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Europe
Russia |
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Last reviewed: 27 July 2009 |
Country information
Area: 17,075,400 square kilometres
Population: 142,008,838 (2008)
Capital City: Moscow
People: 81.5% Russians; 3.8% Tatars; 3% Ukrainians (more than 100 nationalities in all)
Languages: Russian, Tatar, other
Religions: Orthodox Christianity; Islam; Judaism; Buddhism
Currency: 1 Rouble = 100 Kopeks
Major political parties: United Russia, Communist Party, Liberal Democratic Party, A Just Russia
Government: Federation
Head of State/President: Dmitri Medvedev
Prime Minister/Premier: Vladimir Putin
Foreign Minister: Sergei Lavrov
ECONOMY
Basic Economic Facts
GDP: $ 1.677 trillion (2008)
GDP per head: $ 11807 (2008)
Annual growth: 5.6% (2008)
Inflation: 13.3% (rolling inflation 12.3% as of May 2009)
Major industries: Oil, gas, timber, metals, machinery, chemicals and arable farming.
Major import partners: Germany 13.9%, China 9.7%. Japan 5/9%, South Korea 5.1%. US (4.8%), France 4.4%, Italy 4.3%, UK 2.0%
Major export partners: Netherlands 12.3%, Italy 8.6%, Germany 8.4%, Chjina 5.4%, Ukraine 5.1%, Turkey 4.9%, Switzerland 4.1%.
UK exports to Russia: £4.1 billion (2008)
UK Imports from Russia: $6.7 billion (2008)
UK Investment in Russia: $9 billion (2006)
Impact of the Economic Crisis on the Russian Economy
The Russian economy, like many around the world, now appears severely affected by the global slowdown. From 1999 to 2008, the economy benefited from strong growth, averaging about 7% per annum. This growth was accompanied by budget surpluses (4% in 2008), allowing the Russian government to accumulate reserves of almost $600bn.
However, the effects of falling oil prices and the financial crisis have taken their toll on Russia. Oil and gas are crucial to the Russian economy, accounting for over 20% of GDP, 50% of federal budget revenues and 60% of exports. In 2008, after peaking at $149 per barrel in July, the oil price fell as low as $35 per barrel in December.
The Russian Federal Budget and economic forecast for 2009 were originally formulated on the basis of an average oil price of $95 per barrel. On 19 January, Minister of Economic Development, Elvira Nabiullina presented a new economic forecast based on an average of $41 per barrel in 2009. On the basis of this forecast, Parliament has approved the 2009 budget which targets a deficit equal to 7.4% of the GDP.
The Russian Rouble
The value of the Russian rouble, like the Russian economy as a whole, is closely aligned to the oil price and so has also dropped since the summer of 2008. From mid-November the Russian Central Bank began a managed devaluation of the rouble. By 22 January 2009 the rouble had lost more than 30% of its value against the bi-currency basket (dollar and euro). Since that time a hike in oil prices and a renewed inflow of foreign capital has seen the rouble strengthen from its record low in March.
International involvement
Russia’s involvement in the international economy had been deepening rapidly until the economic crisis. Foreign direct investment in Russia reached $103 billion in 2008, and Russian companies were increasingly interested in foreign acquisitions. Russia has been negotiating WTO membership for over 16 years. It recently announced that it would withdraw its accession bid and pursue membership as a Customs Union with Belarus and Kazakhstan. The exact terms of such a bid are currently under negotiation with the WTO Secretariat. In the meantime it is continuing dialogue with the OECD over possible membership. At the OECD's annual ministerial meeting in May 2007 member states agreed to open accession talks with Russia.
Other Economic Challenges
Russia faces wider economic problems, some previously masked by the oil boom. Businesses complain of high levels of bureaucracy and corruption. This is underlined by the small size of Russia’s SME sector (around 13% of GDP). The 2009 World Bank’s Doing Business survey ranks Russia 120th out of 181 countries, indicating significant bureaucratic challenges in the business environment. Corruption is endemic in Russia. In 2008, Russia fell in Transparency International’s corruption perception index to 147th out of 180 countries.
