Moral values critical to Russia's future: Putin

Thirteen years after he rose to power, and more than two decades after the collapse of the Soviet Union, Putin still seems to be searching for an overarching idea to unite Russians.

With the patriarch of the Russian Orthodox Church sitting in the front row, Putin said it is crucial to "support institutions that are bearers of traditional values".

"It is painful for me to say this, but I must: Russian society today is experiencing an obvious deficit of spiritual bonds," Putin said. "Mercy, compassion and support for one another - a lack of those things that have always made us stronger, of which we always were proud."

In power since 2000 as president or prime minister, Putin has used annual appearances to shape an image of a strong leader in command of economic facts and figures.

But domestic pressure is growing on the Kremlin to translate oil and gas income into improvements in roads, schools, police, pensions, housing and healthcare.

Putin also said that businesses should not evade Russia's laws by operating through offshore tax havens. Capital has been leaving Russia at a rate of $80 billion per year.

Nine out of 10 major deals completed by Russian companies, including those in which the state has a stake, were not subject to Russian regulation, Putin said.

"We need a whole system of measures to 'de-offshore' our economy," Putin said, without announcing specific details.

Putin also said Russia's priority of future development would be eastward. "In the 21st century, Russia's vector of development is East. Siberia and Far East is our enormous potential. This is a chance to occupy a proper place in the Asia-Pacific region," he said.

Reuters-Xinhua