Russia’s President Vladimir Putin stressed the importance of “setting the tone matching the rôle, which our country, our army and our people played in victory in the Second World War.” Today, this is each and everyone’s duty. The President’s decision on extra monthly payments to war veterans and siege survivors received acclaim.

In 2005, the city will provide free apartments to veterans of the Great Patriotic War (GPW) severely disabled in combat, non-combat service-disabled veterans and citizens decorated with the “For Defence of Leningrad” medal as well as prisoners of concentration camps duly registered before 1 January 2005. Under the agreement with the Ministry of Communications, all GPW veterans, other eligible citizens and siege survivors previously placed on the waiting list, will be provided with landline telephones. Generally, the waiting list for telephone installation will cease to exist in two years.
I am grateful to the business community for their response to our appeal for sponsorship of the veterans. More than 100 enterprises and companies are taking part in the “Duty” programme.
The Transaero airline has undertaken to provide free travel for war veterans in 2005. Industrial and Construction Bank has sponsored procurement of 24,000 household appliances for veterans and siege survivors. Local construction companies will repair a hospital for war veterans, Bank Sankt-Peterburg and GUP Vodocanal will rebuild a hospital for siege survivors.
In 2005, the city will fund replacement of 14,700 gas stoves and water heaters in the flats of war veterans, the disabled in combat and siege survivors. 1,000 gas stoves will be replaced by Baltic Gas Company at its own expence. Prior to the day of celebrations, we will finish repair and restoration of Piskarevskoye memorial cemetery and the Victory square memorial.
But duty implies more than assistance to war veterans and the giving of anniversary gifts. Our duty also involves honouring the victors by making St. Petersburg a city which is humane, prosperous, convenient and comfortable for living in for all its residents.
In 2005, we will implement biggest construction projects essential for convenience and comfort of a modern megalopolis. We intend to complete the Eastern semi-circle of Ring Motorway (RM). The decision of the Russian Government on the construction of the Western semi-circle of RM funded from Federal budget with projected completion deadline of 2008 is expected shortly.
Our task is, using city budget and federal subsidies, to provide traffic access to RM by building new interchanges and expanding the existing road network.
In 2005, an interchange will be built at the intersection of RM and Sofiiskaya street. Another interchange and off-ramps at Dunaisky prospect will be commissioned. Completion of the second set of off-ramps from the RM interchange at the federal motorway M-10 (extension of Vitebsky prospect to Moskovskoye shosse) is projected. The linking of RM with Koltushskoye shosse is also expected to be finished.

The flood protection barrier is another facility of critical importance to the city. Last year, RUR 650 million was used for civil works. We were aggressive in lobbying for increased federal appropriation for this project in 2005. Now the issue is progressing and the necessary decisions are currently  in the pipeline.

RM construction can and must facilitate the start of building of the Western Expressway. These projects are functionally and logically interrelated. Thus, the Southern span of the Western Expressway leads directly to RM, linking the sea port to 13 federal and regional roads.

Completion of the RM project and construction of the Western Expressway will create the basis for the integrated system of motorways concentrating heavy traffic flows and providing linkage between major transport terminals in the city. The construction of a modern passenger marine terminal in the Western part of Vasilievsky Island was approved in 2004. Without a doubt, this project can be referred to as one of the most ambitious and symbolic for the city.

It is equally pragmatic and important for the image of St. Petersburg as Russia’s sea capital, because one of the main present-day factors holdind back development of highly profitable tourism industry is the lack of port capacity to serve modern cruise ships. Moreover, it is high time to shape St. Petersburg’s marine façade. Both the development of the terminal’s concept and the feasibility study have been completed. Federal budget has allocated RUR 600,000 for dredging works this year.

Erection of a new state-of-the-art building housing the second stage of Mariinsky Theatre will be commenced.

We will pay close attention this year to the improvement of the traffic situation in the city. We expect completion of the first phase of reconstruction of the Lieutenant Schmidt Bridge, and approval of the start of the feasibility study on the proposed new tunnel for motor vehicles to be built under the River Neva. Also this year we will begin reconstruction of Mitrofanyevskoye shosse, the backup avenue for Moskovsky prospect.

Following the commissioning of the Kommendantsky Prospect station, the metro builders will focus on the metro’s Frunzenskaya line. We need to accelerate the metro’s extention to the district of Kupchino where about half a million people reside. The Government has approved a programme of metro development until 2010.

