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Putin's state of the nation: Terrorism tops speech, digs at Turkey

Russian President Vladimir Putin has delivered his annual "State of the Nation" address to the Russian parliament and, after another rollercoaster year for the country, it was closely watched by investors and analysts.

Addressing both houses of parliament, Putin gave his outlook for Russia's future development, addressing an audience of 1,000 people including religious leaders, media chiefs and legal bodies as well as government officials.

Last year, Putin's speech was dominated by criticism of Western sanctions after its annexation of Crimea and alleged role in a pro-Russian uprising in Ukraine as well as criticism of U.S. influence and global power imbalances. This year was very different. Here are the key themes that emerged from his 2015 speech:

Terrorism

While Russia is still operating under Western sanctions, geopolitical events have conspired to make Russia both a friend and foe of the West and the nations that have imposed sanctions against it.

Terrorism was the first topic mentioned in Putin's speech which lasted an hour on Thursday, showing how important this issue is for the country.

"We are fighting for justice, happiness and the entire future of our civilization," Putin told the audience which included central bank Governor Elvira Nabiullina and other officials.

"We have to be prepared and we have to defeat them (terrorists) before they get here that's why we launched this operation in Syria...our forces fight in Syria for Russia, for the security of our people first and foremost."

Russian President Vladimir Putin.
Sasha Mordovets | Getty Images
Russian President Vladimir Putin.

An affiliate of terrorist group Islamic State claimed responsibility for the Russian airplane bombing in October in which 224 people were killed, and this was a pivotal moment for Russia.

Out in the cold geo-politically and economically due to sanctions, its support for Syrian President Bashar Assad, a dampened oil price and a recession, the attack on the Metrojet airliner meant that Russia and the West had a common enemy.

Since the airliner attack, Russia has joined airstrikes against ISIS in Syria, although it has been accused of striking Assad opponents as much as ISIS positions.

Read More This is how much Russia's 'war' in Syria costs

Tensions with another member of the airstrike alliance, Turkey – a former ally of Russia – came to the fore last week after Turkey downed a Russian fighter jet that it said was in its airspace, Russia denied this and a war of words and Russia has threatened economic retaliation.

Putin made several digs at Turkey during his speech, underlining the government's fury and disbelief at Ankara's actions. "We will never forget what they did and we have always believed that betrayal is the most ignoble act. I don't even understand why they did it," he said.

He said Russia did not want to "saber-rattle" but said that Turkey should not think that it can "get away with what it did."

Ukraine

While Russia may have been brought back into the international fold in terms of an alliance against ISIS, sanctions still remain imposed on it over Ukraine and Crimea.

Last year, these events were top of the agenda in Putin's address and he called the annexation of Crimea from Ukraine as a "historic reunification" with the Black Sea peninsula.

Any mention of Ukraine was notable absent in Putin's address this year, however, perhaps due to a renewal of tensions with Russia's neighbor. It did not go unnoticed by followers of the speech on Twitter.

A year on and sanctions remain in place and it is uncertain when sanctions could be lifted – particularly as Russia is currently preparing trade sanctions against Ukraine, showing relations are deteriorating rather than improving. Russia is not happy with a trade deal between the EU and Ukraine set to come into force in January 2016.

On Wednesday, the Lithuanian president implored the European Union to extend, rather than row back, sanctions on Russia, saying it was not upholding the terms of a ceasefire brokered last November.

"The fragile truce in Ukraine is not peace. A ceasefire agreement is constantly violated, heavy military equipment still has not been withdrawn, and control over the Ukrainian border has not been restored," Dalia Grybauskaite said, according to Sputnik news.

The economy

It shouldn't come as a surprise that Russia feels threatened by a trade deal between Ukraine and the EU, its largest trading partner, according to the European Commission. Russia's economy needs all the friends it can get.

The economy was the third subject to be addressed in Putin's speech after a brief mention about the importance of tackling corruption in Russia, particularly ahead of and during 2016 parliamentary elections. Corruption, he said, "deters Russia from developing properly."

Low oil prices, sanctions and the resultant capital flight led to a plunge in the ruble and high inflation in Russia. The Russian central bank has tried to combat this with high interest rates – much to the chagrin of Putin who would prefer to see lower rates in order to encourage spending.

Putin said that Russia needed to boost its economy in several ways, boosting competitive production and help for small and medium-sized enterprises. He also welcomed foreign investors.

The Russian president said that by 2020, he wanted all of Russia's food to be made by domestic producers.

Russia's Finance Minister Anton Siluanov told CNBC in October that he believed Russia would see a contraction in Russian gross domestic product of 3.8 percent in 2015 but that the economy had started to turn a quarter, predicting positive growth of 0.7 percent in 2016.

Russia has tried to turn sanctions into an advantage by promoting import substitution and in retaliation has banned many foreign products, making a spectacle out of bulldozing of piles of imported vegetables, cheese or meat, angering many struggling Russians who are dealing with high food prices and rising poverty.

Not one to let a good crisis go to waste, Putin has tried to use Russia's economic woes as a way to galvanize nationalist sentiment around Russian produce and industry.

In Putin's last state of the nation address he said import substitution was "a long-term strategy" to reduce Russia's reliance on foreign imports. "I want to stress that reasonable import substitution – reasonable is the key word here – is a long-term priority, irrespective of external conditions."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow CNBC International on Twitter and Facebook.