In the longer term, Russia’s demographic deficit may lead to significant labour shortages. Russia’s population is falling by over 700,000 per year. Some analysts predict that it could fall from its current 142m to 120-125m by 2025. Male life expectancy is now 58 years. There is already a shortfall of appropriately-trained workers, which is exacerbated by low labour mobility.
HISTORY
The origins of the Russian state can be traced back to the sixteenth century when the trading principality of Muscovy emerged as the dominant player among a number of small principalities and fiefdoms. Ivan IV (Ivan the Terrible, 1533-1584) was the first prince of Muscovy to style himself as Tsar. The Romanov family emerged as Russia's leaders in the early 17th century, and ruled Russia for the next 300 years. Perhaps the best known of the Romanovs are Peter the Great (1682-1725) and Catherine the Great (1762-1796), who arguably did most to reform and modernise the country.
Bolshevik Revolution
By the early 20th century, discontent at all levels of Russian society was high. Harsh working conditions in the newly industrialised cities, coupled with an absolutist monarchy which was perceived as being indifferent to the suffering of the mass of the population, created conditions which were ripe for the growth of political radicalism. In 1903 a schism in the Russian Social Democrats led to the emergence of the Bolshevik Party, led by Lenin, which was inspired by an extremist interpretation of certain European models of socialism. Dissatisfaction grew following the Bloody Sunday Massacre in 1905, defeat in the Russo-Japanese War and the disastrous course of Russia's involvement in the First World War. By 1917 the Bolsheviks were in a position to seize political control from the recently installed Provisional Government in an opportunistic and fairly bloodless coup. The following year, Russia withdrew early from the First World War with the costly Treaty of Brest-Litovsk. Tsar Nikolai II and his family were shot.
Soviet Union
The early years of Lenin’s rule were marked by civil war and mass starvation. Later, there was considerable rivalry for power as Lenin became increasingly incapacitated. Stalin emerged as the undisputed leader of the Communist Party in 1929. Once in place, his leadership came to be characterised by the use of political purges, mass deportation and imprisonment on an unprecedented scale as means of control. Stalin’s Five Year Plans did, however, see rapid industrialisation. In June 1941 Germany invaded the USSR, triggering a four year war during which up to 27 million Soviet citizens died. Yet Russia emerged from the war victorious and having secured effective political control over most of Eastern Europe. Stalin remained firmly in control until his death in 1953, although he became increasingly paranoid and reclusive. During this period the Communist Party consolidated its hold on every aspect of life by means of a vast security apparatus. The USSR had become an industrial and military superpower, although at an immense human cost.
Khrushchev, Stalin's successor, made some efforts to address the worst excesses of Stalin's rule, while preserving the key elements of Communism. He eased censorship and fostered a foreign policy of peaceful co-existence with the West, while, in the Hungarian Uprising of 1956, maintaining strong control over the Soviet satellite states. But the Party establishment distrusted him and he lost further credibility over his handling of the 1962 Cuban Missile Crisis. He was deposed in 1964 in a political coup. Brezhnev, his successor, presided over a period of consolidation. Life became more predictable and comfortable for the bulk of the population. However, with growth rates steadily declining and social problems growing, it became know as ‘the period of stagnation.’ From 1979 the Soviet Union became involved in a prolonged and bloody occupation of Afghanistan scarring a generation.
Gorbachev
The stagnation of the Brezhnev era was compounded by a quick succession of short-lived Party leaders who died in office. It was only in 1985, when Mikhail Gorbachev took power, that reform took off. Perestroika (restructuring) and glasnost (openness) liberalised both the economy and the political system. Gorbachev’s goal was to build a better form of socialism. Gradually, however, the process of democratisation took on a pace of its own. Gorbachev made it clear that he would not intervene in the internal affairs of the Eastern European satellite states, which prompted widespread protest movements that brought about the collapse of unpopular communist governments which had previously relied on the threat of Soviet military support. At the same time, pressure was growing among the republics of the USSR for greater independence, and in 1990 the Russia republic within the USSR (headed by Yeltsin) declared its independence in a symbolic gesture. In August 1991, a coup was mounted against Gorbachev by a group of Communist Party hard-liners seeking to stop the fragmentation of the USSR. Yeltsin supported Gorbachev and the coup was defeated. But when Gorbachev returned to Moscow from the south where he had been under house arrest, it became clear that Yeltsin held the political initiative, and many of the other republics of the USSR hastened to declare their independence. The dissolution of the USSR on 31 December 1991 left Gorbachev with no option but to resign as its President.
