Russian President Vladimir Putin in his annual state-of-the-nation address on Thursday defended Russia's aggressive foreign policy, saying the actions are necessary for his country's survival.

Putin, in his speech at the Grand Kremlin Palace, defended the annexation of Crimea in March, describing the peninsula as Russia's spiritual ground, "our Temple Mount", and added that national pride and sovereignty are "a necessary condition for survival".

"If for many European countries, sovereignty and national pride are forgotten concepts and a luxury, then for the Russian Federation a true sovereignty is an absolutely necessary condition of its existence," he told a full room of Cabinet ministers, lawmakers and community leaders. "I want to stress: either we will be sovereign, or we will dissolve in the world. And, of course, other nations must understand this as well."

Although Russia is boosting its national defense budget, Putin said it is not going to get involved in an expensive arms race. He said unspecified "unusual solutions" are at the nation's disposal.

"No one will succeed in defeating Russia militarily," he said. "They would have been delighted to let us go the way of Yugoslavia, with all the tragic consequences. But it did not happen. We did not allow it to happen."

He said Russia would not reduce its ties with the West despite a bitter ongoing confrontation over the Ukraine crisis. "Under no circumstances are we going to scale back our ties with Europe, America," he said. "At the same time, we will revive and expand traditional ties with the south of the American continent, continue cooperation with Africa, with countries in the Middle East."

The Russian president said that Russia depends on itself for economic development while remaining open for world investments.

Western sanctions encourage Russia to attain more economic efficiency, Putin said, stressing that the government should cope with disorganized administration, irresponsibility and bureaucratic custom, which are "direct threats to our security".

Speaking on Thursday at a meeting of top diplomats from nations in the Organization for Security and Cooperation in Europe, in Switzerland, US Secretary of State John Kerry said Washington does not want to see Russia isolate itself "through its own actions", calling on Moscow to help halt the raging Ukraine crisis.

"The United States and countries that support Ukraine's sovereignty and rights do not seek confrontation. It is not our design or desire that we see a Russia isolated through its own actions," Kerry said.

Gunbattles in Chechen

Putin also said he is confident that local Chechen forces will deal with the terrorist attack in Grozny.

Russia's National Anti-Terrorist Committee said 10 police officers were killed and 28 wounded in gunbattles early Thursday with militants in the capital of Chechnya. The gunbattles left a 10-story building and a school in ruins in the center of Grozny.

AP - Xinhua - AFP