We project that by 2008 volumes of new housing completed annually will reach 3 million square meters. Stepping up the pace of construction, both residential and for social purposes, is vital in meeting the existing needs of St. Petersburgers. Therefore, I will once again dwell upon the Baltic Pearl project, which creates the most important precedent in terms of comprehensiveness of approach to the accomplishment of this task.

It is for the first time in the history of St. Petersburg that we attract foreign investment exceeding USD 1 billion. What we can see today as an abandoned, waterlogged and empty South West area with no infrastructure whatsoever, will in five years be turned into a modern suburban town the size of a modest European town with accommodation for 35,000 St. Petersburgers, a business centre, parks, schools, kindergartens, sport facilities. This will be the first district in the city where quantity and quality of social infrastructure fully meet European standards.
Meanwhile, the Baltic Pearl project has become a subject of the most ridiculous rumours spread to cause havoc amongst the citizens. Particularly amongst those who have not yet realised that foreign investment is not quite the same as foreign invasion. I would like to use this opportunity to once again confirm that City Government has enough political will to implement this major construction project in the interests of all St. Petersburgers despite opposition by a small group of concerned individuals.
I have no doubt that precisely this kind of project will help put an end to the notorious practice of fill-in development between housing blocks. I have no doubt that success of this project will lead the way for other large-scale foreign and domestic investments into our city. May I reiterate: the Baltic Pearl project must become a locomotive to pull the entire investment train.

In order to speedily relieve the shortage of housing, we should facilitate the involvement of citizens and their money in residential construction. City Government will continue to support mortgage loan schemes.

We signed co-operation agreements with a number of commercial banks, which undertook specific obligations with regard to providing mortgages to individuals on the housing waiting list. In its turn, the city pledged to provide non-repayable grants to partially cover home purchases. We are happy that in these first months of 2005 the number of grants given is growing fast. The programme is becoming a truly effective mechanism. We anticipate the number of mortgage loans to double this year.

As construction expands, the issue of developing a proper urban planning policy is getting even more topical. In 2005 the new Master Plan, which was debated in the Legislative Assembly and currently undergoing public hearings, will become the core of the planning regulations.

We were Russia’s first region to devise a draft of the Cultural Heritage Preservation Strategy. St. Petersburg’s Strategy covers all issues relating to protection, restoration and the use of monuments and urban milieu as well as reconstruction and building within the historical centre of the city. The Strategy’s formula proposed for public debate is “preservation through development, development through preservation.”

I think today everyone accepts the notion that city development is absolutely impossible without radical reform of the housing and utilities management sphere. The old Soviet system had outlived its usefulness, indeed, discredited itself. Housing sector was driven into bankruptcy. Over many decades, almost a century, a vicious circle of irresponsibility has been formed: service providers tend to ignore their responsibilities and residents try to ignore what is happening beyond the front doors of their flats.

A change of attitude can only be achieved by making a person the owner of his home and the adjacent area. But the goal of the reform is dual: to make St. Petersburgers responsible owners and, at the same time, ensure genuine market competition between service providers. The one gets useless without the other, like a janitor without cleaning tools and vice versa.
It is naive to believe that this process depends solely on political will. Things are more compicated. At the launch of the reform, a high precision approach was required in the assessment of social risks, fighting reluctance and even resistance and sabotage. Because while placing such a huge and complex structure as housing and utilities management under market conditions, we had to ensure its uninterrupted running.
And we delivered on our promise made one year ago. We embarked on radical reform of housing and utilities management yet secured failure-free service delivery and avoided job losses in this sector. Trust me, it was a difficult task. It may seem easy only to those irresponsible politicians whose slogans promise immediate results.
The adoption of the legislation on rates and tariffs for housing and communal services provided conditions for the inflow of private capital into the sector. Mechanisms were established to ensure social security for low-income citizens. 
The other side of the reform, as I said earlier, presumes creation of choices, and the participation of citizens themselves in this sector. The most efficient option here is the setting-up of housing associations.
In order to stimulate the formation of associations, St. Petersburg authorities have passed legislation setting the procedure for the transfer of land plots to homeowners’ co-ownership cooperatives. The procedure for the establishment of housing associations authorised to manage real estate complexes, was made significantly shorter and simpler.
During the second part of 2004, over 120 housing associations were registered in old city areas. Admiralteisky district was chosen as a testing ground, where housing management functions were conferred upon the affiliate of a German contractor, Peter Dussman. As of 1 March 2005, over 50 housing associations were registered in the testing zone, most of them in buildings constructed before the Revolution. A similar experiment was launched in Vasileostrovsky district by the LenSpetsSMU company.

