Contrary to expectations, Russian President Vladimir Putin's annual state-of-the-nation speech has focused almost exclusively on domestic issues, with only passing reference to international issues regarding the country's need to build a strong military.

Russian President Vladimir Putin says Moscow should follow the example of the United States in building a strong defense industry.

In his annual state-of-the-nation address in Moscow, Mr. Putin said the United States has done a good job of turning its homeland into a fortress, thanks to a military budget that is 25 times larger than Russia's.

The Kremlin leader says Russia must modernize its army, so that its defenses are stronger and more reliable. But the thrust of Mr. Putin's speech was largely domestic, with a focus on his vision of Russia's economic and political development, in particular social problems.

Speaking on live television from the Kremlin, Mr. Putin acknowledged that government and business have fallen short of fulfilling the hopes of Russia's people. He said many seek wealth and power by taking shortcuts, a reference to top businessmen who have become rich largely through their government connections. He added that corruption remains a serious obstacle to development. But overall he said the state of the country is positive.

Mr. Putin did not mention the current stand-off with Iran over its nuclear program.

Russian diplomats are engaged in delicate negotiations with other major powers about how to deal with Iran.

Mr. Putin also said Russia will continue its role as a major supplier of energy to Europe and other countries. But he did not address concerns about the increasing role the state-run monopoly Gazprom plays in the sector.

Mr. Putin's critics say the Kremlin is using its vast reserves of oil and gas as a political weapon, especially with its nearest neighbors in East Europe that were once in the Soviet bloc.