INTERNATIONAL RELATIONS
Relations between the UK and Russia (2003 was their 450th anniversary) were transformed after the collapse of the Soviet Union. There are frequent contacts at all levels to discuss a wide range of bilateral issues and key foreign policy issues. The State Visit by HM the Queen and the Duke of Edinburgh to Russia in October 1994 was the first ever by a reigning British Monarch. President Putin came to the UK on a State Visit in summer 2003, the first by a Russian leader since 1874. President Putin also visited the UK in October 2005, during the UK Presidency of the European Union.
Relations between Russia and the UK were strained in the aftermath of the murder of Alexander Litvenenko in November 2006 and the closure of the British Council in St. Petersburg and Ekaterinburg in January 2008. The UK co-operates with Russia where it is in its interests to do so. High-level contacts have increased in the last year, in pursuit of shared interests on the global economy, energy and climate security, and international stability – although bilateral differences remain. President Medvedev and Prime Minister Brown held talks in July 2008 andPresident Medvedev visited the UK in April 2009 for the G20 Summit.
President Medvedev has announced a framework for Russian foreign policy under his government, built around the principles of international engagement, and Russia continues to play an important role in international institutions such as the UN Security Council. Nevertheless, differences with the international community have arisen following the conflict in Georgia in 2008, and Russia’s recognition of the Georgian regions of South Ossetia and Abkhazia as independent states.
Negotiations are currently underway between the EU and Russia on a successor to the Partnership and Co-operation Agreement. This will be a wide-ranging agreement covering a number of areas including global and regional security and stability, trade and investment, and climate and energy security.Russia has a dialogue with NATO through the NATO Russia Council, and there are many areas on which NATO and Russia have common interests, including Afghanistan, combating piracy, counter-proliferation and counter-terrorism where there will be opportunities to work together.
The UK and Russia - Trade
Trade between the UK and Russia has been growing at around 25 per cent annually for the last five years. The UK has substantial investments in Russia, and was the largest investor in Russia in both 2006 and 2007.
In turn, Russia is the UK's 12th largest export market, with over 1000 UK companies operating in Russia in 2008. Russia enjoys a historically strong performance in the field of engineering, financial services, ICT, power and energy and sports and leisure infrastructure. Over the past few years, trade between Russia and the UK has increased significantly. Exports of UK goods were valued at £4.1bn in 2008, an increase of 46% on 2007 figures. Russia's potential will be enhanced further if it pushes through a range of institutional and economic reforms necessary to complete the transition to a stable, rules-based economy.
Development Assistance
DFID’s bilateral engagement with Russia started in the early 1990s, initially supporting Russia’s transition to a market economy. After 2002 the focus shifted to a set of policy issues based around the Russian government’s administrative and social reforms. Over the period 2001 – 2006, over £50m was allocated to support this. In addition, there were annual contributions of between £2-3 million for humanitarian operations in the North Caucasus.
DFID closed its bilateral aid programme March 2007, a sign of Russia’s strong economic growth since 2000 and its position as one of the richest Middle Income Countries. As a G8 member and an emerging donor, Russia has the potential to play a major role in global poverty reduction. DFID’s programme in Russia now works through the World Bank and the EBRD across three main areas: building Russia’s aid management capacity; supporting public administration reforms; and promoting energy efficiency.
Cultural Relations with the UK
The British Council continues to operate in Russia through its Moscow offices, although operations in St. Petersburg and Ekaterinburg remain suspended following actions by the Russian authorities in January 2008. The UK does not believe that cultural and human relations should be damaged by unrelated political disputes.
For further details on the UK’s relations with Russia, you may wish to see the Foreign Affairs Committee's Global Security: Russia report and the FCO’s Command Response.
BBC News Country Timeline: Russia
GEOGRAPHY
Russia is the largest country in the world, spanning 11 time zones. The landscape varies widely, from vast open tracts in the European heartlands and the taiga and tundra of Siberia, to mountainous terrain. Agriculture is largely confined to the European regions and the southern belt of Siberia. Further north, the main industries are forestry and extraction of energy and minerals.