As a result of these measures, in the first two months of 2005 the number of complaints filed by residents, and claims in regard of the housing and utilities management, reduced year-on-year as follows: on maintenance issues (including heat supply) – by 55 per cent, on plumbing fixtures – by 27 per cent, on the upkeep of courtyards and staircases – by 15 per cent.

Old Soviet stereotypes are being broken simultaneously in the economy and in the mind. Citizens see for themselves that this is the only right way leading towards a new quality of living standards.
There are also spheres where market factor is not relevant and direct government intervention is required. Our city has long had the dubious reputation of being a capital of dilapidated housing. In 2004, total expenditure for capital renovation of the housing stock amounted to over RUR 2 billion. The 2005 budget sets aside RUR 4.7 billion for capital renovation.
We made marked progress in improving sanitation, city cleansing and, as a consequence, the city ecology. More than 1,000 containers were purchased under the communal sorted-waste collection programme. The communal solid waste management concept was elaborated in co-operation with a research institution of the Russian Academy of Sciences. We will begin to vigorously implement the concept this year.
Following enactment of a new Housing Code, we faced the need to promptly work out and pass 10 by-laws and four ordinances of City Government. We need to approve economically sound tariffs. To this end, Government has appointed an independent auditor who will report the results to the Legislative Assembly for further consideration. We must also decide our position regarding the time frame for the payment of housing and utilities bills in full by the population.
In spite of the federal law requirement to introduce full payment as of 1 January 2006, we should carefully weigh all social implications of the measure. In my opinion, it would be appropriate to raise the figure to 90 per cent by the end of this year (now residents pay only 82 per cent of the approved standard housing service rates), then to 95 per cent as of 1 January 2006, and finally to introduce 100 per cent payment as of 1 January 2007. In doing so we should retain the existing norm for low-income groups, which limits this type of expenditure by 22 per cent of the aggregate income of the family.
The 2005 Budget allocates six times more money for improving the physical environment than it did in 2004. A pedestrian area was created on Bolshaya Moskovskaya and Pravdy streets, and comprehensive street repairs completed on Nevsky prospect and adjacent territories. In 2008, we have to fully implement the Courtyards Landscaping Programme approved earlier. Modernisation of street lighting on Moskovsky prospect, Isaakievskaya square and Engelsa prospect is to be completed in 2005-2006.

We believe that the improvement of streets and courtyards must go hand in hand with modernisation of the city’s general infrastructure to avoid repeating the experience of the past when nice paving slabs were layed on top of worn-out utility lines.

40 per cent of the heating network has exceeded its operational time limit and requires replacement. Water losses in municipal networks are estimated almost at 25 per cent of daily consumption. Average age of Lenenergo’s fixed assets is 28 years. That is why scheduled maintenance has given way to emergency response.
In 2005, budget allocations for heating, power and gas supply infrastructure reached RUR 4.5 billion. Resources of Russia’s largest power companies, RAO UES and Gazprom, are being engaged too. In the framework of strategic partnership with Gazprom, a complete modernisation of the heat supply system in Petrogradsky district was launched.
In 2004, seven old and worn heating plants were demolished, five new modern ones were built, 3.5 kilometers of local utility networks were replaced, and courtyard areas were improved. The city has financed the replacement of utility lines within buildings located in this district which resulted not just in significantly improved heat supply, but also allowed the resettlement of people living in 1,000 communal apartments.

This year we plan to demolish another 22 old heating plants and build 15 new ones to replace them, and to replace 54 kilometers of local utility networks. For these purposes Gazprom will provide RUR 560 million in 2005, thereby improving the heating supply to some 300 residential buildings and 11 child care facilities.

Importantly, last year Government drafted and adopted programmes aimed at the development of the city power, water and heat supply, the sewerage system, and lighting. Implementation of these programmes will help ensure sustainable development of our city.

