( L - R ) Putin, Ivanov, Medvedev

MOSCOW, (Reuters):

Russian President Vladimir Putin attacked U.S. foreign policy and embraced traditional values yesterday ina hawkish speech that laid out a route for his successor to follow when he steps down next year.

Making what he called his last annual address to lawmakers, Putin said he was suspending Russia's commitments under the Con-ventional Forces in Europe treaty and linked the move in part to U.S. plans for a missile shield in eastern Europe.

In a speech punctuated by enthusiastic applause, he gave no clear answer to the question preoccupying Kremlin-watchers and investors ?— who he would endorse as his replacement when his second and final term ends next March.

But he appeared determined to preserve his huge influence after that, announcing big new spending commitments and infrastructure projects ?— some of them with a distinct Soviet flavour ?— that will run long after he bowed out.

"It is premature for me to come out with political last wills and testaments," Putin said.

This year's budget spending will have to be revised up by $25 billion ?— or 12 per cent ?— and Russia will throw hundreds of billions of the petrodollars it has hoarded on power stations, roads, railways, airports and canals.

In a 72-minute address in the Kremlin's Marble Hall, Putin repeatedly stressed the value of Russian values and warned Russia against mimicking western culture.

"Society can only meet big national challenges when ... it preserves respect for its native language (and) its distinctive cultural values," he said.

FRONT-RUNNERS

First deputy prime ministers Sergei Ivanov and Dmitry Med-vedev, the men regarded as front-runners for Putin's job, sat side by side listening to the speech.

One analyst said the hawkish themes tied in closest with Ivanov's world view ?— pos-sibly offering a clue to Putin's preference.

"The general tone of the address ... arguably plays into the hands of Sergei Ivanov," said Tim Ash, an economist at Bear Stearns in London.