The main communications across the country are by air, and the Trans-Siberian railway. The road system is not well developed countrywide. Russia's great rivers also play an important part in transportation as well as in hydroelectric power generation.
Russia's population is small relative to its size, and unevenly distributed, with the vast bulk in the European areas and the Ural regions. In inhospitable regions e.g. the far north and much of Siberia, population density is often less than one person per square kilometre.
POLITICS
The Russian Federation (Russia) is recognised in international law as continuing the legal personality of the Soviet Union (USSR) which was dissolved on 31 December 1991. The Russian Federation is currently divided into some 80 administrative units officially entitled subjects of the Federation. However, a programme of regional mergers is underway.
Yeltsin
Yeltsin launched an agenda for Russia's transition to a democratic, market-based form of government. But the lack of any clear strategy, mounting political opposition, and his own failing health, all made this more difficult. In 1992, Acting Prime Minister Yegor Gaidar began a programme of radical economic reforms, known as ‘shock therapy’, such as measures to cut subsidies and de-regulate prices. These quickly ran into stiff opposition, however, and change was as a result much more gradual and patchy than many had hoped. The exception was the field of privatisation where huge strides forward were taken between 1992 and 1994 to create the bases of a privately owned economic system. Russia was also hamstrung by a constitutional crisis in 1992 and 1993, with Yeltsin contesting power with the Russian Parliament. In September 1993 Yeltsin finally sought to break the impasse, dissolving the Parliament and calling for fresh elections. When Parliamentary supporters took to the streets in violent protest, Yeltsin famously ordered tanks to fire on the White House, which broke the deadlock, but left deep political scars.
Out of that debacle a new Constitution and political institutions emerged. The period between 1993 and 1996 was, however, highlighted by political instability, the war in Chechnya and continuing economic difficulties. By 1996 Yeltsin's popularity ratings were in single figures. He was re-elected that year when the Russian Establishment combined only to prevent a return of the Communists to power. His second term was crippled by severe economic problems, which in August 1998 culminated in the formal devaluation of the rouble and a decision to default on its rouble debts. A rapid turnover of Prime Ministers illustrated Yeltsin's increasingly desperate attempts to find a candidate he thought suitable to replace him. He installed Vladimir Putin as Prime Minister in the summer of 1999 and resigned on 31 December 1999, before the official end of his presidential term.
Putin
Vladimir Putin was formally elected President on 26 March 2000, and served two terms as President before stepping down to become Prime Minister, appointed by his successor Dmitri Medvedev in May 2008.
During his first term as President, Putin moved to re-centralise power, cutting back the positions of regional governments and big business. He also pushed forward an ambitious programme of domestic reforms, particularly in the economic sphere, including banking reforms, tax reform, anti-money- laundering legislation, and administrative and judicial reform (perhaps the key to genuine change in Russia). Favourable economic conditions, fuelled by the high oil prices, ensured his continuing personal popularity and gave him the confidence to press ahead.
President Putin won a second term on 14 March 2004 with a landslide majority, in elections described by the OSCE as ‘neither free nor fair.’ The pace of reform slowed notably during Putin’s second term, and progress on some politically and socially contentious issues like economic reform and pensions was limited. Nonetheless, overall the years of Putin’s Presidency were probably the most stable and prosperous period for Russia since the break up of the USSR, at least in part on the back of high commodity prices.
Results from the Duma (Parliamentary) elections on 2 December 2007 gave an overwhelming victory for the incumbent majority party in the Duma, Putin’s United Russia, which won a constitutional majority. Parliamentary observers from the OSCE and Council of Europe described these elections as ‘neither free nor fair’ and drew attention to unbalanced media coverage and the use of state resources to favour United Russia.
Medvedev
Presidential elections took place on 2 March 2008. Deputy Prime Minister Dmitri Medvedev won 70.2% of the vote. He appointed Vladimir Putin, leader of the United Russia party which dominates the State Duma, as Prime Minister. The three other candidates, Communist leader Gennady Zyuganov, Vladimir Zhirinovsky of the LDPR and Andrei Bogdanov, head of the Democratic Party gained 17.8%; 9.4%; and 1.3% of the vote respectively.