It had long become obvious that where competition and market conditions are absent, stagnation impairs not just housing and utilities, but also local passenger transport. The goal of the transport reform which involves unification of social and commercial routes, is to attract private investment in public transport. This will allow the expansion of stock by more than 200 large buses for social routes as well as 500 medium-size buses at the expense of non-budgetary funds in 2005.

The pace of road infrastructure development lags behind the growing numbers of motor vehicles in the city. In 2005, an estimated 2.5 million square meters of roads will undergo maintenance and reconstruction.

St. Petersburg has found itself in urgent need of a so called Intellectual Transport System to ensure efficient traffic control and provide comprehensive information for motorists and pedestrians. Implementation of this project is well underway and we hope to expand it further next year.

Further modernisation is required in the fields of education, science and culture. A strategic objective facing St. Petersburg schools is to streamline education in accordance with present-day international standards. Educational institutions must become financially autonomous. This is one of the fundamental provisions of the recently endorsed Concept of education development named “St. Petersburg’s School – 2005-2008.”

We are going to revive and promote the development of skills training system, interact with public and private enterprises, and facilitate the meeting of labour market demands. Any employer should realise that it is in his interests to invest in his own staff skills training.

Nearly half a million students study at 53 state and 47 private institutions of higher education of St. Petersburg. These institutions should be more active in entering the international market for educational services. Additional sources of financing must be put in place through appropriate mechanisms. Academic institutions and the largest universities must be used as the backbone for establishing centres of innovation and technology, and industrial parks as well as the industrial technology transfer centre.

Indeed, we are striving to become a capital of investment and innovation. But there is something that no one contests – we are one of the world’s cultural capitals.

For the first time in many years, in 2005 we will make a detailed inventory of St. Petersburg culture’s physical assets. The results will provide the basis for further decisions on the amount of money required for renovation and modernisation of the entire sectoral infrastructure in the next few years. There is no excuse for delays in modernisation of libraries, completion of cinema restructuring, and the creation of integrated museum centres and premises for the Museum of Contemporary Art.

Finally, it is an obligation of the city to set up a dedicated grant system to support young actors, film directors, composers, artists, sculptors and architects.

We are set to make a major advance in the implementation of the Physical Education and Sports Development Programme for 2004-2006 by providing necessary funds in the 2006 budget. The programme envisages renovation of school gyms and sports grounds, acquisition and replacement of sports gear and equipment, repair of junior sport school buildings, and the construction of new and reconstruction of existing sport and recreation centres in various districts of St. Petersburg.
Gazprom has agreed in principle to finance the construction of a new modern stadium for FC-Zenit, our favourite soccer team. The decision will be announced in mid-April after we will have sorted out remaining questions with Mr. Miller of Gazprom. This year we plan to start construction of a new swimming pool meeting top international standards. It is not acceptable that our best sportsmen – swimmers, members of the national Olympic team - are deprived of access to proper training facilities at home, and this makes them move abroad.
Project specifications are ready and I hope that the deputies will back the proposed amendment to this year’s Budget. First phase of construction of the Figure Skating Academy is to be completed this year. St. Petersburg Government has found ways to give significant aid to the city’s leading sport teams through non-budgetary sources.
In 2004, St. Petersburg was visited by over three million foreign tourists. But let us ask ourselves: does this figure match the potential of the unique megalopolis internationally renown in terms of its cultural heritage?

Upon the request of Russia’s Ministry of Economic Development and Trade, experts of the Boston Consulting Group have designed, in co-operation with our specialists, a concept for tourism development in St. Petersburg. It will be tabled by Government in April. The concept specifies a mechanism to achieve 100 per cent growth of St. Petersburg tourist market within five years.

A first class hotel and a medium class hotel started operating in 2004. Another two four star hotels will be opened in the near future. The city has long been in need of a tourist information register and monitoring of utilisation of tourism resources. Both will be put in place in 2005. 

In my previous Address I referred to the growing concerns of citizens over personal safety issues in recent years. We made a decision to halt the trend by strengthening law enforcement agencies financially and organisationally, bringing them closer to the people. In 2004, St. Petersburg’s crime level was below the country’s average although remained high. A number of operations was conducted to prevent terrorist acts in the city.

The city annually increases financing and provides more resources to boost police effectiveness. It approved extra bonuses from St. Petersburg budget for certain categories of officers on top of their regular salaries.

To prevent crime by teenagers, we will increase the personnel in the Juvenile Offenders Inspectorate.

Street patrol units will become more effective and hot pursuits more likely with 16 CCTV cameras and 15 hotlines for crime-reporting installed at public places across the city. Creation of surveillance devices network will be stepped up. I have instructed my staff to develop an integrated programme which aims to support law enforcement agencies.

In 2004, St. Petersburg Government established the City Headquarters of the Voluntary Civilian Patrol. I urge the deputies of local councils to assist the civilian patrols at respective communities. Only yourselves, being in close contact with the residents, have knowledge of spots where most of the cases of public nuisance occur.

St. Petersburg authorities have put in place an integrated system to curb drug distribution. A rehabilitation centre, first of its kind in Russia, was opened in Primorsky district. The construction of a similar facility in Kalininsky district will be finished this year.

We continue our efforts towards restoration of the long forgotten Justices of the Peace. They were allocated 59 premises totalling 22,000 square meters from City Government. RUR 70 million is set aside in the budget for repairs of these premises.

It is hardly arguable that many of the key tasks set out in the Address will not be accomplished unless we strengthen district administrations and encourage their closer interaction with local municipalities. They should jointly co-ordinate dealing with such issues as improvement of the physical environment, creation of housing associations, working with teenagers, supporting foster families, development of community sporting facilities for children, assistance to law enforcement agencies and civilian patrols and many others. Therefore, financial resources available to district administrations and local municipalities will grow accompanied by their greater accountability.

In 2004, boards of district administrations were established. The boards hold meetings to discuss most topical issues of the district’s life which proved to be useful for combining resources of state authorities and local government. In 2005, we need to pass legislation on the transfer of some state powers to local government. The powers in question primarily refer to improvement of the physical environment, and housing and utilities management, as well as spatial development of municipalities.

No reform is an end in itself. It becomes meaningful only if government, business and civic organisations interact in a constructive fashion in the interests of society.

St. Petersburg Government has created clear-cut, transparent, predictable rules of the game equal for all market participants. We provided equal access to land, fuel and energy and other resources. We can neither accept granting concessions and preferences out of hand, differentiating between locals and aliens in the business community, nor live with a vague regulatory environment and red tape in decision-making processes.

We have made substancial progress in simplifying administrative procedures, although much remains to be done. Last year we passed an important law on allocation of land plots for housing construction through tendering only. This enabled us to create equal, transparent conditions applicable to all developers, significantly increase budget revenues and finally get the notion of market value of land in the city. Harshly critisised and besieged with complaints at the beginning, we were eventually proved right and demonstrated our spirit of innovation and initiative since the recently adopted Urban Planning Code of Russia obliges all constituent entities of the Federation do exactly the same as of 1 October 2005.

Very few believed that honest, civilised sales of city-owned real estate by auction are possible, including bidders themselves. Yet we set a precedent which rid business of suspicion and fears. As a result, city coffers received over RUR 2.5 billion from the auction sale of its shares in the Moskva and Oktyabrskaya hotels. You are aware of the price at which the Grand Hotel Europe was once sold (USD 1 million). That was a correct and timely decision. Being the main shareholder, the city was effectively paid no dividends, and hotels were falling into decay, not to mention the threat of asset stripping.  Now that the city has sold them at a high figure, real investors emerged interested in revamping the hotels.
There are over 100,000 small enterprises in the city. Yet we have to admit that the majority of small businesses are still operating in the shadow sector of the economy. We are not going to ignore this fact only because it is about small business, not big business. Small business sector accounts for almost one third of the gross regional product and employs almost half of the working population. This small business sector, as you may see, is not small at all. And its significance is high. All developed countries evolved into civil societies thanks to the middle class, and the latter was formed by small business. By small business which was transparent and law-abiding.
It is this kind of small business that we treat as our “holy cow,” because it saturates the market, boosts free competition, and penetrates the sectors of manufacturing, services, housing and utilities, and transport, but not the spheres where it is easy to catch fish in muddy water. We will be resolute in bringing out of the shadows those who pay no taxes to the state, conceal true salaries, sell counterfeit goods and carry no responsibility for their employees.