Since his election, Medvedev has advocated reforms to the rule of law in Russia, intended to strengthen the independence of the judiciary, and pushed forward anti-corruption legislation. He has proposed a number of reforms to electoral and party law, and in late 2008 oversaw reforms to Russia’s constitution which extend the Presidential term of office to six years, and the State Duma’s term to five years.
Human Rights
While human rights and civil freedoms have improved significantly since the collapse of the USSR, concerns remain about human rights violations in Chechnya and the North Caucasus, torture, constraints on civil society and media freedom, xenophobic or racially motivated attacks and conditions in the armed forces. President Medvedev has underlined his commitment to enhancing the rule of law and the independence of the judiciary, but this has yet to be translated into real progress in these areas.
Further details on the human rights situation in Russia can be found on page 169 of the 2008 FCO Annual Report on Human Rights:
Chechnya the North Caucasus
The Russian Government intervened in Chechnya in 1999 after a short, chaotic period of virtual Chechen self-rule after Russian troops withdrew in 1996. Much of the republic's urban and rural infrastructure was destroyed in fighting between separatist rebels and federal troops allied with local forces loyal to Moscow, especially through the indiscriminate use of heavy artillery and aerial bombardment by the Russian military. In April 2009, Russia announced the end of its Counter-Terrorism Operation in Chechnya. However, continued instability has resulted in local counter-terrorism regimes being re-introduced in several regions of the republic. There are ongoing reports of explosions and shootings carried out by rebel groups, including attacks on federal and local law-enforcement bodies.
Extremists associated with Chechen rebel groups have been linked to several high-profile terrorist attacks in the region, including the Beslan school siege in September 2004, and in Moscow. In the past two years there has been a sharp decrease in the numbers of terrorist incidents outside of the North Caucasus. Russian forces claim to have eliminated many rebel groups and fighters, including Shamil Basayev who had claimed responsibility for a large number of terrorist attacks including Beslan.
A Moscow-initiated political process, launched in March 2003 promising autonomy, reconstruction and stabilisation, has made some progress, especially with high-profile rebuilding work. However, social and economic conditions remain poor. There have been widespread, credible allegations of extra-judicial killings, forced disappearances, torture, rape and arbitrary detention by all sides.
The political process was initiated with a constitutional referendum in March 2003, which received a substantial ‘yes’ vote. However, serious international concerns were raised over election conditions for the referendum. This was followed by presidential elections in October 2003, which elected the incumbent Head of the Administration, Akhmad Kadyrov, as President of Chechnya. Both the UK and the EU raised serious concerns over the election conditions and the plurality of the political process. The assassination of President Kadyrov in May 2004 brought renewed instability. Ramzan Kadyrov, Akhmad’s son, became President of Chechnya in February 2007.
Instability within Chechnya has affected neighbouring republics, particularly Ingushetia and Dagestan, where the frequency of violent incidents has increased in recent years. The whole North Caucasus remains fragile and vulnerable to human rights violations. Difficult socio-economic conditions across much of the region, together with widespread corruption, ethnic and clan tensions and religious divisions, continue to fuel this instability.
Because of the security situation and the threat from terrorism and kidnappings, the FCO advises against travel to certain regions of the North Caucasus. See the FCO Travel Advice for more information.
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See Also
Useful Links
- BBC News Country Timeline: Russia
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British Council Russia
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UK Trade & Investment Country Profile: Russia
Contacts
Address:
6/7 Kensington Palace Gardens
London W8 4QP
Website: www.great-britain.mid.ru
Consular Department
5 Kensington Palace Gardens
London
W8 4QS
Office of the Trade Representative
33 Highgate West Hill
London
N6 6NL
E-mail: info@rustradeuk.org
Website: www.rustradeuk.org
Telephone:
(020) 7229 2666/3628/6412
(020) 7229 8027 Consular Section
(020) 8340 4492/1907 Office of the Trade Representative
Fax:
(020) 7727 8625
020 7229 3215 Consular Department
020 848 0112 Office of the Trade Representative
Email: office@rusemblon.org
Email: info@rusemblon.org
Email: info@rustradeuk.org
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