In autumn 2004, City Government approved the Concept of development and support of small entrepreneurship. Its implementation will create more small businesses in the manufacturing and innovative sectors. Very importantly, it will cut unaccounted turnover due to absolute transparency of the business as a precondition of assistance. In 2005, we started working towards raising the total volume of credits available for small business owners to RUR 2.5 billion, including an extra RUR 25 million of budget funds. We must further increase that amount next year.

The Government has already amended St. Petersburg’s Unified Tax on Imputed Income Act. In the pipeline is the introduction of tax reduction factors for several subsectors of small business. We realise that adoption of these amendments will result in a nearly RUR 70 million decline in revenues to the budget. Yet we believe that protectionism with regard to small businesses which pay taxes and provide people with quality services is not only justified, but necessary.

Level partnership between government and civic organisations is precisely the way towards a civil society. We should travel this route at full throttle. As national reforms gain momentum, it becomes more obvious that no reform can be fruitful and smooth without civic participation.
Participation in city affairs is more than just criticising everything done at Smolny or the Mariinsky Palace. We urge St. Petersburgers to join us in action instead of watching developments through the eyes of outsiders and grumbling in their kitchens. Your input is wanted in all spheres, from housing and utilities policy to protection of monuments. This city is our common habitat.
We need guardianship and supervisory boards at schools, universities, outpatient clinics and hospitals, for making a difference, including control over appropriated spending. Civil society institutions should promptly emerge in all regions of activity. I do expect that this process will receive guidance from the Public Council of St. Petersburg.
There are challenges that we cannot resolve without broad public support. Our city, world-renowned for its distinctive refined and tolerant character, was shocked by a few acts of ethnic violence. We will not tolerate attacks by extremists. All these crimes were fully investigated by the law enforcement agencies and the perpetrators will be severely punished.
The Advisory Board to interact with ethnic and cultural associations and the International Students’ Affairs Council were set up under the Government. Representatives of diasporas, leaders of sectoral authorities and law enforcement agencies with the participation of academics and human rights activists, have begun the elaboration of the programme to harmonise ethnic and cultural relations, and to strengthen tolerance in the city’s community. May I assure you that we will counter any manifestation of xenophobia, antisemitism and discrimination. But governmental efforts require the active support of public opinion, civic organisations and St. Petersburgers themselves.

We are going to continue our support for NGOs and not-for-profit organisations which pursue socially important programmes and projects with their own funds. As a result of the 2004 Contest, 20 public associations were given grants from the city.

An environment for citywide dialogue begins from the openness of government. Since September 2004, the House of Radio has been hosting a permanent Governor’s TV questions office where every St. Petersburger may ask questions and get a personal response. Every day, all members of Government, heads of sectoral Committees and district administrations take part in that initiative. The TV questions office has already processed more than 5,000 enquiries.

In November 2004, we announced the results of the unique “People’s Adviser Campaign.” In the course of this project, the Governor received 12,000 SMS messages from St. Petersburgers, mostly the youth, advancing specific constructive proposals on the city management, some of which have already been implemented. The campaign will definitely be continued this year.

In conclusion, I would like to address St. Petersburgers. We set for ourselves a difficult, obviously, very difficult task of raising the quality of life in the city to XXI century levels and of regaining our city’s historical European role.

This is not a phrase-mongering statement, which is first solemnly made then forgotten after having faced its first difficulties. We are realists. From the very outset, we saw the scope of the challenges and realised what kind of road we have to travel.

During the whole of 2004 we were busy, so to say, laying rails over rough terrain. In doing so we retained and substantially improved the management of the city. We reviewed lost opportunities, abandonded the practices which impeded progress, and hampered efforts to tap the city’s unique human, scientific, innovative, industrial and cultural potential. So if in the remaining three years we succeed in laying these rails, may I assure you that the train will steadily move along the track. 

Today we are doing difficult, rough work which is extremely necessary for the city. And we need your support. We need your understanding that the dreams about a splendid St. Petersburg and the prosperity of its residents will not come true all alone. Together we must bring about change in our life, and push the city towards success. And we have no reasons for depression. The year of 2004 was marked with very good performance. The St. Petersburg of today is stronger and more powerful that one year ago.

We have all the reasons to be optimistic and self-confident. There are no grounds to suffer from self-pity and the complex of provincialism. We are the citizens of the European capital of Russia! We are fortunate to live in St. Petersburg, to work for St. Petersburg, and to modernise St. Petersburg. Nobody will do it, but us.

I thank you.